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HomeMy WebLinkAbout31-Development Services MAYOR & COMMON COUNCIL AND COMMUNITY DEVELOPMENT COMMISSION MEETING BACKUP MEETING DATE: 07/24/2006 DEPUTY: Linda Hartzel ITEM NO. STATUS 31 Backup material (Draft eIP) is in separate folder City of San Bernardino FY 2006 / 07 - 2010 / 11 O OQeF� Capital Improvement O San Ber Program _ � 3/ �. aY- o6 CITY OF SAN BERNARDINO DEVELOPMENT SERVICES DEPARTMENT INTEROFFICE MEMORANDUM a TO: (SEE DISTRIBUTION LIST) FROM: MARK LANCASTER, Deputy Director/City Engineer a SUBJECT: Draft 5-Year CIP— FY 2006/07-2010/11 DATE: July 17, 2006 COPIES: Valerie Ross, Director; Mike Grubbs, Engineering Manager/Field Engineer; Robert Eisenbeisz, Sr. Civil Engineer; Byron Montalvo, Sr. Civil Engineer; Robert Sepulveda, Engineering Associate Attached is the Draft 5-Year Capital Improvement Program (CIP) — Fiscal Years 2006/07-2010/11. Please review this document prior to the July 24, 2006 Workshop at 5:30 p.m. in the Economic Development Agency(EDA) Boardroom. Any questions regarding this document can be addressed at that time. Distribution List: Patrick J. Morris, Mayor Fred Wilson, City Manager Esther Estrada, 1st Ward Councilwoman James F. Penman, City Attorney Dennis J. Baxter, 2nd Ward Councilman Rachel Clark, City Clerk Gordon McGinnis, 3Td Ward Councilman Barbara Pachon, Finance Director Neil Derry, 4th Ward Councilman Lori Sassoon, Ass't City Manager Chas Kelley, 5th Ward Councilman Teri Baker, Ass't to the City Manager Rikke Van Johnson, 0h Ward Councilman Jan Wages, Administrative Analyst II Wendy McCammack, 7th Ward Councilwoman Gary Silvius, Accounting Manager Jorge Carlos, Executive Ass't to Council Ken Fisher, Public Services Director Jim Sharer, Facilities Director Randy Kuettle, Street Superintendent Lemuel Randolph, Parks &Recreation Director � o va c c � o � v� a O � � •� ao U 5n L u � cQj aw x � 2 o g � w LZ � o x o i -0 o c u ,,.) � ---- � t� ° R, sum- •� �� chi !� L � EaA � rx 3 zQ as u r _ O Ej coq MI Eb L o tU CIO U O Q O C .�"2 bA h W N A O � 'r. o CIO .10 4. cn Cd r l u C7 V fDaQ °�' c ° � > C7 O 0 N CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM CIP 2006-2007 to 2010-2011 San Bernar ino Cover Letter Introduction 1-2 Potential Funding Sources 3-12 Summary of Expenditures 13-18 General Buildings 19-31 Streets and Street Lighting 32-157 Sewers 158-191 Storm Drains 192-210 Traffic Controls 211-256 Parks and Recreation 257-301 COVER LETTER DEVELOPMENT SERVICES DEPARTMENT 300 North"D"Street•San Bernardino•CA 92418-0001 Planning&Building 909.384.5057•Fax: 909.384.5080 p �t 11 Public Works/Engineering 909.384.5111 •Fax: 909.384.5155 San Bernar fno www.sbcity.org SM July 17, 2006 Honorable Mayor and Common Council: We are pleased to submit for your consideration the Capital Improvement Program (CIP) for Fiscal Years 2006/2007 through 2010/2011. Overview The five-year CIP is a plan to design and construct the proposed capital improvement projects, with their estimated costs and sources of funds necessary for providing the quality service and public improvements expected by the residents and businesses of the city of San Bernardino. The program is prepared in fiscal year increments (see Summary of Expenditures Section), which is reviewed and updated by the Mayor and Common Council annually to confirm or reorganize projects reflecting current year priorities. The total budget for FY 2006/2007 CIP is $41,007,500. This includes a decrease of$3,637,200 in the Streets & Street Lighting portion of the CIP. It should be noted that the CIP budget for FY 2005/2006 totaled $44,408,700. The overall decrease in CIP budget reflects the numerous traffic signal, sewer, pavement rehabilitation projects and construction of Campus Parkway completed in FY 2005/06. Funding for the pavement rehabilitation projects was a loan from the State Infrastructure Bank and is a one-time effort to bring city streets to a state of good repair. Some of the major projects anticipated to be either in design or construction for FY 2006/07 are: The replacement of the Mt. Vernon Bridge over the BNSF yard; a new connector ramp at University Parkway/I-215; Phase I of State Street extension; and several street improvement projects around San Bernardino International Airport, including widening of Central Avenue, Tippecanoe Avenue, Third and Fifth Streets and extension projects at Mt. View Avenue and Lena Road. Thank you for your consideration of this important document during the budget hearing process. FRED WILSON VALERIE C. ROSS City Manager Director of Development Services i INTRODUCTION i i CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM CIP 2006-2007 to 2010-2011 San Ber�nar ino INTRODUCTION page 1 of 2 Capital improvement programming incorporates planning on a short and mid range basis. It links and coordinates long range general plans with growth, development, and the annual budgetary process. The CIP establishes the immediate and future direction of municipal development. It formulates on a priority basis to comply with State law and within the actual financial capabilities of the City. Since the City does not have sufficient funding to complete every project, it is necessary to carefully analyze the manner in which funds are programmed for improvements. Fiscal analysis, aimed at minimizing the impact of projects on local resources, is a significant element of the programs. In this way it attempts to achieve the goals and objectives of the citizens, the Mayor and Common Council of the City of San Bernardino. In planning for a long term Capital Improvement, it is necessary to analyze the impact of individual projects on the operating budget. All capital projects entail some operation and maintenance costs, which will have to be, carried as an on going expense in future budgets. In any analysis, the continuing operational costs must be weighted against the P ublic benefit and operational saving resulting from the replacement of substandard facilities. The CIP is a planning document and does not appropriate any funds: The projects approved during the CIP process for the upcoming fiscal year are incorporated into the proposed budget for that year. The Mayor and Common Council approve appropriations for those projects through adoption of the annual budget. The remaining four years reflect staff's recommended priorities for the future and are reviewed and revised annually by the Mayor and Common Council. CIP Organization: The CIP is divided into six major sections, according to the category of capital investments, as follow: General Buildings: The general buildings category of the CIP can include the bond service payments for the construction of the City's buildings, and remodeling or replacement of existing facilities. Funding for projects may come from the General Fund, Redevelopment Bond proceeds, Community Development Block Grant (CDBG), State funds and Refuse funds. 1 CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM i CIP 2006-2007 to 2010-2011 San Bernar ono INTRODUCTION page 2 of 2 Streets and Street Lighting: The streets and street lights can include projects to extend and widen streets, street resurfacing, construction of curbs, gutters, sidewalk, handicap ramps, bikeways, right of way acquisition, and street lighting systems. Federal and State aid, State Gas Tax, Sale Tax , and the CDBG Program may fund projects. Sewers: The sewer program can include projects to increase system capacity for new users, replacing aging or obsolete systems and meeting new regulatory requirements. Sewer connecting fees, and sewer line construction and maintenance funds may fund projects. Storm Drains: The storm drain can include projects to install new storm drain P er system Y Comprehensive storm drain master plan, replacing aging or obsolete systems. Development fee and Storm Drain construction funds may fund projects. Traffic Controls: The traffic controls can include projects to install new traffic signals, traffic striping, and replacing aging or obsolete traffic control systems. Projects may be funded by development fees, Federal and State aid, State Gas Tax funds, Sale Tax funds, and Traffic Systems Fee. Parks and Recreation: The parks and recreation category of projects can include the maintenance and upgrade of parks, game courts and field, fielding lighting, recreation buildings, Park's restroom buildings, and play ground equipment. Park construction Fee and CDBG may fund projects. 2 POTENTIAL FUNDING SOURCES CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM MW CIP 2006-2007 to 2010-2011 San Bernar ino POTENTIAL SOURCES OF FUNDING page 1 of 2 The City's General Fund is limited and cannot be relied upon to finance all Capital Improvement Projects. A number of other sources, however, can be tapped to complete the high priority items. These include: 1. Economic Development Agency. 2. Joint Powers Authority Bonds. 3. Housing and Community Development Act of 1974 (as amended). 4. Sewer Line Construction Fund (245). 5. Underground Utility District -PUC Rule No. 20, 20A, 20B. 6. State Gasoline Tax (126 Fund). 7. State Grade Crossing Fund. 8. Senate Bill 325 Funds (SB325). 9. Federal-Aid Highway Act (Surface Transportation Program, also called ISTEA, TEA-21 and SAFETEA-LU). 10. Urban Park and Recreation Recovery Act. 11. Land and Water Conservation Fund. 12. Park Extension and Development Fund (241). 13. Park Development Fee Fund (243). 14. Storm Drain Construction Fund (248). 15. Lease Purchase Financing. 16. State Park Bond Act Funds. 17. Special Assessment Districts. 18. Loans to RDA. 19. Library Services and Construction Act (LSCA). 20. Revenue Bonds. 21. Enterprise Funds. 22. Donations. 23. County Funds. 24. Highway Bridge Rehabilitation & Replacement (HBRR) Funds. 25. High Hazard Elimination Safety Funds (HHES). 26. Section 203 Federal-Aid Grade Crossing Funds. 27. Traffic Systems Fee Fund (250). 28. Half-Cent Sales Tax - Local Funds (129) (Measure 1). CONTINUED ON NEXT PAGE AF N 3 CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM I CIP 2006-2007 to 2010-2011 San Bernar no POTENTIAL SOURCES OF FUNDING page 2 of 2 29. Proposition III Funds. 30. Verdemont Infrastructure Fee Fund. 31. Federal-Aid Highway Act (Congestion Management -Air Quality). 32. Local Partnership Program (SB 300). 33. Safe Routes to School Fund. 34. Transportation Development Act Fund (TDA). 35. Bureau of Indian Affairs Fund (BIA). 36. State Infrastructure Bank Loan. 37. Park Bond Act of 2000 Fund. 38. Assembly Bill 2928 (Proposition 42). 39. Park Bond Act of 2002 Fund. 40. Public Improvement Fund. 41. Developer "Fair Share" Contributions. The above sources of funding have limitations which must be recognized. 4 CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM CIP 2006-2007 to 2010-2011 San Bernar ino POTENTIAL SOURCES OF FUNDING SOURCE DESCRIPTIONS page I of s The previously identified "Potential Sources of Funding" have limitations, which must be recognized: 1. Economic Development Agency Bonds may be issued by the Redevelopment Agency or Economic Development Agency to construct capital improvements within designated redevelopment project areas. 2. Joint Powers Authority Bonds Bonds for certain capital improvements could be obtained through either Joint Powers agreement with the Public Safety Authority, or the Civic Center Authority. Utilization of this medium would commit the City to annual lease payments for the amortization of the capital improvements costs involved. 3. Housing and Community Development Act of 1974 (as amended) The primary objective of this program is to develop viable urban communities by providing decent housing, a suitable living environment and expanding economic opportunities, principally for persons of low and moderate income. This may be achieved through the elimination of slums, blight and detrimental living conditions; conservation and expansion of housing stock; improved public services and improved use of land. The 1983 amendments remove all previous restrictions on parks, playgrounds, flood and drainage, parking, fire protections, and solid waste disposal projects. All public facilities, except for "buildings for the general conduct of government" (i.e. City Halls) are now eligible without restrictions. 4. Sewer Line Construction Fund (245) Monies derived from sewer connection fees and a portion of the monthly sewer charge. These funds are used to extend the City's sewer.system into unsewered areas and construct relief line for reaches that are overloaded. 5 CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM CIP 2006-2007 to 2010-2011 ;an ernar no POTENTIAL SOURCES OF FUNDING s SOURCE DESCRIPTIONS Page 2 ors 5. Underground Utility District - PUC Rule No. 20, 20A and 20B Rule No. 20 of the Public Utilities Commission requires Edison to set aside a certain percentage of their revenues to finance the cost of undergrounding their facilities, within districts designated by the City. Other utility companies, such as telephone and cable television, have to finance the cost of placing their facilities underground. About $500,000 is set aside per year by Edison for undergrounding their facilities. Districts are formed by Council Action and do carry costs to those within the districts not covered by these funds. 6. State Gasoline Tax (126 Fund) About $3.68 million was received by the City this past year, as the City's share of the state taxes on gasoline. It has been the practice for several years to transfer a significant portion of State Gasoline Tax Funds to the General Fund to help fund costs for maintenance of streets. 7. State Grade Crossing Fund An amount of $15 million is allocated each year to the State Grade Crossing Fund for the purpose of eliminating existing, or proposed railroad grade crossings. These funds are allocated, to the extent funds are available, to projects on the annual priority list established by the Public Utilities Commission for projects nominated by the California Department of Transportation and eligible local agencies. Grade Crossing funds are normally provided to finance 80% of the cost for separating existing grade crossings, with the remaining 20% shared equally by the railroad and nominating agency. On new grade crossings, the cost is normally borne equally by the Grade Crossing Fund and the nominating agency, with no participation by the railroad. 8. Senate Bill 325 Funds (SB 325) This bill provides funds for public transportation, but in the case of rural counties, until the transit demand is high enough to require all the funds, the residual funds are given to cities for street maintenance and/or construction. Normally, all of the money is committed to OMNITRANS and Dial-A-Life. The current transit budget demands are such that it is not completely required, thus we re able to utilize it for matching FAU funds. 6 CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM CIP 2006-2007 to 2010-2011 San Bernar No POTENTIAL SOURCES OF FUNDING SOURCE DESCRIPTIONS page 3 of s 9. Federal-Aid Highway Act (Surface Transportation Program, also called ISTEA, TEA-21 and SAFETEA-LU) The Safe, Accountable, Flexible, Efficient Transportation Equity Act —A Legacy for Users (SAFETEA-LU) re-established the Federal-Aid Surface Transportation Program. Under this program, the City will receive about $6,000,000 during the five (5) years covered by the Act, plus an additional $36.5 million in demonstration dollars for projects adjacent to San Bernardino International Airport, $5 million for the 1-215/University Parkway Ramp Project, and $30 million for 1-10/Tippecanoe Avenue Interchange. These funds are restricted to construction by contract on arterial or collector streets. 10. Urban Park and Recreation Recovery Act This Act seeks to restore facilities which have fallen into disrepair; to encourage innovation in recreation programming; to stimulate and support local recreation system maintenance and recovery; and to improve the management and delivery of recreational services for urban residents. Funding for projects under this Act requires local matching funds; Federal 70%...City 30%. 11. Land and Water Conservation Fund The purpose of this State fund is for acquisition and/or development of basic outdoor park and recreational needs, with an emphasis on meeting region-wide requirements. Projects must appear in the Parks and Recreation Element of the local General Plan and must conform to the State outdoor recreational plan. The basis for funding is a 50-50 match. 12. Park Extension and Development Fund (241) This fund was created to assist with the Extension and Development of San Bernardino's park system and for the construction and reconstruction of recreational facilities. These funds may be used for the acquisition of land, construction and furnishing of buildings, installation of equipment, etc. Funding shall be at least four cents tax per one hundred dollars assessed valuation. 7 CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM CIP 2006-2007 to 2010-2011 San Bernar ino POTENTIAL SOURCES OF FUNDING SOURCE DESCRIPTIONS page 4 of 8 13. Park Development Fee Fund (243) This fund, established by the Mayor and Council in 1978 through City Ordinance No. 3714, provides funds for the acquisition and development of parks and recreational facilities through the levying of a fee on residential development in the amount of 1% of the cost of a single family structure, and 1% of the total cost of apartments and condominiums and 1.0% of the cost for improvement or $650 for each mobile home lot constructed, whichever is greater. 14. Storm Drain Construction Fund (248) New developments are required to pay a fee based upon area for construction of storm drains. About $405,000 was collected this year in fees, with $100,000 transferred to the General Fund. 15. Lease Purchase Financing This method is sometimes referred to as the "pay-as-you-use" method. It allows for the expenditure to be made up front and then payments (plus interest) to be paid as you utilize the capital improvement. Some current examples of capital improvements paid for by this method are the Central Fire Station and Central Library as well as the 800 MHz radio system. 16. State Park Bond Act Funds This Act was proposed by the State Legislature to aid municipalities in the acquisition and development of community parks. This measure was on the November, 1988 ballot. i I 17. Special Assessment Districts Special assessment districts can be formed to place a property's proportionate share of the cost for construction of public works improvements. In order for a property to be assessed, it must receive a special benefit from installation of the improvements. Districts can be established under the 1911 Act, 1913 Act or City Municipal Code. Recent developments such as Proposition 218 severely limit this option and require voter approval. 8 CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM CIP 2006-2007 to 2010-2011 San Berner ino POTENTIAL SOURCES OF FUNDING SOURCE DESCRIPTIONS page 5 of 8 18. Loans to RDA Monies borrowed by RDA to finance capital improvement project. 19. Library Services and Construction Act (LSCA) Title II of this act offers construction funds for public libraries allocated through the California State Library for a percentage match toward the total cost of projects. 20. Revenue Bonds Bonds whose debt service payments are financed by charges placed exclusively on users. These charges are termed user charges and may include service charges, tolls, special taxes, admission fees, leases and rents. Revenue bonds are similar to bonds issued by private enterprises. 21. Enterprise Funds Formerly termed Utility Funds. Now covers all types of government user fees (such as parking, transit, refuse, water, sewer, parks and recreation, etc.) Charges are based upon the cost of providing the public services involved. Use of funds is limited to services provided (i.e., refuse monies must be used in refuse related expenditures). 22. Donations Funds derived from individuals or corporations usually in order to get a tax write- off. Normally, these funds are received in a trust fund. These funds are usually restricted to specific projects. 23. County Funds Funds received from the County. Usually these funds are earmarked for a specific project. These will also be the County's shares of the Joint Powers Authority projects in the downtown area. 9 CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM CIP 2006-2007 to 2010-2011 San Bern;iho PO TENTIAL SOURCES OF FUNDING SOURCE DESCRIPTIONS page 6 of 8 24. Highway Bridge Rehabilitation & Replacement (HBRR) Funds Funds are provided under this program to finance 88.53% of the cost of rehabilitating or replacing bridges that are sufficiently deteriorated to receive a priority within the funding range. An 11.47% local match is required. Caltrans determines level of structural deterioration and recommends either repair, rehabilitation or replacement of bridges in the City limits. 25. High Hazard Elimination Safety Funds (HHES) Projects with high accident rates are nominated to Caltrans. Those with a sufficiency high priority are designated to receive funds to finance 90% of the project cost. 10% local match is required. 26. Section 203 Federal-Aid Grade Crossing Funds Funds are provided under Section 203 of the Federal-Aid Highway Act to finance 90% of the cost of adding or upgrading crossing protection devices at grade crossing on a priority list established by the railroad. These funds cannot be used to finance the cost for widening a crossing, which means that these costs have to be borne by the City. Minimum 10% match required plus all costs if crossing is widened. 27. Traffic Systems Fee Fund (250) Fees collected from trip generating developments to finance traffic-related projects or increase capacity. 28. Half-Cent Sales Tax - Local Funds (129) (Measure 1) City's share of the one-half cent (1/2¢) sales tax measure renewal approved in the j General Election in November 2004. I 29. Proposition III Funds City's share of additional Gas Taxes to alleviate congestion, as identified in the Congestion Management Plan. Projects must be in plan to qualify and must propose to reduce congestion. 10 CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM CIP 2006-2007 to 2010-2011 San Bernar rino POTENTIAL SOURCES OF FUNDING SOURCE DESCRIPTIONS page 7 of s 30. Verdemont Infrastructure Fee Fund Fees levied on new developments in the Verdemont Area to finance the cost of infrastructure. This fee was reduced by Council Action in February 1995 from $8,000 per lot to $1,500 per lot to stimulate development. Effective June 22, 2003, the fee was increased to $3,000 per lot for each new single family home. Equivalency charges are determined based on land use and lot size for other non- single family uses. 31. Federal-Aid Highway Act (Congestion Management -Air Quality) The Federal-Aid Highway Act (SAFETEA-LU) provided funds for management of congestion and improving air quality through reduced traffic delay (CMAQ). 32. Local Partnership Program (SB 300) Reimbursement of a portion of the costs of projects financed with local funds, pursuant to SB 300. State Local Partnership Project must be funded with other than state of federal dollars and full cost provided by agency with reimbursement 1 to 2 years later. 33. Safe Routes to School Fund This funding was established as part of AB 1475 in October 1999. California will receive $17,000,000 per year for two years 34. Transportation Development Act Fund (TDA) i The state Transportation Development Act provides that two percent of the Local Transportation Funds (LFT) shall be made available to counties and cities for the exclusive use of pedestrians and bicycles. For San Bernardino County this totals over $700,000 annually. The present call for projects will result in allocation of several years of TDA Article 3 funds, totaling $3.3 million. 35. Bureau of Indian Affairs Fund (BIA) The Bureau of Indian Affairs administers a discretionary use of Federal Gas Tax Funds for road and bridge improvements related to Federal Parkland and Indian Reservation access. 11 CITY OF SAN BERNARDINO CAPITAL IMPROVEMENT PROGRAM CIP 2006-2007 to 2010-2011 ;San ernar ino POTENTIAL SOURCES OF FUNDING SOURCE DESCRIPTIONS page 8 of 8 36. State Infrastructure Bank Loan The State of California administers a loan program wherein local agencies have access to "below market" loans for the purpose of improving infrastructure. 37. Park Bond Act of 2000 Fund Proposition 12 — Safe Neighborhood Parks, Clean Air, Clean Water, and Coastal Protection Bond Act of 2000. 38. Assembly Bill 2928 (Proposition 421 The Governor's Transportation Congestion Relief Program (TCRP), passed in the State Legislative process as Assembly Bill 2928 (Proposition 42), includes an element passed through to local agencies for local street maintenance/construction. Requires a Maintenance of Effort (MOE), by the agency, equivalent to the average recent pre-1999 street maintenance expenditures. In addition, this is the source of funding for the design and construction of"Alameda Corridor East" grade separation projects. 39. Park Bond Act of 2002 Fund Proposition 40 — Clean Water, Clean Air, Safe Neighborhood Parks and Coastal Protection Bond Act of 2002. 40. Public Improvement Fund 41. Developer "Fair Share" Contributions i A new developer impact fee, effective June 2, 2006, was approved by the Mayor and Common Council to collect fair-share contributions from residential, commercial and industrial developers to mitigate the impacts on local and regional transportation systems, fire and police services, parks and community facilities. 12 SUMMARY OF EXPENDITURES O O O O O O O A h M 00 'IT r N M m n V3 FA 6�9 69 6'9 6*3 6*3 O O O C O O O 0 O °N O � � O N 69 4A 64 69 69 65 sn qb 00 as O O O d O O O � O O r vN1 v H 00 O Z ry W r'q r1 69 69 64 65 64 GA O c }�z o o o°OO r°i l� _� o N M h 69 6n bs 69 G04 69 69 za o d � O N O wF � o O � � a N U O /4 69 iA 69 69 6A iA Y3 o 0 0 0 0 0 ',_� � Vl 00 t� 00 M ••- � O O N 69 69 69 69 69 69 CO.) z z Q O W W+ Y t oa �t3 rx cn a z a o �, a ` asya V ci En F- a 0 N OD O O N r O O O C) C V- C6 N 6' M It-- 0 0 0 M w 0 N X �- EO► ~ 1_ U z4 W . � X o (A 06 U w #; W LL ALL /w < {.L V ~ 4 J CL O ■ ❑ El k M LLB v 3. 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L1 Q U F- ti CL n 0 o - o ND U � � F- b9l as Q N � M CC O O 'O • - O - O Q o 0 cfl Ea � � z 0 0 oz p o3o _ 0 0 o z O -v o 0 ' • J U N cz o 0 cn O v 0 0 c� pp o O 0 0 b4 •— a v C C cn m ao c3 b9l fig N t: b Q • �w o U o � L =j • U w C/) o U LL ul F- (D ��. O 0 Ct (n — N E - V' � ( O O O N Q. M CD O C �/ - ;t W .• � - 3 � - 4� z o 0 � Z � O • � � U H Q.) - 0 0_ o 0 0 ;~ ' o 0 umj 69. c Q Q � 0-0 r "' O o In .. .- U ^ V T O O • o O O_ O O U n p- 61% N O Q • 3 M 0 0 E, t a En a `= o L - U- o v� n b v� City of San Bernardino Capital Improvement Program General Buildings Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST MEREMEMEN- GB04-07 City Yard Phased Pavement Rehab Refuse Fund 465.000 Replacement&NPDES Compliance(repave entire Site in phases) GB04-10 City Yard Building Restoration Work Sewer Maintenance 325.000 Fund GB04-11 City Yard Block Wall Installation Sewer Maintenance 175,000 Fund Total 965,000 GB04-07 City Yard Phased Pavement Rehab Refuse Fund 465,000 Replacement&NPDES Compliance(repave entire Site in phases) GB04-10 City Yard Building Restoration Work Sewer Maintenance 425.000 Fund Total 890,000 GB04-07 City Yard Pavement Pavement Rehab Refuse Fund 365.000 Rehab GB04.10 City Yard Building Restoration Work Sewer Maintenance 425.000 Fund Total 790,000 GB04-07 City Yard Repave Site(Phase IV) Refuse Fund 365,000 1 GB04-10 City Yard Building Restoration Work Sewer Maintenance 425,000 Fund Total 790,000 A 30 7/13/2006 T28 AM City of San Bernardino Capital Improvement Program General Buildings Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST GB04-13 Fire Station No.230 at New Building per Fire Master TBD 2,500,000 502 S Arrowhead Ave Plan GB04-14 Animal Shelter Operation has outgrown the TBD 2,000,000 space GB04-15 Fire Station No.221 New Building per Fire Master TBD 2,500,000 200 E 3rd St Plan GB04.16 Fire Station No.226 New Building per Fire Master TBD 2,500,000 1920 N Del Rosa Ave Plan GB04-17 Galaxy Center Remodel TBD 400,000 GB04-18 Norton Gym Remodel TBD 610,000 GB04-20 Police Insufficient Secured Parking TBD 600,000 GB04-22 Roosevelt Bowl ADA Compliance Plan TBD 300,000 Total 11,410,000 31 7/13/2006 7:28 AM C City of San Bernardino FY 2006-2007 /2010-2011 STREETS & STREET LIGHTING i I I 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N Q C1 h p0 0Q pQ Q Q Q Q p� � O O O O O p O O O O O O O O O O O ii((11 f0 O O O O O O O O O O 0 2pp5 g ggp 25 2pp5 25 � 2p5 25 ° O ° 9 8 250 2b5 ((VV O E^ z H � W W Z 0 0 0 0 0 0 0 N V $ 8 8 $ 8 8 8 g co M �ti o U ^" O ` � W Z Q Q Q _ 1� m Z Q w ` Zo e 0 2 O � O «O � � C 0 W • m J C � • m > � C • � -0 ° m u c o O E M• � > a ° _ � ? o b m ry r � m c o m ta7 e ` c E V e c O 0 0 C j E J > O L L L U —� ° Z • ° ; gO > O QQQ ° • O � n n n � Q a a J � O i. 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O o N N N cC C o o icli jCity of San Bernardino j Capital Improvement Program Streets and Street Lighting Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST A SS-A Bridge 8 Railing Repair Repair Def—mies to Bndges Gas Tax Fund 50,000 (Annual) at Various Locations(City Match oN) SS-B Construct Accessibility Construct DiaaDled Access Ramps 1124 Sales Tax Furs 500,000 Improvements(Annual) at Various Locations(Phase Vlll i I j SSC Street Safely Street and Safety Improvements at 1/24 Sales Tax Fund 200,000 improvements(Annual) Various Locations SS-D Pavement Rejuvenation Slurry Seal at Various Areas Gas Tax Fund 150,000 (Annual) i SS-E Miscellaneous Repair Structures in the Street G.Tax Fund 50.000 l Infrastructure Repairs Right-Of-Way Annual) SS-F Bus Slops(Annual) Install Concrete Bus Pads at Bus 1/24 Sales Tax Fund 25,000 Stops SS-0 School of the Month Construconstall Safety Gas Tax Fund 50,OD0 (Annual) Improvements SS-H Guardrail Repair Repair Guardrails at Various 1/24 Sal"Tax Fund 100,000 (Annual) Locations SS-1 Residential Street Repairs at Various Locations Gas Tax Fund 50.000 (Annual) SS04.12 Mt.Vernon Bridge Sir"Conetruclion 34.329,000 Fund(FED HBRR S)/ TBD SS04-14 40th Street Widen Street from Acre Lane to 1/24 Sal"Tax Fund 625,000 Electnc Ave SS04-19 Unwersily Pkwy/I-215 Combined Prolecl Study Report/ TBD 11,850,000 Freeway project Report 8 Freeway Loop SS04-51 Hunts Lane Grade Separation on Hunts Lane TBD 26,400,000 Grade Separation at RR Tracks South of Redlands Blvd.(SanBAG) 5504-52 State Street/Unrversity Grade Separation on TBD 24,950,000 Avenue Univendy/State 5t Caton Blvd at Grade Separation RR Tracks(SanBAG) SS04-119 Little Mountain Drive- From 48th Street to Bridge at Gas Tax Fund 290,000 Street Improvements Devil's Canyon Creek SS04-132 341h Street Pavement From Mt.View Avenue to Leroy State Infrastructure 300.000 Rehabihtalion Street Loan SS04.138 Sierra Way Pavement From 2nd Street to 5th Street TBD 200,000 Rehablhalio SSO4-147 Victoria Street From Tippecanoe Avenue to TBD 130,000 pavement Richardson Street Rehabilitalion SS04-152 'H'Street Widen street from Kendall Drive to TBD 350,000 40th Street SS04.156 'E'Slreel Mill Street to Oak Street Pavement TBD 76,700 Rehabilitation SSOB-02 4th Street/51h Street y-Intersection 1/2-Cen1 Sal"Tax 125,000 Fund SSOB-03 Traffic Calmug om 4th At Tut Juana St.8 Cabrera Ave Gas Tax Fund 89.000 Street 5508-04 Landscaping on 41h Between Mt Venon 8 5th Street 1/2-Cent Sal"Tax 50,000 Street Fund i I I I I 155 711342008 801 AN II City of San Bernardino Capital Improvement Program Streets and Street Lighting Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST SS0" Rancho Avenue From Foothill Blvd.To Mill Sir" TED 105,000 Pavement Rehabilitation 5506.09 Mountain Avenue From Lynwoode Drive 10 39th TIED 55,000 Pavement Street Rehabilitation SS06.11 Rialto Avenue From Waterman Avenue to'E' TED 130.000 Pavement Street Rehabilitation 5506-12 Rialto Avenue From Pepper Avenue to TED 30.000 Pavement Eucalyptus Avenue Rehabilitation 5506-17 Tippecanoe Avenue From Base Lne Street to 91h Slreel TED 50.000 Pavement Rehabilitation SS06-20 'H'Street Pavement From Mill Street to Inland Center TED 60,000 Rehabilitation Dnve 5506-22 Auto Plaza Drive From 1-215 to Fairway Drive TED 180,000 Pavemenl Rehabilitation 5506.26 41h Street Pavement From'E*Street to Arrowhead TBD 175,000 Rehabilitation Avenue 5506.31 Mountain Drive From Hill Drive to Northpark Blvd. TBD 110.000 Pavement Rehabilitation SS06-35 Kendall Drive Sidewalk Between Cambridge Ave 8 Bailey Gas Tax Fund 340,000 Installation Court SS06.44 Rialto Avenue From Lena Road to Tippecanoe TBD 396.600 Pav menI Avenue Rehabilitation SS07-01 Widen Central Avenue From Waterman Avenue to SAFETEA-LU Dana 1,250,000 Easterly Terminus Funds SS07-02 Widen Tippecanoe Between Mill Street and Hand SAFETEA-LU Demo 675.000 Avenue Street Funds 5507-03 Widen 8 Extend Mt. Across Santa Ana River SAFETEA-LU Demo 1.250.000 View Avenue/Road Funds Extension SS07-04 Widen 3rd Street 6 Sin Between Tlplxcaroe Avenue and SAFETEA•LU Demo 7,775.000 Streel Palm Avenue Funds/Local Match (TED).Local Match (City of Highland) SS07-07 Cajon Blvd.Pavement From BNSF Railroad Overcrossir,g Gas Tax Fund 314,000 Rehabtlital— to 05 miles North of Rex Cole Rd. (CO-Op Proectj-County Lead) 550746 Widen Pine Avenue Reimbursement to W a(son 6 Measure I Furl 140.000 from Belmont to Ohio Associates for widening of Pine Avenue Avenue Total 113,755,500 SS-A Bridge a Rating Repair Repair Dehc—les to Bridges Gas Tax Fund 50,000 (Annual) at Various Locations(City Match only) SS-B Construct Accessibility Construct Disabled Access Ramps 1126 Sales Tax Fund 500,000 Improvements(Annual) at Various Locations(Phase VII) SS-C Street Safety Street and Safety Improvements at 1126 Sales Tax Furl 200,000 Improvements(Annual) Various Locations SS-D Pavement Rejuvenalion Slurry Seal at Various Areas Gas Tax Fund 150,000 (Annual) SS-E Misctillaneous Repair Structures in the Street Gas Tax Fund 50,000 InhastruchIne Repairs Righ(-Of-Way Annual) I SS-F Bus Slops(Annual) Install Conicrele Bus Pads at Bus 1/26 Sales Tax Fund 25,000 Slops 156 7n3n66a 60,akf City of San Bernardino Capital Improvement Program Streets and Street Lighting Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST SS-G School.1 the Month Comfit—Vlnstall Safely Gas Tax Fund 50.000 (Annual) Improvemants SS-H Guardrail Repair Repair Guardrails at Vanous 120 Sales Tax Fund 100.000 (Annual) Locations li Residential Street Repairs at Various Locations Gas Tax Fund 50.000 (Annual) SS04-11 Slate Street Badges at Lytle Creek 1/20 Sales Ted,Fund 5,000.000 construction(Phase 4) SS04.14 401h Street Widen Street from Acre Lane to 120 Sales Tax Fund 825,000 Electric Ave SS04-53 Palm Avenue Grade Separation on Palm Ave Street Construction 490.000 Grade Separation and Cajon 61vd at RR Tracks(City) Fund SS04-153 Rancho Street Widen TBD 500.000 from Kendall Drive to 40th Street SSOO-02 4th Street/511h Slreel Y- TBD 1.125.000 I,iwwhon SS06-03 Traffic Calming on 4th Gas Tax Fund 618.000 Street at Tia Juana Strsell 8 Cabrera Ave SS06-04 Landscaping on 411h Between MI.Vxnon Ave.8 Stn TBD 800.000 Slreel Slrel SS06.81 'E'Street Pavement From Base Line Street to Highland TBD 380.200 Rehabddation Avenue SS07-03 Widen 8 Extend MI Across Santa Ana River SAFETEA-LU Demo 10,105,000 View Ave/Road Funds Extension SS07-O4 Widen 3rd Street 8 5th SAFETEA-LU Demo 6.300.000 Street Funda/LOCal Match (TBD) Total 27,116,200 SS-A Bridge 8 Railing Repair Repair Deficiencies to Badges Gas Tax Fund 50.000 (Annual) at Various Locations(City Match oNy) SS-B Construct Accessibility Construct Disabled Access Ramps 120 Sales Tax Fund 500.000, Improvements(Annual) at Various Locations(Phase VII) SS-C Street Safety Street and Safety Improvements at 1/20 Sales Tax Fund 200,000 Improvements(Annual) Various Locations SS-D Pavement Rejuvenation Slurry Seal at Various Areas Gas Tax Fund 150,000 (Annual) SS-E Miscellaneous Repair Structures n the Street Gas Tax Fund 50,000 Infraslructure Repairs Rghl-Of-Way Annual) SS-F Bus Stops(Annual) Install Concrete Bus Paos at Bus 1/20 Set-Tax Fund 25.000 _ Slops SS-G School of the Month Conshucr/Install Safety Gas Tax Fwd 50,000 (Annual) improvemeNs I I I 157 711312000 002" City of San Bernardino Capital Improvement Program Streets and Street Lighting Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST SS-H Guardrail Repair Repair Guadrads at Various 1/20 Sales T.Fund 100,000 (Annual) Locatwns SS-1 Residential Street Repairs at Various Locations Gas Tax Fund 50.000 (Annual) SS04.14 60th Street Widen Street from Acre Lane to 120 Sales Tait Fund 625.ODO Eleclnc Ave SSO4.53 Palm Avenue Grade TED 1.505.000 Separation at BNSF Railroad Tracks SSO4.150 Mountain View Avenue 31st Street to Nonh-End Pavement TBD 3.050,000 Rehabddahn SS06-85 -E-Street Pavement From Base Lim Street to Highland TBD 118.8110 Rehabilitation Avenue SSO6-86 Lugo Avenue Pavement From 1311,Streel to 19th Street TBD 145,200 Rehabd ration 5508-67 Genevieve Street From 1511,Street to Highland TBD 218,000 Pavemenl Avenue Rehabilitalion i SS06-88 Sepulveda Avenue From 11th Street to Highand TBD 84,D00 Pavemenl Avenue RMal,ditaiwn SS0649 WindwrOnve From Gilbert Street to Base Lim TBD 156.000 Pavement Street Rehabilitation Total 7,075,000 SS-A Bridge 8 Railing Repair Repair Deficiencies to Bridges Gas Tax Fund 50,000 (Annual) at Various Locations(City Match only) SS-B Construct Accessibility Construct Disabled Access Ramps 1/20 Sales Tax Fund 500.000 Improvements(Annual) at Various Locations(Phase VII) j SS-C Street Safely Street and Safety Improvements at 1120 Saks Tax Fund 200.000 Improvements(Annual) Various Locatwns SS-D Pavement Rejuvenation Slurry Seal at Various Areas Gas Tax Fund 150,000 (Annual) SS-E Miscellaneous Repair Structures in the Street Gas Tax Fund 50.000 Infrastructure Repairs Right-Of-Way Annual) SS-F Bus Slops(Annual) Install Concrete Bus Pads at Bus 1/20 Sales Tax Fund 25.000 Slops SS-0 School of the Month Construcvlostall Safety Gas Ta,Fund 50.000 (Annual) Improvements 55-H Guardrail Repair Repair Guardrails at Various 120 Sales Tax Fund 100.000 (Annual) Locations SS-1 Residential Slreel Repairs at Various Locations Gas Tax Fund 50,000 (Annual) 5504.11 401h Street Widen Street from Acre Lane l0 1/26 Sales Tax Fund 625.000 Ele tnc Ave SS04-129 Campus Parkway 1-215 Interchange Prolinminary TBD 200,000 (Pepper Linden) Study(50%Local Match) SSO4-151 Tippecanoe Avenue I-101nlenchage PSR(LOGal TBD 4,000,000 MitCh)/Construction(Local Malcn) Total 6.000.900 I I I557-A 7113Q00e a07 am City of San Bernardino Capital Improvement Program _ - Streets and Street Lighting Capital Project Descriptions - - PROJECT DESCRIPTION FUNDING COST SSOO-90 21st Street Pavement From Waterman Avenue to-H' TBD 216,000 _ Rehablht,ton Street SSOe-91 18th Street Pavement From Waterman Avenue to 1. TBD 216.000 Rehablinalron Street SSOG-92 16th Street Pavement From W alerman Aveme to'H' TBD 273.600 Rehabhtabon Street SSO6-93 13th Slrxl Pavement From Waterman Avenue to"H' TBD 270,000 Rehabil,lation Street SS06-94 Serra Way Pavement From 91h Street to Highland TBD 297,000 Rehabilitation Avenue SS06-95 -D'Street Pavement From 91h Slreel to KgNand TBD 436.800 Reh—l,lalwn Avenue SS06-96 -E Street Pavement 9th Street to Base Lim Street TBD 108.000 Rehabitttahon SS06-97 'H'Street Pavement From 9th Street to Highland TBD 320.320 Rehabilitation Avenue SSOB-98 Miramonle Drive From 24th Street to Colima Road TBD 162.000 Pavement Rehabditatron SSOG-99 '1'Street Pavement From 23rd Street to Colima Road TBD 132.000 Rehabilitation SS06-100 Laden Road Pavement From 27th Street to Colima Road TBD 57,600 Rehabilitation SS06-101 Serrano Road From Hig Nand Avenue to 27th TBD 57.600 Pavement Street Rehabihtahon SS06-102 M—upiabe Drive From 27th Street to Colima Road TBD 64.000 Pavement RehabAdauon SS07-02 Widen Tippecanoe TBD 132,000 Avenue Total 2.742,920 157-B 7113ROOe e0e AM C City of San Bernardino FY 2006-2007 / 2010-2011 O SEWERS C () Q In m f0 m t0 Lo (`�') Q o N C] N • N 8O p p p p p O O O O O O O O O O O O O O O O O O O O O O O _ 8O gp gp gp gp t£n3� 2i 25 ZS S 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 LO 0" p p Q Q Q O O O O O O O O O O O O O O O O O O O O O O 00 8 q C81- pS 00 0 0 O O 0 0 O 0 C� O 0 0 0 0 O O 0 O 0 0 O 0 g O o U') o 0 0 0 0 0 0 0 o 0 0 0 g 5� 0 0 0 0 _ 25 TS �S 25 25 25 Q C-S p - � s8 s8 s co a = p, 8s8g ° 8g g8 g g ° ° 88 8 8 8 ° ° g8s8 p - m r N m t`7 : (7 U1 f0 Of (O m In m (O co LO V m 02 V m V N N (D O <D � O N N f� N t7 zz � - a � W d �/ -- � I■■�I � X X X X X X X X X X = a a cOD a r c7 C, () (") w ¢ 4 ¢ C z _ z � � z c m T p ~ Q 3 m s « 0 a m w m x L m > W 3;O _ « 0 N =C O ~ V 0 C J C O m J h m = LL A ` « v E m h > 41 m A O I L 'a �+ C N C m m O c C m m e > c 7 O W o m a 2 N c V C O E Q > CL m «« r m « C « C O A 3 Q J d N 41 m C m m A m A m m O « C y dl ` o U N 2 w b c 41 E o m = d 8 u Q O • c 01 3 in 3 `m F E � ° s d c O yLL j u C m C _ 3 ,mn L ul N y ^ C O R w E m N y m C m C m O L o i o J o m u « E ° E t c _a x m g -° J v_ m n m ° m ; m m a m > t 3 c c m E m a ¢ c E u a v E m -° m E F m d m m m m m K o E a V u c O d m u R c O. m w m o a a a m m E m m m c m L E u c .` m c a E m y m m o a N w � m a Y c m E E 0. e - a m `m A c rx CL m a m c a m A m A m u u c 3 m Q f 3 c t w N — C 0 0 L N `m me a ; c o m m e m 4! m 3 c `m N J m 3-r 3p N N m 0 ; ? m m m f m T 0 m o 3 N c c m LL m m z A K K 0 3 m c > 41 w m m w w o c > c m m a 3 0 > Y Q 14 dJ b c c t o a > < m 4 H c o a • E u o m m f h m d m c m E v E E E N u m m E y c w m we N m e ' v m L m v a —O u L a O A x f m > Q 3 x 3 a m $ n L Q m V a W O m : N N Q n n W A TZ r i v1 N l H 41 dJ N N H N d/ 4/ N N 431 N W N N al 431 h v31 m d! 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O o 0 L't p o 0 6 ci a� x . c ci o ol a A U o OV U � � o •� U J 3 c cn Qon cw = U U E- y W 0 0 'b � +n H N O C a L O Q) � a, O ° nz; N M c� N N o 0 03 ^ cl o w � a D Ln rq a z - o z � r o C. A F CZ > 0 0 0 0 0 Q O t >, N F-I '('•' — N N w o a y b oo coo ct O F 3 03 r- ct V C ' > p O OM � ¢ 3 ¢ N o 0 \Q w a� 0 3 W ° 3 p b 3 ct sue. 0 0 N N (D 0 O ct CC > O Q) 69 b9 cn Ln LTA ct Oc p >> C L U- w u X L a> a� p 03 W — ti N cj� 3 :° a cx . a cun 2 O O U � M Q ° o3 cn 3 N cC Z o 0 ct a a � •� N � -j � 0 0 FaA b > co m Q. U co a. � T o 0 w QO x � t ; o 0 z a O o — N — N N m-M En ct M /A z W > O ct U ct cn o > ct a� v, En m o = A- ct o A z En o °n Lt &- o o ts. c 0 of U =; o o ct co cz ly n C U c c �LL U cc Jr d ct on Q >. ct 4 OU Q b • • • a �'� '- City of San Bernardino Capital Improvement Program Sewers Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST SW-A Sewer Main Extension In excess of 300 feet for SFR Sewer Line 50,000 Development Construction Fund SW-B Sewer Main Extension of Mains and Line Sewer Line 100,000 extension engineering Construction Fund SW-C Rehabilitate Manholes Repair or reconstruct failing Sewer Line 50,000 at Various Locations manholes City Wide Maintenance Fund SW-D Sewer Siphons Flushing at Various Locations Sewer Line 100,000 Maintenance Fund SW-E Miscellaneous Sewer Sewer Line 500,000 Repairs Maintenance Fund SW04-41 Waterman Avenue Install Relief Sewer Lines Sewer Line 380,000 Construction Fund SW07-04 Sierra Way Sewer/ From 38th Street to 39th Street Sewer Line 400,000 Replacement/Repair Maitnenance Fund SW07-05 Northpark Blvd.Sewer From"H"Street to Mayfield Sewer Line 535,000 Repair Construction Fund Total 2,115,000 SW-A Sewer Main Extension In excess of 300 feet for SFR Sewer Line 50,000 Development Construction Fund SW-B Sewer Main Extension of Mains and Line Sewer Line 100,000 extension engineering Construction Fund SW-C Rehabilitate Manholes Repair or reconstruct failing Sewer Line 50,000 at Various Locations manholes City Wide Maintenance Fund SW-D Sewer Siphons Flushing at Various Locations Sewer Line 20,000 Maintenance Fund SW-E Miscellaneous Sewer Sewer Line 500,000 Repairs Maintenance Fund SW04-38 3rd Street "G•Stret to 4th Street Replace Sewer Line 73,000 Sewer Main Construction Fund Total 793,000 90 7/13/2006 8:14 AM City of San Bernardino Capital Improvement Program Sewers Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST SW-A Sewer Main Extension In excess of 300"for SFR Sewer Line 50,000 Development Construction Fund SW-B Sewer Main Extension of Mains and Line Sewer Line 100,000 extension engineering Construction Fund SW-C Rehabilitate Manholes Repair or reconstruct failing Sewer Line 50,000 at Various Locations manholes City Wide Maintenance Fund SW-D Sewer Siphons Flushing at Various Locations Sewer Line 20,000 Maintenance Fund SW-E Miscellaneous Sewer Sewer Line 500,000 Repairs Maintenance Fund Total SW-A Sewer Main Extension In excess of 300"for SFR Sewer Line 50,000 Development Construction Fund SW-13 Sewer Main Extension of Mains and Line Sewer Line 100,000 extension engineering Construction Fund e SW-C Rehabilitate Manholes Repair or reconstruct failing Sewer Line 50,000 at Various Locations manholes City Wide Maintenance Fund SW-D Sewer Siphons Flushing at Various Locations Sewer Line 20,000 Maintenance Fund SW-E Miscellaneous Sewer Sewer Line 500,000 Repairs Maintenance Fund Total 720,000 191 7/13/2006 8:14 AM 0 City of San Bernardino FY 2006-2007 / 2010-2011 � O STORM DRAINS 0 O O O O O O O O O O O Q Q O O O O O O O O g ci 8 pp N N O t0 ro W N b S S O S (V N M m N r N N S N S S r Q N O N m m N N v N v N m m o! 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LL- o n v FE 1' Cl c o LO U Is W v ro a U °' '" W Q E _ Y w o w 010 C13 w vn u -C a w O nc)70 C4 F- City of San Bernardino Capital Improvement Program Storm Drains Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST SD-A Cross Gutters and Various Locations Storm Drain 50,000 Drainage Inlet Repairs Construction Fund SD-B Box Culvert Repairs Various Locations Storm Drain 50,000 Construction Fund SD-C Cleaning Storm Drain Various Locations Storm Drain 50,000 Construction Fund SD-D Cleaning of Channels Various Locations Storm Drain 50,000 Construction Fund SD04-07 Base Line Street Storm Massachusets to"H"Street Storm Drain 400,000 Drain (Design only) Construction Fund SD04-08 State Street Storm Install Master Plan Storm Drain Storm Drain 388,400 Drain from the 1-210 Fwy Construction Fund SD04-16 Orange Street Failed In Orange Street&Installation of Storm Drain 400,000 Rock-Lined Channel Storm Drain in Highland Avenue Construction Fund Reconstruction SD04.17 "E"Street Install Storm Drain along Railroad Storm Drain 250,000 Tracks"G"Street to Lytle Creek Construction Fund SD04-19 40th Street Storm Drain Repair Storm Drain Outlet(Phase Storm Drain 100,000 II)at Devil's Basin Construction Fund Total 1,738,400 10 SD-A Cross Gutters and Various Locations Storm Drain 50,000 Drainage Inlet Repairs Construction Fund SD-B Box Culvert Repairs Various Locations Storm Drain 50,000 Construction Fund SD-C Base Line Street Storm Massachusetts to"H"Street Storm Drain 50,000 Drain (Design only) Construction Fund SD-D Cleaning of Channels Various Locations Storm Drain 50,000 Construction Fund SD04-08 State Street Storm Install Master Plan Storm Drain Storm Drain 388,400 Drain from the 1-210 Fwy Construction Fund SD04-19 40th Street Storm Drain Repair Storm Drain Outlet Phase Storm Drain 100,000 11 at Devils Basin Construction Fund SD04-24 Base Line at Waterman Storm Drain Storm Drain 100,000 Avenue Construction Fund Total 788,400 SD-A Cross Gutters and Various Locations Storm Drain 50,000 Drainage Inlet Repairs Construction Fund SD-B Box Culvert Repairs Various Locations Storm Drain 50,000 Construction Fund SD-C Base Line Street Storm Massachusetts to"H"Street Storm Drain 50.000 Drain (Design only) Construction Fund SD-D Cleaning of Channels Various Locations Storm Drain 50,000 Construction Fund 209 7113/2006 8:31 AM City of San Bernardino Capital Improvement Program Storm Drains Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST SD04-08 State Street Storm Install Master Plan Storm Drain Storm Drain 388,400 Drain from the 1-210 Fwy Construction Fund SD04.19 40th Street Storm Drain Repair Storm Drain Outlet Phase Storm Drain 100,000 11 at Devils Basin Construction Fund SD04-24 Base Line at Waterman Storm Drain Storm Drain 100,000 Avenue Construction Fund Total 788,400 SD-A Cross Gutters and Various Locations Storm Drain 50,000 Drainage Inlet Repairs Construction Fund SD-B Box Culvert Repairs Various Locations Storm Drain 50,000 Construction Fund SD-C Base Line Street Storm Massachusetts to"H"Street Storm Drain 50,000 Drain (Design only) Construction Fund SD-D Cleaning of Channels Various Locations Storm Drain 50,000 Construction Fund SD04-18 Master Plan Storm From"H"Street to Sierra Way Storm Drain 25,000 Drain Project 7-D7 Construction Fund SD04-20 27th Street:Install From"H"Street to Little Mountain Storm Drain 50,000 Master Plan Storm Dr. Construction Fund Drain D-5 SD04-21 Warm Creek channel Replace SlopePaving from Athol Storm Drain 25,000 Street to Arrowhead Avenue Construction Fund SD04-22 Mt.Vemon Avenue Install Phase II of Master Plan Storm Drain 50,000 Storm Drain Construction Fund SD04-24 Base Line at Waterman Storm Drain Storm Drain 100,000 Avenue Construction Fund SD05-03 Meridian&Poplar CSDP Project 3-5,Line F Storm Drain 25,000 Construction Fund Total 475,000 SD04-18 Master Plan Storm From"H"Street to Sierra Way Storm Drain 2,250,000 Drain Project 7-D7 Construction Fund SD04-20 27th Street Install master plan storm drain Storm Drain 1,400,000 D-5 from"H"St to Construction Fund Little Mountain Dr SD04-21 Warm Creek Channel Replace Slope Paving from Storm Drain 600,000 Athol St to Arrowhead Ave Construction Fund SD04-22 Mt.Vernon Avenue Install Phase II of Master Plan Storm Drain 1,400,000 Storm Drain 7-D13 from Construction Fund Mt.Vernon Ave and Base Line St to Goodlet St and Western Ave Total 5,650,000 210 7113/2006 8:31 AM C City of San Bernardino FY 2006-2007 /2010-2011 O TRAFFIC CONTROLS O 0 0 0 0 0 0 75"w 0 0 0 E 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o 8 o Q N N o o Q Q o d w r as N o o o ° a m o4 Q r 1�1 fV (V lh N 10 Q Q o 0 0 0 o Q o 0 0 0 0 0 o 0 0 0 0 0 0 o 0 -6-5-0 0 0 0 0 0 25 g o o O O o 0 0 0 0--a- Q o 0 0 o O o 25 25 o g o o $ o O o 0 L7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 u0'i M M M O Ay � O O 00 O 8 Or r ��j `do O°v OM M W 0 0 O � t7 Q N � OI N N ^I O r _ o N r C'1 N . 4'l Q N Q N � V 7 r C Q.• Q V a C m O w O W C i0 7 C O w W W m O C y w N a w m E o 4z 0 > h OC $ Y 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W ,� b�A � • ffl d4 ' - V C) • N �"+ w LL W 3 cn (1)a> O � Vj . c 5A [� C O s0. . _ s �w � ti oQ) W ti �, ✓� per„ Q U H c� � 0. 1` 1-O I C� Q C) cn bA M �p V U b N � • O O M O cn h.y N C C N • ct b w O O n N (� • EA 69 x N � O � z • • o a w U 00 °o ad o U 0 0 > d G z o z W O a •� � Q � 69 o >, A W 0000 z cn 0 CD z N L7 ,�.� ¢ b o°o_ o0 o 0 er Et? 69 N ct Q .� Z `./ C - U E Q N dq O O O con ¢ z = • � d ( > A ¢ U A bi) o .r C13 0 0 N �y � � .bA � � : • Eft 6R o W > .. i >> Cd 9w O O N U • O O O V �`" O O a� Y LO LO ct O fx bi) V LL CA • LL cn cu 00 CL f` City of San Bernardino Capital Improvement Program Traffic Controls Capital Project Descriptions i I PROJECT DESCRIPTION FUNDING COST TC-A City-Wide Traffic Signal Upgrade Traffic Signals and Traffic Systems Fee 150,000 Improvements Signal Improvements(04105) Fund TC-B Traffic Signals Battery Traffic Systems Fee 30,000 Backup Systems Fund TCC Repair Loop electors at Traffic Systems Fee 30,000 Various Locations Fund TCO4-04 Waterman Avenue 5th Street to 30th Street Traffic Systems Fee 44,100 Signal Interconnect Fund TC04-27 Highland Avenue& TrafficSignal Traffic Systems Fee 185,700 Central Avenue Fund TC04-33 Gilbert Street&Cedar Traffic Signal(Design Only) Traffic Systems Fee 17,500 Avenue Fund/Safe Routes to School Grant TC04-35 Rialto Avenue& Traffic Signal(Design Only) Traffic Systems Fee 5,000 Mendian Avenue Fund/HES Grant TC04.36 Mt.Vernon Avenue From Mill Street to Highland Ave. Traffic Systems Fee 120,000 Interconnect&PPB Fund TC04.45 Palm Avenue&1-215 Development Impact 240,800 Off-Ramp Traffic Signal Fees-Local Circulation TCOS-01 Fluorescent School Safe Routes to 130,500 Zone Signs School Grant TC05-03 13th Street&Mt.View Install New Traffic Signal Safe Routes to 135,000 Ave. School Grant TC06-06 Palm Ave.&Irvington Traffic Signal(Design Only) Traffic Systems Fee 13,500 Ave (Fair Share/7716795 &7776443) TC06-09 Waterman Ave.&30th Upgrade Existing Traffic Signal HES Grant 54,000 Street (Design Only) TC06.10 Northpark Blvd.&Siera Traffic Systems Fee 135,000 Drive Traffic Signal Fund - - TC06-11 Waterman Ave&Olive Traffic Signal(Design Only) Traffic Systems Fee 140,000 Street Fund TC06.12 "E"Street&Century Traffic Signal(Design Only) Traffic Systems Fee 140,000 Avenue Fund TC07-01 Medical Center Dr.& Construct New Traffic Signal Traffic Systems Fee 140,000 Magnolia Ave (Design Only) Fund TC07-02 Kendall Drive&48th Traffic Signal Traffic Systems Fee 20,000 Street Fund TC07-05 Pacific Ave&Valena Traffic Signal Traffic Systems Fee 20,000 Street Fund TC07-06 9th Street&Mt.Vernon Traffic Signal Upgrade Traffic Systems Fee 10,000 Avenue Fund Total 1,761,100 TC-A City-Wide Traffic Signal Traffic Systems Fee 150,000 Improvements Fund TC-B Traffic Signals Battery Traffic Systems Fee 30,000 Backup Systems Fund TCC Repair Loop Detectors Traffic Systems Fee 30,000 at Various Locations Fund TC04.26 Pacific Street&Guthrie Traffic Signal Traffic Systems Fee 2.300 Street Fund 7004.30 Central Avenue& Traffic Signal(Design Only) Traffic Systems Fee 144,500 Arrowhead Avenue Fund TC04-33 Gilbert Street&Cedar Traffic Signal(Design Only) Safe Routes to 135,000 Avenue School TC04-35 Rialto Avenue& Traffic Signal(Design Only) Traffic Systems Fee 135,000 Mendian Avenue Fund 253 7/13/2006 8:46 AM City of San Bernardino Capital Improvement Program Traffic Controls Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST TC04.36 Mt.Vernon Avenue From Mill Street to Highland Ave. Traffic Systems Fee - 120,000 Interconnect&PPB Fund TC0437 "E"Street and Orange Design New Traffic Signal Traffic Systems Fee 20,000 Show Lane Fund ' TC04.38 Sterling Ave and 6th Install New Traffic Signal Traffic Systems Fee 20,000 Street Fund TC0444 Palm Avenue& Install New Signal(50150)Chavez Traffic Systems Fee 25,000 Belmont Avenue Middle School Fund TC0448 9th Street Signal From"E"Street to"H"Street 60,000 Modification TC0449 Lynwood Drive& Install New Traffic Signals Traffic Systems Fee 50,000 Sterling Avenue Fund TC04-50 Del Rosa Avenue Widen to provide two left-Tum Traffic Systems Fee 340,000 Lanes @ SR-30(210) Fund TC06-02 Arrowhead Avenue& Traffic Signal Traffic Systems Fee 108,900 Orange Show Lane Fund TC06-03 Palm Avenue& Traffic Signal(Design Only) Development Impact 102,700 Industrial Prkwy Fee-Local Circulation TC06.13 Rialto Avenue& Traffic Systems Fee 20.000 Tippecanoe Avenue Fund Traffic Signal TC07-02 Kendall Drive&48th Traffic Signal Traffic Systems Fee 130,000 Street Fund TC07-03 Auto Plaza&Fairway Traffic Signal Traffic Systems Fee 20,000 Drive Fund TC07-05 Pacific Avenue& Traffic Signal Traffic Systems Fee 130,000 Valena Street Fund - TC07-06 9th Street&Mt.Vernon Traffic Siganl Upgrade Traffic Systems Fee 100,000 Avenue Fund Total 1.873.400 TC-A City-Wide Traffic Signal Upgrade Traffic Signals and Traffic Systems Fee 150,000 Improvemenets Signal Improvements Fund TC-B Traffic Signals Battery Traffic Systems Fee 30,000 Backup Systems Fund TCC Repair Loop Detectors Traffic Systems Fee 30,000 at Various Locations Fund TC04.26 Pacific Street&Guthne Traffic Signal Safe Routes to 126,000 Street School TC04-37 Orange Show Lane& Traffic Signal Traffic Systems Fee 120,000 "E"Street Fund TC04.38 Sterling Avenue&6th Traffic Signal Traffic Systems Fee 100,000 Street Fund TC04-40 Sierra Way&21st Traffic Systems Fee 20,000 Street Traffic Signal Fund TC0444 Palm Avenue& Traffic Signal Traffic Systems Fee 125,000 Belmont Avenue Fund TC0449 Lynwood Drive& Traffic Signal Traffic Systems Fee 200.000 Steding Avenue Fund TC04.50 Del rosa Avenue Widen to provide 2 Left-Tum Traffic Systems Fee 340,000 I Lanes @ SR-30(210) Fund TC06.13 Rialto Avenue& Traffic Signal Traffic Systems Fee 130.000 Tippecanoe Avenue Fund I TC07-03 Auto Plaza&Fairway Traffic Signal Traffic Systems Fee 130,000 Drive Fund TC07-04 Electric Avenue&48th Traffic Signal Traffic Systems Fee 20,000 Street Fund Total 1,521,000 254 7/1312006 8:47 AM City of San Bernardino Capital Improvement Program Traffic Controls Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST TC-A City-Wide Traffic Signal Upgrade Traffic Signals and Traffic Systems Fee 150,000 Improvemenets Signal Improvements Fund TC-B Traffic Signals Battery Traffic Systems Fee 30,000 Backup Systems Fund TC-C Repair Loop Detectors Traffic Systems Fee 30,000 at Various Locations Fund TC04.11 Highland Avenue& Traffic Signal Traffic Systems Fee 145,000 Guthrie Street Fund TC04.29 Siena Way&16th Traffic Signal(Design Only) Traffic Systems Fee 120,000 Street Fund TC0440 Sierra Way&21st Traffic Signal Traffic Systems Fee 120,000 Street Fund TC07-04 Electric Avenue&48th Traffic Signal Traffic Systems Fee 130,000 Street Fund Total 725,000 TC07-07 Little League Drive& Traffic Signal Traffic Systems Fee 200,000 Belmont Avenue Fund TC07-08 Palm Avenue&Cajon Traffic Signal Traffic Systems Fee 200,000 Blvd. Fund TC07-09 Campus Prkwy(Pepper Traffic Signal Traffic Systems Fee 200,000 Linden)&Industrial Fund Prkwy TC07.10 Campus Prkwy(Pepper Traffic Signal Traffic Systems Fee 350,000 Linden)&1.215 Ramps Fund TC07.11 Campus Prkwy& Traffic Signal Traffic Systems Fee 200,000 C. Nonhpark Blvd. Fund TC07-12 Little Mountain Dr.& Traffic Signal Traffic Systems Fee 200,000 30th Street Fund TC07.13 State Street&1-210 Traffic Signals Traffic Systems Fee 350,000 Ramps Fund TC07.14 Rancho Avenue(State Traffic Signal Traffic Systems Fee 250,000 Street)&Foothill Blvd. Fund TC07-15 Miramonte Drive&27th Traffic Signal Traffic Systems Fee 200,000 Street Fund TC07.16 Mountain Drive& Traffic Signal Traffic Systems Fee 200,000 Kendall Drive Fund TC07-17 Mountain Drive&48th Traffic Signal Traffic Systems Fee 200,000 Street Fund TC07.18 "I"Street&Inland Traffic Signal Traffic Systems Fee 200,000 Center Drive Fund TC07-19 "H"Street&Marshall Traffic Signal Traffic Systems Fee 200,000 Blvd. Fund TC07-20 Mountain View& Traffic Signal Traffic Systems Fee 200,000 Marshall Blvd. Fund TC07.21 Lena Road&Orange Traffic Signal Traffic Systems Fee 200,000 Show Road Fund TC07.22 Lena Road&Central Traffic Signal Traffic Systems Fee 200,000 Avenue Fund TC07-23 Lena Road&Rialto Traffic Signal Traffic Systems Fee 200,000 Avenue Fund TC07.24 Lena Road&3rd Traffic Signal Traffic Systems Fee 200,000 Street Fund TC07-25 Del Rosa Avenue& Traffic Signal Traffic Systems Fee 200,000 Marshall Blvd. Fund t 255 7/13/2006 8:47 AM City of San Bernardino Capital Improvement Program Traffic Controls Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST TC07-26 Del Rosa Avenue&6th Traffic Signal Traffic Systems Fee 150,000 Street Fund TC07.27 Sterling Avenue 8 Traffic Signal Traffic Systems Fee 200,000 Marshall Blvd. Fund TC07-28 Sterling Avenue&6th Traffic Signal Traffic Systems Fee 200,000 Street Fund TC07.29 Mt.View Avenue 8 Traffic Signal Traffic Systems Fee 200,000 Central Avenue(Palm Fund Meadows Dr) TC07.30 Mt.View Avenue 8 1-10 Traffic Signal Traffic Systems Fee 200,000 Westbound Ramp Fund Total 5,100,000 256 7/1312006 8:07 AM � City of San Bernardino FY 2006-2007 / 2010-2011 O PARKS & RECREATION O O LL'1 1� N co Q o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o c o 0 25 ^ :C. 0 0 0 0 0 0 0 0 0 0 8 Q o 0 0 0 0 0 0 0 0 0 0 ^ � 0 a M ' n 0 o ri 0 0 0 0 �i 8 8 8 8 8 8 a S W w S S 8 pp Q 8 S 8 0 o o g 8 O O 0� 2 ~ m Ul /1I W m O I� O N 0 w t a � ..r E N w N o o w o - x N u Q p E t O m 9 m a E o v o Z o E e ° g o v too N o c — m o f E o Til E o LL o m E m m m tl E ® r �j o u E c . 0 c L° o c ? o r t n a o c c w o a c a a a t J m m m U E E U a ° n E 3 o LL _w a f E o m o t o o o v° a cw a c ° c, a o U m U o v z U o oc u N 3 E a o a E E ° P To w m E 8 o E o 0 o E c e °o w° " ° = v A a p° a a u° LL h m ° E a a° ® m e y o E o I.,0 o V ° b m _c o Q = _ �pp U O B `e __ •� m a G P C w O O u L e C w Y V s. f u i >° a u U u i f t°n u°r u D i a° a° a o° rc 3 ai ugi m -1? m ct R w R � R ? 9 a a a a a a a a a a a a a a a a a a a j o g ✓ a z z rc rc m rc o rc rc rc rc rc rc o: w w m w o: w w rc a a a a a a a a a a a a a a a a a a a a a a 4') Ol n O � O O O �U � t0 b �C O O O O Q � O m H 1 O O O O O O O O O O O O O O O O O O O O O O O O Q b I I O O O O O O O O O O O O O O O O O O O O O O O O q Ct ri w n 0 o O O o 0 0 0 0 0 0 0 o O o 0 0 o O o o O O o g ri b A OO O O O O O O O O O O O O O O O O O O O O O 00 O 00 u O O O cr S w V O 8 8 8 8 8 8 8 8 8 T. 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O �' r � c 0 cc c Co `� 0, U Fes- Iw 1 14 0.1 mo � � o U) C) CL LL City of San Bernardino Capital Improvement Program Parks and Recreation Capital Project Descriptions PROJECT DESCRIPTION FUNDING COST PR-A Miscellaneous Annual Park Construction 75.000 Parks Construction Fee Funds PR04.11 Verdemont Master Park Park Construction 250.000 &Trail Plan Fee Funds PR04-24 Magnolia Pocket Park Park Construction 150,000 Fee Funds PR04.28 Select&Design Park Construction 300,000 Community Center in Fee Funds Verdemont Area PR04-29 Fiscalkni Field- Park Construction 200,000 Upgrades Fee Funds PR04.31 Upgrade Community 5th Street,Mill Center,Delmann Park Construction 200,000 Center Heights&Hernandez Center Fee Funds PR04-32 Norton Air Force Base Refurbish Swimming Pool, Park Construction 200,000 Bathhouses.Track&Irrigation Fee Funds Systems PR04.34 Ferns Hill Bowl Rehabilitate Concrete&Seating- Park Construction 400,000 ADA Compliance, Fee Funds TechnicalBooth,Upgrade Lighting&Sound PR04.36 Pioneer Memorial Install Fencing & Resurface Park Construction 200,000 Cemetery Interior Roads Fee Funds PR0437 Design for 2 New At Delmann Heights&Nicholson Park Construction 100,000 Gymnasium Facilities Center Fee Funds PR05-01 Wlidwood Park Senior Park Construction 100,000 Field Expansion Fee Funds PR07.13 Little Mountain Trail Park Construction 100,000 Fee Funds PR07.14 City Hall Plaza Park Park Construction 450,000 Fee Funds Total 2,725,000 PR-A Miscellaneous Annual Park Construction 75,000 Parks Construction Fee Funds PR04.27 Select&Design Park Construction 4,500,000 Community Park in the Fee Funds/ Verdemont Area Developer Impact Fee PR04-28 Select&Design Park Construction 3,000,000 Community Center in Fee Funds/ the Verdemont Area Developer Impact Fee Total 7,575,000 PR-A Miscellaneous Annual Park Construction 75,000 Parks Construction Fee Funds PR04-27 Select&Design In Verdemont Area Park Construction 4,500,000 Community Park Fee Funds/ Developer Impact Fee PR04.28 Select&Design In Verdemont Area Park Construction 3,000,000 Community Center Fee Funds/ Developer Impact Total 7,575,000 PR-A Miscellaneous Annual Park Construction 75.000 Parks Construction Fee Funds Total 75,000 301 - CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY INTER-OFFICE MEMORAND U41 It �TO: Margaret Fedor, Executive Secretary, City lerk's Office FROM: Wasana A. Chantha, Executive Secretary SUBJECT: Complete Set of Documents—2006-271; 2 6-272; and CDC 12006-31 DATE: March 23, 2007 Enclosed for your records is the complete set of documents and/or Agreements that was approved by the Mayor and Common Council of the City of San Bernardino and the Community Development Commission of the City of San Bernardino on July 24, 2006,pertaining to the following Resolutions: 2006-271 Resolution of the Mayor and Common Council of the City of San Bernardino approving and authorizing the Mayor to execute the Contract and related documents for the Loan Guarantee Assistance under Section 108 of the Housing and Community Development Act of 1974, as amended, 42 USC Section 5308 (CDBG Section 108 Contract No. B-03-MC-06-0539) — North Arden Guthrie Commercial Development Project(IVDA Redevelopment Project Area) 2006-272 Resolution of the Mayor and Common Council of the City of San Bernardino approving and authorizing the Mayor to execute the 2006 Redevelopment Cooperation Loan Agreement by and between the City of San Bernardino and the Redevelopment Agency of the City of San Bernardino ("Agency") - North Arden Guthrie Commercial Development Project (IVDA Redevelopment Project Area) CDC/2006-31 Resolution of the Community Development Commission of the City of San Bernardino approving and authorizing the Executive Director of the Redevelopment Agency of the City of San Bernardino ("Agency") to execute the 2006 Redevelopment Cooperation Loan Agreement by and between the Agency and the City of San Bernardino - North Arden Guthrie Commercial Development Project (IVDA Redevelopment Project Area) Should you have any questions, I can be reached at (909) 663-1044. Thank you. Enclosure cc: Barbara Lindseth (with copy of Complete Set of Documents) Maggie Pacheco File c'L Ft "UENrpR,yO U.S.DEPARTMENT OF HOUSING AND URBAN DEVELOndWi WASHINGTON,D.C.20410-7000 - "' !"t"i = /;TY r, OFME OF THE ASSMANT SECRETARY - - "�'-�1 'u.�-4�it 3 i itgo FOR COMMUNRY PLANNING AND DEVFLOPMMr September 14, 2006 Re Note issued by the City of San Bernardino, CA, in the amount of $7,500,000 Dear Sir or Madam: Trust certificates guaranteed by the Secretary of Housing and Urban Development (HUD)were sold in an underwritten public offering on September 14, 2006. These trust certificates are backed by a pool composed of your note(number B-03-MC-06-0539)and the notes of other participating borrowers. Each borrower is responsible for its share of issuance costs related to this offering. The categories of issuance costs and your share under each are as follows: Printing& legal expense $2,983.00 Trustee's fee 3,334.00 Underwriters' fee 30,953.00 Total $37,270.00 These issuance costs were paid with Guaranteed Loan Funds deducted from the proceeds of the notes. You should have received by wire transfer from JP Morgan Chase Bank, the Trustee, net proceeds in the amount of$7,462,730.00. e Enclosed is a fully executed copy.of the Contract for Loan Guarantee Assistance entered into in connection with the public offering. If you have any questions regarding this letter, please get in touch with me at 202.708.1871. Very sincerely yours, Paul D. Webster Director,Financial Management Division Enclosure JT J U.S.DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. §5308 Date of Contract This Contract for Loan Guarantee Assistance ( "Contract" ) is entered into City of San Bernardino, California,. as Borrower (the "Borrower" ) ,_ and the Secretary of Housing and Urban Development ( "Secretary" ) , as guarantor for the Guarantee made pursuant to section 108 ( "Section 108" ) of title I of the Housing and Community Development Act of 1974, as amended (the "Act" ) and 24 CFR Part 570, Subpart M, of the promissory note executed contemporaneously herewith and numbered B-03-MC-06-0539, in the Maximum Commitment Amount of $7, 500, 000, and any amended note or note issued in substitution for such note and having the same note number (the "Note" ) . This is the first Contract under the Funding Approval ( "Commitment" ) of the same number, which was approved by the Secretary on January 28, 2005. The funds paid or credited to the account of the Borrower pursuant to the Note are referred to herein as the "Guaranteed Loan Funds . " The Note (including the Fiscal Agency Agreement and the Trust Agreement as defined in Section I .A. of the Note and incorporated therein) is hereby incorporated into the Contract. Terms used in the Contract with initial capital letters and not otherwise defined in the text hereof shall have the respective meanings given thereto in the Note. The Fiscal Agency Agreement and the Trust Agreement are sometimes collectively referred to herein as the "Fiscal Agency/Trust Agreements, " and the Fiscal Agent and the Trustee respectively are sometimes collectively referred to as the "Fiscal Agent/Trustee. " PART I A- The Note: Advances and Records- The Note provides that Advances and Conversion Date Advances shall be made thereunder upon the written request of the Borrower and the approval of the Secretary, pursuant to this Contract and the Fiscal Agency Agreement. The Commitment Schedule attached to the Note represents the principal repayment schedule for the Maximum Commitment Amount of the Note. At all times, the total amount of all Advances and Conversion Date Advances under the Note for all Principal Due Dates shall not exceed the Maximum Commitment Amount of the Note. Prior to the Conversion Date (as defined in the Note, Section I .A. ) , the total amount of Advances made by the Holder for each Principal Due Date under the Note shall not exceed the applicable Commitment Amount for such Principal Due Date set forth in the Commitment Schedule of the Note. Prior to the Conversion Date, the Borrower agrees that the Fiscal Agent pursuant to the Fiscal Agency Agreement shall record the date 2 and amount of each payment and Advance under the Note and shall maintain the books and records of all Advances and Conversion Date Advances for each Principal Due Date, interest rates on Advances, payments, and Principal Amounts -outstanding for each Principal Due Date. On and after the Conversion Date, the Borrower agrees that the Trustee pursuant to the Trust Agreement will maintain the books and records of all payments on the Note and all Principal Amounts and interest rates on such Principal Amounts (each as to be set forth on Schedule P&I to the Note) . No advances of -any kind may be made on the Note after its Conversion Date. B. Borrower's Requests for Advances. All requests for Advances or Conversion Date Advances by the Borrower under the Note shall : be in writing; specify the amount of the Advance requested; identify the Note by Borrower, number and Maximum Commitment Amount; be addressed to the Secretary at the address for notices specified in paragraph '12 (f) of this Contract; be signed by an authorized official of the Borrower; and otherwise be in the form prescribed by the Secretary_ Advances and Conversion Date Advances shall be requested and will only be approved and made in increments of not less than $1, 000 for any Principal Due Date. A request for an initial Advance under a Note, or a request for a Conversion Date Advance, shall be received by the Secretary at least ten Business Days prior to the Borrower's proposed Funding Date or Conversion Date, as applicable. All other requests for Advances shall be received by the Secretary not less than five Business Days prior to the proposed Funding Date. The Borrower may not deliver a Note or a request for an Advance or Conversion Date Advance to the Secretary more than two calendar months prior to the Borrower's proposed Funding Date. At least two Business Days prior to the proposed Funding Date or Conversion Date if the Borrower' s request was timely received, or the next available Funding Date for which the request was timely received, the Secretary shall, except as otherwise provided in paragraph 11 (c) or 12 hereof, deliver a, corresponding Authorization Order- or Advance Order (as applicable) to the Fiscal Agent in accordance with- Section 2.03 or 2 . 04 of the Fiscal Agency Agreement for the applicable Funding Date or Conversion Date_ If the Borrower requests an Advance or Conversion Date Advance of less than the outstanding Maximum Commitment Amount under the Note, the Borrower may also specify in its written request the amount of the Advance or Conversion Date Advance to be allocated to each Commitment Amount or Principal Amount per Principal Due Date under the Note_ If the Borrower does not specify how the Advance or Conversion Date Advance should be allocated among Commitment Amounts/Principal Due Dates, the Borrower hereby authorizes the Secretary to direct the Fiscal Agent to allocate the Advance to the respective Commitment Amounts or Principal Amounts in order of the earliest Principal Due Date(s) . 3 C. Conversion; Public Offerig. On the Conversion Date (if any) , trust certificates backed by the Note (and similar notes issued by other Section 108 borrowers) will be purchased for a purchase price of the full principal amount thereof by underwriters selected by the Secretary (the "Underwriters" ) pursuant to an Underwriting Agreement between the Underwriters and the Secretary, at a closing on such Conversion Date as determined by the Secretary and the .Underwriters. The Borrower agrees that the interest rate at which the trust certificate of a specified maturity is sold to the Underwriters shall govern the interest rate inserted on the Conversion Date in Schedule P&I of the Note for the Principal Amount of corresponding maturity. D. Consents. By execution of this Contract, the Borrower ratifies and consents to the Secretary's selection of the Underwriters and authorizes the Secretary to negotiate with the Underwriters the terms of the Underwriting Agreement and of the public offering of interests in the trust certificates to investors (including the applicable interest rates) . In addition, by execution hereof the Borrower ratifies and consents to the Secretary' s selection of the Fiscal Agent/Trustee and agrees to the respective terms of the Fiscal Agency/Trust Agreements . If Advances have been made in the Maximum Commitment Amount of the Note not less than ten Business Days prior to the proposed Conversion Date, or if the Borrower requests a Conversion Date Advance, the Borrower authorizes the Secretary to deliver Schedule P&I to the Note completed in accordance herewith to the Fiscal Agent/Trustee on the Conversion Date in accordance with the Fiscal Agency/Trust Agreements, concurrent with delivery of the Secretary' s Guarantee of the trust certificates at the closing on the Conversion Date, and thereafter the Note shall be enforceable in accordance with its terms including Schedule P&I. In addition, the Secretary reserves the right to notify the Borrower not less than one calendar month in advance of a specified Conversion Date that the Note will be sold to the Underwriters on such date, if the Secretary in his sole discretion determines that market conditions or program needs require the participation in the proposed public offering of all or substantially all Borrowers with outstanding Advances. 4 PART II � • Receipt, Deposit and Use of Guaranteed Loan Funds. (a) Except for funds deducted on the Conversion Date pursuant to paragraph 4 (b) and fees and charges deducted by the Fiscal Agent/Trustee pursuant to paragraph 4 (a) , the Guaranteed Loan Funds shall be electronically transferred in accordance with the Borrower's instructions for deposit in a , separate, identifiable custodial account (the "Guaranteed Loan Funds Account" ) with a financial institution whose deposits or accounts are Federally insured. The Guaranteed Loan Funds Account shall be established and designated as prescribed in the attached form document entitled "Letter Agreement for Section 108 Loan Guarantee Program Custodial Account" (Attachment 1) and shall be continuously maintained for the Guaranteed Loan Funds. Such Letter Agreement must be executed when the Guaranteed Loan Funds Account is established. (A fully executed copy of such Letter Agreement shall be submitted to the Secretary within thirty days of its execution. ) The Borrower shall make withdrawals from said account only for payment of the costs of approved Section 108 activities, for transfer to the Loan Repayment Account or for the temporary investment of funds pursuant to this paragraph 1 (a) . Such .temporary investment of funds into the Guaranteed Loan Funds Investment Account shall be required within three Business Days after the balance of deposited funds exceeds the amount of the Federal deposit insurance on the Guaranteed Loan Funds Account . At that time, any balance of funds in the Guaranteed Loan Funds Account exceeding such insurance coverage shall be fully (1000) and continuously invested in _ Government Obligations, as defined in paragraph 10 hereof, held in the Guaranteed Loan Funds Investment Account. All temporary investments, whether or not required as above, shall be limited to Government Obligations having maturities that are consistent with the cash requirements of the approved activities. In no event shall the investments mature on or after October 31, 2007, or have maturities which exceed one year. All such investments shall be held in trust for the benefit of the Secretary by the above financial institution in an account (the "Guaranteed Loan Funds Investment Account" ) established and designated as prescribed in the attached form document entitled "Letter Agreement for Section 108 Loan Guarantee Program Custodial Investment Account" (Attachment 2) , which account shall be maintained for all Government Obligations purchased with funds from the Guaranteed Loan Funds Account. The Guaranteed Loan Funds Investment Account need only be established if and when the Borrower is required to invest, or otherwise invests, the Guaranteed Loan Funds in Government Obligations. Such Letter 5 Agreement must be executed when the Guaranteed Loan Funds Investment, Account is established. (A fully executed copy of such Letter Agreement shall be submitted to the Secretary within thirty days of its execution. ) All proceeds and income derived from such investments shall be returned to the Guaranteed Loan Funds Account. All funds in the Guaranteed Loan Funds Account or the Guaranteed Loan Funds Investment Account must be withdrawn and disbursed by the Borrower for approved activities by October 31, 2007. Any funds remaining in either Account after this date shall be immediately transferred to the Loan Repayment Account established pursuant to paragraph 6 of this Contract. (b) The Borrower shall by the fifteenth day of each month provide the Secretary with a' written statement showing the balance of funds in the Guaranteed Loan Funds Account and the withdrawals from such account during the preceding calendar month, and a statement identifying the obligations and their assignments in the Guaranteed Loan Funds Investment Account. (c) Upon the Secretary giving notice that the Borrower is in Default under this Contract or the Note, all right, title, and interest of the Borrower in and to the Guaranteed Loan Funds and Guaranteed Loan Funds Investment Accounts shall immediately vest in the Secretary for use in making payment on the Note, purchase of Government Obligations in accordance with paragraph 10, or payment of any other obligations of the Borrower under this Contract or the Fiscal Agency/Trust Agreements. 2 . Payments Due on Note; Final Payment and Discharge. The Borrower shall pay to the Fiscal Agent/Trustee, as collection agent for the Note, all amounts due pursuant to the terms of the Note. In accordance with the Note and the Fiscal Agency/Trust Agreements, payment shall be made by 3 : 00 P.M. (New York City time) on the seventh Business Day (the "Note Payment. Date" ) preceding the relevant Interest Due Date or Principal Due Date (each as defined in the Note) . If any Note Payment Date falls on a day that is not a Business Day, then the required payment shall be made on the next Business Day. Payment may be made by check or wire transfer. Upon final payment of all amounts due to Holders under the Note, including any payment made by the Secretary pursuant to the Guarantee, the Fiscal Agent/Trustee is required by the Fiscal Agency/Trust Agreements to return the Note to the Secretary_ Upon final payment to the Secretary of any amounts due as a result of Guarantee Payments or otherwise due under this Contract, the Secretary will cancel and return the Note to the Borrower in discharge of the Borrower's obligations under the Note. 6 3 . Selection of New Fiscal Agent or Trustee. The Secretary shall select a new Fiscal Agent or Trustee if the Fiscal Agent or Trustee resigns or is removed by the Secretary. The Borrower hereby consents in advance to any such selection and to any changes in the Fiscal Agency/Trust Agreements agreed to by any Fiscal Agent or Trustee and the Secretary, subject to paragraph 4 (e) of this Contract. 4. Payments Due Fiscal Agent or Trustee; Documents to the Secretary. (a) The Borrower agrees to pay the fees of the Fiscal Agent as required by Exhibit G to the Fiscal Agency Agreement, and any additional amounts that may be due pursuant to Section 6.01 of the Fiscal Agency Agreement. If not paid by the Borrower by any other means prior thereto, the Borrower agrees that any such fees or additional amounts that have been incurred_ prior to an Advance or a Conversion Date Advance may be deducted by the Fiscal Agent/Trustee from the proceeds of the Advance or Conversion Date Advance, as applicable. (b) The Borrower agrees to pay the Borrower' s share, as determined by the Secretary, of the customary and usual issuance, underwriting, and other costs related to the public Offering and future administration of the Note and the trust certificates, as approved by the Secretary, including the cost of reimbursement and/or compensation of the Trustee pursuant to the Trust Agreement, including Sections 3 . 11 and 7 . 01 thereof. In connection with the public offering on the Conversion Date, such payment shall either be made by wire transfer to the Trustee on the day prior to the Conversion Date or shall be deducted from the Guaranteed Loan Funds on the Conversion Date. 4 (c) The Borrower shall submit to the Secretary not later than ten Business Days prior to the Funding Date for the initial Advance hereunder, or if not submitted earlier, prior to any Conversion Date or Public Offering Date applicable to the Note, this executed Contract, the executed Note, . a request for an Advance or a Conversion Date Advance (as applicable) in proper form, and an opinion acceptable to the Secretary from the Borrower' s counsel to the effect that: (i) the governing body of the Borrower has authorized by resolution or ordinance, in accordance with applicable State and local law, the issuance of the Note and the execution of this Contract; (ii) the Note and this Contract are valid, binding, and enforceable obligations of the Borrower; (iii) the pledge of funds pursuant to 24 CFR 570. 705 (b) (2) and paragraph 5 (a) of this Contract is valid and binding; and (iv) there is no outstanding litigation that will affect the validity of the Note or this Contract. In addition, the Borrower shall submit any other additional documents or opinions specifically 7 required by this Contract (e.g. , paragraph 5 (c) , or paragraph 15, et seq. ) , at the time required thereby. (d) The Borrower agrees to reimburse the Underwriters upon demand by the Secretary for the Borrower' s share, as - determined by the Secretary, of all reasonable out-of-pocket expenses (including reasonable fees and disbursements of counsel) incurred in connection with a proposed public offering, if the Underwriters incur such additional costs for the public offering because of any refusal, inability, or failure on the part of the Borrower timely to submit in acceptable form any document required by this Contract (including paragraph 4 (c) ) , or because of any withdrawal by the Borrower from. the. publ_ic offering, after the Borrower has submitted a request for a Conversion Date Advance hereunder. By execution and delivery of this Contract to the Secretary, the Borrower hereby expressly authorizes the Secretary to pay amounts due under this paragraph from funds pledged under paragraph 5 (a) of this Contract. (e) The undertakings in paragraphs 3 and 4 of this Contract are expressly subject to the requirement that the Fiscal Agency/Trust Agreements shall in no event require payment of fees or charges, reimbursement of expenses, or any indemnification by the Borrower from any source other than funds pledged pursuant to paragraphs 5 or 15 et seq. of this Contract. 5 . Security. The Borrower hereby pledges as security for repayment of the Note, and such other charges as may be authorized in this Contract, the following: (a) All allocations or grants Which have been made or for which the Borrower may become eligible under Section 106 of the Act, as well as any grants which are or may become available to the Borrower pursuant to Section 108 (q) . (b) .Program income, as defined at 24 CFR 570.500 (a) (or any successor regulation) , directly generated from the use of the Guaranteed Loan Funds. (c) Other security as described in paragraph 15, et seq. (d) All proceeds (including insurance and condemnation proceeds) from any of the foregoing. (e) All funds or investments in the accounts established pursuant to paragraphs 1 and 6 of this Contract . 6 . Loan Repayment Account. (a) All amounts pledged pursuant to paragraphs 5 (b) , 5 (c) , and 5 (d) of this Contract shall be deposited immediately on 8 receipt in a separate identifiable custodial account (the "Loan Repayment Account" ) with a financial institution whose deposits or accounts are Federally insured. The Loan Repayment Account shall be established and designated as prescribed in the attached form document entitled "Letter Agreement for Section 108 Loan Guarantee Program Custodial Account" (Attachment 1) and shall be maintained for such pledged funds. The Loan Repayment Account need only be - established if and when the Borrower receives amounts pledged- pursuant to paragraph 5 (b) ,. 5 (c) or 5 (d) . Such Letter. Agreement must be executed when the Loan Repayment Account is established. (A fully executed copy of such Letter Agreement shall be submitted to the Secretary within thirty days of its execution. ) Borrower shall make withdrawals from said account only for the purpose of paying interest and principal due on the Note (including the purchase of Government Obligations in accordance with paragraph 10 hereof) , for payment of any other obligation of the Borrower under this Contract or the Fiscal Agency/Trust Agreements, or for' the '.temporary investment of funds pursuant to this paragraph, until final payment and discharge of the indebtedness evidenced by the Note, unless otherwise expressly authorized by the Secretary in writing. Such temporary investment of funds shall be required within three Business Days after the balance of deposited funds exceeds the amount of the Federal deposit insurance on the Loan Repayment Account. At that time, the balance of funds in the Loan Repayment Account exceeding such insurance coverage shall be fully (100%) and continuously invested in Government Obligations, as defined in paragraph 10 hereof . All temporary investments, whether or not required as above, shall be limited to% Government Obligation§ having maturities that are consistent with cash requirements for payment of principal and interest as required under the Note. In no event shall the maturities of such investments exceed one year. All such investments shall be held in trust for the benefit of the Secretary by the above financial institution in an account (the "Loan Repayment Investment Account".) established and designated as prescribed in the attached form document entitled "Letter Agreement for Section 108 Loan Guarantee Program Custodial Investment Account" (Attachment 2) , which account shall be maintained for all Government Obligations purchased with funds from the Loan Repayment Account. Such Letter Agreement must be executed when the Loan Repayment Investment Account is established. (A fully executed copy of such Letter Agreement shall be submitted to the Secretary within thirty days of its "execution. ) All proceeds and income derived from such investments shall be returned to the Loan Repayment Account. (b) Borrower shall by the fifteenth day of each month, provide the Secretary with a written statement showing the balance of funds in the Loan Repayment Account and the deposits and withdrawals of all funds in such account during the preceding calendar month and a statement identifying the obligations and their assignments in the Loan Repayment Investment Account. (c) Upon the Secretary giving notice that the Borrower is in Default under. this Contract or the Note, all right, - title, and interest of the Borrower in and to the Loan Repayment and Loan Repayment Investment Accounts shall immediately vest in the Secretary for use in making payment on the Note, purchase of Government Obligations in accordance with paragraph 10, or payment of any other obligation of the Borrower under this Contract or the Fiscal Agency/Trust Agreements. 7. Use of CDBG or EDI/BEDI Funds for Repayment. Any funds available to the Borrower under Section 106 of the Act .(including program income derived therefrom) are authorized to be used by the Borrower for payments due on the Note, Optional Redemptiori (as defined in the Note) , payment of any other obligation of the Borrower under this Contract or the Fiscal Agency/Trust Agreements, or the .purchase of Government Obligations in accordance with paragraph 10. Any funds specifically available to the Borrower for such payments or as a debt service reserve under an EDI/BEDI Grant Agreement pursuant to Section 108 (q) of the Act which supports the eligible project(s) and activities financed by the Note may also be used therefor; any other use of Section 108 (q) funds for such purposes shall require the prior written approval of the Secretary. Unless otherwise specifically provided herein or unless otherwise expressly authorized by the Secretary in writing, the Borrower shall substantially disburse funds available in the Loan Repayment or the Loan Repayment Investment Accounts before funds from grants under Section 106 �of the Act are withdrawn from the U.S. Treasury for such purposes. 8 . Secretary's Right to Restrict Use of CDBG Funds to Repayment. Upon a determination by the Secretary that payments required by paragraph 2 and/or paragraph 4 of this Contract are unlikely to be made as specified, the Secretary may give the Borrower notice that the availability to the Borrower of funds pledged under paragraph 5 (a) of this Contract for purposes other than satisfaction of the pledge is being restricted. This restriction shall be in an amount estimated by the Secretary to be sufficient to ensure that the payments referred to in paragraph 2 and/or paragraph 4 hereof are made when due. This restriction may be given effect by conditioning the restricted amounts to prohibit disbursement for purposes other than satisfaction of the pledge at the time such restricted funds are approved as grants, by limiting the Borrower' s ability to draw down or expend the restricted funds for other purposes, and by disapproving payment requests submitted with respect to such grants for purposes other than satisfaction of the pledge. 10 9 Secretary's Right to Use Pledged Funds for Repayment. The Secretary may use funds pledged under paragraph S (a) of this Contract or funds restricted under grants pursuant to paragraph 8 of this Contract to make any payment required of the Borrower under paragraph 2 and/or paragraph 4, if such payment has not been timely made by the Borrower. 10. Defeasance. For purposes of this Contract, after the Conversion Date the Note shall be deemed to have been paid (defeased) if there shall have been deposited with the- Trustee either moneys or Government Obligations (as defined below) , which in the sole determination of the Secretary, mature and bear interest at times and in amounts sufficient, together with any other moneys on deposit with the Trustee for such purpose, to pay when due the principal and interest to become due on the Note. The -Aggregate Principal Amount of the Note or any unpaid Principal Amount may be so defeased, in whole or in part, as of any Interest Due Date, or any other Business Day acceptable to both HUD and the Borrower. In accordance with the Note and the Trust Agreement, the Borrower shall give timely notice and written instructions to the Secretary and the Trustee concerning any principal amounts proposed to be defeased, including any Optional Redemptions proposed, which instructions shall be approved by the Secretary. If the unpaid Aggregate Principal Amount of the Note guaranteed pursuant to this Contract shall be. . defeased and deemed to have been paid in full, then the Borrower shall be released from all agreements, covenants, and further obligations under the Note. "Government Obligation" means a direct obligation of, or any obligation for which the full and timely payment of principal and interest is guaranteed by, the Unioted States of America, including but not limited to, United States Treasury Certificates of Indebtedness, Notes and Bonds - State and Local Government Series or certificates of ownership of the principal of or interest on direct obligations of, or _obligations unconditionally guaranteed by, the United States of America, which obligations are held in trust by a commercial bank which is a member of the Federal Reserve System and has capital and surplus (exclusive--of undivided profits) in excess of $100, 000, 000. 11 . Default- (a) A Default under the Note and this Contract shall occur upon failure by the Borrower to: (i) pay when due an installment of principal or interest on the Note; or (ii) punctually and properly perform, observe, and comply with any covenant, agreement, or condition contained in: (A) this Contract, (B) any security agreement, deed of trust, mortgage, assignment, guarantee, or other contract securing payment of indebtedness evidenced by the Note, or (C) any future . 11 amendments, modifications, restatements, renewals, or extensions of any such documents. (b) The Borrower waives notice of .Default and opportunity for .hearing with respect to a Default under paragraph 11 (a) . (c) In addition to Defaults under paragraph 11 (a) , the Secretary may declare the Note in Default if the Secretary makes a final decision in accordance with the provisions of section 111 -of the Act and 24 CFR 570.913 (or any successor provisions) , including requirements for reasonable notice and opportunity for hearing, that the Borrower has failed to comply substantially with title I of the Act. Notwithstanding any other provision, following the giving of such reasonable notice, the Secretary may, in the Secretary's sole discretion pending the Secretary's -final_ decision, withhold the guarantee of any or all obligations not yet guaranteed on behalf- of the Borrower under outstanding commitments, suspend approval of any further Advances or Conversion Date Advances unde°r the Note, and/or direct. the Borrower' s financial institution to: refuse to honor any instruments drawn upon, or withdrawals from, the Guaranteed Loan Funds Account or the Loan Repayment Account initiated by the Borrower, and/or refuse to release obligations and assignments by the Borrower from the Guaranteed Loan Funds Investment Account or the Loan Repayment Investment Account. 12 . Remedial Actions. Upon a Default or declaration of Default under this Contract, the Secretary may, in the Secretary's sole discretion, take any or all of the following remedial actions : (a) with any funds or security pledged under this Contract, the Secretary may: (i) continue to make payments due on the Note, (ii) make a prepayment under Section I.D. of the Note or make an acceleration payment with respect to the principal amount of the Note subject to Optional Redemption as provided in Section III of the Note, (iii) purchase Government Obligations in accordance with paragraph 10 of this Contract, (iv) pay any interest due for late payment as provided in the Note, this Contract, or the Fiscal Agency/Trust Agreements, (v) pay any other obligation of the Borrower under this Contract or the Fiscal Agency/Trust Agreements, and/or (vi) pay any reasonable expenses incurred by the Secretary or the Fiscal Agent/Trustee as result of the Borrower' s Default. (b) The Secretary may withhold the guarantee of any or all obligations not yet guaranteed or the disbursement of any or all grants not yet disbursed in full under outstanding guarantee commitments or grant approvals for the Borrower under Sections 108 and/or 106 of the Act . . (c) The Secretary may withhold approval of any or all further Advances or Conversion Date Advances under the Note (if 12 applicable) ; direct the Borrower's financial institution .to refuse to: honor any instruments drawn upon, or withdrawals from, the Guaranteed Loan Funds Account or the Loan Repayment Account by the Borrower, and/or to release obligations and assignments.by the Borrower from the Guaranteed Loan Funds Investment Account or the Loan Repayment Investment Account; and/or direct the Borrower and/or the Borrower's financial institution to transfer remaining balances from the Guaranteed Loan Funds Account to the Loan Repayment Account. (d) Until the Conversion Date, or with respect to amounts subject to Optional Redemption, the Secretary may accelerate the Note. (e) The Secretary may exercise any other appropriate remedies or sanctions available by law or regulation applicable to the assistance provided under this Contract, or may institute any other action available under law to recover Guaranteed Loan Funds or to reimburse the Secretary for any payment under the Secretary's -Guarantee or any reasonable -expenses incurred by the. Secretary as a result of the Default. (f) All notices and submissions provided for hereunder shall 'be in writing (including by telex, telecopier or any other form of facsimile communication) and mailed or sent or delivered, as to each party hereto, at its address set forth below or at such other address as shall be designated by such party in a written. notice to the other party hereto. All such notices and other communications shall be effective when received as follows: (i) if sent by hand delivery, upon delivery; (ii) if sent by mail, upon the earlier of the date of receipt or five Business Days after deposit in the mail, postage prepaid; (iii) if sent by telex, upon receipt by the sender of an answer back; and (iv) if sent by telecopier, upon receipt. The Secretary: U.S. Dept. of Housing and Urban Development Attention: Paul Webster, Director Financial Mana ement Division 451 7th Street SW, Room 7180 Washington, DC 20410 Borrower: City of San Bernardino, California Attn: Maggie Pacheco, Director San Bernardino Redevelopment Agency 201 North E Street, #301 San Bernardino, CA 92401 i 13 13 . Limited Liability. Notwithstanding any other provision of this Contract, the Fiscal Agency/Trust Agreements or the Note, any recovery against the Borrower for any liability for amounts due pursuant to the Note, the Fiscal Agency/Trust Agreements or this Contract shall be limited to the sources of security pledged in , paragraph 5 or any Special Conditions of this Contract. Neither the general credit nor the taxing power of the Borrower, or of the State in which the Borrower is located, is pledged for any payment due under the Note, the Contract, or the Fiscal Agency/Trust Agreements. 14 .. Incorporated Grant Agreement. The Contract and the Note are hereby incorporated in and made a part of the Grant Agreement authorized by the Secretary on July 18, 2003 under the Funding Approval for grant number B-03-MC-06-0539 to the Borrower. In carrying out activities with the Guaranteed Loan Funds hereunder, the Borrower agrees to comply with the Act and 24 CFR Part 570, as provided in Subpart M thereof. 15. .Special Conditions and Modifications: ' (a) Paragraph 5 (c) of the Contract is amended by deleting the paragraph as written in its entirety and substituting therefor the following: " (c) Other security, consisting of any and all rights, titles, and interests of the Borrower in and to: (i) A pledge of the Annual Grant Assistance Revenues provided by the Borrower to the Redevelopment Agency of San Bernardino (the "Subrecipient" ) as described in Attachment 3 (the 'Grant Assistance Revenues ' ) and as further described in the e Redevelopment Cooperation Loan Agreement between the Borrower, as "City, " and the Subrecipient, as 'Agency' ( "the Cooperation Loan Agreement" ) . A pledge of the Annual Agency Site Sales Tax Payments available to the Subrecipient as described in Attachment 4 (the 'Sales Tax Payments ' ) , and as further described in the Cooperation Loan Agreement. (iii) A pledge of the Annual Agency Site Tax Increment revenues and receipts available to the Subrecipient as described in Attachment 5 (the 'Tax Increment Revenues ' ) . and as further described in the Cooperation Loan Agreement. The pledge of the Grant Assistance Revenues, the Sales Tax Payments, and the Tax Increment Revenues, (collectively referred to as "Pledged Revenues" ) shall be pursuant to a pledge, assignment and security agreement (the 'Pledge, 14 Assignment and Security Agreement' ) , which shall be in a form acceptable to the Secretary. " (b) Guaranteed Loan Funds shall be used by the Borrower to make a loan to the Redevelopment Agency of San Bernardino (the "Subrecipient" ) for the following activities in connection with the Arden=Guthrie Redevelopment Project (the "Project") : (i) site acquisition, pursuant to 24 CFR 570.703 (a) ; (ii) residential relocation assistance, pursuant to §570 .703 (d) ; (iii) demolition and clearance, pursuant to §570.703 (e) ; The Subrecipient loan shall be evidenced by a promissory note (the "Subrecipient Note" ) and a loan agreement (the "Subrecipient Loan Agreement" ) , which Subrecipient Note. and Subrecipient Loan Agreement shall be in a form acceptable to the Secretary. At the discretion of the Borrower, the terms of the Subrecipient Loan Agreement may be included in the text of the Cooperation Loan Agreement. The amount of principal and/or interest payable under the Subrecipient Note during the twelve-month period beginning July 1 of each year and ending on June 30 of the next succeeding year shall be equal to or greater than the amount of principal and/or interest payable under the Note for the corresponding period. The Subrecipient Note shall not be subject to redemption or prepayment earlier than the earliest possible redemption date under the terms of the Note. (c) In order to secure the payment and performance of the secured obligations of the Subrecipient to the Borrower, the Borrower shall obtain the following collateral (collectively, the "Collateral" ) : (i) A first priority lien on the real property described in Attachment 6 hereof (the "Property") , established through an appropriate and properly recorded Deed of Trust (the "Subrecipient Deed of Trust" or "Deed of Trust" ) . The Subrecipient Deed of Trust shall be subject to release and reconveyance (in whole or in part) prior to the maturity date under the Subrecipient Note at such time as the Subrecipient conveys fee title in the Property to the third party developer entity (the "Developer") identified in the Property Disposition and Development Agreement (the "Development Agreement") described in subparagraph (c) (iv) below_ The Subrecipient Deed of Trust 15 shall contain such other provisions as the Secretary deems necessary. (ii) Any and all rights, titles, and interests of the Subrecipient in and to any leases covering the Property. Such rights, titles, and interests of the Subrecipient shall be the subject of a collateral assignment of leases and rents (the "Collateral Assignment of Leases and Rents") , which shall be in a form acceptable to the Secretary. The Collateral Assignment of Leases and Rents shall be subject to release (in whole or in part) prior to the maturity date of the Subrecipient Note at such time as the Subrecipient conveys the Property to the Developer identified in the Development Agreement identified in subparagraph (c) (iv) , below Any and all rights, titles, and interests of the Subrecipient in and to any licenses, permits, and other agreements covering the Property. Such rights, titles, and interests shall be the subject of a collateral assignment of interest in licenses, permits, and other agreements (the "Collateral Assignment of Interest in Licenses, Permits and Agreements" ) , which shall be in a form acceptable to the Secretary. The Collateral Assignment of Interest in Licenses, Permits and Agreements shall be subject to modification following its initial delivery by the Subrecipient in a form acceptable to the Secretary, in order to acknowledge the collateral assignment to the Secretary by the Subrecipient of the Subrecipient security interest in the Developer Completion Surety, identified in subparagraph (c) (iv) , below. (iv) Any and all of the right, title and interest of the Subrecipient in the Property Disposition and Development Agreement (the "Development Agreement" ) by and between the Subrecipient and a third party developer entity (the "Developer") who shall commit to the Subrecipient under the terms and conditions of the Development Agreement to undertake a specific program of reuse and redevelopment of the Property as part of the Project. The Development Agreement shall contain such Project completion and Developer performance sureties in favor of the Subrecipient as acceptable to the Subrecipient (collectively, "Developer Completion Surety") . The Development Agreement and the Developer Completion Surety shall contain_ 16 (A) a financial commitment of the Developer enforceable by the Subrecipient that the new buildings and improvements constructed on the portion of the Project undertaken by the Developer shall have a minimum assessed valuation for ad valorem property tax purposes of not- less than Seventeen Million Dollars ($17, 000, 000) ; (B) that the building improvements on the portion of the Project undertaken by the Developer shall be substantially completed within twenty four (24) months following the date of transfer of the Property by the Subrecipient to the Developer; (C) a financial covenant of the Developer in favor of the Subrecipient that the retail sales and use taxes generated by businesses situated in the Project which are payable to the City shall be an amount each year which is not less for the applicable year than the amount of estimated Sales Tax Payments to the City shown in Attachment 4; (D) other financial commitments of the Developer acceptable to the Subrecipient, including without limitation, new building construction completion surety of the Developer in favor of the Subrecipient; (E) an express acknowledgment by the Developer that the Developer Completion Surety and the financial performance rights of the Subrecipient under the Development Agreement shall be assigned by the Subrecipient as collateral to the Borrower and the Secretary for the repayment of the Subrecipient Note. The final form of the amendment or modification of the Collateral Assignment of Interests in License, Permits and Agreements, which is to include the collateral pledge of Developer Completion Surety by the Subrecipient to the Borrower within the scope of the collateral assignment of security interests to the Secretary, shall be in form and substance acceptable to the Secretary. (v) Such other alternative collateral or security arrangements as may be requested by the Borrower and approved by the Secretary in writing. 1.7 (d) The Borrower shall select a financial institution acceptable to the .Secretary (the "Custodian" ) to act as custodian for the documents specified in (e) below (hereinafter referred to as the "Security Documents") . The Borrower and the Custodian shall enter into .a written agreement containing such provisions as the Secretary deems necessary. A fully executed copy of such agreement, with original signatures, shall be forwarded to the Secretary contemporaneously with the delivery of documents pursuant to (e) below.. (e) Not later than five business days after the initial disbursement of the Guaranteed Loan Funds to the Subrecipient, the Borrower shall deliver to the Custodian the following: (i) The original Subrecipient Note, endorsed in blank and without recourse. (ii) The original Subrecipient Loan Agreement and a collateral assignment thereof to the Secretary, which assignment shall be in a form acceptable to the Secretary. (iii) The original recorded Deed of Trust signed by the Subrecipient and an assignment thereof to the Secretary, in a recordable form but unrecorded, which assignment shall be in a form acceptable to the Secretary. (iv) The original recorded Collateral Assignment of Leases and Rents and an assignment thereof to the Secretary, in a recordable form but unrecorded, which assignment shall be in a form acceptable to the Secretary. (v) The original Collateral Assignment of Interest in Licenses, Permits, and Agreements and a collateral assignment thereof to the . Secretary, which assignment shall be in a form acceptable to the Secretary. (vi) An opinion of the Borrower' s counsel on its letterhead, addressed and satisfactory to the Secretary, that: (A) The Subrecipient is duly organized and validly existing as a public body under the laws of the State of California and is in good standing in and under the laws of the State of California; (B) The Subrecipient Note has been duly executed and delivered by a party authorized by the 1s Subrecipient to take such action and is a valid and binding obligation of the Subrecipient, enforceable in accordance with its terms, except as limited by bankruptcy and similar laws affecting creditors generally, and (C) The security instruments specified in (ii) through (v) above are valid and legally binding obligations, enforceable in accordance with their respective terms. To the extent that the foregoing opinion deals with matters customarily within the due diligence of counsel to the Subrecipient, Borrower' s counsel may attach and expressly rely on an opinion of Subrecipient ' s counsel satisfactory to the Secretary. (vii) A mortgagee title policy, issued by a company and in a form acceptable to the Secretary, naming the Borrower as the insured party. The policy must, either include in the definition of the "insured each successor in ownership of the indebtedness secured by the Deed of Trust or be accompanied by an endorsement of the policy to the Secretary. (viii) If required by the Secretary, a certified survey with a legal description conforming to the title policy and the Deed of Trust. (ix) An appraisal of the fee simple ownership interest inathe Property specifying an estimate of fair market value of not less than $4, 300, 000. The appraisal shall be completed by an appraiser who is certified by the state and has a professional designation (such as "SRA" or "MAI" ) , and shall conform to the standards of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ( "FIRREA" ) . (x) Any instruments, documents, agreements, and legal opinions required pursuant to paragraph 15 (c) (v) . (f} Not later than five (5) business days after the Subrecipient has transferred its interest in the Property to the Developer under the Development Agreement, the Borrower shall deliver to the Custodian the following: (i) An appraisal of the completed improved value of the Project to be undertaken by the Developer pursuant to the Development Agreement specifying 19 an estimate of fair market value of such portion of the Project as being not less than Seventeen Million Dollars ( 17, 000, 000) . The appraisal shall be completed by an appraiser who is certified by the state and has a professional designation (such as "SRA" or "MAI" ) and shall conform to the standards of the Financial Institutions Reform, Recovery and Enforcement Act -of 1989 ("FIRREA" ) . (ii,) The modification of the Collateral Assignment of Interest in Licenses, Permits and Agreements by and between the Borrower and the Subrecipient which includes the collateral pledge to the Borrower of the Developer Completion Surety: (iii) An opinion of the Borrower's counsel on its letterhead, addressed and satisfactory to the Secretary, that the obligations of the Developer as arise in favor of the Subrecipient under the .Development Agreement, including without limitation, the Developer Completion Surety, are valid and legally binding obligations of the Developer and that the Developer Completion Surety may be lawfully assigned by the Subrecipient to the Borrower and to the Secretary. (iv) An opinion of the Borrower' s counsel on its letterhead, addressed and satisfactory to the Secretary, that: (A) At the time of the execution of the Development Agreement the Subrecipient remains duly organized and validly existing as a public body under the laws of the State of California and is in good standing in and under the laws of the State of •California; (B) The Development Agreement has been duly executed and delivered by a party authorized by the Subrecipient to take such action and is a valid and binding obligation of the Subrecipient, enforceable in accordance with its terms, except as limited by bankruptcy and similar laws affecting creditors generally; and (C) The security instruments identified as the Developer Completion Surety are valid and legally binding obligations, enforceable in accordance with their respective terms. 20 To the extent that the foregoing opinions deal with matters customarily within the due diligence of counsel to the Developer or the Subrecipient, Borrower' s counsel may attach and expressly rely on an opinion of counsel to the Developer or Subrecipient satisfactory to the Secretary. (g) (i) Subject to compliance each year with applicable debt limitation requirements of the State Constitution, the Borrower pledges to provide to the Subrecipient the Grant Assistance Revenues, as described in paragraph 15 (a) , Attachment 3, and the Cooperation Loan Agreement, each year during the term of the Note (the "Borrower Pledge" ) . Borrower shall disburse the proceeds of the Grant Assistance Revenues to the Subrecipient in an amount determined by the Subrecipient as provided in Section 7 of the Cooperation Loan Agreement, in annual installments until the Subrecipient Loan is repaid in full to the City. The obligation of the City to provide such payments to the Subrecipient in each fiscal year is a current obligation of the Borrower, subject to annual appropriation by the City. The Borrower Pledge shall be in effect for the full term of the Note and shall be described and authorized in an Ordinance or Resolution of the Borrower' s legislative body. (ii) The Borrower shall deliver to the Secretary contemporaneously with the delivery of this Contract and the Note: ' (A) A copy of the Ordinance or Resolution describing and authorizing the °Borrower Pledge, and (B) An opinion of Borrower' s counsel on its letterhead, addressed and satisfactory to the Secretary, that the Ordinance or Resolution provided by the Borrower is a valid and legally binding obligation of the Borrower. (h) Paragraph 12 is amended by adding at the end thereof the following language: " (g) The Secretary may complete the endorsement of the Subrecipient Note and record the assignments referred to in paragraph 15 (e) and thereby effectuate the transfer of the documents referenced and underlying indebtedness from the Borrower to the Secretary or" the Secretary' s assignee. 21 " (h) The -Secretary may exercise or enforce any and all other rights or remedies (including any and all rights and remedies available to- a secured party under the Uniform Commercial Code) available by law or agreement (including any of the Security Documents, as defined in paragraph 15 (d) against the Collateral, against the Borrower, against the . Subrecipient, or against any other person or property. " {i) The Borrower agrees that it shall promptly notify the Secretary in writing upon the occurrence of any event which constitutes a default (an "Event of Default" ) under (and as defined in) . any of the Security Documents, as defined in paragraph 15 (d) . Notification of an Event of Default shall be delivered to the 'Secretary as directed in paragraph 12 (f) above. Upon the occurrence of an Event of Default, the Secretary may (without. prior notice or hearing, which Borrower hereby expressly waives) , in addition to (and not in lieu of) exercising any and all remedies that may be available under the Security Documents, declare the Note in Default and exercise any and all remedies available under paragraph 12 . This paragraph shall not affect the right of the Secretary to declare the Note in Default pursuant to paragraph 11 and to exercise in connection therewith any and all remedies available under paragraph 12 _ (j) The Borrower shall deliver to the Secretary contemporaneously with the delivery of this Contract and the Note: (i) an original copy of the Pledge, Assignment and Security Agreement; and, (ii) an opinion of Borrower's counsel on its letterhead, addressed and satisfactory to the Secretary, that the Pledge-, Assignment and -Security Agreement is a valid and legally binding obligation, enforceable in accordance with its terms. (k) Additional Grounds for Default. Notice of Default Restriction of Pledged Grants. Availability of Other Remedial Actions. (i) The Borrower acknowledges and agrees that the Secretary' s guarantee of the Note is made in reliance upon the availability of grants pledged pursuant to paragraph 5 (a) (individually, a "Pledged Grant" and, collectively, the "Pledged Grants" ) in any Federal fiscal year subsequent to the Federal fiscal year ending September 30, 2006 to: (A) pay when due the payments to become due on 22 the Note, or (B) defease (or, if permitted, prepay) the full amount outstanding on the Note. The Borrower further acknowledges and agrees that if the Secretary (in the Secretary's sole discretion) determines that Pledged Grants are unlikely to be available for either of such purposes, such determination shall be a permissible basis for any of the actions specified in paragraphs (ii) and (iii) below (without notice or hearing, which the Borrower expressly waives) . (ii) Upon written notice from the Secretary to the Borrower at the address specified in paragraph 12 (f) above that the Secretary (in the Secretary's sole discretion) has determined that Pledged Grants are unlikely to be available for either of the purposes specified in (A) and (B) .of paragraph (i) above (such notice being hereinafter referred to as the "Notice of Impaired Security") , the Secretary may limit the availability of Pledged Grants by withholding amounts at the time a Pledged Grant is approved or by disapproving payment requests (drawdowns) submitted with respect to Pledged Grants. (iii) If after 60 days from the Notice of Impaired Security the Secretary (in the Secretary' s sole discretion) determines that Pledged Grants are still unlikely to be available for either of the purposes specified in (A) and (B) of paragraph (i) above, the Secretary may declare the Note in Default and exercise any and all remedies available under paragraph 12 . % This paragraph (iii) shall not affect the right of the Secretary to declare the Note and/or this Contract in Default pursuant to paragraph 11 and to exercise in connection therewith any and all remedies available under paragraph 12 . (iv) All notices and submissions provided for hereunder shall be submitted as directed in paragraph 12 (f) above. (1) Part II, Paragraph 1 (a) of the Contract is' amended by deleting the fourth and last sub-paragraph as written in its entirety and substituting therefore the following: "All funds in the Guaranteed Loan Funds Account or the Guaranteed Loan Funds Investment Account must be withdrawn and disbursed by the Borrower for approved activities by October 31, 2007; provided however, that in the event that the Subrecipient may not have entered into a Development Agreement with the 23 Developer, as each of these terms is defined in paragraph 15 (c) (iv) , by a date not later than December 31, 2006, then in such event, the Borrower shall not thereafter disburse any other funds from the Guaranteed Loan Funds Account or the Guaranteed Loan Funds Investment Account without first obtaining the written consent of the Secretary. Any funds remaining in either Account after December 31, 2006, if applicable, or in all events after October 31, 2007, shall on the next business day immediately following such applicable date, be transferred to the Loan Repayment Account established pursuant to paragraph 6 of this Contract_ " [Rest of Page Intentionally Left Blank] a 24 THE UNDERSIGNED, as authorized officials on behalf of the Borrower or the Secretary, have executed this Contract for Loan Guarantee Assistance, which shall be effective as of the date of execution hereof on behalf of the Secretary. City of San Bernardino, CA BORROWER BY- igna ure) Patrick J. Morris (Name) Mayor (Title) (Date) SECRETARY OF HOUSING AND URBAN DEVELOPMENT BY: fiSinatur Ne on R. Bre "on (Name) eneral Deputy Assistant Secretary for Community Planning and Development (Title) SEP 1 3 2006 (Date) ATTACHMENT 1 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Letter Agreement for Section 108 Loan Guarantee Program Custodial Account Wells Fargo Bank, N.A. Name of Institution(and Branch) 707 Wilshire Boulevard, 17th Floor Street Los Angeles, California 90017 City m This account is established for funds received by the Borrower under note(s)guaranteed by the United States Department of Housing and Urban Development(HUD)under the Section 108 Loan Guarantee Program. (Guaranteed Loan Funds Account) ❑ This account is established for repayment of the note guaranteed by HUD under the Section 108 Loan Guarantee Program. (Loan Repayment Account) ❑ This account is established as a debt service reserve under the Section 108 Loan Guarantee Program. (Debt Service Reserve Account) You are hereby authorized and requested to establish a Custodial Account to be specifically designated"city of San Bernardino as Trustee for United States Department ofHousing and Urban Development." All deposits made in such account shall be subject to withdrawal therefrom by the Borrower named below,and shall also be subject to withdrawal therefrom by HUD. No agent of the Borrower shall be authorized to withdraw funds from the account. You are also authorized to pay HUD at any time upon its written demand,which need not name a specific amount, the entire amount in such account subject only to notice requirements contained in applicable regulations governing this institution, but in no event to exceed seven business days. You are further authorized upon the request of HUD to refuse to honor any instrument drawn upon or withdrawals from such account by parties other than HUD and to change the name of the aforesaid account to the "United States Department of Housing and Urban Development." In no instance shall the funds in the Custodial Account be used to offset funds which may have been advanced to, or on behalf of, the Borrower by the custodian institution. 4817-9164-5697.1 1 This letter is submitted to you in duplicate. Please execute the duplicate.copy of the certificate below,acknowledging the existence of such account,so that we may present the copy signed by you to HUD. City of San Bernardino Name of Borrower (Signat re) Mayor Title The undersigned institution certifies to the United States Department of Housing and Urban Development(HUD) that the account identified is in existence in this institution under account number 20347200 ,and agrees with the Borrower named above and HUD to honor-demands on such account in the manner provided in the above letter, subject only to notice requirements contained in applicable regulations governing this institution, but in no event to exceed seven business days. The undersigned institution further agrees upon the request of HUD to refuse to honor any instruments drawn upon or withdrawals from such account by parties other than HUD and to change the name of the aforesaid account to"United States Department of Housing and Urban Development." In no instance shall the funds in the Custodial Account be used to offset funds which may have been advanced to,or on behalf of,the Borrower by the custodian institution_ Deposits in this institution are insured by the Federal Deposit Insurance Corporation,the Federal Savings and Loan Insurance Corporation, or the National Credit Union Ad i 'stration. Wells Fargo Bank, N.A. Name of Institution Signature Scott C. Emmons, Vie President Auqust 7, 2006 Print Name and Title Date 4817-9164-5697-1 2 ATTACHMENT 2 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Letter Agreement for Section 108 Loan Guarantee Program Custodial Investment Account Wells Fargo Bank, N.A. Name of Institution(and Branch) 707 Wilshire Boulevard, 17th Floor Street Los Angeles, California 90017 City August 7, 2006 Date ❑ This account is established to hold obligations and their assignments, such obligations having been purchased with funds from the Guaranteed Loan Funds Account. (Guaranteed Loan Funds Account) ® This Account is established to hold obligations and their assignments, such obligations having been purchased with funds from the Loan Repayment Account. (Loan Repayment Account) ❑ This account is established to hold obligations and their assignments, such obligations having been purchased with funds from the Debt Service Reserve Account. (Debt Service Reserve Investment Account) You are hereby authorized and requested to hold obligations and assignments of those obligations in trust for the Untied States Department of Housing and Urban Development (HUD)in an account specifically designated"city of San Bernardino as Trustee for United States Department of Housing and Urban Development." All obligations and assignments shall be subject to release to the Borrower named below,and shall also be subject to release to HUD. No agent ofthe Borrower shall be authorized to release the obligations or assignments. You are also authorized to release the obligations and assignments to HUD at any time upon its written demand, which need not name specific obligations and assignments, all obligations and assignments being held in such account subject only to notice requirements contained in applicable regulations governing this institution,but in no event to exceed seven business days. You are further authorized upon the request of HUD to refuse to honor any request for release of the obligations and assignments from such account by parties other than HUD and to change the name of the aforesaid account to the"United States Department of Housing and Urban Development." In no instance shall the obligations in the account be used to offset funds which may have been advanced to, or on behalf of,the Borrower by the custodian institution. 4831-5060-0193.1 1 This letter is submitted to you in duplicate. Please execute the duplicate copy of the certificate below,acknowledging the existence of such account,so that we may present the copy signed by you to HUD. City of San Bernardino Name of Borrower (Signa re) Mayor Title The undersigned institution certifies to the United States Department of Housing and Urban Development (HUD) that the account identified is in existence in this institution under account number_20347201 .and agrees with the Borrower named above and HUD to honor demands release on such account in the manner provided in the above letter, subject only to any notice requirements contained in applicable regulations governing this institution,but in no event to exceed seven business days. The undersigned institution further agrees upon the request of HUD to refuse to honor any request for release of the obligations and assignments from such account by parties other than HUD and to change the name of the aforesaid account to"United States Department of Housing and Urban Development." In no instance shall the obligations in the account be used to offset funds which may have been advanced to, or on behalf of, the Borrower by the custodian institution. Deposits in this institution are insured by the Federal Deposit Insurance Corporation,the Federal Savings and Loan Insurance Corporation, or the National Credit Union Administration. Wells Fargo Bank, N.A. Name of Institution Signature Scott C. Emmons, vice President August 7, 2006 Print Name and Title Date 4831-5060-01911 2 Attachment 3 Grant Assistance Revenues Description to be provided by Borrower a I I I i I I Attachment No.3 Description of Pledged Funds (a) The Mayor and Common Council hereby acknowledges that the $7,500,000 HUD Section 108 Loan Promissory Note sets forth a specific schedule of repayment by the City to HUD of the principal amount of the loan under the 2006 HUD Section 108 Loan Contract, as shall be due and payable in the amounts and at the times provided as follows: Principal Due Date Commitment Principal Due Date Commitment Amount Amount August 1, 2006 $0 August 1, 2016 $424,000 August 1, 2007 $0 August 1,2017 $454,000 August 1, 2008 $0 August 1,2018 $494,000 August 1, 2009 $0 August 1, 2019 $534,000 August 1, 2010 $0 August 1, 2020 $574,000 August 1, 2011 $334,000 August 1, 2021 $624,000 August 1, 2012 $344,000 August 1, 2022 $654,000 August 1, 2013 $354,000 August 1, 2023 $654,000 August 1, 2014 $384,000 August 1, 2024 $634,000 August 1, 2015 $404,000 August 1, 2025 $634,000 (Aggregate Principal Amount= $7,500,000) Payments of interest which accrue on the outstanding principal balance of the 2006 HUD Section 108 loan from the date of the $7,500,000 HUD Section 108 Loan Promissory Note (e.g., the "Interim Interest Rate" and later, the "Public Offering Date", as these terms are defined in the $7,500,000 HUD Section 108 Loan Promissory Note) shall be paid by the City at the rate of interest per annum determined in accordance with the interim HUD financing and later on the Public Offering Date to be inserted by HUD or its fiscal agent, in the Schedule "P&I" of the $7,500,000 HUD Section 108 Loan Promissory Note, all as provided in the 2006 HUD Section 108 Loan Contract. (b) Except for the special source of funds as may be available to the City by virtue of the collateral assignments by: (i) the Agency to the City of the Agency's beneficial interest in the Agency Lands pursuant to the 2006 Redevelopment Cooperation Loan Agreement; (ii) the Agency to the City for the collateral assignment to HUD of the Agency's beneficial interest in the "Annual Agency Site Tax Increment Payment" which arises in favor of the Agency under the terms of the 2003 Redevelopment Cooperation Agreement, dated October 1, 2003, by and among the City, IVDA and the Agency; (iii) the Agency to the City for the collateral assignment to HUD of the Agency's beneficial interest in the "Annual Agency Site Sales Tax Payment" which arises in favor of the Agency under the terms of Section 6 of the 2006 Redevelopment Cooperation Loan Agreement; (iv) the Agency to the City for collateral assignment to HUD of the Agency's beneficial interest in the "Annual Agency Grant Assistance Revenue Payment" which arises in favor of the Agency under the terms of Section 7 of the 2006 Redevelopment Cooperation Loan$Agreement; (v) the Agency to the City for collateral assignment to HUD of the Agency's beneficial interest in "Developer Grant Agreement Revenues", which arises in favor of the .Agency under the terms of Section 9 of the 2006 Redevelopment Cooperation Loan Agreement or otherwise under the Developer Grant Agreement; The sole source of funds of the City available to repay the 2006 HUD Section 108 Loan shall be the CDBG Program revenues of the City, all as more fully provided under the 2006 HUD Section 108 Loan Contract and no other source of funds of the City is pledged or shall be available for the repayment of the 2006 HUD Section 108 Loan. For the purposes of the 2006 HUD Section 108 Loan Contract, the source of funds identified above in subsection (b)(ii), (iii) and (iv), are referred to collectively as "Pledged Revenues". Attachment 4 Sales Tax Payments Description to be provided by Borrower I i Attachment No. 4 ARDEN GUTHRIE HUD-108 DEBT SERVICE COVERAGE ANALYSIS Annual Agency Annual Agency Annual Annual Site Sales Tax Site Tax Increment HUD-108 HUD-108 Year -payments' Payrnents2 Debt Service3 over" e4 1 -0- -0- $415,500 N/A 2 -0- -0- 412,500 N/A 3 $490,000 68,000 412,500 1.35 4 510,000 68,700 412,500 1.40 6 530,000 69,400 412,500 1.45 6 551,000 70,100 746,500 .83 7 573,000 70,800 738,130 .87 a. 596,000 71,500 729.210 .92 9 620,000 72,200 739,740 .94 10 645,000 72,900 738,620 .97 11 670,800 73,600 736,400 1.01 12 607,600 74,400 743,080 1.04 13 725,500 75,100 758,110 1.06 14 754,600 75,900 770,940 1.08 15 784,700 76,600 781,570 1.10 16 816,100 77,400 800,000 1.12 17 848,800 78,200 795,680 1.17 18 772,400 78900 759,710 1.12 19 803,300 79,700 703,740 1.25 20 835,400 80,500 668,870 1,37 ti 'Based on 175,000 sq. ft. shopping center with taxable sales of$350 per square foot, inflation at 4%, 80% pass through years one through year seventeen, 70% pass through years eighteen through twenty. 2Based on incremental improvements of$17,000,000, 40% pass through and inflation at I% per year. 3See Exhibit 13. "Column Two Plus Column Three Divided by Column Four. Not applicable during years one and two while project is under development and construction. r Attachment 5 Tax Increment Revenues Description to be provided by Borrower a . Attachment No. 5 ARDEN GUTHRIE HUD-108 DEBT SERVICE COVERAGE ANALYSIS Annual Agency Annual Agency Annual Annual Site Sales Tax Site Tax increment HUD-108 HUD-108 Year Payments' Paymente Debt Service3 vera e4 1 -0- -0- $415,500 N/A 2 -0- -0- 412,500 NIA 3 $490,000 68,000 412,500 1.35 4 510,000 68,700 412,500 1.40 5 530,000 69,400 412,500 1.45 6 551,000 70,100 746,500 .83 7 573,000 70,800 738,130 .87 8.` 596,000 71,500 729.210 .92 9 620,000 721200 739,740 .94 10 645,000 72,900 738;620 .97 11 670,800 73,600 736,400 1.01 12 697,600 74,400 743,080 1.04 13 725,500 75,100 758,110 1.06 14 754,600 75,900 770,940 1.08 15 784,700 76,600 781,570 1.10 16 816,100 77,400 800,000 1.12 17 848,800 78,200 795,680 1.17 18 772,400 78,900 759,710 1.12 19 803,300 79,700 703,740 1.25 20 835,400 80,500 668,870 1.37 a 'Based on 175,000 sq. ft. shopping center with taxable sales of$350 per square foot, inflation at 4%, 80% pass through years one through year seventeen, 70% pass through years eighteen through twenty. BBased on incremental improvements of$17,000,000, 40% pass through and inflation at 1% per year. 'See Exhibit B. `Column Two Plus Column Three Divided by Column Four. Not applicable during years one and two while project is under development and construction. Attachment 6 Real property subject to lien Legal description to be provided by Borrower 1 Attachment No.6 Agency Owned Properties Arden Guthrie Area Census Tract 0074.07 1. 2176 N.Newcomb Street 1191-021-12 6898 23 2. 2158 N.Newcomb Street 1191-021-13 6898 24 3. 2140 N.Newcomb Street 1191-021-14 6898 25 4. 2122 N.Newcomb Street 1191-021-15 6898 26 5. 2104 N.Newcomb Street 1191-021-16 6898 27 6. 2094 N.Newcomb Street 1191-021-17 6898 28 7. 2072 N.Newcomb Street 1191-021-18 6898 29 8. 2050 N.Newcomb Street 1191-021-19 6898 30 9. 2028 N.Newcomb Street 1191-041-17 6898 31 10. 2004 N.Newcomb Street 1191-041-18 6898 32 11. 2029 N.Newcomb Street 1191-041-20- 6898 34 12. 2073 N.Newcomb Street 1191-021-21 6898 36 13. 2095 N.Newcomb Street 1191-021-22 6898 37 14. 2105 N. Newcomb Street 1191-021-23 6898 38 15. 2123 N.Newcomb Street 1191-021-24 6898 39 16. 2141 N.Newcomb Street 1191-021-25 6898 40 IT 2159 N.Newcomb Street 1191-021-26 6898 41 18. 2177 N.Newcomb Street 1191-021-27 6898 42 19. 2194 N. McKinley Avenue 1191-021-29 6898 44 20. 2140 N. McKinley Avenue 1191-021-32 6898 47 21. 2122 N. McKinley Avenue 1191-021-33 6898 48 22. 2104 N. McKinley Avenue 1191-021-34 6898 49 23. 2094 N. McKinley Avenue 1191-021-35 6898 50 24. 2072 N. McKinley Avenue 1191-021-36 6898 51 25. 2050 N. McKinley Avenue 1191-021-37 6898 52 26. 2028 N. McKinley Avenue 1191-041-21 6898 53 27. 2029 N. McKinley Avenue 1191-041-31 7106 39 28. 2051 N. McKinley Avenue 1191-021-69 7106 38 29. 2073 N. McKinley Avenue 1191-021-68 7106 37 30. 2095 N. McKinley Avenue 1191-021-67 7106 36 31, 2159 N. McKinley Avenue 1191-021-63 7106 32 32. 2177 N. McKinley Avenue 1191-021-62 7106 31 33. 2194 N. Dumbarton Avenue 1191-021-60 7106 29 34. 2158 N. Dumbarton Avenue 1191-021-58 7106 27 35. 2104 N. Dumbarton Avenue 1191-021-55 7106 24 36. 2094 N. Dumbarton Avenue 1191-021-54 7106 23 37. 2072 N. Dumbarton Avenue 1191-021-53 7106 22 1 Attachment No.6 Agency Owned Properties Arden Guthrie Area Census Tract 0074.07 BI- 1 _SIR r . 38. 2050 N.Dumbarton Avenue 1191-021-52 _ 7106 21 39. 2029 N.Dumbarton Avenue 1191-041-27 7106 17 40. 2004 N. Dumbarton Avenue 1191-041-29 7106 19 41. 2028 N. Dumbarton Avenue 1191-041-30 7106 20 42. 2051 N. Dumbarton Avenue 1191-021-51 7106 16 43. 2073 N. Dumbarton Avenue 1191-021-50 7106 15 44. 2095 N. Dumbarton Avenue 1191-021-49 7106 14 45. 2105 N. Dumbarton Avenue 1191-02148 7106 13 46. 2141 N. Dumbarton Avenue 1191-021-46 7106 11 47. 2177 N. Dumbarton Avenue 1191-021-44 7106 09 48. 2122 N. Arden Avenue 1191-021-42 7106 07 Total Properties 48 e 2 DATE: 09/26/2006 PAGE: 1 HUD 108 CONSOLIDATED AMORTIZATION SCHEDULE FOR SERIES: 2006-A BORROWER: SAN BERNADINO, CA NOTE NUMBER: B-03-MC-06-0539 NOTE DATE: 09/14/2006 PAYMENT DATE INTEREST DUE PRINCIPAL DUE TOTAL P & I UNPAID PRINCIPAL 02/01/2007 155, 975.29 0. 00 155, 975 .29 7, 500, 000. 00 08/01/2007 204, 931 . 00 0. 00 204, 931 . 00 7, 500, 000. 00 02/01/2008 204, 931 . 00 0 . 00 204, 931. 00 7, 500; 000 . 00 08/01/2008 204, 931 . 00 0 . 00 204, 931 . 00 7,500, 000. 00 02/01/2009 204, 931 .00 0. 00 204, 931.00 7, 500, 000.00 08/01/2009 204, 931 . 00 0 .00 204, 93 1. 00 7, 500, 000. 00 02/01/2010 204, 931 . 00 0 . 00 204, 931.00 7, 500, 000.00 08/01/2010 204, 931 . 00 0.00 204, 931 .00 7, 500, 000.00 02/01/2011 204, 931 . 00 0 . 00 204, 931. 00 7, 500, 000. 00 08/01/2011 204, 931. 00 0. 00 204, 931.00 7, 500, 000. 00 02/01/2012 204, 931 .00 0.00 204, 931. 00 7, 500, 000. 00 08/01/2012 204, 931 . 00 334, 000 . 00 538, 931.00 7, 166, 000. 00 02/01/2013 196, 530 . 90 0 . 00 196, 530 .90 7, 166, 000. 00 08/01/2013 196, 530 . 90 344, 000. 00 540, 530 . 90 6, 822, 000 .00 02/01/2014 187, 844. 90 0. 00 187, 844 . 90 6, 822, 000. 00 08/01/2014 187, 844 . 90 354, 000 . 00 541, 844 . 90 6, 468, 000. 00 02/01/2015 178, 871. 00 0. 00 178, 871 .00 6, 468, 000. 00 08/01/2015 178, 871 . 00 384,000. 00 562, 871 .00 6, 084, 000. 00 02/01/2016 169, 098 .20 0 . 00 169, 098 .20 6, 084, 000. 00 08/01/.2016 169, 098 .20 404, 000 . 00 573, 098 .20 5, 680, 000 . 00 02/01/2017 158, 776 . 00 0 . 00 158, 776.00 5, 680, 000. 00 08/01/2017 158, 776 . 00 424, 000 . 00 582, 776 . 00 5, 256, 000. 00 02/01/2018 147, 540 . 00 0 . 00 147, 540 . 00 5, 256, 000 . 00 08/01/2018 147, 540 . 00 454, 000 . 00 601, 540 . 00 4, 802, 000 . 00 02/01/2019 135, 327 .40 0 . 00 135, 327 .40 4, 802, 000 . 00 08/01/2019 135, 327 . 40 494, 000 .00 629, 327 .40 4, 308, 000 . 00 02/01/2020 121, 865 . 90 0. 00 121, 865. 90 4, 308, 000 . 00 08/01/2020 121, 865. 90 534, 000 . 00 655, 865 . 90 3, 774, 000 . 00 02/01/2021 107, 154 .20 0 . 00 107, 154.20 3, 774, 000.00 08/01/2021 107, 154.20 574, 000. 00 681, 154 .20 3, 200, 000. 00 02/01/2022 91, 168.30 0 . 00 91, 168 . 30 3 , 200, 000. 00 08/01/2022 91, 168 . 30 624, 000 . 00 715, 168 .30 2, 576, 000. 00 02/01/2023 73, 633 . 90 0 . 00 73 , 633 .90 2, 576, 000 . 00 08/01/2023 73, 633 .90 654, 000 . 00 727, 633 .90 1, 922, 000 . 00 02/01/2024 55, 125 .70 0 . 00 55, 125 .70 1, 922, 000. 00 08/01/2024 55, 125 .70 654, 000 . 00 709, 125.70 1, 268, 000. 00 02/01/2025 36, 486.70 0 . 00 36, 486.70 1, 268, 000 . 00 08/01/2025 36, 486 .70 634, 000 . 00 670, 486 .70 634, 000 .00 02/01/2026 18, 290 . 90 0 . 00 18, 290 . 90 634, 000-. 00 08/01/2026 18, 290. 90 634, 000 . 00 652 , 290 .90 0 . 00 TOTAL: 40 5, 765, 644.29 7, 500, 000 . 00 13 , 265, 644 .29 OFFERING CIRCULAR $324,1291000 VS. Department of Housing and Urban Development Section 108 Government Guaranteed Participation Certificates, Series HUD 2006-A, Guaranteed by the Secretary of Housing and Urban Development • The certificates represent fractional undivided interests in a portion of a.trust sponsored by the Secretary :.of dousing and Urban,Development or his authorized designee. The assets of the Trust will consist of notes issued.by units of general local government or their:designated local public agencies, and a guarantee issued by the Secretary of Housing and Urban Development pursuant to which the Secretary will guarantee the timely payment of principal and interest due on these notes. • The Secretary of Housing and Urban Development will also guarantee the timely pass thi`QUgh distribution of interest and principal on the certificates. • _Distributions of interest will be made by the trustee to the certificateholders on each February 1 and August 1, or the next Business Day if such day is not a business day,`commencing February 1, 2007. Interest will accrue on the certificates at the rates.specified in the table below. • Distributions of principal in respect of any certificate will be made by the trustee no later than the related maturity date.for such certificate set forth in;the table below. Principal distributions in respect of certificates that have a,maturity date before August 11:2017 are not subject to prepayment. Certificates having maturity dates,on or after August 1, 2017 are subject to principal prepayments if there is a prepayment on a related,note or if the Secretary accelerates a related note because there has been a default as described herein. See "Description of Notes-Optional Redemption and Acceleration" herein. The full faith and credit of the United States is pledged to honor the note guarantee and the certificate guarantee. See "Full Faith and Credit Guarantee" herein. The Certificates are exempt from the registration requirements of the Securities Act of 1933, so no registration statement related to the certificates has been filed with the Securities and.Exchange Commission. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this offering.circular. Any representation to the contrary is a criminal offense. Maturity interest price to CUSH, Maturity Interest Price to CUSH, Amount Date(1) Rate Public(2) Number Amount Date(1) Rate Pubtic(2) Number $ 8,052,000 August 1,2007 5.23% 100.00% 911759 HN 1 $16,037,000 August 1,2017 530% 100.00% 911:759 HY 7 $14022,000 August 1,2008 5.01% 100.00% 911759 HP 6 $18,007,000 August 1,2018 5.38% 100.60% 911759 HZ 4 $13,073,000 August 1,2009 4.96% 100.00% 911759 HQ 4 $18,400;000 August 1,2019 5A5% 100.00% 911759 JA 7 $13,852,000 August 1,2010 4.99% 100.00% 911759 HR 2 $19,405,000 August 1,2020 5.51% 10000% 911759 JB 5 $13,289,000 August 1,:2011 5.02% 100.00% 911759 HS 0 $18,270,000 August 1,2021 .5.57% 100:00%.'=911759 JC 3 $17,982,000.._ August 1,2012 5.03% 100.00% 911759 HT 8 $18,756,000 August 1,2022. 5.62% 100.00% 911759 JD 1 $16,011,000 August 1,2013 5.05% 100.00% 911759 M 5 $19,262,000 August 1,2023 5.66% 100.00% 911759 JE 9 $15,417,000 August 1,2014 5.07%. -, 100.00% 911759 RV 3 $22,402,000 August 1,2024 5.70% 100.00% 911759 JF 6 $15,990,000 -;August 1,2025 5.09% 100.00% 911759 HW 2 $19,059;000 August 1,2025 5.74% 100.00% 911759 JG 4 $15,831,000 August 1,2016 5.119. 100.00% 911759 HX 9 $13,012,000 August 1,2026 5.77% 100.00% 911759 JH 2 (1)'Principal amounts due on or after August 1, 2017 are subject-to prepayment as described herein.Distributions with respect to any prepayment or acceleration will occur no earlier than August 1,2016 See "Description of Notes-Optional Redemption and Acceleration"herein_ (2) Plus accrued interest, if any,from the Closing Date. We expect that the certificates will be ready for delivery in book-entry form only through The Depository Trust Company, on or about September 14, 2006. Merrill Lynch & CO. Credit Suisse UBS Investment Bank The date of this Offering Circular is September 8, 2006- w LEWIS BRISBOIS BISGAARD & SMITH LLP ATTORNEYS AT LAW 650 EAST HOSPITALITY LANE, SUITE 600, SAN BERNARDINO, CA 92408 PHONE: 909.387.1130 1 FAX: 909.387.1138 WEBSITE: www.lbbslaw.com DAVID F.GONDEK March 22, 2007 FILE No. DIRECT DIAL:909.381.7173 25424-39 E-MAIL:gondek @lbbslaw.com VIA MESSENGER Mr. Scott Emmons Vice-President Wells Fargo Bank,National Association Corporate Trust and Escrow Services 707 Wilshire Boulevard 17th Floor Los Angeles, California 90017 Re: City of San Bernardino, California $7.5M HUD Section 108 Loan Contract For Loan Guarantee Assistance Under Section 108 HUD Contract No. B-03-MC-06-0539 DELIVERY OF SECTION 108 LOAN OBLIGOR SECURITY DOCUMENTS TO DOCUMENT CUSTODIAN (Arden-Guthrie Neighborhood Improvement Project: City of San Bernardino) Dear Mr. Emmons: Transmitted to your attention on behalf of the City of San Bernardino (the "City") under the cover of this delivery instruction is an original executed copy of an agreement entitled "Personal and Professional Services Agreement Financial and Documents Custodian and Trustee Agreement for the HUD Section 108 Loan Guarantee Assistance Program (City of San Bernardino, California: Arden-Guthrie Neighborhood Improvement Project)," dated as of September 1, 2006 (the "Document Custodian Agreement') and certain other documents related to the HUD Section 108 Loan Contract No. B-03-MC-06-0539. 4819-5019-9809.1 LOS ANGELES SAN FRANCISCO SAN DIEGO COSTA MESA SACRAMENTO NEW YORK LAS VEGAS PHOENIX TUCSON CHICAGO 213.250.1800 415362.2580 619.233.1006 714.545.9200 916.564.5400 212.232.1300 702.893.3383 602.385.1040 520.202.2565 312.345.1718 LEWIS BRISBOIS BISGAARD&SMITH LLP Mr. Scott Emmons March 22, 2007 Page 2 In this particular $7.5M HUD Section 108 Loan Contract transaction the City is the "Borrower" as this term is defined in the HUD Section 108 Loan Contract, dated September 13, 2006, by and between the Secretary of the United States Department of Housing and Urban Development ("HUD") and the City, and the "Subrecipient" as this term is defined in the HUD Section 108 Loan Contract, is the Redevelopment Agency of the City of San Bernardino (the "Agency"). As of the date of this delivery instructions, the City has disbursed the principal sum of Two Million Ninety Three Thousand Dollars ($2,093,000 of the HUD Section 108 Loan funds to the Subrecipient/Agency. The documents as delivered to Wells Fargo Bank and you as the Document Custodian for HUD and the City are organized into four(4) separate parts and each individual document within a part is separated by a blue-colored sheet of paper. PART ONE — HUD Section 108 Loan Category I Documents PART TWO — City and Agency Redevelopment Cooperation Loan Agreement Category II Documents PART THREE — Other Related Documents PART FOUR — Document Custodian Agreement An index of the individual documents included under the PART ONE document set, the PART TWO document set and the PART THREE document set is provided below: INDEX OF PART ONE DOCUMENTS 1-1 Contract for Loan Guarantee Assistance Under Section 108 of the Housing and Community Development Act of 1974, as amended(Editor's Note: HUD Document) Attachment No. 1 Letter Agreement for Section 108 Loan Guarantee Program Custodial Account(Editor's Note: HUD Document) Attachment No. 2 Letter Agreement for Section 108 Loan Guarantee Program Custodial Investment Account(Editor's Note: HUD Document) Attachment No. 3 Description of Annual Grant Revenues (Editor's Note: Agency Cash Flow) Attachment No. 4 Description of Annual Agency Site Sales Tax Payment (Editor's Note: Agency Cash Flow) Attachment No. 5 Description of Annual Agency Site Tax Increment Payment (Editor's Note: Description from 2006 Redevelopment Cooperation Loan Agreement) 4819-5019-9809.1 LEWIS BRISBOIS BISGAARD&SMITH 1 r p Mr. Scott Emmons March 22,2007 Page 3 Attachment No. 6 Description of the Pledged Property(Legal Description of Agency Lands owned by Agency as of June 30,2006) I-2 $7,500,000 Section 108 Loan Guarantee Program Variable/Fixed Rate Note (Editor's Note: HUD Document) I-3 Section 108 Note Commitment Schedule(Editor's Note: HUD Document) I-4 Section 108 Note Schedule P&I(Editor's Note: HUD Document) I-5 Trust Agreement by and between Chemical Bank and HUD (Editor's Note: HUD Document) I-6 Supplement to Trust Agreement by and between JP Morgan Chase Bank, as successor to Chemical Bank, and HUD (Editor's Note: HUD Document) I-7 Legal Opinion in Favor of HUD and the City, dated August 8, 2006 I-8 Collateral Assignment of Deed of Trust (4850-4647-0400) (Conformed stamp original recorded copy) [Recorded as Instrument No. 2007-0166756, Official Records San Bernardino County] I-9 Allonge to $7.5M Agency Promissory Note, dated September 14, 2006 (4812- 6638-8225) (Executed original) I-10 $7.5M Agency Promissory Note, dated September 14, 2006 (4831-5221-7856) (Executed original) 1-11 Deed of Trust (4821-4420-8640) (Conformed stamp original recorded copy) [Recorded as Instrument No. 2007-0166755, Official Records San Bernardino County] I-12 Borrower Security Agreement and Collateral Assignment of Documents (4834- 7498-1120) I-13 Agency Appraisal Report on Fair Market Value of Agency Lands I-14 Legal Opinion In Favor of HUD and the City, dated March 21, 2007 (Subrecipient Security Documents) I-15 Form of Notice of Amendment of Collateral Assignment of Deed of Trust [for collateral assignment by City to HUD of additional Agency-acquired properties] 4819-5019-9809.1 LEWIS BRISBOIS BISGAARD&SMITH LLP Mr. Scott Emmons March 22, 2007 Page 4 INDEX OF PART TWO DOCUMENTS II-1 2006 City of San Bernardino and Redevelopment Agency of the City of San Bernardino Redevelopment Cooperation Loan Agreement(4815-4167-0656) Exhibit"A" Vicinity Map Showing Project Site Exhibit`B" Description of the Project Exhibit"C" Listing of Agency Collateral Lands (Editor's Note: Same as Document I-1, Attachment No. 6) Exhibit"D" Form of Agency Note— A (4831-5221-7856) (fully executed form at Document I-10) Exhibit"E" Form of Agency Deed of Trust (4821-4420-8640) (fully executed form at Document I-I 1 Exhibit"F" HUD Section 108 Loan Covenants Applicable to the Project Exhibit"G-1" Agency Collateral Assignment to the City of Developer Grant Agreement Security Documents (4823-7297-3585) Exhibit"G-2" City Collateral Assignment to HUD of Documents (fully executed form at Document No. I-8) (4834-7498-1120) II-2 2003 Redevelopment Cooperation Agreement Among IVDA, the City and the Agency(4834-7147-0080) II-3 Form of Notice of Amendment of Deed of Trust(4830-9269-2481) [for additional Agency-acquired properties pledged to City] INDEX OF PART THREE DOCUMENTS III-1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE CONTRACT AND RELATED DOCUMENTS FOR THE LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 USC SECTION 5308 (CDBG SECTION 108 CONTRACT NO. B-03-MC-06-0539) — NORTH ARDEN GUTHRIE COMMERCIAL DEVELOPMENT PROJECT (IVDA REDEVELOPMENT PROJECT AREA) (4829-3957-2993) 4819-5019-9809.1 i LEWIS BRISBOIS BISGAARD&SMITH LLP Mr. Scott Emmons March 22, 2007 Page 5 III-2 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY TO EXECUTE THE 2006 REDEVELOPMENT COOPERATION LOAN AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND THE CITY OF SAN BERNARDINO (NORTH ARDEN GUTHRIE COMMERCIAL DEVELOPMENT PROJECT) (4810-7894-0417) III-3 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE 2006 REDEVELOPMENT COOPERATION LOAN AGREEMENT BY AND BETWEEN THE CITY OF SAN BERNARDINO AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") — NORTH ARDEN GUTHRIE COMMERCIAL DEVELOPMENT PROJECT(IVDA REDEVELOPMENT PROJECT AREA) I1I-4 2006 HUD Section 108 Loan Term Outline(4815-4167-0656) III-5 City Staff Report INDEX OF PART FOUR DOCUMENTS IV-1 Personal and Professional Services Agreement, dated as of September 1, 2006, by and between Wells Fargo Bank,N.A., and the City of San Bernardino. Please include the enclosed documents as part of the financial records which Wells Fargo holds as Custodian in favor of HUD under Section 1.03 of the Document Custodian Agreement (SEE PART FOUR DOCUMENT) upon your receipt of this letter and the accompanying documents. Please be informed that during the course of construction of the Arden-Guthrie Neighborhood Improvement Project by the Subrecipient/Agency, certain additional loan collateral security documents shall be delivered to you as the Document Custodian, including without limitation assignments by the City to HUD of specific construction contracts and purchases by the Subrecipient/Agency relating to the project. 4819-5019-9809.1 LEWIS BRISBOIS BISGAARD&SMITH LLP Mr. Scott Emmons March 22, 2007 Page 6 If you have any question regarding the delivery of the enclosed documents, please do not hesitate to contact either Maggie Pacheco, Executive Director of the Economic Development Agency of the City of San Bernardino at(909)663-1044 or the undersigned at(909)387-1130. Very truly yours, David F. Gondek of LEWIS BRISBOIS BISGAARD & SMITH LLP Enclosures cc: Paul Webster, HUD Financial Management Division Maggie Pacheco, Executive Director City Clerk . 4 4819-5019-9809.1 o U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT SECTION 108 LOAN GUARANTEE PROGRAM VARIABLE/FIXED RATE NOTE NOTE NUMBER: B-03-MC-06-0539 DATE OF NOTE: BORROWER: City of San Bernardino, PRINCIPAL DUE DATES AND PRINCIPAL California AMOUNT: Before the Conversion Date,the aggregate of Advances made for each applicable Principal Due Date specified in the Commitment Schedule to this Note; on or after the Conversion Date, the Principal Amount(if any) listed for each Principal Due Date in Schedule P&I hereto. MAXIMUM COMMITMENT AMOUNT: $7,500,000 COMMITMENT AMOUNTS: See Commitment Schedule attached hereto a VARIABLE INTEREST RATE: As set forth below. REGISTERED HOLDER: AFTERWATCH&CO As Nominee for Money Market Obligations Trust on behalf of its Government Obligations Fund I. Terms Applicable Before the Conversion Date A. Advances For value received, the undersigned, the City of San Bernardino(the 'Borrower", which term includes any successors and assigns), a public entity organized and existing under the laws of the State(or Commonwealth as applicable)of California promises to pay to the Registered Holder (the"Holder," which term includes any successors or assigns), at the time,in the manner,and with interest at the rate or rates hereinafter provided,such amounts as may be advanced under this Note from time to time by the Holder for disbursement to,or on behalf of,the Borrower (individually, an "Advance", and collectively, "Advances"). The Holder shall make Advances upon the written request of the Borrower and the approval of the Secretary of Housing and Urban Development or his designee(the "Secretary"), pursuant to the Contract for Loan Guarantee Assistance(as further defined in Section W.A. of this Note, the "Contract"), and the Amended and Restated Master Fiscal Agency Agreement(the"Fiscal Agency Agreement")dated as of May 17,2000,between The Chase Manhattan Bank(now known as JPMorgan Chase Bank), as Fiscal Agent(the"Fiscal Agent');and the Secretary. The total amount of Advances made for each Principal Due Date under this Note shall not exceed the applicable Commitment Amount for such Principal Due Date set forth on the Commitment Schedule attached hereto. The aggregate of all Advances under this Note for all Principal Due Dates shall not exceed the Maximum Commitment Amount specified on the attached Commitment Schedule. The Fiscal Agent shall record the date and amount of all payments and Advances on this Note and maintain the books and records of all such Advances and Commitment Amounts for each corresponding Principal Due Date, and all payments. No Advances shall be made on this Note after its Conversion Date. As used herein, "Conversion Date" means the date(if any)upon which this Note is (i) delivered by the Holder to the Fiscal Agent against payment therefor by the purchasers selected by the Secretary to make such payment; and(ii) assigned to JPMorgan Chase Bank (or any successor thereto) acting in its capacity as Trustee (the "Trustee")pursuant to a Trust Agreement between the Secretary and the Trustee, dated as of January 1, 1995,as such agreement may be amended or supplemented(the "Trust Agreement"). Upon the occurrence of both (i) and(ii)in the previous sentence, Section III of this Note applies, thereby converting this Note to a fixed rate obligation. B. Variable Rate of Interest From and including the date of each Advance to but excluding the earlier of(i) the Conversion Date, and(ii)the date of redemption or prepayment of such Advance pursuant to. Section I.D. below(each such date of redemption or prepayment, a"Prepayment Date") interest shall be paid quarterly at a variable interest rate(as set forth below)on the unpaid principal balance of each Advance on the first day of each February, May, August and November(each, an "Interim Payment Date"),commencing on the first Interim Payment Date after the initial Advance is made under this Note. Interest also shall be paid on each applicable Conversion Date,Prepayment Date or Principal Due Date. The amount of interest payable on each Interim Payment Date will represent interest accrued during the three-month period ending immediately prior to such Interim Payment Date, or in the case of the first Interim Payment Date following each Advance that is not made on an Interim Payment Date, the period from and including the date of such Advance to but excluding the first Interim Payment Date following such Advance. The amount of interest payable on this Note's Conversion Date,Prepayment Date, or on any Principal Due Date that precedes such Conversion Date will represent interest accrued during the 2 period from the Iast Interim Payment Date to such Conversion Date,Prepayment Date, or Principal Due Date,respectively. The initial variable interest rate for each Advance will be set on the date of such Advance and will be equal to 20 basis points(0.2%)above the Applicable LIBO Rate(as hereinafter defined) and thereafter will be adjusted monthly on the first day of each month (each, a "Reset Date")to a variable interest rate equal to 20 basis points (0.2%)above the Applicable LIBO Rate (such interest rate,as reset from time to time,the "Standard Note Rate"). If the Conversion Date for this Note has not occurred by the March 1 following the initial Advance under this Note, then the terms of Appendix A shall be used to set the variable interest rate. If the Fiscal Agent does not receive notice of either a Negotiated Special Interest Rate or Holder Determined Special Interest Rate(as defined in Appendix A attached hereto)from the Secretary or Holder, respectively,by the times specified in Appendix A to this Note,then the Standard Note Rate shall apply for the period to which such Negotiated Special Interest Rate or Holder Determined Special Interest Rate would otherwise apply. The Fiscal Agent may conclusively rely on any such notice as to the correctness of any matters set forth therein. Appendix A shall be inapplicable to this Note on or after the Conversion Date. "LIBO Rate" for any given Business Day means,except in the case of manifest error,the interest rate per annum published on that day in the Eastern Edition of The Wall Street Journal or any successor publication.("WSJ"), published by Dow Jories &Company,Inc.,in the section titled "Money Rates" (or any successor section) and opposite the caption "London Interbank Offered Rates (LIBOR) -- three months" (or any successor caption). If such rate does not appear in WSJ on a given Business Day, for each interest period, the LIBO Rate shall be the interest rate,converted to a bond-equivalent yield basis, for deposits in U.S. dollars for three months which appears on Telerate Page 3750 or such other page as may replace Page 3750 on that service or such other service or services as may be nominated by the British Bankers'Association for the purpose of displaying such rate(together, "Telerate Page 3750") as of 11:00 a.m.,London time, on the day(the "Determination Date") that is two London Banking Days preceding the relevant Reset Date or Advance. If such rate does not appear on Telerate Page 3750 on such Determination Date, such rate shall be obtained from the Reuters Screen ISDA Page as of 11:00 a.m.,London time,on such Determination Date. If, in turn, such rate does not appear on the Reuters Screen ISDA Page on such Determination Date, the offered quotation from each of four reference banks (expressed as a percentage per annum)as of approximately 11:00 a.m_,London time, on such Determination Date for deposits in U.S. dollars to prime banks on the London interbank market for a 3-month period, commencing on the Reset Date or date of such Advance, shall be obtained. If at least two such quotations are provided, the LIBO Rate for such Reset Date or date of such Advance will be the arithmetic mean of the quotations, rounded to five decimal places. If fewer than two such quotations are provided as requested, the LIBO Rate for that Determination Date shall be the rate for the most recent day preceding such Determination Date for which the LIBO Rate shall have been displayed on Telerate Page 3750.The LIBO Rate for any interest period shall be converted to a bond-equivalent yield basis by multiplying such rate by the actual number of days in such interest period and dividing that number by 180. 3 "Applicable LIBO Rate" means: (1) with respect to the initial interest rate for the first Advance hereunder,,the LIBO Rate two London Banking Days before the date of such first Advance; (2)with respect to the initial interest rate for any subsequent Advance made before the first Reset Date, the interest rate borne by the first Advance; (3)with respect to the initial interest rate for any subsequent Advance made after the first Reset Date, the LIBO Rate two London Banking Days before the immediately preceding Reset Date; and(4)with respect to the subsequent interest rate at any Reset Date for any Advance,the LIBO Rate two London Banking Days before such Reset Date. "London Banking Day" means any day in which dealings in deposits in United States dollars are transacted in the London interbank market. Interest payable on or before the Conversion Date shall be calculated on the basis of a 360-day year and the actual number of days lapsed. C. Principal Amount Prior to the Conversion Date, the aggregate amount of Advances'under this Note for each specified Principal Due Date shall be the Principal Amount paid by the Borrower on such Principal Due Date(as assigned to such Advances by the Secretary's instructions to the Fiscal Agent in accordance with the Contract and the Fiscal Agency Agreement),except to the extent such Principal Amount shall have been reduced by redemption before such.Principal Due Date as provided below. D. Redemption before Conversion Date At any time on or before the Conversion Date, the Borrower,with the consent of the Secretary, may redeem this Note, in whole or in part, upon fourteen calendar days notice to the Fiscal Agent and the Secretary, at the purchase price of one hundred percent(100%)of the unpaid Principal Amount to be redeemed, plus accrued interest thereon to the date of redemption. Partial redemptions shall be credited against the applicable Principal Amount(s). The related Commitment Amounts and the Maximum Commitment Amount shall be adjusted concurrently with any such redemptions in accordance with the Secretary's instructions to the Fiscal Agent pursuant to the Contract and the Fiscal Agency Agreement. II. Conversion The following events shall occur on the Conversion Date: 4 A. Schedule P&I On the Conversion Date all Advances owed by the Borrower under this Note with the same Principal Due Date shall be aggregated into a single Principal Amount which will accrue interest at the fixed rate applicable to such Principal Due Date.- Such Principal Amount may be adjusted by the Fiscal Agent in accordance with the following paragraph or paragraph IV.H, as applicable. Whether or not adjusted,each Principal Amount, the fixed rate applicable to each Principal Amount,and the applicable Principal Due Date, shall be listed by the Secretary in Schedule P&I. Schedule P&I will be provided by the Secretary to the Fiscal Agent and attached to this Note by the Fiscal Agent upon the Fiscal Agent's receipt of this Note on the Conversion Date. B. Conversion Date Advances If,on or prior to the Conversion Date, the Borrower has not utilized the entire Commitment Amount indicated on the Commitment Schedule attached hereto for a given Principal Due Date, the Borrower may,in accordance with the Fiscal Agency Agreement and the Contract, and with the approval of the Secretary, utilize such_Commitment Amount on the Conversion Date to obtain a Conversion Date Advance. A "Conversion Date Advance" shall mean any amount by which the Secretary instructs the Fiscal Agent to increase a Principal Amount on Schedule P&I for a given Principal Due Date, effective as of the Conversion Date of this Note. Conversion Date Advances shall be funded by the sale of this Note to the purchaser selected by the Secretary. The proceeds of a Conversion Date Advance(net of any applicable fees)shall be distributed to or on behalf of the Borrower on the Conversion Date. The total amount of Conversion Date Advances hereunder shall not exceed the sum of any unused Commitment Amounts for all Principal Due Dates. III. Terms Applicable Upon Conversion The following terms shall apply to this Note from the Conversion Date(if any)until this Note is canceled,or matured and paid in full: Commencing on the Conversion Date, the Borrower promises to pay to the Holder on the applicable Principal Due Date each Principal Amount set forth on.the attached Schedule P&I, together with interest on each such Principal Amount at the rate applicable thereto specified on the Schedule P&I. Interest shall be calculated and payments shall be made in the manner set forth below. Interest on each scheduled Principal Amount of this Note due as of a given date specified on Schedule P&I hereto shall accrue at the related per annum rate specified on Schedule P&I from (and including) the Conversion Date to(but excluding)such Principal Due Date or, if applicable, to the applicable Interest Due Date on which an Optional Redemption (as defined below)occurs. Each interest amount accrued on each unpaid Principal Amount of this Note shall be due semiannually as of February 1 and August 1 of each year(each such February 1 and 5 August 1,an "Interest Due Date")commencing on the first such date after the Conversion Date, until each Principal Amount listed on Schedule P&I to this Note is paid in full. Interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. Certain Principal Amounts that are indicated as being eligible for Optional Redemption on Schedule P&I may be paid,in whole or in part, at the option of the Borrower as of any Interest Due Date on or after the date specified in such schedule (an "Optional Redemption"). In order to elect an Optional Redemption of such a Principal Amount, the Borrower shall give notice of its intention to prepay a Principal Amount to the Trustee and the Secretary not less than 60 days and not more than 90 days prior to the Interest Due Date as of which the Borrower intends to prepay the Principal Amount. The Trustee shall apply any payments received in respect of Optional Redemptions in accordance with written instructions of the Borrower, as approved by the Secretary. Principal Amounts that are not indicated as being eligible for Optional Redemption on Schedule P&I may not be prepaid. IV. General Terms A. Additional Definitions For purposes of this Note, the following terms shall be defined as follows: "Business Day" shall mean a day on which banking institutions in New York City are not required or authorized to remain closed and on which the Federal Reserve Bank and the New York Stock Exchange are not closed. If any payment(including a payment by the Secretary)is required to be made on a day that is not a Business Day, then payment shall be made on the next Business Day_ "Contract" shall mean the Contract for Loan Guarantee Assistance, and any amendments thereto,among the Secretary and the Borrower, the designated public entity named therein (if applicable), and the State named therein (if applicable), that refers to and incorporates this Note by the number hereof. "Principal Amount" shall mean: (i) before the Conversion Date for this Note,the aggregate amount of Advances made for each Principal Due Date specified in the Commitment Schedule attached to this Note, less the amount of any redemptions pursuant to Section I.D. hereof, and any principal repayment; and (ii)on or after the Conversion Date, the principal amount(if any) stated for each Principal Due Date in Schedule P&I attached hereto, less the amount of any principal repayment and any Optional Redemptions made pursuant to Section III hereof and the Trust Agreement. 6 B. Timely Payment to Fiscal Agent or Trustee Notwithstanding anything contained in Section I,Section II,or Section III,the Borrower, in accordance with the Contract, shall be required to make all payments of interest and principal, including any Optional Redemption payment,directly to the Fiscal Agent or the Trustee(as applicable)on the seventh Business Day prior to the appropriate Interim Payment Date, Interest Due Date,Principal Due Date,Prepayment Date, or date of Optional Redemption,as applicable. C. Interest on Late Pa. ents If a payment of principal or interest herein provided for shall not be made by either(i) 2:30 p.m.on an Interest Due Date or Principal Due Date;or(ii)2:30 p.m. on the second Business Day(as herein defined)next succeeding an Interim Payment Date,then interest shall accrue on the amount of such payment at the then applicable interest rate or rates payable on this Note, from the relevant due date, as the case may be, until the date such payment is made. Nothing in the immediately preceding sentence shall be construed as permitting or implying that the Borrower may, without the written consent of the Holder and the Secretary, modify, extend, alter or affect in any manner whatsoever the right of the Holder timely to receive any and all payments of principal and interest specified in this Note. D. Applicability of Fiscal-Agency Agreement or Trust Agreement Prior to the Conversion Date, this Note and Advances and payments made hereunder shall be administered pursuant to the terms of the Fiscal Agency Agreement and are subject to such agreement. On or after the Conversion Date, this Note and Advances and payments made hereunder shall be administered pursuant to the Trust Agreement and are subject to such agreement. The terms and provisions of the Fiscal Agency Agreement or the Trust Agreement, insofar as they affect the rights,duties and obligations of the Holder and/or the Borrower, are hereby incorporated herein and form a part of this Note. The,Borrower hereby agrees to be bound by all obligations of the Borrower to the Fiscal Agent set forth in the Fiscal Agency Agreement. Capitalized terms not defined in this Note shall have the meanings ascribed to them in the Fiscal Agency Agreement or Trust Agreement,as applicable. The Fiscal Agency Agreement provides for the Fiscal Agent to perform certain duties, including the duties of(i) paying agent and calculation agent for this Note until its Conversion Date, and(ii)registrar for this Note until this Note is canceled or a new registrar appointed, each in accordance with the Fiscal Agency Agreement. The Trust Agreement provides for the Trustee to perform certain duties, including the duties of collection agent for this Note after its Conversion Date until a new Trustee is appointed in accordance with the Trust Agreement. This Note may be surrendered to the Fiscal Agent for registration of transfer or exchange, as provided in the Fiscal Agency Agreement. The Fiscal Agent and Trustee each shall permit reasonable inspection to be made of a copy of the Fiscal Agency Agreement or Trust Agreement kept on file at its respective corporate trust office. Neither the Fiscal Agency Agreement nor the Trust Agreement shall change the Borrowers payment obligations under this Note. 7 E. Applicability'of Contract and Secretary's Guarantee This Note evidences indebtedness incurred pursuant to and in accordance with the Contract and pursuant to Section 108 of Title I of the Housing and Community Development Act of 1974,as amended(42 U.S.C. §5308)(the "HCD Act"). This Note is subject to the terms and provisions of the Contract, to which Contract reference is hereby made for a statement of said terms and provisions and for a description of the collateral security for this Note. The payment of principal on the applicable Principal Due Dates and interest on the applicable Interim Payment Dates or Interest Due Dates under this Note is unconditionally guaranteed by the Secretary to the Holder through a guarantee (the"Guarantee"). Execution of the Secretary's Guarantee is required before this Note is effective, and such Guarantee shall be issued pursuant to and in accordance with the terms of the Contract and Section 108 of the HCD Act. F. Default A default under this Note shall occur upon failure by the Borrower to pay principal or interest on this Note when due hereunder. If a Borrower defaults on the payment of any interest or Principal Amounts when due,or if the Secretary gives notice of a final decision to declare the Borrower in default pursuant to the following paragraph of this Section IVY, the Secretary may, but is not obligated to, make on any date on or prior to the Conversion Date with fourteen calendar days prior notice to the Fiscal Agent, or on the seventh Business Day preceding any Interest Due Date on or after the first permissible Optional Redemption date with seven Business Days prior notice to the Trustee,an acceleration payment to the Fiscal Agent or the Trustee, as applicable,equal to the Aggregate Principal Amount of the Note, together with accrued and unpaid interest thereon to such acceleration payment date or Interest Due Date, as applicable. In the event that any such acceleration payment is made from sources other than funds pledged by the Borrower as security under the Contract(or other Borrower funds), the amounts paid on behalf of the Borrower shall be deemed to be immediately due and payable to the Secretary. Nothing in this paragraph shall be construed as permitting or implying that the Borrower may, without the written consent of the Holder and the Secretary, modify,extend,alter or affect in any manner whatsoever the right of the Holder timely to receive any and all payments of principal and interest specified in this Note. In addition,the Secretary may declare the Borrower in default under this Note if the Secretary makes a final decision in accordance with the provisions of 24 C.F.R. § 570.913 (or any successor regulation thereof), including requirements for reasonable notice and opportunity for hearing, that the Borrower has failed to comply substantially with Title I of the HCD Act. Following the giving of such reasonable notice, the Secretary may take the remedial actions specified as available in the relevant provisions of the Contract pending the Secretary's final decision. 8 G. Holder's Reliance on Guarantee Following a default by the Borrower under the terms of this Note, the Holder agrees to rely wholly and exclusively for repayment of this Note upon the Guarantee. The enforcement of any instruments or agreements securing or otherwise related to this Note shall be the sole responsibility of the Secretary,and the Holder shall not be responsible for the preparation, contents or administration of such instruments and agreements, or for any actions taken in connection with such instruments and agreement.The Holder,to the extent it is legally able to do so,shall bind or cause to be bound its successors and assigns to all limitations imposed upon the Holder by this Note. H. Amendment This Note may only be amended with the prior written consent of the Secretary and the Borrower. No such amendment shall reduce,without the prior written consent of the Holder of this Note,in any manner the amount of,or delay the timing of,payments required to be received on this Note by the Holder,Fiscal Agent or Trustee, including Guarantee Payments; provided that prior to the Conversion Date,the Commitment Amounts on the Commitment Schedule attached hereto, and the Principal Amounts due on the corresponding Principal Due Dates may be rescheduled pursuant to written instructions given to the Fiscal Agent by the Secretary with the written agreement of the Borrower and the Secretary absent the consent of the Holder. I_ Waivers The Borrower hereby waives any requirement for presentment, protest or other demand or notice with respect to this Note. The Borrower hereby waives notice of default and opportunity for hearing for any failure to make a payment when due. J. Delivery and Effective Date This Note is deemed issued,executed,and delivered on behalf of the Borrower by its :authorized official as an obligation guaranteed by the Secretary pursuant to Section 108 of the HCD Act, effective as of the date of the Secretary's Guarantee. V. Borrower-Specific Provisions [This space intentionally left blank] 9 THE UNDERSIGNED,as an authorized official of the Borrower,has executed and delivered this Note. City—of-San Bernardino, CA BORROWER (Signat)re) Patrick J. Morris (Name) Mayor of San Bernardino (Title) D 10 ASSIGNMENT AND TRANSFER For value received, the undersigned assigns and transfers this Note to (Name and Address of Assignee) (Social Security or Other Identifying Number of Assignee) and irrevocably appoints attorney-in-fact to transfer it on the books kept for registration of the Note, with full power of substitution. Dated: Note: The signature to this assignment must correspond with the name as written on the face of the Note without alteration or enlargement-or other change. Signature Guaranteed: Qualified Financial Institution By: Authorized Signature [This page to be completed by the Fiscal Agent for transfer of the Note by the Holder as of the Conversion Date pursuant to the last paragraph of Section I.A. of this Note.] 11 APPENDIX A Special Pre-Conversion Interest Rates. (a) The Holder and.the Secretary contemplate that the majority of the outstanding Variable/Fixed Rate Notes will be purchased by underwriters selected by the Secretary for sale in public offerings to occur each year. If a public offering including this Note has not occurred by each March 1 following the initial Advance under this Note, the Secretary shall,upon request, advise the Holder as to when a public offering including this Note is expected to occur, and the Holder and the Secretary agree to consult with each other as to what the interest rate on this Note will be after May I of that year if a public offering has not occurred by such May 1_ The Holder shall notify the Secretary if such consultation has not occurred by April 1 of that year. If no public offering including this Note has occurred on or before such May 1, the applicable interest rate on this Note from such May 1 shall be the rate (if any)negotiated and agreed upon by the Secretary and the Holder. Such rate may be the Standard Note Rate or some other rate agreed upon by the Holder and the Secretary at least two Business Days before such May 1 (such other rate, the"Negotiated Special Interest Rate"). The Secretary shall notify the Fiscal Agent and the Holder in writing of any Negotiated Special Interest Rate within two Business Days of the determination thereof. (b) If the Secretary and the Holder do not, by the April 15th preceding such May 1, negotiate and agree under Section (a)of this Appendix on an interest rate applicable to this Note, then the Holder may,on or before the April 20th, preceding such May 1, give written notice to the Secretary of its intent to change the interest rate on this Note and, if such notice was given during such period, the Holder may, on such May 1, unilaterally determine(subject to the terms of this paragraph)the interest rate that this Note will bear(such rate,the "Holder Determined Interest Rate")from and including such May I to but excluding the earliest of: (i) the Conversion Date; (ii) the date that this Note is purchased by a new Holder(as described in Section (c) below)or(iii)a Monthly Special Reset Date (as defined below). Interest from and including such May 1 to but excluding the Public Offering Date shall be paid on the unpaid principal balance of all outstanding Advances under this Note at the rate(s)to be determined by the Holder which,based upon then prevailing market conditions and taking into account all the circumstances, will enable the Holder to sell this Note at one hundred percent(100%)of the aggregate amount of all Advances hereunder prior to the date of such sale. Such interest rate shall be determined as of such May 1 and shall be determined again on the foregoing basis on the first of each month thereafter(the first of each month after such May 1, a "Monthly Special Reset Date"). The Holder shall notify the Fiscal Agent and the Secretary in writing within two Business Days following such dates of the determination of the Holder Determined Interest Rate and each applicable interest rate determined on a Monthly Special.Reset Date. (c) If the Secretary and the Holder have failed to agree upon an interest rate pursuant to Section (a)of this Appendix A, the Secretary,upon seven calendar days notice to the Holder, may arrange for the purchase of this Note in full by another entity on the following May 1 or any Business Day thereafter. If such a purchase occurs, the Holder shall sell and assign this Note to the purchaser thereof without recourse to the Holder and deliver this Note and its Guarantee to the Fiscal Agent for registration in the name of the purchaser thereof in accordance with the Secretary's written instructions. The purchase price for this Note shall be 100% of the aggregate amount of all Advances owing hereunder plus accrued interest to the date of purchase. Payment to the Holder of the purchase price for this Note shall be made by the purchaser thereof in Federal funds at the offices of the Holder, or at such other place as shall be agreed upon by the Holder and the Secretary, at 10:00 a.m., New York time, on the date of purchase. After such purchase date this Note shall bear a rate of interest negotiated between the Secretary and the new interim Holder(the "New Purchaser Special Interest Rate"). The Secretary shall notify the Fiscal Agent and the new purchaser in writing of any New Purchaser Special interest Rate within two Business Days following the date of determination thereof. (d) Notwithstanding Sections (a) through (c) (inclusive)of this Appendix, no Borrower is obligated to pay interest at a variable rate exceeding the maximum rate permitted by generally applicable law of the Borrower's state (such rate, the "Maximum Rate"). If the Borrower receives notice of a variable interest payment that exceeds the Maximum Rate, then the Borrower shall timely pay such amount as does not exceed the Maximum Rate, and concurrently shall notify the Secretary and the Fiscal Agent of the reason for any interest non-payment. 2 I COMMITMENT SCHEDULE Note No. B-03-MC-06-0539 Principal Due Date Commitment Amount August 1,2006 $0 August 1,2007 0. August 1, 2008 0 August 1,2009 0 August 1,2010 0 August 1, 2011 334,000 August 1, 2012 344,000 August 1, 2013 354,000 August 1, 2014 384,000 August 1, 2015 404,000 August 1, 2016 424,000 August 1, 2017 454,000 August 1, 2018 494,000 August 1, 2019 534,000 August 1, 2020 574,000 August 1, 2021 624,000 August 1, 2022 654,000 August 1; 2023 654,000 August 1,2024 634,000 August 1, 2025 634,000 Maximum Commitment Amount = $7,500,000 SCHEDULE M* Note No. B-03-MC-06-0539 Principal Amount Principal Interest Rate Optional Redemption Available Due Date YES NO $ August 1,2006 X August 1,2007 X August 1,2008 X August 1,2009 X August 1, 2010 X August 1,2011 X August 1,2012 X e August 1,2013 X- August I, 2014 X August 1, 2015 X August 1,2016 X August 1, 2017 X August 1, 2018 X August 1,2019 X August 1,2020 X August 1,2021 X August 1,2022 X August 1, 2023 X August 1, 2024 X August 1,2025 ' X $ = Aggregate Principal Amount Principal Amounts due on or after August 1, 2016, may be redeemed,subject to the terms contained herein and in the Trust Agreement, on any Interest Due Date on or after August 1 2015. *This schedule will not be completed when initially executed and delivered by the Borrower for Guarantee for interim, variable-rate financing. It will be completed when assigned by the Holder at the request of the Borrower for conversion to Fixed Rates on the Conversion Date.The first date shown above on which Optional Redemption is available is expected to be the same when this schedule is completed, if the Borrower participates in the initial Section 108 public offering after receiving an interim financing Advance hereunder. If the Borrower participates in a later public offering, the first date on which Optional Redemption is available is expected to be correspondingly later. 1 Standard fens 1194 Letter of Credit Number 1 TF SwV;00° AUTHORIZED SIGNATURE CARD t�eOOl san:ce 41ereae of Aoow-h FOR PAYMENT. VOUCHERS - ON LETTER OF CREDIT Federal Reserve Bank Letter of Credit Issued in Favor of(Recipient) Issued by (Federal Agency) 4 SIGNATURES OF INDIVIDUALS AUTHORIZED ❑ ONLY ONE SIGNATURE REQUIRED ON PAYMENT VOUCHERS TO DRAW ON THE CITED LETTER OF CREDIT TWO a - ❑ ANY O SIGNATURES REQUIRED TO SIGN OR_COUNTERSIGN Typed e and Signet a Typed Name and Signature �- [Ma g ie Pachec46Executive Director Barbara Lindseth, Admin.. Typed-Name and Signature Typed Name and Signature Patrick Mor 's, Mayor an Bernardino 1 CERTIFY THAT TURES ABOVE ARE OF THE INDIVIDUALS AUTHOR- APPROVED: IZED TO DRAW PAYMENT VOUCHERS FOR THE CITED LETTER OF CREDIT- GATE AND SIGNATURE OF AUTHORIZING OFFICIAL (Recipient) DATE AND SIGNATURE OF AGENCY CERTIFYING OFFICER 1194-101 Government P11"Un41 Offlm' 19410-201-760/90093 Standard form 1194 t TFRM 6-4000 Letter of Credit Number Fis AUTHORIZED SIGNATURE CARD m�Senice 8—OfACe 1, FOR PAYMENT VOUCHERS ON LETTER OF CREDIT Federal Reserve Bank Letter of Credit Issued in Favor of(Recipient) Issued by (Federal Agency) SIGNATURES OF INDIVIDUALS AUTHORIZED ❑ ONLY ONE SIGNATURE REQUIRED ON PAYMENT VOUCHERS TO DRAW ON THE CITED ETTER OF CREDIT °` ❑ ANY TWO SIGNATURES REQUIRED TO SIGN OR COUNTERSIGN T ame and Signature Typ Na a and Sign at / g Magg a Pac ec xecutive Director Barbara Lindseth, Admin. Services Director Typed Name and Signature Typed Name and Signature ork� Patrick J. orris, ayor of ernardino I CERTIFY THAT THE NATURE ABOVE ARE OF THE INDIVIDUALS AUTHOR- APPROVED: IZED TO DRAW PAYMENT CHERS FOR THE CITED LETTER Of CREDIT. DATE AND SIGNATURE OF AUTHORIZING OFFICIAL (Recipient) DATE AND SIGNATURE Of AGENCY CERTIFYING OFFICER 1194-101 _ - ft V.S. Government Printing Ottl_- 1 9 411--2 0 1-7 60/41 00 9 9 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California SS. County of San Bernardino On August 8, 2006, before me, Wasana Chantha, Notary Public, personally appeared Maggie Pacheco. H personally known to me ❑ proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to WASANA CHANTHA the within instrument and acknowledged to " Commission# 1380487 me that she executed the same in her Z Notary Public -California D San Bernardino County authorized capacity, and that by her signature on the instrument the person, or the entity upon ehalf of which the person acted, execut the instrument. WITNESS and and official seal. Place Notary Seal Above ignature of Notary Public Though the information below is not required by law, it may prove valuable to persons retying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Authorized Signature Card for Payment Vouchers on Letter of Credit Document Date: Number of Pages: 1 Signer(s) Other Than Names Above: None. Capacity(les) Claimed by Signer Signer's Names: Maggie Pacheco OF SIGNER 0 Individual Top of thumb here ❑ Corporation Officer-Title(s): ❑ Partner- ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator 10 Other: Executive Director Signer is Representing: Redevelopment Agency of the City of San Bernardino CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ss. County of San Bernardino On August 9, 2006, before me, Wasana Chantha, Notary Public, personally appeared Barbara Lindseth. 0 personally known to me ❑ proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to WASANA CHANTHA the within instrument and acknowledged to Commission# 1380487 z me that she executed the same in her Z Notary Public - California > San Bernardino County authorized capacity, and that by her signature 4NMYComm.E vlresOct18.M on the instrument the person, or the entity upon b f of which the person acted, execute t instrument. WITNESS y nd and official seal. Place Notary Seat Above ignature of Notary Public Though the information below is not required by taw, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Authorized Signature Card for Payment Vouchers on Letter of Credit t Document Date: Number of Pages: 1 Signer(s) Other Than Names Above: None. Capactty(ies) Claimed by Signer - THUMBPRINT Signer's Name: Barbara Lindseth OF SIGNER ❑ Individual Top of thumb here ❑ Corporation Officer-Title(s): ❑ Partner- ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator 0 Other: Administrative Services Director Signer is Representing: Redevelopment Agency of the City of San Bernardino CALIFORNIA _ ALL-PURPOSE F W. _- �; P+• �M ACKNOWLEDGEMENT STATE OF CALIFORNIA ) COUNTY OF �/�ll���J'7�) On before me, _.s DATE NAME,TITLE OF OFFICER-E.G.MN�E,N07 = personally appeared, personally known to me(or proved to me on the basis of satisfactory evidence)to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/ they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s)on the instrument the person(s),or the entity upon behalf of which the person(s)acted, . executed the instrument. : El. Cam#t 1652M WITNESS my hand and official seal. N0kW FUNC-CA01100ro. taxi 9 e � �Cprrn.B�MarZQ�01 _ NOTARY PUBLIC SIGNATURE a = - OPTIONAL INFORMATION { TITLE OR TYPE OF DOCUMENT YJ DATE OF DOCUMENT NUMBER OF PAGES ` SIGNER(S)OTHER THAN NAMED ABOVE "h .e� �90 ,tsf�--.`.�•r ''�T x. 's4'{ft• ,f, yr• CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ss. County of San Bernardino On August 8, 2006, before me, Wasana Chantha, Notary Public, personally appeared Maggie Pacheco. 0 personally known to me ❑ proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to WASANA CHANTHA the within instrument and acknowledged to Commission#1380487 Z me that she executed the same in her Z QMyCor=.E4*es0ct18,2006 mNotary Public-California D authorized capacity, and that by her signature San Bernardino County on the instrument the person, or the entity upon b hoif of which the person acted, execut d e instrument. WITNESS nd and official seal. Place Notary Seal Above ture of Notary Public Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Authorized Signature Card for Payment Vouchers on Letter of Credit e Document Date: Number of Pages: 1 Signer(s) Other Than Names Above: None. Capacity(ies) Claimed by Signer HUNISPRIIJ Signer's Names: Maggie Pacheco RIGHTT OF SIGNER ❑ Individual Top of thumb here 11 Corporation Officer-Title(s): ❑ Partner- ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator 0 Other: Executive Director Signer is Representing: Redevelopment Agency of the City of San Bernardino CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ss. County of San Bernardino On August 9, 2006, before me, Wasana Chantha, Notary Public, personally appeared Barbara Lindseth. H personally known to me ❑ proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to 7W:ASANA CHANTHA the within instrument and acknowledged to ... mmission# 1380487 me that she executed the same in her Z -a Notary Public-California > authorized capacity, and that by her signature San Bernardino County - on the instrument the person, or the entity MY Comm.Expires octl$2006 upon behalf of which the person acted, executed instrument. WITNESS my n and official seal. Place Notary Seal Above Signature of Notary Public Though the information below is not required by law,it may prove valuable to persons relying on the document and could prevent fraridulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Authorized Signature Card for Payment Vouchers on Letter of Credit a Document Date: Number of Pages: 1 Signer(s) Other Than Names Above: None. Capacity(ies) Claimed by Signer h RIGHT THU Signer's Name: Barbara Undseth . 4E ❑ Individual Top of thumb here ❑ Corporation Officer-Title(s): ❑ Partner- ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator 0 Other: Administrative Services Director Signer is Representing: Redevelopment Agency of the City of San Bernardino CALIFORNIA 1 - - ALL-PURPOSE ACKNOWLEDGEMENT L CALIFORNIA STATE OF CA ) ` w_r COUNTYOF�- On before me, NAME,TITLE OF OFFICER-E.� /"JA=N , ,NOT Y PUBLIC- DATE personally appeared, Ay_ personally known to me(or proved to me on the basis of satisfactory evidence)to be the person(s) -- rt= whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/ r ~ they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s)on the instrument the person(s);or the entity upon behalf of which the person(s)acted, executed the instrument. ' one commw"w 01652M NOWN KMC._ccrKon+M WITNESS my hand and official seal. a 1Aat: O. NOTARY PUBLIC SIGNATURE ' :. {rra'tii I OPTIONAL INFORMATION TITLE OR TYPE OF DOCUMENT /� DATE OF DOCUMENT NUMBER OF PAGES / SIGNER(S)OTHER THAN NAMED ABOVE �� ..r {� .nc 7zt i�?r 's';rf •tr.{ d.^�+{b +!•s"-riR �'lf{ '�+,�4•,.t � .�'r;: •�tE:H LEWIS BRISBOIS BISGAARD & SMITH LLP ATTORNEYS AT LAW 650 EAST HOSPITALITY LANE, SUITE 600, SAN BERNARDINO, CA 92408 PRONE: (909) 387-1130 1 FAX: (909) 387-1138 1 WEBSITE: www.lbbslaw.com TIMOTHY J.SABO August 8, 2006 FILE NO. DIRECT DIAL:909.381.7187 25424-39 E-MAIL:sabo @lbbslaw.com Honorable Alphonso R. Jackson Secretary of Housing and Urban Development 451 7th Street, SW Washington, D.C. 20410 Re: City of San Bernardino, California a Arden-Guthrie Neighborhood Revitalization Project Contract for Loan Guarantee Assistance Under Section 108 of the Housing and Community Development Act of 1974, as Amended, 42 U.S.C. Section 5308 (HUD Section 108 Promissory Note No. B-03-MC- 06-0539) $7.5M HUD Variable/Fixed Rate Note No. B-03-MC-06-0539 Dear Secretary Jackson: The undersigned, being duly licensed and in good standing to practice law in the State of California, is special legal counsel to the City of San Bernardino (the "Borrower"), and is a partner of the law firm of Lewis Brisbois Bisgaard & Smith LLP. As such, I have represented Borrower regarding that certain Variable/Fixed Rate Note, referred to as HUD Section 108 Note No. B-03-MC-06-0539 in the Aggregate Principal Amount of Seven Million Five Hundred Thousand Dollars ($7,500,000.00) (the "Note"), executed by Borrower payable to the order of the Registered Holder thereof, and to be guaranteed by the Secretary of Housing and Urban Development ("HUD") under Section 108 of the Housing and Community Development Act of 1974, as amended, 42 U.S.C. 5308 ("Section 108"). The Note will initially be issued to the interim lender, which will make advances to the Borrower in the amount requested by the Borrower under the Note. HUD's guarantee of the 4837-0339-6865.1 )S ANGELES SAN FRANCISCO SAN DIEGO COSTA MESA SACRAMENTO NEW YORK LAS VEGAS PHOENIX TUCSON CHICAGO 3)250-1800 (415)362-2580 (619)233-1006 (714)545-9200 (916)564-5400 (212)232-1300 (702)893-3383 (602)385-1040 (520)202-2565 (312)345-1718 Honorable Alphonso R. Jackson August 8, 2006 Page 2 Note will be governed by the Contract for Loan Guarantee Assistance under Section 108 between the Borrower and HUD (the "Contract"), in which the Borrower pledges Community Development Block Grants pursuant to 24 CFR 570.705(b)(2), as well as any other security specified therein, as security for HUD's guarantees. It is anticipated that the Note, as authorized by the Contract, will be included in a future trust created by HUD (together with other Section 108 notes issued by other borrowers) and participation certificates based on the trust will ultimately be sold in a future public offering by the underwriters selected by HUD. In my capacity as special legal counsel, I have reviewed the printed instructions prepared by HUD as relate to the Contract and the delivery of this opinion, and I have consulted with the management staff of the Borrower, and the management staff of the subrecipient under the Contract, the Redevelopment Agency of the City of San Bernardino, and I have made an examination and investigation of all such matters of fact and questions of law as I consider necessary or advisable to enable me to render the opinion hereafter set forth. Specifically, and without limiting the generality of the foregoing, I have examined: (i) the Constitution of the State of California; i (ii) the laws of the State of California as relate to municipal corporations and community redevelopment agencies; (iii) Resolution No. 2006-271 of the Mayor and Common Council, dated July 24, 2006, authorizing the Borrower to enter into the transaction referenced in the caption of this opinion and authorizing Patrick J. Morris, as the Mayor of the City of San Bernardino to execute on behalf of Borrower all documents necessary or desirable to accomplish the transaction; (iv) the Contract; (v) the Note; (vi) the Amended and Restated Master Fiscal Agency Agreement dated as of May 17, 2000, the Trust Agreement dated as of January 1, 1995, and the form of Supplement to the Trust Agreement. As of the date hereof, based on the foregoing investigation and authorities, I am of the opinion that: 1. The Borrower has authorized the transaction, including issuance of the Note, the pledge of grant funds, and the execution of all documents necessary or desirable to accomplish the transaction, in accordance with applicable State and local law. 2. The Borrower has authorized Patrick J. Morris as the Mayor or the City of San Bernardino to execute the Contract, the Note and all other documents necessary or desirable to accomplish the transaction. 4837-0339-6865.1 Honorable Alphonso R. Jackson August 8, 2006 Page 3 3. The Note and the Contract have been duly executed by Patrick J. Morris, Mayor of the City of San Bernardino and upon delivery thereof, due execution of the Contract and the Guarantee by HUD, and receipt of the loan proceeds by the Borrower, the Note and the Contract, including the obligations for compensation and indemnification in favor of the Fiscal Agent/Trustee as incorporated therein, shall be valid, binding and enforceable obligations of the Borrower. 4. The pledge of present and future Community Development Block Grants by the Borrower pursuant to 24 CFR 570.705(b)(2) and the Contract is valid. 5. There is no outstanding, or to my knowledge threatened, action, suit, proceeding, investigation or litigation by or against the Borrower which will affect the validity of the Note or the security therefor. Very truly yours, TimoY t J.Sa o of LEWIS BRISBOIS BISGAARD& SMITH LLP 4837-0339-6865.1 ALLONGE $7,500,000 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AGENCY PROMISSORY NOTE-A (ARDEN-GUTHRIE NEIGHBORHOOD REDEVELOPMENT PROJECT) HUD SECTION 108 LOAN CONTRACT NO. B-03-MC-06-0539 FOR VALUE RECEIVED, on behalf of the City of San Bernardino, California (the "City"), the undersigned officer of the City, hereby assigns, endorses, sets over and transfers to the United States Secretary of the Department of Housing and Urban Development (the "Secretary of HUD"), for the purposes set forth in that certain agreement by and between the Secretary of HUD and the City entitled "Contract for Loan Guarantee Assistance Under Section 108 of the Housing and Community Development Act of 1974, As Amended, 42 USC Section 5308 (HUD Section 108 Promissory Note No. B-03-MC-06-0539)", all of the right, title and interest of the City in and to the attached promissory note labeled "Redevelopment Agency of the City of San Bernardino Agency Promissory Note-A (Arden-Guthrie Neighborhood Redevelopment Project)" in the original principal amount of Seven Million Five Hundred Thousand Dollars ($7,500,000), made by the Redevelopment Agency of the City of San Bernardino in favor of the City. The undersigned.represent and warrant to the Secretary of HUD that the City is the legal and beneficial owner of the Agency Note, free and clear of any adverse claim. Dated: 1 t+Y bkf 2A , 2006 CITY OF SAN BERNARDINO By Mayor APPROVED AS TO FORM t Attorney [NOTARY ACKNOWLEDGEMENT ATTACHED] 4812-6638-8225.1 1 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ss. County of San Bernardino On November 21, 2006, before me, Wasana Chantha, Notary Public, personally appeared Patrick J. Morris. Q personally known to me ❑ proved to me on the basis of satisfactory evidence wASANA CHANTHA to be the person whose name is subscribed to Commission# 1694902 Notary Public the within instrument and acknowledged to -es -California z San Bernardino County D me that he executed the same in his My Comm.Expires oct 18,2010 authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS r4 hand and official seal. n I Place Notary Seal Above Signature of Notary Public Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Allonge $7,500,000 Redevelopment Agency of the City of San Bernardino Promissory Note-A(HUD Section 108 Loan Contract No. B-03-MC-06-0539) Document Date: November 21, 2006 Number of Pages: 1 Signer(s) Other Than Names Above: None Capacity(ies) Claimed by Signer RIGHT THUMBPRINT Signer's Name: Patrick J. Morris OF SIGNER ❑ Individual Top of thumb here ❑ Corporation Officer-Title(s): ❑ Partner- ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator 0 Other: Mayor of the City of San Bernardino, California Signer is Representing: City of San Bernardino, California i REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AGENCY PROMISSORY NOTE-A Arden-Guthrie Neighborhood Redevelopment Project THIS PROMISSORY NOTE IS A SPECIAL LIMITED OBLIGATION OF THE AGENCY PAYABLE SOLELY FROM THE SOURCE OF AGENCY FUNDS DESCRIBED HEREIN AND NEITHER THE FAITH NOR CREDIT NOR TAXING POWER OF ANY OTHER LOCAL AGENCY, INCLUDING THE CITY OF SAN BERNARDINO, IS PLEDGED HEREUNDER Principal Amount: Date: SQ j +, 2006 $7,500,000 LS�oMf_ A5 9-- Maturity Date: Interest Rate: % mNBu r v , 2026 Long Term Rate of Interest: Fixed Rate (equal to 2006 H]bD Note "Permanent Rate") THIS AGENCY PROMISSORY NOTE-A, is datedNo - and evidences an indebtedness of the Redevelopment Agency of the C y o an Bernardino (the "Agency") to the City of San Bernardino, California (the "City"). For value received, the Agency hereby promises to pay to the order of the City at such address as the City shall designate, the principal amount of Note-A at the times specified herein, together with interest thereon in accordance with the terms hereof. Note-A is hereby tendered in accordance with Section 3 of that certain 2006 Redevelopment Cooperation Loan Agreement (Arden-Guthrie Neighborhood Redevelopment Project), dated as of July 1, 2006 (the "Loan Agreement"), by and between the City and the Agency as approved by Agency Resolution No.\ dated �—' , with respect to the following facts: RECITALS A. The Agency has undertaken the redevelopment of certain lands in the redevelopment project area of the Inland Valley Development Project referred to as the "Arden- Guthrie Project Site"; and B. The Agency's redevelopment proposal (the "Project") is focused on certain blighted parcels of land in the Arden-Guthrie neighborhood which are more particularly identified in the Loan Agreement which include approximately twelve (12) acres of land (the "Project Site"); and C. The Project includes the acquisition by the Agency of certain additional lands adjacent to the Project Site referred to in the Loan Agreement as the "Agency Supplemental Collateral Lands" and the demolition of the existing improvements on such Agency 4831-5221-7856.2 1 11/6/06 jmm Supplemental Collateral Lands, including the relocation of the existing occupancies thereon, and the construction of new buildings and appropriate on-site vehicle circulation and landscape improvements on the Project Site and the Agency Supplemental Collateral Lands; and D. The Agency has previously prepared a redevelopment project assistance proposal for the Project, which includes as elements of such assistance to the "Developer" as this term is defined in the Loan Agreement, the transfer and conveyance by the Agency to the Developer of the "Agency Lands" for improvement as the "Developer Project", subject to certain terms and conditions as set forth in the "Developer Grant Agreement" as each of these terms is defined in the Loan Agreement; and E. At the request of the Agency, the City of San Bernardino (the "City") has made arrangements with the United States Secretary of the Department of Housing and Urban Development ("HUD"), to provide the City with a "Section 108 Loan Guarantee" under the provisions of the Housing and Community Development Act of 1974, as amended (42 USC Section 5308) and HUD Section 108 Loan Program regulations set forth at 24 CFR Part 570.700 (the "2006 City Section 108 Loan") in an amount of Seven Million Five Hundred Thousand Dollars ($7,500,000), and in turn the City proposes° to loan to the Agency the proceeds of the 2006 HUD Section 108 Loan to the Agency in support of the Project; and F. The City shall provide the Agency with the proceeds of the 2006 HUD Section 108 Loan, all in the aggregate principal amount of Seven Million Five Hundred Thousand Dollars ($7,500,000) subject to a number of conditions as set forth in the Loan Agreement. SECTION 1. This Note—A is tendered by the Agency to the City as evidence of the indebtedness of the Agency to the City incurred in connection with the disbursement of the proceeds of Loan A made by the City to the Agency under the Loan Agreement. The terms and provisions of the Loan Agreement are hereby incorporated into this Note-A by this reference. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Loan Agreement. SECTION 2. Interest on the outstanding principal balance of this Note-A, shall accrue from its date as indicated, above, as follows: from the date on which the interest rate payable by the City to HUD on the outstanding balance of the 2006 HUD Note is charged to the City as a fixed rate of interest per annum, the rate of interest payable by the Agency to the City on the outstanding balance of this Note-A shall be the same rate of interest equal to the "Permanent Rate", as this term is defined in the 2006 HUD Note. SECTION 3. Payments of principal and interest under this Note-A shall be made by the Agency to the City on June 30 of each year following its date, either in whole or in part, from "Agency Grant Assistance Revenues", "Developer Grant Agreement Revenues", "Annual Agency Site Tax Increment Payments" and "Annual Agency Site Sales Tax Payments" as each of these terms is defined in the Loan Agreement or other legally available funds of the Agency. 4831-5221-7856.2 2 11/6/06 jmm Each such payment by the Agency shall be applied first to pay current interest, then to pay accrued and unpaid interest and then to pay principal under this Note-A. It is anticipated that the outstanding principal balance of this Note-A, together with all accrued interest shall be fully repaid to the City by the Agency on or before 2026 (the "Maturity Date"). On the Maturity Date any remaining principal and alY accrued Ad unpaid interest under this Note-A shall be due and payable. SECTION 4. The Agency hereby pledges to make payments hereunder prior to the Maturity Date from each of the following sources of funds: (i) Agency Grant Assistance Revenues (ii) Developer Grant Agreement Revenues, if any (iii) Annual Agency Site Tax Increment Payments (iv) Annual Agency Site Sales Tax Payments and (v) other legally available funds of the Agency which have not been pledged to repay other indebtedness of the Agency. The Agency hereby acknowledges and agrees that the Note-A shall be considered as an indebtedness of the Agency as the same is intended for purposes of the filing of a statement of indebtedness with the County of San Bernardino pursuant to Health and Safety Code Section 33675. 0 This Note-A is a special and limited obligation of the Agency and the sole source of funds as pledged for the repayment thereof is as provided in this Section 4. Neither the taxing power of the Agency or any other agency is pledged to repay the principal or accrued interest hereunder. SECTION 5. This Note-A shall mature as of 2026, unless prepaid in full before such date. SECTION 6. The Agency may prepay to the City the principal amount of this Note-A and accrued interest thereon, on the same terms and conditions as the City may prepay the principal amount of the 2006 HUD Note to the Secretary of HUD. SECTION 7. This Note-A is secured by the collateral pledge and assignment to the City of the Agency Collateral Lands under the terms of the Agency Deed of Trust of even date herewith. Upon the release and reconveyance by the City of the Agency Deed of Trust, the Agency shall upon the request of the City execute a collateral assignment in favor of the City of the rights and interests of the Agency in the Developer Grant Agreement, as set forth in the Loan Agreement. SECTION 8. The City shall have no power to transfer or assign its right to receive the payment of principal and payments of accrued interest under the Note-A except to HUD as security for the 2006 HUD Section 108 Loan unless the Agency has first granted written approval to the City for such a proposed assignment in its sole and absolute discretion; provided, however, that the Agency agrees to cooperate with the City as necessary or appropriate to provide the City with additional documentation to evidence the indebtedness of the Agency to the City under this Note-A and to perfect or protect the pledge of Agency funds as set forth in Section 4 to secure the payments of the Agency to the City under this Note-A. 4831-5221-7856.2 3 11/6/06 jmm f� AGENCY Redevelopment Agency of the City of San Bernardino, a public body corporate and politic By: rsionomfthe hair of mu Development City of San Bernardino 4831-5221-7856.2 4 11/6/06 jmm I --- --- --- - - -- Recorded in Official Records,County of San Bernardino 3/1612007 LARRY WALKER 10:31 AM " per ``' �K Auditor/Controller — Recorder v � P Counter RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Doc#: 2007—0166755 Titles: a Pages: 37 Fees 0.00 Taxes 0.00 Lewis Brisbois Bisgaard & Smith LLP Other 0.00 650 East Hospitality Lane PAID $0.00 Suite 600 San Bernardino, California 92408 Attn: David F. Gondek DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND SECURITY AGREEMENT (Arden-Guthrie Neighborhood Redevelopment Project) (HUD Section 108 Loan Agreement No. B-03-MC-06-0539) THIS DEED OF TRUST,ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND SECURITY AGREEMENT AND REQUEST FOR NOTICES ("Agency Deed of Trust") is made as of July 1, 2006,by the Redevelopment Agency of the City of San Bernardino, a public body corporate and politic(hereinafter referred to as"Trustor"),whose address is 201 North "E"Street, Suite 301, San Bernardino,California 92401,to LandAmerica NCS Insurance Company (hereinafter referred to as"Trustee"),whose address is 888 West 6t'Street,4t'Floor, Los Angeles, California 90017, for the benefit of the City of San Bernardino, a municipal corporation, its successors and assigns(herein called"Beneficiary"),whose address is 201 North`B"Street, Suite 301, San Bernardino, California 92401. WITNESSETH `Py That Trustor,for valuable consideration,grants,bargains,sells,conveys and warrants to Trustee, in trust with power of sale, that property in the City of San Bernardino, County of San Bernardino,State of California,more particularly described in Exhibit"A"attached hereto and made a part hereof(the "Land"), together with the following described estate, property and rights of Trustor in the Land and/or in any improvements now or hereafter constructed on the Land(herein severally and collectively referred to as the"Mortgaged Property")as security for the performance of each covenant and agreement of Trustor contained herein and in all other instruments executed in connection herewith, and for the payment of all sums of money secured hereby. A. All the fee and leasehold estates and rights of Trustor now held and hereafter acquired in and to the Mortgaged Property and in and to land lying in streets and roads adjoining the Land, and all access rights and easements appertaining thereto; and B. All buildings,structures,improvements,furnishings,fixtures and equipment, real,personal and mixed,now or hereafter attached to,or used or adapted for use in the operation of the Mortgaged Property and any and all replacements and additions thereto, including without 48214420-8640.2 1 11/6/06 jmm limitation, all heating apparatus and equipment whatsoever, all boilers, engines, motors, dynamos, generating equipment, pumps, piping and plumbing fixtures, cooling, ventilating, sprinkling, fire- extinguishing apparatus,gas and electric fixtures,elevators,escalators,partitions,and shrubbery and plants; and including also all interest of any owner of the Mortgaged Property in any of such items hereafter at any time acquired under conditional sales contract, chattel mortgage or other title- retaining or security instrument, all of which property mentioned in this paragraph shall be deemed part of the realty and not severable wholly or in part without material injury to the freehold; and C. All and singular the lands, tenements, privileges, water, water rights, water stock, mineral,oil and gas rights,hereditaments and appurtenances thereto belonging or in anywise appertaining,and the reversion and.reversions,remainder and remainders,rents,royalties,issues and profits thereof, and all the estate,rights,title, claim, interest and demand whatsoever of the Trustor either in law or equity, of, in and to the Land, whether now held or hereafter acquired; D. All of the right,title and interest of Trustor now or hereafter existing in and to the following now or hereafter located in, upon, within or about or used in connection with the construction, use, operation or occupancy of the Land and/or the improverpents thereon and any business or activity conducted thereon or therein,together with all accessories,additions,accessions, renewals,replacements and substitutions thereto or therefor and the proceeds and products thereof- (i)all materials,supplies,furniture,furnishings,appliances,office supplies,equipment,construction materials,vehicles,machinery,computer hardware and software,maintenance equipment,window washing equipment, repair equipment and other equipment and tools, telephone and other communications equipment;(ii)all books,ledgers,records,accounting records,files,tax records and returns,policy manuals,papers,correspondence,and electronically recorded data;(iii)all"General Intangibles" (as such term is defined in the California Uniform Commercial Code), instruments, money,"Accounts,"(as such term is defined in the California Uniform Commercial Code),accounts receivable, notes, certificates of deposit, chattel paper,letters of credit, choses in action, good will, rights to payment of money,rents,rental fees,equipment fees and other amounts payable by persons who utilize the Mortgaged Property or any of the improvements or paid by persons in order to obtain the right to use the Mortgaged Property and any of the improvements, whether or not so used; =° trademarks, service marks, trade dress, tradenames, licenses, sales contracts, deposits, plans and specifications, drawings, working drawings, studies, maps, surveys; soils, environmental, engineering or other reports, architectural and engineering contracts, construction contracts, construction management contracts, surety bonds, feasibility and market studies,management and operating agreements,service agreements and contracts,landscape maintenance agreements,security service and other services agreements and vendors agreements; (iv) all compensation, awards and other payments or relief(and claims therefor)made for a taking by eminent domain,or by any event in lieu thereof(including,without limitation,property and rights and interests in property received in lieu of any such taking), of all or any part of the Mortgaged Property(including without limitation, awards for severance damages),together with interest thereon, and any and all proceeds(or claims for proceeds)of casualty,liability or other insurance pertaining to the Mortgaged Property,together with interest thereon;(v)any and all claims or demands against any person with respect to damage or diminution in value to the Mortgaged Property or damage or diminution in value to any business or other activity conducted on the Mortgaged Property; (vi) any and all security deposits,deposits of security or advance payments made to others with respect to: (1) insurance policies relating to the Mortgaged Property; (2) taxes or assessments of any kind or nature affecting the Mortgaged 4821-4420-8640.2 2 11/6/06 jmm Property;(3)utility services for the Mortgaged Property and/or the improvements;(4)maintenance, repair or similar services for the Mortgaged Property or any other services or goods to be used in any business or other activity conducted on the Mortgaged Property; (vii) any and all authorizations, consents, licenses, permits and approvals of and from all persons required from time to time in connection with the construction, use, occupancy or operation of the Mortgaged Property, the improvements, or any business or activity conducted thereon or therein or in connection with the operation, occupancy or use thereof, (viii) all warranties, guaranties, utility or street improvement bonds,utility contracts,telephone exchange numbers,yellow page or other directory advertising and the like;(ix)all goods,contract rights,and inventory;(x)all leases and use agreements of machinery, equipment and other personal property; (xi)all insurance policies covering all or any portion of the Mortgaged Property;(xii)all reserues(including those provided for in Section 17 hereof)and funds held in escrow by Beneficiary or other person for Beneficiary's benefit and any funds deposited with Beneficiary, all accounts into which such funds are deposited and all accounts, contract rights and general intangibles or other rights relating thereto;(xiii)all names by which the Mortgaged Property is now or hereafter known;(xiv)all interests in the security deposits of tenants;(xv)all management agreements, blueprints, plans, maps, documents, books and records relating to the Mortgaged Property; (xvi)the proceeds from sale, assignment, conveyance or transfer of all or,any portion of the Mortgaged Property or any interest therein, or from the sale of any goods, inventory or services from,upon or within the Mortgaged Property and/or the improvements(but nothing contained herein shall be deemed a consent by Beneficiary to such sale,assignment,conveyance or transfer,except as expressly provided in this Agency Deed of Trust); (xvii) any property described in paragraph B, above,which are not fixtures under California law;(xviii)all other property(other than fixtures)of any kind or character as defined in or subject to the provisions of the California Uniform Commercial Code, Secured Transactions, as amended and; (xix) all proceeds of the conversions, voluntarily or involuntarily, of any of the foregoing into cash or liquidated claims. TO HAVE AND TO HOLD the Mortgaged Property,together with all and singular the lands, tenements, privileges, water, water rights, water stock, mineral, oil and gas rights, hereditaments and appurtenances thereto belonging or in any wise appertaining, and the reversion and reversions,remainder and remainders,rents,royalties, issues an4rofits thereof, and all of the estate,right,title,claims and demands whatsoever of the Trustor,either in law or in equity,of,in and to the Mortgaged Property, forever as security for the faithful performance of the Promissory Note (as defined below)secured hereby and as security for the faithful performance of each and all of the covenants, agreements, terms and conditions of this Agency Deed of Trust, and in all other instruments executed in connection herewith, SUBJECT, HOWEVER, to the right, power and authority given to and conferred upon Beneficiary to collect and apply such rents,issues and profits. This Agency Deed of Trust also constitutes a security agreement in all of the property above described or referenced in which such interest may be created under the California Uniform Commercial Code and for such purposes Trustor hereby grants to Beneficiary a security interest therein. 1. Note Secured. This Agency Deed of Trust is made for the purpose of securing the performance of each covenant,agreement and obligation of Trustor herein and of each covenant, agreement and obligation of Trustor described as the 2006 Redevelopment Cooperation Loan Agreement(Arden-Guthrie Neighborhood Redevelopment Project),dated as of July 1,2006, by and between the Trustor and the Beneficiary, as the "City" (the "City Section 108 Loan 4821-4420-8640.2 3 11/6106 jmm Agreement"); the Promissory Note Payable to a Public Agency ($7,500,000) (the "Promissory Note"), and all interest thereon and other amounts evidenced thereby; all future advances made to Trustor by Beneficiary, its successors and assigns, under the Promissory Note or pursuant to the terms of this Agency Deed of Trust or the City Section 108 Loan Agreement; the obligations evidenced by all renewals,extensions,modifications,substitutions and conditions of the Promissory Note; and any and all other obligations of Trustor to Beneficiary, its successors and assigns, now existing and hereafter arising and which are at any time specifically declared by Beneficiary in writing to be secured by this Agency Deed of Trust or which specifically indicate in the instruments which evidence the same that they are intended to be so secured. Unless otherwise indicated in this Agency Deed of Trust,the meaning of defined terms and phrases as denoted by an initial capitalized letter in a word or phrase, shall be the same as set forth in the City Section 108 Loan Agreement. 2. Trustor's Covenant of Payment. Trustor shall perform all of its obligations under the Promissory Note, the City Section 108 Loan Agreement and under this Agency Deed of Trust when due,without excuse or delay of any kind whatsoever,except as expressly provided herein or therein,and Trustor shall pay the Promissory Note,and all other debts and monies secured by this Agency Deed of Trust when due,without het off or deduction of any kind. 3. Trustor's Warranties of Title. Trustor warrants to Beneficiary that it is the sole holder of fee simple absolute title to all of the Mortgaged Property and that except as set forth in this Agency Deed of Trust,the Promissory Note and the City Section 108 Loan Agreement said title is marketable and free from any lien or encumbrance,unless approved in writing by Beneficiary,and the liens imposed by law for nondelinquent real property taxes and assessments. Trustor further covenants and agrees as follows:that except as required under the City Section 108 Loan Agreement, Trustor will keep the Mortgaged Property free from all liens of any kind, including, without limitation, statutory and governmental;,that no lien superior or junior to this Agency Deed of Trust will be created or suffered to be created by Trustor during the life of this Agency Deed of Trust without Beneficiary's prior written consent;that Trustor has good right to make this Agency Deed of Trust and the person or persons executing this Agency Deed of Trust on behalf of Trustor has or have the authority to do so;and that Trustor will forever warrant and defend Beneficiary's interest in the Mortgaged Property against every person, whomsoever, claiming any right or interest in the Mortgaged Property or any part thereof. 4. Trustor's Right to Contest Statutory Liens. As used herein the words "mechanic's lien"and"materialmen's lien"means and includes a stop notice as this term is defined in California Civil Code Section 3179, et seq. The filing of a mechanic's or materialmen's lien against the Mortgaged Property or a stop notice against the Trustor or the Beneficiary and/or funds held by or owed to the Trustor for the improvement of the Mortgaged Property shall not constitute a default hereunder,if and so long as(a)no defaults exist under the Promissory Note,the City Section 108 Loan Agreement or this Agency Deed of Trust; (b)within fifteen(15)days after filing of such lien,Trustor obtains and maintains in effect a bond issued by a California admitted surety acceptable to Beneficiary in an amount not less than the entire sum alleged to be owed to the lien claimant or such other amount as is required to obtain a court order to release said lien of record; (c) Trustor provides to Beneficiary and pays for an endorsement to Beneficiary's title insurance policy,in a form satisfactory to Beneficiary, which insures the priority of this Agency Deed of Trust over the lien being contested; (d) Trustor immediately commences its contest of such lien and continuously 4821 4420-8640.2 4 11W06 jmm pursues the same in good faith and with due diligence;(e)such bond or contest stays the foreclosure of the lien; and (f)Trustor pays in full any judgment rendered for the lien claimant within ten(10) days following entry of any such judgment. 5. Maintenance and Inspection of Improvements. Trustor shall maintain the buildings and other improvements now or hereafter located on the Mortgaged Property in a first class condition and state of repair,reasonable wear and tear excepted. Trustor shall not commit or suffer any waste; shall promptly comply with all requirements of federal, state and municipal authorities and all other laws, ordinances, regulations, covenants, conditions and restrictions respecting the Mortgaged Property or the use thereof, and shall pay all fees or charges of any kind in connection therewith. 6. Construction and Repairs. Trustor shall complete or restore promptly and in a good and workmanlike manner any building or improvement that may be constructed,damaged or destroyed on the Mortgaged Property, and pay when due all costs incurred therefor. 7. Alterations. No building or other improvement on the Mortgaged Property shall be structurally altered,removed or demolished without the Beneficiary's prior written consent, nor shall any fixture or chattel covered by this Agency Deed of Trust and adapted to the proper use and enjoyment of the Mortgaged Property be removed at any time without Beneficiary's prior written consent, unless actually replaced by an article of equal suitability and value, owned by the Trustor, free and clear of any lien or security interest, except such as may be approved in writing by the Beneficiary. 8. Compliance With Laws. Trustor shall comply with all statutes, laws, ordinances and regulations,which now or hereafter pertain to the construction,repair,condition,use and occupancy of the Mortgaged Property, including, without limitation, all environmental, subdivision,zoning,building code,fire,occupational,health,safety,occupancy and other similar or dissimilar statutes, and shall not permit any tenant or other occupant to violate the same. If any statute or order of any court of competent jurisdiction requires -any correction, alteration or - retrofitting of any improvements on or related to the Mortgaged Property, Trustor shall promptly undertake the required repairs and restoration and complete the same with due diligence at its sole cost and expense. 9. Environmental Covenants. Representations. Warranties and Indemnity. (a) Trustor will not use any Hazardous Materials(as defined herein below)in the construction of any improvements on or about the Mortgaged Property. (b) Trustor shall,at its sole expense,comply and cause each tenant leasing space within the Mortgaged Property to comply with all applicable laws,regulations,codes and ordinances relating to any Hazardous Materials or to any Environmental Activities(as defined herein below), including, without limitation, obtaining, filing, serving or posting all applicable notices, permits, licenses and similar authorizations. Trustor shall establish and maintain a management and operating policy for the Mortgaged Property to assure and monitor continued compliance by Trustor 48214420-8640.2 5 11/6/06 jmm and each tenant leasing space in the Mortgaged Property with all such laws, regulations,codes and ordinances. (c) Trustor agrees to submit from time to time, if requested by Beneficiary, a report,satisfactory to Beneficiary,certifying that the Mortgaged Property is not now being used nor has it ever been used for any Environmental Activities. Beneficiary reserves the right, in its reasonable discretion, to retain, at Trustor's expense, an independent professional consultant to review any report prepared by Trustor and/or to conduct its own investigation of the Mortgaged Property for Hazardous Materials. Trustor hereby grants to Beneficiary, its agents, employees, consultants and contractors the right to enter upon the Mortgaged Property to perform such tests as are reasonably necessary to conduct such a review and/or investigation. (d) Upon the discovery by Trustor of any event or situation which would render any of the representations or warranties contained in subparagraph 9(g) hereof inaccurate in any respect, if made at the time of such discovery, Trustor shall promptly notify Beneficiary of such event or situation and, within thirty (30) days after such discovery, submit to Beneficiary a preliminary written environmental plan setting forth a general description of such event or situation and the action that Trustor proposes to take with respect thereto. Within sixty(60)days after such discovery, Trustor shall submit to Beneficiary a final written environmental report, setting forth a detailed description of such event or situation and the action that Trustor proposes to take with respect thereto,including,without limitation,any proposed corrective work,the estimated cost and time of completion, the name of the contractor and a copy of the construction contract, if any, and such additional data, instruments, documents, agreements or other materials or information as Beneficiary may reasonably request. The plan shall be subject to Beneficiary's written approval, which approval may be granted or withheld in Beneficiary's sole but reasonable discretion. Beneficiary shall notify Trustor in writing of its approval or disapproval of the final plan within fifteen (15) days after receipt thereof by Beneficiary. If Beneficiary disapproves the plan, Beneficiary's notice to Trustor of such disapproval shall include a brief explanation of the reasons therefor. Trustor shall submit to Beneficiary a revised final written environmental plan that remedies the defects identified by Beneficiary as reasons for Beneficiary's disapproval of the previous plan.If Trustor fails to submit a revised plan to Beneficiary within said thirty(30) day period, or if such revised plan is submitted to Beneficiary and Beneficiary disapproves said plan, such failure or disapproval shall, at Beneficiary's option and upon notice to Trustor, constitute an "Event of Default"hereunder. If Beneficiary does not notify Trustor of its approval or disapproval of the final plan or any revisions thereof within the fifteen(15)day period described above,Trustor shall provide written notice to Beneficiary of Beneficiary's failure to respond,at which time Beneficiary shall have an additional forty-five (45) days after receipt of such notice from Trustor to notify Trustor of its approval or disapproval of the final plan within said additional forty-five (45) day period. If Beneficiary fails to notify Trustor of its disapproval or approval of said plan within said forty-five (45) day period the plan shall be deemed approved. Once any such plan is approved in writing or deemed approved by Beneficiary, Trustor"shall promptly commence all action necessary to implement such plan and to comply with any requirements or conditions imposed by Beneficiary, and shall diligently and continuously pursue such action to completion in strict accordance with the terms of said plan. The rights of Beneficiary with respect to the approval or disapproval of the environmental plan set forth herein and the actions of Beneficiary pursuant to such rights are not intended to,and shall not,in and of themselves,confer on Beneficiary a right to manage,operate or 4821 4420-8640.2 6 11/6/06 jmm control the Mortgaged Property on a continuing basis following the discovery of the event(s) or occurrence(s) described in this subparagraph 9(d). (e) Trustor agrees to submit from time to time, if requested by Beneficiary, a report,satisfactory to Beneficiary,specifying any activities involving,directly or indirectly,the use, generation, treatment, storage or disposal of any Hazardous Materials on the Mortgaged Property. Beneficiary reserves the right,in its sole and reasonable discretion,to retain,at Trustor's expense,an independent professional consultant to review any report prepared by Trustor and/or to conduct its own investigation of the Mortgaged Property. Trustor hereby grants to Beneficiary, its agent, employees, consultants and contractors the right to enter upon the Mortgaged Property and to perform such tests as Beneficiary deems are necessary to conduct such a review and/or investigation. Beneficiary shall hold in confidence any report delivered by Trustor to Beneficiary pursuant to this Section 9, except for disclosure to (a) any consultant(s)hired by Beneficiary to review said report, (b)legal counsel,accountants and other professional advisors to Beneficiary,(c)regulatory officials having jurisdiction over Beneficiary who may request said report, (d) as required by any federal, state, county, regional or local authority or law, rule, regulation or ordinance, (e) as required in %connection with any legal proceeding, and (f) any financial institution in connection with a disposition or proposed disposition of all or part of Beneficiary's or any participant's interests hereunder. "Hazardous Materials" as used in this Agency Deed of Trust shall mean any hazardous or toxic materials,pollutants, effluents, contaminants, radioactive materials, flammable explosives,chemicals known to cause cancer or reproductive toxicity,emissions or wastes and any other chemical, material or substance, the handling, storage, release, transportation, or disposal of which is or becomes prohibited, limited or regulated by any federal, state,county,regional or local authority or which,even if not so regulated,is or becomes known to pose a hazard to the health and safety of the occupants of the Mortgaged Property including, without limitation, (1) asbestos, (ii) petroleum and petroleum by-products,(iii)urea formaldehyde foam insulation,(iv)polychlorinated biphenyls, (v) all substances now or hereafter designated as "hazardous substances," "hazardous materials" or "toxic substances" pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980("CERCLA"),42 U.S.C. Section 9601 et seq.,as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Water Pollution Control Act,33 U.S.C. Section 1251 et seq. the Clean Air Act,42 U.S.C. Section 7401 et seq.,the Hazardous Materials Transportation Act,49 U.S.C. Section 1801 et seq., or the Resource, Conservation and Recovery Act,42 U.S.C. Section 6901 et seq.;(vi)all substances now or hereafter designated as "hazardous wastes" in Section 25117 of the California Health & Safety Code or as "hazardous substances" in Section 253 16 of the California Health & Safety Code; (vii) all substances now or hereafter designated by the Governor of the State of California pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986 as being known to cause cancer or reproductive toxicity,or(viii)all substances now or hereafter designated as"hazardous substances," "hazardous materials" or"toxic substances"under any other federal, state or local laws or in any regulations adopted and publications promulgated pursuant to said laws. "Environmental Laws" as used herein shall mean all laws, rules, regulations and ordinances relating to Hazardous Materials, including,but not limited to,those relating to soil and 4821-4420-8640.2 7 11/6/06 jmm groundwater conditions and those statutes referred to in the definition of Hazardous Materials set forth hereinabove. "Environmental Activities" as used herein shall mean the use, generation, transportation, treatment, storage or disposal of any Hazardous Materials at any time located on or present on, under or about the Mortgaged Property. (f) Trustor hereby agrees,at its sole cost and expense,to indemnify,protect,hold harmless and defend (with counsel of Beneficiary's choice), Beneficiary, its successors and assignees,and the officials,officers,agents,attorneys and employees of each of them(individually, each an "Indemnitee", and collectively, the "Indemnitees") from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses (including, without limitation, attorneys' and experts' reasonable fees, disbursements and costs) of any kind or of any nature whatsoever(collectively, "Claims") which may at any time be imposed upon, incurred or suffered by, or asserted or awarded against, any Indemnitee directly or indirectly relating to or arising from any of the following "Environmental Matters," but excluding any Claims arising solely from the gross negligence or willful misconduct of Beneficiary: (i) Any past,present or future presence of any Hazardous Materials on, in, under or affecting all or any portion of the Mortgaged Property or on, in, under or affecting all or any portion of any property adjacent or proximate to the Mortgaged Property, if such Hazardous Materials originated or allegedly originated on or from the Mortgaged Property; (ii) Any past, present or future storage, holding, handling, release, threatened release,discharge,generation, leak, abatement,removal or transportation of any Hazardous Materials on, in, under or from the Mortgaged Property or any portion thereof, (iii) The failure of Trustor to comply with any and all laws, rules, regulations, judgments, orders, permits, licenses, agreements, covenants, restrictions, requirements or the like now or hereafter relating to or governing in any way the J environmental condition of the Mortgaged Property or the presence of Hazardous Materials on, in, under or affecting all or any portion of the Mortgaged Property including, without limitation, all Environmental Laws; (iv) The failure of Trustor to properly complete,obtain,submit and/or file any and all notices,permits, licenses,authorizations,covenants,and the like relative to any of the Environmental Matt ers described herein in connection with the Mortgaged Property or the ownership, use, operation or enjoyment thereof, (v) The extraction, removal, containment, transportation or disposal of any and all Hazardous Materials from any portion of the Mortgaged Property or any other property adjacent or proximate to the Mortgaged Property, if such Hazardous Materials originated or allegedly originated on or from the Mortgaged Property; 4821-4420-8640.2 8 11/6/06 jmm (vi) Any past,present or future presence, permitting, operation, closure, abandonment or removal from the Mortgaged Property of any storage tank that at any time contains or contained any Hazardous Materials and is or was located on, in or under the Mortgaged Property or any portion thereof, (vii) The implementation and enforcement of any monitoring,notification or other precautionary measures that may at any time become necessary to protect against the release or discharge of Hazardous Materials on, in, under or affecting the Mortgaged Property or into the air,any body of water, any other public domain or any property adjacent or proximate to the Mortgaged Property; I Y (viii) Any failure of any Hazardous Materials generated or moved from the Mortgaged Property to be removed,contained,transported or disposed of in compliance with all applicable Environmental Laws; or 4 (ix) Any breach by Trustor of any of its covenants, representations or warranties regarding Environmental Matters contained in this Agency Deed of Trust or any of the other Transaction Documents. The indemnity contained herein shall terminate and be of no further force and effect, if no Claim is pending, upon the repayment of the Loan in accordance with its terms. (g) Trustor hereby represents and warrants as follows: (i) Trustor has not received any written notice of claims or actions (collectively, "Hazardous Materials Claims")pending or threatened against Trustor or any previous owner or user of the Mortgaged Property (and relating to Trustor's and/or such previous owner's or user's ownership of the Mortgaged Property), by any governmental entity or agency or any other person or entity and relating to Hazardous Materials or pursuant to Environmental Laws; and (ii) Trustor has not received any written notice(1)pursuant to which the Mortgaged Property has been designated as"border zone property"under the provisions of California Health and Safety Code Sections 25220 et seq., or any regulation adopted in accordance therewith, (2)of a hearing at which the Mortgaged Property will be considered for designation as "border zone property,"or(3) of an occurrence or condition on any real property adjoining or in the vicinity of the Mortgaged Property that could cause the Mortgaged Property or any part thereof to be designated as "border zone property." The foregoing shall constitute environmental provisions for purposes of California Code of Civil Procedure Section 736. 10. Insurance 10.1. Casualty Insurance. Trustor shall at all times keep the Mortgaged Property insured for the benefit of Trustee and Beneficiary as follows: 4821-4420-8640.2 9 11/6/06 jmm 10.1.1. Against damage or loss by fire and such other hazards (including lightning, windstorm,hail, explosion, riot, acts of striking employees,civil commotion, vandalism,malicious mischief,aircraft,vehicle, and smoke)as are covered by the broadest form of extended coverage endorsement available from time to time, in an amount not less than the full insurable value(as defined in section 10.9)of the Mortgaged Property,with a deductible amount not to exceed an amount satisfactory to Beneficiary; 10.1.2. Rent or business interruption or use and occupancy insurance on such basis and in such amounts and with such deductibles as are satisfactory to Beneficiary; 10.1.3. Against damage or loss by flood,if the Mortgaged Property is located in an area identified by the Secretary of Housing and urban Development or any successor or other appropriate authority(governmental or private)as an area having special flood hazards and in which flood insurance is available under the National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of 1973,as amended,modified,supplemented,or replaced from time to time, on such basis and in such amounts as Beneficiary may require; 10.1.4. Against damage or loss from(a)sprinkler system leakage and (b)boilers,boiler tanks,heating and air conditioning equipment,pressure vessels, auxiliary piping, and similar apparatus, on such basis and in such amounts as Beneficiary may require; 10.1.5. During any alteration, construction, or replacement of improvements on the Mortgaged Property, or any substantial portion thereof, a Builder's All Risk policy with extended coverage with course of construction and completed value endorsements,for an amount at least equal to the full insurable value of the improvements on the Mortgaged Property,and workers' compensation, in statutory amounts, with provision for replacement with the coverage described in this Section 10, without gaps or lapsed coverage, for any completed portion of improvements on the Mortgaged Property; and 10.2. Liability Insurance. Trustor shall procure and maintain workers' compensation insurance for Trustor's employees and comprehensive general liability insurance " covering Trustor, Trustee, and Beneficiary against claims for bodily injury or death or for damage occurring in, on, about, or resulting from the Mortgaged Property, or any street, drive, sidewalk, curb,or passageway adjacent to it,in standard form and with such insurance company or companies and in an amount of at least$2,000,000 combined single limit,or such greater amount as Beneficiary may require, which insurance shall include completed operations, product liability, and blanket contractual liability coverage that insures contractual liability under the indemnifications set forth in this Agency Deed of Trust and the City Section 108 Loan Agreement (but such coverage or its amount shall in no way limit such indemnification). 10.3. [Reserved-No Text] 10.4. Form of Policies. All insurance required under this Section 10 shall be fully paid for and nonassessable. The policies shall contain such provisions, endorsements, and expiration dates as Beneficiary from time to time reasonably requests and shall be in such form and 4821-4420-8640.2 10 11/6/06 jmm amounts, and be issued by such insurance companies doing business in the State of California, as Beneficiary shall approve in Beneficiary's sole and absolute discretion. Unless otherwise expressly approved in writing by Beneficiary,each insurer shall have a Best Rating of Class A,Category VIII, or better. All policies shall (a) contain a waiver of subrogation endorsement; (b) provide that the policy will not lapse or be canceled, amended, or materially altered (including by reduction in the scope or limits of coverage)without at least 30 days'prior written notice to Beneficiary;(c)with the exception of the comprehensive general liability policy, contain a mortgagee's endorsement (438 BFU Endorsement or equivalent), and name Beneficiary and Trustee as insureds; and (d) include such deductibles as Beneficiary may approve. If a policy required under this paragraph contains a co-insurance or overage clause, the policy shall include a stipulated value or agreed amount endorsement acceptable to Beneficiary. 10.5. Duplicate Originals or Certificates. Duplicate original policies evidencing the insurance required under this Section 10 and any additional insurance that may be purchased on the Mortgaged Property by or on behalf of Trustor shall be deposited with and held by Beneficiary and,in addition,Trustor shall deliver to Beneficiary(a)receipts evidencing payment of all premiums on the policies and(b) duplicate original renewal policies or a binder with evidence satisfactory to Beneficiary of payment of all premiums at least 30 days before the policy expires. In lieu of the duplicate original policies to be delivered to Beneficiary under this Section 10.5,Trustor may deliver an underlier of any blanket policy,and Trustor may also deliver original certificates from the issuing insurance company, evidencing that such policies are in full force and effect and containing information that,in Beneficiary's reasonable judgment,is sufficient to allow Beneficiary to ascertain whether such policies comply with the requirements of this Section 10. 10.6. Increased Coverage. If Beneficiary determines that the limits of any insurance carried by Trustor are inadequate or that additional coverage is required, Trustor shall, within 10 days after written notice from Beneficiary,procure such additional coverage as Beneficiary may require in Beneficiary's sole and absolute discretion. 10.7. No Separate Insurance. Trustor shall trot carry separate or additional insurance concurrent in form or contributing in the event of loss with that required under this Section 10,unless endorsed in favor of Trustee and Beneficiary,as required by this Section 10 and otherwise approved by Beneficiary in all respects. 10.8. Transfer of Title. In the event of foreclosure of this Agency Deed of Trust or other transfer of title or assignment of the Mortgaged Property in extinguishment,in whole or in part, of the Promissory Note, all right, title, and interest of Trustor in and to all insurance policies required under this Section 10 or otherwise then in force with respect to the Mortgaged Property and all proceeds payable under,and unearned premiums on,such policies shall immediately vest in the purchaser or other transferee of the Mortgaged Property. 10.9. [Reserved—No Text] 10.10. Approval Not Warranty. No-approval by Beneficiary of any insurer may be construed to be a representation,certification,or warranty of its solvency and no approval by 4821-4420-8640.2 1 1 11/6/06 jmm ---------- Beneficiary as to the amount,type,or form of any insurance may be construed to be a representation, certification, or warranty of its sufficiency. 10.11. Beneficiary's Right To Obtain. Trustor shall deliver to Beneficiary original policies or certificates evidencing such insurance at least 30 days before the existing policies expire. If any such policy is not so delivered to Beneficiary or if any such policy is canceled, whether or not Beneficiary has the policy in its possession, and no reinstatement or replacement policy is received before termination of insurance, Beneficiary, without notice to or demand on Trustor, may(but is not obligated to)obtain such insurance insuring only Beneficiary and Trustee with such company as Beneficiary may deem satisfactory, and pay the premium for such policies, and the amount of any premium so paid shall be charged to and promptly paid by Trustor or, at Beneficiary's option, may be added to the Promissory Note. Trustor acknowledges that, if Beneficiary obtains insurance,it is for the sole benefit of Beneficiary and Trustee, and Trustor shall not rely on any insurance obtained by Beneficiary to protect Trustor in any way. 10.12. Duty To Restore After Casualty. If any act or occurrence of any kind or nature (including any casualty for which insurance was not obtained or obtainable) results in damage to or loss or destruction of the Mortgaged Property,Trustor shall immediately give notice of such loss or damage to Beneficiary and,if Beneficiary so instructs,shall promptly,at Trustor's sole cost and expense, regardless of whether any insurance proceeds will be sufficient for the purpose, shall (i)commence and continue diligently to completion to restore,repair,replace,and rebuild the Mortgaged Property as nearly as possible to its value, condition, and character immediately before the damage, loss or destruction; or,(ii)pay all monetary obligations then due under the Promissory Note to Beneficiary. 11. Assignment of Insurance and Condemnation Proceeds. Should the Mortgaged Property or any part or appurtenance thereof or right or interest therein be taken or damaged by reason of any public or private improvement,condemnation proceeding(including change of grade), fire,earthquake or other casualty, or in any other manner,Beneficiary or Trustee may,at its option, commence, appear in and prosecute, in its own name, any action_-or proceeding, or make any =__= reasonable compromise or settlement in connection with such taking or damage, and obtain all compensation, awards or other relief therefor. All compensation,awards,damages,rights of action " and proceeds, including the policies and the proceeds of any policies of insurance affecting the Mortgaged Property, are hereby assigned to Beneficiary,but no such assignments shall be effective to invalidate or impair any insurance policy. Trustor further assigns to Beneficiary any return premiums or other repayments upon any insurance at any time provided for the benefit of the Beneficiary and all refunds or rebates made of taxes or assessments on the Mortgaged Property,and Beneficiary may at any time collect said return premiums, repayments, refunds and rebates in the event of any default by Trustor under the Promissory Note,the City Section 108 Loan Agreement or this Agency Deed of Trust. No insurance proceeds or condemnation awards at any time assigned to or held by Beneficiary shall be deemed to be held in trust and Beneficiary may commingle such proceeds with its general assets and shall not be liable for the payment of any interest thereon. Trustor also agrees to execute such further assignments of any such policies,compensation, award, damages, rebates, return of premiums,repayments,rights of action and proceeds as Beneficiary or Trustee may require. 4821-4420-8640.2 12 11/6/06 jmm 12. Use of Insurance Proceeds. After any damage by casualty to the Mortgaged Property,whether or not required to be insured against under the policies to be provided by Trustor, Trustor shall give prompt written notice thereof to Beneficiary generally describing the nature and cause of such casualty and the extent of the damage to or destruction of the Mortgaged Property. Trustor shall have the obligation to promptly repair the damage, regardless of whether and to the extent the casualty was covered by an insurance policy. For these purposes, Beneficiary shall make available to Trustor proceeds of any insurance policy covering the casualty and maintained by Trustor under and subject to each of the following terms and conditions: (a) Insurance proceeds which are directly attributable to the damage (herein the"Proceeds")shall be released to Trustor upon and subject to satisfaction of each of the following conditions: (i) There exists no default under the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust at any time prior to or during the course of reconstruction; (ii) Receipt by Beneficiary of satisfactory written evidence that any proposed restorations by Trustor will comply with all statutes, ordinances, regulations, rules, rulings, restrictive covenants, reciprocal easements, leases and contracts; that all proposed plans and specifications are approved by all required governmental agencies;and that Trustor has obtained all necessary building and other permits and approvals for such reconstruction; (iii) Receipt by Beneficiary from Trustor of sufficient cash funds to cover one hundred percent(100%)of any difference between the estimated costs of completion, as certified by an architect or engineer approved by Beneficiary in writing, and the Proceeds, the amount of such difference shall be paid in cash to Beneficiary with said amount and any interest earned thereon shall be released to Beneficiary,as necessary,following the exhaustion otavailable insurance proceeds, or at such earlier time deemed appropriate by Beneficiary. In the event of any default under the Promissory Note, the City Section 108 Loan Agreement or this Agency �- Deed of Trust, or any reconstruction requirements, Beneficiary may, at its option, apply any portion or all of such amounts and interest against the accrued interest and principal sums outstanding under the Promissory Note; (iv) Receipt by Beneficiary of a certificate executed by Trustor describing the work to be performed in connection with such restoration and a certificate by an independent architect or engineer selected or approved by Beneficiary in writing stating that the work described in the Trustor's certificate is adequate to restore the Mortgaged Property to substantially the same size, design, quality and condition as existed prior to the damage. The architect's or engineer's certificate shall include its estimate of all costs and expenses which will be required to complete such restorations; and - 4821-4420-8640.2 13 11/6/06 jmm (v) Such additional conditions as may reasonably be imposed by Beneficiary to provide assurance that the Proceeds will be used to restore the Mortgaged Property to substantially the same condition, to the extent possible, as existed prior to the damage or taking, including, without limitation, Beneficiary's prior written approval of all permits,plans,specifications and construction contracts for such restoration. (b) Beneficiary shall disburse the Proceeds in increments corresponding to the percentage of completion costs then incurred for labor performed and materials furnished (which may, at Beneficiary's discretion, be subject to reasonable holdbacks required by Beneficiary, not exceeding ten percent (10%) of the total estimated cost of completion and which will be released upon lien-free completion of the restorations in accordance with the requirements of this Agency Deed of Trust and the expiration of the periods within which any mechanic's or materialman's lien may be filed). Disbursements shall be conditioned upon Beneficiary's written confirmation that all of its requirements therefor have been satisfied, including its receipt of periodic inspection and completion percentage certificates executed by the project architect approved by Beneficiary in writing, payment acknowledgments and unconditional lien releases, and such other conditions to periodic disbursements as are customarily imposed by Beneficiary in connection with its construction loans, no defaults or misrepresentations of Trustor and Trustor's obtaining all title insurance endorsements,payment and performance bonds,and builder's risk policies required by Beneficiary. Trustor shall, during the progress of the work, also submit to the Beneficiary, at periodic intervals not less frequently than monthly,a certificate satisfactory to Beneficiary furnished by an architect or engineer approved by Beneficiary in writing showing the cost of labor and materials incorporated into the work during the period specified in the certificate,which period shall not include any part of the period covered by any other such certificate; and (c) After completion of the restoration and subject to the conditions herein stated, and, if Trustor is not then in default under the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust,Beneficiary shall pay to Trustor(or such other persons or entities that may have an interest therein) the undisbursed Proceeds-and Trustor's deposit for any '74:i- estimated restoration expense held by Beneficiary upon delivery to Beneficiary of(i) a certificate executed by Trustor showing that the work has been completed and that all bills for labor performed and materials furnished in connection therewith have been paid,(ii)unconditional lien releases and other appropriate written acknowledgments of payment in full executed by all contractors and subcontractors performing labor on or furnishing materials to the Mortgaged Property; (iii) a certificate executed by an architect or engineer approved by Beneficiary confirming that the Mortgaged Property has been restored to substantially the same size,design,quality and condition as existed immediately prior to the damage and in accordance with all applicable federal, state, local and other governmental laws and regulations; and(iv)a certificate of occupancy and other permits issued by the appropriate governmental authorities authorizing the occupancy of the Mortgaged Property for its intended purposes and use. If(i)any of the conditions in subparagraph 12(b),above,are not fulfilled within sixty (60)days after the date of the casualty,or if the reconstruction cannot be completed within such 60 day period, within such additional time as may be reasonably necessary to complete the reconstruction,not to exceed one hundred eighty(180)days,and provided such additional time does 4821-4420-8640.2 14 11/6/06 jmm not result in a breach by the Trustor under the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust; or (ii) if Trustor fails to exercise diligence in promptly commencing or continuously prosecuting the work; or(iii) if Trustor is otherwise in default under the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust, or any reconstruction requirements set forth therein or herein, Beneficiary may, at its option, apply the Proceeds and any deposits made by Trustor hereunder to the indebtedness secured hereby, or to complete the necessary repairs and use the Proceeds for the payment thereof. If the Proceeds are so applied to the indebtedness and, together with any other payments due to Beneficiary under the Promissory Note, and all other debts of Trustor to Beneficiary are discharged, Beneficiary shall not have the right to require the Mortgaged Property to be repaired under the terms of this Agency Deed of Trust, but Beneficiary's rights under any other lien that it holds against the Mortgaged Property and which is not also required to be released shall not be thereby impaired or affected. Trustor shall not commence any repairs or reconstruction of any casualty until Beneficiary consents in writing thereto, which consent may be withheld by Beneficiary in its sole discretion,until all of the conditions contained in this paragraph are satisfied. All work of repairing or restoring damage shall be done in a good and workmanlike manner with materials of good quality and in conformity with all applicable laws, ordinances, rules and regulations. Nothing herein contained shall be construed as authorizing the Trustor to subject the Mortgaged Property to any mechanic's, materialman's or other lien for the payment of bills for material furnished or labor performed in connection with any work contemplated by this paragraph. In any event in which the Beneficiary is not otherwise obligated to permit the insurance proceeds to be applied to the restoration of the Mortgaged Property as hereinabove described and, at the option of Beneficiary,the proceeds of a loss under any policy, whether or not endorsed payable to Beneficiary, may be applied in payment of the principal, interest or any other sums secured by this Agency Deed of Trust, whether or not then due, or to the restoration or replacement of any building on the Mortgaged Property, without in any way affecting the enforceability or priority of the lien of this Agency Deed of Trust or the obligation of the Trustor or any other person for payment of the indebtedness hereby secured-or the reconstruction of the damaged improvements,whether such Trustor be the then owner of said building or improvements or not. 13. Use of Condemnation Awards. Should the Mortgaged Property or any portion thereof or any improvements thereon be taken or damaged by reason of any public improvement or condemnation proceeding,or by any other form of eminent domain,Trustor agrees that Beneficiary shall be entitled to all compensation, awards and other payments or relief therefor and may, at its option, commence, appear in or prosecute in its own name any action or proceeding or make any reasonable compromise or settlement in connection with such taking or damage,and Trustor agrees to pay Beneficiary's costs and reasonable attorneys' fees incurred in connection therewith.All such compensation, awards, damages, rights of actions and proceeds may be applied by Beneficiary toward the repair of any damage to the improvements on any portion of the Mortgaged Property not subject to the taking as and subject to the same conditions herein provided with respect to the disposition of insurance proceeds,as set forth in Section 12 hereinabove;provided,however,that if the taking results in a loss of the Mortgaged Property to an extent which,in the reasonable opinion of Beneficiary, renders or will render the Mortgaged Property not economically viable or which 4821-4420-8640.2 15 11/6/06 jmm substantially impairs Beneficiary's security or lessens to any extent the value, marketability or intended use of the Mortgaged Property,Beneficiary may apply the condemnation proceeds to reduce the unpaid indebtedness secured hereby in such order as Beneficiary may determine. Trustor agrees to execute such further assignments of condemnation proceeds as Beneficiary or Trustee may from time to time require. If so applied,any proceeds in excess of the unpaid principal and accrued interest due under the Promissory Note plus all other sums due to Beneficiary from Trustor shall be paid to Trustor or Trustor's assignee. 14. Mortgaged Property Taxes and Assessments. Trustor shall pay in full on or before the due date thereof all rents,taxes,assessments community redevelopment in lieu of property tax charges and encumbrances, with interest, that may now or hereafter be levied, assessed or claimed upon the Trustor's ownership or use of the Mortgaged Property that is the subject of this Agency Deed of Trust or any part thereof,and upon request,provide the Beneficiary with copies of official receipts for payment therefor, and shall pay all taxes imposed upon, and reasonable costs, fees and expenses of, this Agency Deed of Trust. 15. Assessment Districts. Trustor agrees not to consent to inclusion of the Land in any local improvement or special assessment district or to the imposition of any special or local improvement assessment against the Mortgaged Property, without Beneficiary's prior written consent. 16. Mortgage Taxes. In the event of the passage after the date of this Agency Deed of Trust of any federal,state or municipal law,ordinance or regulation relating to the taxation of mortgages,deeds of trust or debts secured thereby so as to tax or assess any interest of Beneficiary or any payments secured hereby. Trustor shall bear and pay the full amount of such taxes. 17. Special Assessment and Insurance Reserves. Trustor shall,at the request of the Beneficiary, pay to Beneficiary equal monthly installments of the special assessments and insurance premiums estimated by the Beneficiary next to become due, in addition to any other periodic payment or performances owed by Trustor under the Promissory Note or this Agency Deed of Trust, so that thirty (30) days before the due date thereof, or of the first installment thereof, Beneficiary will have on hand an amount sufficient to pay the next maturing assessments and �- insurance premiums. The amount of the additional payment to be made on account of assessments and insurance premiums shall be adjusted annually or more frequently as Beneficiary deems necessary and any deficit shall be immediately paid by Trustor upon request and any surplus shall be credited on the mortgage account. Subsequent payments on account of assessments and insurance premiums shall be made in accordance with the next estimate by the Beneficiary of annual requirements. To the extent permitted by applicable law,all monies paid to Beneficiary on account of assessments or insurance premiums may be commingled and invested with Beneficiary's own funds and, unless and to the extent required by law, shall not bear interest for Trustor. Beneficiary shall not exercise the rights granted in this paragraph so long as the following conditions are met: (a) There is no other default under the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust; and - (b) Trustor pays all assessments and insurance premiums prior to delinquency;or 4821-4420-8640.2 16 11/6/06 jmm i (c) Assessments and insurance premiums are paid to the bond trustee. Upon Trustor's failure to comply with any of the conditions (a), (b) or (c) above, Beneficiary may,at its option,then or thereafter exercised,require Trustor to pay the additional sums described in this paragraph. Notwithstanding the foregoing,in the event that the bond trustee or the Senior Lender releases casualty or condemnation proceeds to the Trustor for the repair or reconstruction of the Mortgaged Property, Beneficiary shall also consent to the release of such proceeds. 18. Trustor's Rip-ht to Contest Taxes. Trustor shall have the right to contest any real property tax or special assessment so long as(a)no defaults exist under the Promissory Note,the City Section 108 Loan Agreement, this Agency Deed of Trust; (b) Trustor makes any payment or deposit or posts any bond as and when required as a condition to pursuing such contest; (c)Trustor commences such contest prior to such tax or assessment becoming delinquent and continuously pursues the same in good faith and with due diligence; (d) such contest or any bond furnished by Trustor stays the foreclosure of any lien securing the payment of any such tax or assessment; and(e) Trustor pays any tax or assessment within ten (10) days following the date of resolution of such contest. 19. Report of Real Estate Transaction. Trustor has made or provided for making, or will make or provide for making,on a timely basis,any reports or returns required by state or local law relating to the Mortgaged Property, or the development of the Mortgaged Property, notwithstanding the fact that the primary reporting responsibility may fall on the Beneficiary, or other party. Trustor's obligations under this paragraph will be deemed to be satisfied,if proper and timely reports and returns required under this paragraph are filed by a title company involved in each real estate transaction relating to the Mortgaged Property, but nothing contained herein shall be construed to require such returns or reports to be filed by Beneficiary. 20. Leases. With respect to any leases currently or hereafter relating to any portion of the Mortgaged Property, Trustor agrees that each such lease shall comply with the applicable provisions of the City Section 108 Loan Agreement. 21. Assignment of Leases. Trustor hereby unconditionally and absolutely assigns, transfers and sets over unto Beneficiary, all leases, subleases, rental agreements, occupancy agreements,licenses,concessions,entry fees and other agreements that grant a possessory interest in all or any part of the Mortgaged Property,together with all rents,issues,deposits and profits of the Mortgaged Property, together with the immediate and continuing right to collect and receive the same, for the purpose and upon the terms and conditions hereinafter set forth. Trustor further unconditionally and absolutely assigns,transfers and sets over unto Beneficiary all of its right,title and interest in and to any plans, drawings, specifications, permits, engineering reports and land planning maps,which it now has or may hereafter acquire regarding any improvements now on or to be constructed upon the Mortgaged Property. Beneficiary confers upon Trustor a license to collect and retain the rents,issues,deposits and profits of the Mortgaged Property,as they become due and payable,subject,however,to the right of Beneficiary upon a default hereunder to revoke said license, at any time,in its sole discretion and without notice to Trustor. Beneficiary may revoke said license 4821-4420-8640.2 17 11/6/06 jmm and collect and retain the rents, issues, deposits and profits of the Mortgaged Property assigned herein to Beneficiary upon the occurrence of an Event of Default hereunder or under any of the obligations secured hereby, and without taking possession of all or any part of the Mortgaged Property, and without prejudice to or limitation upon any of its additional rights and remedies granted pursuant hereto or pursuant to the Promissory Note or the City Section 108 Loan Agreement, and Beneficiary shall,in its sole and absolute discretion,have the right to apply such income for the payment of all expenses or credit the net amount of income that it receives from the Mortgaged Property,to the indebtedness in the manner,order and amounts as Beneficiary shall determine.In the event the Beneficiary exercises or is entitled to exercise any of its rights or remedies under this Agency Deed of Trust as a result of the default of the Trustor under the Promissory Note or the City Section 108 Loan Agreement,and if any lessee,sublessee or assignee under any lease assigned under this paragraph files or has filed against it any petition in bankruptcy or for reorganization or undertakes or is subject to similar action,Beneficiary shall have,and is hereby assigned by Trustor, all of the rights that would otherwise inure to the benefit of Trustor in such proceedings, including, without limitation, the right to seek"adequa6 protection"of its interests,to compel assumption or rejection of any such lease and to seek such claims and awards as may be sought or granted in connection with the rejection of any such lease. Unless otherwise agreed to by Beneficiary in writing,Beneficiary's exercise of any of the rights provided in this paragraph shall preclude Trustor from the pursuit and benefit thereof, without any further action or proceeding of any nature. The foregoing assignment shall not impose upon Beneficiary any duty to produce rents from the Mortgaged Property, and such assignment shall not cause Beneficiary to be a "mortgagee in possession" for any purpose. The rights granted in this paragraph shall be in addition to and not in derogation of any similar or related rights granted to Beneficiary in the separate assignment of leases and rents of even date herewith. 22. Impairment of SecuritX. Trustor shall not, without first obtaining Beneficiary's written consent,which consent shall not be unreasonably withheld, assign any of the rents or profits of the Mortgaged Property or change the general nature or use of the Mortgaged Property or initiate or acquiesce in any zoning reclassiTication,or do,or suffer to be done,any act or thing that would impair the security of Beneficiary's lien upon the Mortgaged Property or the rents thereof. Trustor shall not, without the written consent of Beneficiary, which consent shall not be unreasonably withheld,(i)initiate or support any zoning reclassification of the Mortgaged Property, s" seek any variance under existing zoning ordinances applicable to the Mortgaged Property or use or permit the use of the Mortgaged Property in a manner that would result in such use becoming a non- conforming use under applicable zoning ordinances;(ii)modify,amend or supplement any easement, reservation,restriction,covenant,condition or encumbrance pertaining to the Mortgaged Property; (iii) impose or consent to any restrictive covenant or encumbrance upon the Mortgaged Property, execute or file any subdivision or parcel map affecting the Mortgaged Property or consent to the annexation of the Mortgaged Property to any municipality; or(iv)permit or suffer the Mortgaged Property to be used by the public or any person in such manner as might make possible a claim of any implied dedication or easement. 23. Defense of Suits. Trustor shall appear in and defend any suit, action or proceeding that might affect the value,priority or enforceability of this Agency Deed of Trust or the Mortgaged Property itself or the rights or powers of Beneficiary or Trustee, including any suits relating to damage to property or death or personal injuries, whether or not Trustor is ultimately 4821-4420-8640.2 18 11/6/06 jmm found liable for any negligence or other wrongful conduct or inaction. Trustor, following mutual negotiations with Beneficiary, has waived and does hereby waive any immunity to such liability to Beneficiary under any industrial insurance or similar statute, to the extent such immunity would impair Beneficiary's rights against Trustor. Should Beneficiary elect to appear in or defend any such action or proceeding or be made a party to any such action or proceeding by reason of this Agency Deed of Trust,or elect to prosecute such action as appears necessary to preserve the value,priority or enforceability of this Agency Deed of Trust or the Mortgaged Property itself,Trustor will at all times indemnify from and, on demand, reimburse Beneficiary and Trustee for, any and all loss, damage, expense or cost,including cost of evidence of title expert witness fees and attorneys' fees,arising out of or incurred in connection with any such suit, action or proceeding, and any appeal or petition for review thereof,and the sum of such expenditures shall be secured by this Agency Deed ofTrust with interest at the rate of 10% per annum and shall be due and payable on demand. Trustor shall pay costs of suit, cost of evidence of title expert witness fees and reasonable attorneys' fees in any proceeding or suit brought by Beneficiary to foreclose this Agency Deed of Trust and in any appeal therefrom or petition for review thereof. a 24. Assignments and Transfers by Trustor. Beneficiary may,at its option,declare immediately due and payable all sums secured by this Agency Deed of Trust upon the sale or transfer, without the Beneficiary's prior written approval, of all or any part of the Mortgaged Property, or any interest in the Mortgaged Property. The option of declaring immediately due and payable all sums secured by this Agency Deed of Trust upon a sale or transfer of the Mortgaged Property shall be exercised by the Beneficiary in accordance with the provisions of Section 29 hereof; provided however, this option shall not be exercised if such remedy is prohibited by applicable law. 25. Matters Requiring Beneficiary's Prior Consent. So long as any part of the Loan remains unpaid or any part of the Obligations remain unperformed, Trustor shall not do or suffer any of the following without Beneficiary's prior written consent,which consent shall not be unreasonably withheld:(i)change its form of organization;(ii)modify its organizational documents; (iii) cause itself to become organized as the same or any other type of legal entity in a jurisdiction other than that under the laws of which it is organized on the date of this Agency Deed of Trust;(iv) make or suffer any change in ownership or management that results in a"change of control"of the J Borrower, or that results in the Borrower becoming subject to the control of persons other than its owners on the date of this Agency Deed of Trust,voluntarily or by operation of law(for purposes of this Section 25(iv) the words "change of control" shall mean the transfer of 50% or more of the ownership interest in the Borrower to persons other than its owners on the date of this Agency Deed of Trust); (v) make or suffer any change in its ownership or management, or become subject to control by persons other than its owners on the date of this Agency Deed of Trust,voluntarily or by operation of law;(vi)sell,convey,assign,or transfer any Mortgaged Property or any interest therein, whether legal or equitable, directly or indirectly-, (vii) create, incur, assume, suffer to exist, or otherwise become liable on any indebtedness relating to the Mortgaged Property other than the Loan; or(viii)grant or suffer the imposition of any lien upon,security interest in,or other encumbrance of any of the Mortgaged Property.Any violation of the provisions of this Section 25 shall constitute an Event of Default under this Agency Deed of Trust and each other Transaction Document, with respect to which Beneficiary shall have the right to accelerate the maturity of the Loan and pursue all 4821-4420-8640.2 19 11/6/06 jmm other remedies available to Beneficiary under this Agency Deed of Trust, any other Transaction Document, and/or applicable law. 26. Further Encumbrances. Trustor acknowledges that Beneficiary relied upon the Mortgaged Property not being subject to additional liens or encumbrances for reasons including, but not limited to,the possibility of competing claims or the promotion of plans disadvantageous to Beneficiary in bankruptcy; the risks to Beneficiary in a junior lienholder's bankruptcy; questions involving the priority of future advances,the priority of future leases of the Mortgaged Property,the marshaling of Trustor's assets, and the Beneficiary's rights to determine the application of condemnation awards and insurance proceeds;the impairment of the Beneficiary's option to accept a deed in lieu of foreclosure; the increased difficulty of reaching agreements for workouts or to the actions to be taken by trustees,receivers,liquidators and fiduciaries;and Beneficiary's requirements of Trustor's preservation of its equity in the Mortgaged Property and the absence of debt that could increase the likelihood of Trustor being unable to perform its obligations when due. Therefore, as a principal inducement to Beneficiary to make the Loan secured by this Agency Deed of Trust, and with the knowledge that Beneficiary will materially rely upon this paragraph in so doing, Trustor a covenants not to encumber the Mortgaged Property, without first receiving Beneficiary's express written consent in each instance, which consent may be withheld by Beneficiary. A breach of this covenant shall constitute a default under the City Section 108 Loan Agreement,the Promissory Note and this Agency Deed of Trust, and Beneficiary may exercise all remedies available to Beneficiary under the City Section 108 Loan Agreement, the Promissory Note or this Agency Deed of Trust. Without limiting the generality of the foregoing, no mortgages, deeds of trust or other forms of security interests prior or subordinate to the security interests of Beneficiary shall encumber any real or personal property that is the subject of any lien or security interest granted to Beneficiary,without Beneficiary's prior written consent. 27. [Reserved—No Text] 28. Event of Default. An"Event of Default"shall be deemed to have occurred in any of the following circumstances: (a) Failure of Trustor to satisfy any performance or payment obligation required under this Agency Deed of Trust, the Promissory Note or the City Section 108 Loan Agreement when due, however Trustor shall have ten(10) days to cure any such default; (b) Failure of Trustor to properly perform its obligations under this Agency Deed of Trust,the Promissory Note or the City Section 108 Loan Agreement,by a date specified herein or therein or in a written notice to Trustor, if applicable;(which date specified shall not be less than thirty(3 0)days nor greater than sixty(60)days from the date of such notice,and shall be determined by Beneficiary in its sole discretion); provided, however, that: (i) if such default set forth in the notice cannot be cured by the date specified,(ii)Trustor commences to cure the default prior to the date specified in the notice, and(iii)Trustor diligently proceeds to cure the default thereafter; then the date specified in the notice shall be extended by any period reasonably necessary to complete the cure,but in no event for more than ninety(90)days after the date originally specified in the notice; 4821-4420-8640.2 20 11/6/06 jmm (c) Trustor becomes insolvent or generally is not paying its debts as they become due,as defined in the United States Bankruptcy Reform Act, as amended from time to time(which Act, as amended, is herein called the "Bankruptcy Code"), or shall file a voluntary petition in bankruptcy seeking to effect a reorganization plan or other arrangement with creditors or any other relief under the Bankruptcy Code or under any other state or federal law relating to bankruptcy or other relief for debtors, whether now or hereafter in effect,or shall consent to or suffer the entry of any order for relief in any involuntary case under the Bankruptcy Code,or shall be the defendant or subject of any involuntary petition filed under the Bankruptcy Code that is not dismissed within ninety(90) days of the filing thereof, or shall make an assignment for the benefit of creditors; (d) Any court(gr similar tribunal)having jurisdiction over Trustor or any of the Mortgaged Property or other property of Trustor shall enter a decree or order appointing a receiver, trustee, guardian, conservator, assignee in bankruptcy or insolvency of Trustor, of any of the Mortgaged Property,of any other real property of Trustor,of any other significant asset of Trustor,or shall enter a decree or order for relief in any Involuntary case under the Bankruptcy Code; (e) The entry of any final judgment or arbitration award against Trustor that is not paid or stayed pending appeal, or the sequestration or attachment of, or any levy or execution upon (i) any of the Mortgaged Property, (ii) any other collateral provided by Trustor or any other person under this Agency Deed of Trust or as security for performance or payment of the Loan,or(iii)any significant portion of the other assets of Trustor,which is not released,expunged or dismissed prior to the earlier of(30)days after such sequestration, attachment or execution or five(10)days before the sale of any such assets; (f) Trustor shall dissolve,liquidate or wind up its affairs or shall bring any legal action or take any other action contemplating such dissolution, liquidation or winding up; (g) The determination by Beneficiary that any representation, warranty or _ statement contained in this Agency Deed of Trust or the Promissory Note or the City Section 108 Loan Agreement in writing delivered to Beneficiary in connection with Promissory Note or City Section 108 Loan Agreement was incomplete,untrue or misleading in any material respect as of the date made and Trustor has not cured such default within thirty (30) days from written notice by Beneficiary of such default; (h) The enactment of any law that deducts from the value of the Mortgaged Property for the purpose of taxation of any lien thereon or imposing upon Beneficiary the payment of the whole or any part of the taxes,assessments,charges or liens herein required to be paid by Trustor or changing in any way the laws relating to the taxation of deeds of trust or debts secured by deeds of trust or Beneficiary's interest in the Mortgaged Property or the manner of collection of taxes so as to affect this Agency Deed of Trust or the Promissory Note or the City Section 108 Loan Agreement or the holder thereof or imposing a tax, other than a Federal or state income tax, on or payable by Trustee or Beneficiary by reason of their ownership of this Agency Deed of Trust or the Promissory Note and, in such event, Trustor, after demand by Beneficiary, does not pay such taxes or assessments within thirty(30)days or reimburse Beneficiarytherefor or,in the opinion of counsel for Beneficiary, it might be unlawful to require Trustor to make such payment or the making of such 4821 4420-8640.2 21 11/6/06 jmm payment might result in the imposition of interest costs beyond the maximum amount permitted by applicable law; (i) Trustor acknowledges and agrees that all material non-monetary defaults are conclusively deemed to be and are defaults impairing the security of this Agency Deed of Trust,and that Beneficiary shall be entitled to exercise any appropriate remedy, including, without limitation, foreclosure of this Agency Deed of Trust, upon the occurrence of any such material non-monetary default; and 29. Rights and Remedies on Default. Upon the occurrence of any Default or Event of Default under this Agency Deed of Trust and at any time thereafter,Trustee or Beneficiary may exercise any one or more of the following rights and remedies: (a) Loan Remedies. Beneficiary may exercise any right or remedy provided for in the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust; (b) Acceleration. Beneficiary may declare the Promissory Note and all other performances or sums secured by this Agency Deed of Trust immediately due and payable; (c) Foreclosure Rights. Beneficiary may declare all performances or sums secured hereby immediately due and payable either by commencing an action to foreclose this Agency Deed of Trust as a mortgage,or by the delivery to Trustee of a written declaration of default and demand for sale and of written notice of default and of election to cause the Mortgaged Property to be sold, which notice Trustee shall cause to be duly filed for record in case of foreclosure by exercise of the power of sale herein. Should Beneficiary elect to foreclose by exercise of the power of sale herein,Beneficiary shall also deposit with Trustee this Agency Deed of Trust,the documents evidencing Loan and any receipts and evidence of expenditures made and secured hereby as Trustee may require, and notice of sale having been given as then required by law and after lapse of such time as may then be required by law after recordation of such notice of default, Trustee, without demand on Trustor,shall sell the Mortgaged Property at the time and place of sale fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder upon any terms and conditions specified by Beneficiary and permitted by applicable law. Trustee may postpone sale of all or any portion of the Mortgaged Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to any purchaser its deed or deeds conveying the Mortgaged Property, or any portion thereof, so sold, but without any covenant or warranty, express or implied. The recitals in such deed or deeds of any matters or facts,shall be conclusive proof of the truthfulness thereof. Any person,including Trustor,Trustee or Beneficiary,may purchase all or any portion of the Mortgaged Property, as applicable, at sale. (d) Right to Rescind. Beneficiary, from time to time before Trustee's sale,may rescind any such notice of breach or default and of election to cause the Mortgaged Property to be sold by executing and delivering to Trustee a written notice of such rescission,which notice,when recorded,shall also constitute a cancellation of any prior declaration of default and demand for sale. The exercise by Beneficiary of such right of rescission shall not constitute a waiver of any breach or 48214420-8640.2 22 11/6/06 jmm default then existing or subsequently occurring, or impair the right of Beneficiary to execute and deliver to Trustee,as above provided,other declarations of default and demand for sale,and notices of breach or default, and of election to cause the Mortgaged Property to be sold to satisfy the obligations hereof, nor otherwise affect any provision, agreement, covenant or condition of the Promissory Note,the City Section 108 Loan Agreement and/or of this Agency Deed of Trust or any of the rights, obligations or remedies of the parties hereunder. (e) UCC Remedies. Beneficiary shall have all the rights and remedies of a secured party under the California Uniform Commercial Code,including,without limitation,Section 9501(4) thereof. Upon request, Trustor shall assemble and make such collateral available to Beneficiary at a place to be designated by Beneficiary that is reasonably convenient to both parties. Upon repossession, Beneficiary may propose to retain the collateral in partial satisfaction of the Promissory Note or sell the collateral at public or private sale in accordance with the Uniform Commercial Code as adopted in the state where the Mortgaged Property is situated or any other applicable statute. Such sale may be held as i part of,distinctive from or without a trustee's sale or foreclosure of the real property secured by this Agency Deed of Trust. If any notification of disposition of all or any portion of the collateral is required by law,such notification shall be deemed reasonably and properly given, if mailed at least ten (10) days prior to such disposition. If Beneficiary disposes of all or any part of the collateral after default,the proceeds of disposition shall be applied in the following order: (i) to the reasonable expenses of retaking, holding, preparing for sale, selling the collateral, and the like; (ii) to the reasonable attorneys' fees and legal expenses incurred by Beneficiary; and I (iii) to the satisfaction of the indebtedness secured by this Agency Deed of Trust. (fl Remedial Advances. Should Trustor fail to make any payment or to do any act as herein provided,then Beneficiary or Trustee,without obligation so to do and without demand " upon Trustor and without releasing Trustor from any obligation hereof,may(i)make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the Mortgaged Property for such purposes;(ii) commence,appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, (iii) pay, purchase, contest or compromise any encumbrance, charge, lien, tax or assessment, or the premium for any policy of insurance required herein; and in exercising any such power, incur any liability, expend whatever amounts in its absolute discretion it may deem necessary therefor, including cost of evidence of title, employ counsel and pay such counsel's fees. Beneficiary shall be subrogated to the rights and lien interests of any person who is paid by Beneficiary pursuant to the terms of this paragraph. Trustor shall repay immediately on written notice to Trustor all sums expended or advanced hereunder by or on behalf of Beneficiary, with interest from the date of such advance or expenditure at the rate of 10% per annum, and the repayment thereof shall be secured hereby. 4821-4420-8640.2 23 11/6/06 jmm (g) Summary Possession. Beneficiary may, at its option, either in person or by agent, employee or court-appointed receiver, enter upon and take possession of the Mortgaged Property and continue any work of improvement, repair or renovation thereof at Trustor's expense and lease the same or any part thereof, making such alterations as it finds necessary, and may terminate in any lawful manner any lease(s) of the Mortgaged Property, exercising with respect thereto any right or option available to the Trustor. The entering upon and taking possession of the Mortgaged Property, the collection of rents, issues and profits, or the proceeds of fire and other insurance policies or compensation or awards for any taking or damage to the Mortgaged Property, and the application or release thereof shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (h) Collection of Rents. Beneficiary may require any tenant or other user of the Mortgaged Property to make payments of rent or use fees directly to Beneficiary, regardless of whether Beneficiary has taken possession of the Mortgaged Property. If any rents are collected by Beneficiary,then Trustor hereby irrevocably designates Beneficiary as Trustor's attorney-in-fact to endorse instruments received in payment thereof in the name of Trustor and to negotiate the same and collect the proceeds. Payments by tenants or other users to Beneficiary in response to Beneficiary's demand shall satisfy the obligation for which the payments are made, whether or not any proper grounds for the demand existed.Beneficiary may exercise its rights under this paragraph either in person, by agent or through a receiver. (i) Beneficiary's Enforcement of Leases. Beneficiary is hereby vested with full power to use all measures, legal and equitable,deemed by it necessary or proper to collect the rents assigned in this Agency Deed of Trust,including the right,in person or by agent,employee or court- appointed receiver,to enter upon the Mortgaged Property, or any part thereof, and take possession thereof forthwith to the extent necessary to effect the cure of any default on the part of Trustor as lessor in any leases or upon Trustor's default under the Promissory Note or the City Section 108 Loan Agreement. Trustor hereby grants to Beneficiary full power and authority to exercise all rights, privileges and powers herein granted at any and all times hereafter, without notice to Trustor, including the right to operate and manage the Mortgaged Property,-make and amend leases and perform any other acts reasonably necessary to protect the value, priority or enforceability of any security for the obligations of the Trustor under the Promissory Note or the City Section 108 Loan Agreement and use and apply all of the rents and other income herein assigned to the payment of the costs of exercising such remedies, of managing and operating the Mortgaged Property, and of any indebtedness or liability of Trustor to Beneficiary,including but not limited to the payment of taxes, special assessments, insurance premiums, damage claims, the costs of maintaining, repairing, rebuilding and restoring any improvements on the Mortgaged Property or of making the same rentable, attorneys' fees incurred in connection with the enforcement of this Agency Deed of Trust, and any principal and interest payments due from Trustor to Beneficiary under the Promissory Note and this Agency Deed of Trust,all in such order as Beneficiary may determine. Beneficiary shall be under no obligation to enforce any of the rights or claims assigned to it hereunder or to perform or carry out any of the obligations of the lessor under any leases and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Trustor in any leases. It is further understood that this Agency Deed of Trust shall not operate to place responsibility for the control,care,management or repair of the Mortgaged Property,or parts thereof, upon Beneficiary nor shall it operate to make Beneficiary liable for the carrying out of any of the 48214420-8640.2 24 11/6/06 jmm terms and conditions of any leases, or for any waste of the Mortgaged Property by the lessee under any leases or by any other party, or for any dangerous or defective condition of the Mortgaged Property or for any negligence in the management, upkeep, repair or control of the Mortgaged Property resulting in loss or injury or death to any lessee, invitee, licensee, employee or stranger, except as may result from the gross negligence or willful misconduct of Beneficiary after taking possession of the Mortgaged Property hereunder. 0) Beneficiary's Enforcement of Contracts. Beneficiary shall have the right to enforce Trustor's rights under all architect, engineering, construction and related contracts and to bring an action for the breach thereof in the name of Beneficiary or, at Beneficiary's option, in the name of Trustor, in the event any architect, engineer, contractor or other party breaches their respective contract or contracts,regardless of whether Beneficiary acquires or retains any interest in the Mortgaged Property. Trustor hereby irrevocably appoints Beneficiary as its attorney-in-fact for the purposes of the foregoing, which power shall be durable and coupled with an interest. Beneficiary does not assume and shall not be obligated to perform any of Trustor's obligations under said contracts nor shall Beneficiary be required to enforce such contracts or bring action for the breach thereof,provided;however,any performance of the respective contracts specifically required by the Beneficiary in writing, following any default by Trustor under the Promissory Note,the City Section 108 Loan Agreement or the contracts, and which is properly and timely undertaken by the contractor, engineer or architect, shall be paid for by the Beneficiary in accordance with the terms and conditions of the contracts. Such payments shall be deemed additions to the amounts owed by Trustor to the Beneficiary under the Promissory Note and secured by this Agency Deed of Trust and shall bear interest at the rate of 10%per annum from the date of advance to and including the date of full payment, and shall be secured by any deed of trust, collateral assignment of leases and rents, security agreement and other documents granted to secure the Promissory Note. (k) Appointment of Receiver. Beneficiary has the right to have a receiver appointed to take possession of any or all of the Mortgaged Property,with the power to protect and preserve the Mortgaged Property,to operate the Mortgaged Property preceding foreclosure or sale,to collect the income from the Mortgaged Property and apply the proceeds,over and above the cost of the receivership,against the Promissory Note. The receiver may serve without bond,if permitted by law.Beneficiary's right to the appointment of a receiver shall exist whether or not the apparent value " of the Mortgaged Property exceeds the indebtedness secured hereby by a substantial amount. Employment by Beneficiary shall not disqualify a person from serving as a receiver. Upon taking possession of all or any part of the Mortgaged Property, the receiver or Beneficiary may: (i) use, operate,manage,control and conduct business on the Mortgaged Property and make expenditures for all maintenance and improvements as in its judgment are necessary and proper; (ii) collect the income from the Mortgaged Property and apply such sums to the expenses of use, operation and management; and (iii) at Beneficiary's option, complete any construction in progress on the Mortgaged Property, and in that connection pay bills, borrow funds,employ contractors and make any changes in plans or specifications as Beneficiary deems reasonably necessary or appropriate. If the revenues produced by the Mortgaged Property are insufficient to pay expenses,the receiver may borrow, from Beneficiary or otherwise, as Beneficiary may deem reasonably necessary for the purposes stated in this paragraph. The amounts borrowed or advanced shall be payable on demand and bear interest from the date of expenditure until repaid at the rate of 10%per annum. Such sums shall become a part of the debt secured by this Agency Deed of Trust. 4821-4420-8640.2 25 11/6/06 jmm (1) Specific Enforcement. Beneficiary may specifically enforce any covenant in this Agency Deed of Trust or the Trustor's compliance with its warranties herein and may restrain and enjoin the breach or prospective breach of any such covenant or the noncompliance with any condition and Trustor waives any requirement of the posting of any bond in connection therewith. (m) General Creditors' Remedies. Beneficiary shall have such other rights and remedies as are available under any statute or at law or in equity, generally, and the delineation of certain remedies in this Agency Deed of Trust shall not be deemed in limitation thereof 30. Application of Sale Proceeds. After deducting all costs and expenses of Trustee and of this Agency Deed-of Trust, including cost of evidence of title and reasonable attorneys' fees in connection with sale,as above set forth,Trustee shall apply the proceeds of sale to payment of all sums expended under the terms hereof, not then repaid, with accrued interest at the rate of 10% per annum; all other sums then secured hereby; and the remainder, if any, to the Beneficiary and any other person or persons legally entitled thereto. 31. Remedies Cumulative. No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of any other remedy provided herein or under the Promissory Note,the City Section 108 Loan Agreement or this Agency Deed of Trust,or otherwise by law provided or permitted,or provided in any guaranty given in connection with the Promissory Note, but each shall be cumulative and shall be in addition to every other remedy. Every power or remedy given by this instrument to Trustee or Beneficiary or to which either of them may be otherwise entitled,may be exercised concurrently or independently,from time to time and as often'as may be deemed expedient by Trustee or Beneficiary and either of them may pursue inconsistent remedies. 32. No Waiver. No waiver of any default or failure or delay to exercise any right or remedy by Beneficiary shall operate as a waiver of any other default or of the same default in the future or a preclusion of any right or remedy with respect to the same-or any other occurrence. 33. Marshaling. In case of a sale under this Agency Deed of Trust, the Mortgaged Property, real,personal and mixed,may be sold in one or more parcels.Neither Trustee nor Beneficiary shall be required to marshal Trustor's assets. 34. SUBMISSION TO JURISDICTION. TRUSTOR,TO THE FULLEST EXTENT PERMITTED BY LAW,HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,(A)SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF CALIFORNIA OVER ANY SUIT,ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS DEED OF TRUST, (B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN SAN BERNARDINO COUNTY, CALIFORNIA, (C) SUBMITS TO THE JURISDICTION OF SUCH COURTS,AND,(D)TO THE FULLEST EXTENT PERMITTED BY LAW,AGREES 4821-4420-8640.2 26 11/6/06 jmm THAT IT WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY FORUM OTHER THAN SAN BERNARDINO COUNTY,CALIFORNIA(BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF BENEFICIARY TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). TRUSTOR FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO THE TRUSTOR AT THE ADDRESS FOR NOTICES DESCRIBED HEREIN, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW). 35. Trustor's Indemnification. Trustor agrees to indemnify and hold harmless Trustee and Beneficiary from and against any and all losses, liabilities, penalties, claims, charges, costs and expenses(including attorneys'fees and disbursements)(the"Losses")that maybe imposed on,incurred or paid by or asserted against Trustee and/or Beneficiary by reason or ou account of,or in connection with: (a) any default by Trustor hereunder or under the Promissory Note or the City Section 108 Loan Agreement; (b) Trustee's and/or Beneficiary's good faith and commercially reasonable exercise of any of their rights and remedies or the performance of any of their duties hereunder or under any other documents to which Trustor is a party; (c) the construction, reconstruction or alteration of the Mortgaged Property; (d) any negligence, willful misconduct or failure to act of Trustor, or any negligence,willful misconduct or failure to act of any lessee of the Mortgaged Property, or any of their respective agents, contractors, subcontractors, servants, employees, licensees or invitees; or (e) any accident, injury, death or damage to any person or property occurring in, on or about the Mortgaged Property or any street, drive,, sidewalk, curb or passageway adjacent thereto, except for the willful misconduct or gross negligence of the indemnified person; or(f) any failure of Trustor to file any tax reports or returns referred to in this Agency Deed of Trust. The indemnity provided under subsection (f) of this paragraph shall also extend to counsel for the Beneficiary. Any amount payable to Trustee, Beneficiary or counsel for Beneficiary under this paragraph shall be due and payable within ten(10)days after demand therefor and receipt by Trustor of a statement from Trustee,Beneficiary and/or counsel for Beneficiary setting _ forth in reasonable detail the amount claimed and the basis therefor, and such amounts shall bear interest at the rate of 10%per annum from and after the date such amounts are paid by Beneficiary, Trustee or counsel for Beneficiary, until paid in full by Trustor. Trustor's obligations under this paragraph shall not be affected by the absence or unavailability of insurance covering the same or by the failure or refusal by any insurance carrier to perform any obligation on its part under any such policy of insurance. If any claim, action or proceeding is made or brought against Trustor and/or Beneficiary that is subject to the indemnity set forth in this paragraph,Trustor shall resist or defend against the same,if necessary,in the name of Trustee and/or Beneficiary,with attorneys for Trustor's insurance carrier (if the same is covered by insurance) or otherwise by attorneys approved by Beneficiary. Notwithstanding the foregoing,Trustee and Beneficiary,in their reasonable discretion, may engage their own attorneys to resist or defend, or assist therein, and Trustor shall pay, or, on demand, shall reimburse Trustee and Beneficiary for then payment of the reasonable fees and disbursements of said attorneys. The indemnity provided for herein shall survive Trustor's performance of the obligations secured by this Agency Deed of Trust and foreclosure, whether by 4821 4420-8640.2 27 11/6/06 jmm judicial foreclosure, power of sale pursuant to this Agency Deed of Trust or by deed in lieu of foreclosure. 36. Attorneys' Fees; Costs. Trustor agrees to reimburse Beneficiary for all costs, expenses expert witness and consulting fees and reasonable attorneys' fees that Beneficiary incurs in connection with the realization or enforcement of any obligation or remedy contained in this Agency Deed of Trust, the Promissory Note or the City Section 108 Loan Agreement, with or without litigation, including without limitation any costs, expenses and fees incurred: (a) on appeal; (b) in any arbitration or mediation; (c) in any action contesting or seeking to restrain, enjoin, stay, or postpone the exercise of any remedy in which Beneficiary prevails; (d)in any bankruptcy,probate, receivership or other proceeding involving Trustor; and (e) in connection with all negotiations, documentation,and other actions relating to any work-out,compromise,settlement or satisfaction of the debt secured hereby or settlement of any covenants and obligations secured by this Agency Deed of Trust or set forth in the Promissory Note or the City Section 108 Loan Agreement. For the purposes hereof, the words "reasonable attorneys' fees" shall mean and include the salaries and fringe benefits of the City Attorney and lawyers employed by the City of Attorney of the City of San Bernardino, computed on a hourly basis, who may provide legalaservices to the Beneficiary in connection with the exercise by the Beneficiary of any of its remedies hereunder. All such costs, expenses and fees shall be due and payable upon demand, shall bear interest from the date incurred through the date of collection at the rate of 10% per annum, and shall be secured by this Agency Deed of Trust. 37. Acceptance by Trustee. Trustee accepts this Trust when this Agency Deed of Trust, duly executed and acknowledged, is made a public record, as provided by law. 38. Successor Trustee. Trustee may resign by an instrument in writing addressed to Beneficiary, or Trustee may be removed at any time with or without cause by an instrument in writing executed by Beneficiary and duly recorded. In case of the death, resignation, removal or disqualification of Trustee or if for any reason Beneficiary shall deem it desirable to appoint a substitute or successor trustee to act instead of Trustee herein named or any substitute or successor trustee, then Beneficiary shall have the right and is hereby authorized and empowered to appoint a _ successor trustee,or a substitute trustee,without other formality than appointment and designation in writing executed and acknowledged by Beneficiary and the recordation of such writing in the office where this Agency Deed of Trust is recorded, and the authority hereby conferred shall extend to the appointment of other successor and substitute trustees successively. Such appointment and designation by Beneficiary shall be full evidence of the right and authority to make the same and of all facts therein recited. If such appointment is executed on behalf of Beneficiary by an officer of Beneficiary, such appointments shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the Trustee or any officer of Beneficiary. Upon the making of such appointment and designation, all of the estate and title of Trustee in the Mortgaged Property shall vest in the named successor or substitute trustee and it shall thereupon succeed to and shall hold, possess and execute all the rights, powers, privileges, immunities and duties herein conferred upon Trustee;but,nevertheless,upon the written request of Beneficiary or of the successor substitute trustee,the Trustee shall execute and deliver an instrument transferring to such successor or substitute trustee all of the estate and title in the Mortgaged Property of the trustee so ceasing to act, together with all the rights, powers, privileges, immunities and duties herein 48214420-8640.2 28 11/6/06 jmm conferred upon Trustee,and shall duly assign,transfer and deliver any of the properties and moneys held by the Trustee hereunder to said successor or substitute trustee. All references herein to Trustee shall be deemed to refer to any trustee (including any successor or substitute, appointed and designated, as herein provided) from time to time acting hereunder. Trustor hereby ratifies and confirms any and all acts that Trustee herein named or its successor or successors, substitute or substitutes, in this Agency Deed of Trust, shall do lawfully by virtue hereof. 39. Reconveyance Pursuant to the Terms of Section 10 of the Collateral Assignment. Trustee shall reconvey,without warranty,the Mortgaged Property then held hereunder: (i)written request of Beneficiary, stating that all performances and sums secured hereby have been satisfied and paid,and upon surrender of this Agency Deed of Trust to Trustee for cancellation and retention,and upon payment of its fees,or(ii)in accordance with the provisions of Section 10 of the Collateral Assignment of Deed of Trust executed by the Beneficiary in favor of the Secretary of HUD concurrently with this Agency Deed of Trust. The recitals in any reconveyance executed under this Agency Deed of Trust of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." a 40. No Releases. The Mortgaged Property shall not be released from the lien of this Agency Deed of Trust and no person shall be released from liability under the Promissory Note or any other obligation secured hereby,except in the manner herein specified. Without affecting the liability of any other person for the payment and performance of any obligation herein mentioned (including Trustor should it convey said Mortgaged Property) and without affecting the lien or priority hereof upon any Mortgaged Property not released,Beneficiary may,without notice,release any person so liable, extend the maturity or modify the terms of any such obligation, grant other indulgences,make future or other advances to Trustor or any one or more parties comprising Trustor, assign or in any manner transfer this Agency Deed of Trust, release or reconvey or cause to be released or reconveyed at any time all or part of the said Mortgaged Property described herein,take or release any other security or make compositions or other arrangements with debtors. Beneficiary may also accept additional security, either concurrently herewith or-thereafter, and sell same or otherwise realize thereon, either before, concurrently with, or after sale hereunder. 41. Beneficiary's Consents. At any time, upon written request of Trustor, Trustor's payment of Beneficiary's fees and presentation of this Agency Deed of Trust(in case of full reconveyance,for cancellation and retention),without affecting the liability of any person for the payment of the indebtedness, Beneficiary may: (a)consent to the making of any map or plat of said Mortgaged Property;(b)join in granting any easement or creating any restriction thereon,(c)join in any other agreement affecting this Agency Deed of Trust or the lien or charge thereof, and (d) reconvey, without warranty, all or any part of the Mortgaged Property. 42. RESERVED-NO TEXT. 43. Further Assurances. Trustor,from time to time,within fifteen(15)days after request by Beneficiary, shall execute, acknowledge and-deliver to Beneficiary, such chattel mortgages, security agreements or other similar security instruments, in form and substance reasonably satisfactory to Beneficiary, covering all property of any kind whatsoever owned by 4821-4420-8640.2 29 11/6/06 jmm Trustor or in which Trustor has any interest which, in the reasonable opinion of Beneficiary, is essential to the operation of the Mortgaged Property covered by this Agency Deed of Trust.Trustor shall further, from time to time, within fifteen (15) days after request by Beneficiary, execute, acknowledge and deliver any financing statement, renewal, affidavit, certificate, continuation statement or other document as Beneficiary may reasonably request in order to perfect, preserve, continue, extend or maintain the security interest under, and the priority of, this Agency Deed of Trust and the priority of each such chattel mortgage or other security instrument. Trustor further agrees to pay to Beneficiary on demand all reasonable costs and expenses incurred by Beneficiary in connection with the preparation, execution,recording, filing and refiling of any such instrument or document,including the charges for examining title and the attorneys' fees for rendering an opinion as to priority of this Agency Deed of Trust and of such chattel mortgage or other security instrument as a valid and subsisting lien. However,neither a request so made by Beneficiary,nor the failure of Beneficiary to make such request shall be construed as a release of such Mortgaged Property,or any part thereof, from the conveyance of title under this Agency Deed of Trust,it being understood and agreed that this covenant and any such chattel mortgage,security agreement or other similar security instrument delivered to Beneficiary are cumulative and given as additional security. 44. Time of Performance. Time is of the essence hereof in connection with all obligations of the Trustor herein and under the Promissory Note. 45. Notices. The undersigned Trustor requests that a copy of any Notice of Default or Notice of Sale hereunder-be mailed to it at its address as hereinbefore set forth. Any notices to be given to Trustor by Beneficiary hereunder shall be sufficient,if personally delivered or mailed, postage prepaid, to the address of the Trustor stated hereinabove, or to such other address that Trustor has requested in writing to Beneficiary. Any time period provided in the giving of any notice hereunder shall commence upon the date such notice is delivered or deposited with the United States Postal Service for delivery by regular first-class postage pre-paid mail,as officially recorded on the certified mail receipt. 46. Beneficiary's Right to Inspect. Beneficiary and-its agents and representatives _ may enter upon the Mortgaged Property at all reasonable times to attend to Beneficiary's interest and to inspect the Mortgaged Property. J 47. Reports and Statements. Trustor shall deliver to Beneficiary,within ninety (90) days after the end of each of Trustor's fiscal years, and within twenty (20) days after Beneficiary's request, following an Event of Default,reasonably detailed operating statements and occupancy reports in a form satisfactory to Beneficiary covering the Mortgaged Property, both certified as correct by Trustor. At Beneficiary's option, after an Event of Default, such operating statements shall be prepared by an independent certified public accountant at Trustor's expense. If Beneficiary so requests,such statements shall specify,in addition to other information requested by Beneficiary,the rents and profits received from the Mortgaged Property,the disbursements made for such period,the names of the tenants of the Mortgaged Property and a summary of the terms of the respective leases or the rental arrangements. Trustor shall permit Beneficiary or its representative to examine all books and records pertaining to the Mortgaged Property,and shall deliver to Beneficiary all financial statements,credit reports,and other documents pertaining to the financial condition and 4821-4420-8640.2 30 11/6/06 jmm i obligations of Trustor and any tenants of the Mortgaged Property, and rental, income, and expense statements, audits, and tax returns relating to the Mortgaged Property. 48. Assignment by Beneficiary; Participation. Beneficiary may assign this Agency Deed of Trust in whole or in part to any person, including without limitation the United States Secretary of the Department of Housing and Urban Development and may grant participations in any of its rights under this Agency Deed of Trust, without notice and without affecting Trustor's liability under this Agency Deed of Trust. In connection with any proposed assignment,participation or similar arrangement, Beneficiary may make available to any person all credit and financial data Furnished or to be furnished to Beneficiary by Trustor. Trustor agrees to provide to the person designated by Beneficiary any information as such person may reasonably require to form a decision regarding the proposed assignment, participation or other arrangement. 49. RESERVED—NO TEXT. a 50. Legal Relationships. The relationship between Beneficiary and Trustor is similar to that of legder and borrower,and no partnership,joint venture,or other similar relationship shall be inferred from this Agency Deed of Trust. Trustor shall not have the right or authority to make representations, to act, or to incur debts or liabilities on behalf of Beneficiary. Trustor is not executing this Agency Deed of Trust as an agent or nominee for an undisclosed principal, and no third party beneficiaries are or shall be created by the execution of this Agency Deed of Trust,other than by the assignment by Beneficiary of this Agency Deed of Trust. '5 1. Trustor Certification of Approval. Trustor hereby covenants and certifies that by executing this Agency Deed of Trust, Trustor has obtained the approval of any existing Senior Lender to execute and deliver the Promissory Note and this Agency Deed of Trust. 52. Modification. This Agency Deed of Trust may be amended, modified, changed or varied only by a written agreement signed by all of the parties hereto.No requirement of this Agency Deed of Trust may be waived,at any time,except in a writing signed by Beneficiary and any such waiver shall be effective only as to its terms and on a single occasion. Neither, Beneficiary's delay or omission in exercising any right,power or remedy under this Agency Deed of Trust upon default of Trustor nor Beneficiary's failure to insist upon strict performance of any of the covenants or agreements contained in this Agency Deed of Trust shall be construed as a waiver of any such right,power,remedy,covenant or agreement or as an acquiescence in Trustor's breach or default. 53. Successors. Subject to the prohibitions against Trustor's assignments herein, this Agency Deed of Trust shall inure to the benefit of and bind all of the parties, their successors, estates,heirs, personal representatives and assigns. 54. Partial Invalidity. If a court of competent jurisdiction finally determines that any provision of this Agency Deed of Trust is invalid or unenforceable, the court's determination shall not affect the validity or enforceability of the remaining provisions of this Agency Deed of Trust. In such event, this Agency Deed of Trust shall be construed as if it did not contain the particular provision that was determined to be invalid or unenforceable. No such determination shall 4821-4420-8640.2 31 11/6/06 jmm I affect any provision of this Agency Deed of Trust to the extent that it is otherwise enforceable under the laws of any other applicable jurisdiction. 55. Mutual Negotiation. Beneficiary and Trustor confirm that they have mutually negotiated this Agency Deed of Trust and that none of the terms or provisions of this Agency Deed of Trust shall be construed against either party. 56. Paragraph Headings. The paragraph headings are for convenience only and in no way define, limit,extend,or describe the scope or intent of this Agency Deed of Trust or any of its provisions. 57. Applicable Law. This Agency Deed of Trust and the rights of the parties hereunder shall be governed by,construed and enforced in accordance with the laws of the State of California. 58. Entire Agreement. This Agency Deed of Trust, including any exhibits or addenda, contains the entire agreement of the parties with respect to the subject matter hereof 59. Counterparts. This Agency Deed of Trust may be executed in two or more counterparts, all of which together shall constitute one and the same instrument and lien. The signature pages of exact copies of this Agency Deed of Trust may be attached to one copy to form one complete document. Additional copies of this Agency Deed of Trust may be executed in counterparts and recorded in two or more counties, all of which shall constitute one and the same instrument and lien. 60. Fixture Filing and Recording. This Agency Deed of Trust constitutes a financing statement filed as a fixture filing under California Commercial Code Section 9502(c), as amended or recodified from time to time. This Agency Deed of Trust is to be recorded in the real estate records of San Bernardino County, California, and covers goods that are, or are to become, fixtures. 61. Survival of Representations and Warranties. All of Trustor's representations and warranties contained in this Agency Deed of Trust shall be true and correct at all times during the term of the Promissory Note secured hereby,until performance of all obligations set forth in the Promissory Note and in the City Section 108 Loan Agreement or,alternatively,full repayment of the Promissory Note and release and reconveyance of this Agency Deed of Trust. 62. Conflicting Provisions. To the extent that the provisions of this Agency Deed of Trust conflict with any provisions of the City Section 108 Loan Agreement,the provisions of this Agency Deed of Trust shall control. 63. RIGHTS OF THE SECRETARY OF HUD. This Agency Deed of Trust is part of the"City Section 108 Loan Collateral" as this term is defined in the City Section 108 Loan Agreement. Pursuant to the provisions of paragraph 15(f) of that certain Contract for Loan Guarantee assistance under Section 108 of the Housing and Community Development Act,of 1974, as amended (the "HUD Section 108 Loan Agreement") by and between the Beneficiary and the 4821-4420-8640.2 32 11/6/06 jmm United States Secretary of Housing and Urban Development(the"Secretary"),the Beneficiary shall make a collateral assignment in favor of the Secretary,or its assignee, in this Agency Deed of Trust to the"Custodian"(as this term is defined in the HUD Section 108 Loan Agreement). Paragraph 15(i) of the HUD Section 108 Loan Agreement provides in relevant part: "The Secretary may complete the endorsement of the Subrecipient Note[e.g.:the Promissory Note from Trustor to Beneficiary] and record the assignments referred to in paragraph 15(e) and thereby effectuate the transfer of the documents referenced and underlying indebtedness [e.g.,the City Section 108 Loan Collateral including without limitation this Agency Deed of Trust] from the Borrower[pa g.:the Beneficiary]to the Secretary or the Secretary's assignee." Paragraph 15(i) of the HUD Section 108 Loan Agreement further provides: "The Borrower[e.g.,the City/Beneficiary] agrees that it shall promptly notify the Secretary [of HUD] in writing upon the occurrence of any event which constitutes a default(an"Event .� of Default") under (and as defined in) any of the Security Documents, as defined in paragraph 15(d)[e.g.,the City Section 108 Loan Collateral,including without limitation this Agency Deed of Trust]. Notification of an Event of Default shall be delivered to the Secretary[of HUD] as directed in paragraph 12(f)above. Upon the occurrence of an Event of Default, the Secretary [of HUD] may(without prior notice or hearing, which Borrower [e.g.,the Beneficiary]hereby expressly waives),in addition to(and not in lieu of)exercising any and all remedies that may be available under the Security Documents [ e.g., the City Section 108 Loan Collateral] declare the [HUD] Note in Default and exercise any and all remedies available under paragraph 12. This paragraph shall not affect the right of the Secretary[of HUD] to declare the [HUD] Note in default pursuant to paragraph 11 and to exercise in connection therewith any and all remedies available under paragraph 12." The Trustor acknowledges and agrees that this Agency Deed of Trust is and shall be enforceable by the Secretary of HUD upon the completion of the endorsement by the Secretary of HUD of the Promissory Note. 4821-4420-8640.2 33 11/6/06.imm IN WITNESS WHEREOF,Trustor hereby duly executes this Agency Deed of Trust as of the day and year first above written. TRUSTOR Redevelopment Agency of the City of San Bernardino, a public body corporate and politic By: hairpers n of the N11milnity elo ent Commission of the City of San Bernardino, its governing body Olt [NOTARY ACKNOWLEDGMENT ATTACHED] 48214420-8640.2 34 11/6/06 jmm CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California SS. County of San Bernardino On November 21, 2006, before me, Wasana Chantha, Notary Public, personally appeared Patrick J. Morris. 0 personally known to me ❑ proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to wnsnNA CHANTHn`'•`� the within instrument and acknowledged to Commission# 1694902 me that he executed the same in his -�� Notary Public-California > authorized capacity, and that by his signature San Bernardino County on the instrument the person, or the entity my Comm.Exp*es Oct 18,201 upon behalf hich the person acted, executed the i strutnent. WITNESS my h nd official seal. Place Notary Seal Above Si ature of Notary Public Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Deed of Trust, Assignment of Leases and Rents, Fixture filing and Security Agreement and Request for Notices (HUD Section 108 Loan Agreement No. B-03- MC-06-0539) Document Date: July 1, 2006 Number of Pages: 35 Signer(s) Other Than Names Above: None Capacity(ies) Claimed by Signer RIGHTTHUMBPRINT Signer's Name: Patrick J. Morris OF SIGNER ❑ Individual Top of thumb here ❑ Corporation Officer-Title(s): ❑ Partner- ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator B Other: Mayor of the City of San Bernardino, California Signer is Representing: City of San Bernardino, California EXHIBIT"A" LEGAL DESCRIPTION OF PROPERTY [INSERT COMPOSITE LEGAL DESCRIPTION OF EACH AGENCY-OWNED PARCEL OF LAND INCLUDED IN THE ARDEN-GUTHRIE NEIGHBORHOOD] 4821-4420-8640.2 35 11/6/06 jmm LEGAL DESCRIPTION OF AGENCY OWNED PROPERTY THE LAND REFERRED TO IN THIS REPORT IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN BERNARDINO AND IS DESCRIBED AS FOLLOWS: LOTS: 7; 9; 11; 13; 14; 15; 16; 17; 19; 20; 21; 22; 23; 24; 27; 29; 31; 32; 36; 37; 38; 39; OF TRACT 7106 IN THE CITY OF SAN BERNARDINO. AND LOTS: 23; 24; 25; 26; 27; 28; 29; 30; 31; 32; 34; 36; 37; 38; 39; 40; 41; 42;44; 47; 48; 49; 50; 51; 52; 53; OF TRACT 6898 IN THE CITY OF SAN BERNARDINO BORROWER SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT OF DOCUMENTS PURSUANT TO CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974,AS AMENDED,42 U.S.C. SECTION 5308 (HUD SECTION 108 LOAN CONTRACT NO. B-03-MC-06-0539) SERIES HUD 2006-A CERTIFICATES Arden-Guthrie Project of the Redevelopment Agency of the City of San Bernardino THIS BORROWER SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT OF DOCUMENTS PURSUANT TO CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. SECTION 5308 (this "Agreement") is dated as of 2006, by the City of San Bernardino (the "City") in favor of the Secretary of the United States Department of Housing and Urban Development(the"Secretary of HUD"). RECITALS A. The Secretary of HUD and the City are parties to that certain Contract For Loan Guarantee Assistance for the HUD Series 2006-A Certificates (the "HUD Section 108 Loan Contract Agreement"), as dated by the Secretary of HUD upon acceptance, pursuant to which the City is authorized to loan up to Seven Million Five Hundred Thousand Dollars ($7,500,000) of Community Development Block Grant Program Section 108 monies to the Redevelopment Agency of the City of San Bernardino, a public body corporate and politic (the "Agency") in support of the Arden-Guthrie Project (the "Project") to be undertaken by (the "Developer") in accordance with a Developer Grant Assistance Agreement, dated as of , 2006 (the "Developer Grant Agreement') by and between the Developer and the Agency, in connection with the development of that certain property referred to by the Agency as the Arden-Guthrie Neighborhood Improvement Area (the "Site"). Descriptions of the Site and the Project are more particularly set forth in the Developer Grant Agreement. B. Pursuant to the Developer Grant Agreement, the Developer shall deliver to the Agency various instruments and documents, including without limitation the following: Irrevocable and Unconditional Standby Letter of Credit No. in the principal sum of$ ; Project Completion Guaranty of ; Real Property Tax Minimum Assessment Valuation Covenant and Covenant to Pay Property Taxes; 4834-7498-1120.2 1 11/6/06 jmm Evidence of property casualty insurance naming the Agency, the City and the Secretary of HUD as additional insureds. C. The City and the Agency have entered into that certain Redevelopment Cooperation Loan Agreement (2006 Arden-Guthrie Project) dated as of July 1, 2006 (the "Redevelopment Loan Cooperation Agreement"). Pursuant to Section 4(e) of the Redevelopment Loan Cooperation Agreement the Agency is authorized to consent to an assignment by the City of the City's beneficial interest in the Developer Grant Agreement to HUD as collateral for the repayment of the "Loan-A" as described in the Redevelopment Loan Cooperation Agreement and to execute any and all documents and/or security agreements necessary to effectuate the collateral assignment by the City to HUD of the instruments and contracts which is the subject matter of this Agreement. A true and correct copy of the Redevelopment Loan Cooperation Agreement is attached to this Agreement. D. The HUD Section 108 Loan Agreement requires the City to deliver to the "Custodian" (as that term is defined in the Section 108 Loan Agreement) for the benefit of the Secretary of HUD each of the "Security Documents", as this term is defined in the Section 108 Loan Agreement, together with an assignment thereof to the Secretary of HUD as provided in this Agreement. NOW, THEREFORE, WITH REFERENCE TO THE ABOVE RECITALS AND IN RELIANCE THEREON, AND FOR SUCH OTHER GOOD AND VALUABLE CONSIDERATION THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE CITY AGREES AS FOLLOWS: Section 1. This Agreement is delivered to HUD in satisfaction of certain requirements set forth in paragraph 15(a) of the HUD Section 108 Loan Contract, which amends paragraph 5(c), thereof, to provide for this "Borrower Security Agreement". Section 2. The City hereby grants, assigns and transfers to the Secretary of HUD as collateral for the payment by the City of the obligation as arise in favor of the Secretary of HUD under the HUD Section 108 Loan Contract, each of the Security Documents subject to the terms of this Agreement. The City intends and declares that by this Agreement, the Secretary of HUD, and its successors and assigns, shall have the rights and powers and shall be entitled to all of the benefits under the Security Documents, to the same degree and extent as though the Security Documents had been originally made between: (A) the Developer and the Secretary of HUD, in the case of such documents as provided for under the Developer Grant Agreement; and (B) the Agency and the Secretary of HUD, in the case of such documents as provided for under the Redevelopment Loan Cooperation Agreement. (i) The Security Documents which arise under the Developer Grant Agreement and which are hereby assigned to the Secretary of HUD are more particularly identified as follows: (1) Project Completion Guaranty of ; 4834-7498-1120.2 2 11/6/06 jmm 2 Notice of Collateral Assignment of Real Property Tax Minimum Assessed ( ) p Y Valuation Covenant by the Agency to the City (Recorded Instrument No. (3) Cash draws by the Agency, if any, under Standby Letter of Credit No. (4) Notice of Collateral Assignment of Project Participation Fee by the Agency to the City(Recorded Instrument No. ). (ii) The Security Documents which arise under the Redevelopment Loan Cooperation Agreement and which either have been previously assigned by the City to the Secretary of HUD or which are hereby assigned to the Secretary of HUD are more particularly identified as follows: (1) Note-A, dated , 2006, endorsed in favor of the Secretary of HUD, or order by the City in the allonge attached to Note-A; (2) Collateral Assignment of"Site Tax Increment," as this term is defined in Section 4 of the IVDA Redevelopment Loan Cooperation Agreement, by the Agency to the City. True and correct original copies of each of the instruments.and documents described in the preceding subparagraphs (i) and (ii), above, are attached to this Agreement. Section 3. For so long as no breach by the City has occurred under the HUD Section 108 Loan Contract, the City reserves the right to consent to or make necessary or appropriate amendments and/or revisions to certain of the Security Documents as set forth in the subparagraph below; provided, however, that the City shall not make or consent to any amendment or revision which materially diminishes the value of any of such documents as security under the HUD Section 108 Loan Contract: the Developer Grant Agreement by and between the Agency and the Developer; and the IVDA Redevelopment Cooperation Agreement but only in so far as the provisions of Section 4 thereof (assignment of IVDA tax increment to the Agency) are not affected without the consent of the Secretary of HUD. Section 4. The City represents and warrants to the Secretary of HUD that the City is (and as to any other Security Documents acquired by the City hereafter) and the City shall remain the sole owner of the Security Documents, excepting only the security interest of the Secretary of HUD therein as granted by this Agreement and further excepting the senior security interest of the "Construction Lender" in the Site as may hereafter be permitted under the Developer Grant Agreement. 4834-7498-1120.2 3 11/6/06 jmm Section 5. This Agreement shall be a conditional assignment of the Security Documents and the Secretary of HUD shall not exercise its rights hereunder unless the Secretary of HUD shall give and serve upon the City written notice that there has been a default under the HUD Section 108 Loan Contract beyond any applicable cure period. The City expressly acknowledges and agrees that the Secretary of HUD may exercise its rights hereunder with or without either the City's or the Secretary of HUD's receipt of the proceeds of the Developer Guaranty as assigned by the Agency to the City, and without either the City's or the Secretary of HUD's receipt of the proceeds of any other security provided by the Agency to the City under the Redevelopment Loan Cooperation Agreement as collateral for the repayment of the HUD Section 108 Loan Contract. Section 6. Upon the delivery to the City by the Secretary of HUD of a notice of default as provided in Section 5, the City shall not have any further interest in or with respect to the Security Documents; provided however, that if the City: (i) repays in full its obligations under the HUD Section 108 Loan Contract; or (ii) if the Secretary of HUD elects to permit the City to cure a default under the HUD Section 108 Loan Contract, then in either such case, the rights and interests of the City under the Security Documents shall be reinstated. a Section 7. In the event of any default by the Developer or the Agency, as applicable, under the Security Documents, the City shall have the right, but not the obligation, upon written notice to the Secretary of HUD, to cure any such default of the applicable debtor and take any action under Security Documents to preserve the City's and the Agency's rights under such Security Documents. Section 8. The City agrees to provide prompt written notice to the Secretary of HUD of any default by the Developer or the Agency, as applicable, under any of the Security Documents. Section 9. The City agrees that the Secretary of HUD shall not be obligated to perform or discharge any obligation, duty or liability under the Security Documents by reason of this Agreement until such time as the Secretary of HUD may exercise its election as provided in Section 5 hereof, and that neither this Agreement, or the Secretary of HUD's performance under this Agreement or the Security Documents, shall have the effect of releasing the City from any liability under the HUD Section 108 Loan Contract. Section 10. Until the City pays HUD in full under the HUD Section 108 Loan Contract, the City agrees not to do, or suffer to be done, any of the following acts without obtaining the prior written consent of the Secretary of HUD: (i) cancel any of the Security Documents; (ii) surrender of the Security Documents, except for the Developer's letter of credit; (iii) waive or forgive any Security Documents; (iv) further assign any Security Documents; (v) modify any of the Security Documents, except as set forth in Section 3, without the consent of the Secretary of HUD which consent shall not be unreasonably withheld, conditioned or denied; or(vi) fail to perform any obligation of the City under the Security Documents. Section 11. All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed to have been duly given(a) on the date of 4834-7498-1120.2 4 11/6/06 jmm service if served personally to the party to whom notice is to be given, (b) on the day of transmission if sent by facsimile transmission to the facsimile number given below, and telephonic confirmation or receipt is obtained promptly after completion of transmission, (c) on the day after delivery to Federal Express or similar overnight courier service or the Express Mail service maintained by the United States Postal Service, or (d) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed, return receipt requested, to the party as follows: If to City: City of San Bernardino Attn: Mayor c/o Economic Development Agency of the City of San Bernardino 201 North"E" Street, Suite 301 San Bernardino, California 92401 If to the Secretary of HUD: Secretary of the United States Department of Housing and Urban Development e Attn: Director, Financial Management Division 451 Seventh Street, S.W., Room 7180 Washington, DC 20410 Section 12. At such time as the proceeds of the HUD Section 108 Loan are disbursed by the City to the Agency as the "Subrecipient" as this term is defined in the HUD Section 108 Loan Contract, the City'shall promptly cause to be delivered to the "Custodian" within five (5) business days thereafter, each of the documents described in paragraph 15(e) of the HUD Section 108 Loan Contract. Section 13. From and after a default by the City under the HUD Section 108 Loan Contract, the City hereby irrevocably appoints the Secretary of HUD as the City's attorney- in-fact to exercise any and all of the City's rights in and or under any of the Security Documents, to give appropriate receipts, releases and satisfactions on behalf of the City in connection with the City's rights or delegations under any of the Security Documents, and to do any and all other acts in the name of the City or in its own name with the same force and effect as if this Agreement had not been made. This power of attorney is coupled with an interest. (signature page to follow) 4834-7498-1120.2 5 11/6/06 jmm THIS BORROWER SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT OF DOCUMENTS PURSUANT TO CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. SECTION 5308 is dated as of , 2007, and is executed on behalf of the City by its authorized officers whose signatures appear below. CITY City of San Bernardino Date: By: Mayor APPROVED AS TO FORM: City Attorney CONSENT AND APPROVAL OF COLLATERAL ASSIGNMENT TO HUD UNDER THIS AGREEMENT: Redevelopment Agency of the City of San Bernardino, a public body corporate and politic Date: By: Chair of the Community Development Commission of the City of San Bernardino APPROVED AS TO FORM: Agency Counsel 4834-7498-1120.2 6 11/6/06 jmm SELF CONTAINED APPRAISAL OF ESTIMATE OF FAIR MARKET VALUE ARDEN-GUTHRIE LOTS SOUTH OF HIGHLAND AVENUE BETWEEN ARISEN AVENUE AND GUTHRIE STREET SAN BERNARDINO, CA 92410 EDA PO File No. 16270 PREPARED FOR a City of San Bernardino Economic Development Agency Attn: Colin Strange Project Manager 201 North "E"Street, Suite 301 San Bernardino, California 92401 PREPARED BY Joe J. Villegas, MAI VILLEGAS APPRAISAL COMPANY 732 N. Mountain Avenue, Suite A _ Upland, CA 91786 VALUATION DATE September 11, 2006 DATE PREPARED September 26, 2006 Villegas Appraisal Company Real Estate Appraisers • Consultants 732 N. MOUNTAIN AVENUE SUITE A UPLAND, CA 917868 • (909) 981-4153 - FAX (909) 946-4900 JOE J. VILLEGAS, MAI `MAr A September 26, 2006 City of San Bernardino Economic Development Agency Attn: Mr. Colin Strange Project Manager 201 North "E" Street, Suite 301 San Bernardino, California 92401 '* Job No: 06-156 a EDA PO File No.:16270 Re: Estimate of Fair Market Value For the Arden-Guthrie Project San Bernardino, CA 92405 Dear Mr. Strange: At your request and authorization, I have conducted the investigations and analyses necessary to form-the opinions of the fair market value of the fee simple interest of the above-referenced vacant commercial zoned parcels. The subject parcels consists of 48 individual lots with a combined area approximate 8.23 acres or 358,637 square feet of land. The appraiser has clustered the contiguous lots into larger parcels ranging from 30,986 square feet up to 73,900 square feet. It is the appraiser's opinion that by clustering the lots results in the highest and best use. The non-contiguous lots and stand alone range from approximately 7,200 square feet to 15,496 square feet. The appraiser is appraising the fair market value of the subject property. This is a Complete Self Contained Appraisal. The intended use of this appraisal is for exclusive use of the Economic Development Agency for HUD financing. Parcel A, 2029 TO 2105 N. Dumbarton Based upon the investigations conducted, the analyses made, and on my experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: FOUR HUNDRED SIXTY-EIGHT THOUSAND DOLLARS $468,000 Parcel B, 2029 TO 2095 N. McKinley Based upon the investigations conducted, the analyses made, and on my experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: FOUR HUNDRED THOUSAND DOLLARS $400,000 Parcel C, 2073 TO 2177 N. Newcomb Based upon the investigations conducted, the analyses made, and on my experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the Assumptions and Limiting Conditions and the certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: SIX HUNDRED FIVE THOUSAND DOLLARS $605,000 Parcel D, 2028 TO 2140 N. McKinley Based upon the investigations conducted, the analyses made, and on my experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: SIX HUNDRED FIVE THOUSAND DOLLARS $605,000 Parcel E, 2004 TO 2104 N. Dumbarton Based upon the investigations conducted, the analyses made, and on my experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: FIVE HUNDRED THIRTY THOUSAND DOLLARS $530,000 li Parcel F, 2004 TO 2176 N. Newcomb Based upon the investigations conducted, the analyses made, and on my experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: SEVEN HUNDRED THIRTY-NINE THOUSAND DOLLARS $739,000 Parcel G; 2029 N. Newcomb Based upon the investigations conducted, the analyses made, and on my experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple intereft is as follows: FLIGHTY SIX THOUSAND DOLLARS $86,000 Parcel H, 2194 N. McKinley Based upon the investigations conducted, the analyses made, and on my experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: ONE HUNDRED FIFTY DOLLARS $150,000 Parcel I, 2159 To 2177 N. McKinley Based upon the investigations conducted, the analyses made, and on my experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the ; Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: TWO HUNDRED SEVENTEEN THOUSAND DOLLARS $217,000 Parcel J, 2194 N. Dumbarton Based upon the investigations conducted, the analyses made, and on my experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: ONE HUNDRED FIFTY THOUSAND DOLLARS $150,000 iii Parcel K, 2158 N. Dumbarton Based upon the investigations conducted, the analyses made, and on my experience as real estate analyst and appraiser. I have formed the opinion that, as of September 11, 2006, subject to the Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: EIGHTY SIX THOUSAND DOLLARS $86,000 Parcel L, 2141 N. Dumbarton Based upon the investigations conducted;the analyses made, and on my experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: EIGHTY SIX THOUSAND DOLLARS $86,000 Parcel M, 2177 N. Dumbarton Based upon the investigations conducted, the analyses made, and on my experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: NINETY THREE THOUSAND DOLLARS $93,000 Parcel N, 2122 N. Arden Based upon the investigations conducted, the analyses made; and on fffy experience as real estate analyst and appraiser, I have formed the opinion that, as of September 11, 2006, subject to the _ Assumptions and Limiting Conditions and the Certification set forth in the report which follows, the fair market value of the fee simple interest is as follows: EIGHTY SIX THOUSAND DOLLARS $86,000 My.opinion of value represents cash equivalent terms and addresses real property only. It does not include any personal property,business goodwill or trade fixtures that may be associated with real property. This appraisal is prepared in accordance with the Uniform Appraisal Standards for Federal Land Acquisitions, Uniform Standards of Professional Appraisaf Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation, the State's "Real Estate Appraiser Regulations" and "Real Estate Appraiser Licensing and Certification Law" and the City of San • iv Bernardino Economic Development Agency's "Minimum Appraisal Standards and Reporting Requirements for Commercial Properties." The complete summary narrative report which follows sets forth the data and analyses upon which my opinion of market value is, in part, predicated. Based on conversations with owners and brokers, a reasonable marketing time for this property is estimated to be from six to nine months, based on current market conditions and presuming diligent marketing efforts. Respectfully submitted, VILLEGAS APPRAISAL COMPANY' IJ. Villegas Al a rtified eral Real Estate Appraiser" ifornia State Certification No.: AG004648 a Expiration Date January 17, 2009 v 02=35 1" t Jr )� ✓ 4ry._S Artrs: .� e Ck;� y G , _ Boundary _ Arden F f :'5 6 .. _ e S _ i.! t ,{ r i.. SOM.- LIi TABLE OF CONTENTS Letterof Transmittal................................................................................. i Tableof Contents....................................................................................ttt Certification..... ............................................. ................................... ...8 Summary of Salient Data and Conclusions.......................................................9 Subject Photographs................................................ ............................... 12 Assumptions and Limiting Conditions .......................................................... 39 INTRODUCTION Introduction.......................................................................................... 42 Client/User .......................................................................................... 42 IntendedUse ................................:....................................................... 42 Market Value Definition ..........................:.... .......................................... 42 Datesof Value .................................................................. ................... 42 Relevant Characteristics........................................................................... 43 Scopeof Work..............................................:....................................... 43 Property Rights Appraised........................................................................ 43 Ownership History ............................................................. ................... 44 Competency Provision......................... ......................... ......................... 44 Regional/City Description ............................:........................................... 46 Neighborhood Description ........................................... ........................... 58 Retail Market Trends ............................................................................. 61 Site Description .................................................................................... 66 Assessed Valuation ................................................ 74 Highestand Best Use ............................................................................. 7 5 VALUATION AppraisalProcess...................................................... ........................... 78 LandValuation. .........................................................................._......... 79 Final Value Reconciliation_............................. ........................................142 ExposureTime................................................................................ 144 - ADDENDA Grant Deed Comparable Land Photographs Comparable Land Data and Plat Maps Qualifications Vii CERTIFICATION 1, the undersigned, certify that, to the best of my knowledge and belief: the statements of fact contained in this report are true and correct. - the reported analyses, opinions, and conclusions are limited only by the reported Assumptions and Limiting Conditions, and are my personal impartial, unbiased professional analyses, opinions and conclusions. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect.tQ the parties involved. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. t My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. - the reported analysis, opinions and conclusions were developed, and this report has been prepared in conformity with requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute which include the Uniform Standards of Professional Appraisal Practice, and the Uniform Standards For Federal Land Acquisitions. the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. Naomi Bonner, #AT 027539 provided significant real property appraisal assistance to the person signing this certification. Joe J. Villegas, M.AI, has made a personal inspection of the property that is the.subject of this report and has considered pertinent facts affecting the value thereof. As of the date of this report,Joe J. Villegas, MAI, has completed the continuing education program of the Appraisal Institute JVillegas, I fied Gene Real Estate Appraiser" rnia State Certification No.: AG004648 Expiration Date: January 17, 2009 8 SUMMARY OF SALIENT FACTS AND CONCLUSIONS Property Name: Arden-Guthrie Project Property Location: Between Highland Avenue and 20`' Street to the south and between Guthrie Street and Arden Avenue to the east, City of San Bernardino, San Bernardino County, California. Thomas Guide: San Bernardino County, 577E--4 Property Description: 47 vacant finished sites and 1 boarded/vandalized 4-plex within the Arden-Guthrie Project. Property Owner: Economic Development Agency, City of San Bernardino 4 Assessor's Parcel Nos.: 1191-021-12, 1191-021-13, 1191-021-141'1191-021-15 1191-021-16, 1191-021-17, 1191-021-18, 1191-021-19, 1191-021-21, 1191-021-22, 1191-021-23, 1191-021-24, 1191-021-25, 1191-021-26, 1191-021-27, 1191-021-329 1191-021-33, 1191-021-34, 1191-021-35, 1191-021-36, 1191-021-37, 1191-021-44, 1191-02146, 1191-02149, 1191-021-50, 1191-021-42, 1191-021-51, 1191-021 42, 1191-021-53, 1191-021-54, 1191-02148, 1191-021-29, 1191-021-55, 1191-021-58, 1191-021-60, 1191-021-621, 1191-021-63, 1191-021-67, 1191-021-68, 1191-021-699 - 1191-021-17, 1191-041-18, 1191-041-20, 1191-041-219 1191-021-27, 1191-041-29, 1191-041-30, 1191-041-31. _ Census Tract: 0074.07 - Land: 8.23 acres or 358,637 square feet of usable land. Flood Hazard: There are two Flood Zones in the Arden-Guthrie Project. The northern sites are in Zone "X" Community#060281, Panel 7963 F dated March 18, 1996. The southerly sites are in Zone X-500 Year with Community #060281 Panel 7963 F, dated March 18, 1996. Flood insurance is available but not required. Zoning: PCR (Public/Commercial Recreation) District. (SP) Specific Plan, Special Purpose District Highest and Best Use: "As Is" Vacant: Commercial uses allowed within PCR Zone 9 Interest Appraised: Fee Simple Date of Value: September 11, 2006 Date of Report: September 26, 2006 SALES COMPARISON APPROACH Parcel A: 2029 to 2105 N. Dumbarton SALES COMPARISON APPROACH Land Valuation $468,000 Reconciled Fair Market Value $468,000 Parcel B: 2029 to 2095 N. McKinley SALES COMPARISON APPROACH ° Land Valuation $400,000 Reconciled Fair Market Value $400,000 Parcel C: 2073 to 2177 N. Newcomb SALES COMPARISON APPROACH Land Valuation $605,000 Reconciled Fair Market Value $605,000 Parcel D: 2028 to 2140 N. McKinley SALES COMPARISON APPROACH Land Valuation $605,000 • Reconciled Fair Market Value $605,000-- Parcel E: 2004 to 2104 N. Dumbarton SALES COMPARISON APPROACH Land Valuation $530,000 Reconciled Fair Market Value $530,000 Parcel F: 2004 to 2176 N. Newcomb SALES COMPARISON APPROACH Land Valuation $739,000 Reconciled Fair Market Value $739,000 Parcel G: 2029 N. Newcomb SALES COMPARISON APPROACH Land Valuation $86,000 Reconciled Fair Market Value $86,000 10 Parcel H: 2194 N. McKinley SALES COMPARISON APPROACH Land Valuation $150,000 Reconciled Fair Market Value $150,000 Parcel I: 2159 to 2177 N. McKinley SALES COMPARISON APPROACH Land Valuation $217,000 Reconciled Fair Market Value $217,000 Parcel J: 2194 N. Dumbarton SALES COMPARISON APPROACH Land Valuation $150,000 Reconciled Fair Market Value ' $150,000 Parcel K: 2158 N. Dumbarton t SALES COMPARISON APPROACH Land Valuation $86,000 Reconciled Fair Market Value $86,000 Parcel L: 2141 N. Dumbarton SALES COMPARISON APPROACH ° Land Valuation $86,000 Reconciled Fair Market Value $86,000 Parcel M: 2177 N. Dumbarton SALES COMPARISON APPROACH Land Valuation $93,000 Reconciled Fair Market Value $93,000 Parcel N: 2122 N. Arden ` J SALES COMPARISON APPROACH Land Valuation $86,000 Reconciled Fair Market Value $86,000 11 SUJBECT PHOTOGRAPHS "Taken: September 11, 2006 I _ ARDEN AVE. FACING NORTH ARDEN FACING SOUTH 12 SUBJECT PHOTOGRAPHS Taken: September 11, 2006 i 20TH STREET FACING EAST 20'STREET FACING WEST 13 SUBJECT PHOTOGRAPHS Taken: September 11, 2006 t HIGHLAND AVE. (OUTER HIGHWAY)FACING EAST FROM GUTHRIE STREET t MCKINLEY STREET FACING SOUTH 14 SUBJECT PHOTOGRAPHS Taken: September 11,2006 � I( s L A DUMBARTON STREET FACING SOUTH S� NEWCOMB STREET FACING SOUTH 15 SUBJECT PHOTOGRAPHS Taken: September 11, 2006 2177 DUMBARTON STREET FACING EAST 2141 DUMBARTON STREET FACING EAST 16 SUBJECT PHOTOGRAPHS Taken: September 11, 2006 �t 2105 DUMBARTON STREET FACING SOUTHEAST 2095 DUMBARTON STREET FACING NORTHEAST 17 SUBJECT PHOTOGRAPHS Taken: September 11, 2006 4 2073 DUMBARTON STREET FACING EAST 2051 DUMBARTON STREET FACING EAST 18 SUBJECT PHOTOGRAPHS Taken: September 11, 2006 2029 DUMBARTON STREET FACING EAST 2004 DUMBARTON STREET FACING NORTHWEST 19 SUBJECT PHOTOGRAPHS Taken: September 11, 2006 'z 2028 DUMBARTON STREET FACING WEST 2050 DUMBARTON STREET FACING WEST 20 I ii SUBJECT PHOTOGRAPHS Taken: September 11, 2006 i i 2072 DUMBARTON STREET FACING SOUTHWEST xX+ S 2094 DUMBARTON STREET FACING NORTHWEST 21 � � ' • ' • , , 11, �. >-w �� ,�#,�I ��: _� 1' ., '"• t�D i "_x may. �, .��• rr 1,, ';' .. _, R_ � - • .. ,� ,.� .. ......;, e�y,�CE�.�:.. .. .... x �. .. (!� � • ( • � � a � ._f.sec: ,rys.;. .. ;P�• '..'1 3 • 3-- i � • 1 SUBJECT PHOTOGRAYUS September 116 -.:vim @f�� �,' i�s,� ��g,�}i:: j ���x -�i•'s ei• a 9 2194 DUMBARTON - 3 A 2176 NEWCOMB SUBJECT PHOTOGRAPHS Taken: September 11, 11 , NEWCOMB STREET FACING WEST S-' 9.. � �'•Alp - � Jr�{� v.� 5 � 1gpT� i fa Y •Mi STREET FACING WEST SUBJECT PHOTOGRAPHS Taken: September 11, 2006 1 2122 NEWCOME STREET FACING WEST �*c 2104 NEWCOMB STREET FACING WEST 25 SUBJECT ' 2006 Taken: September 11, r. LL '�# sA - r 094 NEWCOME STREET FA&NG NEWCOMB STREET FACING WEST SUBJECT PHOTOGRAPHS Taken: September 11, 2006 66 x i 2050 NEWCOME STREET FACING WEST 2025 NEWCOMB STREET FACING WEST 27 SUBJECT PHOTOGRAPHS Taken: September 11, 2006 2004 NEWCOME STREET FACING NORTHWEST �.s 2029 NEWCOMB STREET FACING EAST 28 � tl� � - - 4 R _ f �. t�y ZEN � � I SUBJECT PHOTOGRAPHS Taken: September 11, 2006 2141 NEWCOME STREET FACING EAST >z ----------- 2159 NEWCOMB STREET FACING EAST 31 i � � � . 11� t _. 'six � ,. �� �" v �` .,. .#aFs� � _ _ - a a .� A�. L ti�-� �`af�X 4, "; -' Y�, � — ��.F ��.. � .a,_ i °-. � _ -�~,�. 1• � i SUBJECT PHOTOGRAPHS Taken: September 11, 2006 2073 MCKINLEY STREET FACING EAST - - _., wf � Kt r c . �'�% Y x 2051 MCKINLEY STREET FACING EAST 33 • , �• III 13 N vpppp ,ssT' ,y •f. v 6 7 .� 9 , o ..`mss � �i � d 4 th"• i SUBJECT PHOTOGRAPHS Taken: September 11, 2006 S h: r 2122 MCKINLEY STREET FACING WEST 2104 MCKINLEY STREET FACING NORTHWEST 35 SECT PHOTOGRAPHS Taken: September l, 2006 - . � 29RCKINLEY STREET FACING NORTHWEST �< v 27ycKINLEY STREET FACING WEST 36\ : � 11. 1 1 1 F i� • s .3 !A ANA loy -M NOW 1 Nit 1 i t SUBJECT PHOTOGRAPHS Taken: September 11, 2006 kAR 1 I FRONT VIEW OF 2194 MCKINLEY STREET FACING SOUTHWEST `i 2122 N.ARDEN FACING WEST 38 ASSUMPTIONS AND LIMITING CONDITIONS The analyses and opinions set forth in this appraisal are subject to the following assumptions and limiting conditions; No responsibility is assumed by the appraiser for matters which are legal in nature. A title report was not provided to the appraiser. The appraiser assumes that there are no easements, liens, encroachments, encumbrances or other property restrictions which would adversely affect the value of the subject property as estimated herein, other than typical utility easements. No survey of the boundaries of the property was undertaken by the appraiser. All areas and dimensions furnished are presumed to be correct. The appraiser assumes for purposes of this appraisal that the soil conditions are adequate to support the subject's existing improvements and that there are no toxic elements or substances associated with the subjects soils. No representations, however, are made concerning soil conditions. k Information contained in this appraisal has been gathered from sources which are believed to be reliable, and, where feasible, has been verified. No responsibility is assumed for accuracy of information supplied by others. The appraiser assumes no responsibility for economic or physical factors which may affect the opinions herein stated which may occur at some date after the date of value. The appraiser's analyses of events which influence the valuation process are predicated on the continuation of historic and current trends in the market. The property is appraised assuming it to be under responsible ownership and competent management, and available for its highest and best use. No engineering survey has been made by the appraiser. Except as specifically stated,data relative to size and area was taken from sources considered reliable. Should further information become available which differs from the numbers used, the appraiser reserves the right to adjust the opinions of value accordingly. No encroachment of real property improvements is considered to exist. Maps, plats and exhibits included herein are for illustration only, as an aid in visualizing matters;discussed within the appraisal. They should not be considered as surveys nor relied upon for any other purpose, nor should they be removed from, reproduced, or used apart from this report. No opinion is expressed as to the value of sub-surface oil, gas, or mineral rights, or whether the property is subject to surface entry for the exploration or removal of such materials except, as is expressly stated. 39 No opinion is intended to be expressed on matters which require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. The appraiser has inspected, as far as possible, by observation, the land; however it was impossible to personally inspect the conditions beneath the soil; therefore, no representations are made as to these matters unless specifically considered in the appraisal. No consideration has been given in this appraisal to personal property (if any) located on the site; only the real estate has been considered, unless otherwise specified. This also excludes the value of any itefns of a historical., archaeological or biological nature. The property being appraised is not known to have any significant natural, cultural, recreational, or scientific value. This is an assumption of this report. The appraiser shall not be required, by reason of this appraisal, to give testimony or to be in attendance in court or any govefnmental or other hearing with reference to the property without prior arrangements having first been made with the appraiser relative to such additional employment. This valuation is further contingent upon the assumption that no hazardous waste is located in, on, or near the subject site, such that value or utility would be negatively affected. Joe J. Villegas, MAI, the signatory of this appraisal, is a member of the Appraisal Institute. The Bylaws and Regulations of the Institute require each member and candidate to control the use and distribution of each appraisal by such member or candidate. Therefore, except as hereinafter provided, the party for whom this appraisal was prepared may distribute copies of this appraisal, in its entirety, to such third parties as may be selected by the party for whom,this appraisal was prepared; however, selected portions of this appraisal shall not be given to third parties without the prior written consent of the signatory of this appraisal. s. Neither all nor any part of the contents of this report shall be conveyed to any person or entity, other than the appraiser's or firm's client, through advertising, solicitation materials, public relations, news, sales, or other media for public or private communication without the written consent and approval of the signatory of this appraisal, particularly as to valuation conclusions, the identity of the appraiser or firm with which the appraiser is connected, or any reference to the Appraisal Institute or the MAI designation. Furthermore, this report is for the sole use of the client, Economic Development Agency. Further, the appraiser or firm assumes no obligation, liability, or accountability to any ;third party. If this report is placed in the hands of°anyone but the client, client shall make such party aware of all the assumptions and limiting conditions of the assignment. It is assumed there are no deed restrictions to a single use. If there are such restrictions, it could adversely impact site value. 40 The appraiser reserves the right to make such adjustments to the valuation herein reported, as may be required by the consideration of additional data or more reliable data that may become available. This report was prepared exclusively for Economic Development Agency (EDA) for the sole purpose of assisting EDA in a just compensation for a full taking regarding the property in question. This report cannot be used or relied upon by anyone but EDA except where permitted or required by Law. a a 41 INTRODUCTION CLIENT/USER- The Client/Intended User of this appraisal report is The Economic Development Agency of The City of San Bernardino, County of San Bernardino, State of California. INTENDED USE; Economic Development Agency Director Maggie Pacheco states that the redevelopment agency has been buying land in the Arden-Guthrie neighborhood for 20 years, and owns 48 lots. With the HUD loan, the Economic Development Agency expects to buy the remaining 25 lots within a year and a half. The agency already is negotiating with Home Depot to develop the property. DEFINITION OF VALUE: Fair Market Value Definition The term "fair market value" is defined as follows: For purposes of this analysis, the definition of market value as established by the Code of Civil Procedure CCP 1263.320 (a) has been utilized. This definition is as follows: "The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a sgller, being willing to sell under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing and able to buy but under no particular necessity for so doing, each dealing with the other with full ` knowledge of all the uses and purposes for which the property is reasonably adaptable and available" CCP 1263.320 (b) states, "The fair market value of property taken for which there is no relevant market is its value on the date of valuation as determined by any method of valuation that is just and equitable" EFFECTIVE DATE; The effective date of value is September 11, 2006. The date of inspection is September 1, 2006. 42 RELEVANT CHARACTERISTICS; The Arden-Guthrie Project neighborhood is bounded by Highland Avenue and 20`' Street to the north and south and Arden Avenue and Guthrie Street on the east and west. It is one of the most high crime neighborhoods in the City of San Bernardino according to police records. There are 48 finished sites involved in this appraisal report of the Arden-Guthrie Project. Deeds and legal descriptions of each site are furnished in the addenda of this report. The subject project neighborhood has easy access to the #30 Freeway at Highland Avenue and Arden Avenue. Highland Avenue h8 a high traffic count. Another economic attribute is the closeness of the Arden-Guthrie neighborhood to the City of Highland, which has significant new housing. The real property interest to be valued in this appraisal report is "Fee Simple". Fee Simple Estate The real estate interest appraised is the fee simple estate as of the effective date of the appraisal. The Dictionary of Real Estate Appraisal, 3rd Edition, 1993, defines fee simple estate as follows: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. No personal property, trade fixtures, or intangible items that are not real property are included in this appraisal report. - As of March 1992, the Arden-Guthrie neighborhood is a Restricted Specific Commercial Zone. The Economic Development Agency owns 48 lots in Arden-Guthrie Project and with the HUD loan,.the agency expects to buy the remaining 26 lots within a year and a half. HYPOTHETICAL CONDITIONS; A Hypothetical Condition is that which is contrary to what exists but is supposed for the purpose of analysis. There are no hypothetical conditions related to this appraisal report. SCOPE OF WORK (APPRAISAL DEVELOPMENT AND REPORTING PROCESS): The scope of this assignment has included: 43 .Exterior inspection of the subject property and surrounding neighborhood; .Research and investigation of current market conditions as they relate to the subject property as well as the market sector within which the subject is identified; .Interviews with brokers, appraisers, property owners and managers, as well as relevant public agencies or governing bodies;. Collection, verification to the extent possible during the normal course of business, and analysis of the land sales data as are available to indicate a value conclusion; and .Applied one approach for the fand valuation that any reasonable appraiser would consider arriving at an indication of value. OWNERSHIP HISTORY ` The subject 48 sites are vested in the Redevelopment Agency City of San Bernardino. Maggie Pacheco, Economic Development Agency Director states that the agency has been buying land in the Arden-Guthrie Project for 20 years and presently owns 48 lots. The most recent acquisition was 2194 McKinley which closed escrow on August 25, 2006 between Dion and Tina Graham, Sellers and the Redevelopment Agency of San Bernardino, Buyer. The purchase price was reported at $265,000 which included some value for the boarded up improvements. The four plex has lost its legal non-conforming status because it has been vacant over 12 months; therefore, the improvements cannot be restored and re-rented. The appraiser did not assign any value to the improvements. No listings or pending sales were reported to the appraiser. The subject parcels were purchased from individual owners. Competency Provision This competency provision was subject to the implementation of state licensing and certification. The State of California has fulfilled this requirement and requires appraisals for federally regulated institutions to be performed by either licensed or certified appraisers. The appraiser is currently certified with the State of California, have previously appraised this property type, and have attained a level of competency necessary to complete the assignment in a diligent manner. 44 Regional Area Map ___ i © • • • r: FA Su Loma U. 5 ;J• U TI im 91 hu ' '""' COUNTYXITY AREA ANALYSIS The subject property is located in the City of San Bernardino, which is situated toward the eastern end of San. Bernardino County and the Inland Empire competitive market. The City of San Bernardino is surrounded by the Cities of Rialto and Colton to the west, the Cities of Highland and Redlands to the east, the San Bernardino County line to the north, and the Cities of Colton and Loma Linda to the west. The County of San Bernardino San Bernardino was created in 1853 from what was formerly an easterly section of Los Angeles County and parts of Mariposa County. In 1893 San Bernardino County contracted to its current size as Riverside County was created. Population a San Bernardino County has since outgrown its agricultural roots and is currently home to nearly 2,000,000 citizens, making San Bernardino County the third most populated County within the State of California behind Los Angeles and Orange Counties. The County of San Bernardino has shown an accelerated population growth pattern, following Southern California regional trends. US Census data from 1990 estimated the County's population at 1,418,000, while year 2000 data estimated a County population of 1,700,000-an increase of approximately 17% over the ten-year period. Current estimates project a population of 2.8 million for the year 2020. The following graph illustrates the population growth trend for San Bernardino County and is, based on data provided by the US Department of Finance: 2,000,000 °- :,800,000 - 1.600,000 1,400.000 1,200.000 - 1.000,000 = 800,000 600.000 400.000 200.000 . 0 1950 1960 1980 1990 2000 2005 46 The increasing population demonstrated above yields the following growth rates: Year Population %Increase 1980 919,700 N/A 1990 1,418,380 _ 54% 2000 1,7_09,434 21% - 2001 ---- 1,741,100 - 2% 2004 1,897,950 ---- 8% 2005 1,946,202 2% 2006 1,991,829 2% Labor Market Characteristics Fortunately, the explosive population growth did not come as a burden to the labor market of San Bernardino County, as the 4.3% current rate of,unemployment would indicate. While much of the State and Nation saw a recent spike in unemployment, to a moderately healthy 4.8% rate of state unemployment and a 5.1% national unemployment, the County of San Bernardino has demonstrated a fair amount of insulation to this and other adverse market trends as evidenced by an unemployment rate that is currently below the State and National marks. A juxtaposition of the California State and San Bernardino County Unemployment trends is illustrated below: 0.066 7% 0.059 0.09 0.053 0.05 0.055 6%- 0.048 ®:®dR 0.04 O-tAZ5 0.048 5% 043 4% 3% 2% California San Bernardino 1% 0% - 1997 1998 1999 2000 :2001 2002 2003 2005 2006 Tile San Bernardino County Labor market is becoming markedly skilled, largely due to the availability of intellectual capital afforded by several public and private universities and colleges within the County as well as the numerous colleges and universities in the surrounding Los Angeles, Orange, Riverside, and San Diego Counties. 47 The San Bernardino County Labor Market is heavily weighted in the services industry which comprises about 25.8% of the overall labor market. Government employment and retail trade rank second and third with 19.8% and 19.4% of the labor market, respectively. Aside from being the largest component of the San Bernardino labor market, services are also expected to be the fastest growing. Current projections estimate that services employment will climb 30.2% between 1999 and 2006. Within the services industry, forecasts by the US Department of Finance suggest that other services and business services will show the highest percentage gains over the noted period. Major area employers are listed on the following table: Employer Name Location Industry California State University San Bernardino Colleges and Universities California Steel Industries Fontana Blast Furnace and Basic Steel Products Chaffey Community College Alta Lorna Colleges and Universities Community Hospital San Bernardino Hospitals County of San Bernardino San Bernardino Public Administration Government Environment Systems Research Redlands Computer&Data Processing Services Hub Distributing Ontario Family Clothing Stores t Jerry L_Pettis Memorial Veterans Hospital Loma Linda Hospitals Loma Linda University Medical Loma Linda Offices and Clinics of Medical Doctors Ontario International Airport Ontario Airports,Flying Fields,and Services San Manuel Bingo and Casino Highland Misc.Shopping Goods Stores Snow Summit Mountain Resort Big Bear Lake Hotels and Motels Stater Brothers Holdings,Inc Colton Grocery Stores University of Redlands Redlands Colleges and Universities US Post Office San Bernardino US'Postal•Service Other Pertinent Facts and Figures • Personal income (2001) for the Inland Empire Market (San Bernardino and Riverside Counties) totaled $81 billion, larger than 21 of the Nation's states • Median Family Income (2000) was $42,066 • Median sale prices for new and existing homes of$161,000 48 Economic Trends Analysis The National Economy continues to appear precarious although marked improving indications which is slowly replacing uncertainty. Ongoing geopolitical situations, a markedly higher unemployment rate and the unveiling of widespread corporate wrongdoings have weighted down the markets in recent months although more recent indications suggest a period of stabilization and recovery. Reacting to weak economic indicators and waning investor confidence, the Federal Reserve and US Government have turned to policies and legislature that are designed to revive the sluggish economy. Some signs of economic recovery have begun to show as national GDP growth has remained positive, although at subdued levels hovering mostly between I% and 3% during recent quarters. 4 t 49 CITY MAP �x 33 _ Y 40th St + San Manuel 74� �t 'ti Rtservat/on 3Q ,., 5...:.3.� k x � Subject. F Cy (si Ste' Ld rs.{ �r. .Y,yk•..... � �+ 50 The City of San Bernardino The city is characterized by a manufacturing and distribution economy. San Bernardino currently has the second largest population east of Los Angeles County and the eight largest in Southern California. The City's population as of January 2006 is 201,823, an increase of approximately 0.8 percent from the previous year of 200,280. Economic and Employment Trends San Bernardino's professional areas include the administrative offices for San Bernardino County, Caltrans, and federal agencies like the Defense Finance & Accounting Service. Cal State San Bernardino and San Bernardino Valley College are in the city, Loma Linda University Medical Center and the University of Redlands are next door. 4 The region gained 56,658 new jobs in 2005, accounting for 22% of all new jobs created in the State last year. Over the past 15 years, more than 500,000 jobs nearly half of all new jobs created in the state were created in the Inland Empire, according to the California Employment Development Department.. After months of uninterrupted increases, home sales in Riverside and San Bernardino County finally began to slow during the first few months of 2006; by May 2006, sales had dropped 8.6 percent in Riverside County year to year; while in San Bernardino County sales of Single Family Homes rose a modest 2.6% during May. Residential building permits for new home construction were also slowing in the spring of 2006. New permits for single-family homes were down 25.6% compared with May 2005 according to the Construction Industry Research Board. In San Bernardino County new home permits were just 5.6% below 2005. Linkages/Access With its location near the I-10 and I-215 freeway junction, San Bernardino is in the heart of the - Inland Empire, Southern California's fastest growing economy. Within 30 minutes, companies have immediate access to the Burlington Northern Santa Fe Railroad intermodal yard and San Bernardino International Airport. The city offers an efficient surface street system that provides access to the area's freeways. Good accesses to Eastern US markets are provided by the cargo facilities of San Bernardino International Airport. Mayor/Council Set 2006-07 City Goals • On May 22, the Mayor and Council met for a workshop at CSUSB to set priorities for Fiscal Year 2006-07. After discussing a wide variety of issues, the Mayor and Council used a voting process to reach consensus. Through that process, the following priorities were selected, and will be a key focus of our efforts over the coming fiscal year. The new goals are listed below by priority. 51 • Increase police staffing. • Focus on job creation, business recruitment and retention. As one component, seek to bring at least one permanent air cargo carrier to SBIAA. • Facilitate downtown redevelopment progress (Carousel Mall, 5'/G redevelopment, etc.) and focus on a cohesive development strategy for the downtown area, including enhancing green space; facilitate the retention of County offices in the City, and the potential development of a new County Justice Center in the downtown area. • Enhance code enforcement efforts. • State Street plan needed - a major opportunity. • Improve development processing. • Conduct a citywide organizational review. • Provide incentives and strategies to promote home ownership, improve rental housing and reduce the proportion of rental units,by encouraging infill housing and apartments to condo conversions. ' • Move forward with economic development opportunities surrounding the North Lake project area. • ►Increase security infrastructure by improving street lighting and installing surveillance cameras on City streets, alleys and apartment complexes. • Improve street conditions through an aggressive capital improvement program. • Develop a 30-acre regional park in the Verdemont area. • Develop collaborative relationships With the County, SBUSB, and other community partners to address the root cause of crime. The City of San Bernardino has several development projects; such as the Downtown Area, The Santa Fe Deport District, and the San Bernardina International Airport Authority. These projects are at the present time on-going with long-term goals. The City of San Bernardino Police*Department is 100 years old. The Police Department has divided the City into 21 patrol-car beats with 15 full-time beats. Over the next 5 years the goal is to increase staffing to allow deployment of all 21 beats. The Police Department states it has seen a reduction in violent crimes of 7.95% with the implementation of the beat plan. Operation Phoenix (Mayor Pat Morris' Crime-Fighting Program for San Bernardino. It is the opinion of the Mayor that Suppression,Intervention and Prevention are the pillars upon which to re-build the City of San Bernardino, to rid it of crime and violence and become an example of peace, prosperity and renewal. Suppression: L Hire 40 new police officers to fully and permanently implement the Police BEAT System. There is no better method for rooting-out and responding to criminal activity than having police officers rigorously patrolling every neighborhood in the City. The commitment to public safety must be stronger if we are to take back the City streets. The Mayor implores the City Council to conduct an emergency meeting and authorize the hiring of additional officers immediately. 52 2. Increase use of gang injunctions and sweeps. Greatly expand the use of injunctions against known street gangs in the City's neighborhoods. These highly effective injunctions prohibit gang members from associating with one another and significantly restrict their ability to commit the crimes that plague the City streets. 3. Target illegal gun and drug traffickers from tougher sentencing guidelines. Most violent crime involves guns and drug trafficking, which are federal offenses and qualify for tougher criminal sentencing. The City must target and federally prosecute traffickers that illegally supply the guns and drugs to gangs and youth in the community. 4. Coordinate resources with State and Federal authorities. The quest for law enforcement assistance.and funding must be collaborative and must invoke all levels of government. To obtain the necessary resources to fight this battle the City must mobilize California Highway Patrol and the US Attorney's Office. Intervention 3 5. Use technology to track violent parolees 24-7. Global Positioning Satellite (GPS) anklets have been used very successfully to track sexual offenders. The City must now expand the use of GPS anklets to all violent parolees to track their movements. 6. Increase security infrastructure. The City will improve street lighting and install surveillance cameras on City streets, alleys and in apartment complexes that are considered "high-risk" locations for criminal activity. 7. Utilize aggressive code enforcement and demolition of abandoned buildings. The City will aggressively pursue demolition of abandoned buildings that are dangerous and/or create a public nuisance. We will hold property owners and landlords accountable for conditions that spawn crime and the City will close down rental properties that fail to comply. 8. Aggressively attack non-violent crime and fully support community courts. People must be held accountable for non-violent crime (drug use and low-level drug possession, prostitution, graffiti, vandalism, disorderly conduct, aggressive panhandling, etc.) that often goes unpunished and can lead to more troubling and violent criminal conduct. Suppression, Intervention and Prevention are the pillars upon which the City will rebuild —= from crime and violence and into an example of peace, prosperity and renewal. 9. Appoint Mayoral liaison to strengthen police-neighborhood partnerships. The Mayor will create a special liaison in the Mayor's office to attgnd all neighborhood-police meetings and report to him on all ideas and requests for public assistance/improvements that would improve neighborhood safety and reduce crime. Prevention 10. Join and support San Bernardino County's Healthy Babies Initiative. San Bernardino County is launching a comprehensive local health initiative to attack the current epidemic of babies born to mothers using alcohol or drugs, a factor that significantly increases a child's future involvement in the criminal justice system. Yet the City must participate fully in this program. 11.Identify affordable and quality pre-school opportunities. 12. Develop ".new" vocational curriculum with school district officials. In order to motivate "at-risk" students to complete their education the City must offer alternatives to a curriculum dominated by college prep and academic classes. 53 13. Expand after school programs. Having quality youth development programs is critical to breaking the hold of gangs and drugs in the neighborhoods. Working with the police, schools, non-profits, and the faith-based community, San Bernardino must vastly expand its support and number of opportunities for expanded after school programs. 14. Increase youth sports programs. 15. Create police-sponsored activities league. Police engagement with youth in a police- sponsored activities league (PAL) and other after school recreation activities will build trust and set positive values. 16. Revitalize participation in neighborhood associations. The City has neighborhood watches and neighborhood associations, but many lack the full participation of area residents. They must be fully engaged to help~spot and resolve local problems. 17. Transform San Bernardino from a "City of Renters" into a "City of Owners". Over the years San Bernardino has become a City of renters and it is a common understanding that "nobody paints a rented house." Usingavailable local and state affordable housing funds, the City will institute first-time homeowner programs to assist families to acquire a stake in the City of San Bernardino. 18. Adopt civic beautification partnership. Using the CALTRANS freeway adoption model, civic-minded businesses and service organizations will be afforded the opportunity to adopt, clean up and beautify City streets. Project Greenback The Mayor's plan is to promote investment and create jobs for San Bernardino. If San Bernardino is ultimately to solve its crime problem, the City must execute an economic development strategy that can deliver the types of jobs that its population needs. San Bernardino has two areas with distinct advantages. The most obvious it the land within and around San Bernardino International Airport that is now starting to add manufacturing, logistics and distribution jobs such as those with Stater Brothers and Mattel at a rapid rate. The other is the area along the I-215 freeway near Cal- . . State San Bernardino. With the recent power of the Inland Empire's office market expansion, the fact that San Bernardino has the second largest such market in the region means that the higher-end jobs associated with office firms should not be overlooked. These can both create jobs for executives and professionals, but also the support jobs for which numerous local residents can be trained. Given the wide range of advantages for the logistics and manufacturing sectors, San Bernardino is well positioned to undertake a major coordinated economic development effort. Currently the logistics sector, in particular, is growing in and around the City. Longer-Term Goals • Stimulate new development in MtNernon/Santa Fe Depot District, Downtown and Old Towne Areas. • Reduce crime • Accurate Pavement Management System that incorporates streets/.curbs/gutters/sidewalks, 54 and fund it. Build the Lakes Project. This subject property report is situated in the downtown section of the City of San Bernardino and is within Economic Development Project area. The Mt Vernon/Santa Fe Depot District is to the west of the #215 Freeway and is separated from the downtown area by the freeway and railroad tracks. Downtown Facelift The Sun Newspaper had an article`fin Sunday February 20, 2005, regarding the plight of the current downtown area and redevelopment of an area from "H" Street on the west to "F" Street on the east and from 5t'Street on the north to 4`h Street on the south. The Cinema Star and California Theatre were established to create a night-life iii the downtown area and bring more people into the downtown. Downtown has had some limited successes. The Cinema-Star opened in the late 1990's. New senior living complexes have been built and the San Bernardino City Unified School District plans a new elementary school at Sixth and "F" street in the 2005-2006 school year. The senior residents in the new senior complexes do not feel secure because of the shoplifters, other crimes, drug and prostitution scenes being played out in the streets of the neighborhood. The Carousel Mall is struggling to keep retail tenants in an almost vacant mall. The Salvation Army Center is located on 5`h Street. According to the article, the area has been a magnet for the low-income and homeless. Another article in the Sun dated February 14, 2006 indicated that in 2005, the City reached a decade high number of homicides and was ranked as the 18`h most dangerous city in the nation. There have been nine homicides as of February 2006. = _ Economic Development Agency "The News Of The City" Vo1.5, Number 13 has an article on the Economic Development Agency, written by Maggie Pacheco, Executive Director. The article lists the economic activity that continues at a fast pace in the areas traditionally attractive to developers such as the Hospitality Lane and the Cal-State University area, there is new interest in the inner City areas including downtown and some of the traditional corridors such as Waterman and Mount Vernon. The downtown core on the site currently occupied by Carousel Mall was purchased in February, 2006 by LNR Corporation out of Miami Beach and has submitted initial plans to the City for the redevelopment of the mall site. The new submittal plan is a mixed use, urban village consisting of 135,00 square feet of retail/commercial space together with a residential component of 630 single family attached/detached homes. - The Agency is also.one of many agencies and partners assisting with the City's Operation Phoenix. 55 The Agency has committed to the program by providing both commercial and housing programs in the designed Operation Phoenix area. The City of San Bernardino Economic Development Agency also supports other agencies with the City such as Community Development Block Grant, Mortgage Assistance Program, Cal State San Bernardino Professor Homebuyer assistance Program, the Business Incentive Grant Improvement Program, The Business Utility User's Tax Rebate Program, Home Sweet Home Repair Assistance program. San Bernardino Valley Municipal Water District According to the Executive Summary of August 23, 2004 prepared by the City of San Bernardino San Bernardino Valley Municipal Water District, two lake projects are in the conceptual planning stages. This subject property being appraised is situated in a neighborhood that is between the projected North Lake Area and South Lake Area. The subject property has a neighborhood boundary of 6' Street to the North, "E" Street to the East. 2nd Street to the South and I-215 Freeway to the West. The subject property is located in the City of San Bernardino, which is situated toward the eastern end of San Bernardino County and the Inland Empire competitive market. The City of San Bernardino is surrounded by the Cities of Rialto and Colton to the west, the Cities of Highland and Redlands to the east,the San Bentardino County line to the north, and the Cities of Colton and Loma Linda to the west. 56 NEIGHBORHOOD MAP _ s p�800m '. 284 fa n HM10M Dr £ i San Manuel Indian Reservation � -4� k . ( ,�*F�S� wry'^ {�+,��. � � � �� 3 ;"`sg� n., j M• _ i t -�l E h Ave 30 f � ` Subject °" Itll E t st t 14 i '1 { St Line -i i #M "' Sp NQ = _ # .1. may, ssu�,t� Sth St E 5th St 57 NEIGHBORHOOD DESCRIPTION The subject properties are located south of Highland Avenue, east of Arden Avenue, north of 20' Street and west of Guthrie Street. The properties are known as the "Arden-Guthrie Project". At Arden and Highland there are Ingress and Egress Ramps to the #30 Freeway. The "Arden- Guthrie" neighborhood is approximately 16.5 acres. The neighborhood boundaries for the "Arden-Guthrie Project" are: North Boundary: Highland Avenue and the #30 Freeway East Boundary: Victoria Avenue South Boundary: Pacific Street West Boundary: Sterling Avenue North Boundary Highland Avenue is predominately zoned CG (General Commercial)with a few exceptions, going as far west as the#215 Freeway. The subject neighborhood which is on the south side of Highland Avenue is zoned PCR (Public/Commercial Recreation) District and is in a Special Purpose District/Specific Plan. At the #30 Freeway Egress Ramp, the south side of Highland Avenue reverts back to CG Zoning and continues the East Boundary at Victoria Street. The north side of Highland Avenue is CG-1. There is a single family neighborhood on the southwest corner of Sterling Avenue and Highland Avenue with a RS Zone; however, entry into the single-family neighborhood is from Osborne at Highland Avenue. This neighborhood has a concrete block wall that encloses it from view on Highland Avenue and Sterling Avenue. Perris Hill Park on Highland east of Waterman is zoned PP Public Park and the San Bernadine Medical Center is zoned CO-1 �. (Professional Office) at the southeast corner of Highland Avenue and Waterman Avenue West Boundary T At the northwest corder,of Sterling and Highland is a large Target store and El Pollo Loco - Restaurant. On the northeast corner is a commercial retail strip center with Ranch Market, Rite- Aide, Washington Mutual, Big Five and Blockbuster. The Highland Galleria is across the street on the southeast corner;:it is another commercial strip center with a Staples Center. Highland Village is another strip center located at the southwest corner of Highland Avenue and Guthrie Street. Across the street from the subject neighborhood is a small strip center with San Bernardino Fireplace and 4 other units. East Boundary At Arden and Highland there are the Ingress and Egress Ramps to the #30 Freeway. On the northwest corner of Highland Avenue and Arden Avenue is a Baker's Drive Through fast food shop. The northeast corner has a Shell Gas Station and Coco's Restaurant. The southeast corner has the Egress Ramp for the 30 Freeway. East of the Egress Ramp is a Subway Sandwich shop, Chevron Gas Station, Taco Bell fast food and I-Hop Restaurant. Ken's Liquor is located at Rockford. 58 At Victoria Avenue is the Patton State Hospital on the northeast corner of Highland Avenue and Victoria Avenue. Part of Victoria Avenue is in the City of Highland and part is within the City of San Bernardino. The southeast corner of Victoria Avenue and Highland Avenue has a commercial retail center with "Food for Less" and "Big Lots" as anchors. The southwest corner has small older multi-family dwellings and older single family residences. On Highland Avenue, Rockford Avenue is the border line between the City of Highland and the City of San Bernardino. Arden Avenue south of Highland has some of the Arden-Guthrie multi-family 4-plexes on the west side of Arden. On the east side of Arden;below the Ingress #30 Freeway Ramp are the "Park Heights" Apartments located at 2011 Arden Avenue. This is a large gated controlled access apartment complex with well maintained landscaping, covered parking, and amenities such as pool and spa. South of the Park Heights Apartments there is a signalized intersection at Arden and 20' Street. The north side of 20' Street is the "Arden-Guthrie Neighborhood". The south side of 20' Streets from Arden to Guthrie to the west has a fenced construction site. There is earth grading underway for an extension of the Emmerton Pubic Elementary School. The existing Emmerton Public School is to the south of 20'on Arden Avenue. According to Construction Company, the grades will be divided up between the existing building and the new building upon completion of the construction. The existing building will house K-3`d Grade and the new building when completed will house 4h Grade through 6`' Grade. South Boundary: At the northeast corner of Arden Avenue and Pacific Street is the "San Bernardino Soccer Complex. This is a large area of green lawn and playing area along with the complex headquarters building. The grounds are well maintained. On the Southeast corner of Arden Avenue and Pacific Street is the Speicher Memorial Park which extends southerly to Sand Creek and Upper Warm Creek Channel just north of Baseline Street. The southwest corner of Pacific Street and Arden Avenue is the location of San Gorgonio High School; it also extends down to Upper Warm Creek Flood Control Channel and north of Baseline. The northwest corner of Arden Avenue and Pacific Street has a single family tract homes. These homes appear to have been built in the early 1960's. Proceeding north on Guthrie, Newcomb or McKinley, the area is generally single family residential until Sunrise Lane. At Sunrise Lane there are multi-family apartment buildings; many are 4- plex units. There is vacant land on the north side of Sunrise to 20'Street because of the new addition to Emmerton School. The south side of Sunrise Lane east and west of Guthrie has multi-family apartment buildings, mostly 4 plex units, Sunrise Lane and 19' Street from Guthrie to Sterling have multi-family 4-plex units, some have maintained lawns and landscaping and some are lacking in any landscaping. At Guthrie Street and 20(' on the east and west side of the street and extending to Outer Highland Avenue are the Sycamore Ridge Apartment Homes. The address is 2020 Guthrie Street. This is another large 59 gated and controlled access apartment community. The Sycamore Ridge apartments advertise they provide a library and homework station(Novaland Learning Center)and help with homework and general reading. They have a courtesy patrol, covered parking, and amenities such as swimming pool and spa. They have affordable housing such as the Section 8 program. Pacific Street westerly to Sterling Avenue has single family residences. At the northeast corner there is another elementary school. Going north on Sterling back to Highland Avenue there are single family residences and at Sunrise Lane and 19' Street there are multi-family residences, most of which are 4-plex units. FFIEC provided a Geo-code Search Results for 2006 HMDA/CDR for 2194 N. Newcomb Street located within the Arden-Guthrie Neighborhood and last updated June 14, 2006. Tract Income Level Low Tract Population 3,34 Tract Median Family Income% E41.71 ECensus unty Code 071 2005 HUD Estimated MSA/MD Tract 0074.07 Median Family Income 2005 Est.Tract Median Family $23,983 Owner-Occupied Units 271 Income Owner Occupied 2000 Tract Median Family Income $19,792 1-to 4 Family Units 271 2006 MSA/MD/statewide non-MSA/MD Median Family $47,448 %below Poverty Line 55.37 Income Total Housing Units 1138 7Renter e Princi al City Yes 1-to 4-Family Units 848 Occupied Units 631 Median Age of Housing Stock 33 yrs Vacant Units 236 Using Demographics provided by LoopNet, the following information was provided for the Arden-Guthrie Neighborhood: Population Change Total Population 1 Mile Radius 3 Mile Radius 5 Mile Radius 2005 Total Population 20,977 109,648 211,730 2005 Total Households 6,483 33,628 65,305 INCOME Household Income 1 Mile Radius 3 Mile Radius 5 Mile Radius 2005 Median Household 29,304 34,554 35,463 Income 60 Inland Empire Commercial Market Review Second Quarter 2006 CB Richard Ellis Market View Inland Empire Retail for the Second Quarter 2006 quotes: "Numerous retail developments across the Inland Empire continue to flourish as retail developers scatter to find their diamond in the rough." The Inland Empire encompassing both Riverside and San Bernardino Counties has a region's retail market consisting of approximately 495 square miles, all of which is supported by tremendous housing growth and a continuing population boom across the region. The California Department of Finance has predicted that the Inland Empire will be the fastest growing urban area of California in the next decade. In addition the US Commerce Department has predicted that the Inland Empire will outperform the growth rate of any other area in the United States. With the rise of higher income jobs across the Inland Empire, the region is going through an influential change, which will drive well educated workers to seek affordable high end homes. As reported by county economic development agencies, the increase in jobs and housing throughout the Inland Empire calls the need for more development, investments, and higher end retail centers. Economic development officials report that the Inland Empire lacks up-scale retail. Many counties throughout the Inland Empire are encouraging new retailers to expand by offering work force development programs, training reimbursement programs, and tax credits. With the increase in population and housing development the Inland Empire will need retailers that will support the economic shift. Retailers are looking for customers that can afford and appreciate the product they are presenting to the market. While housing prices make a slight decline across California, the Inland Empire continues to attract residents migrating from coastal counties due to immaculate priced homes, attractive employment opportunities, and booming retail market. Skeptics forecasted a large decline in housing development throughout the Inland Empire, but newly -onstructed retail centers surrounding planned housing developments puts skeptics to rest. New retail centers throughout the Inland Empire will drive the job market and-strengthen the Inland Empire's economy. Due to an increase in tenant demand and occupied space in newly developed centers, the region's overall vacancy rate has decreased to 5.86% in the second quarter, a slight change from first quarter 2006. With new tenants expanding to the Inland Empire, it is not a surprise that vacancy rates have dropped. The high demand for retail product has pushed the average asking rates to a high of$1.68, with the low tracking at $1.43. The City of San Bernardino is in the East End Submarket. Building Vacancy Absorption Construction Avg-High Asking Submarket Names Square Feet Rate% Square Feet Square Feet NNN S/PSF/MTH East End 33,417,332 8.01% 489 604 5,759,710 $1.22 High Desert 6,424,272 3.97% 66,000 - 1,157,008 $0.97 Low Desert 10,452,519 3.55% 331,335 2,950,918 $2.42 So.Riv.aounty 14,056,067 3.53% 1,230,182 3,390,272 $1.79 West End , 24,193,066 5.73% 756,193 3,077,102 $1.74 Market Total 88,543,256 5.86% 2,873,314 16,335,010 x1.68 61 Market Outlook: There is more than 16 million square feet of retail product under construction and over 32 million square feet still planned. Respectively, the continuous demand in Inland Empire is reflected by lower vacancy rates and higher asking rates. Unemployment Rate The Inland Empire reported an unemployment rate of 4.3% in the second quarter of 2006. Second quarter unemployment numbers reflected a .40% decrease from the previous quarter. The state and national rates decreased to stand at 4.6% and 4.4% respectively. In addition of 14,600 non-farm jobs from the previous quarter indicates that the Inland Empire continues to add to its strong labor force and is able to meet the demands of the rapidly growing employment industry. Total non-farm jobs in the Inland Empire for the second quarter increased a 1.2% increase over the previous quarter and approximately over 230,000 jobs over the last five years. In the second quarter the Inland Empire retail employment ended with 166,400 jobs with the creation of 900 jobs over the previous quarter. Total retail employment accqunts for approximately 10.4% of the entire Inland Empire's non-farm employment. Vacancy Retail vacancy for the Inland Empire has shown a steady decrease since 2004. South Riverside County submarket had the lowest vacancy rate, dropping from 3.86% in the first quarter of 2006 - to 3.53% in the second quarter of 2006. The Low Desert submarket followed closely with a vacancy rate of 3.55%. Of the center types, Specialty Centers continue to post the lowest vacancy = rate since first quarter 2006, at 2.49% Net Absorption In the second quarter of 2006 the Inland Empire produced a positive 966,000 square feet of new absorption, which is a significant decrease from the first quarter. Of the demand in the Inland Empire, the South Riverside submarket accounted for 97% of the absorption totaling 938,646 square,,Jeet. The Inland Empire's year-to-date absorption is more than 2.8 million square feet. Average Asking Lease Rates: The Inland Empire's second quarter average triple net asking lease rate for retail space fluctuated slightly when compared to the previous quarter. While first quarter asking rates were as low as $1.46 and as high as $1.67, current rates range from a low-of$1.43 to a high of$1.68. The Inland Empire lease rates have shown a substantial increase when compared to the same time period last year, when the average loco was $1.32 and the average high average was $1.49. 62 Construction Activity: In the second quarter of 2006, the Inland Empire completed construction on approximately 966,000 square feet of new retail product. Several notable projects came online including French Valley Village Center in French Valley, Expressway Center in Perris, Lake Elsinore Marketplace in Lake Elsinore and Murrieta Spectrum in Murrieta. The Inland Empire currently has 128 planned centers totaling over 32 million square feet and approximately 16 million square feet under construction. CB Richard Ellis Submarket Descriptions have the "East End" including: Banning, Beaumont, Big Bear, Big Bear Lake, Blue Jay, Cabazon, Calimesa, Colton, Corona, Eastvale, Highland, Lake Arrowhead, Loma Linda, Mira Loma, Moreno Valley, Norco, Redlands, Rialto, Riverside, San Bernardino and Yucaipa. The appraiser also looked at market data furnished by NAI Capital, for the Inland Empire (Riverside/San Bernardino), California termed "Metropolitan Area Economic Overview, Effective Retail Low High Averqge Yacanc Downtown a N/A I N/A N/A N/A Neighborhood Service Centers $15.00 $36.00 $25.20 , 3.8% Sub Regional Centers $30.00 $48.00 $39.00 3.8% Regional Malls $36.00 $72.00 $54.00 3.8% On Development Land, NAI Capital furnished the following data: Development Land Low (Price/Acre) High Price/Acre Office in CBD N/A N/A In Office Park $1,089,000 $1,306,800 In Industrial Park $295,000 $522,720 Office/Industrial-Non- ark _ N/A N/A Retail/Commercial $348,000 $1,045,440 Residential $65,000 NAI is showing the Population total for 2005 is estimated at 3,781,349-for the Inland Empire. = - Estimated Growth Rate as of 2010 is estimated a 2.6%. Summary Market Outlook According to CB Richard Ellis and NAI Capital, the commercial market continues to growing. Quick Stats for the Inland Empire Retail Market provided by CB Richard Ellis shows vacancy at 5.86% is down from last year and also from First Quarter 2006. Lease Rates are current at$1.68, wlich is up from last year and from First Quarter 2006. Net Absorption Quick Stats shows current at 966K which is up from last year but down from the First Quarter of 2006, The last Quick Stat is Construction, shown at 16.3 M, up from last year and also up from First Quarter 2006. 63 - PLAT MAP �o N - e p � - 1 1 1 o �- v W ! omo A n Y ' s -34N3d4- --—--— 0 - p j O ; 0 i ® O 1 .. 3311Y Portions of LC i O Subject -13-1#+4 -- -- o -� -----i 3aiFl �k x _ Sites e o - o G o o Q' e• .. Lilly - O ' e' -A 64 PLAT MAP o —ml� la I O�f L� xe c A311.Y NO1aYB11NO s 3. •° °) _ Portion of « i Subject O Sites m e A311Y10 I — C = �3 e^ i 0 —1-331Hf r`O M O s ----------------O---------------- I ---------�3-f-----A----- �N--- � ee ae -- A311Y • a , U _I ® � Portion of Subject 13341S )°- �4 Sites ° MUIR to ..... ' d f�A311Y « — v - r- tot, 4^' AA'� - v 0 1 r - - 65 SITE DESCRIPTION Location The Arden-Guthrie Neighborhood consists of approximately 16.5 acres. It is bound by Highland Avenue and 20'''Street to the north and south and Arden Avenue and Guthrie Street on the east and west. The sites in this appraisal have a total of 8.23 acres or 358,637 square feet of usable land that are within the approximate 16.5 acres of the Arden-Guthrie Neighborhood. Redevelopment of the Arden-Guthrie Neighborhood There have been several articles written in the local newspapers, "The Sun" and the "Press Enterprise". The Press Enterprise's article of Tuesday, July 25, 2006 heading quotes the following: "San Bernardino aplans to tear down apartments", The article written by Chris Richards goes on to state: "Redevelopment: the city secures a HUD loan to buy 26 residential lots in the Arden-Guthrie area. San Bernardino City Council members Monday signed off on a$7.5 million loan to buy and demolish a neighborhood of apartment buildings that has long been a source of trouble in the,city. The Redevelopment Agency will use the Housing and Urban Development loan to purchase 26 residential lots improved with four-plexes in the Arden-Guthrie neighborhood, interim Economic Development Agency Director Maggie Pacheco said. The neighborhood, 16.5 acres - bounded by Highland. Avenue and 20'b Street to the north and south and Arden Avenue and Guthrie Street on the east and west-is one of the most high crime in San Bernardino, police records show. Pacheco said the redevelopment agency has been buying land there for 20 years and owns 48 lots. With the HUD loan, Pacheco said the agency expects to buy the remaining 26 four-plexes within a year and a half. The agency already is negotiating with Home Depot to develop the property." It is the opinion of this appraiser that the preceding project has not been considered in this valuation but is included to show the transition from residential to commercial land use. 66 There are 47 vacant lot sites and one improved site with a boarded up four-plex in this appraisal report all of which are owned by the City of San Bernardino Economic Development Agency. The parcels are basically rectangular in shape with a few irregular in shape. The parcels consist of 48 legal assessor parcel numbers. Copies of the deeds and legal descriptions are included in the addenda of this appraisal report. Size and Access For the purposes of this appraisal;the appraiser has clustered the following parcels within each table shown below. The"stand-atone" parcels are not contiguous to the larger clusters and are appraised as individual lots. Parcel F: ADDRESS APN NUMBER TOTAL SQUARE FEET 2176 Newcomb Street 1191-021-12-0-000 7,200 Square Feet 2158 Newcomb Street 1191-021-13-0-000 7,200 Square Feet 2140 Newcomb Street 1191-021-14-0-000 7,200 Square Feet 2122 Newcomb Street 1191-021-15-0-000 7,200 Square Feet 2104 Newcomb Street 1191-021-16-0-000 7,200 Square Feet 2094 Newcomb Street 1191-021-17-0-000 7,200 Square Feet 2072 Newcomb Street 1191-021-18-0-000 7,200 Square Feet 2050 Newcomb Street 1191-021-19-0-000 7,200 Square Feet 2028 Newcomb Street 1191-041-17-0-000 _ 7,200 Square Feet _. .2004 Newcomb Street 1191-041-18-0-000 9,100 Square Feet TOTAL SQUARE FEET 73,900 Square Feet Parcel C: ADDRESS APN NUMBER TOTAL SQUARE FEET 2073 Newcomb Street 1191-021-21-0-000 7,200 Square Feet 2095 Newcomb Street 1191-021-22-0-000 7,200 Square Feet :2105 Newcomb Street 1191-021-23-0-000 7,200 Square Feet 2123 Newcomb Street 1191-021-24-0-000 7,200 Square Feet 2141 Newcomb Street 1191-021-25-0-000 7,200 Square Feet 2159 Newcomb Street 1191-021-26-0-000 - 7,200 Square Feet 2177 Newcomb Street 1191-021-27-0-000 7,200 Square Feet TOTAL SQUARE FEET 50,400 Square Feet 67 Parcel G: ADDRESS APN NUMBER TOTAL SQUARE FEET 2029 Newcomb Street 1191-041-20-0-000 7,200 Square Feet TOTAL SQUARE FEET 7,200 Square Feet Parcel D: ADDRESS APN NUMBER TOTAL SQUARE FEET 2140 McKinley Street 1191-021-32-0-000 7,200 Square Feet 2122 McKinley Street 1191-021-33-0-000 7,200 Square Feet 2104 McKinley Street 1191-021-34-0-000 7,200 Square Feet 2094 McKinley Street 1191-021-35-0-000 7,200 Square Feet 2072 McKinley Street 1191-021-36-0-000 7,200 Square Feet a 2050 McKinley Street 1191-021-37-0-000 7,200 Square Feet 2028 McKinley Street 1191-041-21-0-000 7,255 Square Feet TOTAL SQUARE FEET 50,455 Square Feet Parcel H: ADDRESS APN NUMBER TOTAL SQUARE FEET 2194 McKinley Street 1191-021-29-0-000 10,540 Square Feet TOTAL SQUARE FEET 10,540 Square Feet Parcel I: ADDRESS APN NUMBER TOTAL SQUARE FEET 2177 McKinley Street 1191-021-62-0-000 7,747 Square Feet 2159 McKinley Street 1191-021-63-0-000 7,749 Square Feet TOTAL SQUARE FEET 15,496 Square Feet Parcel B: ADDRESS APN NUMBER TOTAL SQUARE FEET 2095 McKinley Street 1191-021-57-0-000 7,754 Square Feet 2073 McKinley Street 1191-021-58-0-000 7,756 Square Feet 2051 McKinley Street 1191-021-59-0-000 7,757 Square Feet 2029 McKinley Street 1191-041-31-0-000 7,719 Square Feet TOTAL SQUARE FEET 30,986 Square Feet 68 Parcel E: ADDRESS APN NUMBER TOTAL SQUARE FEET 2104 Dumbarton Street 1191-021-55-0-000 7,200 Square Feet 2094 Dumbarton Street 1191-021-54-0-000 7,200 Square Feet 2072 Dumbarton Street 1191-021-53-0-000 7,200 Square Feet 2050 Dumbarton Street 1191-021-52-0-000 7,200 Square Feet 2028 Dumbarton Street 1191-041-30-0-000 7,200 Square Feet 2004 Dumbarton Street 1191-041-29-0-000 8,300 Square Feet TOTAL SQUARE FEET 44,300 Square Feet Parcel K: ADDRESS APN NUMBER TOTAL SQUARE FEET 2158 Dumbarton Street 1191-021-58-0-000 7,200 Square Feet TOTAL SQUARE FEET 7,200 Square Feet Parcel M: ADDRESS APN NUMBER TOTAL SQUARE FEET 2177 Dumbarton Street 1191-021-44-0-000 7,200 Square Feet TOTAL SQUARE FEET 7,200 Square Feet Parcel L: _.. ADDRESS APN NUMBER TOTAL SQUARE FEET 2141 Dumbarton Street 1191-021-46-0-000 7,200 Square Feet � ? TOTAL SQUARE FEET 7,200 Square Feet _ Parcel J: ADDRESS APN NUMBER TOTAL SQUARE FEET 2194 Dumbarton Street 1191-021-60-0-000 10,560 Square Feet TOTAL SQUARE FEET 10,560 Square Feet 69 Parcel A: ADDRESS APN NUMBER TOTAL SQUARE FEET 2105 Dumbarton Street 1191-021-48-0-000 7,200 Square Feet 2095 Dumbarton Street 1191-021-49-0-000 7,200 Square Feet 2073 Dumbarton Street 1191-021-50-0-000 7,200 Square Feet 2051 Dumbarton Street 1191-021-51-0-000 7,200 Square Feet 2029 Dumbarton Street 1191-041-27-0-000 7,200 Square Feet TOTAL SQUARE FEET 36,000 Square Feet Parcel N: ADDRESS APN PLUMBER TOTAL SQUARE FEET 2122 Arden Avenue 1191-021-42-0-000 7,200 Square Feet TOTAL SQUARE FEET 7,200 Square Feet This neighborhood has access off of Highland Avenue at Guthrie. The development has a cul-de- sac divider approximately half-way south of Highland Outer Highway for the streets on Newcomb Street, McKinley Street and Dumbarton Avenue. Properties that are south of the cul-de-sac can be accessed from Guthrie Street or Arden Avenue at 20' Street. The properties on Arden Avenue have access from Highland Avenue or 20'Street. All of the properties have an alley access at the rear of the property which has complete north/south access without any cul-de-sac. Topography and Drainage The parcels are below Highland Avenue grade. Drainage appears to run to the south. No ponding was visible. A soils report was not provided for my review. This appraisal assumes no adverse _ conditions exist with respect to drainage. The subject properties are located in two flood zones. The northerly properties are in Zone "X" which represents an area determined to be outside the 100 and 500 year flood plains, per Community Number 060282 7963F, Dated 3-18-1996. The southerly properties are located in Zone "X (500 year). An area inundated by 500 year flooding; an area inundated by 100 year flooding with average depths of less than 1 foot, or with drainage areas less than 1 square mile; or an area protected by levees from 100 year flooding. The Community Number is 0602817963 dated 3-18-1996. Soils and Geology The appraiser was not provided with a soils report. For purposes of this appraisal, it is assumed that the soil conditions are suitable for the type of improvement currently occupying the subject sites. Upon inspection of the sites, no signs of erosion or adverse conditions were noted. For 70 purpose of this appraisal, I assume that the value of the subject sites are not adversely affected by any soils conditions. No representations are made concerning soils conditions. Earthquake According to the State of California Department of Mines and Geology, the City of San Bernardino is located within a Special Study Fault Earthquake Zone. Southern California is known to have frequent seismic activity. No representations are made concerning geological stability. Utilities Electric: Southern California Edison Gas: So. California Gas Company. Water: City of San Bernardino. Sewer: City of San Bernardino ° Telephone: Verizon. Utilities are available to the sites. Zoning The subject parcels are currently in a Special Purpose District zoned PCR (Public/Commercial Recreation) District, as per the Planning Dept. of the City of San Bernardino. The PCR zone is intended to provide for the continuation of existing and development of new public and private commercial recreation facilities which ensure their compatibility with djacent land uses. _ Permitted Uses in PCR Zones: a. Baseball stadiums, arenas, exhibition, convention and sporting facilities; b. Entertainment, hotels, restaurants, specialty commercial and farmers markets; c. Open space; d. Public and private golf courses; and e. Other such uses that the Director may find to be similar with those uses listed above, pursuant to Section 19.02 In talking with the Linda Dortch, Planning Department, the appraiser was informed to use the most restrictive commercial zoning; therefore the appraiser is using CN (Commercial Neighborhood) District for uses and standards. 71 The CN (Commercial Neighborhood) District is intended to provide for the continued use, expansion, and new development of small scale, low-intensity neighborhood commercial uses which serve and are in proximity to residential neighborhoods throughout the City. Most uses in CN Zone require a Development Permit. Examples of Uses permitted with a Development Permit include: Administrative and Professional Office/Services, Auto Parts Sales without installation, Delicatessens/Sandwich Shops/Donut Shops, Restaurants without drive- through, Auditoriums, Convention Halls and Theaters, Financial/ commercial establishments engaged in monetary transactions, Blood Banks, Health Clinics, Social Service Centers,Personal Services, Retail Commercial such as Drug Stokes, Flower Shops, General Merchandise, Home Improvement with Outdoor Display of Lumber, Garden and Nursery Items, Nurseries/Garden Supplies, Specialty Food Stores, Service Commercial such as copy Centers/Postal Service Centers, Misc. Repairs/Services (indoors only) and Recycling Facilities. The development standards for CN (Neighborhood Commercial) Zone are as follows: Minimum Gross Lot Area: 7,200 Square Feet Minimum Front Set Back 15 Feet Minimum Side Set Back 10 Feet Minimum Rear Set Back 10 Feet Maximum Building Height 25 feet - Maximum Building Coverage 50% Nuisances and Hazards A historical study of uses of the subject parcels have not been provided to the appraiser. The appraiser is aware there were 4-plex units built around the year 1964 on each of the sites prior to the purchase by the City of San Bernardino Economic Development Agency. Based upon the appraiser's physical inspection of the subject and the surrounding area, the subject does have trash, debris and weeds which are a nuisance and could contribute to a hazardous condition. The appraiser's fair market value opinion is contingent upon the subject property not being impacted by any materials or conditions that could be considered hazardous, such as, but not limited to: asbestos, harmful radon levels, ground contamination, PCB's,etc. Should any material be discovered in a later study, the cost of mitigation may represent a deduction of value herein. This is a contingency of this report. 72 Easements/Restrictions No responsibility is assumed by the appraiser for matters which are legal in nature. The appraiser was not provided with a copy of a Preliminary title report. Based on my physical inspection of the subject property, no adverse easements or restrictions were apparent. I assume that there are no adverse easements, encumbrances, restrictions or other items affecting the value of the property. No opinion of title is rendered, and the subject is appraised as though free of all liens, easements, encroachments, and encumbrances, and the title is assumed to be marketable. No survey of the property's boundaries was performed by the appraiser. All site areas and dimensions were Qbtained from public records,,and are presumed to be correct. Site Improvements All of the parcels are finished lots with street improvements such as asphalt pavement, concrete curb and gutter, public sidewalks and street lighting. The alley behind eAch of the sites is asphalt paved and dirt. Traffic Count The City of San Bernardino Engineering Department provided the two traffic,count for the subject arteries: Traffic Count south of 20``' at Arden shows I north bound traffic at 4,482; south bound traffic at 3899, total is 8,381. This traffic count was dated January 14, 1998 and is the latest count for the intersection. Traffic Count at Highland Avenue and Guthrie shows east bound traffic at 10,280,west bound traffic at 11,114 with a total of 23,478. This traffic count was dated May 1, 2002 and is the latest count for the intersection. Conclusion The,subject properties are located on dedicated streets within the City of San'Bernardino. They eve easy access to the #30 Freeway at Arden Avenue and Highland Avenue. The.commercial development potential of the subject properties should.meet.the requirements of the Highest and Best Uses. There are commercial establishments to the west.-north and east of the Arden-Guthrie Neighborhood along Highland Avenue. 73 ASSESSED VALUE AND REAL ESTATE TAXES Real property taxes in California are limited to one percent of a property's assessed value, as of the specified base year. The base year valuation is the 1975 Assessor's market value estimate, or an updated market value estimate that is required in the event of a sale, lease, or new construction involving the property. In addition to the taxes at one percent of the base year assessed value, there is an additional tax to amortize any previous voter-approved bonded indebtedness. The subject property is located in tax rate area 1.2554. There are no property taxes for the subject properties because they are owned by the City of San Bernardino. To provide for inflation, if there is no sale, lease or new construction involving the subject, there is a maximum two percent per year increase allowed in the assessed values assigned to land and improvements. a a 74 HIGHEST AND BEST USE The Highest and Best Use is that use which is most likely to produce the greatest net return over a given period of time. Net return refers to the residual left over from gross yield after all costs have been deducted. Only those uses which are physically possible,probable, and legally permissible may be considered tenable. Thus, highest and best use may be defined as the available use and program of future utilization that produces the highest present land value. The appraiser has investigated and analyzed the highest and best use of the subject sites and the existing improvements in regard to those uses which are physically possible, legally permissible, economically feasible, and maximally productive. That use which passes the three initial criteria and maximizes net return is the highest and best use. I have considered the highest and best use of the subject parcels assuming that as vacant as of thet appraisal date. Highest and Best Use as Vacant a e Physically Possible My physical inspection of the 48 subject properties did not uncover a physical condition which would prohibit its development. The subject parcels range in size from 7,200 to 15,496 square feet representing a total of 358,637 square feet or 8.23 acres. The finished lots have good physical access; however, prior to development a lot line adjustment is required from the City of San Bernardino Planning Department for the purpose of assemblage. The appraiser clustered the individual lots based on contiguity which is rated by developers as having good development potential. • Parcel A containing 10 lots has 73,900 square feet. • Parcel B containing 7 lots has 50,400 square feet. • Parcel D containing 7 lots has 50,455 square feet. • Parcel G containing 4 lots has 30,986 square feet. • Parcel H containing 6 lots has 44,300 square feet. • Parcel M containing 5 lots has 36,000 square feet. The subject smaller lots, which are not contiguous to other lots, contain 7,200 square feet to 15,540 square feet. • Parcel C contains one lot with 7,200 square feet. 0 Parcel E contains one lot with 10,540 square feet. • Parcel F contains two lots with 15,496 square feet. • Parcel I contains one lot with 7,200 square feet. • Parcel J contains one lot with 7,200 square feet. • Parcel K contains one lot with 7,200 square feet. • Parcel L contains one lot with 10,560 square feet. • Parcel N contains one lot with 7,200 square feet. The subject smaller 7,200 square foot lots are rated by developers as having fair development 75 potential because of their smaller sizes. The subject larger lots ranging from 10,540 to 15,496 are rated by developers as having average development potential. The appraiser was not furnished with a soils report. Therefore, I am unable to definitively comment on the adequacy of the subject soils' load bearing capacity. Based on my observations, retail development was noted on the southwest corner of Guthrie Street and Highland Avenue and also on the Southeast Corner of Sterling Avenue and Highland Avenue. The preceding discussion on physically possible indicates the highest and best use of the subject parcels is to hold for future retail development. Legally Permissible The subject sites are zoned PCR,Public/Commercial Recreation District by the City of San Bernardino. Development permitted under the PCR zoning`classification includes baseball stadiums, arenas, exhibition,convention,and sporting facilities;entertainment,hotels,restaurants,specialty commercial, and farmers markets;open space,public and private golf courses and othel uses that the Director may find similar with those uses listed above. The appraiser consulted with Linda Dortch relative to development standards and she suggested that the appraiser use the CN, Neighborhood Commercial development standards for the subject properties since it is more restrictive than the CG-1, General Commercial zone. The clustered parcels can meet the setback, landscaping, and parking requirements necessary to support a retail development. The smaller lots appear to be affected by development standards'that would fall under the CN, Neighborhood Commercial District. The City Planning Department indicated that the minimum lot size to create a new commercial lot is 10,000 square feet. For existing lots of record, the sites must meet setbacks, parking and landscaping requirements prior to development. The minimum lot size under the CN zone is 7,200 square feet. The CN zone development standards are intended to provide for the continued use, expansion and new development of small scale, low-intensity neighborhood commercial uses which serve and are in proximity to residential neighborhoods. - Economically Feasible To be economically feasible, a proposed property must provide a return of the invested monies and a return on the initial investment. My analysis of the economically feasible uses.of the subject parcels included a review of current commercial land uses in the subject neighborhood, a comparison of the current economic performance of retail buildings in the neighborhood, and a brief review of recent development projects. According to the Inland Empire Retail Market View prepared by CB Richard Ellis, the retail market remained relatively steady. The second quarter of 2006 ended with a 5.86 percent vacancy rate down from the last quarter. The overall vacancy for the East End Submarket was reported at 8.01%. The current lease rates were reported at an average low of$1.43 to an average high of$1.68 per square foot,up significantly from last year. In 2005,the Inland Empire leases rates were reported at an average low of$1.32 to an average high of$1.49 per square foot. The average high lease rates for the East End was reported at$1.22 per square foot. 76 Net absorption in the second quarter of 2006 for the East End Submarket produced a positive 489,604 square feet of new absorption. Of the demand in the Inland Empire, the South Riverside submarket accounted for 97% of the 966,000 square feet of new space. The Inland Empire's year to date absorption is more than 2.8 million square feet. The Inland Empire market outlook is more than 16 million square feet of retail product is under construction and over 32 million square feet is still planned. In the East End Submarket there is 5,759,710 square feet under constnaction, representing 35% of the total retail product under construction. The next highest is the.West End Submarket with 3,077,102 square feet under construction. Demographics provided by Loop Net indicate a median household income of$34,554 per year and.a population of 109,648 people within a three mile radius of the subject as of year end 2005. The total number of housing units from the 2000 Census was reported at 38,052. DemograpWcs provided by Loop Net indicate a median 6usehold income of$35,463 per year and a population of 211,730 people within a five mile radius of the subject as of year end 2005. The total number of housing units from the 2000 Census was reported at 71,261. It is the opinion of this appraiser that most households will seek retail shopping within a three to five mile radius from the subject property. Therefore, the economically feasible highest and best use of the sites is to cluster the individual contiguous lots and develop with a retail-related development, Most Profitable The preceding discussion on most profitable indicates the highest and best use is to cluster the individual contiguous lots and develop with a retail-related development. The assemblage will result in the highest total value for the subject properties. Conclusion The preceding discussion indicates the highest and best use is to cluster the individual contiguous lots and develop with a retail-related development. The assemblage will result in the highest total value for the subject properties. It is this appraiser's opinion that the physically possible, legally permissible, economically feasible, and Most profitable highest and best use of the subject properties "as vacant" is to hold for future retail development. 77 APPRAISAL PROCESS The assignment is to provide a fair market value of the subject property, based on its highest and best use as of the effective date of value, An appraisal is an orderly process in which the data used to estimate the value of the subject property is acquired, classified, analyzed and presented. Appraisal methodology applied to any specific property or property type must emulate the thinking of the most probable class of purchaser. The first step is defining the appraisal problem, i.e., the .identification of the real estate, the effective date of value estimate, the property rights being appraised and the type of value sought. Once this has been accomplished, the appraiser collects and analyzes the factors that affect the market value of the subject property. Typically there are three approaches.considered in the valuation of real property: the Cost, Sales Comparison and Income approaches. The type and age of the property and the quality and quantity of available data affect the applicability of each approach in a specific appraisal situation. The basic tenet of all three appraisal approaches is the principle of substitution,which affirms that a prudent purchaser has three alternative courses of action available: to buy a vacant site and build a similar property (Cost Approach), to acquire an equally desirable existing property offering comparable utility (Sales Comparison Approach) or to acquire a substitute income stream of a comparable quality; quantity and durability (Income Approach). The Cost Approach is used to estimate the reproduction/replacement costs of the improvements, less accrued depreciation. The depreciated value is added to the land value. Accrued depreciation includes physical deterioration, functional obsolescence, and external obsolescence. The Cost Approach to value is devoted to an analysis of the physical value of the property and is typically given the least emphasis.The Sales Comparison Approach is used to estimate the whole property as improved. The appraiser gathers data on sales of comparable properties and analyzes the nature and condition of each sale, making logical adjustments for dissimilar characteristics. Typically, a common,unit of comparison is used. For improved properties the unit of comparison may be the price per square foot, the price per unit, or a gross income multiplier. The Sales Comparison Approach gives a good indication of value when sales of similar properties are available. The Income Approach, which incorporates the Direct Capitalizatioli Method, is utilized in valuing income producing properties. Under this valuation method,a rental survey of similar, competing units is conducted in order to estimate the gross income, vacancies and-expenses, utilizing known costs and the history of the subject. In the Direct Capitalization method, the net operating income, prior to debt recapture, is then capitalized into value using an appropriate overall capitalization rate. Properties with leases are typically valued using a discounted cash flow analysis in this approach. This alternative method involves projecting future cash flows and a reversion at the end ..of the holding period. The sum of these cash flows and reversion are then discounted at an overall yield rate to estimate the value. For the purpose of this appraisal, the appraiser utilized the Sales Comparison Approach for the Land Valuation. The Cost Approach and Income Approaches to value are not applicable. 78 LAND VALUATION Estimate of Land Value The appraiser has valued the land as if vacant utilizing the sales comparison approach. The price per net or usable square foot is considered by market participants to be the most relevant unit of comparison for similar parcels located in this submarket, therefore, the appraiser has utilized the price per net square foot to establish value in his analysis. The appraiser conducted a search for closed sales and pending sales of commercial or industrial ;zoned sites similar to the subject relative to their highest and best use. The appraiser reviewed a ::large number of sales and was able to confine most of the sales samples to properties located within a 5 mile radius of the subject. Sales were selected which exhibited comparability to the subject relative to highest and best use, location, zoning/entitlements, utility availability, size, and topography. The appraiser has selected six land sales that are most similar to the subject properties ranging in size from 30,986 square feet up to 73,900 square feet. These six properties are tabulated on the table on the following page. The appraiser has selected five land sales that are most similar to the subject properties ranging in size from 7,200 square feet up to 15,496 square feet. These five properties are tabulated on the table on the subsequent pages, following the preceding valuation. The appraiser has clustered the individual contiguous parcels because this results in the highest total value. 79 COMPARABLE LAND SALE SUMMARY Gross Sale Price Data No. 1 Location Size Sale Date Price/Gross SF Zoning (SF) 1/ SEC Victoria Ave. &5'St. 24,586 6/09/2006 $200,000 GC City of Highland, CA $8.13 gross SF Highland 2/ SEC Highland Ave. &Medical 141,570 5/15/2006 $1,725,000 CO-1, City of Center Drive $12.18 gross SF San Bernardino San Bernardino, CA 3/ 6962 Boulder Ave. 21,450 7/20/2005 $350,000 GC, City of Highland, CA $16.3200 gross SF Highland 4/ SWC J St. &Mill St. 20,552 7/11/2005 $175,000 CG-1 City of San Bernardino, CA $8.51 gross SF San Bernardino 5/ NWC of Macy St. & 95,832 Pending $1,100,000 IL, City of San Highland Avenue Sale $11.48 gross SF Bernardino San Bernardino, CA 6/ NWC of 16`h Street& 90,169 Pending $1,500,000 CO-1, City of Medical Center Drive Sale $16.63 gross SF San Bernardino San Bernardino, CA Subject: 30,986 MIA N/A PCR, City of 2004-2176 N. Newcomb SF San Bernardino 2073-2177 N. Newcomb to 2028-2140 N. McKinley 73,900 2029-2095 N. McKinley SF 2004-2104 N. Dumbarton 2029-2105 N. Dumbarton San Bernardino, CA 80 LAND SALES MAP Sale 3 ikmlmi W.S.of Boulder Ave ue Subject N. of Baseline, Highland ion f 30 , w t Htgatands r W 1�, ° Patton 33 1 i Sale 5 � -ia` UOyc � � ��x� "��7 ���••••••yy� � 441 rf•r?, �� ti,. ' ` `f NWC Macy& 3t�� ; ,. Highland Ave., SB `�`•"�l '` �<� __._..., Sale 2 Ria1C01 Al r�� SEC Medical Center Dr. &Highland SB a geexrsrdl Sale 6 �` 5 nt7 Alr v� NWC Medical Center j _ Sale 1 Dr. & 16"',SB - 3" 3Q t �Y r-, SEC Victoria and °' a s #� 51h St.,Highland y " L _ w Sale 4 ,_ r 4-= +; SWC of Mill&J St., SB _x < T + Rd-"; -�C 2W' 1tTEQ 81 Analysis of Land Sales for 2029-2095 N. McKinley and 2029-2105 N. Dumbarton COMPARABLE LAND SALE SUMMARY Gross Sale Price Data No. /Location Size Sale Date Price/Gross SF Zoning (SF) 11 SEC Victoria Ave. &5"'St. 24,586 6/09/2006 $200,000 GC City of Highland, CA �µ $8.13 gross SF Highland 2/ SEC Highland Ave. &Medical 141,570 5!15,2006 $1,725,000 CO-1, City of Center Drive $12.18 gross SF San Bernardino San Bernardino, CA IN 6962 Boulder Ave. 21,450 7/2012005 $350,000 GC, City of Highland, CA $16.3200 gross SF Highland 4/ SWC J St. &Mill St. 20,552 7/11/2005 $175,000 CG-1 City of San Bernardino, CA $8.51 gross SF San Bernardino 5/ NWC of Macy St. & 95,832 Pending $1,100,000 IL, City of San Highland Avenue Sale $11.48 gross SF Bernardino San Bernardino, CA 6 NWC of 161h Street& 90,169 Pending $1,500,000 CO-1, City of Medical Center Drive Sale $1663 gross SF San Bernardino San Bernardino, CA = Subject: 30,986 N/A N/A PCR, City of SF San Bernardino 2029-2095 N. McKinley to 2029-2105 N. Dumbarton 36,000 San Bernardino, CA SF The subject sites contain approximately 30,986 to 36,000 gross square feet and are rectangular in shape. All selected sales are relatively similar to the subject relative to highest and best use, utility availability, topography, and property rights conveyed. I have applied adjustments to the below-listed elements of comparison in supporting my estimate of land value. In order to derive a point estimate of value of the subject, I have used percentage adjustments. These percentage adjustments are generally based on the relationship between the subject and the comparable properties as perceived by market participants. 82 Non-Physical Adjustments: ❑ Property rights conveyed ❑ Financing terms ❑ Conditions of sale ❑ Market conditions Physical Adjustments: ❑ Location ❑ Size and shape ❑ Topography Ll Zoning/Entitlements ❑ Utility Availability ❑ Condition of site ❑ Non-realty components of value Property Rights Conveyed A transaction price is predicated on the real property interests conveyed. The land value estimate assumes that the subject site is appraised in fee in accordance with its highest and best use. If a different form of ownership is transferred, an adjustment to the sale price may prove necessary. All of the land data used in this report were fee simple transfers. As a result, no adjustments are appropriate for conveyed property rights. Financing ® My market value estimate assumes an all-cash transaction or a down payment and financing at prevailing market terms. Adjustments for financing terms are warranted when a property is purchased subject to non-market financing arrangements. Non-market financing arrangements can include seller-carried notes or assumable loans with interest rates, loan-to-value ratios, and/or " amortization schedules more favorable than the terms commonly available in the market. Sale Two and Sale Five involved short term seller financing ranging from 5 to 7 years, specific terms were not available; therefore, limited weight was assigned to these two sales. As discussed in the sale data sheets, the financing terms of all sales reflect the market,and are considered cash equivalent. No adjustments are warranted. 83 i Conditions of Sale My market value estimate assumes that the subject property will be sold where: 1) the buyer and seller are typically motivated, 2)both parties are well informed or well advised, and each is acting in what they consider to be their own best interest, 3) a reasonable time is allowed for exposure in the open market, and 4) neither the buyer nor the seller are under undue duress. If a property is sold and either the buyer or seller were under duress, an adjustment should be applied to the sale price to reflect the property's sale price assuming an arm's-length transaction. During the verification process, the appraiser attempted to determine whether atypical motivations were involved in any of the transactions. Based on my research, all sales represented arm's-length ,transactions, involved no duress, and did not involve land assemblage in which buyers paid above market prices because of anticipated plottage value resulting from the greater utility of a larger site. Reportedly, Pending Sales Five and Six were sold very close to the asking prices, the listing brokers would not disclose the actual sales price. The appraiser applied a 5% downward adjustment to each sale for atypical conditions of sale. 4 Market Conditions Changes in market conditions subsequent to a comparable sale transaction.may require adjustment. The market data in this report sold from July 2005 to June 2006. The effective appraisal date is September 11, 2006. The limited market data did not allow a matched-pair analysis to assist in the quantification of changes in market conditions, therefore the appraiser has reviewed the data on a broader basis to. extract time adjustments. The regional recession of the early 1990s had a significant downward' impact on.the market values of most property types. The market values of undeveloped parcels located in the neighborhood declined significantly from late 1990 to approximately 1996. Discussions with real estate brokers indicate that prices for land ready for development have ;remained relatively stable. Therefore, no adjustments to the comparable sales are warranted. _ Location Location adjustments were applied to the comparable sales where appropriate. The sale data did permit derivation of location adjustments through matched-pair analysis. A number of other variables contained in the data set prohibit reasonable grouping of the sales. The market data was also considered on a broader basis to identify general patterns which would support location adjustments. Specifically, consideration was given to differences in demand. The location and demand of Comparable Sales One and Four are rated inferior to that of the subject. An upward adjustment is warranted. The location and demand of Comparable Sale Three is rated superior to that of the subject. A downward adjustment is warranted. Sales Two, Five and Six are rated similar to that of the subject. 84 Size and Shape This element of comparison includes analysis of the utility associated with the size and shape of each sale. I analyzed the impact of size on sale price of a population of land sales, including the six Land Comparables. Typically, rectangular parcels with adequate width, configured to provide adequate street frontage, provide the most utility for development and consequently sell for higher per square foot prices than parcels lacking such utility. The subject contains approximately 30,986 and 36,000 square feet, and the size and shape provide average development potential and is considered of average utility by market participants. With-the exception of Sale Three, the shapes of the sales do not limit development options, have good utility and are considered generally superior to the subject. Downward adjustments are warranted for Sales One, Two, Four, Five and Six. Typically, larger parcels sell for less on a per square foot basis than do smaller parcels, primarily because of the larger pool of potential purchasers for smaller parcels. Sales Two, Five and Six warranted upward adjustments. Topography Level sites are considered superior to sloping sites since level sites require less grading and, typically, offer a higher development potential. Based on our physical inspection of the subject and all comparables, the subject and all land sales are generally level. No adjustments are appropriate since the sales are similar to the subject relative to topography. Use/Zoning/Entitlements Any difference in the highest and best use of a comparable and the subject property must be - addressed. When current zoning reflects the highest and best use, adjustments for different zoning classifications are necessary when the land uses allowed under the subject's classification are substantially different than those allowed by the zoning designation governing any of the comparable land sales. Sales One, Three, and Four are zoned for unrestricted General Commercial use and are rated superior to the subject. Downward adjustments are warranted. Sales Two and Six are zoned for restricted professional office use and are rated similar to that of the subject. Sale 5 is zoned for light industrial use is rated inferior to that of the subject. An upward adjustment is warranted. Condition of Site/Utility Availability This adjustment relates'to the site condition at the time of sale, and assumes that the subject site is vacant and available for development to its highest and best use. Some land sales have improvements which require demolition, thereby requiring a potential investor to'discount a purchase offer by the anticipated demolition costs. Conversely, some land sales include improvements which have contributory value that must be added to a potential investor's offering price for the site as if vacant. 85 Sales One, Two, Four, Five and Six were sold ready for development. Sale Three was sold for land value with a 1,131 square foot unfinished single family residence which was expanded and finished by the purchaser. The costs to demolish the building was estimated at$5.00 per square foot. Therefore: 1,131 sf x $5.00/sf = $5,655 $350,000 = 1.6%. An upward adjustment is warranted. Signalized Traffic Corner Sale One, Two, Five and Six are located on signalized traffic corners and rated superior to that of the subject. Downward adjustments-are warranted. Sale Three is an interior parcel and rated inferior to that of the subject, an upward adjustment is warranted. Non-realty components of value The inclusion of non-realty components of value in the purchase price of a property would require adjustment to derive the sale price attributable to the real property only. Non-realty components include going concern value, personalty, and other items. No known non-realty components were included in the purchase prices of the sales. No adjustments are appropriate. Valuation of 2029-2105 N. Dumbarton and 2029-2095 N. McKinley The foregoing analysis is tabulated in the adjustment grid which appears below. Property Rights ` Adjusted Price $ 8.13 $ 12.18 $ 16.32 $ 8.51 $ 11.48 $ 16.63 • Financing Terms Adjusted Price $ 8.13 $ 12.18 $ 16.32 $ 8.51 $ 11.48 $ 16.63 Conditions of Sale 1 -5.00% -5.00% - Adjusted Price $ 8.i3 $ 12.18 $ 16.32 $ 8.51 $ 10.91 $ 15.80 Market Conditions now Zoning -4% -4%° -4% 4% Location 10% -10% 10% Lot Size 16% 11% 7% ShapetUtility -5% -5% -5% -5% -5% Site Condition 1.60% Signalized Traffic Comer -10°x6 -10% 10% -10% -10% 86 Land Value Conclusion for 2029-2105 N. Dumbarton and 2029-2095 N. McKinley The sales in the sample reflect the most similar data to the subject available relative to highest and best use, location, zoning, market conditions, property rights conveyed, financing, topography, and utility availability. On an unadjusted basis, the six sales within the sample fall within the range of$8.13 to$16.32 per square foot. On an adjusted basis, the sales lie within the range of$7.40 to $15.93 per square foot with a mean of$11.61. Sales Two and Five were given limited weight due to seller financing, Sale One, Three, Four and Six were given most weight. The adjusted sale price of Sales One, Three, Four and Six is $7.40, $15.93, $8.60 and$14.53 per gross square foot, respectively. Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject 2029 to 2105 Dumbarton containing 36,000 square feet, as of September 11, 2006 is: a I $13.00/square foot x 36,000 gross square feet = $468,000 FOUR HUNDRED SIXTY-EIGHT THOUSAND DOLLARS $468,000 Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject 2029 to 2095 McKinley containing 30,986 square feet, as of September 11, 2006 is: $13.00/square.foot x 30,986 gross square feet = $402,818, Rounded to: $400,000 FOUR HUNDRED THOUSAND DOLLARS-- $400,000 87 i Analysis of Land Sales for 2073-2177 N. Newcomb, 2028-2140 N. McKinley and 2004-2104 N. Dumbarton COMPARABLE LAND SALE SUMMARY Gross Sale Price Data No. / Location Size Sale Date Price/Gross SF Zoning (SF) 1/ SEC Victoria Ave. &5`h St. `x,4,586 6/09/2006 $200,000 GC City of Highland, CA $8.13 gross SF Highland 2/ SEC Highland Ave;&Medical 141,570 5/15/2006 $1,725,000 CO-1, City of Center Drive $12.18 gross SF San Bernardino San Bernardino, CA a t 3/ 6962 Boulder Ave. 21,450 7%20/2005 $350,000 GC, City of Highland, CA $16.3200 gross SF Highland 4/ SWC J St. &Mill St. 20,552 7/11/2005 $175,000 CG-1 City of San Bernardino, CA $8.51 gross SF San Bernardino 5/ NWC of Macy St. & 95,832 Pending $1,100,000 .IL, City of San Highland Avenue Sale $11.48 gross SF Bernardino San Bernardino, CA a 6/ NWC of 16"'Street& 90,169 Pending $1,500,000 CO-1, City of Medical Center Drive Sale $16.63 gross SF San Bernardino San Bernardino, CA Subject. 44,300 N/A N/A PCR, City of 2073-2177 N. Newcomb SF San Bernardino 2028-2140 N. McKinley to 2004-2104 N. Dumbarton 50,455 San Bernardino, CA SF The subject sites contain approximately 44,300 to 50,455 gross square feet and are rectangular in shape. All selected sales are relatively similar to the subject relative to highest and best use, utility availability, topography, and property rights conveyed. I have applied adjustments to the below-listed elements of comparison in supporting my estimate of land value. In order to derive a point estimate of value of the subject, I have used percentage 88 I adjustments. These percentage adjustments are generally based on the relationship between the subject and the comparable properties as perceived by market participants. Non-Physical Adjustments: ❑ Property rights conveyed ❑ Financing terms ❑ Conditions of sale ❑ Market conditions Physical Adjustments: ❑ Location ❑ Size and shape ❑ Topography ❑ Zoning''Entitlements ❑ Utility Availability ❑ Condition of site ❑ Non-realty components of value Property Rights Conveyed A transaction.price is predicated on the real property interests conveyed. The land value estimate assumes that the subject site is appraised in fee in accordance with its highest and best use. If a different form'of ownership is transferred, an adjustment to the sale price may prove necessary: All of the land data used in this report were fee simple transfers. As a result, no adjustments are appropriate for conveyed property rights. :Financing My market value estimate assumes an all-cash transaction or a down payment and financing at prevailing market terms. Adjustments for financing terms are warranted when a property is purchased subject to non-market financing arrangements. Non-market financing arrangements can include seller-carried notes or assumable loans with interest rates, loan-to-value ratios, and/or amortization schedules more favorable than the terms commonly available in the market. Sale Two and Sale Five involved short term seller financing ranging from 5 to 7 years, specific terms were not available; therefore, limited weight was assigned to these two sales. As discussed in the sale;data sheets, the financing terms of all sales reflect the market, and are considered cash equivalent. No adjustments are warranted. 89 Conditions of Sale My market value estimate assumes that the subject property will be sold where: 1) the buyer and seller are typically motivated, 2)both parties are well informed or well advised, and each is acting in what they consider to be their own best interest, 3) a reasonable time is allowed for exposure in the open market, and 4) neither the buyer nor the seller are under undue duress. If a property is sold and either the buyer or seller were under duress, an adjustment should be applied to the sale price to reflect the property's sale price assuming an arm's-length transaction. During the verification process, the appraiser attempted to determine whether atypical motivations were involved in any of the transactions. Based on my research, all sales represented arm's-length transactions, involved no duress, and did not involve land assemblage in which buyers paid above market prices because of anticipated plottage value resulting from the greater utility of a larger site. Reportedly, Pending Sales Five and Six were sold very close to the asking prices, the listing brokers would not disclose the actual sales price. The appraiser applied a 5% downward adjustment to each sale for atypical conditions of sale. 4 Market Conditions Changes in market conditions subsequent to a comparable sale transaction may require adjustment. The market data in this report sold from July 2005 to June 2006. The effective appraisal date is September 11, 2006. The limited market data did not allow a matched-pair analysis to assist in the quantification of changes in market conditions, therefore the appraiser has reviewed the data on a broader basis to -extract time adjustments. The regional recession of the early 1990s had a significant downward impact on the market values of most property types. The market values of undeveloped parcels located in the neighborhood declined significantly from late 1990 to approximately 1996. Discussions with real estate brokers indicate that prices for land ready for development have .remained relatively stable. Therefore, no adjustments to the comparable sales are warranted. _ Location Location adjustments were applied to the comparable sales where appropriate. The sale data did permit derivation of location adjustments through matched-pair analysis. A number of other variables contained in the data set prohibit reasonable grouping of the sales. The market data was also considered on a broader basis to identify general patterns which would support location adjustments. Specifically, consideration was given to differences in demand. The location and demand of Comparable Sales One and Four are rated inferior to that of the subject. An upward adjustment is warranted. The location and demand of Comparable Sale Three is rated superior to that of the subject. A downward adjustment is warranted. Sales Two, Five and Six are rated similar to that of the subject. 90 Size and Shape This element of comparison includes analysis of the utility associated with the size and shape of each sale. I analyzed the impact of size on sale price of a population of land sales, including the six Land Comparables. Typically, rectangular parcels with adequate width, configured to provide adequate street frontage, provide the most utility for development and consequently sell for higher per square foot prices than parcels lacking such utility. The subject contains approximately 44,300, 50,400 and 50,455 square feet, and the size and shape provide average development potential and is considered of average utility by market participants. With the exception of Sale Three, the shapes of the sales do not limit development options, have good utility and are considered generally superior to the subject.. Downward adjustments are warranted for Sales One, Two, Four, Five and Six. Typically, larger parcels sell for less on a per square foot basis than do smaller parcels, primarily because of the larger pool of potential urchasers for smaller parcels. Sales Two, Five and Six warranted upward adjustments. Sales One, Three, and Four are smaller and rated superior to that of the subject sites. Downward adjustments are warranted. Topography Level sites are considered superior to sloping sites since level sites require less grading and, typically, offer a higher development potential. Based on our physical inspection of the subject and all comparables, the subject and all land sales are generally level. No adjustments are appropriate since the sales are similar to the subject relative to topography. Use/Zoning/Entitlements Any difference in the highest and best use of a comparable and the-subject property must be addressed. When current zoning reflects the highest and best use, adjustments for different zoning classifications are necessary when the land uses allowed under the subject's classification are substantially different than those allowed by the zoning designation governing any of the comparable land sales. Sales One, Three, and Four are zoned for unrestricted General Commercial use and are rated superior to the subject. Downward adjustments are warranted. Sales Two and.Six are zoned for restricted professional office use and are rated similar to that of the subject. Sale 5 is zoned for.light industrial use is rated inferior to that of the subject. An upward adjustment is warranted. Condition of Site/Utility Availability This adjustment relates to the site condition at the time of sale, and assumes that the subject site is vacant and available for development to its highest and best use. Some land;".sales have improvements which require demolition, thereby requiring a potential investor to discount a purchase offer by the anticipated demolition costs. Conversely, some land sales include 91 improvements which have contributory value that must be added to a potential investor's offering price for the site as if vacant. Sales One, Two, Four, Five and Six were sold ready for development. Sale Three was sold for land value with a 1,131 square foot unfinished single family residence which was expanded and finished by the purchaser. The costs to demolish the building was estimated at$5.00 per square foot. Therefore: 1,131 sf x $5.00/sf = $5,655 -:- $350,000 = 1.6%. An upward adjustment is warranted. Signalized Traffic Corner Sale One, Two, Five and Six are located on signalized traffic corners and rated superior to that of the subject. Downward adjustments are warranted. Sale Three is an interior parcel and rated inferior to that of the subject, an upward adjustment is warranted. Non-realty components of value The inclusion of non-realty components of value in the purchase price of a property would require adjustment to derive the sale price attributable to the real property only. Non-realty components include going concern value, personalty, and other items. No known non-realty components were included in the purchase prices of the sales. No adjustments are appropriate. The foregoing analysis is tabulated in the adjustment grid which appears below. _-- Property Rights Adjusted Price HI 8.13 $ 12.18 $ 16.32 $ 8.51 $ 11.48 $ 16.63 Financing Terms ` :. Adjusted Price $ 8.13 $ 12.18 $ 16.32 $ 8.51 $ 11.48 $ 16.63 Conditions of Sale -5.00% -5.00% k Adjusted Price $ 8.13 $ 12.18 $ 16.32 $ 8.51 $ 10.91 $ 15.80 Market Conditions 7Lot g -4% -4% -4% 4% tion 10°k -10%i 10°k ize -6.0% 15% -6% -6% 6% 6% ShapeNtility -5% -5% -5% -5% -5% Site Condition 1.6% Signalized Traffic Comer -10% -10% 10% 10% -10% is 92 Land Value Conclusion for 2073-2177 N. Newcomb, 2028-2140 N. McKinley and 2004- 2104 N. Dumbarton The sales in the sample reflect the most similar data to the subject available relative to highest and best use, location, zoning, market conditions, property rights conveyed, financing, topography, and utility availability. On an unadjusted basis, the four sales within the sample fall within the range of$8.13 to $16.32 per square foot. On an adjusted basis, the sales lie within the range of$6.91 to$14.95 per square foot with a mean of$11.14. With the exception of Sales Two and Five which were given least weight due to seller financing, Sales""One, Three, Four and Six were given most weight. The adjusted sale price of Sales One, Three, Four and Six is$6.91, $14.95, $8.08 and$14.38 per gross square foot,respectively. i Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject 2073-2177 N. Newcomb containing 50,400 square feet, as of September 11, 2006 is: $12.00/square foot x 50,400 gross square feet = $604,800, Rounded to: $605,000 SIX HUNDRED FIVE THOUSAND DOLLARS $605,000 Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the•subject 2028-2140 N. McKinley containing 50,455 square feet, as of September 11, 2006 is: $12.00/square foot x 50,455-gross square feet = $605,460, Rounded to: $605,000 SIX HUNDRED FIVE THOUSAND DOLLARS $605,000 " Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject 2004-2104 N. Dumbarton containing 44,300 square feet, as of September 11, 2006 is: $12.00/square foot x 44,300 gross square feet = $531,600, Rounded to: $530,000 FIVE HUNDRED THIRTY THOUSAND DOLLARS $530,000 93 Analysis of Land Sales for 20042176 N. Newcomb COMPARABLE LAND SALE SUMMARY Gross Sale Price Data No. /Location Size Sale Date Price/Gross SF Zoning (SF) 1/ SEC Victoria Ave. &5`h St. 24,586 6/09/2006 $200,000 GC City of Highland, CA $8.13 gross SF Highland 2/ SEC Highland Ave. &Medical 141,570 5/15/2006 $1,725,000 CO-1, City of Center Drive s $12.18 gross SF San Bernardino San Bernardino, CA a 3/ 6962 Boulder Ave. 21,450 7/20/2005 $350,000 GC, City of Highland, CA $16.3200 gross SF Highland 4/ SWC J St. &Mill St. 20,552 7/11/2005 $175,000 CG-1 City of San Bernardino, CA $8.51 gross SF San Bernardino 5/ NWC of Macy St. & 95,832 Pending $1,100,000 IL, City of San Highland Avenue Sale $11.48 gross SF Bernardino San Bernardino, CA 16/ NWC of 16'Street& 90,169 Pending $1,500,000 CO-1,City of Medical Center Drive Sale $16.63 gross SF San Bernardino San Bernardino, CA Subject: 73,900 N/A N/A PCR, City of 2004-2176 N. Newcomb SF San Bernardino San Bernardino, CA The subject sites contain approximately 73,900 gross square feet and are rectangular in shape. All selected sales are relatively similar to the subject relative to highest and best use, utility availability, topography;;and property rights conveyed.. I have applied adjustments.to the below-listed elements of comparison in supporting my estimate of land value. .In order to derive a point estimate of value of the.subject, I have used'percentage adjustments. These percentage adjustments are generally based on the relationship between the subject and the comparable properties as perceived by market participants. 94 Non-Physical Adjustments: ❑ Property rights conveyed ❑ Financing terms ❑ Conditions of sale ❑ Market conditions Physical Adjustments: ❑ Location ❑ Size and shape ❑ Topography v ❑ Zoning/Entitlements ❑ Utility Availability ❑ Condition of site ❑ Non-realty components of value Property Rights Conveyed A transaction price is predicated on the real property interests conveyed. The land value estimate assumes that the subject site is appraised in fee in accordance with its highest and best use. If a different form of ownership is transferred, an adjustment to the sale price may prove necessary. All of the land data used in this report were fee simple transfers. As a result, no adjustments are appropriate for conveyed property rights. Financing My market value estimate assumes an all-cash transaction or a down payment and financing at prevailing market terms. Adjustments for financing terms are warranted when a property is purchased subject to non-market financing arrangements. Non-market--financing arrangements can include seller-carried notes or assumable loans with interest rates, loan-to-value ratios, and/or 4t amortization schedules more favorable than the terms commonly available in the market. Sale Two and Sale Five involved short term seller financing ranging from 5 to 7 years, specific terms were not available; therefore, limited weight was assigned to these two sales. As discussed in the sale data sheets, the financing terms of all sales reflect the market, and are considered cash equivalent. No adjustments are warranted. 95 Conditions of Sale My market value estimate assumes that the subject property, will be sold where: 1) the buyer and seller are typically motivated, 2)both parties are well informed or well advised, and each is acting in what they consider to be their own best interest, 3)a reasonable time is allowed for exposure in the open market, and 4) neither the buyer nor the seller are under undue duress. If a property is sold and either the buyer or seller were under duress, an adjustment should be applied to the sale price to reflect the property's sale price assuming an arm's-length transaction. During the verification process, the appraiser attempted to determine whether atypical motivations were involved in any of the transactions. Based on my research, all sales represented arm's-length transactions, involved no duress, and did not involve land assemblage in which buyers paid above market prices because of anticipated plottage value resulting from the greater utility of a larger site. Reportedly, Pending Sales Five and Six were sold very close to the asking prices, the listing brokers would not disclose the actual sales price. The appraiser applied a 5% downward adjustment to each sale for atypical conditions of sale. Market Conditions Changes in market conditions subsequent to a comparable sale transaction may require adjustment. The market data in this report sold from July 2005 to June 2006. The effective appraisal date is September 11, 2006. The limited market data did not allow a matched-pair analysis to assist in the quantification of changes in market conditions, therefore the appraiser has reviewed the data on a broader basis to extract time adjustments. The regional recession of the early 1990s had a significant downward impact on the market values of most property types. The market values of undeveloped parcels located in the neighborhood declined significantly from late 1990 to approximately 1996. Discussions with real estate brokers indicate that prices for land ready for development have - remained relatively stable. Therefore, no adjustments to the comparable sales are warranted. Location Location adjustments were applied to the comparable sales where appropriate. The sale data did permit derivation of location adjustments through matched-pair analysis. A number of other variables contained in the data set prohibit reasonable grouping of the sales. The market data was also considered on a broader basis to identify general patterns which would support location adjustments. Specifically, consideration was given to differences in demand. The location and demand of Comparable Sales One and Four are rated inferior to that of the subject. An upward adjustment is warranted. The location and demand of Comparable Sale Three is rated superior to that of the subject. A downward,adjustment is warranted. Sales Two, Five and Six are rated similar to that of the subject. 96 i i Size and Shape This element of comparison includes analysis of the utility associated with the size and shape of each sale. I analyzed the impact of size on sale price of a population of land sales, including the six Land Comparables. Typically, rectangular parcels with adequate width, configured to provide adequate street frontage, provide the most utility for development and consequently sell for higher per square foot prices than parcels lacking such utility. The subject contains approximately 28,800 and 30,986 square feet, and the size and shape provide average development potential and is considered of average utility by market participants. With the exception of Sale Three, the shapes of the sales do not limit development options, have good utility and are considered generally superior to the subject. Downward adjustments are warranted for Sales One, 'Two, Four, Five and Six. s Typically, larger parcels sell for less on a per square foot basis than do smaller parcels, primarily because of the larger pool of potential purchasers for smaller parcels. Sales Two, Five and Six warranted upward adjustments. b Topography Level sites are considered superior to sloping sites since level sites require less grading and, typically, offer a higher development potential. Based on our physical inspection of the subject and all comparables, the subject and all land sales are generally level. No adjustments are appropriate since the sales are similar to the subject relative to topography. Use/Zoning/Entitlements Any difference in the highest and best use of a comparable and the subject property must be addressed. When current zoning reflects the highest and best use, adjustments for different zoning ` classifications are necessary when the land uses allowed under the subject's classification are substantially different than those allowed by the zoning designation governing any of the comparable land sales. Sales One, Three, and Four are zoned for unrestricted General Commercial use and are rated superior to the subject. Downward adjustments are warranted. Sales Two and Six are zoned for restricted professional office use and are rated similar to that of the subject. Sale 5 is zoned for light industrial use is rated inferior to that of the subject. An upward adjustment is warranted. Condition of Site/Utility Availability This adjustment relates to the site condition at the time of sale, and assumes that the subject site is vacant and available for development to its highest and best use. Some land sales have improvements which. require demolition, thereby requiring a potential investor to discount a purchase offer by the anticipated demolition costs. Conversely, some land sales include improvements which have contributory value that must be added to a potential investor's offering price for the site as if vacant. 97 Sales One, Two, Four, Five and Six were sold ready for development. Sale Three was sold for land value with a 1,131 square foot unfinished single family residence which was expanded and finished by the purchaser. The costs to demolish the building was estimated at $5.00 per square foot. Therefore: 1,131 sf x $5.00/sf = $5,655 -:- $350,000 = 1.6%. An upward adjustment is warranted. Signalized Traffic Corner Sale One, Two, Five and Six are located on signalized traffic corners and rated superior to that of the subject. Downward adjustments are warranted. Sale Three is an interior parcel and rated inferior to that of the subject; an upward adjustment is warranted. Non-realty components of value ' The inclusion of non-realty components of value in the purchase price of a property would require adjustment to derive the sale price attributable to the real property only. Non-fealty components include going concern value,personalty, and other items. No known non-realty components were included in the purchase prices of the sales. No adjustments are appropriate. The foregoing analysis is tabulated in the adjustment grid which appears below. Property Rights Adjusted.Price $ 8.13 $ 12.18 $ 16.321 $ 8.51 $ 11.48 $ 16.63 Financing Terms Adjusted Price $ 8.13 $ 12.18 $ 16.32 $ 8.51- $ 11.48 $ 16.63 Conditions of Sale -5.00% -5.00% Adjusted Price $ 8.13 $ 12.18 $ 16.32 $ 8.51 $ 10.91 $ 15.80 r Market Conditions Zoning -4% -4% . 4% 4% Location 100/0 -10% 10% Lot Size 12.0% 12% -6% _ -11% 4.5% 4.5% Shape/Utility -5% -5% -5% -5% -5% Site Condition 1.6% Signaiized Traffic Comer, -10% -10% 10% -10% -10% 98 Land Value Conclusion for 2004-2176 N. Newcomb The sales in the sample reflect the most similar data to the subject available relative to highest and best use, location, zoning, market conditions, property rights conveyed, financing, topography, and utility availability. On an unadjusted basis, the four sales within the sample fall within the range of$8.13 to $16.32 per square foot. On an adjusted basis, the sales lie within the range of$6.42 to$14.95 per square foot with a mean of$10.86. With the exception of Sales Two and Five which are given limited weight due to seller financing, Sales One, Three, Four and Six were given most weight. The adjusted sale price of Sales One, Three, Four and Six is $6.42, $14.95, and$14.14 per gross square foot, respectively. Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject 2004-2176 N. Newcomb containing 73,900 square feet, as of September 11, 2006 is: n $10.00/square foot x 73,900 gross square feet = $739,000, Rounded to: $739,000 SEVEN HUNDRED THIRTY-NINE THOUSAND DOLLARS $739,000 99 i LAND SALES MAP 1km San Manuel Nk� _ Indian Subject ° o Reservation - 30 ,E _ Sale 1 a�7'`" - �, -�--� _ �;� �•Ifightows 1363 W. 5"'St. s " Pateoh San Bernardino i Sale 5 108 W. Highland San Bernardino waft u p��� r ,.^s •°' "s it �- r coup 5 r k Sale 2 . i 3 i _ =} 1347 N. E St., SB 30 Sale 4^ TM W.S. of Mt.Vernon, N.of �4 Citrus Ave.,Colton I Sale 3 465 N. Mt. Vernon Colton 101 COMPARABLE LAND SALE SUMMARY i Gross ss Sale Price Data No. / Location Size Sale Date Price/Gross SF Zoning (SF) 1/ 1363 W. 5th St. 5,460 3/17/2006 $47,000 CG-1 City of San Bernardino, CA $8.61 gross SF San Bernardino 2/ 1347 N. E St. 11,250 2/27/2006 $110,000 CG-1, City of San Bernardino, CA $9.78 gross SF San Bernardino 3/ 465 N. Mt. Vernon Ave. 13,068 2/08/2006 $210,000 C-2, City of Colton, CA $16.07 gross SF ° Colton a 4/ West Side of Mt. Vernon Ave. 16,000 5/04/2005 $290,000 C-2 City of 178 feet north of Citrus $18.12 gross SF Colton Colton, CA 51 108 W. Highland Avenue 22,950 3/23/05 $360,000 CG-1, City of San Bernardino, CA $15.69 gross SF San Bernardino Subject: Z 200 SF N/A N/A PCR, City of 2029 N. Newcomb to San Bernardino 2194 N. McKinley 15,496 2159-2177 N. McKinley 2194 N. Dumbarton 2158 N.Dumbarton - 2105 N. Dumbarton 2141 N. Dumbarton 2177 N. Dumbarton San Bernardino, CA 100 Analysis of Land Sales for 2029 N. Newcomb COMPARABLE LAND SALE SUMMARY Gross Sale Price Data No. /Location Size Sale Date Price/Gross SF Zoning (SF) 1/ 1363 W. 5th St. 5,460 3/17/2006 $47,000 CG-1 City of San Bernardino, CA $8.61 gross SF San Bernardino 2/ 1347 N. ESt. 11,250 2/27/2006 $110,000 CG-1, City of San Bernardino, CA `* $9.78 gross SF San Bernardino 3/ 465 N. Mt. Vernon Ave. 13,068 2/08/2006 $210,000 C-2, City of Colton, CA $16.07 gross SF Colton 4/ West Side of Mt. Vernon Ave. 16,000 5/04/2005 $290,000 C-2 City of 178 feet north of Citrus $18.12 gross SF Colton Colton, CA 5/ 108 W. Highland Avenue 22,950 3/23/05 $360,000 CG-1,City of San Bernardino, CA $15.69 gross SF San Bernardino Subject: 7,200 SF N/A N/A PCR, City of 2029 N. Newcomb San Bernardino San Bernardino, CA The subject site contains approximately 7,200 gross square feet and is rectangular in shape. All selected sales are relatively similar to the subject relative to highest and best use, utility availability, topography, and property rights conveyed. I have applied adjustments to the below-listed elements of comparison in supporting my estimate of land value. In order to derive a point estimate of value of the subject, I have used percentage adjustments. These percentage adjustments are generally based on the relationship between the subject and the comparable properties as perceived by market participants. 102 Non-Physical Adjustments: ❑ Property rights conveyed ❑ Financing terms ❑ Conditions of sale ❑ Market conditions Physical Adjustments: ❑ Location ❑ Size and shape - ❑ Topography ❑ Zoning/Entitlements ❑ Utility Availability ❑ Condition of site ❑ Non-realty components of value 4 Property Rights Conveyed A transaction price is predicated on the real property interests conveyed. The land value estimate assumes that the subject site is appraised in fee in accordance with its highest and best use. If a different form of ownership is transferred, an adjustment to the sale price may prove necessary. All of the land data used in this report were fee simple transfers. As a result, no adjustments are appropriate for conveyed property rights. Financing My market value estimate assumes an all-cash transaction or a down payment and financing at prevailing market terms. Adjustments for financing terms are warn rated when a property is purchased subject to non-market financing arrangements. Non-market financing arrangements can include seller-carried notes or assumable loans with interest rates, loan-to-value ratios, and/or - amortization schedules more favorable than the terms commonly available in the market. As discussed in the sale data sheets, the financing terms of all sales reflect the market, and are considered cash equivalent. No adjustments are warranted. Conditions of Sale My market value estimate assumes that the subject property will be sold where: 1) the buyer and 1 .s4ler are typically motivated,2)both parties are well informed or well advised, and each is acting in what they consider to be their own best interest, 3)a reasonable time is allowed for exposure in the open market, and 4)neither the buyer nor the seller are under undue duress. If a property is sold and either the buyer or seller were under duress, an adjustment should be applied to the sale price to reflect the property's sale price assuming an arm's-length transaction. According to the 103 Now listing broker, Sale Two was sold below market value; therefore, the appraiser applied a 20% upward adjustment to Sale Two. During the verification process, the appraiser attempted to determine whether atypical motivations were involved in any of the transactions. Based on my research, all sales represented arm's-length transactions, involved no duress, and did not involve land assemblage in which buyers paid above market prices because of anticipated plottage value resulting from the greater utility of a larger site. Market Conditions Changes in market conditions subsequent to a comparable sale transaction may require adjustment. The market data in this report sold from March 2005 to March 2006. The effective appraisal date is September 11, 2006. The limited market data did not allow a matched-pair analysis to assist in the quantification of changes in market conditions, therefore the appraiser has reviewed the data on a broader basis to extract time adjustments. The regional recession of the early 1990s had a significant downward impact on the market values of most property types. The market values of undeveloped parcels located in the neighborhood declined significantly from late 1990 to approximately 1996. Discussions with real estate brokers indicate that prices for land ready for development have remained relatively stable. Therefore, no adjustments to the comparable sales are warranted. Location Location adjustments were applied to the comparable sales.where appropriate. The sale data did permit derivation of location adjustments through matched-pair analysis. A number of other variables contained in the data set prohibit reasonable grouping of the sales. The market data was also considered on a broader basis to identify general patterns which would support location adjustments. Specifically, consideration was given to.differences in demand. The location and =_, demand of Comparable Sale One is rated inferior to that of the subject. An upward adjustment is Warranted. The location and demand of Comparable Sales Two, Three, Four and Five are rated superior to that of the subject. Downward adjustments are warranted. Size and Shape This element of comparison includes analysis of the utility associated with the size and shape of each sale. I analyzed the impact of size on sale price of a population of land sales, including the five Land Comparables. Typically, rectangular parcels with adequate width, configured to provide adequate street frontage, provide the most utility for development and consequently sell for higher per square foot prices than parcels lacking such utility. The subject contains approximately 7,200 square feet, and the size and shape provide fair development potential and is considered of fair utility by market participants. With the exception of Sale One, the shapes of the sales do not limit development 104 options, have good utility and are considered generally superior to the subject. Downward adjustments are warranted for Sales Two, Three, Four and Five. Typically, larger parcels sell for less on a per square foot basis than do smaller parcels, primarily because of the larger pool of potential purchasers for smaller parcels. Sales Two, Three, Four and Five warranted upward adjustments. Topography Level sites are considered superior to sloping sites since level sites require less grading and, typically, offer a higher development potential. Based on our physical inspection of the subject and all comparables, the subject and all land sales are generally level. No adjustments are appropriate since the sales are similar to the subject relative to topography. Use/Zoning/Entitlements Any difference in the highest and best use of a comparable and the subject property must be addressed. When current zoning reflects the highest and best use, adjustments for different zoning classifications are necessary when the land uses allowed under the subject's classification are substantially different than those allowed by the zoning designation governing any of the comparable land sales. Sales One, Two, Three, Four and Five are zoned for unrestricted General Commercial use and are rated superior to the subject. Downward adjustments are warranted. Condition of Site/Utility Availability This adjustment relates to the site condition at the time of sale, and assumes that the subject site is vacant and available for development to its highest and best use. Some land sales have improvements which require demolition, tkereby requiring a potential investor to discount a purchase offer by the. anticipated demolition costs. Conversely,_some land sales include _. improvements which have contributory value that must be added to a potential investor's offering price for the site as if vacant. Sales One, Two, Three, Four, and Five were sold ready for development. Signalized Traffic Corner Sales Three and Five are located on signalized traffic corners and are rated superior to that of the subject. Downward adjustments are warranted. Non-realty components of value The inclusion of non-realty components of value in the purchase price of a property would require adjustment to derive the sale price attributable,to the real property only. Non-realty components include going concern value,personalty, and other items. No known non-realty components were included in the purchase prices of the sales. No adjustments are appropriate. 105 The foregoing analysis is tabulated in the adjustment grid which appears below. .�r .a. ., � 3Sate..2 Sale 3; Saie4,,, Salex5 ,. Property Rights Adjusted Price $ 8.61 $ 9.78 . $ 16.07 ` $ 18.1.2. 15.69 Financing Terms Adjusted Price $ 8.61 $ 9.78 $ 16.07 $ 18.12 : $ 15.69 Conditions of Sale 20.00%i Adjusted Price $ 8.61 $ 11.74 $ 16.07 ': $ 18.12 ! $ 15.69 Market Conditions Adjusted Price $ to $ 11.74 $" 16:07 $ 18.12 $ 151 Zoning -5% -5% -5% i -5% -5% Location 12% -10% -10% -10% -10% Lot Size 1.5% 1.5% 2.0°!0 4.0% Shape/Utility -8% -8% + -8% -8% Site Condition q Signalized Traffic Comer -10% -10% 1 PhyslcalCharadterasitcs fdtal Net Adjustment ]h 0 Aasteb)fsrice/ q:Fti-iNean ' :' .10?J r _ Land Value Conclusion for 2029 N. Newcomb The sales in the sample reflect the most similar data to the subject available relative to highest and best use, location, zoning, market conditions, property rights conveyed, financing, topography, and utility availability. On an unadjusted basis,the four sales within the sample fall within tlfe range of$8.61 to $16.07 "per square foot. On an adjusted basis, the sales lie within the range of$9.21 to$14.31 per square - 'foot with a mean of$10,98. All five sales were considered and given equal weight. Given the smaller size of the subject site and its infdl location, the appraiser estimated the fair market value at the upper end of the range. Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject 2029 N. Newcomb containing 7,200 square feet, as of September 11, 2006 is: $12.00/square foot x 7,200 gross square feet = $86,400, Rounded to $86,000 EIGHTY-SIX THOUSAND DOLLARS $86,000 106 Analysis of Land Sales for 2194 N. McKinley COMPARABLE LAND SALE SUMMARY Gross Sale Price Data No. /Location Size Sale Date Price/Gross SF Zoning (SF) 1/ 1363 W. 5th St. 5,460 3/17/2006 $47,000 CG-1 City of San Bernardino, CA $8.61 gross SF San Bernardino 2/ 1347 N. E St. 11,250 2/27/2006 $110,000 CG-1, City of San Bernardino, CA $9.78 gross SF San Bernardino 3/ 465 N. Mt. Vernon Ave. 13,068 2/08/2006 $210,000 C-2, City of Colton, CA $16.07 gross SF Colton 4/ West Side of Mt. Vernon Ave. 16,000 5/04/2005 $290,000 C-2 City of 178 feet north of Citrus $18.12 gross SF Colton Colton, CA 5/ 108 W. Highland Avenue 22,950 3/23/05 $360,000 CG-1, City of San Bernardino, CA $15.69 gross SF San Bernardino Subject; 10,540 08125106 $265,000 PCR, City of 2194 N. McKinley SF San Bernardino San Bernardino, CA The subject site contains approximately 10,540 gross square feet and is rectangular in shape. All selected sales are relatively similar to the subject relative to highest and best use, utility availability, topography, and property rights conveyed. I:have applied adjustments to the below-listed elements of comparison in supporting my estimate of land value. In order to derive a point estimate of value of the subject, I have used percentage adjustments. These percentage adjustments are generally based on the relationship between the subject and the comparable properties as perceived by market participants. 107 Non-Physical Adjustments: ❑ Property rights conveyed ❑ Financing terms ❑ Conditions of sale ❑ Market conditions Physical Adjustments: ❑ Location ❑ Size and shape ❑ Topography ❑ Zoning/Entitlements ❑ Utility Availability ❑ Condition of site ❑ Non-realty components of value Property Rights Conveyed a A transaction price is predicated on the real property interests conveyed. The land value estimate assumes that the subject site is appraised in fee in accordance with its highest and best use. If a different form of ownership is transferred, an adjustment to the sale price may prove necessary. All of the land data used in this report were fee simple transfers. As a result, no adjustments are appropriate for conveyed property rights. Financing My market value estimate assumes an all-cash transaction or a down payment and financing at - prevailing market terms. Adjustments for financing terms are warranted when a property is purchased subject to non-market financing arrangements. Non-market financing arrangements can include seller-carried notes or assumable loans with interest rates, loan-to-value ratios, and/or amortization schedules more favorable than the terms commonly available in the market. As discussed in the sale data sheets, the financing terms of all sales reflect the market, and are considered cash equivalent. No adjustments are warranted. Conditions of Sale My market value estimate assumes that the subject property will be sold where: 1) the buyer and seller are typically motivated,2)both parties are well informed or well advised, and each is acting in what they consider to be their own best interest, 3)a reasonable time is allowed for exposure in the open market, and 4) neither the buyer nor the seller are under undue duress. If a property is sold and either the buyer or seller were under duress,an adjustment should be applied to the sale price to reflect the property's sale price assuming an arm's-length transaction. According to the listing broker, Sale Two was sold below market value; therefore, the appraiser applied a 20% upward adjustment to Sale Two. 108 During the verification process, the appraiser attempted to determine whether atypical motivations were involved in any of the transactions. Based on my research, all sales represented arm's-length transactions, involved no duress, and did not involve land assemblage in which buyers paid above market prices because of anticipated plottage value resulting from the greater utility of a larger site. Market Conditions Changes in market conditions subsequent to a comparable sale transaction may require adjustment. The market data in this report sold ffOm March 2005 to March 2006. The effective appraisal date is September 11, 2006. The limited market data did not allow a matched-pair analysis to assist in the quantification of changes in market conditions, therefore the appraiser has reviewed the data on a broader basis to extract time adjustments. The regional recession of the early 1990s had a significant downward impact on the market values of most property types. The markeb values of undeveloped parcels located in the neighborhood declined significantly from late 1990 to approximately 1996. Discussions with real estate brokers indicate that prices for land ready for development have remained relatively stable. Therefore, no adjustments to the comparable sales are warranted. Location Location adjustments were applied to the comparable sales where appropriate. The sale data did permit derivation of location adjustments through matched-pair analysis. A number of other variables contained in the data set prohibit reasonable grouping of the sales. The market data was also considered on a broader basis to identify general patterns which would support location adjustments. Specifically, consideration was given to differences in demand. The location and demand of Comparable Sale One is rated inferior to that of the subject.. An upward adjustment is warranted. The location and demand of Comparable Sales Two, Three, Four and Five are rated superior to that of the subject. Downward adjustments are warranted. Size and Shape This element of comparison includes analysis of the utility associated with the size and shape of each sale. I analyzed the impact of size on sale price of a population of land sales, including the five Land Comparables. Typically, rectangular parcels with adequate width,configured to provide adequate street frontage, provide the most utility for development and consequently sell for higher per square foot prices than parcels lacking such utility. The subject contains approximately 10,540 square feet, and the size and shape provide good development potential and is considered of good utility by market participants. With the exception of Sale One, the shapes of the sales do not limit development options, have good utility and are considered generally similar to the subject. An upward adjustment is warranted for Sale One. 109 Topography Level sites are considered superior to sloping sites since level sites require less grading and, typically, offer a higher development potential. Based on our physical inspection of the subject and all comparables, the subject and all land sales are generally level. No adjustments are appropriate since the sales are similar to the subject relative to topography. Use/Zoning/Entitlements F Any difference in the highest and best use of a comparable and the subject property must be addressed. When current zoning reflects the highest and best use, adjustments for different zoning classifications are necessary when the land uses allowed under the subject's classification are substantially different than those allowed by the zoning designation governing any of the comparable land sales. Sales One, Two, Three, Four and Five are zoned for unrestricted General Commercial use and are rated superior to the subject. Downward adjustments are warranted. Condition of Site/Utility Availability This adjustment relates to the site condition at the time of sale, and assumes that the subject site is vacant and available for development to ,its highest and best use. Some land sales have improvements which require demolition, thereby requiring a potential investor to discount a purchase offer by the anticipated demolition costs. Conversely, some land sales include improvements which have contributory value'that must be added to a potential investor's offering price for the site as if vacant. Sales One, Two, Three, Four, and Five were sold ready for development. - Signalized Traffic Corner Sales Three and Five are located on signalized traffic corners and are rated superior to that of the subject. Downward adjustments are warranted. Sales One, Two and Four are interior block parcels and are rated inferior to that of the subject. Upward adjustments are warranted. Non-realty components of value The inclusion of non-realty components of value in the purchase price of a property would require adjustment to derive the sale price attributable to the real property only. Non-realty components include going concern value, personalty, and other items. No known non-realty components were included in the purchase prices of the sales. No adjustments are appropriate. The foregoing analysis is tabulated in the adjustment grid which appears below. 110 Property Rights Adjusted Price $ 8.61 $ 9.78 $ 16.07 $ 18.12 $ 15.69 Financing Terms Adjusted Price $ 8.61 $ 9.78 $ 16.07 $ 18.12 $ 15.69 Conditions of Sale 20.00% Adjusted Price $ 8.61 $ 11.74 $ 16.07 $ 18.12 $ 15.69 Market Conditions Zoning -5% -5% -5% -5% -5% Location 12% -10% -10% -10% -10% Lot Size --1.6% 1.0% 3.5% Shape/Utility 8% Site Condition Signalized Traffic Comer 10% 10% -10% 10% -10% Adjusted Price $ r . i Fair Market Value Conclusion for 2194 N. McKinley The sales in the sample reflect the most similar data to the subject available relative to highest and best use, location, zoning, market conditions, property rights conveyed, financing, topography, and utility availability. On an unadjusted basis, the four sales within the sample fall within the range of$8.61 to $16.07 per square foot. On an adjusted basis, the sales lie within the range of $10.62 to $17.40 per square foot with a mean of $12.71. All five sales were cohsidered and given equal weight. Given the smaller size of the subject site and its frontage on Highland Avenue, the appraiser estimated the fair market value at the upper end of the range. The subject site recently closed _ escrow for the amount of $265,000 which included some value to the existing boarded up improvements. For purposes of this appraisal, it is the opinion of this appraiser that the value attributable to the land is estimated at$14.00 per square foot; therefore, $14.00 per square foot x 10,540 square feet results in$147,560 rounded to$150,000. No value to the improvements have been assigned because,the improvements have lost their legal non-conforming status and cannot be issued a business license to operate as a four unit complex. Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject 2194 N. McKinley containing 10,540 square feet, as of September 11, 2006 is: ONE HUNDRED FIFTY THOUSAND DOLLARS $150,000 111 Analysis of Land Sales for 2159-2177 N. McKinley COMPARABLE LAND SALE SUMMARY Gross Sale Price Data No. /Location Size Sale Date Price/Gross SF Zoning (SF) 1/ 1363 W. 5th St. 5,460 3/17/2006 $47,000 CG-1 City of San Bernardino, CA $8.61 gross SF San Bernardino 2/ 1347 N. E St. 11,250 2/27/2006 $110,000 CG-1, City of San Bernardino, CA $9.78 gross SF San Bernardino 3/ 465 N. Mt. Vernon Ave. 13,068 2/08/2006 $210,000 C-2, City of Colton, CX $16.07 gross SF Colton 4/ West Side of Mt. Vernon Ave. 16,000 5/04/2005 $290,000 C-2 City of 178 feet north of Citrus $18.12 gross SF Colton Colton, CA 51 108 W. Highland Avenue 22,950 3/23/05 $360,000 CG-1, City of San Bernardino, CA $15.69 gross SF San Bernardino Subject: 15,496 N/A N/A PCR, City of 2159-2177 N. McKinley San Bernardino San Bernardino, CA = ' The subject site contains approximately 15,496 gross square feet and is rectangular in shape. All selected sales are relatively similar to the subject relative to highest and best use, utility availability, topography, and property rights conveyed. I have applied adjustments to the below-listed elements of comparison in supporting my estimate of land value. In order to derive a point estimate of value of the subject, I have used percentage adjustments. These percentage adjustments are generally based on the relationship between the subject and the comparable properties as perceived by market participants. 112 Non-Physical Adjustments: ❑ Property rights conveyed ❑ Financing terms ❑ Conditions of sale ❑ Market conditions Physical Adjustments: ❑ Location ❑ Size and shape ❑ Topography " ❑ Zoning/Entitlements ❑ Utility Availability ❑ Condition of site a' ❑ Non-realty components of value 4 Property Rights Conveyed A transaction price is predicated on the real property interests conveyed. The land value estimate assumes that the subject site is appraised in fee in accordance with its highest and best use. If a different form of ownership is transferred, an adjustment to the sale price may prove necessary. All of the land data used in this report were fee simple transfers. As a result, no adjustments are appropriate for conveyed property rights. Financing My market value estimate assumes an all-cash transaction or a down payment and financing at prevailing market terms. Adjustments for financing terms are warranted when a property is purchased subject to non-market financing arrangements. Non-market financing arrangements can - include seller-carried notes or assumable loans with interest rates, loan-to-value ratios, and/or amortization schedules more favorable than the terms commonly available in the market. As discussed in the sale data sheets, the financing terms of all sales reflect the market, and are considered cash equivalent. No adjustments are warranted. Conditions of Sale My market value estimate assumes that the subject property will be sold where: 1) the buyer and seller are typically motivated,2)both parties are well informed or well advised, and each is acting in what they consider to be their own best interest, 3)a reasonable time is allowed for exposure in the open market, and 4) neither the buyer nor the seller are under undue duress. If a property is sold and either the buyer or seller were under duress, an adjustment should be applied to the sale price to reflect the property's sale price assuming an arm's-length transaction. According to the listing broker, Sale Two was sold below market value; therefore, the appraiser applied a 20% upward adjustment to Sale Two. 113 During the verification process, the appraiser attempted to determine whether atypical motivations were involved in any of the transactions. Based on my research, all sales represented arm's-length transactions, involved no duress, and did not involve land assemblage in which buyers paid above market prices because of anticipated plottage value resulting from the greater utility of a larger site. Market Conditions Changes in market conditions subsequent to a comparable sale transaction may require adjustment. The market data in this report sold from March 2005 to March 2006. The effective appraisal date is September 11, 2006. The limited market data did not allow a matched-pair analysis to assist in the quantification of changes in market conditions, therefore the appraiser has reviewed the data on a broader basis to extract time adjustments. The regional recession of the early 1990s had a significant downward impact on the market values of most property types. The market values of undeveloped parcels located in the neighborhood declined significantly from late 1990 to approximately 1996. Discussions with real estate brokers indicate that prices for land ready for development have remained relatively stable. Therefore, no adjustments to the comparable sales are warranted. Location Location adjustments were applied to the comparable sales where appropriate. The sale data did permit derivation of location adjustments through matched-pair analysis. A number of other variables contained in the data set prohibit reasonable grouping of the sales. The market data was also considered on a broader basis to identify general patterns which would support location adjustments. Specifically, consideration was given to differences in demand. The location and demand of Comparable Sale One is rated inferior to that of the subject= An upward adjustment is warranted. The location and demand of Comparable Sales Two, Three, Four and Five are rated superior to that of the subject. Downward adjustments are warranted. - Size and Shape This element of comparison includes analysis of the utility associated with the size and shape of each sale. I analyzed the impact of size on sale price of a population of land sales,,including the five Land Comparables. Typically, rectangular parcels with adequate width, configured to provide adequate street frontage, provide the most utility for development and consequently sell for higher per square foot prices than parcels lacking such utility. The subject contains approximately 15,496 square feet, and the size and shape provide good development potential and is considered of good utility by market participants. With the exception of Sale One, the shapes of the sales do not limit development options, have good utility and are considered generally similar to the subject. An upward adjustment is warranted for Sale One. 114 Topography Level sites are considered superior to sloping sites since level sites require less grading and, typically, offer a higher development potential. Based on our physical inspection of the subject and all comparables, the subject and all land sales are generally level. No adjustments are appropriate since the sales are similar to the subject relative to topography. Use/Zoning/Entitlements ,. Any difference in the highest and best use of a comparable and the subject property must be addressed. When current zoning reflects the highest and best use, adjustments for different zoning classifications are necessary when the land uses allowed under the subject's classification are substantially different than those allowed by the zoning designation governing any of the comparable land sales. Sales One, Two, Three, Four and Five are zoned for unrestricted General Commercial use and are rated superior to the subject. Downward adjustments are warranted. Condition of Site/Utility Availabili This adjustment relates to the site condition at the time of sale, and assumes that the subject site is vacant and available for development to its highest and best use. Some land sales have improvements which require demolition, thereby requiring a potential investor to discount a purchase offer by the anticipated demolition costs. Conversely, some land sales include improvements which have contributory value that must be added to a potential investor's offering price for the site as if vacant. Sales One, Two, Three, Four, and Five were sold ready for development. Signalized Traffic Corner -- Sales Three and Five are located on signalized traffic comers and are rated superior to that of the subject. Downward adjustments are warranted. Sales One, Two and Four are interior block parcels and are rated similar to that of the subject. Non-realty components of value The inclusion of non-realty components of value in the purchase price of a property would require adjustment to derive the sale price attributable to the real property only. Non-realty components include going concern value,personalty, and other items. No known non-realty components were included in the purchase prices of the sales. No adjustments are appropriate. The foregoing analysis is tabulated in the adjustment grid which appears below. 115 Property Rights Adjusted Price $ 8.61 $ 9.78 $ 16.07 $ 18.12 $ 15.69 Financing Terns Adjusted Price $ 8.61 $ 9.78 $ 16.07 $ 18.12 $ 15.69 Conditions of Sale 20.00% Adjusted Price $ 8.61 $ 11.74 $ 16.07 $ 18.12 $ 15.69 Market Conditions Zoning -5% -5% -5% -5% -5% Location 12% -10% -10% -10% -10% Lot Size v -3.0% -1.5% 2.0% Shape/Utility 8% Site Condition Signalized Traffic Comer Adjusted Price $ 9.6n $ :0 $ 12.05 $ 15.40 12 0,31 WON Land Value Conclusion for 2159-2177 N. McKinley The sales in the sample reflect the most similar data to the subject available relative to highest and best use, location, zoning, market conditions, property rights conveyed, financing, topography, and utility availability. On an unadjusted basis, the four sales within the sample fall within the range of$8.61 to $16.07 per square foot. On an adjusted basis, the sales lie within the range of$9,,64 to$15.40 per square foot with a mean of$11.80. All five sales were considered and given equal weight. Given the smaller size of the subject site, the appraiser estimated the fair market value at the upper end of the range. It is the opinion of this appraiser that the value attributable to the land is estimated at $14.00 per square foot; therefore, $14.00 per square foot x 15,496 square feet results in$216,944 rounded to $217,000. Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject site 2159-2177 N. McKinley containing 15,496 square feet as of September 11, 2006 is: TWO HUNDRED SEVENTEEN THOUSAND DOLLARS $217,000 116 Analysis of Land Sales for 2194 N. Dumbarton COMPARABLE LAND SALE SUMMARY Gross Sale Price Data No. /Location Size Sale Date Price/Gross SF Zoning (SF) 1/ 1363 W. 5th St. 5,460 3/17/2006 $47,000 CG-1 City of San Bernardino, CA $8.61 gross SF San Bernardino 2/ 1347 N. E St. 11,250 2/27/2006 $110,000 CG-1, City of San Bernardino, CA $9.78 gross SF San Bernardino 3/ 465 N. Mt. Vernon Ave. a 13,068 2/08/2006 $210,000 C-2, City of Colton, CA $16.07 gross SF Colton 4/ West Side of Mt. Vernon Ave. 16,000 5/04/2005 $290,000 C-2 City of 178 feet north of Citrus $18.12 gross SF Colton Colton, CA 5/ 108 W. Highland Avenue 22,950 3/23/05 $360,000 CG-1, City of San Bernardino, CA $15.69 gross SF San Bernardino Subject: 10,560 N/A N/A PCR, City of 2194 N. Dumbarton San Bernardino San Bernardino, CA The subject site contains approximately 10,560 gross square feet and is rectangular in shape. All selected sales are relatively similar to the subject relative to highest and best use,.utility availability, topography, and property rights conveyed. I have applied adjustments to the below-listed elements of comparison in supporting my estimate of land value. In order to derive a point estimate of value of the subject, I have used percentage adjustments. These percentage adjustments are generally based on the relationship between the subject and the comparable properties as perceived by market participants. 117 Non-Physical Adjustments: ❑ Property rights conveyed ❑ Financing terms ❑ Conditions of sale ❑ Market conditions Physical Adjustments: ❑ Location ❑ Size and shape ❑ Topography ❑ Zoning/Entitlements ❑ Utility Availability ❑ Condition of site ❑ Non-realty components of value Property Rights Conveyed A transaction price is predicated on the real property interests conveyed. The land value estimate assumes that the subject site is appraised in fee in accordance with its highest and best use. If a different form of ownership is transferred, an adjustment to the sale price may prove necessary. All of the land data used in this report were fee simple transfers. As a result, no adjustments are appropriate for conveyed property rights. Financing My market value estimate assumes an all-cash transaction or a down payment and financing at prevailing market terms. Adjustments for financing terms are warranted when a property is purchased subject to non-market financing arrangements. Non-market-financing arrangements can include seller-carried notes or assumable loans with interest rates, loan-to-value ratios, and/or amortization schedules more favorable than the terms commonly available in the market. J As discussed in the sale data sheets, the financing terms of all sales reflect the market, and are considered cash equivalent. No adjustments are warranted. Conditions of Sale My market value estimate assumes that the subject property will be sold where: 1) the buyer and seller are typically motivated, 2)both parties are well informed or well advised, and each is acting in what they consider to be their own best interest, 3)a reasonable time is allowed for exposure in the open market, and 4) neither the buyer nor the-,seller are under undue duress. If a.property is sold and either the buyer or seller were under duress, an adjustment should be applied.to the sale price to reflect the property's sale price assuming an arm's-length transaction. According to the listing broker, Sale Two was sold below market value; therefore, the appraiser applied a 20% upward adjustment to Sale Two. 118 During the verification process, the appraiser attempted to determine whether atypical motivations were involved in any of the transactions. Based on my research, all sales represented arm's-length transactions, involved no duress, and did not involve land assemblage in which buyers paid above market prices because of anticipated plottage value resulting from the greater utility of a larger site. Market Conditions Changes in market conditions subsequent to a comparable sale transaction may require adjustment. The market data in this report sold from March 2005 to March 2006. The effective appraisal date is September 11, 2006. The limited market data did not allow a matehed-pair analysis to assist in the quantification of changes in market conditions, therefore the appraiser has reviewed the data on a broader basis to extract time adjustments. The regional recession of the early 1990s had a significant downward impact on the market values of most property types. The market values of undeveloped parcels + located in the neighborhood declined significantly from late 1990 to approximately 1996. Discussions with real estate brokers indicate that prices for land ready for development have remained relatively stable. Therefore, no adjustments to the comparable sales are warranted. Location Location adjustments were applied to the comparable sales where appropriate. The sale data did permit derivation of location adjustments through matched-pair analysis. A number of other variables contained in the data set prohibit reasonable grouping of the sales. The market data was also considered on a broader basis to identify general patterns which would support location adjustments. Specifically,consideration was given to differences in demand. The location and demand of Comparable Sale One is rated inferior to that of the subject.. An upward adjustment is - warranted. The location and demand of Comparable Sales Two, Three, Four and Five are rated superior to that of the subject. Downward adjustments are warranted. ` - Size and Shape This element of comparison includes analysis of the utility associated with the size and shape of each sale. I analyzed the impact of size on sale price of a population of land sales, including the five Land Comparables. Typically, rectangular parcels with adequate width,configured to provide adequate street frontage, provide the most utility for development and consequently sell for higher per square foot prices than parcels lacking such utility. The subject contains approximately 15,496 square feet, and the size and shape provide good development potential and is considered of good utility by market participants. With the exception of Sale One, the shapes of the sales do not limit development options, have good utility and are considered generally similar to the subject. An upward adjustment is warranted for Sale One. 119 Topography Level sites are considered superior to sloping sites since level sites require less grading and, typically, offer a higher development potential. Based on our physical inspection of the subject and all comparables, the subject and all land sales are generally level. No adjustments are appropriate since the sales are similar to the subject relative to topography. Use/Zoning/Entitlements Any difference in the highest and best use of a comparable and the subject property must be addressed. When current zoning reflects the highest and best use, adjustments for different zoning classifications are necessary when the land uses allowed under the subject's classification are substantially different than those allowed by the zoning designation governing any of the comparable land sales. Sales One, Two, Three, pour and Five are zoned for unrestricted G@neral Commercial use and are rated superior to the subject. Downward adjustments are warranted. Condition of Site/Utility Availability This adjustment relates to the site condition at the time of sale, and assumes that the subject site is vacant and available for development to •its highest and best use. Some land sales have improvements which require demolition, thereby requiring a potential investor to discount a purchase offer by the anticipated demolition costs. Conversely, some land sales include improvements which have contributory value that must be added to a potential investor's offering price for the site as if vacant. Sales One, Two, Three, Four, and Five were sold ready for development. Signalized Traffic Corner Sales Three and Five are located on signalized traffic corners and are rated superior to that of the subject. Downward adjustments are warranted. Sales One, Two and Four are interior block parcels and are rated inferior to that of the subject. Upward adjustments are warranted. Non-realty components of value The inclusion of non-realty components of value in the purchase price of a property would require adjustment to derive the_sale price attributable to the real property only. Non-realty components include going concern value,personalty, and other items. No known non-realty components were included in the purchase prices of the sales. No adjustments are appropriate. The foregoing analysis is tabulated in the adjustment grid which appears below. 120 Property Rights Adjusted Price $ 8.61 $ 9.78 $ 16.07 $ 18.12 ! $ 15.69 Financing Terrns Adjusted Price $ _ 8.61 $ 9.78 $ 16.07 $ 18.12 ! $ 15.69 Conditions of Sale 20.00% Adjusted Price $ 8.61 ! $ 11.74 ' $ 16.07 ( $ 18.12 $ 15.69 Market Conditions Adjusted Price $ 8.61 $ 11.74 $ 15.07 $ 18.12 $ 15:69 Zoning -5% -5% -5% ' -5% -5% Location 12% -10% 10% -10% -10% Lot Size -1.5% 1.0°k 3.0% Shape/Utility 8% Site Condition Signalized Traffic Comer 10% 10°k j -10°k 10% -100,6 Physical Characteristics Total Net,Adjustment 24%0' !;Adjusted Price 10.63 11.15 $ ' , Adjusted Ptiae/Sq.Ft Mean $ -- Land Value Conclusion for 2194 N. Dumbarton The sales in the sample reflect the most similar data to the subject available relative to highest and best use, location, zoning, market conditions, property rights conveyed, financing, topography, and utility availability. On an unadjusted basis, the four sales within the sample fall within tlie range of$8.61 to $16.07 per square foot. On an adjusted basis, the sales lie within the range of $10.63 to $17.40 per square foot with a mean of $12.69. All five sales were considered and given equal weight. Given the smaller size of the subject site, the appraiser estimated the fair market value at the upper end of the range. It is the opinion of this appraiser that the value attributable to the land is estimated at$14.00 per square foot;therefore, $14.00 per square foot x 10,560 square feet results in$147,840 rounded to $150,000. Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject site 2194 N. Dumbarton containing 10,560 square feet as of September 11, 2006 is: ONE HUNDRED FIFTY THOUSAND DOLLARS $150,000 121 Analysis of Land Sales for 2158 N. Dumbarton COMPARABLE LAND SALE SUMMARY Gross Sale Price Data No. /Location Size Sale Date Price/Gross SF Zoning (SF) 1/ 1363 W. 5th St. 5,460 3/17/2006 $47,000 CG-1 City of San Bernardino, CA $8.61 gross SF San Bernardino 2/ 1347 N. E St. 11,250 2/27/2006 $110,000 CG-1, City of San Bernardino, CA $9.78 gross SF San Bernardino 3/ 465 N. Mt. Vernon Ave. 13,068 2/08/2000 $210,000 C-2, City of Colton, CA $16.07 gross SF Colton 4/ West Side of Mt. Vernon Ave. 16,000 5/04/2005 $290,000 C-2 City of 178 feet north of Citrus $18.12 gross SF Colton Colton, CA 5/ 108 W. Highland Avenue 22,950 3/23/05 $360,000 CG-1, City of San Bernardino, CA $15.69 gross SF San Bernardino Subject: 7,200 N/A NIA PCR, City of 2158 N. Dumbarton San gernardino San Bernardino, CA The subject site contains approximately 7,200 gross square feet and is rectangular in shape. All selected sales are relatively similar to the subject relative to highest and best use, utility availability, topography, and property rights conveyed. I have applied adjustments to the below-listed elements of comparison in supporting my estimate of land value. In order to derive a point estimate of value of the subject, I have used percentage adjustments. These percentage adjustments are generally based on the relationship between the subject and the comparable properties as perceived by market participants. 122 Non-Physical Adjustments: ❑ Property rights conveyed ❑ Financing terms ❑ Conditions of sale ❑ Market conditions Physical Adjustments: ❑ Location ❑ Size and shape ❑ Topography ❑ Zoning/Entitlements ❑ Utility Availability ❑ Condition of site ❑ Non-realty components of value �roperty Rights Conveyed A transaction price is predicated on the real property interests conveyed. The land value estimate assumes that the subject site is appraised in fee in accordance with its highest and best use. If a different form of ownership is transferred, an adjustment to the sale price may prove necessary. All of the land data used in this report were fee simple transfers. As a result, no adjustments are appropriate for conveyed property rights. Financing My market value estimate assumes an all-cash transaction or a down payment and financing at prevailing market terms. AZIjustments for financing terms are warr4ited when a property is purchased subject to non-market,financing arrangements. Non-market financing arrangements can include seller-carried notes or assumable loans with interest rates, loan-to-value ratios, and/or amortization schedules more favorable than the terms commonly available in the market. As discussed in the sale data sheets, the financing terms of all sales reflect the market, and are considered cash equivalent. No adjustments are warranted. Conditions of Sale My market value estimate assumes that the subject property will be sold where: 1)the buyer and seller,are typically motivated,2)both parties are well informed or well advised, and each is acting in what they consider to be their own best interest, 3)a reasonable time is allowed for exposure in the open market, and 4) neither the buyer nor the seller are under undue duress. If a property is sold and either the buyer or seller were under duress, an adjustment should be applied to the sale price to reflect the property's sale price assuming an arm's-length transaction. According to the listing broker, Sale Two was sold below market value; therefore, the appraiser applied a 20% upward adjustment to Sale Two. 123 During the verification process, the appraiser attempted to determine whether atypical motivations were involved in any of the transactions. Based on my research, all sales represented arm's-length transactions, involved no duress, and did not involve land assemblage in which buyers paid above market prices because of anticipated plottage value resulting from the greater utility of a larger site. Market Conditions Changes in market conditions subsequent to a comparable sale transaction may require adjustment. The market data in this report sold from March 2005 to March 2006. The effective appraisal date is September 11, 2006. The limited market data did not allow a matched-pair analysis to assist in the quantification of changes in market conditions, therefore the appraiser has reviewed the data on a broader basis to extract time adjustments. The regional recession of the early 1990s had a significant downward impact on the market valves of most property types. The market values of undeveloped parcels located in the neighborhood declined significantly from late 1990 to approximately 1996. Discussions with real estate brokers indicate that prices for land ready for development have remained relatively stable. Therefore, no adjustments to the comparable sales are warranted. Location Location adjustments were applied to the comparable sales where appropriate. The sale data did permit derivation of location adjustments through matched-pair analysis. A number of other variables contained in,the data set prohibit reasonable grouping of the sales. The market data was also considered on a broader basis to identify general patterns which would support location adjustments. Specifically, consideration was given to differences in demand. The location and demand of Comparable Sale One is rated inferior to that of the subject. An upward adjustment is warranted. The location and demand of Comparable Sales Two, Three, Four and Five are rated superior to that of the subject. Downward adjustments are warranted. Size and Shape This element of comparison includes analysis of the utility associated with the size and shape of each sale. I analyzed the impact of size on sale price of a population of land sales, including the five Land Comparables. Typically, rectangular parcels with adequate width,configured to provide adequate street frontage, provide the most utility for development and consequently sell for higher per square foot prices than parcels lacking such utility. The subject contains approximately 7,200 square feet, and the 1 size and shape provide fair development potential and is considered of fair utility by market participants. With the exception of Sale One, the shapes of the sales do not limit development options, have good utility and are considered generally superior to the subject. Downward adjustments are warranted for Sales Two, Three, Four and Five. 124 Topography Level sites are considered superior to sloping sites since level sites require less grading and, typically, offer a higher development potential. Based on our physical inspection of the subject and all comparables, the subject and all land sales are generally level. No adjustments are appropriate since the sales are similar to the subject relative to topography. Use/Zoning/Entitlements Any difference in the highest and best use of a comparable and the subject property must be addressed. When current zoning reflects the highest and best use, adjustments for different zoning classifications are necessary when the land uses allowed under the subject's classification are substantially different than those allowed by the zoning designation governing any of the comparable land sales. Sales One, Two, Three, Four and Five are zoned for unrestricted General Commercial use and are rated superior to the subject. Downward adjustments are warranted. Condition of Site/Utility Availability This adjustment relates to the site condition at the time of sale, and assumes that the subject site is vacant and available for development to its highest and best use. Some land sales have improvements which require demolition, thereby requiring a potential investor to discount a purchase offer by the anticipated demolition costs. Conversely, some land sales include improvements which have contributory value that must be added to a potential investor's offering price for the site as if vacant. Sales One, Two, Three, Four, and Five were sold ready for development. Signalized Traffic Corner Sales Three and Five are located on signalized traffic corners and are rated superior to that of the subject. Downward adjustments are warranted. Sales One, Two and Four are interior block parcels and are rated similar to that of the subject. Non-realty components of value The inclusion of non-realty components of value in the purchase price of a property would require adjustment to derive the sale price attributable to the real property only. Non-realty components include going concern value,personalty, and other items. No known non-realty components were included in the purchase prices of the sales. No adjustments are appropriate. The foregoing analysis is tabulated in the adjustment grid which appears below. 125 _Sale 1 Sale 2 Sale 3: Sale 4 Sale 5 Property Rights Adjusted Price $ 8-61 $ 9-78 $_ 16-07 $ 18-12 $ 15.69 Financing Terms T Adjusted Price $ 8.61 $ 9.78 $ 16.07 $ 18.12 $ 15.69 Conditions of Sale 20.00%i Adjusted Price — $ - 8.61 $ 11-74 $ 16.07 i $ 18.12 $ 15.69 Market Conditions Adiusted.Price $ 8.81: $ -11.74 ,-$ 16.07 1 $ 18.12:i $ 559:' Zoning -5% -5% -5°k 5% 5% Location 12% -10% -10% -10% -10% Lot Size 1.5% 2.0% 2.0% 5.0% Shape/Utility 8°k -8% -8% -8°k Site Condition I Signalized Traffic Comer -10% I -10% ysical Characteristics Total iVet f►djttstm @ht 7% 22% 31% Adjusted 09 , a d owed t�%ceYS 7�ean - Land Value Conclusion for 2158 N. Dumbarton The sales in the sample reflect the most similar data to the subject available relative to highest and best use, location, zoning, market conditions, property rights conveyed, financing, topography, and utility availability. On an unadjusted basis, the four sales within the sample fall within the range of$8.61 to $16.07 per square foot. On an adjusted basis, the sales lie within the range of$9.21 to$14.31 per square foot with a mean of$11.03. All five sales were considered and given equal weight. Given the smaller size of the subject site, the appraiser estimated the fair market value at the upper end of the range. It is the opinion of this appraiser that the value attributable to the land is estimated at $12.00 per square foot; therefore, $12.00 per square foot x 7,200 square feet results in$86,400 rounded to $86,000. Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject site 2158 N. Dumbarton containing 7,200 square feet as of September 11, 2006 is: EIGHTY-SIX THOUSAND DOLLARS $86,000 126 Analysis of Land Sales for 2105 N. Dumbarton COMPARABLE LAND SALE SUMMARY Gross Sale Price Data No. /Location Size Sale Date Price/Gross SF Zoning (SF) 1/ 1363 W. 5th St. 5,460 3/17/2006 $47,000 CG-1 City of San Bernardino, CA $8.61 gross SF San Bernardino 2/ 1347 N. E St. 11,250 2/27/2006 $110,000 CG-1, City of San Bernardino, CA $9.78 gross SF San Bernardino 3/ 465 N. Mt. Vernon Ave. 13,068 2/08/2006 $210,000 C-2, City of Colton, CA $16.07 gross SF Colton 4/ West Side of Mt. Vernon Ave. 16,000 5/04/2005 $290,000 C-2 City of 178 feet north of Citrus $18.12 gross SF Colton Colton, CA 51 108 W. Highland Avenue 22,950 3/23/05 $360,000 CG-1, City of San Bernardino, CA $15.69 gross SF San Bernardino Subject: 7,200 N/A N/A PCR, City of 2144 N. Dumbarton San Bernardino San Bernardino, CA The subject site contains approximately 7,200 gross square feet and is rectangular in shape. All selected sales are relatively similar to the subject relative to highest and best use, utility availability, topography, and property rights conveyed. I have applied adjustments to the below-listed elements of comparison in supporting my estimate of land value. In order to derive a point estimate of value of the subject, I have used percentage adjustments. These percentage adjustments are generally based on the relationship between the subject and the comparable properties as perceived by market participants. 127 Non-Physical Adjustments: ❑ Property rights conveyed ❑ Financing terms ❑ Conditions of sale ❑ Market conditions Physical Adjustments: ❑ Location ❑ Size and shape ❑ Topography ❑ Zoning/Entitlements ❑ Utility Availability ❑ Condition of site ❑ Non-realty components of value Property Rights Conveyed A transaction price is predicated on the real property interests conveyed. The land value estimate assumes that the subject site is appraised in fee in accordance with its highest and best use. If a different form of ownership is transferred, an adjustment to the sale price may prove necessary. All of the land data used in this report were fee simple transfers. As a result, no adjustments are appropriate for conveyed property rights. Financing My market value estimate assumes an all-cash transaction or a down payment and financing at prevailing market terms. Adjustments for financing terms are warranted when a property is purchased subject to non-market financing arrangements. Non-market financing arrangements can include seller-carried notes or assumable loans with interest rates, loan-to-value ratios, and/or amortization schedules more favorable than the terms commonly available in the market. As discussed in the sale data sheets, the financing terms of all sales reflect the market, and are considered cash equivalent. No adjustments are warranted. Conditions of Sale My market value estimate assumes that the subject property will be sold where: 1)the buyer and seller are typically motivated,2)both parties are well informed or well advised,and each is acting in what they consider to be their own best interest, 3)a reasonable time is allowed for exposure in the open market, and 4) neither the buyer nor the seller are under undue duress. If a property is sold and either the buyer or seller were under duress, an adjustment should be applied to the sale price to reflect the property's sale price assuming an arm's-length transaction. According to the listing broker, Sale Two was sold below market value; therefore, the appraiser applied a 20% upward adjustment to Sale Two. 128 During the verification process, the appraiser attempted to determine whether atypical motivations were involved in any of the transactions. Based on my research, all sales represented arm's-length transactions, involved no duress, and did not involve land assemblage in which buyers paid above market prices because of anticipated plottage value resulting from the greater utility of a larger site. Market Conditions Changes in market conditions subsequent to a comparable sale transaction may require adjustment. The market data in this report sold from March 2005 to March 2006. The effective appraisal date is September 11, 2006. The limited market data did not allow a matched-pair analysis to assist in the quantification of changes in market conditions, therefore the appraiser has reviewed the data on a broader basis to extract time adjustments. The regional recession of the early 1990s had a significant downward impact on the market values of most property types. The market values of undeveloped parcels located in the neighborhood declined significantly from late 1990 to approximately 1996. Discussions with real estate brokers indicate that prices for land ready for development have remained relatively stable. Therefore, no adjustments to the comparable sales are warranted. Location Location adjustments were applied to the comparable sales where appropriate. The sale data did permit derivation of location adjustments through matched-pair analysis. A number of other variables contained in the data set prohibit reasonable grouping of the sales. The market data was also considered on a broader basis to identify general patterns which would support location adjustments. Specifically, consideration was given to differences in demand. The location and demand of Comparable Sale One is rated inferior to that of the subject. An upward adjustment is warranted. The location and demand of Comparable Sales Two, Three, Four and Five are rated superior to that of the subject. Downward adjustments are warranted. Size and Shape This element of comparison includes analysis of the utility associated with the size and shape of each sale. I analyzed the impact of size on sale price of a population of land sales, including the five Land Comparables. Typically, rectangular parcels with adequate width,configured to provide adequate street frontage, provide the most utility for development and consequently sell for higher per square foot prices than parcels lacking such utility. The subject contains approximately 7,200 square feet, and the size and shape provide fair development potential and is considered of fair utility by market participants. With the exception of Sale One, the shapes of the sales do not limit development options, have good utility and are considered generally superior to the subject. Downward adjustments are warranted for Sales Two, Three, Four and Five. 129 Topography Level sites are considered superior to sloping sites since level sites require less grading and, typically, offer a higher development potential. Based on our physical inspection of the subject and all comparables, the subject and all land sales are generally level. No adjustments are appropriate since the sales are similar to the subject relative to topography. Use/Zoning/Entitlements Any difference in the highest and best use of a comparable and the subject property must be addressed. When current zoning reflects the highest and best use, adjustments for different zoning classifications are necessary when the land uses allowed under the subject's classification are substantially different than those allowed by the zoning designation governing any of the comparable land sales. Sales One, Two, Three, Four and Five are zoned for unrestricted General Commercial use and are rated superior to the subject. Downward adjustments are warranted. Condition of Site/Utility Availability This adjustment relates to the site condition at the time of sale, and assumes that the subject site is vacant and available for development to its highest and best use. Some land sales have improvements which require demolition, thereby requiring a potential investor to discount a purchase offer by the anticipated demolition costs. Conversely, some land sales include improvements which have contributory value that must be added to a potential investor's offering price for the site as if vacant. Sales One, Two, Three, Four, and Five were sold ready for development. Signalized Traffic Comer Sales Three and Five are located on signalized traffic comers and are rated superior to that of the subject. Downward adjustments are warranted. Sales One, Two and Four are interior block parcels and are rated similar to that of the subject. Non-realty components of value The inclusion of non-realty components of value in the purchase price of a property would require adjustment to derive the sale price attributable to the real property only. Non-realty components include going concern value,personalty, and other items. No known non-realty components were included in the purchase prices of the sales. No adjustments are appropriate. The foregoing analysis is tabulated in the adjustment grid which appears below. 130 Property Rights Adjusted Price _ $ 8.61 $ 9.78 $ 16.07 $ 18.12 $ 15.69 Financing Terms Adjusted Price _ $ 8.61 $-- 9.78 $ - 16.07 : $ 18.12 : $ 15.69 Conditions of Sale 20.00%' i Adjusted Price $ 8.61 $ 11._74 $ 16.07 $ 18.12 ! $ 15.69 Market Conditions Adjusted Price $ 8.61 $ 11.74 $ 16.071 $ 18.12 1,$ .15.89' Zoning -5% -5% -5% -5% -5°k Location 12% -10% -10% -10% -10% Lot Size 1.5% 2.0% 2.0°k 5.0% Shape/Utility -8% -8% -8% i -8% Site Condition I Signalized Traffic Comer -10% -100/0 f'hyslc�l Cha �cterlsf�cs Total 22 Net Adjustment ° - % 31% =21✓0' 28°/P Adjusted Price $ 9.21 $ 9.21 $ 11.09 Adjustea(Price/Std- t /pan'<: $ 1'1.83 Land Value Conclusion for 2141 N. Dumbarton The sales in the sample reflect the most similar data to the subject available relative to highest and best use, location, zoning, market conditions,_property rights conveyed, financing, topography, and utility availability. On an unadjusted basis, the four sales within the sample fall within the range of$8.61 to $16.07 per square foot. On an adjusted basis, the sales lie within the range of$9.21 to $14.31 per square foot with a mean of$11.03. All five sales were considered and given equal weight. Given the smaller size of the subject site, the appraiser estimated the fair market value at the upper end of the range. It is the opinion of this appraiser that the value attributable to the land is estimated at $12.00 per square foot; therefore, $12.00 per square foot x 7,200 square feet results in$86,400 rounded to $86,000. Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject site 2141 N. Dumbarton containing 7,200 square feet as of September 11, 2006 is: EIGHTY-SIX THOUSAND DOLLARS $86,000 131 Analysis of Land Sales for 2177 N. Dumbarton COMPARABLE LAND SALE SUMMARY Gross Sale Price Data No. /Location Size Sale Date Price/Gross SF Zoning (SF) 1/ 1363 W. 5th St. 5;460 3/17/2006 $47,000 CG-1 City of San Bernardino, CA $8.61 gross SF San Bernardino 2/ 1347 N. E St. 11,250 2/27/2006 $110,000 CG-1, City of San Bernardino, CA $9.78 gross SF San Bernardino s 3/ 465 N. Mt. Vernon Ave. 13,068 2/08/2006' $210,000 C-2,City of t Colton, CA $16.07 gross SF Colton 4/ West Side of Mt. Vernon Ave. 16,000 5/04/2005 $290,000 C-2 City of 178 feet north of Citrus $18.12 gross SF Colton Colton, CA 5/ 108 W. Highland Avenue 22,950 3/23/05 $360,000 CG-1, City of San Bernardino, CA $15.69 gross SF San Bernardino Subject: 7,200 N/A N/A PCR;City of 2177 N. Dumbarton San Bernardino San Bernardino, CA The subject site contains approximately 7,200 gross square feet and is rectangular in shape. All selected sales are relatively similar to the subject relative to highest and best use, utility availability, topography, and property rights conveyed. I have applied adjustments to the below-listed elements of comparison in supporting my estimate of land value. In order to derive a point estimate of value of the subject, I have used percentage adjustments. These percentage adjustments are generally based on the relationship between the subject and the comparable properties as perceived by market participants. 132 Non-Physical Adjustments: ❑ Property rights conveyed ❑ Financing terms ❑ Conditions of sale ❑ Market conditions Physical Adjustments: ❑ Location ❑ Size and shape ❑ Topography ❑ Zoning/Entitlements ❑ Utility Availability ❑ Condition of site ❑ Non-realty components of value a Property Rights Conveyed A transaction price is predicated on the real property interests conveyed. The land value estimate assumes that the subject site is appraised in fee in accordance with its highest and best use. If a different form of ownership is transferred, an adjustment to the sale price may prove necessary. All of the land data used in this report were fee simple transfers. As a result;no adjustments are appropriate for conveyed property rights. Financing My market value estimate assumes an all-cash transaction or a down payment and financing at prevailing market terms. Adjustments for financing terms are warranted when a property is purchased subject to non-market financing arrangements. Non-market financing arrangements can include seller-carried notes or assumable loans with interest rates, loan-to-value ratios, and/or amortization schedules more favorable than the terms commonly available in the market. As discussed in the sale data sheets, the financing terms of all sales reflect the market, and are considered cash equivalent. No adjustments are warranted. Conditions of Sale My market value estimate assumes that the subject property will be sold where: 1)the buyer and i seller are typically motivated,2)both parties are well informed or well advised, and each is acting } in what they consider to be their own best interest, 3)a reasonable time is allowed for exposure in the open market, and 4) neither the buyer nor the seller are under undue duress. If a property is ? sold and either the buyer or seller were under duress, an adjustment should be applied to the sale price to reflect the property's sale price assuming an arm's-length transaction. According to the listing broker, Sale Two was sold below market value; therefore, the appraiser applied a 20% upward adjustment to Sale Two. 133 i During the verification process, the appraiser attempted to determine whether atypical motivations were involved in any of the transactions. Based on my research, all sales represented arm's-length transactions, involved no duress, and did not involve land assemblage in which buyers paid above market prices because of anticipated plottage value resulting from the greater utility of a larger site. Market Conditions Changes in market conditions subsequent to a comparable sale transaction may require adjustment. The market data in this report sold from March 2005 to March 2006. The effective appraisal date is September 11, 2006. The limited market data did not allow a matched-pair analysis to assist in the quantification of changes in market conditions, therefore the appraiser has reviewed the data on a broader basis to extract time adjustments. The regional recession of the early 1990s had a significant downward impact on the market values of most property types. The market values of undeveloped parcels located in the neighborhood declined significantly from late 1990 to approximately 1996. Discussions with real estate brokers indicate that prices for land ready for development have remained relatively stable. Therefore, no adjustments to the comparable sales are warranted. Location Location adjustments were applied to the comparable sales where appropriate. The sale data did permit derivation of location adjustments through matched-pair analysis. A number of other variables contained in the data set prohibit reasonable grouping of the sales. The market data was also considered on a broader basis to identify general patterns which would support location adjustments. Specifically, consideration was given to differences in demand. The location and demand of Comparable Sale One is rated inferior to that of the subject. An upward adjustment is warranted. The location and demand of Comparable Sales Two, Three, Four and Five are rated superior to that of the subject. Downward adjustments are warranted. Size and Shape This element of comparison includes analysis of the utility associated with the size and shape of each sale. I analyzed the impact of size on sale price of a population of land sales, including the five Land Comparables. Typically, rectangular parcels with adequate width,configured to provide adequate street frontage, provide the most utility for development and consequently sell for higher per square foot prices than parcels lacking such utility. The subject contains approximately 7,200 square feet, and the size and shape provide fair development potential and is considered of fair utility by market participants. With the exception of Sale One, the shapes of the sales do not limit development options, have good utility and are considered generally superior to the subject. Downward adjustments are warranted for Sales Two, Three, Four and Five. 134 Topography Level sites are considered superior to sloping sites since level sites require less grading and, typically, offer a higher development potential. Based on our physical inspection of the subject and all comparables, the subject and all land sales are generally level. No adjustments are appropriate since the sales are similar to the subject relative to topography. Use/Zoning/Entitlements Any difference in the highest and best use of a comparable and the subject property must be addressed. When current zoning reflects the highest and best use, adjustments for different zoning classifications are necessary when the land uses allowed under the subject's classification are substantially different than those allowed by the zoning designation governing any of the comparable land sales. Sales One, Two, Three, Four and Five are zoned for unrestricted General Commercial use and are rated superior to the subject. Downward adjustments are warranted. Condition of Site/Utility Availability This adjustment relates to the site condition at the time of sale, and assumes that the subject site is vacant and available for development to its ,highest and best use. Some land sales have improvements which require demolition, thereby requiring a potential investor to discount a purchase offer by the anticipated demolition costs. Conversely, some land sales include improvements which have contributory value that must be added to a potential investor's offering price for the site as if vacant. Sales One, Two, Three, Four, and Five were sold ready for development. Signalized Traffic Corner Sales Three and Five are located on signalized traffic comers and are rated superior to that of the subject. Downward adjustments are warranted. Sales One, Two and Four are interior block parcels and are rated inferior to that of the subject. Upward adjustments are warranted. Non-realty components of value The inclusion of non-realty components of value in the purchase price of a property would require adjustment to derive the sale price attributable to the real property only. Non-realty components include going concern value,personalty, and other items. No known non-realty components were included in the purchase prices of the sales. No adjustments are appropriate. The foregoing analysis is tabulated in the adjustment grid which appears below. 135 Property Rights Adjusted Price _ $ 8.61 $ 9.78 $ 16.07 ! $ 18.12 $ 15.69 Financing Terms Adjusted Price $ 8.61 $ 9.78 $ 16.07 ! $ 18.12 $ 15.69 Conditions of Sale 20.00% Adjusted Price $ 8.61 $ 11.74 $ 16.07 $ 18.12 $ 15.69 Market Conditions Adjusted Price A611 $ 11.74 16.-07 $ 18.12 $ 15-99 Zoning -5% -5% -5% -5% -5% Location 12% -10% -10% 10% i -10% Lot Size 1.5% 2.0% 2.0% 5.0% Shape/Utility -8% -8% -8% 8% Site Condition Signalized Traffic Comer 100/6 10% i -10% 10% -10% Physical Characteristics Total et, itistrrient 17% -12% -31 W- 11°1°, r° -- Adjusted Price $n , ,• ` Y ilaljfisted��ce irSgfi-t.34Yean � -?• � 9- Land Value Conclusion for 2177 N. Dumbarton The sales in the sample reflect the:most similar data to the subject available relative to highest and best use, location, zoning, market,conditions, property rights conveyed, financing, topography, and utility availability. On an unadjusted basis, the four sales within the sample fall within the range of$8.61 to $16.07 per square foot. On an adjusted basis, the sales lie within the range of $10.07 to $16.13 per square foot with a mehn of $11.79. All five sales were considered and given equal weight. Given the smaller size of the subject site, the appraiser estimated the fair market value at the upper end of the range. It is' the opinion of this appraiser that the value attributable to the land is estimated at$13.00 per square foot; therefore, $13.00 per square foot x 7,200 square feet results in$93,600, Rounded to: $93,000. Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject site 2177 N. Dumbarton containing 7,200 square feet as of September 11, 2006 is: NINETY-THREE THOUSAND HUNDRED DOLLARS •$93,000 136 Analysis of Land Sales for 2122 N. Arden COMPARABLE LAND SALE SUMMARY Gross Sale Price Data No. I Location Size Sale Date Price/Gross SF Zoning (SF) 1/ 1363 W. 5th St. 5,460 3/17/2006 $47,000 CG-1 City of San Bernardino, CA $8.61 gross SF San Bernardino 2/ 1347 N. E St. 11,250 2/27/2006 $110,000 CG-1, City of San Bernardino, CA $9.78 gross SF San Bernardino 3/ 465 N. Mt. Vernon Ave. 13,068 2/08/2006 $210,000 C-2, City of Colton, CA $16.07 gross SF Colton 4/ West Side of Mt. Vernon Ave. 16,000 5/04/2005 $290,000 C-2 City of 178 feet north of Citrus $18.12 gross SF Colton Colton, CA 5/ 108 W. Highland Avenue 22,950 3/23/05 $360,000 CG-1, City of San Bernardino, CA $15.69 gross SF San Bernardino Sulyect: 7,200 NIA NIA PCR, City of 2122 N. Arden San Bernardino San Bernardino, CA The subject site contains approximately 7,200 gross square feet and is rectangular in shape. All selected sales are relatively similar to the subject relative to highest and best use, utility availability, topography, and property rights conveyed. I have applied adjustments to the below-listed elements of comparison in supporting my estimate of land value. In order to derive a point estimate of value of the subject, I have used percentage adjustments. These percentage adjustments are generally based on the relationship between the subject and the comparable properties as perceived by market participants. 137 Non-Physical Adjustments: ❑ Property rights conveyed ❑ Financing terms ❑ Conditions of sale ❑ Market conditions Physical Adjustments: ❑ Location ❑ Size and shape ❑ Topography ❑ Zoning/Entitlements ❑ Utility Availability ❑ Condition of site ❑ Non-realty components of value Property Rights Conveyed A transaction price is predicated on the real property interests conveyed. The land value estimate assumes that the subject site is appraised in fee in accordance with its highest and best use. If a different form of ownership is transferred, an adjustment to the sale price may prove necessary. All of the land data used in this report were fee simple transfers. As a result, no adjustments are appropriate for conveyed property rights. Financing My market value estimate assumes an all-cash transaction or a down payment and financing at ® prevailing market terms. Adjustments for financing terms are warranted when a property is purchased subject to non-market financing arrangements. Non-market financing arrangements can include seller-carried notes or assumable loans with interest rates, loan-to-value ratios, and/or amortization schedules more favorable than the terms commonly available in the market. As discussed in the sale data sheets, the financing terms of all sales reflect the market, and are considered cash equivalent. No adjustments are warranted. Conditions of Sale My market value estimate assumes that the subject property will be sold where: 1) the buyer and seller are typically motivated, 2)both parties are well informed or well advised, and each is acting in what they consider to be their own best interest, 3)a reasonable time is allowed for exposure in the open market, and 4) neither the buyer nor the seller are under undue duress. If a property is sold and either the buyer or seller were under duress, an adjustment should be applied to the sale j price to reflect the property's sale price assuming an arm's-length transaction. According to the listing broker, Sale Two was sold below market value; therefore, the appraiser applied a 20% upward adjustment to Sale Two. 138 During the verification process, the appraiser attempted to determine whether atypical motivations were involved in any of the transactions. Based on my research, all sales represented arm's-length transactions, involved no duress, and did not involve land assemblage in which buyers paid above market prices because of anticipated plottage value resulting from the greater utility of a larger site. Market Conditions Changes in market conditions subsequent to a comparable sale transaction may require adjustment. The market data in this report sold from March 2005 to March 2006. The effective appraisal date is September 11, 2006. The limited market data did not allow a matched-pair analysis to assist in the quantification of changes in market conditions, therefore the appraiser has reviewed the data on a broader basis to extract time adjustments. The regional recession of the early 1990s had a significant downward a impact on the market values of most property types. The market values of undeveloped parcels located in the neighborhood declined significantly from late 1990 to approximately 1996. Discussions with real estate brokers indicate that prices for land ready for development have remained relatively stable. Therefore, no adjustments to the comparable sales are warranted. Location Location adjustments were applied to the comparable sales where appropriate. The sale data did permit derivation of location adjustments through matched-pair analysis. A number of other variables contained in the data set prohibit reasonable grouping of the sales. The market data was also considered on a broader basis to identify general patterns which would support location adjustments. Specifically, consideration was given to differences in demand. The location and demand of Comparable Sale One is rated inferior to that of the subject. An upward adjustment is warranted. The location and demand of Comparable Sales Two, Three, Four and Five are rated superior to that of the subject. Downward adjustments are warranted. Size and Shape This element of comparison includes analysis of the utility associated with the size and shape of each sale. I analyzed the impact of size on sale price of a population of land sales, including the five Land Comparables. Typically, rectangular parcels with adequate width,configured to provide adequate street frontage, provide the most utility for development and consequently sell for higher per square foot prices than parcels lacking such utility. The subject contains approximately 7,200 square feet, and the size and shape provide fair development potential and is considered of fair utility by market participants. With the exception of Sale One, the shapes of the sales do not limit development options, have good utility and are considered generally superior to the subject. Downward adjustments are warranted for Sales Two, Three, Four and Five. 139 Topography Level sites are considered superior to sloping sites since level sites require less grading and, typically, offer a higher development potential. Based on our physical inspection of the subject and all comparables, the subject and all land sales are generally level. No adjustments are appropriate since the sales are similar to the subject relative to topography. Use/Zoning/Entitlements Any difference in the highest and best use of a comparable and the subject property must be addressed. When current zoning reflects the highest and best use, adjustments for different zoning classifications are necessary when the land uses allowed under the subject's classification are substantially different than those allowed by the zoning designation governing any of the comparable land sales. Sales One, Two, Three, Four and Five are zoned for unrestricted General Commercial use and are rated superior to the subject. Downward adjustments are warranted. Condition of site/Utility Availability This adjustment relates to the site condition at the time of sale, and assumes that the subject site is vacant and available for development to its highest and best use. Some land sales have improvements which require demolition, thereby requiring a potential investor to discount a purchase offer by the anticipated demolition costs. Conversely, some land sales include improvements which have contributory value that must be added to a potential investor's offering price for the site as if vacant. Sales One, Two, Three, Four, and Five were sold ready for development. Signalized Traffic Comer Sales Three and Five are located on signalized traffic corners and are rated superior to that of the subject. Downward adjustments are warranted. Sales One, Two and Four are interior block parcels and are rated similar to that of the subject. Non-realty components of value The inclusion of non-realty components of value in the purchase price of a property would require adjustment to derive the sale price attributable to the real property only. Non-realty components include going concern value,personalty, and other items. No known non-realty components were included in the purchase prices of the sales. No adjustments are appropriate. The foregoing analysis is tabulated in the adjustment grid which appears below. 140 Property Rights __ Adjusted Price _ $ 8.61 $ 9.78 $ 16.07 • $ 18.12 $ 15.69 Financing Terms Adjusted Price $ 8.61 $ 9.78 $ 16.07 ' $ 18.12 ' $ 15.69 Conditions of Sale 20.00%j Adjusted Price $ 8.61 $ 11.74 $ 16.07 i $ 18.12 $ 15.69 Market Conditions Adjusted Price $ 8.61 $ 11.74 $ 16.07 $` 18:12 $ 15.69_ Zoning -5% -5%_ -5% -5% -5% Location 12% -10% -10% I -10°k i 10°k Lot Size 1.5% 2.0% 2.0% 5.0% Shape/Utility -8% -8% ! -8% -8% Site Condition Signalized Traffic Comer -10% -10% Physi Cfiaracteri cal stics Total Net Adjustment 7% -22% =31%0' rm2l -280 Adjusted 19 14.31 $ 11.30 i Aaljiisfei��rice'�Sq:•i�t`Alean :S 11ry� _ -` Land Value Conclusion for 2122 N. Arden The sales in the sample reflect the most similar data to the subject available relative to highest and best use, location, zoning, market conditions, property rights conveyed, financing, topography, and utility availability. On an unadjusted basis, the four sales within the sample fall within the range of$8.61 to $16.07 per square foot. On an adjusted basis, the sales lie within the range of$9.21 to$14.31 per square foot with a mean of$11.03. All five sales were considered and given equal weight. Given the smaller size of the subject site, the appraiser estimated the fair market value at the upper end of the range. It is the opinion of this appraiser that the value attributable to the land is estimated at $12.00 per square foot; therefore, $12.00 per square foot x 7,200 square feet results in$86,400 rounded to $86,000. Based on the foregoing analysis, I conclude that the fair market value of the fee simple interest of the subject site 2122 N. Arden containing 7,200 square feet as of September 11, 2006 is: EIGHTY-SIX THOUSAND DOLLARS $86,000 141 RECONCILIATION The value indications for the subject properties, according to the Sales Comparison Approach to value, are as follows: Parcel A: 2029 to 2105 N. Dumbarton SALES COMPARISON APPROACH Land Valuation $468,000 Reconciled Fair Market Value $468,000 Parcel B: 2029 to 2095 N. McKinley SALES COMPARISON APPROACH Land Valuation $400,000 Reconciled Fair Market Value $400,000 Parcel C: 2073 to 2177 N. Newcomb 4 SALES COMPARISON APPROACH Land Valuation $605,000 Reconciled Fair Market Value $605,000 Parcel D: 2028 to 2140 N. McKinley SALES COMPARISON APPROACH Land Valuation $605,000 Reconciled Fair Market Value $605,000 Parcel E: 2004 to 2104 N. Dumbarton SALES COMPARISON APPROACH Land Valuation $530,000 Reconciled Fair Market Value $530,000 Parcel F: 2004 to 2176 N. Newcomb SALES COMPARISON APPROACH Land Valuation $739,000 Reconciled Fair Market Value $739,000 Parcel G: 2029 N. Newcomb SALES COMPARISON APPROACH Land Valuation $86,000 Reconciled Fair Market Value $86,000 Parcel H: 2194 N. McKinley SALES COMPARISON APPROACH Land Valuation $150,000 Reconciled Fair Market Value $1507000 142 i Exposure/Marketing Period Section A-9 of the Uniform Appraisal Standards for Federal Land Acquisitions provides that the appraiser shall not link an estimate of market value for federal land acquisition purposes to a specific exposure time. This is contrary to USPAP Standards Rule 1-2 and Standards Rule 2-2, and is considered a jurisdictional exception. 0 a 144 4 i ADDENDA 4 t GRANT DEEDS 10/03/06 12:34 FAX 909 890 3622 FNl' (;US' 5GKV1k;t vvcivva VeMft iwll Recorded In Of ual Records.County of San 8emardlrw 812512008 RECORDING REQUESTED BY: LARRY WALKER NC .05 PM Orange Coast Title Company of the Inland AuditorfContmiler-Recorder empire 846 Orange Coast AND WHEN RECORDED,MAM TO: Doc#: 2006.0584594 Tttiea: 1 Pages: 2 Fear 9.00 REDEVELOPMENT AGENCY OP THE Taxes 291--o MY OF SAN BERNARDINO OUNK m 201 North"E"Street;Suite 30I PAID 300.50 San Bemardino,CA 92401 TMS SPACE FOR RECORDER'S USE ONLY GRANT DEED ASSESSORS PARCEL:14 -79 1 191-021-29 0000 The unde�igned Casntw(s) dwUm that the DOCUMEN-r T1TI,E ORDER NO.:140-7832196 TRANSFER TAX 1$: TRA:ESCROW 0077 004 0 24479-BR PROPERTY TRANSFER TAX IS SET OUT SEPARATELY ON 4 S 7ATEMENT PURSUANT TO SECTION 11931 OF THE REVENUE dr TAXATION CODE. FOR A VALUABLE CONSIDERATION,receipt of which is hereby acknowledged Dion Graham and Tina Graham,Husband and Wife as Joint Tenants Hereby GRANT(S)to THE REDEVELOPMENT AGENCY OF THE CTTY OF SAN BERNARDINO, a public body, corporate and poHtic All that real property situated in the City of San Bernardino, County of SAN BERNARDINO, State of CA, described as: Lot 44, of Tract 6898, in the City of San Bernardino, County of San Bernadine, State of California, as per map recorded in Book 88, Page 34 and 35 of Maps, in the office County. of the County Recorder of said Dated August 17,2006 sta>rof coup Of on before Dion Graham otary P ro t>ae( to me on the basis of be tttC PGEpn(g) w11PaG rtamo(s)iSl$C SubBCrlbod evidrnce)GD 10 the wktt n HSS�uav=and 0 8W to ose that bdaheRhey Cxmued the s me in hie/her/th� Tina Grab ut ,,�.,qw r•rrrrrr ceptutityCa),and that by bi�hcahheir npatutt(s)on the k5eumWt .��� A L �(! Ile P—an(21 or the atdty upon belutlf of which the Petro $)=4 a,,=d the J`�� r' d f NwARy�s 1 :wrr:ms my and o>�cial = - .� MAIL TAX STATEMENT e.,`''r•r•".•••��•''•, S TO:Same as Above (This area for official notary seal) 10/03/06 1S:38 FAX. 11003 FILED SUM108 cOuAI ��pi A8 AMINO 0I01a JUN 10 2005 eY 2 DPW - 3 4 5 6 SUPERIOR COURT OF THE STATE OF CALIFORNIA 7 COUNTY OF SAN BERNARDINO 8 9 REDEVELOPMENT AGENCY OF THE ) CASE NO.: SCISS119674 CITY OF SAN BERNARDINO, ) [Conunoneed October 21,20041 10 Plaintiff, FINAL ORDER OF CONDEMNATION 1 I vs ) [CCP 1268-0301 i2 PETRI AHONEN;GLENDALE FEDERAL. ) 2105 N.Dumbarton Ave.,San Bernardino,CA BANK;COUNTY TREASURER-TAX 13 COLLECTOR OF SAN BERNARDINO ) 14 COUNTY;DOES 1 THROUGH 100;AND ) ALL PERSONS UNKNOWN CLAIMING ) I5 ANY RIGHT,TITLE OR INTEREST IN OR TO THE REAL PROPERTY TO BE ) 16 CONDEMNED IN THIS ACTION, ) 17 Defendants. ) 19 ) ) 20 21 judgment in condemnation was entered in the above-entitled action in favor of plaintiff 22 Redevelopment Agency of the City of San Bernardino("plaintiff') May 24, 2005, relative to th 23 parcel of real property described in more detail below and in the complaint, commonly known as 24 2105 N.Dumbarton Avenue,San Bernardino,California. 25 It appearing to the court's satisfaction that plaintiff, under that judgment, paid full jus 26 compensation in the total sum of$20,200 for the real property located at 2105 N. Dumbarton 27 Avenue, disbursed in accordance with the judgment of condemnation on file I in this actio 2$ ORIGINAL 4820-3479-45U.1 -1 FINAL ORDER OFCOMFMNATI Description: San Bernardino,CA Document-rear.DOCID 2005.445582 Page: Z of 5 order: lfxoarl Comments i I (including payment of$20,200 to the tax collector for unpaid taxes owed on the property locat 2 at 2105 N.Dumbarton Avenue- 3 IT IS ORDERED AND ADJUDGED: 4 The fee simple title to the parcel of real property,situated in the County of San Bernardino 5 State of California,more particularly described in the complaint and judgment as 6 Lot 13,Tract No.7106,in the City of San Bernardino,County of San 7 Bernardino,as per plat recorded in Book 90 of Maps,pages 61 and 62, 8 records of said County. 9 [APN i 191-021-48,2105 N.Dumbarton Avenue, San Bernardino 924081 10 is condemned to and taken for the infill land assembly public use described in th 11 complaint. ' 12 on filing a certified copy of this Final Order of Condemnation with-the County Recorde 13 of the County of San Bernardino,the fee simple title to the real property described above shall ves 14 in the plaintiff,its successors and assigns. 15 IT IS FURTHER ORDERED AND ADJUDGED that the plaintiffs portion of th 16 current and any delinquent property taxes are canceled as of the date that this Final Order o i7 Condemnation is recorded, and no portion of any unsecured property taxes, penalties and cost 18 shall be recoverable from the plaintiff,pursuant to Rev.&Tax. Code§5081-5091. 20 Dated: Judge o Sup rior Court 21 22 i 23 24 25 26 27 28 4920-3429-0526-1 1 FINAL ORDER OF CONDEMNAMN 1 Descriptions Sau Hezan&r ino'CA Document-year.DocZD 2005.445592 Page: 3 of 5 Order: NIONI Comment. VO/GO/VO 14.4V rnA ova evu auGG i -p erNo. 2724719 A ,-. lgowod in Official �COPQ9, tbunty of �tg� P;14025A A Wilardino, Larry tJalkvt', Rocort>•r ,oali�sa Doc No. 199901�Z�aB OtGORDiP r~Y nrt rrzpnelta 3 nf1 . e 0pm 03/30/99 T I,ttpomm orris P400"ee• city of RECMDED Bernar4 a. Rust prim lithe 9 � 68i City of San Bernardino, Redevelopment Agency 201 N. E" Street 3rd Flooi t Z 4 S a ? ! San Bernardino, cA 92401-1507 F a F sr+ at ar err sirs an To ra Parcel No. E S- YIS u stA titp !Baas tat OR The u S 8 CitLTAXS&n BeIrkSTO DOCUMENTARY TRANSFER TAX= City of San Bernardino, Redevelopment Agency x Computed on the optiskWation Or value of property rornreyed;OR 201 N. "E' street 3rd Floor San Bernardino, CA 92401-1507 o,npuWOi� don orveiue1e9911ensorencumbrances UnlnCorpOrated area:QQ Chy at san Bernardino GRANT DEED FOR A VALUABLE CONSIDERATION.Welpt d which"hereby acknowled99d. Thomas E. ti1111ama and Crystal Williams, Nusband and Hite, as Joint Tenants he"(3fiNYT(S)to City of San Bernardino, Redevelopment Agency ft trial h the City d San Bernardino County d San Bernardino,State of CaNfomta,de*crlbed es Lepai deWption per E41bK-A,attached and made a part hereof Dated November30 1998 RAY-DUN M.CRM Carwnli0Oft!1zxW6 No+aa Puvc-CCRI 9 ut M�/S;om,,.fa�MeaNW 6,7fu1 Thomas t, Williams 1 .tom �l/ it�yplYaa4rLg•uaar,3AYV —/., 1M;�77�Z///,� kuno7 adw�0 Cryata ills. # 90iI0CYi! !vnuaD 71Rf�'W tf9^_-avN STATE OF COUNTY OF F -I +. before mc.all otarY I is`at 4r said�nq and Slate g«saaalty own to me(or proved to me oa the basis of saasfactucy c%dcaoc)to be the pc;aoa(e)Wbosa names)Is/are wtucrihod to the within iaarumeat and adkaorrledged to me that bCl6he/Wey 004*ed the same.is htis/hcr/their authorized eapKitp(ies),and that by his/her their si�atWe(s)Oh the"trument the person(s),or the entity upon behalf Of which the persoa(s)acted executed the imtramtnt. WrrNgSS ray ofkw scat. • 1 Sigmaturc f MAIL TAX ENTS AS DIRECTED ABOVE Description:San Sernardlno,CA Document-year.boCID 2001.48249 Page;2 of 5 Order.neoma Comment: 08/28/06 14:21 FAX 909 890 35ZZ rnr w�i annri..n L '- i REDEVELQPMENT AGENCY CERTIFICATE OF ACCEPTANC E 'PHIS 1S TO CERTIFY that the ioterest in real property conveyed by GRANT DFYI)dated November 30,1998 from Tho the City of Bernardino Redevelopment l and Wife,as Joint Tenants,GRANTOR,. the Chairman of said Agcacy,a Political Subdivision,GRANTEE,is hercby accepted by Agency on this 11th 1949,pursuant to authority granted by the Common day of March Council by motion ou February 1,1999,and the GRANTED COnsente to recordation thercof by said Ckairman,its duly authorized oft5ccr. Dated this 11th day of March,199Isard lifornia. Jgdit man of the Redevelopment Agency d AFN Nos, 0285-501-05-0000 0285-501-13-0000 0285-501-17-GOOD 0285.501-18-0000 0285-501-20-0000 0285-501-21-0000 0285-503-02.0000 0285-593-03-0000 0285-503-040000 0285-503454000 0285-503-06-0000 0285-503-07.0000 . 0285-503-09-0000 0285-503-10-0000 ` 0285-503-11-0000 0285.551-03-0000 ° —0285-551-06-0000 0785-551-07-8000 Oki $ 018&551-0"OM 11285-551-09-0000 _ 0285-5514041000 -0285-551-11-0000 i P3CkbmiWitl'w&C0A] Desafption:San Bemardino,CA Document-yearbuclD 2001.48249 Page:3 of 5 order naoma Comment. uuiecsiub 1.4:L1 VAA llU`.1 ODU J04Z rlrl 1IUOI OLGMyluG �x REDEVELOPMENT AGENCY NDEU CERTIFICATE OF ACCEPTANCE THIS IS TO CERTIFY that the interests is real property conveyed by GRANT DEED dated November 30,1995 ftrom Thonaa E.WYliams and Crystal Will tas,Husband and Wife,as joint Tenets,GRANTOR;to the City of San Ba=rdino Redevelopment Agency,a Political Subdivision,GRANTEE,is kereby accepted by the Chairman of said Agency on this I Ith day of March 1999,°pursuant to authority granted by the Common Coundl by motion on February 1,1.499,and the GRANM consents to recordation thereof by said Chairman,its duty autboriud officer. Dated this day of October;2000,at San Bernardino,Caiffornia. C-� Judith t le,Chairman of the Redevelopment Agency 3 APN Nos. 02352-06-0060 02.35-552.47.4000 0285-552-034000 0285-557-09-0000 0235.551-10-0000 0285-552-11-0000 PJGtbm[Wil1iusr..COA1 Description'San Bemardino,CA Document•Year.DoclD 2001.48249 Page:4 of 5 Order.naome Comment: 08/28/06 14:21 NAA 8UU aVU Sti22 VNI kuol anecrl�ln Mibit A Lotlel 23 through 28, 30, 31, 32, 34, 98.. 39, 41, 42 and 49 of ?raat ffio. 6896, in the City of San garnardiae, County of Jan Seroardino, Cal State of ifornia, as per a� _�_ in gook 00 of Maps, page to) 34 and 35 in the office of the Coonty ymcordes of said County• Pexnatdino. County Lot(s) T, 19 through 24 of 2saot of tract No. 7108, in the Cite of San of San pemardino, State of California, as Per WAP z�aordod is Book 90 of Nape, Yago(e) 61 and 62, swords of said County. l vooa� �r of oeOWL DOCkUM i i De=dptto r San Elimardno,CA Document-Year.0=10 2001.48249 Page:5 Of 5 Wer.naome Comment i 08/28/06 14:21 FAX 909 890 3622 PNT UUbl JCKV1kn R"ded In Off kill Records, cau ly of San Brnardino, Errol 1. nacKZLA, R000rder i Doc No . 19960310860 ,���R60 �. 11 ' 24aM 08/23/96 WI EN RECORDED MAIL TO: MR. 5 MRS. THOMAS S. WILLIAMS 1922 RED MILL CIRCLE TUSTIN, CA 92780 1 ! i 4 f n FU rf yr art m wr Nr yaw ORDER NO. 6724559-F03 - 6724582- 03 ESCROW N0. 6707054-F51 S rar u m trtco llliyi T ju ppC<%[TliTAiCY'[1tAtlSPP3 TAX i MAILTAXsTATENUMTo: �,, „wmy y.o�ar.orFwaai��14° oCaMpul�ao M c�dirrrtiai orwtw 1s W.roc�M.aw ordnisaaeV.d" QUITCLAIM DEED See Summary of OTS Regulatory fictions FOR A VALUABLE COFiSIDFRATIbN,receipt of which is hereby aclmowledged, Federal Deposit Insurance Corporatooi acting in its capacity as Receiver for HOMeFed Bank, F.A. .which pursuant to 12 U.S.C.Section 144la(m)(1)succeeded the Resolution Trust Corporation in its capacity as Receiver for HomeFed Dank,F.A. does hereby RENO-E,RELEASE and FOREVER QUITCLAIM to THOMAS�WILLLAMS AND CRyS*iWILLIAMS,husband and wife as aoint Ten»te the following real property locatedn the City of San Bernardino County of San Bernardino :,State of California ,described as follows: • SEE E7CHIATI'"A"LEGAL-DESCRIPTION ATTACHED HERETO AND A PART HEREOF: Federal Deposit Insurance Corporation as Receiver for HomeFed Bank,F.A. i �4. wers L-� ayne I Title: Attorney in Fact Date: August 8, 1996 4 Descr+ption:San$eMardino,CA Document-Year.Doo►D 1996.310860 Page:1 of 4 Order nooma Comment: I I vo/4o/vo 14.44 me UU`J OJU J04Z rlvl GUJ1 3CKY1k.1n 11 t!uitc�al� Deed from FDIC to willialls exhibit 'A' (Description of the Real Property) The land described herein is situated in the City and County of San Bernardino, State of California: i TATS 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 34, 37, 38., 39, 41, 42, 48, TRACT f896, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER NAP RECORDED IF BOOR 68 OF MAPS, PAGES 34 AND 35, IN THE OFFICE OF THE COUNTY RECORDED OF SAID COMM LOTS 7, 19, 20, al, 22, 23, 24 OF TRACT 7106, IN THE CITY OF SAN BERNARDINO, AS PER PLAT RECORDED IN BOOK 90 OF DAPS, PAGES 61 AND 62, RECORDS OF SAID COUNTY. Desc4pUon:San Bernardino,CA Document-Year.DoCID 1996.310860 Page:4 of 4 Order,naoma Comment: Ob/ZS/Ob 14:ZZ VILA yVy OUV JOGG rret MOM E10onlctlttRdeda4fllclalRecords,CwmtyolSanBemudlro ec« IiaO Ml LARRY WALKER VA IRDiNG �g�� � d�I4crl�onnbb�Ql'-Ramat O�cost Tide-RivCnidc 754 Orange Coast TitleCOr%any AND WIC ACCORDED,MAIL TO, Doc 0 2046-0097618 Thks: t Pages: 5 t'eec X SAN W AGENCY OF THE C �1�11111�111�N�11 � .90 201 NORTH E STRF�Kr,SUM 301 I PNP .00 SAN BERNARDM,CA 92401 TMs SPACE FOR RECORDERS USE ONLY GRANT DEED Tice tatd.91,Md Grantats) declare that the DOCUMENT ASSESSOR'S PARC ELNO:1191-MI-21 FER TAX IS TTnj ORDERNO,210-715704-M s Co�Y ChY ESCROW NO.:820002-Bw o0-�c full whae of the intact propastY C°"`°1 0-r TRA:007004 ,�a,opehnd 0-e ti.fall,,alas Im the veh,e of hear a�,mbcaacts gem .mg thereon C Ibc tune of mlr- OR trensfa is FJCEh P'f fiam tax far the tollowahg rm"a: FOR A VALUABLE CONSIDERATION,receipt of which is hmby acknowledged,RAFAEL S.ORANTBS and HECTOR M.MORINO and ROBERTO ROMO,as Cmwntuiity Property hereby GRANT(S)to REDEVLOPMENT AGENCY OF THE CITY OF SAN BERNARDINO of all that real property ity of SAN BERNARDINO,Caaaty of SAN HFdtNARBIMO,Sims CA,dcscarbcd aiu,W in ee C a:LOT 36, TRACT 6898,IN THE CITY OF SAN BERNARDINO,COUNTY OF SAN SEANARDIlVO,STATE OF CALM ORMA,A9 PER MAP RECORDED IN BOOK 88,PAGES 34 AND 35 OF MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF SAID' COUNTY. Dalcd Dooemba 6,20015 6ratao(Catifornia l i on ivon'r r�ra�y �t PawnelYappened �A�.fEL s- a�a..te5 Mr0 14C 7a oI- Paaaorally Y1lotra bo mcuo :0-i•---m Oae basis of setiaSdaY evidrna)to !�'�� be dw pu«dg whose n=arllfl deC subsmbcd to the wA=inSULUr]n�m�t�ca�d R M.M 0 •clan Iedgw to me did acaukd the awe is�t{r�a� • 110106aod CRadtyy0t and&e by siymme{dl on dx atNucnaaa �_ dtc pown4*or dw mhty upnc Wmff of which dw Pc3000 acted etccuted the C km1II1Q1L- ROBERTO ROMO WIT ESS and olfic6l cal Si (This ant for official notary seal) ABOVE MAIL TAX STATEMENTS TO: SAME AS W""�7 r ARtillE11 06AId1mmis1as DescriptJno,CA Document•Year.OociD 2008.97618 Page: 1 of 5 .O r.,naoma Comment: UtsicaiU0 14:LJ VAA WUU 0UU J04Z rivl I-lUJl annyl.-n 'LIv'6 1 PzQtqsm BY Recorded in Official Rgwds, County of and Wk" recorded nail to: San Bernardino, Errol J. Mackrw,, Recordor "a'OM U° )M` TRU@T c�A Doc NO . 19950322943 of UWG RZACS LO eon n91 3 :-90pM 99/19/95 t,a2w ar.ACa, CA, 90801 jg=# M ELINDr► SAMUN 1®►u 2= ST"MCM® TOO Fidelity win[ Title t SO 1[ise Trout City of "n Bernardino ra fa I err a_M3 I to err Ita Wr m mg ro rs I rcm 201 T. wow strut - 3rd 210or 2 Ban BernardiaO. CA 92601 -3 � s s� -----------------SYACE ADUU IRIS LI6 A U W-0 To"TAX i iE1 CING O M The undersigned declares under penalty of perjury that the follo"i"g declaratian is true and correct' 1j The grastea hernia (Nan was not the foreclosing beaefloiary 2) Thu amount of the unpaid her with costs raa......p55,]23.92 3) Thu aswuat paid by the grantee at the 'Trustee'■ sale was...455r710.00 4) The documentary transfer tax is..............• 5) Said property is in ( ) unincorporated area; (S) rAty of sad ser"ardino, county oft San, Bernardino Date 09/15/95 g S MUNT OF LONG BBACs T.S. Ito. s8-1146-oo Title order No. $233041 "No 0245-501-19-0-000 FARNE" An MnCEAWS TRUST COMPANY OF LONG SEAM a Califoraia casporatioa, as trustee under the dead of trust described below, hereby grants and conveys NithmA coveaaat or warrabty, eaprossed or implied tat RXDEVKLO?KM ROOMY OF TS3 CITY OF BAN L6ANAit UW all that certain real property situated in sae , California, known ae 2141 Newcomb @t., san Sdrsardino, California, and described as Lot 40 of Tract No. 6@9@r in the City of sae Bernardino, as par map recorded in book ", pages 34 cad 35 of Maps, in the office of the County Rocorder of said County. This conveyance is sale under the powers conferred on the grantor by the deed of trust executed by DANIEL O. SALE WD FByLLIS Y. HALE, WSaANn AND wit's, AS JOINT ANTS, as original trustor, and lA10sSR5 AND MZRC.QAMT4 TRUST COWRNT O! lAm zZRCa, as original trustee, and FAR1018S ANO MRCIU=s BANS or LONG BSACB, as original beneficiary, dsted March 39, 1993, and recorded oa April 38, 1993, se instrument "'abet 93-1@1447 of Official Records of san Bernardino County, California; and after fulfilling the conditions spscified is the deed of trust aathor"Un the conveyance as follows: The aritytosad �ootiee�o�d the witlwatreeosdel the office of the Coax trust Recorder of son nernardiao County, the nature of the default being the failure to poi the Desalption:San Semardino,CA Document-Year.DoclD 1995.322943 Page: 1 of 3 order,naoma Comment: VO/GO/Ve 1Y.41 rAA .7VV OVV JO44 VOL 4UJ1 anKV1%+11 installment of principal and/or interest which becasa due February 7. 1995' plus late charges, and all subsequent installments of principal and/or interest, plus late Tp11 d0!®tilt still existed at the time of sale. Not less than three SMU$ elapsed bOU614 the reccrdlaq of the notice of default and the posting and first publication of the notice of sale of the property. The beneficiary made due and proper demand ou.the trwates to sell property in accordance with the laws of california and the terms of the deed of trust. Whers", all applicable statutory provisions of said deed of trust have boars complied With as to acts to be performed and mailtnq the copies of notices, whereas, the holder of said note did execute and deliver to trustee written declaration of default and demand for sale sad notice of default and election to tense the undersigned to sell said property which notice was recorded April 11, 1995, as Instrument me. 1993-0112622 of Official Records in the office of the Recorder of Bob Bernardino County, California, Thereafter, a notice of trustee's sale, stating that said trustee would sell the above described property at public auction to the bigbest bidder for cash on Beptombsr 13, 1995, at 1;00 p.m., at the male south entrance to City of Chino Civic Center located at 13220 Central Avenas, Chino, California. said Notice was posted for not Teas than twenty. days before tha date of sale therein fixed an followst In one public place in the said city of Chino, California, wberein said property was to be sold, to wits on a bulletin board in the City of Chinn Civic Center located at 13220 Central Avs., Chian, Cif: and also in a coasDicuous place on said property to be sold; and said Trustee did cause a copy of said Fvtice to be published once a week for at least twenty days before the data of sale therein fixed in the Precinct Reporter, a newspaper of general circulation printed and published in the city or district in which said real property is situated, the first data of such publication being August 24, 1995. Said notice was also recorded at least 20 days prior to the sale in the office of the county recorder of the county in which the property heretofore described is located. Whereas, Trustee did at the time and plane of Gale fixed as aforesaid, then sad there sell, at public auction, to said greats, being the highest bidder therefore, the property hereinafter described for the sum of 455,723,97, by the satisfaction of the indebtedness then secured by said Deed of Trust. In Witness whereof, the oadersigned caused its corporate nano, and seal to be hereunto affixed l FAa1MRi also 1QRMANTS TAM C010"T a or DATED 09/15/95 BY SKI-INM 05MIS, Varsolosureeff. LINDA as . TrUst officer DesuipVon:Son Bernardino,CA Document-Year.Doclo 1995-322943 Page:2 of 3 Order.nooma Continent: Vet 4o,vU 14.44 FAA VV:/ OaU 3044 C1111 I.UJI JCKYltrl LOUZ4 Warded in Offfclal Pbeca'slr, county of Rel-jrdcd ft the request of San Bernardlno, Errol J. tlaakZt,as, Recorder Arrowhead Re-crow, Inc. Poe No. 19970427385 'GE COMT MLE 00, 0 8 : 08am 11/21/97 J CITY OF SAN BSRNARDINO, E.D.A. � �� Rol NOR71i "H- STREET, THD FLOOR f u' y jTi V SAN BERNARDINO, CA 92401 K rtl An art crt Cot try ►rr rr I rM Bscrow No, t AR49E7-08 �/ _t OLD CASE *:046-794B79 S^ 9LL NEW CASE * rw tT U trr C Tp TiYt Irl er Gai txse Stet®of Calito 11aCITY OF SAN BERNARDZNOGrant Deed TRAN9FBR TAX For value received, ANDREW M. CUOMD .Secretary of Huu4ng and Urban Dcvetopment,of Washington,D.C.,grams to CITY OF SAN BERNARDINO, ECONOMIC DEVELOPMENT AGENCY SEE ZXHIBIT "A" ATTACHM HERETO AND INCORPORATED HEREIN. i t A.P.N. 0205-501-04 B ' the tame pr acqu. to by the Geantn:parwant to.the provisions of the National Housing Act,as amended (12 UT..1701)ate the Department o7 Housing sad urban Development Act(42 US.C.,3531). Said convganoc is made Subject to all eorenants eu^n3 0t4 restrietiO% reurvationa,conditions sad ��appeaziag of word agatosr the above AwCriibCd property also t5 bjoct to any state of facts which an accurate survey oI raid property would show. 4 In witness whereof,the undersigned on April 03, 1997 bas set his/her hand and seal as CHIEF, REO BRANCEt ,HUD Office, SANTA ANA .California,for and on behalf of the said Secretary of Hoaaag and Urban Development,under authority and by virtue of 50 F.R.42049(10/17/85). ANDREW M. CUCMO Witnesses: Secretary of Housing and Urban Urbaan�Dodopmcnt MICHAEL FRRMOtrr, cuiEF, RHO BRANCH (Title) HUD Office, Santa Ana ,California State of Califon County of Q e se On April 03, 1997 before me, C%° L Notary Public, personally appeared MINI, FREMONT. CHIRP RSO BRANCH p4Aou*known to me(or proved to me on the basis of saddsoory ovidcmm) to be Om p..=(s) am ose nes)wlare subscribed to the wWn inttrament and acknowledged to me that ic/she/lbey emawtcd the tame in bis/ber/d+air aathorimd capadty(ier)�and" by his/her/their signature(s) oh the Instrument the pez 9),or the entity LLpon whicfi the perm-am(s)adcd,caocuted the inatrAaroat. WAUM my and a JOYCE OLSON @ Coaaw.at0"M 6 4o WAAY� Notary Public in for vasty and State 00-,.Pro rte r.vas Nonry Seel Forts HU0918M(II-95) Description;San Bemardinc,CA Document-Yeer.DocfD 1997.427385 Page:1 of 3 Order:neome Comment voicoivo 14:G4 rtld vva oyv acct rVI 1.0,71 OnKyltn �v�a order No. S-115790-9 �IT "A" Tlba land referred to in this Report is situated in the State of California, cwnty of San Bemardino and is described as foU.owe: Wt 47 of Ttact 6696, in the City of San Beaazxdim, Oxmty of San Bernrdim, State of California, as per nep zecorded in Hook 86, Pages 34 and 35 of M3pe, in the office of the O:x y Recmder of said Ommty. 4 4 Description;San SemaOno,CA Document Year.DoclD 1997.427385 Page:2 of 3 Order naoma Comment: 08/28/06 14:25 FAX 909 890 36ZZ E'N'L' UU5'1' ZiMVIUtS - Rararded to Oleolal Racordt,C"M al SUN BarnardM 2/04/2 119 PM LARRY WALKER wj Auddst/Controller - ROC*rkt RECORDING REQUESTf?n BY P Counter utio- 2003-0073715 Ttiiaa: 1 Ptah: 2 APN 258.501-06 I Faea WHEN RECORDED Ma,TO Other se ee Name RedcveioM=I Agency of the City f San Address Beinutilm,.201 North"E"Street,Su to k 301 city Son Bernardino, CA 92401 State Zip R CR�3`TT31� Grant Deed The undestgnad grantors)declare(a): Documentary trans[cr tart Is$NA Oov.Alcatel ! ( )cornputed on full vahte of property oonved,or ( )computed on full value kss value offiefli and ancumbrautcca remaining at time of®le. ( )Uniocorpontcd arcs:(X ) l of an an no { )Realty net sold. FOR A YALUA-3LE CONSIDERATION,m xjpt of which is hereby acknowledged, Frazee Communal Center,a California Ron- r9fit COMOMI ion Hereby GRANT(S)to Rcdevel ttrent c of the Cit of San glyrditig.a bodY CorParlIM and r2liti, that property in the County of San Bemardino Stale of Calif 12. See exhibit"A"attached hero to and in aced here in for all purggxs. Mail Tax Statements to Rcdcve meat e cy of the_City of San Demardl no as addressed above Daa�� 02 7 — OZ— t- I, Frazce�1 STATE OF CA FORMA _0R' �CT!C 10 I'f zw COUNTY of�9N ir_Wj2RAq'(':li Nv On -G. helbre me,the undasigncd,a Notary Public is an for cold Staae,peraoaalty appasred �_ t-Tu-�- fta cuk ° pmved to ate on the Is of satisfaimry_ e.idcnee n be the pwsuri{a)whose aaeit(a& subscnlxd a the wbtn instrument aw adtaowicd fled to me titer paled tits soma t it authorized egraeiry and tint by r dpmurc(apt umameni the par_ Ord earthy upon If or IAA A.GONV which the perwafy acted,exxant Cemmhswn N 1148427 s Notary Pubic-Cu ltunia z wrr" m�- '­Texe Sml berftardi rlo Coulty Si�ary�. L Namct - (typed w printed) (This arw for offiut notarial axat) Desfxfption.San Bemanrno,CA Document-Y ar.DoGID 2003.73715 Page: 1 of? Order:naome Comment: VO/GO/VO 14.LJ I'AA .7V� O`JV JV GG L'll Wall JG(�11u1: .G Vry Exhibit"A" Legal Descripd Dn for the North Arden Guthrie Properties 2104 McKinley Avenue APN 256-501-06 Lot 49 of tract 6898,in the City of San Bernardino,County of San Bemardino,as shorn by MAP on file in Book 88,P es 34 and 35,of Maps,Records of said County. a• t Description:San Bem rdmo,CA Ooaument-Y ar.DooiD 2003.73715 Page:2 of 2 Order neoma Comment: - ua/Z8/ub 14:z5 PAA vuv ovu 3tiLL l triv'l' t:UJ7' J1SKy1l:C tlyuca Pacardel le 0110d ReaoMa,(body of Saw garaawns 2f04MW LARRY WALKER 8W GJ PM AuditorlCenlrallrr — Recorder RfC0RDR7G REQtJESTEO OY `a P CounisT Order o Doi#: 2803—0873717 Thin: 1 Paget; 2 r.an a_aa APN 2e5-501-07 O01 her WHEN RECGItf)EDMAILTD 114 s Rdevelopmcni Agency of the City f San Address Bemardiro,201 North"E"Sued,Su to 1301 city Spt Bernardino, CA 92401 Statc Zip S A THLS lJN R St . Grant Decd r)owpu.TwWed on n grantor(s)dectare(s tfansfhr tax is$NA Gay.A ed on full velne of prnpaty canvff yed,or ted on full value less value of lieak end encumbraoces remaining at torte of stdc.iporatd area:(X )ity 4f Sul�eraardtno trot said FOR UABLE CONSIDERA770N,re 'pt of which is hereby ecttwwl®dgd, F ni Ccntcr a fit lion Hereby GRANT(S)to l Redevd nt A of 6c i of San BJmerdino a b Co orate and Politic that property in the County San Bernardino State of Calif is c ibit"A"attached here w in ed_hcrc in for all poses. Mail Tax Statements to(Redevelopment of the Cit of San ma 'no as addressed above Date /�•2 / �' Praaee STATeOF CAUFORNIA R�7"C NCItJ r�'I�IL f�/T COUNTY OFr���? On 1 �- beforeme,Ow andecSlaned,a Notary Pubbc in an a fbr said State,personally appeared poise WIT purred to me on Ike I 85is orsetisfactory evidence to be die pasor4q Mtose subscribed to Me within instrxaent and admowledged a me tkx Ab y«darted the gone in fd�e'dthsk sulhoriad capecity" "byb<enlhwr sigmtnrtWn dte ltutr nem the pcnwKs�,M ealky upon lick.Wof IISA/l GOME1 whI&*A po caitd the ins _ Lyon N 11989?) t91.1NBSS my Sort Sa mdklo COUM' Sigaed.R r - ANCcnme w0dM2M2 Name (� s`1 . (typed or prim TMs sea for oRical notarial eats)) De,SCriptton:Son Bemardino,CA Document-Y ar.Doc1D 2003.73717 Page:9 of 2 Order.naoma Comment: 08/28/06 14:25 FAX 909 890 3622 FNT C;UST SERVICE 4YU3U I I I 1 I Exhibit"Y' Legal Description for the North Arden Guthrie Properties I i i 2094 McKinley Avenue APN 215-501-07 Lot 50 of tract 6898,in the City of San Bernardino,County of San Bernardino,as shown by MAP on file in Book 88,P4es 34 and 35,of Maps,Records of said County. i I I I I 1 , 1 I I Description;San Bemardbo,CA Document-4.00C10 2003.73797 Page:2 of 2 Order.naoma Comment: - Ub/Ltf/Ub 14:L, rAa `JUV 68U JbZL t'IYl' IUJl' JtSKY1lC g5vai 1 %aoordad in official Records, Gutty of Recorded t the rcgttest of San Bwiwrdino, Errol J. Mackttan, Nacordar Arrowhead Escrow, Inc_ Doc No. 19970427377 q.MWE COW>mE CO, 09 : 0 Dam 11/21/97 Return to E. Cyst l itl a X11 .� CITY OF SAM BERNAaD7NO. S.D.A. 201 NORTH •B" STREET, THIRD FLOOR i Z a 4 3 I i e lr n SAN BERNARDINO, CA 92401 ►i iVF i+Mf rf1CR Q► AN W M ICON ��` Escrow No.: AR4963-08 5 OIL ( t OLD CASH #,046-794675 aeasr u rrr CM9 tussrar sA paH rrir+ v 7 NEW CASE # St&% confornieCITY OF SAN BERNARDINOGNat D®Ed TRANSFER TAX $ ,P For value received, ANDREW M. CUONO ,Swetay of Housing and Urban Developmut,of Washington,D.C.,grants to CITY OF SAN BERNARDINO, ECONOMIC DEVSLOVMHNT AGENCY SRit BRHIBIT "A• ATTACHED HSRb7CO AND INCORPORATED HEREIN. A.P.N. 0285-501-08 Be the same acquired by the Cxnn[°r want to the yrorisioac of the National Housagt A� as aaaeodcd mmgg operty ent Act 42 U.S.C.s3531). (12 U.SC.111701)and fist I3epartmant of Home and rban Developmpoas, ( rights Said ooavrya he above de�d per ta� sure of -27-which m accura a survey of 6aid property ���� also SAW to any wardd show. on ril 03, 1997 has sct his/her hand and seal as in witness whcrwt,tl+a undersigsedHUD Offuc, SANTA ANA California,for and on bchalf of the said CHIEF, REO BRANCH (10/17/&S)- Secret",of Homing and Urban Development,=der anthonty and by vatuc of 501'.1.42099 ANDREW M. CUOMO Witnesses Seaitary of Hoofing and Urban Development Bri - (Seai1 MICHAEL FREMONT, CHIEF, HBO BRANCH (Title) HUD Office, Santa Ana California i State of California icounty of on April 03 1997 blare me �. ;q e"- Osor/ Notary Puhlic, per 0-11y aPP� i FRW40Nt Z BW-L:9 P known 10 we(or proved to me on Ibc basis of sa aory w{ a aamc(s i, are subserihed to the within inarvment and acknowkdged to me that erideace) to be the peraui(s) ) / �u. end that his a tlicir eignatnre(c) °n the he/she/they executed the same in his/her/ticir artborimd capauty(' ) b7 /b / instrornent 4hLa the entity upon of wfiicb the persoo(e)acted.executed the instnimcat_ Witness ra SignAurc �comm, O4so52 Notar y puntyad State eam ors.t iaw • • Wolay Sael r-prM Hu041ea4 p1-eb1 DoclD 1997.427377 P89 e, I of 3 Description:San Bernardino,CA Dccument-Year. Order.naoma Comment. 1 I _... �... .... �...... .. ...... ...... ........ ..., v.. i ..came i .c �VSL Order No. S-115786-9 a�uBIT.'A" ,Me laud referred to in this Report is situated in the State of WIfOrni.a, County of San.Bernardino and is described as follows: Lot Sl. 'Fact No. 6898, is the City of Sail Bernardino, O=ItY Of Sou Benku ii m, State of t3li.fonu a, as per map re=ded in Bock 88, Pages 34 arxi 35 of hips, in the office of the ca mty Refitx of said 0o`nty. Desoffpfron:San Bemardino,CA Document-Year DoclO 1997.427377 Page:2 of 3 order.neome Comment. US/Za/Ub t4:Zb t'AA yUy ODU JUZZ t SV1 kluai JOKY 1VL` WA V0% Rioorded in Official Rnoords, County Of Sin 60rrArdino, Errol J. Mad", McorW Cal Arrowhead Escrow, 111c, Doc No . 19970427381 coasr THE co. 08 : 00am 11/21/97 Rerun to CITY OF SAN BERNARDINO, E.D.A. , title I 6i1 201 NORTH "s- STREET, THIRD FLOOR t : s s a • SAN BERNARDINO, CA 32401 rs rat uT tsw rM r Cn aa.ar rti ran rt:a Escrow No.: AR4985-08 OLD CASE 9.046-794981 S— 81 NEW CASE aka LT La lit VT-" TRAMS Tar DA rws4 RAk State of CiafflornWITY Of SAN BBRRARDINOGr8nt Deed TRAN9FHR TAX 9Ier' For valet received, ANDREW M. CUtM ,Secretary of}lousing and Urban Developas=4 of Washington,D.C.,grants to { CITY OF SAN BERNARDINO, ECONOMIC'DET/ELOPMM" AdENC:Y 1 SEE EXHIBIT 'A- ATTACHED HERETO AND INCORPORATED HEREIN. A.P.N. 0285-501-09 the same property acq fired by the Grantor punt�ant to the provisiow of slit Natioad Housing Act,as amsnded (12 US. x1702)aed the ant of Ho and Urban Development Act(42 U.S.0 s3531). Said conveyance is made Subject to all coveuaats easements,restlictious reservations,cgaditioras and Of record against the above desaibcd ptopertp,also�ubjea to any state of facts which an accurate survey o said ly would show. In witness wbtreof,tht undersigned on Aaril 03, 1997 has set his/her hand and seal as CHIEF, RSO BRANCH ,HUD Off od, SANTA ANA ,California,for and on behalf of the said Secretary of Housing and Urban Development,udder authority and by virtue of 50 FR.42099(10/17/85). ANDREW N. CUOMO witne=&Z Secretary of Housing and Urban Development By.%ll� (seal) MICHAEL FREMONT, CHIEF, FRO BRANCH (Tint) HUD Office, Santa Ana California State of Cafiforn i County of :Sb On Bpr11 03, 1997 before me; / t1 B Notary Public, penonslly appeared MZC'lTAfiL FRSr402tT CHIEF REO BRAN oaaRy itaown to me(or prowed to me on the basis of saUactory evidettce) to be the persona)wbost nmc(s)jis/arc subscribed to the within instrument and aclmowledgcd to me that be/shc/they catcuted the same in his/her/tb* authorized capaeityCies), and that by his/hu/their dgauurc(s) oa the insw meat the pecan ,or the entity upon behalf f which the peraon(s)acted,executed the instrument Witness my ban and o cial seal. gJl— JOVGE Ol-SON Signature t`,omaf•trf01t06� �nran'i VUatrC d11rG Notary Public in alt—or ovnty and StateEawtMOr,.-�oo�!+v , r r4gwy Scat i ryyR1 Ma1A1RfN f/1ASl peSWptlon--San Sen'lerdino,CR Document-fear DoCID 1997.427381 Page: i of 3 Order:neome Comment: i U6/L6/Ub 14:26 rAA VOY 85U 3622 FNT CUST SERVICE (0035 i I is 1 1 order No. 5-115788-9 MaMIT "A° 'Ito land refer to in thif Report. is situated in the State of California, 0=1ty of San 8ernaxdim and is described as follows! I, i Lot 52 of Tract No. 6896 in ft City of San Bernardim, C=ity of San Bernardino, state of California, as per m�V reooa:ded in Book 88, Pages 34 and 35 of MVS, in the office of the axmty R&oersrder of said C=ty. I i I i I I I � i I i I { I `i I 1 i 1 1 I 1 i . i I s I DesCfipNon' Son&Mgdlno,C.A Document- ar.DoclD 1997.427381 Page.2 of 3 Order.moms Comment: l rns a,UOS Onscritlrs tA 037 R;sgyrdad In Oft ICW Rawr4s, CuurltY Of i gel gerrtterdl�, Utrry ua1R6r. Recorder t FIRST AMERICAN TITLE CO 2001 0532584 ' µYpNggP7R I BCOIIDLDMAILTO: REDEVELOPMENT AGPISCKOF THE CITY flpAe }t1/�! I1�[ Q l' OF SAN SERNARAINO Ik1\Y1 11Yi11Nt j`� a 20 1 NORTH"E"g7T1£C[,SIfiCB 11301 I SAN HERNARD(NtO,CA nO t 1 2 1 4 i 1 Escrow Not AR25337 j ►6 la of on w Awn OW Casa N: 64&071443 I � 5� — INt it u In Vice haul TAX ea Ost ��No_, S.tcrvw No.: AR25337 A.P.N.: 0285-551-1i j GRANT DEED Sts to of Cq+liforda,City of ban Svaarfta TH'UNDERSIGNED URANTOR(S)DKLARI.'(S)THAT DOCUMENTARY TRANSFER TAX 19 TQ.QQ por value received,Mel March cT,5oerctuY of H"itts WW Urban Development,of WabbWw,,D.C,grards to REDEVELOPMENT AGLNCy OF THE CITY O SAN BERNARD'" the following described reel propert7 in the County n4sAN BERNARDINO,Stain of Califotnic SEE IgXMR'"A" ATTACHED HERETO ANO!MADE A PART HEREON aired by fim tirantor purtpmtlt to the prov'uions of the National Hewing Act,as ellwtrdsd{I Z U,S.C. 13eutg the same tx-rtY nx�tt Act 42 U.S.C.s353 i), s1 7o1)and the Deparacxrzt ofHowutB and Urban ve1oP { of--d Said conveyance is made Subject to all cavensnts. erneub.teab'chorls reservat ons,oonditians send rights appeanng against the above described prrpeay:stso Subject to�r1y state of facts wbicb an accurate Itirvey of said property would slaw• the undars' ed oo Im sct hither head acrd scsl as Senor REO 9pecielist,HUD office Santa In ;rt m wbermf, goosing and Urban Dcveloprtsar+4 under authority and by virtue of 50 F R Ana,Califotni4 far and on behalf of the said Sxretai y 42099(10/17/83)• Met Ma ' THW INSTRt1tAMr REED FOR RECORO try FIRST AMERif ltt o floating and Upton Dc v to t WME M AS AN lypp WE ATtOtt 0"L OR �(ptRNIlIFD�' ItS VICUT etnor REO S l]RON 71 HUD OfTicc,Smin Arta,California . Document Date: Nvverokr4,24ot STATE OP CAI,IFOt(NIA Pas / �r CO(IN'ryOF - I NOU befom ttx the rtndalrilotcd Notary Public parsoaa0y aPP°- ,,yy��,q**on the buiI of satistwtM OMcnca)o0 be the.*.,id These yOoo() d II Srmor 11130 8padatist,yar,omtty W_,_;;(a Pro"T mbsenW m the Within iusR mmu and adatowledgod twine flat hd13a/tttay atramed the sax In bisAlai41 aa6roriud wPaetQ(lee) °�tbat by Im Atckya dr 0,FW ra(a)on the iostn, Km th.psrsan(s)w tk em;ty apoo behalf of which the parsoa(a)60(e4 tneecated the haoruawaL "od and otnl""seat ` �" 4 DAWTI I%RGWONU taus.tr AVFQ Notary Putt;c in sad NOTARY ertauetAUruRwu� sM SCARAR6t+0 ctwRTT 0 I costal>:Iw.ttov.s,1om Farm HU"1964(1145) i 1 6Mi 1»K STATEWM AS 04M'U'D Al*'t t , D cdption:San Samerdino,CA Document-Y4ar.DOCID 2001.532584 Page: 1 of 3 Calder naoma Comment: i 1 I voicoiuo i4.4r me tout$ atou oo[t UNT UUbT bhKV1Lt5 ' Pot rh.rb.r 1 LEGAL DESCI4 "ICI Real property In the Clty of San Bema►dlno,County of San eama4ao,State of California, described as faibm.' Lot 9,Tract No.7106,in the lCo� re n B rn sslin.State Of C:aUbmla,as per plat recorded in book 90 or Maps,pages APN:0285-551-19-0-M 1 a a i l l PWAfforkan Me DeScrtpfton:Sera Bemardoo,CA Document-Yeer DoclD 2001.532584 Page.2 of 3 order naoma Corwent. i ens ',VOL ocnrjV6 10040 Recorded to OMdal Records,Co4ntyd can Swowdlou X13fM ` LARRY WALKER M24 AM LMJ Audhlarx"trollar— Reeordet .�rsa RECORDINOREQUESTEDBY P Counter Ord"" AOIoot 2u003-0(1�653MM39 roles 1 fin.a•, a aPN 268-551-17 ather e.ee WHEN RECORDED MAILTO 1 linll IMft xame R[D se.ee Re lerelopmrnt Agency of the City of San Address ncrnardino,201 North"F.'Street,Suite a 301 City San Bernardino, CA 92401 State Zip SPACE S LINE FOR 11JECKODER'S USE Graot Deed The undenigned grantor(s)deciare(s_ Dawmcntary transfer tax is$NA Gov.Agency ( )computed on full vahte of propcnty conveyed,or ( )computed on full vahte less value of lion and emumbronces remaining at time of sale. ( )Unlnoorpormd area:( X )City of SN Bernwdmo ( )Really not sold. FOR A VALUABLE CONSIDERATION,receipt of which is hereby acknowledged, Frans Community Center,a California non-profit CorDaration Hereby GRANT(S)w Redevelupmcni ARCncy of the City of ttrt Bunardino,a body CorixlraW and Politic ;y that property in 9 the county of San Bernardino State of California See exhibit"A"tdtaclxd hoe to and inc rated here in for ell purposes. Mail Tax Statements to Rqd M AErIcy of the QIY Qf an f1cirwdinu as addrr4scd vc Datc /— 02 �— O y— ranee STATE OF CALIFORNIA COUNTY OF!� k I P�0r)1 fyC� On i -24-07.' _ before mc,the undasigucil.a Notary Public in said for said Stale,personally appeared ` (-R "?HQ\j t1r4Ei.C�(�N _ I perseirWiy4w,a�ift- ale proved to mean the basis of salisfactmy evidence to be she pcnon(o whose namo"ov subscribed to the witkia imtrumcm and adatowledecd to me thal ex"cd the same in h thak authu iarA capadh(�J,and that by hellroih:c sienoniW}ont&nwumcnt the per roe,Of{he entlty open bchaf or which On perwr4r)odcd,executed U)r)instrament. USA A.GOMEZ Cornm1swrt M 11987a WITNESS my a Dail NSm De�rnardKO Signatatt {/ _ A�Ctmm.OgitesOalE,?lAZ Name !_ U SO 0-1-C C44 f Z2 {uyped or printed) This area for offical"Wial weal) Description:San Bernardino,CA Document-Year_DoCID 2003.966339 Page:I of 3 Order.naome Comment: ��. ovo vav ,o�c rni w�i anicritn L9041 Exhibit"A" Segal Description for the North Arden Guthrie Properties 2141 Durnbarton Avenue APN 288-551-17 Lot 1 I of tract 7106,in the City of San Bernardino,County of San Bernardino,as plat recorded in Book 90,Pages 61 and 62,of Maps,Records of said County. i 0 t Description:San Bernardino,CA Document-Year.DodD 2003.166339 Page:2 of 3' Order:naoma Comment: - - rna wai antcvicn tO044 �-+-► 19ecofd(ne RequBsted By ' CHICAGO TMT:WMPANY e95-123062 AFCORDPQ REO11Em M a •�) ulvtsn Mde Cwf)*n-Escrow plvleloa t 140 aa1Pr Rscaeam MAA TO: I 1)6 TAE REDEVELOPMENT AGENCY CITY OF i SAN OEANARDWO KAREN CATO 201 No"-E'STREET.780 fMCIM SAN KfV4AMMO.CA SMI I ' T"*s�Aa eon Rtcano9rc ust my '. T1T12 O noEA aro."1 3441-1 a F5Cnpw 110.29.1 afa7 U cc RATQJ-Q THE ULIaOWUMAM ANSM�a I o Pp oonwuta an 1dl value 01 PWP"wnv�■TSd °� 1 t compumd an 1401 v4lW lase vaaut oi SAS{srOEIN mWen.s*ro 1d^6„Time Of ad+- n ( 1 UafKyrpasosd eves 1XI CYT `\ FOR A VALUAOIE CONSIGEMTION,r"WT as wAfc►to hereby acS s0vrkd6ed N N MAMICAN SAVMM NANIC.F.A.MA AsrEflICAM SAYM08 6AN11 1lerstr7 GrAW(el ta•. l� THE REUEV0-aM61f'7 AGENCY CM OF 60 6l�IIL"DWO The reel property to Me dW of SAN BERNAROINO.ICoun"of San Bwnadlro.Stall of CsetorNs. ' decaAbsd■�. II M am 0W.&q,6trte of Calforls,as Loo 14.of Treat 7106.In%"CITY of s■n 6amsrdiRe.Ce1s1rY • ow Map r*a-.' M&Da 00.Peas 61 and 62 of lilwo F Uw af6a sl the Can1Ty 11swd■r of sold County, ; •a ALSO KNOWN AS: 200 DUAMLWON AVCMEE BAN 6EpNMINO.CA 92404 206.651-14 i i 6AVINO6 iANK.F.A. i S a6.1Ka STAR TAIE(W Or CAU1'OFW1a IF 001PRT OF qr Y I; bolt- a9 • ".my Mi+in and hr py M■.�p!■�^�� end ' sUIORT 7168[ w>�R�SdQ1t perawp bwnaa r r to vw Fwa.a WS■ d sme' so—%w sow~ hf . m e a.t "N°"d�Y.e■rMIlvae^prnrr■r; 0�0i11 on w n.e...e wwu® .�....e.■.w,et.Awa.a a■aRR)d aw IIINV■eV „r.�YY,_�„ , 11i1icK iwT1.�.�0 OrRdr••«. f�R��o�y o�■.trt��•11w ""• ftl+ra■w erwla w,adr-0 o seal h■stw.eea bk I ; I t i Description:San 8emarrlino,CA Document-Ye�,ar.DoClD 1995.123062 Page,2 of—27 Order:naoma Comment f 1 uaizaiub 14:25 ICAA 909 890 3622 FNT CUST SERVICE @045 t Rncocded in Official Records. county of 1Fccordedat the requemof € 34n Bernardino, Erroi J. mwKtua, Recorder Arrowhead Eeorow, Inc. Doc No. 19970427371 op.kWaE COAST TMLE CO- E 08: 00am 11/21/97 Return to CITY OF SAN SERNARDZNO, B.D.A. I Tlti� YI� 201 NORTH "E" STREET, THIRD FLOOR If 1 M JrA 1 r f Fj !M 7 r t F 1 a rt 5Aft 8BRN11RDIN0, CA 92401 1, ri In I OF NMI ►N CM I CPT C"A10 IN IBIrR Kw V' ESCIOW No.: AR4960-08 I OLD CASH #1:046 770898 t NEW CASE #t � ��ttr U sn G SO T1Wr iAK 011 IRS IrAg State of CafifomWITY OF SAN B ARDINOGrant DeW TRANSFER TAX $J" For value received, ANDREW M. CUQt40 ,Secretary of Housing and Urban Development,of Washington,D-C,grants to CITY OF SAN BERNARDINO. SCONOMICIDEVELOPKENT AGENCY �G BCH 81f8IBIT -A` ATTACHED HIMSTO ltm INCORPORATED HEREIN- A.P.N. 0795-551-13 B ' the same prop�rc,acquired by the Grata pursuant to tic proviuious of the National Housing Act,as amended (12 Us.51701)and Ohe Department 01 Housing Urban Development Ad(42 US.C.0531). Said conveyanec is asade Subject to all covenai 4 easements,restrictia roslsavationa,conditions and n&hts appearing wour ld h agafnst tha above desdibed property,all o Subjed to any state of(ads width an accurate survey oI said property i In witness whereof the undersOmd on Ap�l l 03, 1997 has set his/her hand and seal as CHIEF, REO BRANCI[ HUD Office, SANTA ANA C Woraia,for and on bcbalf of the said Secretary of Housing aad Urban Development,weer authority and by virtue of 50 F.R.42094(10/17185). ANDREW M. CUOMO Witner,w: Secretary of Housing and Urban Development ey -•�•� (seal) MICHAEL FREMOM, CHIEF, RSO BRANCH (Me) HUD OM=, Santa Ana CAlifornia State of ew, County of On April 03, 1997 before mr, I e % Nmry Public, personally appeared Q MICHAEL FREMONT, CHISr.RSO BRAMCtt po6oaaay known to me(or proved to me on the basis of satisfactory evidence) to be the persan(s) whose natmc(/ace subscribed to the within ieattt[taew and wknowledged to me that belaw/they executed the same is his/herfthe' authorized capacity(ies), and that by his/bar/their signature(s) on the instrument the person(s�or the entity upon behal f of width the person(6)acted,e=culed the iasbrutneat. Witness my ha signature JOYCE OLSON Cea.n aatrawsx .; Notary Public in for and State sanlaitruoanpplrrty� r i No"seal Form HUD-0104(ttdsS) kk Description:San 8emardino,CA Document-yek r.Doc1D 1997.427371 Page:1 of 3 Order:naoma Comment i ) i i i VO/ZO/vo 14:Z6 VAe VUV o`JV 3UZZ FNT OUST SERVICE _ (9046 Qzder No. 3-115763-9 EM33M •A" Tm land referred to in this Report is situated in the State of California, oamty of San Beznawino and is drscribed an follows: Lot 15 TYac t No. 7105 in the City of San Bemazdi=, qty of San Bexrsazdino, State of California, as per map xsoorded in Book 90, Pages 61 and 62 of Mape, Records of said County. 1 a DesWpffon.San 8emardino,CR Document Year.DoCID 1997.427371 Page:2 of 3 Order.'neoma Comment Ova oav evcc r1.t t uJt Jtl!(Y 1GL 111048 Vt4coroe0 in Officiai Recarae, Couhty cI Recorded (het uestof San tlerrtardinc, Larry blacker, ReCOrder G.atew3y t. e Mrlipaay-Co Rm Arrowhead Bacrow, Inc. D®c T\O, 20000010672 Return to 3 : 00pm 01/11/00 "VEVLPMT AGCY CITY SAN BERNARDINO �Wj Title 201 NORTH "E" BTRFET lIlT tYt SRN BERNARDIVO, CA 92401 1 2 F1 3 4 f n/rl 7 !F7!Q t PC in art tars "cn urT CPT soy aM Pea Escrow No.: 2-AR14861-OR Q Ot.D CA.gK 11:098-008895 NEW CAS E I; uSE ECHO 3 3�r 3 { - L - ats sT ta Sn nTCe I Rini 1*4 G gll�i q state of CalltorrAa c i r r - s— ftERN aR a, Grant need TRANSFER TAX 0.()0 Por value rccoived, ANDREW M. CUOMO Sc rotary of Housing and Urban Devr1upraent,of Washiagtoa,D.C.,grants to REDEVELOPMENT AGENCY OF T'SS CITY OF SAN BERNARDINO SEE F, KIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF A.P.N. 0285-551-1Y Bon the sauce prnpcRy acquired by the Grantor pursuant to the provisions of the National Housing Act,as amended (12 U.S. .s1701)and tfte&parimcat cT Housing and Urban Development Act(42 U.S.C.s3531). Said conveyance is made Subject to all covenant�oasemcnts,reslncWns resrTvatione,conditions and❑�p,�s appearing of reootd agarast the above described property;=object to any state of(acts which as acnsate survey oP said property would show, t In witness whereof,the undersigned on DEC 6 7999 has set his/her hand sod seal as senior REO Specialist ,I-IUD twice,Santa Ana California,for and on bcbalf of the said Secretary of housing and Urban Dcvelopmcnt,under authority and by virtue of 501'.8.4200(10/17/85). ANDREW M. CUOMO Witnesses: secretary o ousing aMOVC hopment By Seal JE;SSF HLRi '-f1:(%Senior REO Specialist (Title) f{UD Uffle, Sirrca Ana ,California State of California SAN BERNARDINO ;u c«mty of . On 0 E 16 1999 bdarc me, the undersi.otted Notary Public, personally appeared JVS91R. ItTST° 1 e 1 ttH specialist personally known to me(ar proved to me on the basis of satisfactory evidence) to be the pcx-.s) whose namc(s) is/ace subscrdsed to the within instrument and acknowledged to me that he/she/they arecu the samc in his/her/their authorized capaaty(jcs), and that by his/her/their signature(s) on the instrument the m the untidy upon bgshaff of which the person(s)acted,executed the ulsttumont. Wkwumss my Is d amt 1 scat. PAMdtA R.LOWRY Sip 1latwe s No y K"l v tfC1 10 Notary Yabl in and County and State Son noCowuy PVC—r>�1 Jun 11,2009 MA&TAX STATE.MWTS AS OHIECTED Mifl`OP Navary ticaf Fwm HUD-9i504(11-851 Description:San Sernardino,CA Document-Year.DwID 2000.10672 Page:1 of 3 Order:naoma Comment ••••• ..... .... �i...a .no uvo vav JvLG r"I -Uat OLKV11-It 19049 Order No.: 410.333136-41 Reference No.: AR14961 EXHIBIT A LOT 16. TRACT NO. 7106, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BSRNARDINO, STATE OF CALIFORNIA, AS PER PLAT RSCORDM IN BOOK 90 OF MAPS, PAGES 61 AND 62, RECORDS OP SAID COUNTY, ASSESSOR PARCEL NO. : 0265-551-12-0-040 I • i 4 Preliminary Report - Schedule A Gateway Title Company - 935 South Mt- Vernon Suite 110 Colton, CA 92324 000-464-.3317 De=1#16n:Sari Bemardno,CA OocumeW-Year.Docla 2000.10672 Page.2 of 3 Order.neoma Comment. lilt 05 Rocorded at the regomt of Recorded in Official Records, Coknty of Ban Bernardino, Errol J. Maokaum. Recorder Arrowhead Eacrow, Inc. Doc; No t 19970427379 ORANGE CQAST MU 00. 08 : 00am 11/21/97 etura to CITY OF SAN BSRNARDINO, E.D.A. �i SIM 201 KOR911 "S• STREET, THIRD FLOOR u v 1,•1`^' SAN BERNARDINO, CA 92401 1 2F-1 S I 7 e M sr--j• K fit rrr "RT an OT ral M � Escrow N.-- AR4984-OB OLD CASE t.-046-794876 g �� NRN CASE 1, role to m CRtA ruuTll] w tev tMAM State of Calllorf1WITY OF SAN BERNARVINOGfant Deed TRANSFER TAX $ For value received, ANDREW N. CUOMO Secretary of Mousing and Urban Development,of Washington,D.C,grants to CITY OF SAN BERNARnipo, ECONOMIC bZV9LOPr10aTr AGENCY 568 RXHIBIT "A" ATTAC3iED HERETO AND INCORPORATED HERRIN. A.P.N. 0295-552-03 a ' the same property acquired by the Grantor punu*nt to the provisions of the Nation Housing Act,as amended (12 U�31701)and the'"Pertment of Housing and Urban Development Act(42 U.S.C.s3531�. Said coaveuW the it made Svbjcct``o aU covcaaateasemcots,restri rescrvatioas,conditions of record aga and tasi the above desrnbed Property;also Subject ubject to any ma would show, to of facts which an accurate survey of said property 0 In witness whereof,the mtdersigned On April 03, 1997 has set his/her hand and scat as CHIEF, REO BRANC9 ,HUD Office, SANTA ANA ,California,for and on behalf of the said Secretary of Housing and Urban Development,under authority and by virtue of$0 F.R,42099(10/17/85). ANDREW M. CUOMO Witnesses: Secretary f Housing Dosing and Urban Development MICHAEL I?REAtOQT1, CHI SF, RPsO BRANCH (Title) HUD Office, Santa Ana California State of Californi County , C44 K �' :ss ,rte/t On April 03, 1997 Wore me, L°C/ l Notary Pub&, personally appcar d K19ML ISF p illy known to me (or proved t0 me on the bads of satisfactory evrdeaoe) to be the persm(r)whose name(!) is/are subsaibcd to the within insuumpnt and adawwwgod to tae that he/she/tbcy--nod the same is his/her/their authotfwd capaci1y(ieGX and that by his/her/their sggatum(s) on the instrument the persoa(s),or the eafay upon behalf of which the peraon(s)ailed,e=cwed the instrument. Witness my sad C al. Z' Signature - JOYGE OLSON Notary Public' County and State 1MY�to,0101 SAM K301" "Dontlln7 low"00"low 1,tall 1 Ngtarr Scat Peen HUD41OD4(114W Destxfption:San Semardino,CA Document-Year.D0c)D 1997.427379 Page: 1 of 3 Order. naoma Comment: U5/ZS/U6 14:Z9 VAX 909 a90 3622 FNT CUST SERVICE fj054 order No. S-7.1.5787-9 The land referred to in this Refit is situated in the State of California, Qmunty of San Bwawd m and is cev� as folkws: IM 27 of 7LW= 7106, in the City of San BenaxtlSAD, O=Ity of San Bernardino, State of Wifamia, as per Mop teo=j d in Boric 90. Pages 61 and 62 of Maps, in the offfaa of the County Re=der of said Gamty. Description:San Bernardino CA Document Year.DWD 1997.427379 Page:2 of 3 order.'naoma comment: UO/zoiuti 14:60 NAX 909 890 3622 FNT COST SERVICE 0 056 aaom,lad Is onow Rwords.C-01 41 tern Ssraadno 9/OtilM e:00 AM R�coRnn+�ReQt,�rr�� LARRY WALKER sA FOW AMMCAN TITLE CO AMVdM9J9XMD9DUAR.T0: AUdil fUntmft — Rictider REOEVELOPMENT AGENCY OF THE CITY 700 First Amerloarl — DG OF SAY BERNARDINO 10 Doclh 2002—0465569 ipla: 1 PaQa>a: 1 201 N."li"STRSBT,SUITE.301 Za e.ee SAN w Ka;A 27452 A 92401 II ���I�������I�1�� Ito �•M Es row Nv:AR27452 �4� U l('h�N other O.M Old Case f: 048-200153 �W SPACE ABOVE THIS LINE IS FOR RECORDER'S UM A.P.N.: 0215-55241 Order No.: 578614 Escrow No,: AR27452 GRANT DEED State orCalifornla,City of SAN BERNARDINO TIM UNDERSIGsNED GRANTOR(S)DECLARE(S)THAT DOCUMENTARY TRANSFER TAX IS WOO-PURCHASER IS A GOVERNMENT AGENCY For value received,Mel Martinez,Scam y of Housing and Urban Developmtmt,of Washington,D.C.grams to REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO the following descn'bod real propmly in the County of SAN BERNARDINO,State of California: SEE EXHIBIT"A" ATTACHXD HERETO AND MADE A PART HEREOF Bcing the same property acquired by the Grantor puisuard to the provisions of the National Housing Act,as atrrendcd(12 U.S-C. s1701)and the Department of Housing and Urban Dovelopmom Aux(42 U.S.C.x3531). Said ounmyance is madc Subject to all covenants,easements,restrictions,reservations,conditions and rights appearing of record against ttm about deacribed property:also Subject to.any state of facts which an accurate survey of said property would show. In witness wherwf,the tudcmgnod on has set hislhes hand and seal as Authorized Signor.HUD Office Stlma Ana,California,for and on behalf of the said Secre(ary of Housing and Urban DmIopmrnt,under authority and by viMe of 50 F.R. 42099(10!1785). Mel M nicer Secre f Housing and Urban a pore By: VERONICA tRiRTIr1E2 k Autho HUD Office,Santa Ana,C"orma Document Date: laly 10,2002 STATE OF CALIl' PMA )ss co 0 before me,the uadarcignad,Notary Public personally appeared Authod&d Si t,personally known to me(or proved to use on the basis of satisfaotary evidcmc)to be the penvn(s)whose nerne(s)talare sabmibed to the within instawnent and w1amm4edgod tome that Wshelthey executed the same in hisilmItheir audwrized capacitAics1,and Utah by hieRta/dr-ir signature(s)an the instrutaent the person(a)or the entity upon behalf of which the person(,)acted,executed the insRtunem WT[MESS my hand Ekid seal. S*Mature JoycE GLWN Notary Public in MQ Esr austty and State COMM./t IM60 2 NOTARY PUSUC-CAUFOMIA 3i Z SAW ti1MARDtHO COUNTY � Form HUD-91104 p l-Y.S) �Cpmmiscla� Novetabea 2.2t10Z Description:Sen Semardmo,CA Document-Yew.Doo1D 2002.465569 Page: 1 of 3 Order.naoma Comment: Uoicoiuo 14:JU VAA NUN usU JUZZ FNT COST SERVICE f�057 Order!Number: 0623-578624 (10) / Page Number: S LEGAL DESCRIPTION Real property in the City of San Bernardino,County of San Bernarfno,State or California, described as Wows: LOT 29 OF TRACT NO.7106,IN THE CITY OF SAW BERNARDINO,STATE OF CALIFORNIA,AS PER MAP REOORDED IN BOOK 90,PAGES)61 AND 62 OF MAPS,RECORDS OF SA LO COUNTY. APN:0285-552-01-M I fib AiwnCan 71t1e Depsc dption.San 8ernee7no,CA Document-Year.DccfD 2002.465569 Page:2 of 3 Order rki ma Comment: Rctwrtted at the r neat of "Corm in off 19041 Rttoordt, county of W I Bann Bernardino, Errol J. MICka)11, R4cordGr Arrowhead Tacrov, Inc. Doc No . 19970427390 ORWE COW MY CO. WOO= i 1/21197 Retura to yy A �{ CITY OF SAN BERNARDINO, B.D.A. Tl�le A ti�� V 701 NORTH "E° STR]KET, THIRD FLOOR SAN BERNARDIND, CA 92401 1 2 7 a i 1 1 t 9 1 K- FIE APr 6Nr rag" fYT tTr let ace+ tFl A tG74 Escrow Ho.: AR4989-08 712 1 OLD CASE #;046-814703 S_ d!1 NEW CASE {I Sol IT I Is IF 010 TUN Tar [+a Carl M SteteOf CailfOMIRCITY OF SAN BERNARDINOGraftt Deed TRANSFER TAU S For value received. ANDREW M. CUO 0 Secretary of Housing and Urban Development,of WashiagtoN D.C,,grant&to CITY OF SAN BE9NARDINO, ECONOMIC DEVELOPMENT AGENCY SEE EXHIBIT "A" ATTACHED HERETO AND INCORPORATED HEREIN. A.P,N. 0285-504-10 {12 U.S.Cthi Sama�opertt aeyaired by the Grantor purruant to the provisions of the National Housing Act,as amended tLc uepaitraent of Hoasiag and Urban Developmcnt Act(42 U.S.C.x3531). Said conveyance is made Subject to all coveaa%easements,restrict reserl�lianE COR&Loa4 and rights appearing of record against the above dcgd%cd property;ako Subject to any state of s winch an accurate survey oTT said property would sburv. In witness whereof,the undersigned oa April 03, 1997 ,bin set his/her band and seal as CHIEF, M BRANCH . ,HUD Office, SANTA ANA ,Cxti£ornia,for and on behalf of the said Secretary of Housing and Urban Devekipmwl,under authority and by virtue of 5D F.R.42099(10/17/80), ANDREW M. CU0140 Witnesses: Secretary of Housing aad Urban DevclopmcTtt By:%�(� i�.►rsr�� (Seal) MICHAEL FRRMONT, CHIEF, REO BRANCH ([yam) HUD Office, Santa Ana California State of Gliforni County of On April 03, 1997 before me,.—/��'^�1-L-�. /J Notary Puhiic, personally appeared MICHAEL FREmONi', CHIEF, RBO SRAb)m Pa�Y known to me(or proved to me oz the basis of eatisfacoory evidence) to be the persoo(s) whose namc(s) is/are subxcdbed to the within instrmoent and aclmowk4W to me that he/she/they eaccatad the same in his/her/theii authorised capadty(ies} and that by bis/her/ibe-ir siratare(s) on the iasuvmeat the person(a),or the entity upon be of which the person(s)acted e1u cuted the iashrameat Witness myhhamok'end seal. / JOYCE o 6 52 Notary Public v"uIM eau d d fo Calmly sad State *=7C4W4-n EW%A0Maourrtv Ew"law r tare tVaaq Seal Form HUD-91504(11$5) Desorlpttion:San Bernardino,CA Document-Year,DoclD 1997.427390 Page: 1 of 3 Order.naome Comment; _ U01401va 14:3u NAA ava ssu 362L Frfr CUS`r SERVICE 19060 order ado. S-115792-9 SIT "A' i 'Ite land refezred to in this. is situated in the State of Callta nia, O=ity Of San Ben=da no and is=described as follows Lot 31 of Tract No. 7306, in the City of San Bernardino, qty of San Bernardino, State of Calitomia, as per map recorded in Book 90, Pages 61 and fit of Maps, Reasde of San BmT=T irro County, Califania. OeWptlon. San Bemaroino,CA Document-Year.DOCID 1897.427390 Page:2 of Order.nsoms Comment: Recorded In Official Ragortit, County of Recorded at the request of Ban Sw n&rdLm. Errol J. tlaokaA. Recorder Arrowhead escrow, Inc. Doc No - 19970427406 WME coast 08 : 80W 11/21/97 Return CITY t0F SAN RF3tNI1RDIN0, E.D.A. , hap (fast title p X11 201 NORTH ^E^ STREET, THIRD FLOOR 1 1 s &F 1 t / t SAN BERNARAINO, CA 91401 r1 fU Art W4 "tM IM a1 0010 PW R KOK r� Eecraa NO.� AR5101-08 Vj OLD CASE #.044-640445 S_ NHW CASE # as n l rr p1C0 ThA li far M rMii tub We Al Cilifot'ttiaClTY OF SAN BEE ARDINOGrant o"d TRANSFER TAX S For value received, ANDREW H. CTK KO Secretary of Hnuiing and Urban Development,of Washington,D.C.,grants to j. CITY OF BAN BERNARDINO, ECONOMIC �EVELOPMHNT AGENCY i SHE SXHrBIT °A" ATTACHED HERETO INCORPORATED HEREIP. A.P.N. 0285-504-09 Beim the same pr aoguirod the C{ hr pureuaat to the provisions of the National Housing Act,as amended (12 USZ.x1701)and=partment of Hoaswg nd Urban Development Act(42 US.C.13531). Said Conveyance z made Subject to all conna.ita,.. casement&, restrictions,rescrvatioas,conditions and rights appearing of record agarasl the above described property-,olio Sub)eet to any state of facts which an; survey of said property wouid abaw. i In witnas_s whorcofr the undersigned on Apl 16, 1997 has set his/her hand and seal as CHIEF, REO BRANCH ,HUD Office,:-:, SANTA ANA California,for and on behalf of the said Secretary of Housing and Urban Development,un .r authority and by virtue of 50 R.R.42099(10/17/85). ANDREW H. CUCMO Wknesses: Secretary of Housing and Urban Development By- � (Seal) MICHAEL FRHMONT, CHIEF, RBO BRANCtr HUD Office, Santa Ana California j State of California i. County l: On April. 16, 1997 before me, �t/� �L� D Notary Public, periaaaily appeared NICRASL FREMNT CHIEF REO BRAN pefsonally known to me(or proved to me on the basis of satisfactory erideacc) to be the persoA(a) whose aamc(i) is arc subscribed to the within instrument and acknowlodged to me that he/aht/they executed the same in his/her/ i'Ruthoriaed capacity(ies), and that by his/her/then signature(s) on the l instrument the person(s),or the entity upon f which the person(s)acted,executed the instrument. WAneas ely Is and eial seal. JOBSignature 'i erM4a06UC GJ,tIFOala p 1 Notary Public i d ty and State f :� iYaary s� Fam HUDQi W4(11-W Desa 1pi on:San Bernardino,CA Document-Year.Doc)D 1997.4274()6 Page: 1 of 3 jOrder,norm Comment- l., a i .i VINI uuar att(VIUh 10063 Order Na_ 5-u7oo2-g EQMIT °A" The land ref--z to in thL i Report is situated in the State of California, CamtY of San 8ernar mid i described as follows. Lat 32 of T aM N0. 7106 in City of San Bernardino, omnty of San Bernardino, State of Califosaia, as per m recorded in Book 90, Pages 61 and 62 of Maps, in the office of the oxmty Hecor ler of said oolmty_ 1) . h 71 i 5 2I it I i I C I. 1: • 1' i F Description:San Bemardno,CA Document-Ye��.Doc1D 1997.427406 P age: of 3 Order.neoms Cammeni~ t { Uoicoivo 14:31 me VUV OVU 3bZZ FPIFI' CUS'1' SERVICE tpaotro r Recorded in atficiat Records, County of Recordcdat the rzgeestof San Bernardino. Errol J. Ma tvm, Raeordsr Arrovrhead escrow, Inc" Doc NO. 19970427373 COAST TmE M 08 : 00am 11/21/97 Return to CITY OF SAY BERFARDINO, B.D.A. Title 611 101 NORTH 'E^ STREET. THIRD FLOOR 1 2 _ 7 i a 7 or— r a SAN BBRHAADINO, CA 92401 PC Fit I a WSW Mpg fto Escrow No.: AR4981-06 OLD CASE #:046-898446 NOW CASE # oar R Tama Irr w am tun Struof catitorngCZTY OP SAN BERNARDINOG"nt O"d TRANSFER TAX $ ,J For vatue received, ANDREW M. CUOMO ,Secretary of Housing and Urban Devclopment,of Wuhington,D.C.,grants to CITY OF BAN BEANARDINO, SCONOKIC DEVELOPMENT AGENCY SSB WUMIT "A' ATTACHED HERETO AND IIVMRPORATED HSRErN" A.P.N. 0285-504-05 B ' the wee pr enquired the Crrawar pursuant to the provisions of the Natioeal Housing-Act.as amended (12 Us�.'1701)and the Dopartmeat eT Housing and Urban Devalopmwt Act(42 U.S.C.0591). said reyancc a made Sabjw to al covenants,easements,restricli reservationz,oondttipns and rights appearing od agautat the above desedbed proporiy;also Subj�t to my state I facts which as acuuate survey oC said property 4 In witness whereof,the undersigned m April 03, 1997 has set his/her hand and seal as CRISP, REO BRANCH ,HUD OfBM' BANTA ANA ,Califomia,for and on behalf of tho said Secret"of Housing,and Urban Development,wwar authority and by Viafte of 50 F.R.42099(10/17/85). ANDREW M. CUOMO witnesses: Secretary of Housing and Urban Dovelopmew By, �__ "'r (Seal) MICHAEL FRE24ONT, CHIEF, REO BRAMH Cntle) HUD OfGco, Santa Ana ,Cafdorais State of Cal'rfor " County of :♦ss On April 03, 1997 beforo me,�/o L� �Q NOtary public, p—onalfy appeared atlCtAst, Fx84oraT C7tIEF Rao ORMCH y known to me(or prorod to me oa the basis of sudsfeuory cvid==) to be the persoo(a) whose name(.) 6/are subuxibed to the within i zbwzent and aekmowledged to sae that he/abt:/they ettecutod the same in his/hec/thek atrthoriarmd. capaQty(res), and that by his/her/their signature(s) on the instrument the ptxsoe(s),or the entity upon bebaN of which the person(s)acted,eraated the iastrawcot. Witness my seal Sngnature U .IOYCE O�; Notary Pubic' and Coraty and StatestOSS052 a't"aara�tan+o�aaarnr"'-P O.+e�rb.s.rrra .• . Notary Seal Descriptfon:San BemaraUno,CA Document-Year.DoCID 1997.427373 Page., 1 of Order naoma Comment_ UO/ZO/U0 14:32 NAA VUV OVU JUZZ FNT GUST SKKV1Uh KyUOo Ox�er No. S-115'f84-9 EXHIBIT W The land referred co, in this Report is situated in the State of Ca7..i.foznia, qty of San Bernardino and is described as follows: Lot 36 of Tract No. 7106, in the City of San Bernardino, Qxmty of San Bernazdim, State of Cali tcmi.a, as per nW reo=lad in Bock 90, Pages 61 and 62 of Maps, in the office of the OamC.y Remriair of said Catty. Description:son Semardlno,CA Document Year.Doc1D 1997.427373 Page:2 of 3 order.'naoma Comment 08/28/06 14:32 FAX 909 890 3622 FNC COST SERVICE t¢i01i8 Gateway Title Companyoitan wrWr in no. iot R.mker, �°' - nCGOanuVGREQULSfCDar rurdino. l,art•Y GAT9WAY Tfft.E C0%"AftY 1 20009095281 axe tvxev ascoRo w hue tv: REDEVEGOWENT AGENCY OFTHECM ee m am 03/22" ow SAN BSRNARDINO 2111NOW111-rL"StRELT,Sul"*3at SAN BE.RMARDINO�CA 92401 Escrow No:AR16VI s Z t a T" .C.7- $ Old Cale ik M8 638750 K � � yrg ryr am rat S—n U x" in.Co IMac tae ear A.P.N.: 8285-Sa944 Order No.: 41"33SS741 Escrow No.i AR16578 GRANT DEED State of Catiforula,City of SAN SERNARDINO THE UNDERSIGNFD GRANTORS)DM ARH(S)MIAT DOCUMENTARY TRANSFER TAX IS 0.00 For value received,AndmW M.Cuomo,Se",eury,of housing and Urban Develapmcat,of tNashinpon,L7.C,grsab to REDCVELOFMLNT AGENCY OF TELL CITY OF SAN RERNARDINO the following described teal property in the Cowity,of Sea Bernar diao,State of California: SCE EXHffirr"A" ATTACHED H9-RETO AND MADEIA FART HEREOF Bcing the same pmpeM acquired by the Orantor purauent to the prcvia m of fie National Honsin9 Act,ea amended(12 US .C- s 170 1)and the Dcpactrucot of Housing and Urban DeveWpumm Act(42 U.S.C.s3531). Said coaveyaace is nude Subject to all lmveaanm.easements reatrktioas,reeetvatiorA,eaadWom end rights appearing of record against the above described property;also Subject to any:mate of facts which an aeeutate taavey of said property would show. In witness whereof,the undersigned 14A V 6 2005-set his/her land and sod as Senior REO speciaiwt,HUD office Santa Ana.CAlifornia,for and on behalf of the said Semelery of Homing and Urbert Devcl authority y virtue of 50 F.R. 42099(10117/85). AND CU O secrets ousin and U a e t tSQll Seaar REA Spoc(eltu tcc, �n fornia Doeum m Date: Mare41,3om , STATE OF CAUFORNIA M3 o NouryPt"tPeMOSUrarprared LM 1 CKSON Senior KW Spmiahat,pasort krawn a me(a pmved to aw on the basis of xm isfectory evideace)to be the poraoa(s)whoa tume(a)Ware ukwnbed to the within instrument and adrnowledaed to tna thht hdlhddtey executed the erne in hi ball heir authorized apechY(m),and that by his wbglr a)on the intmmeut the pe(lod(s)or the prdity upon behalf of which die pasoa(a)acted,executed the immument. WITHSS IN tndof8cialscal, Notary Wk in a fnrCw4my and State *A t,TAK STA7EMINTS A9 WRECTED A" Description:San Bemardino,CA Document-Ye,�r.DoclD 2000.95281 Page:1 of Order:neorna Comment_ Uoi LO/gig 14:JL VILA aV;0 OaV JOLL Cril GUal JCKY1%,1 _ gyvra „aFw c1r 1 SCI JQ Rscord*d in official Record!, COkMV Of aF,f^�., (a.�v. •:H':y" ftri Sornudlflo, Larry Walor, Rt=(Mr `� /� �] ItCC0"[NO RRQUESTED aV �C i�o• 20000414502 COMMONWEA;,Tll LAND TITLE CO ,"WNYNRECORnEDMAli.TO: 08 : 00sm 11/13/00 REDEVU,OPMENT ACENCY OF THE CITY � � OF SAN SE"ARDINO 201 NORTH"E"SWEET,8111TH 9301 Is SAN aERNARDINO,CA 42401 t 7 3 a a 4 3 1 £serow Not A(120349 R air E tN UT 1M / h tear Old Cant �- 5 !s am n M to-o) 111905 TO as eMM FIM �.�.J gYA t;A r f.41.IM1C RS FOR RtiC07tDCR' U9E A.P.N.: OZ85-SO4-03-0-009 Order No.: 6017685-10 Escrow No.: AR29349 GRANT DEED State of California,City of SAN BERNARDINO THE UNDERSIGNED ORANT<)R(S)DECLARES)THAT D D UUMENTARY TRANSFER TAX IS PAID THRU CONCURRENT For value received,Andrew M,Cuomo,Seetetary of Housing and Urban Development,of Waeliington,D,C.grstRS to Z REDEVYLOPMENT AGENCY OF THE CITY OF SAN BERNARDINO < the fallowing described real property m the County of San Bernardino,State of California: 0 E7 SFE EXHIBIT"A" ATTACHED HF.RFTO AND MADE A PART HF,REOF .Z-- Being the same property acquired by the Grantor pursuant m the provisions of the Notional Housing Ad,as amended(]2 U.S.C. C) 111701)and the Dopartment of lieusing and Urban Developateat Act(42 U.S.C,E3531). 1 Said conveyance is made Subject m all covenants,easements,rctaictions,reservations,conditions and rights appearing of record property, Subject to any state of facts which an accurate survey of said property would show. against the about described prop In witness wbcm"the undersigned on OU ,his sN hisRier hand and seal as Se r REO Specialist,FIUD ice Saata Atur,California,for and on behalf of the said Secretary of Housing and Urban peveioptmat,and authority and by vitt+e of 50 F R 42099(1011785). 49ofmous A4• OMO andT)rba Dovel ent Senior M Specialist ,Sant Ana. pfornia Document Date: September a,3000 5TATe OF CALIFORNIA )m iJJl11V O N98 /�/ (� O before mc,the rmdrnigned,Nolmy Public pusona11y9oprattd D ts/arc Senior REO Specialist,personalty known tonic(or proved to nit on the ba5ls ofsatisfadory evidence)to be the arsons)whose tiamo(s) subscribed to the within imirurrient and aeksowtedeed to me that 1 dsndthey eacculed tiw acme is hia/hcrliheir oath!fired eapaciry(ita),and drat by hi~hheir ognaiure(s)on the instrument the tong)or The entity upon behalf of which the perwu(r)acted,"ecuted the inatumeru. W)T' M my official seal. Si arc JOYCE OWON P� is M p0601.Ftte7860 :Z Notary Public in fm C any nwd tote al nA"PUBLIC-CALIFORNIA 3 i Z SAN 06194ARDINO COUNTY Ram liUD-91KH 0 1-351 Now~2• /aAR._TAE STATEMENTS Aa DIRECTED ANO Desaipfion:San BemafdinO,CA Document-Yeer.DodD 2000.414502 Page:i Of j order.naoma Comment: { i i 1 ...,.avi vv iti.JJ rns ova oav aocc CIYl t,VJi- JLKY 1LtS lQJ U7L M No.: 601WAS EXHIBIT "A" Lot 38 of Tr6ct 7106,in the City of SAN BERNARDINO,County of SAM BERNARDINO,State of California,as per map recorded In Book 96,page(s)61 and 6I,of Maps,In the oRlce of the County Recorder of said County. 9 pa"3Of6 Dmrlpdon:San ge(na0jno;CA Document-Year.DoclD 2000.414502 Page:2 of 3 Order.neoma Comment: VOA GO/VV 14.00 Vt%A VVV OUV JVGG a•r.a �a.v. vas..,a.�.. �, _ _ 0� Nrzvaaurc tcQtrrslw av irdeld lrof,u�ryR�er, R000r� PIRST AMU"TITLE CO AND wftCN%#=KOM MM1,Tn' pOC No . 20090241468 R$DBVCLOPM{CtVTAGENCY OF THE CITY 08. 00am 06/22/01 OF SAN BERNARDINO 1 }j tat NORTH"E"STRMT,SUITE It"t � i 11 SAN BERNARDINO,CA 92411 1 2 l � � f 2 f 8 f El tecraw Not AR23419 sc to trF heel ra cn tx ett bra ON Case N: 9/11-175590 MM S7 U 767 tTT-W t4Mr lax W Clove E1tIW A.P.N.: 0285-501-10 OcderNo: 500705 Escrow No.: AR23619 GRANT DEED State of California.City of BAN DERNARAINO THE UNDLRSIGNST)GRAN TORS)DECLARE(S)TIiAT NO DOCUMENTARY TRANSFER TAX 1S 2UE PURCHASER lS & a9Y n NT A5ENCY For value received.Mel Martina;Secretary of Housing and Urban Development,of Washington,D.C.grants 10 REDHVEI.OPMENT ACENCY OF THE CITY OF SAN BERNARDINO the foUawing&sc ibed real property In the County of SAN BERNARDfNO,State of califomia: SEE EXHIBIT"A" ATTACHED HBRETO AND MAIZE A PART,'HEREOF geiog 0.same property 101pisod by the Grantor pur-mu to the ptov iaiom of the Nauoml Housing Alt,as amended(12 U.S.C. s 170 1)and the Depsrtrtreat of Housing and Urban Developmcnt Act(42 U.S.C.s3531). Said conveyance is made Subject to a0 eovcusnts,easements,restrictions,reservations,conditions and rights appearing of rocord against the above described property,also Subject to lwlY state of fleets which an accurate survey of Reid property would show- In witness whereof,the urdersignod on '( �/ has set hi0ler hand and seal as Senior REO Specialist.HUD Wtce Sama Ana,California,for and on behalf of the said Secretary of Housing and Urban Development,under wAtKnity aced by virtue of 50 F.R. 42099(101)7185), F�EDIY RA1l TI1LE R�UAf�11}AMr Mal Martinez NASRf COADED1H19HS1RU11ENT61REQU61,lS Secretary of Housing and Urban Development wt�olaNODUnolta+tr,�Dw+SNOt�In+>� u � rsoan IiFORREG WITTrMOMIDEVORA3 TOM ffW--0P0N1K TITIF)0 MY REALPRWr! Senior RECI Specialist 111ATMY8EDESC ID INEl A HUD Office,Santa Ana,Californla DoeurttentDate: May 19,?M1 9TAT)i OP CALI FORNIA )m •CO - F��bcfam roe,the undersiprcd,Notary Public pes"rdly Senior RP.O Spa isltst persawMy lcnorra to ow(or proved to me ar the basis of sariat otory evidantx)to be the Paraon(a whux namo(s)is/ary subscribed to the within hgtrwneet and ackaowiedged m me that bdshdthey executed ere salon is 6islheritheir audrnriaad capscity(ies).and that by hWherAtbeir signalure(s)oa the ir4n*t ellt the per os(a)or the emery upon behalrof which dls perwa(s)aged,executed flit instrvrmnt. W 4TPJE39 nN hmmd aM .d seal, -- - �9i�tetlae t .I�Y�flt�i� Notary Public fi or and Stale ^ COMM,11107860 2 Z 0 NOTARY P qKK•CAUr7>lmtA Pam 1{110.9180{(11-85) MAN SER♦t AMMO COU111, MY Cerran4alon Etpkm N1101ebar 2.2002 9W TAXXTAWWWTiASUO"TADr404 Descriptlon:San Bemarrfino,Ca Document-Year..Doc10 2001.241466 Page: 1 of 3 Order,naoma Comment: voizaiuo 14:33 me yva aau socZ Order No. 2023028 r EXHIBIT LEGAL DESCRIPTION Lot 53,Tract 6888,County of San Semardirm),State of California,as per map recorded in Book 88, Page 34 and 35 of Maps•in the offlce of the County Recorder of said County. Assessor's Parcel No:0286-501-10 Lcrresi-a.a Poge 2 Description:San eemaNino,CA Document-Year.DoclD 2001.241468 Page:.2 o/3 Order.naoma Comment: VU/f.V/VV 12.YV f'AA Ovu Vov Vv�.�. •-,.a vv.. �r�^�^ RtcoTdinfl PDQY11itw By CHICA.60 TITLE CLIMFM. '< 1-123�1b5 StCogWW I,IOULSTEO eT 1rl+aslo�TIIN Co+oA�Y Ewo"Olvl+i0n Attu vw+et n Mn��O' t THE NDEV"PMEFIT A(EMEt CITY Of SAN BEpNAROINO d K^Km CATES I 201 FiOF{'TH'E-STREET.9N0"OR SAN B"AMNO,CA 8201 , 1 TWJ afAU FOR R"AM 9Wt OMIY , TARE 0."N0,M+/3rm1$ t ,5"0w N0.j(y1160e T10 - 1tEt.1 n W `NEpOOYMt�(TAAT TMANMIIF♦31T N t � V (x1 waw,�n ml lot"kA of property may'o• uba Ian+ak+M B tlfns of s>N• 1 ) comM^d an iol rslw NIN`��01 SN DER OINO.ANO City t I uNnwrQQ_"d arse IN] COtWgfj ATON.1006"01 wd is hsrs31 aC0pplsdg0d, OR A V AIMAD 6ANNGS DANK At11611 CAN SAV MS BMW F.A.OM AMEMCM .,,,Y GRANTisI 10: THE KOLVEU"WT AOHIC'T CITY OF DAN g01NAR0TMO (� IIN INS ProPam to the dry d SAN��-gDM.'r—d rdho.Sftm d(�Iiiomla U` OarlgY N suI twlydlnA.Rsa 01 Ca1Qj W r dysclt3ed d: ai s-Damrd1�10, Lot 17,d a in 61 OW D2 01`A-ps b M4 uttia at V Calm'! � per Map CaII^tv' 1NO.cA t►" ALSO KNOWN As: 2026 tDW"WON AVE7i17F.6l►N AY'. 2W661-11 GAVH1oi eAY f ,,"a#o�s ey.�npn SIL*n of OtoFAA coulmr OF 0. II b.*A ad M•p•a''r.wn«d w,•oGJa w/ T p n wp OaMI�NpM�1 rrrtrt+tt^n �drwv��" �00Mf�� " irpyraw mww0.11 y,V~. w w anr+""a =i Descripuon:San 6emardino,CA aocume nt-1�ear.DoctD 1995.123065 Page:2 of order MOM Comment: i US/Z8/Ut5 14:34 t'AA 8051 88U 3tiZZ V1141 t.;ual OVIKVIS n _ VJvra Raaordad in offlctpkl Fte-rds, COUMV Of {2;cawrdcd;Vat tJhep/request of Last ligrnareino, Larry Naihtr, iteaorditr ` t OW ad`166crow.�t`'r�� ���tar` p®c No. 20000010676 3 : 00pm 01/11/00 Return to REDUVLPMT AGCY CITY SAN BERNARDINO t y 1it1� 4 201 NORTH "E" STREET t' I 1 4 S f 7 1 9 1 SAN BERNARDINO, CA 92401 PG rrf Ail( GaAs ►a CPT tarM Ana M T roar Escrow No.i 2 A1214876-GR OLD CASE #=046-016360 S, 8 NEW CAS£ #: USE ECHO -3 3 31 tf 3-t(I i, ■ea ST 'it sill orON rats TN_c. _- Milli State of Calffornla C IT of SAN aIA-14A tiQ,�° Grant Deed TRANSFER TAX 0.00 - uR of For value received, ANDREW M. CUOMO(+ Sc,retary of Housing and Urban Devclopm Washington,D.C.,grants to :I REOEV1rLOt?MENT AOSNCY OF THE CITY OF:SAN BERNARPINO ✓ I SEE EXHIBIT "A" ATTACHF.O HERETO AND'IMADE A PART HEREOF A.P.N. 0265-524-02, Bein the carne property acgdved by the[)rantar msuant w the provisions of the National Housing Ad,as amended (12 U.St s1701)and the Dcpartmwt pouf Hausin8 and Jrfian Developmca Act(42 U.S.C.53531). Said conveyance is made Subject to all covenants,leasements,restrictions retosvations,conditions and appearing of record against the above described property,also 11i rd to any elate of fads which an acenrate survey of said Property would show, �!Q i � In witness whereof,the uoderaigoed on O E C `��� has set his/her hand and seal as Senior REO Specialist ,HUD Office, b tl�o Ana California for and on behalf of the said Sasetary of Housing and Urban Dcvelopmeat,rendethor ity and by vie Ee oMSO CF.R (10/17165)_ ' itDesSC6: Seem f Holz nd Urban Dcvelopmwt s (Sea))Hy JESSF Hr STFfwSenr REO Specialist ( ttk) HUD Officc, Santa Arta .California state or California ss county of SAN BERM MINO V„ EC 2$ 1999 before me, thie underei ned Notary public, personally appeared nice REO 9 eeialiet�-'. usonattY known to me(or pnrved to me on the basis of sa0sfsctory evideam) to be ncc person(s) whose rsarrre(s) n/ -iabscribed to the within instrument and acknowledged to mi; that heJshe/tfity rarecuted the same in his/het/their ori zod capaeity(ies),and that by his/her/iheir signaturc(s)04 the instrument s),or the eadty upon half o yvirich the person(s)octal atecuted lire instruareut Witness has odofrkmiseat. PNNS1ARtAWRY r ( parrim.ilo I#1220M Signatu� Hatay Pubk•Calkwrio Notary ie in for County and State i Son itarwdn°CMM* { QW03rTM50MJWiI4.= Nnrary Coat 1 Form HUO-91aD6(11485) �FTATEMFNrS AS UIREdtO AVIK DOSCr WOO:San Bemardlno,CA Document-Y`ar.DoclD 2000.10576 PNO: 1 of 3 Order.'naoma Comment. i i VO/LO/VV L%.O% PAA .7V.7 ovu JVLL VOL VUJL OnKYU-n jVOV I � I i I Order No.. 410-333143-41 Reference NO. : AR14876/048-016360 i EXHIBIT A 1 LOT 39 OF TRACT NO. 7106, Iq TEE CITY OF SAN BERNAROINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOR 90 OF NAPS, PAGES 61 AND 62 IN THE OrFICEjOF THE COUNTY RECORDER OF SAID COUNTY. I ASSESSOR PARCEL NO.: 0295-S0 102-0-000 i i i i i1 1 r I 4 I i t i I i • I a I --------------------------- i ----------------------------------------------- i I Preli inary Report - Schedule A Gateway Title Camj&ny - 935 South Mt. Vernon Suite 110 Colton, CA 92324 800-464-3337 t Desaiptlon'San Bemard+nO,CA D=ment:Y A.DoCID 2000.10676 Page:2 of 3 Order:naoma Comment 1 Qo,c,o,vv rY.JY rnA JUD QJU JULG r_11 �.VJL JLi Imo♦iii. .�.,�� i I I I STATE OF CALIFORNIA - SS COUNTY Of SAN BERNARDINO j Q IDB9D kCCEPTANCB i i I This is to ccrtify that the i tereot in real property conveyed by the within i instrument dated 12/13 99 from Andrew M- Cuomo, Secretary of Housia9 and Urban Development, of Washington, D.C., owner, to the Redevelopment Agency of the City of San Berr 4rdino, County of San Bernardino, State of California, a Municipal Corporakion, is hereby accepted by order of the community Development commission of the pity of San Bernardino, pursuant to authority so i i ordered on December 4, 1995 ani the grantee conaenrs to retordatior_ thereof by its duly authorized officer. Said property is also known as: i 2029 WKINLBY AVEWN SAW 13ZRAV INO CA 92404. !i 1 3 REDZVgLORVWAGZ HCY 0 THE CITY "SAN BERN INo Dated: 2, i DY: i y Z V tJSDEL,'RXECUTIVS RRCCOR i jI 1 I i i i i Desedlptton:San Bemardino,CA Document-Year dD 2000.10676 Page:3 of 3 Order,naoma Comment: i s t LAND COMPARABLEIS PICTURES u } Land Sale One- SEC victoria & 5' St., Highland Land Sale Two - SEC Highland &Medical Ctr. Dr., SB Land Sale Three- 6962 Boulder Ave., Highland i I I I i Land Sale Four- SWC Mil &J Street, SB i i I x• t a Q Land Sale Five-NWC Macy& Highland, SB Land Sale Sig-NWC 16th &MedieAl Center, SB i a SMALLER PARCELS PHOTOGRAPHS 1'�'x• _° of .'+ �. L �`}' tJ�'�`.v'y�. �! .^'�Z±��'f f+jt�' _L ; ti :.J s i�:�� ��'`f�'�{43Nr�� > !• 7r c#j+ �"'� .f°�f .. w� t y zu r we* f• � _ - h woo wmvr- F. f s i I AMA F i� l Land Sale Three-463 N. Mt.Vernon, Colton 1 rk T #. Land Sale Four-West Side of Mt.Vernon, Colton � fON j x T 1 1 � � � ► � I i i i l l � i i COMPARABLE LAND DATA (LARGER PARCELS) Plat Map One Ph. Cunningham Subdivision, M.B. 2/22 city of Highland 1192 -JS Cily of San Bernardino to. Rafe Ara. 1184 18042 :: A= _ r.w �-,.f fl „- - —--—--—- —.n..--_--------------------iHfiff---- h Site 32 551 i°"4� '' Si I Pe^` _I I p pP� Q j 3333 I �\`' �- I 0131 Assessor's Map f—I!.0 a.4244,f.Y.411;2 Nn. S.W.2/4, Sec 5 Boat 1191 Page 55 .1YCY5i nf� TAS., R.3W. San Bernardino County i Plat Map Two a y" POE Tod Na 2852 M9.40/29,30 San 8�rardka City 143-01 i 0% o To+c ,711 a.eo 7001,)116 1 Site I 1 I I I I 1 b�wti - I i 2 1 3 4 1 3 1 6 1 I e- 9 f X) 1 t1 ! 12 13 I i9 1 IS - m I 1 I f I I ti l 1 I P9 !q tt.l0�� `27 31 l2 D ]4 33 >B I 3r 39 b 2 I Q `.R, ®�• ® i 0:20 j O @ O. I STRE[7-1—�— : O AsseM/S Map 1wn-ACMNari elk a for Book 143 Pop.01 tee.1905 ftx De St—m ck w Saa BwWrdhw County Plat Map Three N.1/2, N.W.1/4,S.E.1/4 Sec. 33, T.1N.R.,3W. S.B.M. City or Highland 1200-43 Tax Rate Area 18044 16127 ' O Z •.. 1 O � - O t2 � 111 � � ^ ,ti « « Site V 01 0 Q Q 21 4!t nu. Assessor's Mop ft hue,1q 6. i1515.1.1.175111-21 pin. S.E.I/I, Se<. 33 Book 1200 page 43 ACT n13 111x1 N.5111,1.4. Hfly T.iN., R.3WW. San 0ernar dino county Plot Mop Four Son mate a ulr wl 05 Am J 1 !8 I L Site TTD01 __1 L ° S7REET_'J—i- y i V O 9 @) ® ee e ® 2 Q ® u a ® Oes 0 Z4 u ® ¢It Offi �€� pea re® 1 G p ® y``�-4--ESPMWZA �'r �p —i wcvaso — smwr—v—]� Nala- sr rs BIM^9 Wt BOO*w ft r:05 I 9/zWbc (PaceWfa-Ialsa,,,.Ma 2i.ae , 12 r--, r--� I I N""t�°"snw� urcM.. 7 &ff4rdmo canty .cs nw - 01 it Plat Map Five Por Trod No.3948 San Bernardino city 143-33 D_ MBBD/51-53 7010 to Arya 1 O sM us � ® w Ira Q 117 ® ® 35 y n �� ..••ate.® •,ri�9�,� p •� �•p® •u•��9�4 Q ei 4µ "—i 404A1S1 SAN CAR(q Uf j•O ®t O _STREET-+, o yp.p ® n9 xx xa x 111 11 113 114 rzs O °� ��� 1{'� 101 !06 !OS 10{ I r1l RL 129 130 1� °IWiI . r09 1 p2 WI 13r -4•p. J° —�OUffYt- 00 L ® < • 0 sb vl O 11 I O Y J © 4 �57REET 1 9$y iT J� � 80 1 el 62 83 B1 O ® ® 131 I \,\ .vc. xoamax.aa[ Site 90 I 9l •V 93 H --.-N(YAANO—•-• a i= Sex eraxxaorxo 1 i ' 269 Aaaes3orb Ff� ,__watCnreemre k8 1ar Soak 143 Pugs 33 IlWmbeva !n Ws San Bemodlro CovNy »n[955 1°uw u 3 n 1 1 I i Plat Map Six A,�, � Pon.Rancho Son Bernardino san Beraorano city 143-07 v" Taa Pb* Area M 8.7/2 3 Y3y�,t'u 7001,7116 Pon lot I �� W O71 Site {- j�ajl I O _ 15 u ® pa I 'o i - --� aaR ur O Por.MI.1Mran Oranpe Grave a F l Ca taaac Me 12/16 Asseswr�,Nap ✓x , ktrh-Al—ori&k.a tot Back 143 Fhye 07 kkuntwn SMm m Gvdaa. San Barnor0m County anra,re Par.Mt.Vernon Orange Grove 8 Fruit Co. Lands saa n.rno.+dao axr zes- 15 M.B.12116 ]7a°"OIQ]pIO T117 •.., X43 _ � 3 sJ a I� I 1A vN. i 1 1 / ® o ®R--- Site A 143 _ 1 a....ara Mev W- .e. .�+aaa n%.1,4e1,♦.,..rE!/3T,b gook%9 d- la ••_w..•.+�ee-s.P.......,..+e san aenordkao couair i SMALLER PARCELS PLATS w Plat Map One a�""'., Par. Rancho San Bernardino S-Bemmdllro city I3e-18 �4 . ME 712 Tax Rare Arco N12,7167 p " J ,1 JI I i t 1 1 L IL t I L 1 l 1 --L Sfh SfREEI—� . Y Site •------ 11 E 19 �O ICG CIO 0 O O O H I I n n less w w l �S IIn ro s e T s I I lei 19 m �III EE 93 e (9 N E5 ft R? O KINGNAN Y-'28--______ '29 \6 i 36 STREET- Y9 7�0 39 3e 3l i ,M 35 34 Js JY 31 W 1K1ry'' 41 i OY I3 I,44 1 1 � 11 11 ll1 1 � n I 'STREET— - 1 1I1I1II� O 21 As"ssort Map �✓/ Hc° Note-Assessors ate Lot Book 138 Page 18 i41 17� •pll 1949 Sat Fe Tract Me.15/49 N—b— aWlfy 41 �- Plat Map Two Por. Rancho San Bernardino Soneemxdlno city 145-21 T—RWa dr-7012,71ro �al� —_I—�,—Wth. to N 3l i J9 b 1! .IY' 4] N 1] 00 O) 10 cn �S 1Q4 !] I la I) 19 !9 YO PI Pa ® G 2 1 O 21 Site 0 FEE ` .ice .e .' !—�--WABASH .•-.......�r.ri STREET--�—I 1 ]® W e N l f 6 (81 K 19 0 ;--}----- — -- i to I 0 - `'"-l3lh • '• �_--__@___ STREET_i--� ^ aRMa a>o Rewae M,p o/Ylpin/ia Art Sub.NB.17/61 I �� Assessor's Map �vliin�e Par.dlnsins Mace Tiaa1 N.B.17165 24 Abre_AssessorY BNB.a W Back 145 Pope 21 E. Mry191a Ramaq i e u8.2018 AM�ab—Sh—JCkd" Son Be—dilro C—ty i I i I Plat Map Three Por. Town of Cotton �,f0nn City t62-20 MH 9/37 2000,2076 Site Mr.VEFNpN � l?) =-� _a =- -1- 4 a — _ 0 ------ ` a • a 9 e y Q _ , - n g - - ---E --= ---®�-- i -i---= - --k-d . O —(F-13M —�-- � —� �-- s7AEET-Q7--• � 1 1 i I snore.a O Assessor's Map Note-assessor's Slk a Lot Book 162 Pogo 20 Bps.10" Nomoer:st—in Gimks. Son Samardino County s i a t 1 I "1 J 5 Plat Map Four Colton City 160-l8 Por.Santa Fe Park Tr.Na 2239 ras race area o M.B. 32/4 2076.2!08 J L Site Zj ®'® F x _ N •x n e x a `lII ° 1 3 Z 3 • x x ° . ° x a °® ® p ® o ® O t (D O e O O O �O O O O Ole O� O O ­--VIRGINIA DRIVE—.. oa ® ®iS 14 m ® m ® o ® ® o © ® © e� � 8 0 ' 0 8 8 8 & � 8 � 8 • 8 °` x 8 � °. 8 $ x 'o Yt m ® G✓ ® ® © O O l® ® O I C O �. J O O O O O O G O e- y# —RVERSIDE A S—, ,® ® � It o ® o .0 o : Aasassar'a Map _ Book 160 Poyy�IB .A°^1°^� San B 6,0.Alno CoVMy ,We s..r..N•1919 1 t 1 l 3 i 3 ; a Plat Map Five Por.Rancho San Bernardino Saa Benmdm dry 150-22 M © T7160.1012 Rate R 7/2 ` - � OJ WAY 1 P—SIERRA — O I O OC O © I C , O C I © 0. O I ® © OY ® O ® ® © ® I a C 11 e o i o I I w t w STREET 0 O I rl L SIERRA W4Y—:--- I Site �j So—V.I.Tnzt k4H '� Randip KOI.d Awlu T f No.1946 M8.VV32 ^ _ = L O GENEVIEVE STREET—=—M le 6ufasar9 Map Non-A—'S 81k a Lt I Book 150 WQe 22 own .6'�•ia' Number Sh Circ . r Sal Bamadiao Goaaty i l a QUALIFICATIONS 'a i APPRAISER QUALIFICATIONS PROFESSIONAL EXPERIENCE 1995-Present. Villegas Appraisal Company Upland,CA As principal of Villegas Appraisal Company have appraised and testified as an expert witness in the valuation of commercial and industrial real estate. Have provided clients with self contained narrative reports, complete summary reports, limited summary reports, form reports, and performed appraisal reviews for clients. Have also appraised office buildings, shopping centers, single and multi-tenant industrial buildings, supermarkets, AM PM mini- mart stations,mobile home parks,single family subdivisions,ground lease valuations,limited liability interest valuations, eminent domain and diminution valuations. 1992- 1995 Topa Savings Bank Los Angeles, CA Vice President/Chief Appraiser As the Chief Appraiser for Topa Savings Bank,was responsible for the review of commercial and residential appraisal reports. Provided the bank with consultant services as well as the, valuation of commercial and residential properties. 1991 - 1992 Johnson Appraisal Company Diamond Bar, CA Senior Appraiser As a senior appraiser with Johnson Appraisal Company, was responsible for the appraisal of retail shopping centers,office buildings,restaurants,motels and hotels,apartment complexes, mixed use commercial projects and mini storage facilities. 1987- 1990 Interstate Appraisal Corporation Riverside,CA Assistant Vice President As an assistant vice president with Interstate Appraisal Corporation, was responsible fo;the appraisal of retail shopping centers, office buildings, restaurants, motels, apartment complexes, cold storage facilities, mixed use commercial projects, and residential subdivisions. EDUCATION 1972-1974 Calif.State Univ.,Fullerton Fullerton,CA Bachelor of Arts/History 1970-1972 Rancho Santiago College Santa Ana,CA Associate of Art PROFESSIONAL EDUCATION Appraisal Institute Seminars: Appraising Congregate and Residential Care Facilities Institute for Planning,Zoning and Eminent Domain Southern California Hotel/Motel Workshop Condemnation Appraising Basic and Advanced Principles The Appraiser as an Expert Witness Southern California Market Trends Understanding Limited Appraisals 9 I Appraisal Review-Income Properties Appraisal Institute: j R.E. Appraisal Principles ' Basic Valuation Procedures Capitalization Theory and Techniques- Parts A and B i Case Studies in R.E. Valuation Report Writing and Valuation Analysis Standards of Professional Practice- Parts A and B SOFTWARE PROFICIENCY Argos,Lotus,WordPerfect,Word,Excel COURT TESTIMONY Superior Court,Los Angeles County,Expert witness;Arbitration,Orange County,Expert witness;R.E.Tax Appeal,Los Angeles County/testified in a deposition in Orange County, testified in two depositions in Los Angeles County and testified as an expert witness in a trial in Los Angeles County. ACCREDITATIONS MAI,Appraisal Institute,Chicago,Illinois,Member No.9196. All experience and education requirements icompleted. Certified General Appraiser,State of California,Certificate No.AG004648. All experience and education a requirements completed. Licensed Real Estate Broker,State of California,License No.00380118. All experience and education requirements completed. List of Publications:None a LEWIS BRISBOIS BISGAARD & SMITH LLP ATTORNEYS AT LAW 650 EAST HOSPITALITY LANE, SUITE 600, SAN BERNARDINO, CA 92408 PHONE: 909.387. 1130 I FAX: 909.387.1138 I WEBSITE: www.lbbslaw.com DAVID F.GONDEK March 21, 2007 FILE No. DIRECT DIAL:909.381.7173 25424-39 E-MAIL:gondek @lbbslaw.com Honorable Alphonso Jackson Secretary United States Department of Housing and Urban Development 451 Seventh Street, S.W. Room 7180 Washington, D.C. 20001 Honorable Rachel Clark City Clerk City of San Bernardino 300 North"D" Street, 2nd Floor San Bernardino, California 92418 Re: City of San Bernardino, California, Contract for Loan Guarantee Assistance Under Section 108 of the Housing and Community Development Act of 1974, as amended, 42 U.S.C. Section 5308, by and between Secretary of Housing and Urban Development and City of El Monte, California, dated as of September 1, 2006 (the"Contract") $7.5M HUD Section 108 Loan Contract Number B-03-MC-06-0539 OPINION OF SPECIAL LEGAL COUNSEL TO THE CITY OF SAN BERNARDINO REGARDING INITIAL DISBURSEMENT OF CITY SECTION 108 LOAN PROCEEDS TO THE OBLIGOR, REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO Ladies and Gentlemen: This legal opinion is delivered to the Secretary of the United States Department of Housing and Urban Development ("HUD") and to the City of San Bernardino, California (the "City")pursuant to Paragraph 15(e)(vi) of the Contract. 4814-0671-3345.1 LOS ANGELES SANFRANCISCO SANDMGO ORANGECOUNfY Iru MDAPME SACaAMWTO NEWYORK LaSVEGAS PHOEMX TUCSON 213150.1800 4153622580 619233.1006 714545.9200 909387.1130 9165645400 2122321300 702.893.3383 602 385.1040 5202022565 LEWIS BRISBOIS BISGAARD&SMITH LLP Honorable Alphonso Jackson Honorable Rachel Clark March 21, 2007 Page 2 The undersigned has acted as special legal counsel to the City of San Bernardino, California (the "City") in connection with the transaction contemplated in the Contract by and between the City and the Redevelopment Agency of the City of San Bernardino (the "Subrecipient"). We are of the opinion that: (A) All filings required by the Secretary of State of California for the formation and operation of the Subrecipient are current with the State of California; (B) the Subrecipient Note has been duly executed and delivered by the Chair of the governing board of the Redevelopment Agency of the City of San Bernardino as authorized by the Subrecipient to take such action and is a valid and binding obligation of the Subrecipient, enforceable in accordance with its terms, except as limited by bankruptcy and similar laws affecting creditors generally; and (C) the other Subrecipient security instruments specified in (ii), (iii) and (iv) of Paragraph 15(e) of the Contract are valid and legally binding obligations of the Subrecipient, enforceable in accordance with their respective terms. I am further of the opinion that the collateral assignment by the City to the Secretary of the Agency Note and the Subrecipient security instruments specified in (ii) through (v) of Paragraph 15(e) of the Contract under the City's "Collateral Assignment of Documents Pursuant to Contract for Loan Guarantee Assistance Under Section 108 of the Housing and Community Development Act of 1974, As Amended 42 U.S.C. Section 5308", dated as of September 1, 2006, is evidenced by the following instruments, each executed by the City in favor of HUD: (i) Allonge — City Endorsement in favor of HUD of the $7.5M Subrecipient Section 108 Loan Promissory Note of the Redevelopment Agency of the City of San Bernardino, dated September 14, 2007,payable to the City; (ii) City Assignment to HUD of $7.5M City Deed of Trust (Subrecipient/Redevelopment Agency of the City of San Bernardino as Trustor). Collectively, each of the two (2) documents identified above in subparagraph (i) and (ii) are referred to as the"City Assignment to HUD of the Subrecipient Documents." The assignment by the City in favor of HUD (including the endorsement of the $7.5M Agency Promissory Note payable to the City as evidenced by the Allonge, subparagraph (i) above) and the City Assignment to HUD of the Subrecipient Documents has been duly executed on behalf of the City as evidenced by the original signatures of the City officials who are each personally known to the undersigned and who are authorized by the City to executed each such 4814-0671-3345.1 LEWIS BRISBOIS BISGAARD&SMITH LLP Honorable Alphonso Jackson Honorable Rachel Clark March 21, 2007 Page 3 document on behalf of the City. The assignment by the City in favor of HUD of each of the Subrecipient Documents under the provisions of the City Assignment to HUD of the Subrecipient Documents is a valid and legally binding obligation of the City and is enforceable by HUD in accordance with the City Assignment to HUD of the Subrecipient Documents. ery truly yours, 4 . David F. Gondek of LEWIS BRISBOIS BISGAARD & SMITH LLP 4814-0671-3345.1 THIS COLLATERAL ASSIGNMENT OF PROMISSORY NOTE AND DEED OF TRUST PURSUANT TO CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. §5308 is dated as of July 1, 2006, and is executed on behalf of the City by its authorized officer whose signature appear below. Dated �Qip�1( 2.,1 , 2006 CITY OF SAN BERNARDINO B : May r APPROVED AS TO FORM: ,-r��c� orr15 City Specla C nsel (Notary Acknowledgement Attached) 48504647-0400.2 6 11/6/06 jmm I CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ss. County of San Bernardino On November 21, 2006, before me, Wasana Chantha, Notary Public, personally appeared Patrick J. Morris. R1 personally known to me ❑ proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to WASANA CHANTHA me that he executed the same in his Commission# 1644902 Notary Public -California authorized capacity, and that by his signature San Bernardino County on the instrument the person, or the entity My Comm.Expi<es Oct 18,201 upon behalf of which the person acted, executed the inst ent. WITNESS my h " a d official seal. Place Notary Seal Above si ature of Notary Public Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Collateral Assignment of Promissory Note and Deed of Trust (HUD Section 108 Loan Contract No. B-03-MC-06-0539) Document Date: July 1, 2006 Number of Pages: 6 Signer(s) Other Than Names Above: None Capacity(ies) Claimed by Signer RIGHT THUMBPRINT Signer's Name: Patrick J. Morris OF ❑ Individual Top of thumb here ❑ Corporation Officer-Title(s): ❑ Partner- ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator Q Other: Mayor of the City of San Bernardino, California Signer is Representing: City of San Bernardino, California RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Lewis Brisbois Bisgaard & Smith LLP 650 East Hospitality Lane Suite 600 San Bernardino, California 92408 Attn: David F. Gondek DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND SECURITY AGREEMENT AND REQUEST FOR NOTICES (Arden-Guthrie Neighborhood Redevelopment Project) (HUD Section 108 Loan Agreement No. B-03-MC-06-0539) THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,FIXTURE FILING AND SECURITY AGREEMENT AND REQUEST FOR NOTICES ("Agency Deed of Trust") is made as of July 1, 2006,by the Redevelopment Agency of the City of San Bernardino,a public body corporate and politic(hereinafter referred to as"Trustor'),whose address is 201 North "E"Street,Suite 301,San Bernardino,California 92401,to LandAmerica NCS Insurance Company (hereinafter referred to as"Trustee"), whose address is 888 West 6th Street,40i Floor, Los Angeles, California 90017, for the benefit of the City of San Bernardino, a municipal corporation, its successors and assigns(herein called"Beneficiary"),whose address is 201 North"E"Street, Suite 301, San Bernardino, California 92401. WITNESSETH ° That Trustor,for valuable consideration,grants,bargains,sells,conveys and warrants to Trustee, in trust with power of sale, that property in the City of San Bernardino, County of San Bernardino,State of California,more particularly described in Exhibit"A"attached hereto and made a part hereof(the "Land"), together with the following described estate, property and rights of Trustor in the Land and/or in any improvements now or hereafter constructed on the Land(herein severally and collectively referred to as the"Mortgaged Property")as security for the performance of each covenant and agreement of Trustor contained herein and in all other instruments executed in connection herewith, and for the payment of all sums of money secured hereby. A. All the fee and leasehold estates and rights of Trustor now held and hereafter acquired in and to the Mortgaged Property and in and to land lying in streets and roads adjoining the Land, and all access rights and easements appertaining thereto; and B. All buildings,structures,improvements,furnishings,fixtures and equipment, real,personal and mixed,now or hereafter attached to,or used or adapted for use in the operation of the Mortgaged Property and any and all replacements and additions thereto, including without 48214420-8640.2 (� T 6 Cc C,c_ .t0''t'e*R 01 11/6/06 jmm ��;` , � '- �1`� 1 ASS 1G.oal C-oT of colk� limitation, all heating apparatus and equipment whatsoever, all boilers, engines,motors, dynamos, generating equipment, pumps, piping and plumbing fixtures, cooling, ventilating, sprinkling, fire- extinguishing apparatus,gas and electric fixtures,elevators,escalators,partitions,and shrubbery and plants; and including also all interest of any owner of the Mortgaged Property in any of such items hereafter at any time acquired under conditional sales contract, chattel mortgage or other title- retaining or security instrument, all of which property mentioned in this paragraph shall be deemed part of the realty and not severable wholly or in part without material injury to the freehold; and C. All and singular the lands, tenements, privileges, water, water rights, water stock,mineral,oil and gas rights,hereditaments and appurtenances thereto belonging or in anywise appertaining,and the reversion and reversions,remainder and remainders,rents,royalties,issues and profits thereof, and all the estate,rights,title,claim,interest and demand whatsoever of the Trustor either in law or equity, of, in and to the Land, whether now held or hereafter acquired; D. All of the right,title and interest of Trustor now or hereafter existing in and to the following now or hereafter located in, upon, within or about or used in connection with the construction, use, operation or occupancy of the Land and/or the improvements thereon and any business or activity conducted thereon or therein,together with all accessories,additions,accessions, renewals,replacements and substitutions thereto or therefor and the proceeds and products thereof: (i)all materials,supplies,furniture,furnishings,appliances,office supplies,equipment,construction materials,vehicles,machinery,computer hardware and software,maintenance equipment,window washing equipment, repair equipment and other equipment and tools, telephone and other communications equipment;(ii)all books,ledgers,records,accounting records,files,tax records and returns,policy manuals,papers,correspondence,and electronically recorded data;(iii)all"General Intangibles" (as such term is defined in the California Uniform Commercial Code), instruments, money,"Accounts,"(as such term is defined in the California Uniform Commercial Code),accounts receivable,notes, certificates of deposit, chattel paper, letters of credit, choses in action, good will, rights to payment of money,rents,rental fees,equipment fees and other amounts payable by persons who utilize the Mortgaged Property or any of the improvements or paid by persons in order to obtain the right to use the Mortgaged Property and any of the improvements, whether or not so used; trademarks, service marks, trade dress, tradenames, licenses, sales contracts, deposits, plans and specifications, drawings, working drawings, studies, maps, surveys; soils, environmental, engineering or other reports, architectural and engineering contracts, construction contracts, construction management contracts, surety bonds, feasibility and market studies,management and operating agreements,service agreements and contracts,landscape maintenance agreements,security service and other services agreements and vendors agreements; (iv) all compensation, awards and other payments or relief(and claims therefor)made for a taking by eminent domain,or by any event in lieu thereof(including,without limitation,property and rights and interests in property received in lieu of any such taking), of all or any part of the Mortgaged Property(including without limitation, awards for severance damages),together with interest thereon, and any and all proceeds(or claims for proceeds)of casualty,liability or other insurance pertaining to the Mortgaged Property,together with interest thereon;(v)any and all claims or demands against any person with respect to damage or diminution in value to the Mortgaged Property or damage or diminution in value to any business or other activity conducted on the Mortgaged Property, (vi) any and all security deposits, deposits of security or advance payments made to others with respect to: (1)insurance policies relating to the Mortgaged Property; (2) taxes or assessments of any kind or nature affecting the Mortgaged 4821-4420-8640.2 1 t l g t 11/6/06 jmm 2�� �° Property;(3)utility services for the Mortgaged Property and/or the improvements;(4)maintenance, repair or similar services for the Mortgaged Property or any other services or goods to be used in any business or other activity conducted on the Mortgaged Property; (vii) any and all authorizations, consents, licenses, permits and approvals of and from all persons required from time to time in connection with the construction, use, occupancy or operation of the Mortgaged Property, the improvements, or any business or activity conducted thereon or therein or in connection with the operation, occupancy or use thereof, (viii) all warranties, guaranties, utility or street improvement bonds,utility contracts,telephone exchange numbers,yellow page or other directory advertising and the like;(ix)all goods,contract rights,and inventory;(x)all leases and use agreements of machinery, equipment and other personal property; (xi)all insurance policies covering all or any portion of the Mortgaged Property;(xii)all reserves(including those provided for in Section 17 hereof)and funds held in escrow by Beneficiary or other person for Beneficiary's benefit and any funds deposited with Beneficiary, all accounts into which such funds are deposited and all accounts, contract rights and general intangibles or other rights relating thereto;(xiii)all names by which the Mortgaged Property is now or hereafter known;(xiv)all interests in the security deposits of tenants;(xv)all management agreements, blueprints, plans, maps, documents, books and records relating to the Mortgaged Property; (xvi) the proceeds from sale,assignment, conveyance or transfer of all or, any portion of the Mortgaged Property or any interest therein,or from the sale of any goods,inventory or services from,upon or within the Mortgaged Property and/or the improvements(but nothing contained herein shall be deemed a consent by Beneficiary to such sale,assignment,conveyance or transfer,except as expressly provided in this Agency Deed of Trust); (xvii) any property described in paragraph B, above,which arc not fixtures under California law;(xviii)all other property(other than fixtures)of any kind or character as defined in or subject to the provisions of the California Uniform Commercial Code, Secured Transactions, as amended and; (xix) all proceeds of the conversions, voluntarily or involuntarily, of any of the foregoing into cash or liquidated claims. TO HAVE AND TO HOLD the Mortgaged Property,together with all and singular the lands, tenements, privileges, water, water rights, water stock, mineral, oil and gas rights, hereditaments and appurtenances thereto belonging or in any wise appertaining, and the reversion and reversions,remainder and remainders,rents,royalties,issues and profits thereof, and all of the estate,right,title,claims and demands whatsoever of the Trustor,either in law or in equity,of,in and to the Mortgaged Property, forever as security for the faithful performance of the Promissory Note (as defined below)secured hereby and as security for the faithful performance of each and all of the covenants, agreements, terms and conditions of this Agency Deed of Trust, and in all other instruments executed in connection herewith, SUBJECT, HOWEVER, to the right, power and authority given to and conferred upon Beneficiary to collect and apply such rents,issues and profits. This Agency Deed of Trust also constitutes a security agreement in all of the property above described or referenced in which such interest may be created under the California Uniform Commercial Code and for such purposes Trustor hereby grants to Beneficiary a security interest therein. 1. Note Secured. This Agency Deed of Trust is made for the purpose of securing the performance of each covenant,agreement and obligation of Trustor herein and of each covenant, agreement and obligation of Trustor described as the 2006 Redevelopment Cooperation Loan Agreement(Arden-Guthrie Neighborhood Redevelopment Project),dated as of July 1,2006, by and between the Trustor and the Beneficiary, as the "City" (the "City Section 108 Loan 48214420-8640.2 3 11/6/06 jmm J Agreement"); the Promissory Note Payable to a Public Agency ($7,500,000) (the "Promissory Note"), and all interest thereon and other amounts evidenced thereby; all future advances made to Trustor by Beneficiary, its successors and assigns, under the Promissory Note or pursuant to the terms of this Agency Deed of Trust or the City Section 108 Loan Agreement; the obligations evidenced by all renewals,extensions,modifications,substitutions and conditions of the Promissory Note; and any and all other obligations of Trustor to Beneficiary, its successors and assigns, now existing and hereafter arising and which are at any time specifically declared by Beneficiary in writing to be secured by this Agency Deed of Trust or which specifically indicate in the instruments which evidence the same that they are intended to be so secured. Unless otherwise indicated in this Agency Deed of Trust,the meaning of defined terms and phrases as denoted by an initial capitalized letter in a word or phrase, shall be the same as set forth in the City Section 108 Loan Agreement. 2. Trustor's Covenant of Payment. Trustor shall perform all of its obligations under the Promissory Note, the City Section 108 Loan Agreement and under this Agency Deed of Trust when due,without excuse or delay of any kind whatsoever,except as expressly provided herein or therein,and Trustor shall pay the Promissory Note,and all other debts and monies secured by this Agency Deed of Trust when due, without set off or deduction of any kind. 3. Trustor's Warranties of Title. Trustor warrants to Beneficiary that it is the sole holder of fee simple absolute title to all of the Mortgaged Property and that except as set forth in this Agency Deed of Trust,the Promissory Note and the City Section 108 Loan Agreement said title is marketable and free from any lien or encumbrance,unless approved in writing by Beneficiary,and the liens imposed by law for nondelinquent real property taxes and assessments. Trustor further covenants and agrees as follows:that except as required under the City Section 108 Loan Agreement, Trustor will keep the Mortgaged Property free from all liens of any kind, including, without limitation, statutory and governmental;that no lien superior or junior to this Agency Deed of Trust will be created or suffered to be created by Trustor during the life of this Agency Deed of Trust without Beneficiary's prior written consent;that Trustor has good right to make this Agency Deed of Trust and the person or persons executing this Agency Deed of Trust on behalf of Trustor has or have the authority to do so;and that Trustor will forever warrant and defend Beneficiary's interest in the Mortgaged Property against every person, whomsoever, claiming any right or interest in the Mortgaged Property or any part thereof. 4. Trustor's RigJit to Contest Statutory Liens. As used herein the words "mechanic's lien"and"materialmen's lien"means and includes a stop notice as this term is defined in California Civil Code Section 3179, et seq. The filing of a mechanic's or materialmen's lien against the Mortgaged Property or a stop notice against the Trustor or the Beneficiary and/or funds held by or owed to the Trustor for the improvement of the Mortgaged Property shall not constitute a default hereunder,if and so long as(a)no defaults exist under the Promissory Note,the City Section 108 Loan Agreement or this Agency Deed of Trust; (b)within fifteen(15)days after filing of such lien,Trustor obtains and maintains in effect a bond issued by a California admitted surety acceptable to Beneficiary in an amount not less than the entire sum alleged to be owed to the lien claimant or such other amount as is required to obtain a court order to release said lien of record; (c) Trustor provides to Beneficiary and pays for an endorsement to Beneficiary's title insurance policy,in a form satisfactory to Beneficiary, which insures the priority of this Agency Deed of Trust over the lien being contested; (d) Trustor immediately commences its contest of such lien and continuously 48214420-8640.2 4 Q� _ G XAi(61-T "V-N 11/6/06 jmm J� pursues the same in good faith and with due diligence;(e)such bond or contest stays the foreclosure of the lien; and(f)Trustor pays in full any judgment rendered for the lien claimant within ten(10) days following entry of any such judgment. 5. Maintenance and Inspection of Improvements. Trustor shall maintain the buildings and other improvements now or hereafter located on the Mortgaged Property in a first class condition and state of repair,reasonable wear and tear excepted. Trustor shall not commit or suffer any waste; shall promptly comply with all requirements of federal, state and municipal authorities and all other laws, ordinances, regulations, covenants, conditions and restrictions respecting the Mortgaged Property or the use thereof, and shall pay all fees or charges of any kind in connection therewith. 6. Construction and Repairs. Trustor shall complete or restore promptly and in a good and workmanlike manner any building or improvement that may be constructed,damaged or destroyed on the Mortgaged Property, and pay when due all costs incurred therefor. 7. Alterations. No building or other improvement on the Mortgaged Property shall be structurally altered,removed or demolished without the Beneficiary's prior written consent, nor shall any fixture or chattel covered by this Agency Deed of Trust and adapted to the proper use and enjoyment of the Mortgaged Property be removed at any time without Beneficiary's prior written consent,unless actually replaced by an article of equal suitability and value,owned by the Trustor, free and clear of any lien or security interest, except such as may be approved in writing by the Beneficiary. 8. Compliance With Laws. Trustor shall comply with all statutes, laws, ordinances and regulations which now or hereafter pertain to the construction,repair,condition,use and occupancy of the Mortgaged Property, including, without limitation, all environmental, subdivision,zoning,building code,fire,occupational,health,safety,occupancy and other similar or dissimilar statutes, and shall not permit any tenant or other occupant to violate the same. If any statute or order of any court of competent jurisdiction requires any correction, alteration or retrofitting of any improvements on or related to the Mortgaged Property, Trustor shall promptly undertake the required repairs and restoration and complete the same with due diligence at its sole cost and expense. 9. Environmental Covenants. Representations. Warranties and IndemnitX. (a) Trustor will not use any Hazardous Materials(as defined herein below)in the construction of any improvements on or about the Mortgaged Property. (b) Trustor shall,at its sole expense,comply and cause each tenant leasing space within the Mortgaged Property to comply with all applicable laws,regulations,codes and ordinances relating to any Hazardous Materials or to any Environmental Activities(as defined herein below), including, without limitation, obtaining, filing, serving or posting all applicable notices, permits, licenses and similar authorizations. Trustor shall establish and maintain a management and operating policy for the Mortgaged Property to assure and monitor continued compliance by Trustor (A 48214420-8640.2 5 11/6/06 jmm and each tenant leasing space in the Mortgaged Property with all such laws,regulations,codes and ordinances. (c) Trustor agrees to submit from time to time, if requested by Beneficiary, a report,satisfactory to Beneficiary,certifying that the Mortgaged Property is not now being used nor has it ever been used for any Environmental Activities. Beneficiary reserves the right, in its reasonable discretion, to retain, at Trustor's expense, an independent professional consultant to review any report prepared by Trustor and/or to conduct its own investigation of the Mortgaged Property for Hazardous Materials. Trustor hereby grants to Beneficiary, its agents, employees, consultants and contractors the right to enter upon the Mortgaged Property to perform such tests as are reasonably necessary to conduct such a review and/or investigation. (d) Upon the discovery by Trustor of any event or situation which would render any of the representations or warranties contained in subparagraph 9(g) hereof inaccurate in any respect, if made at the time of such discovery, Trustor shall promptly notify Beneficiary of such event or situation and, within thirty (30) days after such discovery, submit to Beneficiary a preliminary written environmental plan setting forth a general description of such event or situation and the action that Trustor proposes to take with respect thereto. Within sixty(60)days after such discovery,Trustor shall submit to Beneficiary a final written environmental report, setting forth a detailed description of such event or situation and the action that Trustor proposes to take with respect thereto,including,without limitation,any proposed corrective work,the estimated cost and time of completion, the name of the contractor and a copy of the construction contract, if any, and such additional data, instruments, documents, agreements or other materials or information as Beneficiary may reasonably request. The plan shall be subject to Beneficiary's written approval, which approval may be granted or withheld in Beneficiary's sole but reasonable discretion. Beneficiary shall notify Trustor in writing of its approval or disapproval of the final plan within fifteen (15) days after receipt thereof by Beneficiary. If Beneficiary disapproves the plan, Beneficiary's notice to Trustor of such disapproval shall include a brief explanation of the reasons therefor. Trustor shall submit to Beneficiary a revised final written environmental plan that remedies the defects identified by Beneficiary as reasons for Beneficiary's disapproval of the previous plan.If Trustor fails to submit a revised plan to Beneficiary within said thirty(30) day period, or if such revised plan is submitted to Beneficiary and Beneficiary disapproves said plan, such failure or disapproval shall, at Beneficiary's option and upon notice to Trustor, constitute an "Event of Default"hereunder. If Beneficiary does not notify Trustor of its approval or disapproval of the final plan or any revisions thereof within the fifteen(15)day period described above,Trustor shall provide written notice to Beneficiary of Beneficiary's failure to respond,at which time Beneficiary shall have an additional forty-five (45) days after receipt of such notice from Trustor to notify Trustor of its approval or disapproval of the final plan within said additional forty-five (45) day period. If Beneficiary fails to notify Trustor of its disapproval or approval of said plan within said forty-five (45)day period the plan shall be deemed approved. Once any such plan is approved in writing or deemed approved by Beneficiary, Trustor"shall promptly commence all action necessary to implement such plan and to comply with any requirements or conditions imposed by Beneficiary, and shall diligently and continuously pursue such action to completion in strict accordance with the terms of said plan. The rights of Beneficiary with respect to the approval or disapproval of the environmental plan set forth herein and the actions of Beneficiary pursuant to such rights are not intended to,and shall not,in and of themselves,confer on Beneficiary a right to manage,operate or 4821-4420-8640.2 6 11/6/06 jmm control the Mortgaged Property on a continuing basis following the discovery of the event(s) or occurrence(s) described in this subparagraph 9(d). (e) Trustor agrees to submit from time to time, if requested by Beneficiary, a report,satisfactory to Beneficiary,specifying any activities involving,directly or indirectly,the use, generation, treatment, storage or disposal of any Hazardous Materials on the Mortgaged Property. Beneficiary reserves the right,in its sole and reasonable discretion,to retain,at Trustor's expense,an independent professional consultant to review any report prepared by Trustor and/or to conduct its own investigation of the Mortgaged Property. Trustor hereby grants to Beneficiary, its agent, employees, consultants and contractors the right to enter upon the Mortgaged Property and to perform such tests as Beneficiary deems are necessary to conduct such a review and/or investigation. Beneficiary shall hold in confidence any report delivered by Trustor to Beneficiary pursuant to this Section 9,except for disclosure to (a)any consultant(s)hired by Beneficiary to review said report, (b)legal counsel,accountants and other professional advisors to Beneficiary,(c)regulatory officials having jurisdiction over Beneficiary who may request said report, (d) as required by any federal, state, county, regional or local authority or law, rule, regulation or ordinance, (e) as required in connection with any legal proceeding, and (f) any financial institution in connection with a disposition or proposed disposition of all or part of Beneficiary's or any participant's interests hereunder. "Hazardous Materials" as used in this Agency Deed of Trust shall mean any hazardous or toxic materials,pollutants, effluents,contaminants,radioactive materials, flammable explosives, chemicals known to cause cancer or reproductive toxicity,emissions or wastes and any other chemical, material or substance,the handling, storage,release, transportation, or disposal of which is or becomes prohibited, limited or regulated by any federal,state,county,regional or local authority or which, even if not so regulated,is or becomes known to pose a hazard to the health and safety of the occupants of the Mortgaged Property including, without limitation, (i) asbestos, (ii) petroleum and petroleum by-products;(iii)urea formaldehyde foam insulation,(iv)polychlorinated biphenyls, (v) all substances now or hereafter designated as "hazardous substances," "hazardous materials" or "toxic substances" pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980("CERCLA"),42 U.S.C. Section 9601 et seq.,as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Water Pollution Control Act,33 U.S.C. Section 1251 et seq. the Clean Air Act,42 U.S.C. Section 7401 et seq.,the Hazardous Materials Transportation Act,49 U.S.C. Section 1801 et seq.,or the Resource, Conservation and Recovery Act,42 U.S.C. Section 6901 et seq.;(vi)all substances now or hereafter designated as "hazardous wastes" in Section 25117 of the California Health & Safety Code or as "hazardous substances" in Section 253 16 of the California Health & Safety Code; (vii) all substances now or hereafter designated by the Governor of the State of California pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986 as being known to cause cancer or reproductive toxicity,or(viii)all substances now or hereafter designated as"hazardous substances," "hazardous materials" or "toxic substances"under any other federal, state or local laws or in any regulations adopted and publications promulgated pursuant to said laws. "Environmental Laws" as used herein shall mean all laws, rules, regulations and ordinances relating to Hazardous Materials, including,but not limited to,those relating to soil and FxKt�(! YA" 482111420-8640.2 7 11/6/06 jmm 1� groundwater conditions and those statutes referred to in the definition of Hazardous Materials set forth hereinabove. "Environmental Activities" as used herein shall mean the use, generation, transportation, treatment, storage or disposal of any Hazardous Materials at any time located on or present on, under or about the Mortgaged Property. (f) Trustor hereby agrees,at its sole cost and expense,to indemnify,protect,hold harmless and defend (with counsel of Beneficiary's choice), Beneficiary, its successors and assignees,and the officials,officers,agents,attorneys and employees of each of them(individually, each an "Indemnitee", and collectively, the "Indemnitees") from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses (including, without limitation, attorneys' and experts' reasonable fees, disbursements and costs) of any kind or of any nature whatsoever(collectively, "Claims") which may at any time be imposed upon, incurred or suffered by,or asserted or awarded against, any Indemnitee directly or indirectly relating to or arising from any of the following "Environmental Matters," but excluding any Claims arising solely from the gross negligence or willful misconduct of Beneficiary: (i) Any past,present or future presence of any Hazardous Materials on, in, under or affecting all or any portion of the Mortgaged Property or on, in, under or affecting all or any portion of any property adjacent or proximate to the Mortgaged Property, if such Hazardous Materials originated or allegedly originated on or from the Mortgaged Property; (ii) Any past, present or future storage, holding, handling, release, threatened release,discharge,generation,leak,abatement,removal or transportation of any Hazardous Materials on, in, under or from the Mortgaged Property or any portion thereof, (iii) The failure of Trustor to comply with any and all laws, rules, regulations, judgments, orders, permits, licenses, agreements, covenants, restrictions, requirements or the like now or hereafter relating to or governing in any way the environmental condition of the Mortgaged Property or the presence of Hazardous Materials on, in, under or affecting all or any portion of the Mortgaged Property including, without limitation, all Environmental Laws; (iv) The failure of Trustor to properly complete,obtain,submit and/or file any and all notices,permits, licenses, authorizations,covenants, and the like relative to any of the Environmental Matters described herein in connection with the Mortgaged Property or the ownership, use, operation or enjoyment thereof, (v) The extraction, removal, containment, transportation or disposal of any and all Hazardous Materials from any portion of the Mortgaged Property or any other property adjacent or proximate to the Mortgaged Property, if such Hazardous Materials originated or allegedly originated on or from the Mortgaged Property; Ifutct�t r A- 4821-4420-8640.2 8 3Sv 11/6/06 jmm (vi) Any past,present or future presence,permitting,operation,closure, abandonment or removal from the Mortgaged Property of any storage tank that at any time contains or contained any Hazardous Materials and is or was located on, in or under the Mortgaged Property or any portion thereof, (vii) The implementation and enforcement of any monitoring,notification or other precautionary measures that may at any time become necessary to protect against the release or discharge of Hazardous Materials on, in, under or affecting the Mortgaged Property or into the air,anybody of water,any other public domain or any property adjacent or proximate to the Mortgaged Property; (viii) Any failure of any Hazardous Materials generated or moved from the Mortgaged Property to be removed,contained,transported or disposed of in compliance with all applicable Environmental Laws; or (ix) Any breach by Trustor of any of its covenants, representations or warranties regarding Environmental Matters contained in this Agency Deed of Trust or any of the other Transaction Documents. The indemnity contained herein shall terminate and be of no further force and effect, if no Claim is pending, upon the repayment of the Loan in accordance with its terms. (g) Trustor hereby represents and warrants as follows: (i) Trustor has not received any written notice of claims or actions (collectively, "Hazardous Materials Claims")pending or threatened against Trustor or any previous owner or user of the Mortgaged Property (and relating to Trustor's and/or such previous owner's or user's ownership of the Mortgaged Property), by any governmental entity or agency or any other person or entity and relating to Hazardous Materials or pursuant to Environmental Laws; and (ii) Trustor has not received any written notice(1)pursuant to which the Mortgaged Property has been designated as"border zone property"under the provisions of California Health and Safety Code Sections 25220 et seq., or any regulation adopted in accordance therewith, (2)of a hearing at which the Mortgaged Property will be considered for designation as "border zone property,"or(3) of an occurrence or condition on any real property adjoining or in the vicinity of the Mortgaged Property that could cause the Mortgaged Property or any part thereof to be designated as "border zone property." The foregoing shall constitute environmental provisions for purposes of California Code of Civil Procedure Section 736. 10. Insurance 10.1. Casualty Insurance. Trustor shall at all times keep the Mortgaged Property insured for the benefit of Trustee and Beneficiary as follows: 4821-4420-8640.2 9 11/6/06 jmm 10.1.1. Against damage or loss by fire and such other hazards (including lightning, windstorm, hail,explosion, riot, acts of striking employees, civil commotion, vandalism,malicious mischief,aircraft,vehicle,and smoke)as are covered by the broadest form of extended coverage endorsement available from time to time, in an amount not less than the full insurable value(as defined in section 10.9)of the Mortgaged Property,with a deductible amount not to exceed an amount satisfactory to Beneficiary; 10.1.2. Rent or business interruption or use and occupancy insurance on such basis and in such amounts and with such deductibles as are satisfactory to Beneficiary; 10.1.3. Against damage or loss by flood,if the Mortgaged Property is located in an area identified by the Secretary of Housing and urban Development or any successor or other appropriate authority(governmental or private)as an area having special flood hazards and in which flood insurance is available under the National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of 1973,as amended,modified,supplemented,or replaced from time to time, on such basis and in such amounts as Beneficiary may require; 10.1.4. Against damage or loss from(a)sprinkler system leakage and (b)boilers,boiler tanks,heating and air conditioning equipment,pressure vessels, auxiliary piping, and similar apparatus, on such basis and in such amounts as Beneficiary may require; 10.1.5. During any alteration, construction, or replacement of improvements on the Mortgaged Property,or any substantial portion thereof, a Builder's All Risk policy with extended coverage with course of construction and completed value endorsements,for an amount at least equal to the full insurable value of the improvements on the Mortgaged Property,and workers' compensation, in statutory amounts, with provision for replacement with the coverage described in this Section 10, without gaps or lapsed coverage, for any completed portion of improvements on the Mortgaged Property; and 10.2. Liability Insurance. Trustor shall procure and maintain workers' compensation insurance for Trustor's employees and comprehensive general liability insurance covering Trustor, Trustee, and Beneficiary against claims for bodily injury or death or for damage occurring in, on, about, or resulting from the Mortgaged Property, or any street, drive, sidewalk, curb,or passageway adjacent to it,in standard form and with such insurance company or companies and in an amount of at least$2,000,000 combined single limit,or such greater amount as Beneficiary may require, which insurance shall include completed operations, product liability, and blanket contractual liability coverage that insures contractual liability under the indemnifications set forth in this Agency Deed of Trust and the City Section 108 Loan Agreement (but such coverage or its amount shall in no way limit such indemnification). 10.3. [Reserved-No Text] 10.4. Form of Policies. All insurance required under this Section 10 shall be fully paid for and nonassessable. The policies shall contain such provisions, endorsements, and expiration dates as Beneficiary from time to time reasonably requests and shall be in such form and 482111420-8640.2 11/6/06 jmm amounts, and be issued by such insurance companies doing business in the State of California, as Beneficiary shall approve in Beneficiary's sole and absolute discretion. Unless otherwise expressly approved in writing by Beneficiary,each insurer shall have a Best Rating of Class A,Category VIII, or better. All policies shall (a) contain a waiver of subrogation endorsement; (b) provide that the policy will not lapse or be canceled, amended, or materially altered (including by reduction in the scope or limits of coverage)without at least 30 days'prior written notice to Beneficiary;(c)with the exception of the comprehensive general liability policy, contain a mortgagee's endorsement (438 BFU Endorsement or equivalent), and name Beneficiary and Trustee as insureds; and (d) include such deductibles as Beneficiary may approve. If a policy required under this paragraph contains a co-insurance or overage clause, the policy shall include a stipulated value or agreed amount endorsement acceptable to Beneficiary. 10.5. Duplicate Originals or Certificates. Duplicate original policies evidencing the insurance required under this Section 10 and any additional insurance that may be purchased on the Mortgaged Property by or on behalf of Trustor shall be deposited with and held by Beneficiary and,in addition,Trustor shall deliver to Beneficiary(a)receipts evidencing payment of all premiums on the policies and(b) duplicate original renewal policies or a binder with evidence satisfactory to Beneficiary of payment of all premiums at least 30 days before the policy expires. In lieu of the duplicate original policies to be delivered to Beneficiary under this Section 10.5,Trustor may deliver an underlier of any blanket policy,and Trustor may also deliver original certificates from the issuing insurance company, evidencing that such policies are in full force and effect and containing information that,in Beneficiary's reasonable judgment,is sufficient to allow Beneficiary to ascertain whether such policies comply with the requirements of this Section 10. 10.6. Increased Coverage. If Beneficiary determines that the limits of any insurance carried by Trustor are inadequate or that additional coverage is required, Trustor shall, within 10 days after written notice from Beneficiary,procure such additional coverage as Beneficiary may require in Beneficiary's sole and absolute discretion. 10.7. No Separate Insurance. Trustor shall not carry separate or additional insurance concurrent in form or contributing in the event of loss with that required under this Section 10,unless endorsed in favor of Trustee and Beneficiary,as required by this Section 10 and otherwise approved by Beneficiary in all respects. 10.8. Transfer of Title. In the event of foreclosure of this Agency Deed of Trust or other transfer of title or assignment of the Mortgaged Property in extinguishment,in whole or in part, of the Promissory Note, all right, title, and interest of Trustor in and to all insurance policies required under this Section 10 or otherwise then in force with respect to the Mortgaged Property and all proceeds payable under,and unearned premiums on,such policies shall immediately vest in the purchaser or other transferee of the Mortgaged Property. 10.9. [Reserved—No Text] 10.10. Approval Not Warranty. No approval by Beneficiary of any insurer may be construed to be a representation,certification,or warranty of its solvency and no approval by mot{ «31( A 4821-4420-8640.2 11 c� 3(O 11/6/06 jmm Y Beneficiary as to the amount,type,or form of any insurance may be construed to be a representation, certification, or warranty of its sufficiency. 10.11. Beneficiary's Right To Obtain. Trustor shall deliver to Beneficiary original policies or certificates evidencing such insurance at least 30 days before the existing policies expire. If any such policy is not so delivered to Beneficiary or if any such policy is canceled, whether or not Beneficiary has the policy in its possession, and no reinstatement or replacement policy is received before termination of insurance, Beneficiary, without notice to or demand on Trustor, may(but is not obligated to) obtain such insurance insuring only Beneficiary and Trustee with such company as Beneficiary may deem satisfactory, and pay the premium for such policies, and the amount of any premium so paid shall be charged to and promptly paid by Trustor or, at Beneficiary's option, may be added to the Promissory Note. Trustor acknowledges that, if Beneficiary obtains insurance,it is for the sole benefit of Beneficiary and Trustee,and Trustor shall not rely on any insurance obtained by Beneficiary to protect Trustor in any way. 10.12. Duty To Restore After Casualty. If any act or occurrence of any kind or nature (including any casualty for which insurance was not obtained or obtainable) results in damage to or loss or destruction of the Mortgaged Property,Trustor shall immediately give notice of such loss or damage to Beneficiary and,if Beneficiary so instructs,shall promptly,at Trustor's sole cost and expense, regardless of whether any insurance proceeds will be sufficient for the purpose, shall (i)commence and continue diligently to completion to restore,repair,replace,and rebuild the Mortgaged Property as nearly as possible to its value,condition, and character immediately before the damage,loss or destruction;or,(ii)pay all monetary obligations then due under the Promissory Note to Beneficiary. 11. Assignment of Insurance and Condemnation Proceeds. Should the Mortgaged Property or any part or appurtenance thereof or right or interest therein be taken or damaged by reason of any public or private improvement,condemnation proceeding(including change of grade), fire,earthquake or other casualty,or in any other manner,Beneficiary or Trustee may,at its option, • commence, appear in and prosecute, in its own name, any action or proceeding, or make any reasonable compromise or settlement in connection with such taking or damage, and obtain all compensation,awards or other relief therefor. All compensation,awards,damages,rights of action and proceeds, including the policies and the proceeds of any policies of insurance affecting the Mortgaged Property,are hereby assigned to Beneficiary,but no such assignments shall be effective to invalidate or impair any insurance policy. Trustor further assigns to Beneficiary any return premiums or other repayments upon any insurance at any time provided for the benefit of the Beneficiary and all refunds or rebates made of taxes or assessments on the Mortgaged Property,and Beneficiary may at any time collect said return premiums, repayments, refunds and rebates in the event of any default by Trustor under the Promissory Note,the City Section 108 Loan Agreement or this Agency Deed of Trust. No insurance proceeds or condemnation awards at any time assigned to or held by Beneficiary shall be deemed to be held in trust and Beneficiary may commingle such proceeds with its general assets and shall not be liable for the payment of any interest thereon. Trustor also agrees to execute such further assignments of any such policies,compensation,award, damages,rebates, return of premiums,repayments,rights of action and proceeds as Beneficiary or Trustee may require. , t t l f3 (T (� 4821-4420-8640.2 12 C"&3(P 11/6/06 jmm 12. Use of Insurance Proceeds. After any damage by casualty to the Mortgaged Property,whether or not required to be insured against under the policies to be provided by Trustor, Trustor shall give prompt written notice thereof to Beneficiary generally describing the nature and cause of such casualty and the extent of the damage to or destruction of the Mortgaged Property. Trustor shall have the obligation to promptly repair the damage, regardless of whether and to the extent the casualty was covered by an insurance policy. For these purposes,Beneficiary shall make available to Trustor proceeds of any insurance policy covering the casualty and maintained by Trustor under and subject to each of the following terms and conditions: (a) Insurance proceeds which are directly attributable to the damage (herein the"Proceeds") shall be released to Trustor upon and subject to satisfaction of each of the following conditions: (i) There exists no default under the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust at any time prior to or during the course of reconstruction; (ii) Receipt by Beneficiary of satisfactory written evidence that any proposed restorations by Trustor will comply with all statutes, ordinances, regulations, rules, rulings, restrictive covenants, reciprocal easements, leases and contracts; that all proposed plans and specifications are approved by all required governmental agencies;and that Trustor has obtained all necessary building and other permits and approvals for such reconstruction; (iii) Receipt by Beneficiary from Trustor of sufficient cash funds to cover one hundred percent(100%)of any difference between the estimated costs of completion, as certified by an architect or engineer approved by Beneficiary in writing, and the Proceeds, the amount of such difference shall be paid in cash to Beneficiary with said amount and any interest earned thereon shall be released to Beneficiary,as necessary,following the exhaustion of available insurance proceeds, or at such earlier time deemed appropriate by Beneficiary. In the event of any default under the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust, or any reconstruction requirements, Beneficiary may, at its option, apply any portion or all of such amounts and interest against the accrued interest and principal sums outstanding under the Promissory Note; (iv) Receipt by Beneficiary of a certificate executed by Trustor describing the work to be performed in connection with such restoration and a certificate by an independent architect or engineer selected or approved by Beneficiary in writing stating that the work described in the Trustor's certificate is adequate to restore the Mortgaged Property to substantially the same size, design, quality and condition as existed prior to the damage. The architect's or engineer's certificate shall include its estimate of all costs and expenses which will be required to complete such restorations; and F Kftt B t( 48214420-8640.2 13 11/6/06 jmm (v) Such additional conditions as may reasonably be imposed by Beneficiary to provide assurance that the Proceeds will be used to restore the Mortgaged Property to substantially the same condition, to the extent possible, as existed prior to the damage or taking, including, without limitation, Beneficiary's prior written approval of all permits,plans,specifications and construction contracts for such restoration. (b) Beneficiary shall disburse the Proceeds in increments corresponding to the percentage of completion costs then incurred for labor performed and materials furnished (which may, at Beneficiary's discretion, be subject to reasonable holdbacks required by Beneficiary, not exceeding ten percent (10%) of the total estimated cost of completion and which will be released upon lien-free completion of the restorations in accordance with the requirements of this Agency Deed of Trust and the expiration of the periods within which any mechanic's or materialman's lien may be filed). Disbursements shall be conditioned upon Beneficiary's written confirmation that all of its requirements therefor have been satisfied, including its receipt of periodic inspection and completion percentage certificates executed by the project architect approved by Beneficiary in writing, payment acknowledgments and unconditional lien releases, and such other conditions to periodic disbursements as are customarily imposed by Beneficiary in connection with its construction loans, no defaults or misrepresentations of Trustor and Trustor's obtaining all title insurance endorsements,payment and performance bonds,and builder's risk policies required by Beneficiary. Trustor shall, during the progress of the work, also submit to the Beneficiary, at periodic intervals not less frequently than monthly,a certificate satisfactory to Beneficiary furnished by an architect or engineer approved by Beneficiary in writing showing the cost of labor and materials incorporated into the work during the period specified in the certificate,which period shall not include any part of the period covered by any other such certificate; and (c) After completion of the restoration and subject to the conditions herein stated, and, if Trustor is not then in default under the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust,Beneficiary shall pay to Trustor(or such other persons or entities that may have an interest therein)the undisbursed Proceeds and Trustor's deposit for any estimated restoration expense held by Beneficiary upon delivery to Beneficiary of(i) a certificate executed by Trustor showing that the work has been completed and that all bills for labor performed and materials furnished in connection therewith have been paid,(ii)unconditional lien releases and other appropriate written acknowledgments of payment in full executed by all contractors and subcontractors performing labor on or furnishing materials to the Mortgaged Property; (iii) a certificate executed by an architect or engineer approved by Beneficiary confirming that the Mortgaged Property has been restored to substantially the same size,design,quality and condition as existed immediately prior to the damage and in accordance with all applicable federal, state, local and other governmental laws and regulations; and(iv)a certificate of occupancy and other permits issued by the appropriate governmental authorities authorizing the occupancy of the Mortgaged Property for its intended purposes and use. If(i)any of the conditions in subparagraph 12(b),above,are not fulfilled within sixty (60)days after the date of the casualty,or if the reconstruction cannot be completed within such 60 day period, within such additional time as may be reasonably necessary to complete the reconstruction,not to exceed one hundred eighty(180)days,and provided such additional time does 4821-4420-8640.2 14 -3r^ 1���f llg I „mac 11/6/06 jmm % 1� not result in a breach by the Trustor under the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust; or(ii) if Trustor fails to exercise diligence in promptly commencing or continuously prosecuting the work; or(iii)if Trustor is otherwise in default under the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust, or any reconstruction requirements set forth therein or herein, Beneficiary may, at its option, apply the Proceeds and any deposits made by Trustor hereunder to the indebtedness secured hereby, or to complete the necessary repairs and use the Proceeds for the payment thereof. If the Proceeds are so applied to the indebtedness and, together with any other payments due to Beneficiary under the Promissory Note, and all other debts of Trustor to Beneficiary are discharged, Beneficiary shall not have the right to require the Mortgaged Property to be repaired under the terms of this Agency Deed of Trust, but Beneficiary's rights under any other lien that it holds against the Mortgaged Property and which is not also required to be released shall not be thereby impaired or affected. Trustor shall not commence any repairs or reconstruction of any casualty until Beneficiary consents in writing thereto, which consent may be withheld by Beneficiary in its sole discretion,until all of the conditions contained in this paragraph are satisfied. All work of repairing or restoring damage shall be done in a good and workmanlike manner with materials of good quality and in conformity with all applicable laws, ordinances, rules and regulations. Nothing herein contained shall be construed as authorizing the Trustor to subject the Mortgaged Property to any mechanic's, materialman's or other lien for the payment of bills for material furnished or labor performed in connection with any work contemplated by this paragraph. In any event in which the Beneficiary is not otherwise obligated to permit the insurance proceeds to be applied to the restoration of the Mortgaged Property as hereinabove described and, at the option of Beneficiary,the proceeds of a loss under any policy,whether or not endorsed payable to Beneficiary, may be applied in payment of the principal, interest or any other sums secured by this Agency Deed of Trust, whether or not then due, or to the restoration or replacement of any building on the Mortgaged Property, without in any way affecting the enforceability or priority of the lien of this Agency Deed of Trust or the obligation of the Trustor or any other person for payment of the indebtedness hereby secured or the reconstruction of the damaged improvements,whether such Trustor be the then owner of said building or improvements or not. 13. Use of Condemnation Awards. Should the Mortgaged Property or any portion thereof or any improvements thereon be taken or damaged by reason of any public improvement or condemnation proceeding,or by any other form of eminent domain,Trustor agrees that Beneficiary shall be entitled to all compensation, awards and other payments or relief therefor and may, at its option, commence, appear in or prosecute in its own name any action or proceeding or make any reasonable compromise or settlement in connection with such taking or damage,and Trustor agrees to pay Beneficiary's costs and reasonable attorneys' fees incurred in connection therewith.All such compensation, awards, damages, rights of actions and proceeds may be applied by Beneficiary toward the repair of any damage to the improvements on any portion of the Mortgaged Property not subject to the taking as and subject to the same conditions herein provided with respect to the disposition of insurance proceeds,as set forth in Section 12 hereinabove;provided,however,that if the taking results in a loss of the Mortgaged Property to an extent which,in the reasonable opinion of Beneficiary, renders or will render the Mortgaged Property not economically viable or which 4821-4420-8640.2 15 1 g 1 T tk 11/6/06 jmm substantially impairs Beneficiary's security or lessens to any extent the value, marketability or intended use of the Mortgaged Property,Beneficiary may apply the condemnation proceeds to reduce the unpaid indebtedness secured hereby in such order as Beneficiary may determine. Trustor agrees to execute such further assignments of condemnation proceeds as Beneficiary or Trustee may from time to time require. If so applied,any proceeds in excess of the unpaid principal and accrued interest due under the Promissory Note plus all other sums due to Beneficiary from Trustor shall be paid to Trustor or Trustor's assignee. 14. Mortgaged Property Taxes and Assessments. Trustor shall pay in full on or before the due date thereof all rents,taxes,assessments community redevelopment in lieu of property tax charges and encumbrances, with interest, that may now or hereafter be levied, assessed or claimed upon the Trustor's ownership or use of the Mortgaged Property that is the subject of this Agency Deed of Trust or any part thereof,and upon request,provide the Beneficiary with copies of official receipts for payment therefor, and shall pay all taxes imposed upon, and reasonable costs, fees and expenses of, this Agency Deed of Trust. 15. Assessment Districts. Trustor agrees not to consent to inclusion of the Land in any local improvement or special assessment district or to the imposition of any special or local improvement assessment against the Mortgaged Property, without Beneficiary's prior written consent. 16. Mortgage Taxes. In the event of the passage after the date of this Agency Deed of Trust of any federal, state or municipal law,ordinance or regulation relating to the taxation of mortgages,deeds of trust or debts secured thereby so as to tax or assess any interest of Beneficiary or any payments secured hereby. Trustor shall bear and pay the full amount of such taxes. 17. Special Assessment and Insurance Reserves. Trustor shall, at the request of the Beneficiary, pay to Beneficiary equal monthly installments of the special assessments and insurance premiums estimated by the Beneficiary next to become due, in addition to any other periodic payment or performances owed by Trustor under the Promissory Note or this Agency Deed of Trust, so that thirty (30) days before the due date thereof, or of the first installment thereof, Beneficiary will have on hand an amount sufficient to pay the next maturing assessments and insurance premiums. The amount of the additional payment to be made on account of assessments and insurance premiums shall be adjusted annually or more frequently as Beneficiary deems necessary and any deficit shall be immediately paid by Trustor upon request and any surplus shall be credited on the mortgage account. Subsequent payments on account of assessments and insurance premiums shall be made in accordance with the next estimate by the Beneficiary of annual requirements. To the extent permitted by applicable law,all monies paid to Beneficiary on account of assessments or insurance premiums may be commingled and invested with Beneficiary's own funds and, unless and to the extent required by law, shall not bear interest for Trustor. Beneficiary shall not exercise the rights granted in this paragraph so long as the following conditions are met: (a) There is no other default under the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust; and (b) Trustor pays all assessments and insurance premiums prior to delinquency;or 48214420-8640.2 16 % / 11/6/06 jmm (c) Assessments and insurance premiums are paid to the bond trustee. Upon Trustor's failure to comply with any of the conditions (a), (b) or (c) above, Beneficiary may,at its option,then or thereafter exercised,require Trustor to pay the additional sums described in this paragraph. Notwithstanding the foregoing,in the event that the bond trustee or the Senior Lender releases casualty or condemnation proceeds to the Trustor for the repair or reconstruction of the Mortgaged Property, Beneficiary shall also consent to the release of such proceeds. 18. Trustor's Right to Contest Taxes. Trustor shall have the right to contest any real property tax or special assessment so long as(a)no defaults exist under the Promissory Note,the City Section 108 Loan Agreement, this Agency Deed of Trust; (b) Trustor makes any payment or deposit or posts any bond as and when required as a condition to pursuing such contest;(c)Trustor commences such contest prior to such tax or assessment becoming delinquent and continuously pursues the same in good faith and with due diligence; (d) such contest or any bond furnished by Trustor stays the foreclosure of any lien securing the payment of any such tax or assessment;and(e) Trustor pays any tax or assessment within ten (10) days following the date of resolution of such contest. 19. Report of Real Estate Transaction. Trustor has made or provided for making, or will make or provide for making,on a timely basis,any reports or returns required by state or local law relating to the Mortgaged Property, or the development of the Mortgaged Property, notwithstanding the fact that the primary reporting responsibility may fall on the Beneficiary, or other party. Trustor's obligations under this paragraph will be deemed to be satisfied,if proper and timely reports and returns required under this paragraph are filed by a title company involved in each real estate transaction relating to the Mortgaged Property, but nothing contained herein shall be construed to require such returns or reports to be filed by Beneficiary. 20. Leases. With respect to any leases currently or hereafter relating to any portion of the Mortgaged Property, Trustor agrees that each such lease shall comply with the applicable provisions of the City Section 108 Loan Agreement. 21. Assignment of Leases. Trustor hereby unconditionally and absolutely assigns, transfers and sets over unto Beneficiary, all leases, subleases, rental agreements, occupancy agreements,licenses,concessions,entry fees and other agreements that grant a possessory interest in all or any part of the Mortgaged Property,together with all rents, issues, deposits and profits of the Mortgaged Property, together with the immediate and continuing right to collect and receive the same, for the purpose and upon the terms and conditions hereinafter set forth. Trustor further unconditionally and absolutely assigns,transfers and sets over unto Beneficiary all of its right,title and interest in and to any plans, drawings, specifications, permits, engineering reports and land planning maps,which it now has or may hereafter acquire regarding any improvements now on or to be constructed upon the Mortgaged Property. Beneficiary confers upon Trustor a license to collect and retain the rents, issues,deposits and profits of the Mortgaged Property,as they become due and payable,subject,however,to the right of Beneficiary upon a default hereunder to revoke said license, at anytime,in its sole discretion and without notice to Trustor. Beneficiary may revoke said license 48214420-8640.2 17 11/6/0 � 11/6/06 jmm and collect and retain the rents, issues, deposits and profits of the Mortgaged Property assigned herein to Beneficiary upon the occurrence of an Event of Default hereunder or under any of the obligations secured hereby, and without taking possession of all or any part of the Mortgaged Property, and without prejudice to or limitation upon any of its additional rights and remedies granted pursuant hereto or pursuant to the Promissory Note or the City Section 108 Loan Agreement, and Beneficiary shall,in its sole and absolute discretion,have the right to apply such income for the payment of all expenses or credit the net amount of income that it receives from the Mortgaged Property,to the indebtedness in the manner,order and amounts as Beneficiary shall determine. In the event the Beneficiary exercises or is entitled to exercise any of its rights or remedies under this Agency Deed of Trust as a result of the default of the Trustor under the Promissory Note or the City Section 108 Loan Agreement,and if any lessee,sublessee or assignee under any lease assigned under this paragraph files or has filed against it any petition in bankruptcy or for reorganization or undertakes or is subject to similar action,Beneficiary shall have,and is hereby assigned by Trustor, all of the rights that would otherwise inure to the benefit of Trustor in such proceedings, including, without limitation, the right to seek"adequate protection"of its interests,to compel assumption or rejection of any such lease and to seek such claims and awards as may be sought or granted in connection with the rejection of any such lease. Unless otherwise agreed to by Beneficiary in ° writing,Beneficiary's exercise of any of the rights provided in this paragraph shall preclude Trustor from the pursuit and benefit thereof, without any further action or proceeding of any nature. The foregoing assignment shall not impose upon Beneficiary any duty to produce rents from the Mortgaged Property, and such assignment shall not cause Beneficiary to be a "mortgagee in possession" for any purpose. The rights granted in this paragraph shall be in addition to and not in derogation of any similar or related rights granted to Beneficiary in the separate assignment of leases and rents of even date herewith. 22. Impairment of Security. Trustor shall not, without first obtaining Beneficiary's written consent,which consent shall not be unreasonably withheld,assign any of the rents or profits of the Mortgaged Property or change the general nature or use of the Mortgaged Property or initiate or acquiesce in any zoning reclassification,or do,or suffer to be done,any act or thing that would impair the security of Beneficiary's lien upon the Mortgaged Property or the rents thereof. Trustor shall not, without the written consent of Beneficiary, which consent shall not be unreasonably withheld,(i)initiate or support any zoning reclassification of the Mortgaged Property, seek any variance under existing zoning ordinances applicable to the Mortgaged Property or use or permit the use of the Mortgaged Property in a manner that would result in such use becoming a non- conforming use under applicable zoning ordinances;(ii)modify,amend or supplement any easement, reservation,restriction,covenant,condition or encumbrance pertaining to the Mortgaged Property; (iii) impose or consent to any restrictive covenant or encumbrance upon the Mortgaged Property, execute or file any subdivision or parcel map affecting the Mortgaged Property or consent to the annexation of the Mortgaged Property to any municipality; or(iv)permit or suffer the Mortgaged Property to be used by the public or any person in such manner as might make possible a claim of any implied dedication or easement. 23. Defense of Suits. Trustor shall appear in and defend any suit, action or proceeding that might affect the value,priority or enforceability of this Agency Deed of Trust or the Mortgaged Property itself or the rights or powers of Beneficiary or Trustee, including any suits relating to damage to property or death or personal injuries, whether or not Trustor is ultimately 482111420-8640.2 18 V V 11/6/06 jmm Y found liable for any negligence or other wrongful conduct or inaction. Trustor, following mutual negotiations with Beneficiary,has waived and does hereby waive any immunity to such liability to Beneficiary under any industrial insurance or similar statute, to the extent such immunity would impair Beneficiary's rights against Trustor. Should Beneficiary elect to appear in or defend any such action or proceeding or be made a party to any such action or proceeding by reason of this Agency Deed of Trust,or elect to prosecute such action as appears necessary to preserve the value,priority or enforceability of this Agency Deed of Trust or the Mortgaged Property itself,Trustor will at all times indemnify from and, on demand, reimburse Beneficiary and Trustee for, any and all loss, damage, expense or cost,including cost of evidence of title expert witness fees and attorneys' fees,arising out of or incurred in connection with any such suit,action or proceeding, and any appeal or petition for review thereof,and the sum of such expenditures shall be secured by this Agency Deed ofTrust with interest at the rate of 10%per annum and shall be due and payable on demand. Trustor shall pay costs of suit, cost of evidence of title expert witness fees and reasonable attorneys' fees in any proceeding or suit brought by Beneficiary to foreclose this Agency Deed of Trust and in any appeal therefrom or petition for review thereof. 24. Assignments and Transfers by Trustor. Beneficiary may,at its option,declare immediately due and payable all sums secured by this Agency Deed of Trust upon the sale or transfer, without the Beneficiary's prior written approval, of all or any part of the Mortgaged Property, or any interest in the Mortgaged Property. The option of declaring immediately due and payable all sums secured by this Agency Deed of Trust upon a sale or transfer of the Mortgaged Property shall be exercised by the Beneficiary in accordance with the provisions of Section 29 hereof, provided however, this option shall not be exercised if such remedy is prohibited by applicable law. 25. Matters Requiring Beneficiary's Prior Consent. So long as any part of the Loan remains unpaid or any part of the Obligations remain unperformed, Trustor shall not do or suffer any of the following without Beneficiary's prior written consent,which consent shall not be unreasonably withheld:(i)change its form of organization;(ii)modify its organizational documents; (iii) cause itself to become organized as the same or any other type of legal entity in a jurisdiction other than that under the laws of which it is organized on the date of this Agency Deed of Trust;(iv) make or suffer any change in ownership or management that results in a"change of control"of the Borrower, or that results in the Borrower becoming subject to the control of persons other than its owners on the date of this Agency Deed of Trust,voluntarily or by operation of law(for purposes of this Section 25(iv) the words "change of control" shall mean the transfer of 50% or more of the ownership interest in the Borrower to persons other than its owners on the date of this Agency Deed of Trust); (v) make or suffer any change in its ownership or management, or become subject to control by persons other than its owners on the date of this Agency Deed of Trust,voluntarily or by operation of law;(vi)sell,convey,assign,or transfer any Mortgaged Property or any interest therein, whether legal or equitable, directly or indirectly; (vii) create, incur, assume, suffer to exist, or otherwise become liable on any indebtedness relating to the Mortgaged Property other than the Loan; or(viii)grant or suffer the imposition of any lien upon,security interest in,or other encumbrance of any of the Mortgaged Property.Any violation of the provisions of this Section 25 shall constitute an Event of Default under this Agency Deed of Trust and each other Transaction Document, with respect to which Beneficiary shall have the right to accelerate the maturity of the Loan and pursue all F KVCtt317 14 4821-4420-8640.2 19 6�3� 11/6/06 jmm other remedies available to Beneficiary under this Agency Deed of Trust, any other Transaction Document, and/or applicable law. 26. Further Encumbrances. Trustor acknowledges that Beneficiary relied upon the Mortgaged Property not being subject to additional liens or encumbrances for reasons including, but not limited to,the possibility of competing claims or the promotion of plans disadvantageous to Beneficiary in bankruptcy; the risks to Beneficiary in a junior lienholder's bankruptcy; questions involving the priority of future advances,the priority of future leases of the Mortgaged Property,the marshaling of Trustor's assets, and the Beneficiary's rights to determine the application of condemnation awards and insurance proceeds;the impairment of the Beneficiary's option to accept a deed in lieu of foreclosure; the increased difficulty of reaching agreements for workouts or to the actions to be taken by trustees,receivers,liquidators and fiduciaries;and Beneficiary's requirements of Trustor's preservation of its equity in the Mortgaged Property and the absence of debt that could increase the likelihood of Trustor being unable to perform its obligations when due.Therefore, as a principal inducement to Beneficiary to make the Loan secured by this Agency Deed of Trust, and with the knowledge that Beneficiary will materially rely upon this paragraph in so doing, Trustor covenants not to encumber the Mortgaged Property, without first receiving Beneficiary's express written consent in each instance, which consent may be withheld by Beneficiary. A breach of this covenant shall constitute a default under the City Section 108 Loan Agreement,the Promissory Note and this Agency Deed of Trust,and Beneficiary may exercise all remedies available to Beneficiary under the City Section 108 Loan Agreement, the Promissory Note or this Agency Deed of Trust. Without limiting the generality of the foregoing, no mortgages, deeds of trust or other forms of security interests prior or subordinate to the security interests of Beneficiary shall encumber any real or personal property that is the subject of any lien or security interest granted to Beneficiary,without Beneficiary's prior written consent. 27. [Reserved—No Text] 28. Event of Default. An"Event of Default"shall be deemed to have occurred in any of the following circumstances: (a) Failure of Trustor to satisfy any performance or payment obligation required under this Agency Deed of Trust, the Promissory Note or the City Section 108 Loan Agreement when due, however Trustor shall have ten(10) days to cure any such default; (b) Failure of Trustor to properly perform its obligations under this Agency Deed of Trust,the Promissory Note or the City Section 108 Loan Agreement,by a date specified herein or therein or in a written notice to Trustor, if applicable;(which date specified shall not be less than thirty(30)days nor greater than sixty(60)days from the date of such notice,and shall be determined by Beneficiary in its sole discretion); provided, however, that: (i) if such default set forth in the notice cannot be cured by the date specified,(ii)Trustor commences to cure the default prior to the date specified in the notice, and(iii)Trustor diligently proceeds to cure the default thereafter; then the date specified in the notice shall be extended by any period reasonably necessary to complete the cure,but in no event for more than ninety(90)days after the date originally specified in the notice; 4821-4420-8640.2 20 �3 11/6/06 jmm (c) Trustor becomes insolvent or generally is not paying its debts as they become due,as defined in the United States Bankruptcy Reform Act, as amended from time to time(which Act, as amended, is herein called the "Bankruptcy Code"), or shall file a voluntary petition in bankruptcy seeking to effect a reorganization plan or other arrangement with creditors or any other relief under the Bankruptcy Code or under any other state or federal law relating to bankruptcy or other relief for debtors, whether now or hereafter in effect, or shall consent to or suffer the entry of any order for relief in any involuntary case under the Bankruptcy Code,or shall be the defendant or subject of any involuntary petition filed under the Bankruptcy Code that is not dismissed within ninety(90) days of the filing thereof, or shall make an assignment for the benefit of creditors; (d) Any court(or similar tribunal)having jurisdiction over Trustor or any of the Mortgaged Property or other property of Trustor shall enter a decree or order appointing a receiver, trustee, guardian, conservator, assignee in bankruptcy or insolvency of Trustor, of any of the Mortgaged Property,of any other real property of Trustor,of any other significant asset of Trustor,or shall enter a decree or order for relief in any involuntary case under the Bankruptcy Code; (e) The entry of any final judgment or arbitration award against Trustor that is not paid or stayed pending appeal, or the sequestration or attachment of,or any levy or execution upon (i) any of the Mortgaged Property, (ii)any other collateral provided by Trustor or any other person under this Agency Deed of Trust or as security for performance or payment of the Loan,or(iii)any significant portion of the other assets of Trustor,which is not released,expunged or dismissed prior to the earlier of(3 0)days after such sequestration, attachment or execution or five(10)days before the sale of any such assets; - (0 Trustor shall dissolve,liquidate or wind up its affairs or shall bring any legal action or take any other action contemplating such dissolution, liquidation or winding up; (g) The determination by Beneficiary that any representation, warranty or statement contained in this Agency Deed of Trust or the Promissory Note or the City Section 108 Loan Agreement in writing delivered to Beneficiary in connection with Promissory Note or City Section 108 Loan Agreement was incomplete,untrue or misleading in any material respect as of the date made and Trustor has not cured such default within thirty (30) days from written notice by Beneficiary of such default; (h) The enactment of any law that deducts from the value of the Mortgaged Property for the purpose of taxation of any lien thereon or imposing upon Beneficiary the payment of the whole or any part of the taxes,assessments,charges or liens herein required to be paid by Trustor or changing in any way the laws relating to the taxation of deeds of trust or debts secured by deeds of trust or Beneficiary's interest in the Mortgaged Property or the manner of collection of taxes so as to affect this Agency Deed of Trust or the Promissory Note or the City Section 108 Loan Agreement or the holder thereof or imposing a tax, other than a Federal or state income tax, on or payable by Trustee or Beneficiary by reason of their ownership of this Agency Deed of Trust or the Promissory Note and, in such event, Trustor, after demand by Beneficiary, does not pay such taxes or. assessments within thirty(3 0)days or reimburse Beneficiary therefor or,in the opinion of counsel for Beneficiary, it might be unlawful to require Trustor to make such payment or the making of such 4821-4420-8640.2 �-��K(t)1 ( 11/6/06 jmm 21 3�' payment might result in the imposition of interest costs beyond the maximum amount permitted by applicable law; (i) Trustor acknowledges and agrees that all material non-monetary defaults are conclusively deemed to be and are defaults impairing the security of this Agency Deed of Trust,and that Beneficiary shall be entitled to exercise any appropriate remedy,including,without limitation, foreclosure of this Agency Deed of Trust, upon the occurrence of any such material non-monetary default; and 29. Rights and Remedies on Default. Upon the occurrence of any Default or Event of Default under this Agency Deed of Trust and at any time thereafter,Trustee or Beneficiary may exercise any one or more of the following rights and remedies: (a) Loan Remedies. Beneficiary may exercise any right or remedy provided for in the Promissory Note, the City Section 108 Loan Agreement or this Agency Deed of Trust; (b) Acceleration. Beneficiary may declare the Promissory Note and all other performances or sums secured by this Agency Deed of Trust immediately due and payable; (c) Foreclosure Rights. Beneficiary may declare all performances or sums secured hereby immediately due and payable either by commencing an action to foreclose this Agency Deed of Trust as a mortgage,or by the delivery to Trustee of a written declaration of default and demand for sale and of written notice of default and of election to cause the Mortgaged Property to be sold, which notice Trustee shall cause to be duly filed for record in case of foreclosure by exercise of the power of sale herein. Should Beneficiary elect to foreclose by exercise of the power of sale herein,Beneficiary shall also deposit with Trustee this Agency Deed of Trust,the documents evidencing Loan and any receipts and evidence of expenditures made and secured hereby as Trustee may require, and notice of sale having been given as then required by law and after lapse of such time as may then be required by law after recordation of such notice of default, Trustee, without demand on Trustor,shall sell the Mortgaged Property at the time and place of sale fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder upon any terms and conditions specified by Beneficiary and permitted by applicable law. Trustee may postpone sale of all or any portion of the Mortgaged Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to any purchaser its deed or deeds conveying the Mortgaged Property, or any portion thereof, so sold, but without any covenant or warranty, express or implied. The recitals in such deed or deeds of any matters or facts,shall be conclusive proof of the truthfulness thereof. Any person,including Trustor,Trustee or Beneficiary,may purchase all or any portion of the Mortgaged Property, as applicable, at sale. (d) Right to Rescind. Beneficiary, from time to time before Trustee's sale,may rescind any such notice of breach or default and of election to cause the Mortgaged Property to be sold by executing and delivering to Trustee a written notice of such rescission,which notice,when recorded,shall also constitute a cancellation of any prior declaration of default and demand for sale. The exercise by Beneficiary of such right of rescission shall not constitute a waiver of any breach or 48214420-8640.2 3 r�f l t l l 11/6/06 jmm 22 3 default then existing or subsequently occurring, or impair the right of Beneficiary to execute and deliver to Trustee,as above provided,other declarations of default and demand for sale,and notices of breach or default, and of election to cause the Mortgaged Property to be sold to satisfy the obligations hereof, nor otherwise affect any provision, agreement, covenant or condition of the Promissory Note,the City Section 108 Loan Agreement and/or of this Agency Deed of Trust or any of the rights, obligations or remedies of the parties hereunder. (e) UCC Remedies. Beneficiary shall have all the rights and remedies of a secured party under the California Uniform Commercial Code,including,without limitation,Section 9501(4) thereof. Upon request, Trustor shall assemble and make such collateral available to Beneficiary at a place to be designated by Beneficiary that is reasonably convenient to both parties. Upon repossession, Beneficiary may propose to retain the collateral in partial satisfaction of the Promissory Note or sell the collateral at public or private sale in accordance with the Uniform Commercial Code as adopted in the state where the Mortgaged Property is situated or any other applicable statute. Such sale may be held as a part of,distinctive from or without a trustee's sale or foreclosure of the real property secured by this Agency Deed of Trust. If any notification of disposition of all or any portion of the collateral is required by law,such notification shall be deemed e reasonably and properly given, if mailed at least ten (10) days prior to such disposition. If Beneficiary disposes of all or any part of the collateral after default,the proceeds of disposition shall be applied in the following order: (i) to the reasonable expenses of retaking, holding, preparing for sale, selling the collateral, and the like; (ii) to the reasonable attorneys' fees and legal expenses incurred by Beneficiary; and (iii) to the satisfaction of the indebtedness secured by this Agency Deed of Trust. (f) Remedial Advances. Should Trustor fail to make any payment or to do any act as herein provided,then Beneficiary or Trustee,without obligation so to do and without demand upon Trustor and without releasing Trustor from any obligation hereof,may(i)make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the Mortgaged Property for such purposes;(ii) commence,appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, (iii) pay, purchase, contest or compromise any encumbrance, charge, lien, tax or assessment, or the premium for any policy of insurance required herein; and in exercising any such power, incur any liability, expend whatever amounts in its absolute discretion it may deem necessary therefor, including cost of evidence of title, employ counsel and pay such counsel's fees. Beneficiary shall be subrogated to the rights and lien interests of any person who is paid by Beneficiary pursuant to the terms of this paragraph. Trustor shall repay immediately on written notice to Trustor all sums expended or advanced hereunder by or on behalf of Beneficiary, with interest from the date of such advance or expenditure at the rate of 10% per annum, and the repayment thereof shall be secured hereby. 61 T l� 4821-4420-8640.2 23 3(„ 11/6/06 jmm /" (g) Summary Possession. Beneficiary may, at its option, either in person or by agent, employee or court-appointed receiver, enter upon and take possession of the Mortgaged Property and continue any work of improvement,repair or renovation thereof at Trustor's expense and lease the same or any part thereof, making such alterations as it finds necessary, and may terminate in any lawful manner any lease(s) of the Mortgaged Property, exercising with respect thereto any right or option available to the Trustor. The entering upon and taking possession of the Mortgaged Property, the collection of rents, issues and profits, or the proceeds of fire and other insurance policies or compensation or awards for any taking or damage to the Mortgaged Property, and the application or release thereof shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (h) Collection of Rents. Beneficiary may require any tenant or other user of the Mortgaged Property to make payments of rent or use fees directly to Beneficiary, regardless of whether Beneficiary has taken possession of the Mortgaged Property. If any rents are collected by Beneficiary,then Trustor hereby irrevocably designates Beneficiary as Trustor's attorney-in-fact to endorse instruments received in payment thereof in the name of Trustor and to negotiate the same and collect the proceeds. Payments by tenants or other users to Beneficiary in response to Beneficiary's demand shall satisfy the obligation for which the payments are made,whether or not any proper grounds for the demand existed.Beneficiary may exercise its rights under this paragraph either in person, by agent or through a receiver. (i) Beneficiary's Enforcement of Leases. Beneficiary is hereby vested with full power to use all measures, legal and equitable,deemed by it necessary or proper to collect the rents assigned in this Agency Deed of Trust,including the right,in person or by agent,employee or court- appointed receiver, to enter upon the Mortgaged Property,or any part thereof, and take possession thereof forthwith to the extent necessary to effect the cure of any default on the part of Trustor as lessor in any leases or upon Trustor's default under the Promissory Note or the City Section 108 Loan Agreement. Trustor hereby grants to Beneficiary full power and authority to exercise all rights, privileges and powers herein granted at any and all times hereafter, without notice to Trustor, including the right to operate and manage the Mortgaged Property, make and amend leases and perform any other acts reasonably necessary to protect the value, priority or enforceability of any security for the obligations of the Trustor under the Promissory Note or the City Section 108 Loan Agreement and use and apply all of the rents and other income herein assigned to the payment of the costs of exercising such remedies, of managing and operating the Mortgaged Property, and of any indebtedness or liability of Trustor to Beneficiary,including but not limited to the payment of taxes, special assessments, insurance premiums, damage claims, the costs of maintaining, repairing, rebuilding and restoring any improvements on the Mortgaged Property or of making the same rentable, attorneys' fees incurred in connection with the enforcement of this Agency Deed of Trust, and any principal and interest payments due from Trustor to Beneficiary under the Promissory Note and this Agency Deed of Trust,all in such order as Beneficiary may determine. Beneficiary shall be under no obligation to enforce any of the rights or claims assigned to it hereunder or to perform or carry out any of the obligations of the lessor under any leases and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Trustor in any leases. It is further understood that this Agency Deed of Trust shall not operate to place responsibility for the control,care,management or repair of the Mortgaged Property,or parts thereof, upon Beneficiary nor shall it operate to make Beneficiary liable for the carrying out of any of the 48214420-8640.2 24 ll-5 11/6/06 jmm terms and conditions of any leases, or for any waste of the Mortgaged Property by the lessee under any leases or by any other party, or for any dangerous or defective condition of the Mortgaged Property or for any negligence in the management, upkeep, repair or control of the Mortgaged Property resulting in loss or injury or death to any lessee, invitee, licensee, employee or stranger, except as may result from the gross negligence or willful misconduct of Beneficiary after taking possession of the Mortgaged Property hereunder. 0) Beneficiary's Enforcement of Contracts. Beneficiary shall have the right to enforce Trustor's rights under all architect, engineering, construction and related contracts and to bring an action for the breach thereof in the name of Beneficiary or, at Beneficiary's option, in the name of Trustor, in the event any architect, engineer, contractor or other party breaches their respective contract or contracts,regardless of whether Beneficiary acquires or retains any interest in the Mortgaged Property. Trustor hereby irrevocably appoints Beneficiary as its attorney-in-fact for the purposes of the foregoing, which power shall be durable and coupled with an interest. Beneficiary does not assume and shall not be obligated to perform any of Trustor's obligations under said contracts nor shall Beneficiary be required to enforce such contracts or bring action for the breach thereof,provided;however,any performance of the respective contracts specifically required by the Beneficiary in writing, following any default by Trustor under the Promissory Note,the City Section 108 Loan Agreement or the contracts, and which is properly and timely undertaken by the contractor, engineer or architect, shall be paid for by the Beneficiary in accordance with the terms and conditions of the contracts. Such payments shall be deemed additions to the amounts owed by Trustor to the Beneficiary under the Promissory Note and secured by this Agency Deed of Trust and shall bear interest at the rate of 10%per annum from the date of advance to and including the date of full payment, and shall be secured by any deed of trust, collateral assignment of leases and rents, security agreement and other documents granted to secure the Promissory Note. (k) Appointment of Receiver. Beneficiary has the•right to have a receiver appointed to take possession of any or all of the Mortgaged Property,with the power to protect and preserve the Mortgaged Property,to operate the Mortgaged Property preceding foreclosure or sale,to collect the income from the Mortgaged Property and apply the proceeds,over and above the cost of the receivership,against the Promissory Note. The receiver may serve without bond,ifpermitted by law.Beneficiary's right to the appointment of a receiver shall exist whether or not the apparent value of the Mortgaged Property exceeds the indebtedness secured hereby by a substantial amount. Employment by Beneficiary shall not disqualify a person from serving as a receiver. Upon taking possession of all or any part of the Mortgaged Property, the receiver or Beneficiary may: (i) use, operate,manage,control and conduct business on the Mortgaged Property and make expenditures for all maintenance and improvements as in its judgment are necessary and proper; (ii) collect the income from the Mortgaged Property and apply such sums to the expenses of use, operation and management; and (iii) at Beneficiary's option, complete any construction in progress on the Mortgaged Property, and in that connection pay bills, borrow funds,employ contractors and make any changes in plans or specifications as Beneficiary deems reasonably necessary or appropriate. If the revenues produced by the Mortgaged Property are insufficient to pay expenses,the receiver may borrow, from Beneficiary or otherwise, as Beneficiary may deem reasonably necessary for the purposes stated in this paragraph. The amounts borrowed or advanced shall be payable on demand and bear interest from the date of expenditure until repaid at the rate of 10%per annum. Such sums shall become a part of the debt secured by this Agency Deed of Trust. 4821-4420-8640.2 11/6/0 6 jnun 25 3 (1) Specific Enforcement. Beneficiary may specifically enforce any covenant in this Agency Deed of Trust or the Trustor's compliance with its warranties herein and may restrain and enjoin the breach or prospective breach of any such covenant or the noncompliance with any condition and Trustor waives any requirement of the posting of any bond in connection therewith. (m) General Creditors' Remedies. Beneficiary shall have such other rights and remedies as are available under any statute or at law or in equity, generally, and the delineation of certain remedies in this Agency Deed of Trust shall not be deemed in limitation thereof 30. Application of Sale Proceeds. After deducting all costs and expenses of Trustee and of this Agency Deed of Trust, including cost of evidence of title and reasonable attorneys' fees in connection with sale,as above set forth,Trustee shall apply the proceeds of sale to payment of all sums expended under the terms hereof,not then repaid, with accrued interest at the rate of 10% per annum; all other sums then secured hereby; and the remainder, if any, to the Beneficiary and any other person or persons legally entitled thereto. 31. Remedies Cumulative. No remedy°herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of any other remedy provided herein or under the Promissory Note,the City Section 108 Loan Agreement or this Agency Deed of Trust,or otherwise by law provided or permitted,or provided in any guaranty given in connection with the Promissory Note, but each shall be cumulative and shall be in addition to every other remedy. Every power or remedy given by this instrument to Trustee or Beneficiary or to which either of them may be otherwise entitled,may be exercised concurrently or independently,from time to time and as often as may be deemed expedient by Trustee or Beneficiary and either of them may pursue inconsistent remedies. 32. No Waiver. No waiver of any default or failure or delay to exercise any right or remedy by Beneficiary shall operate as a waiver of any other default or of the same default in the future or a preclusion of any right or remedy with respect to the same or any other occurrence. 33. Marshaling. In case of a sale under this Agency Deed of Trust, the Mortgaged Property,real,personal and mixed,may be sold in one or more parcels.Neither Trustee nor Beneficiary shall be required to marshal Trustor's assets. 34. SUBMISSION TO JURISDICTION. TRUSTOR,TO THE FULLEST EXTENT PERMITTED BY LAW,HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,(A)SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF CALIFORNIA OVER ANY SUIT,ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS DEED OF TRUST, (B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN SAN BERNARDINO COUNTY, CALIFORNIA, (C) SUBMITS TO THE JURISDICTION OF SUCH COURTS,AND,(D)TO THE FULLEST EXTENT PERMITTED BY LAW,AGREES 48214420-8640.2 26 3 ( T 11/6/06 jmm 1" THAT IT WILL NOT BRING ANY ACTION,SUIT OR PROCEEDING IN ANY FORUM OTHER THAN SAN BERNARDINO COUNTY,CALIFORNIA(BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF BENEFICIARY TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). TRUSTOR FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO THE TRUSTOR AT THE ADDRESS FOR NOTICES DESCRIBED HEREIN, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN , SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW). 35. Trustor's Indemnification. Trustor agrees to indemnify and hold harmless Trustee and Beneficiary from and against any and all losses, liabilities,penalties, claims, charges, costs and expenses(including attorneys' fees and disbursements)(the"Losses")that maybe imposed on,incurred or paid by or asserted against Trustee and/or Beneficiary by reason or on account of,or in connection with: (a) any default by Trustor hereunder or under the Promissory Note or the City Section 108 Loan Agreement; (b) Trustee's and/or Beneficiary's good faith and commercially reasonable exercise of any of their rights and remedies or the performance of any of their duties hereunder or under any other documents to which Trustor is a party, (c) the construction, reconstruction or alteration of the Mortgaged Property-, (d) any negligence, willful misconduct or failure to act of Trustor,or any negligence,willful misconduct or failure to act of any lessee of the Mortgaged Property, or any of their respective agents, contractors, subcontractors, servants, employees, licensees or invitees; or (e) any accident, injury, death or damage to any person or property occurring in, on or about the Mortgaged Property or any street, drive, sidewalk, curb or passageway adjacent thereto, except for the willful misconduct or gross negligence of the indemnified person; or(f) any failure of Trustor to file any tax reports or returns referred to in this Agency Deed of Trust. The indemnity provided under subsection (f) of this paragraph shall also extend to counsel for the Beneficiary. Any amount payable to Trustee,Beneficiary or counsel for Beneficiary under this paragraph shall be due and payable within ten(10)days after demand therefor and receipt by Trustor of a statement from Trustee,Beneficiary and/or counsel for Beneficiary setting forth in reasonable detail the amount claimed and the basis therefor, and such amounts shall bear interest at the rate of 10%per annum from and after the date such amounts are paid by Beneficiary, Trustee or counsel for Beneficiary, until paid in full by Trustor. Trustor's obligations under this paragraph shall not be affected by the absence or unavailability of insurance covering the same or by the failure or refusal by any insurance carrier to perform any obligation on its part under any such policy of insurance. If any claim, action or proceeding is made or brought against Trustor and/or Beneficiary that is subject to the indemnity set forth in this paragraph,Trustor shall resist or defend against the same,if necessary,in the name of Trustee and/or Beneficiary,with attorneys for Trustor's insurance carrier (if the same is covered by insurance) or otherwise by attorneys approved by Beneficiary. Notwithstanding the foregoing,Trustee and Beneficiary,in their reasonable discretion, may engage their own attorneys to resist or defend, or assist therein, and Trustor shall pay, or, on demand, shall reimburse Trustee and Beneficiary for the payment of the reasonable fees and disbursements of said attorneys. The indemnity provided for herein shall survive Trustor's performance of the obligations secured by this Agency Deed of Trust and foreclosure, whether by 4821-4420-8640.2 27 3f, 1"t laI 7 n 11/6/06 jmm judicial foreclosure, power of sale pursuant to this Agency Deed of Trust or by deed in lieu of foreclosure. 36. Attorneys' Fees;Costs. Trustor agrees to reimburse Beneficiary for all costs, expenses expert witness and consulting fees and reasonable attorneys'fees that Beneficiary incurs in connection with the realization or enforcement of any obligation or remedy contained in this Agency Deed of Trust, the Promissory Note or the City Section 108 Loan Agreement, with or without litigation, including without limitation any costs, expenses and fees incurred: (a)on appeal; (b) in any arbitration or mediation; (c) in any action contesting or seeking to restrain, enjoin, stay, or postpone the exercise of any remedy in which Beneficiary prevails; (d)in any bankruptcy,probate, receivership or other proceeding involving Trustor; and (e) in connection with all negotiations, documentation,and other actions relating to any work-out,compromise,settlement or satisfaction of the debt secured hereby or settlement of any covenants and obligations secured by this Agency Deed of Trust or set forth in the Promissory Note or the City Section 108 Loan Agreement. For the purposes hereof, the words "reasonable attorneys' fees" shall mean and include the salaries and fringe benefits of the City Attorney and lawyers employed by the City of Attorney of the City of San Bernardino, computed on a hourly basis, who may provide legal services to the Beneficiary in connection with the exercise by the Beneficiary of any of its remedies hereunder. All such costs, expenses and fees shall be due and payable upon demand,shall bear interest from the date incurred through the date of collection at the rate of 10%per annum, and shall be secured by this Agency Deed of Trust. 37. Acce tp ance by Trustee. Trustee accepts this Trust when this Agency Deed of Trust, duly executed and acknowledged,is made a public record, as provided by law. 38. Successor Trustee. Trustee may resign by an instrument in writing addressed to Beneficiary, or Trustee may be removed at any time with or without cause by an instrument in writing executed by Beneficiary and duly recorded. In case of the death, resignation, removal or disqualification of Trustee or if for any reason Beneficiary shall deem it desirable to appoint a substitute or successor trustee to act instead of Trustee herein named or any substitute or successor trustee,then Beneficiary shall have the right and is hereby authorized and empowered to appoint a successor trustee,or a substitute trustee,without other formality than appointment and designation in writing executed and acknowledged by Beneficiary and the recordation of such writing in the office where this Agency Deed of Trust is recorded,and the authority hereby conferred shall extend to the appointment of other successor and substitute trustees successively. Such appointment and designation by Beneficiary shall be full evidence of the right and authority to make the same and of all facts therein recited. If such appointment is executed on behalf of Beneficiary by an officer of Beneficiary, such appointments shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the Trustee or any officer of Beneficiary. Upon the making of such appointment and designation, all of the estate and title of Trustee in the Mortgaged Property shall vest in the named successor or substitute trustee and it shall thereupon succeed to and shall hold, possess and execute all the rights, powers, privileges, immunities and duties herein conferred upon Trustee;but,nevertheless,upon the written request of Beneficiary or of the successor substitute trustee,the Trustee shall execute and deliver an instrument transferring to such successor or substitute trustee all of the estate and title in the Mortgaged Property of the trustee so ceasing to act, together with all the rights,powers, privileges, immunities and duties herein 48214420-8640.2 28� Kft tb 17 11/6/06 jmm Y'� conferred upon Trustee,and shall duly assign,transfer and deliver any of the properties and moneys held by the Trustee hereunder to said successor or substitute trustee. All references herein to Trustee shall be deemed to refer to any trustee (including any successor or substitute, appointed and designated, as herein provided) from time to time acting hereunder. Trustor hereby ratifies and confirms any and all acts that Trustee herein named or its successor or successors, substitute or substitutes, in this Agency Deed of Trust, shall do lawfully by virtue hereof. 39. Reconveyance Pursuant to the Terms of Section 10 of the Collateral Assignment. Trustee shall reconvey,without warranty,the Mortgaged Property then held hereunder: (i)written request of Beneficiary,stating that all performances and sums secured hereby have been satisfied and paid,and upon surrender of this Agency Deed of Trust to Trustee for cancellation and retention,and upon payment of its fees,or(ii)in accordance with the provisions of Section 10 of the Collateral Assignment of Deed of Trust executed by the Beneficiary in favor of the Secretary of HUD concurrently with this Agency Deed of Trust. The recitals in any reconveyance executed under this Agency Deed of Trust of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." 0 40. No Releases. The Mortgaged Property shall not be released from the lien of this Agency Deed of Trust and no person shall be released from liability under the Promissory Note or any other obligation secured hereby,except in the manner herein specified. Without affecting the liability of any other person for the payment and performance of any obligation herein mentioned (including Trustor should it convey said Mortgaged Property) and without affecting the lien or priority hereof upon any Mortgaged Property not released,Beneficiary may,without notice,release any person so liable, extend the maturity or modify the terms of any such obligation, grant other indulgences,make future or other advances to Trustor or any one or more parties comprising Trustor, assign or in any manner transfer this Agency Deed of Trust, release or reconvey or cause to be released or reconveyed at any time all or part of the said Mortgaged Property described herein,take or release any other security or make compositions or other arrangements with debtors. Beneficiary may also accept additional security, either concurrently herewith or thereafter, and sell same or otherwise realize thereon, either before, concurrently with, or after sale hereunder. 41. Beneficiary's Consents. At any time, upon written request of Trustor, Trustor's payment of Beneficiary's fees and presentation of this Agency Deed of Trust (in case of full reconveyance,for cancellation and retention),without affecting the liability of any person for the payment of the indebtedness,Beneficiary may: (a)consent to the making of any map or plat of said Mortgaged Property;(b)join in granting any easement or creating any restriction thereon,(c)join in any other agreement affecting this Agency Deed of Trust or the lien or charge thereof, and (d) reconvey, without warranty, all or any part of the Mortgaged Property. 42. RESERVED—NO TEXT. 43. Further Assurances. Trustor,from time to time,within fifteen(15)days after request by Beneficiary, shall execute, acknowledge and deliver to Beneficiary, such chattel mortgages, security agreements or other similar security instruments, in form and substance reasonably satisfactory to Beneficiary, covering all property of any kind whatsoever owned by 4821-4420-8640.2 29 ��� ? l 1 I 11/6/06 jmm Trustor or in which Trustor has any interest which, in the reasonable opinion of Beneficiary, is essential to the operation of the Mortgaged Property covered by this Agency Deed of Trust.Trustor shall further, from time to time, within fifteen (15) days after request by Beneficiary, execute, acknowledge and deliver any financing statement, renewal, affidavit, certificate, continuation statement or other document as Beneficiary may reasonably request in order to perfect, preserve, continue, extend or maintain the security interest under, and the priority of, this Agency Deed of Trust and the priority of each such chattel mortgage or other security instrument. Trustor further agrees to pay to Beneficiary on demand all reasonable costs and expenses incurred by Beneficiary in connection with the preparation, execution,recording, filing and refiling of any such instrument or document,including the charges for examining title and the attorneys' fees for rendering an opinion as to priority of this Agency Deed of Trust and of such chattel mortgage or other security instrument as a valid and subsisting lien. However,neither a request so made by Beneficiary,nor the failure of Beneficiary to make such request shall be construed as a release of such Mortgaged Property,or any part thereof, from the conveyance of title under this Agency Deed of Trust,it being understood and agreed that this covenant and any such chattel mortgage,security agreement or other similar security instrument delivered to Beneficiary are cumulative and given as additional security. a 44. Time of Performance. Time is of the essence hereof in connection with all obligations of the Trustor herein and under the Promissory Note. 45. Notices. The undersigned Trustor requests that a copy of any Notice of Default or Notice of Sale hereunder-be mailed to it at its address as hereinbefore set forth. Any notices to be given to Trustor by Beneficiary hereunder shall be sufficient,if personally delivered or mailed, postage prepaid,to the address of the Trustor stated hereinabove, or to such other address that Trustor has requested in writing to Beneficiary. Any time period provided in the giving of any notice hereunder shall commence upon the date such notice is delivered or deposited with the United States Postal Service for delivery by regular first-class postage pre-paid mail,as officially recorded on the certified mail receipt. 46. Beneficiary's Right to Inspect. Beneficiary and its agents and representatives may enter upon the Mortgaged Property at all reasonable times to attend to Beneficiary's interest and to inspect the Mortgaged Property. 47. Reports and Statements. Trustor shall deliver to Beneficiary,within ninety (90) days after the end of each of Trustor's fiscal years, and within twenty (20) days after Beneficiary's request,following an Event of Default,reasonably detailed operating statements and occupancy reports in a form satisfactory to Beneficiary covering the Mortgaged Property, both certified as correct by Trustor. At Beneficiary's option, after an Event of Default, such operating statements shall be prepared by an independent certified public accountant at Trustor's expense. If Beneficiary so requests,such statements shall specify,in addition to other information requested by Beneficiary,the rents and profits received from the Mortgaged Property,the disbursements made for such period,the names of the tenants of the Mortgaged Property and a summary of the terms of the respective leases or the rental arrangements. Trustor shall permit Beneficiary or its representative to examine all books and records pertaining to the Mortgaged Property,and shall deliver to Beneficiary all financial statements,credit reports,and other documents pertaining to the financial condition and 48214420-8640.2 30 11/6/06 jmm r obligations of Trustor and any tenants of the Mortgaged Property, and rental, income, and expense statements, audits, and tax returns relating to the Mortgaged Property. 48. Assignment by Beneficiary; Participation. Beneficiary may assign this Agency Deed of Trust in whole or in part to any person, including without limitation the United States Secretary of the Department of Housing and Urban Development and may grant participations in any of its rights under this Agency Deed of Trust,without notice and without affecting Trustor's liability under this Agency Deed of Trust. In connection with any proposed assignment,participation or similar arrangement, Beneficiary may make available to any person all credit and financial data furnished or to be furnished to Beneficiary by Trustor. Trustor agrees to provide to the person designated by Beneficiary any information as such person may reasonably require to form a decision regarding the proposed assignment, participation or other arrangement. 49. RESERVED—NO TEXT. 50. Legal Relationships. The relationship between Beneficiary and Trustor is similar to that of lender and borrower,and no partnership,joint venture,or other similar relationship shall be inferred from this Agency Deed of Trust. Trustor shall not have the right or authority to make representations,to act, or to incur debts or liabilities on behalf of Beneficiary. Trustor is not executing this Agency Deed of Trust as an agent or nominee for an undisclosed principal, and no third party beneficiaries are or shall be created by the execution of this Agency Deed of Trust,other than by the assignment by Beneficiary of this Agency Deed of Trust. 51. Trustor Certification of Approval. Trustor hereby covenants and certifies that by executing this Agency Deed of Trust,Trustor has obtained the approval of any existing Senior Lender to execute and deliver the Promissory Note and this Agency Deed of Trust. 52. Modification. This Agency Deed of Trust may be amended, modified, changed or varied only by a written agreement signed by all of the parties hereto.No requirement of this Agency Deed of Trust may be waived,at any time,except in a writing signed by Beneficiary and any such waiver shall be effective only as to its terms and on a single occasion. Neither, Beneficiary's delay or omission in exercising any right,power or remedy under this Agency Deed of Trust upon default of Trustor nor Beneficiary's failure to insist upon strict performance of any of the covenants or agreements contained in this Agency Deed of Trust shall be construed as a waiver of any such right,power,remedy, covenant or agreement or as an acquiescence in Trustor's breach or default. 53. Successors. Subject to the prohibitions against Trustor's assignments herein, this Agency Deed of Trust shall inure to the benefit of and bind all of the parties,their successors, estates,heirs, personal representatives and assigns. 54. Partial Invalidity. If a court of competent jurisdiction finally determines that any provision of this Agency Deed of Trust is invalid or unenforceable, the court's determination shall not affect the validity or enforceability of the remaining provisions of this Agency Deed of Trust. In such event, this Agency Deed of Trust shall be construed as if it did not contain the particular provision that was determined to be invalid or unenforceable. No such determination shall < <i 420-8640.2 31 11/6/0 11/6/ 6 jmm affect any provision of this Agency Deed of Trust to the extent that it is otherwise enforceable under the laws of any other applicable jurisdiction. 55. Mutual Negotiation. Beneficiary and Trustor confirm that they have mutually negotiated this Agency Deed of Trust and that none of the terms or provisions of this Agency Deed of Trust shall be construed against either party. 56. Paragraph Headings. The paragraph headings are for convenience only and in no way define, limit,extend, or describe the scope or intent of this Agency Deed of Trust or any of its provisions. 57. Applicable Law. This Agency Deed of Trust and the rights of the parties hereunder shall be governed by,construed and enforced in accordance with the laws of the State of California. 58. Entire Agreement. This Agency Deed of Trust, including any exhibits or addenda, contains the entire agreement of the parties with respect to the subject matter hereof 59. Counterparts. This Agency Deed of Trust may be executed in two or more counterparts, all of which together shall constitute one and the same instrument and lien. The signature pages of exact copies of this Agency Deed of Trust may be attached to one copy to form one complete document. Additional copies of this Agency Deed of Trust may be executed in counterparts and recorded in two or more counties, all of which shall constitute one and the same instrument and lien. 60. Fixture Filing and Recording. This Agency Deed of Trust constitutes a financing statement filed as a fixture filing under California Commercial Code Section 9502(c),as amended or recodified from time to time. This Agency Deed of Trust is to be recorded in the real estate records of San Bernardino County, California, and covers goods that are, or are to become, fixtures. 61. Survival of Representations and Warranties. All of Trustor's representations and warranties contained in this Agency Deed of Trust shall be true and correct at all times during the term of the Promissory Note secured hereby,until performance of all obligations set forth in the Promissory Note and in the City Section 108 Loan Agreement or,alternatively,full repayment of the Promissory Note and release and reconveyance of this Agency Deed of Trust. 62. Conflicting Provisions. To the extent that the provisions of this Agency Deed of Trust conflict with any provisions of the City Section 108 Loan Agreement,the provisions of this Agency Deed of Trust shall control. 63. RIGHTS OF THE SECRETARY OF HUD. This Agency Deed of Trust is part of the"City Section 108 Loan Collateral"as this term is defined in the City Section 108 Loan Agreement. Pursuant to the provisions of paragraph 15(f) of that certain Contract for Loan Guarantee assistance under Section 108 of the Housing and Community Development Act,of 1974, as amended (the "HUD Section 108 Loan Agreement") by and between the Beneficiary and the 420-8640.2 32 3 11/6/0 6 jmm E- cf ,L t3 l( V� f l 1/6/0 United States Secretary of Housing and Urban Development(the"Secretary"),the Beneficiary shall make a collateral assignment in favor of the Secretary,or its assignee, in this Agency Deed of Trust to the "Custodian"(as this term is defined in the HUD Section 108 Loan Agreement). Paragraph 15(i) of the HUD Section 108 Loan Agreement provides in relevant part: "The Secretary may complete the endorsement of the Subrecipient Note[e.g.:the Promissory Note from Trustor to Beneficiary] and record the assignments referred to in paragraph 15(e) and thereby effectuate the transfer of the documents referenced and underlying indebtedness [e.g.,the City Section 108 Loan Collateral including without limitation this Agency Deed of Trust] from the Borrower[e.g.: the Beneficiary]to the Secretary or the Secretary's assignee." Paragraph 15(i) of the HUD Section 108 Loan Agreement further provides: "The Borrower[e.g.,the City/Beneficiary] agrees that it shall promptly notify the Secretary [of HUD] in writing upon the occurrence of any event which constitutes a default(an"Event of Default") under (and as defined in) any of the Security Documents, as defined in paragraph 15(d)[e.g.,the City Section 108 Loan Collateral,including without limitation this Agency Deed of Trust]. Notification of an Event of Default shall be delivered to the Secretary[of HUD] as directed in paragraph 12(f)above. Upon the occurrence of an Event of Default, the Secretary [of HUD] may(without prior notice or hearing, which Borrower [e.g.,the Beneficiary]hereby expressly waives),in addition to(and not in lieu of)exercising any and all remedies that may be available under the Security Documents [ e.g., the City Section 108 Loan Collateral] declare the [HUD] Note in Default and exercise any and all remedies available under paragraph 12. This paragraph shall not affect the right of the Secretary [of HUD] to declare the [HUD] Note in default pursuant to paragraph 11 and to exercise in connection therewith any and all remedies available under paragraph 12." The Trustor acknowledges and agrees that this Agency Deed of Trust is and shall be enforceable by the Secretary of HUD upon the completion of the endorsement by the Secretary of HUD of the Promissory Note. 4821-4420-8640.2 33 �jl to?c�l-L L,l „ 11/6/06 jnun Y IN WITNESS WHEREOF,Trustor hereby duly executes this Agency Deed of Trust as of the day and year first above written. TRUSTOR Redevelopment Agency of the City of San Bernardino, a public body corporate and politic By: hairpers n of the NQ nity Dexelopa(ent Commission of the City of San Bernardino, its governing body [NOTARY ACKNOWLEDGMENT ATTACHED] t 4821-4420-8640.2 34 11/6/06 jmm •irrrmymw wrrri -- ..__. CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ss. County of San Bernardino On November 21, 2006, before me, Wasana Chantha, Notary Public, personally appeared Patrick J. Morris. Q personally known to me ❑ proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to wASANA CHANTHA the within instrument and acknowledged to Commission# 1694902 me that he executed the same in his Notary Public •California authorized capacity, and that by his signature Son Bernardino County - on the instrument the person, or the entity My comm.Expires Oct 18,201 upon behalf which the person acted, executed the i str#ent. r WITNESS my nd official seal. Place Notary Seal Above Si ature of Notary Public Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Deed of Trust, Assignment of Leases and Rents, Fixture filing and Security Agreement and Request for Notices (HUD Section 108 Loan Agreement No. B-03- MC-06-0539) Document Date: July 1, 2006 Number of Pages: 35 Signer(s) Other Than Names Above: None Capacity(ies) Claimed by Signer RIGHT THUMBPRINT Signer's Name: Patrick J. Morris OF ❑ Individual Top of thumb here ❑ Corporation Officer-Title(s): ❑ Partner- ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator 2 Other: Mayor of the City of San Bernardino, California Signer is Representing: City of San Bernardino, California `�' Ct t2 EXHIBIT"A" LEGAL DESCRIPTION OF PROPERTY [INSERT COMPOSITE LEGAL DESCRIPTION OF EACH AGENCY-OWNED PARCEL OF LAND INCLUDED IN THE ARDEN-GUTHRIE NEIGHBORHOOD] t 4821-4420-8640.2 35 11/6/0 11/6/O6 jmm J LEGAL DESCRIPTION OF AGENCY OWNED PROPERTY THE LAND REFERRED TO IN THIS REPORT IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN BERNARDINO AND IS DESCRIBED AS FOLLOWS: LOTS: 7; 9; 11; 13; 14; 15; 16; 17; 19; 20; 21; 22; 23; 24; 27; 29; 31; 32; 36; 37; 38; 39; OF TRACT 7106 IN THE CITY OF SAN BERNARDINO. AND LOTS: 23; 24; 25; 26; 27; 28; 29; 30; 31; 32; 34; 36; 37; 38; 39; 40; 41; 42; 44; 47; 48; 49; 50; 51; 52; 53; OF TRACT 6898 IN THE CITY OF SAN BERNARDINO 9 3�, CDC/2003-29 2003 REDEVELOPMENT COOPERATION AGREEMENT BY AND AMONG THE INLAND VALLEY DEVELOPMENT AGENCY, THE CITY OF SAN BERNARDINO, AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (Arden-Guthrie) Dated as of October 8,2003 • MC/2003-29 2003 REDEVELOPMENT COOPERATION AGREEMENT (Arden-Guthrie) This 2003 Redevelopment Cooperation Agreement (the "Agreement) is dated as of October 8,2003 by and among the Inland Valley Development Agency, a joint powers authority established under the laws of the State of California(the"IVDA'),the City of San Bernardino,a charter city (the "City"), and the Redevelopment Agency of the City of San Bernardino, a body corporate and politic (the "Agency') and is entered into with respect to the following facts set forth in the Recitals: --RECITALS-- WHEREAS, for the past many years the City of San Bernardino (the "City") and the Redevelopment Agency of the City of San Bernardino (the "Agency') have been engaged in efforts to address blighting conditions in a portion of the City known as the Arden-Guthrie neighborhood; and WHEREAS, the Arden-Guthrie neighborhood has been afflicted with a number of physical and economic conditions of blight over the years, as these terms are defined in Health and Safety Code Section 33032, including without limitation, conditions of substandard structures and dwellings, residential overcrowding, substandard property maintenance conditions, inadequate design of improvements, abandonment of property, depreciating and stagnant property values, and criminal activity which has occurred at rates substantially higher than crime rates in other neighborhoods of the City; and WHEREAS, the Agency, in cooperation with the City, has previously embarked on a program to acquire properties in the Arden-Guthrie neighborhood and to relocate the persons and households occupying such property into safe, sanitary and decent housing in other suitable locations;and WHEREAS, as of June 30,2003,the Agency has incurred a redevelopment indebtedness in excess of$10,000,000 in connection with its previous efforts to address conditions of blight in the Arden-Guthrie neighborhood and to prevent the spread of blight from the Arden-Guthrie neighborhood into nearby neighborhoods and communities;and WHEREAS, the City believes it is necessary and appropriate for the Agency to acquire additional lands in the Arden-Guthrie neighborhood in order the foster a commercially viable and economically sustainable plan of redevelopment and reuse of the Arden-Guthrie neighborhood and to prevent the spread of blight in the Arden-Guthrie neighborhood into other surrounding neighborhoods and communities; and WHEREAS, the Arden-Guthrie neighborhood is situated within the redevelopment project area of the Inland Valley Development Project which is a special redevelopment project area administered by the Inland Valley Development Agency(the"IVDA"); and 1 C AW I NDO W MEMM03-09-15 IVDA ' CDC/2003-29 WHEREAS, the IVDA has been established pursuant to a joint exercise of powers agreement in January 1990, for the purpose of assisting in the conversion, redevelopment and civilian reuse of the former Norton Air Force Base Iocated within the City of San Bernardino; and WHEREAS, the member governmental entities of the IVDA include the County of San Bernardino, a political subdivision of the State of California, and the City of Colton,a municipal corporation, and the City of Loma Linda,a municipal corporation,and the City; and WHEREAS,the IVDA has been granted specific powers by the State Legislature in 1989 (Stats. 1989 c.545 and See Now Stats 1997,c.580 and Health and Safety Code Section 33492.40, et seq.) to assist in the redevelopment of the former Norton Air Force Base and the lands in proximity thereto pursuant to the Community Redevelopment Law (Health and Safety Code Section 33000,et seq.,hereinafter referred to as the"CRL");and WHEREAS, the IVDA has adopted the Redevelopment Plan for the Inland Valley Redevelopment Project Area (the."Redevelopment Plan") in accordance with the provisions of the CRL, and the Redevelopment Plan provides for certain redevelopment activities to be undertaken within the redevelopment project area as more fully described in the Redevelopment Plan(the"Project Area");and WHEREAS,the Arden-Guthrie neighborhood is located within the Project Area; and WHEREAS, at the present time, substantially all the financial and administrative staff resources available to the IVDA are devoted to the implementation of certain agreements affecting the former Norton Air Force Base including an agreement entitled "Agreement Between the Department of the Air Force and the Inland Valley Development Agency," dated March 7, 1995, as amended, and an agreement entitled "Master Disposition and Development Agreement", dated November 6, 2002, both of which specifically relate to the civilian reuse and redevelopment of the lands comprising the former Norton Air Force Base;and WHEREAS, the Agency seeks to initiate certain plans, studies and redevelopment activities affecting the Arden-Guthrie Implementation Area,as defined herein,which are situated within the Project Area but which are not part of the former Norton Air Force Base;and WHEREAS, the IVDA, the City and the Agency deem that the approval and implementation of this Agreement are consistent with the Redevelopment Plan and the purposes and intent of the CRL and in particular Health and Safety Code Section 33492.40, et seq., to expeditiously accomplish the redevelopment of certain lands located in the City of San Bernardino which are also within the Project Area. NOW, THEREFORE, THE INLAND DEVELOPMENT AGENCY, THE CITY OF SAN BERNARDINO AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO DO HEREBY MUTUALLY AGREE AS FOLLOWS: Section 1. Recitals. The parties acknowledge and agree that the recitals as set forth above are accurate and correct in all respects. 2 C\W iNV0W5NTEMPKI3-09-15 IVDA CDC/2003-29 Section 2. Accomplishment of Public Purposes. The parties acknowledge and agree that this Agreement provides the IVDA, the City and the Agency with a means to foster the redevelopment of a portion of the Project Area located within the municipal boundaries of the City of San Bernardino which could not otherwise be accomplished within the foreseeable future unless the parties to the Agreement agree to exercise certain responsibilities as set forth herein. This Agreement is intended to be consistent with the intent and legal requirements of the CRL and in particular Health and Safety Code Section 33492.40,et seq., and shall be considered as an agreement entered into by the IVDA, the City and the Agency to accomplish the removal of blighting conditions within the Project Area and to compliment the civilian reuse and redevelopment of certain lands nearby the former Norton Air Force Base in the Project Area. This Agreement shall provide the IVDA with additional assistance from the City and the Agency to undertake studies and redevelopment activities in the portion of the Project Area commonly known as the Arden-Guthrie neighborhood, as more fully depicted in Exhibit "A" attached hereto. The lands depicted in Exhibit "A" are referred to herein as the "Arden-Guthrie Study Area". The parties presently anticipate that a specific program of redevelopment shall hereafter be formulated by the City and the Agency potentially involving third-party landowners and/or developers within a portion of the Arden-Guthrie Study Area depicted in Exhibit `B" attached hereto. The area designated in Exhibit `B" is referred to herein as the "Arden-Guthrie Implementation Area." Section 3. Grant of Redevelopment Powers to the City and the Agency/Arden- Guthrie Implementation Area. (a) Except as set forth in Section 3(b) and Section 3(c) of this Agreement, the IVDA hereby grants to the Agency, acting by and through the Community Development Commission of the City of San Bernardino (the "Commission") and to the legislative body of the Agency acting by and through the Mayor and Common Council of the City of San Bernardino (the "City"), as applicable, the right,power and authority to act for and on behalf of the WDA for the purpose of exercising all redevelopment powers legally available to the IVDA as set forth in the Redevelopment Plan, the CRL and in particular the provisions of Health and Safety Code Section 33492.40, et seq., affecting any lands and property situated within the Arden-Guthrie Implementation Area. In addition to any other powers which the City and/or the Agency may have, the Agency may, either in its name or on behalf of the IVDA, exercise all of the powers, rights and authorities of the IVDA as set forth in the Redevelopment Plan with respect to the lands and property situated within the Arden-Guthrie Implementation Area, including, but not limited to, the right to acquire and dispose of real and personal property, to either exercise the power of eminent domain directly on behalf of the IVDA or request the IVDA to consider the exercise of such powers in support of the Agency and at the sole discretion of the IVDA, sue and be sued, enter into agreements and undertake such other actions as appropriate to the intent of this Agreement. No such action of the City or the Agency, as applicable with respect to the exercise of such redevelopment powers affecting the Arden-Guthrie Implementation Area, need be consented to, ratified or confirmed by the IVDA unless such ratification, consent or confirmation by the IVDA is otherwise requested at the discretion of the City or the Agency. In the event the 3 Ci W TN DOW SNTFM P\03-09-15 IVDA CDC/2003-29 IVDA is so requested in writing by either the City or the Agency to ratify, consent or confirm any action or intended action of the City or the Agency with the respect to the Arden-Guthrie Implementation Area pursuant to this Agreement, the IVDA shall consider such matter as soon as practicable after receipt of such written request. The City and the Agency shall be solely responsible for the payment of all costs and expenses as may be associated with the implementation of any redevelopment activity as may hereafter be undertaken by the City and the Agency in the Arden-Guthrie Implementation Area as authorized by this agreement. (b) Notwithstanding the provisions of Section 3(a), the City and the Agency shall not initiate any amendment of the Redevelopment Plan or any amendment or supplement to the Implementation Plan for the Inland Valley Redevelopment Project Area without first obtaining the written approval of the IVDA in its sole and absolute discretion. (c) Notwithstanding the provisions of Section 3(a) or any other part of this Agreement,the City and the Agency shall take no action under this Agreement which causes the IVDA to incur an indebtedness which is payable from any funds, revenues or assets of the IVDA, except from"Transfer Revenues",if any as this term is defined in Section 4. Section 4. Transfer of a Certain Portion of the IVDA Tax Increment Funds for the Redevelopment of the Arden-Guthrie Implementation Area. (a) In addition to the meaning of certain words and phrases as set forth in the preceding Recital paragraphs and sections of this Agreement, the following definitions shall apply to usage of the terms set forth in this Agreement: • "Arden-Guthrie Properties Base Year" means and refers to the secured property tax roll t assessed valuation of the Arden-Guthrie Properties for ad valorem property tax purposes, for the 2002-03 fiscal year of the IVDA as shown on the secured property tax assessment rolls of the County Assessor. • "Arden-Guthrie Properties Indebtedness"means and refers to the indebtedness which the Agency may incur on or after the date of this Agreement with respect to the Arden- Guthrie Reuse Project. 0 "Arden-Guthrie Properties" means and refers to the approximately thirteen(13) acres of land in the Arden-Guthrie Implementation Area which is also depicted in Exhibit"B". • "Arden-Guthrie Reuse Project" means and refers to a community redevelopment project of the Agency, and the related activities which may hereafter be undertaken by the Agency in the Arden-Guthrie Implementation Area. The Arden-Guthrie Reuse Project shall be more particularly identified in the written notice provided to the IVDA by the Agency under Section 4(e). 4 C1WINDOWSUEMM3-09-151 MA CDC/2003-29 • "Tax Increment Revenue" mean and refer to those revenues, if any, received by the IVDA under Article VII, Section B(702) of the Redevelopment Plan as relate to the Arden-Guthrie Properties; • "Transfer Revenue" means and refers to a portion of the tax increment revenue of the IVDA attributable to the Arden-Guthrie Properties described in Section 4(b) which the IVDA shall pay to the Agency each year during the tern of this Agreement with respect to indebtedness incurred by the Agency in connection with the redevelopment of the Arden-Guthrie Properties subject to the conditions set forth in Section 4. (b) Transfer Revenue is a portion of the tax increment revenue of the IVDA generated by the Arden-Guthrie Properties by virtue of the Arden-Guthrie Reuse Project, if any, each fiscal year, in excess of such tax increment revenue of the IVDA attributed to the Arden- Guthrie Properties Base Year, net of the low- and moderate-income housing set-aside obligation of the IVDA with respect to such tax increment revenue in each such fiscal year, and further net of the portion of such tax increment revenue of the IVDA with respect to the Arden-Gutherie Properties which is payable by the IVDA in such fiscal year under the School District Agreements as set forth in Section 4(f). (c) Provided the Agency has given the IVDA the notice described in Section 4(e), commencing no sooner than the 2005-06 fiscal year of the IVDA, and for each fiscal year of the IVDA thereafter during the term of this Agreement, the IVDA hereby agrees to pay to the Agency the Transfer Revenue attributable to the Arden-Guthrie Properties (if any) for each such fiscal year following the Arden-Guthrie Properties Base Year. The obligation of the IVDA to pay the Transfer Revenue to the Agency is a special fund obligation of the IVDA payable solely from the portion of the tax increment revenue of the NDA generated by the Arden-Guthrie Properties by virtue of the Arden-Guthrie Reuse Project, if any, in the amount as calculated each fiscal year under the formula set forth in Section 4(b). No Transfer Revenues shall be payable by ° the NDA to the Agency for any fiscal year of the IVDA after June 30, 2040. Any unpaid balance of the Arden-Guthrie Properties Indebtedness as may exist as of July I, 2040, shall be discharged,released and forgiven by the Agency. (d) The IVDA shall only remit the Transfer Revenues calculated pursuant to Section (b) to the extent that the Agency has incurred on or after July 1, 2003, funds, or incurred indebtedness in connection with the redevelopment of all or any portion of the Arden-Guthrie Properties Indebtedness, including without limitation indebtedness incurred under one or more separate agreements by and between the Agency and the City of San Bernardino or indebtedness to a noteholder, bondholder, trustee or other creditor of the Agency related to costs incurred or paid by the Agency for the redevelopment of the Arden-Guthrie Reuse Project. The Agency shall, as a condition precedent to the receipt of Transfer Revenue on each May 1, commencing on May 1, 2005, submit to the IVDA a suitably detailed written statement of the outstanding unpaid balance of Arden-Guthrie Properties Indebtedness incurred by the Agency, including the relevant terms of repayment of such Arden-Guthrie Properties Indebtedness. (e) By a date not later than June 30, 2007, the Agency shall give notice to the IVDA that the Agency entered into one or more written agreements with third-parties for the acquisition 5 C k%VINDOWS%TEMP%M-09-15 f VDA CDC/2003-29 ' or redevelopment of at least seven (7) acres of land included in the Arden-Guthrie Implementation Area. Such notice shall contain a suitably detailed description of the Arden- Guthrie Reuse Project and the current balance, as of the date of such notice of the Arden-Guthrie Properties Indebtedness. Concurrently with such notice, the Agency shall also deliver to the IVDA a copy of such written agreements. In the event that such notice is not given by the Agency, then in such event, no Transfer Revenues shall be payable to the Agency by the IVDA under this Agreement. (f) This Agreement and the amounts of Transfer Revenue to be remitted by the IVDA to the Agency shall at all times be subject to the provisions of the various school district pass-through agreements between the IVDA and the San Bernardino City Unified School District, Colton Joint Unified School District, Redlands Unified School District, County Superintendent of Schools and the San Bernardino Valley College District (collectively, the "School District Pass-Through Agreements") as the same are applicable to the increases in the tax increment revenues generated by the Arden-Guthrie Properties. The calculation of the amount of the Transfer Revenue to be remitted by the IVDA to the Agency shall be net of all ° amounts required to be paid by the IVDA to the various school districts pursuant to the School District Pass-Through Agreements. The IVDA shall be solely responsible for the administration of the School'District Pass-Through Agreements. (g) The IVDA has established the Low and Moderate Income Housing Fund for the Inland Valley 'Redevelopment Project, and twenty percent (20%) of tax increment revenues received by the IVDA are deposited into such fund each year, subject to certain decreases authorized under applicable law. Said twenty percent(20%) figure may be decreased pursuant to Health and Safety Code Section 33334.2(a)(1) and (2) from time-to-time by the IVDA. If the IVDA determines for the entire Project Area, inclusive of the Arden-Guthrie Properties, to deposit less than said twenty percent (20%) figure for a particular fiscal year, as permitted by Health and Safety Code Section 33492.40(e) and 33334.2(a)(2)(A),or if the IVDA determines to make no deposit into the Low- and Moderate-Income Housing Fund for the entire Project Area, inclusive of the Arden-Guthrie Properties, as permitted by Health and Safety Code Section 33334.2(a)(1)(A), then in any such event, the Transfer Revenue calculation as set forth in Section 4(b) of this Agreement for the particular fiscal year(s) in which such a finding is made by the IVDA, shall not be subject to any off-set or adjustment corresponding to any amounts of such tax increment revenue that the.IVDA has not deposited into the IVDA Low and Moderate Income Housing Fund. (h) The obligation of the IVDA to remit any portion of the Transfer Revenue to the Agency pursuant to this Agreement is, at all times, subordinate to the obligations of the IVDA incurred pursuant to any and all tax allocation bonds, notes or other forms of indebtedness, and all refinancings of any of these, issued or incurred by the IVDA to the holders of publicly issued bonds, notes or other forms of indebtedness considered municipal securities sold in the municipal bond market. (i) The IVDA and the Agency will cooperate in each year during the term of this Agreement in the preparation of the Statement of Indebtedness for the IVDA as relates to the Arden-Guthrie Properties Indebtedness and the Transfer Revenue payable by the IVDA to the Agency for the Arden-Guthrie Properties Indebtedness. The IVDA and the Agency further agree, upon thirty (30) days written request,to exchange suitably detailed and written accounting 6 C:1W FNDDWS\TEMP\03-09-15 IVDA CDC/2003-29 and audit records related to the Arden-Guthrie Properties Indebtedness and the Transfer Revenue, including the estimates and final remittance amounts of Transfer Revenue each fiscal year as calculated by the IVDA, and the Arden-Guthrie Properties Indebtedness amounts incurred by the Agency with respect to the redevelopment of the Arden-Guthrie Properties. 0) Except as set forth in this Agreement as relates to Transfer Revenues,no other tax increment revenue or other funds or assets of the IVDA are subject to this Agreement. The IVDA may, but shall not be required, unless subsequently approved by the IVDA on a case-by- case basis, advance, loan or otherwise transfer to the Agency other tax increment revenue as may then be available to the IVDA from the Project Area, subject to applicable law. Section 5. Pre-June 30, 2003 Indebtedness of the Agency Relating to the Arden- Guthrie Implementation Area. As of June 30, 2003, the Agency has incurred the sum of $10,000,000 in redevelopment indebtedness with respect to its efforts to address conditions of blight in the Arden-Guthrie Implementation Area, including indebtedness incurred for the ® acquisition of the property. No cost, expense or indebtedness incurred by the Agency with respect to the Arden-Guthrie Implementation Area prior to June 30, 2003 shall be deemed to be an eligible cost or indebtedness of the Agency for purposes of calculating the Arden-Guthrie Properties Indebtedness. Section 6. Notices. Formal notices, demands and communications among the IVDA, the Agency and the City shall be deemed sufficiently given if (i) dispatched registered or certified mail via United State Postal Service, postage prepaid, return receipt requested, as designated in this Section 11, (ii) by personal deliver, (iii) express delivery service with written verification of deliver, or (iv) by electronic transmittal including fax transmissions with telephonic verification of receipt. Such written notices, demands and communications may be sent in the same manner to such other addresses as any party may from time to time designate by written notice to the other parties. Copies of all notices,demands and communications shall be sent as follows: IVDA: Inland Valley Development Agency 294 South Leland Norton Way San Bernardino,California 92408 Attention: Executive Director Agency: Redevelopment Agency of the City of San Bernardino 201 North"E"Street, Third Floor San Bernardino, California 92401 Attention: Executive Director City: City of San Bernardino San Bernardino City Hall 300 North"D"Street, Sixth Floor San Bernardino, California 92418 Attention: City Administrator 7 C MNDOWSITEM%03-09-15 IVDA CDC/2003-29 Notices which are dispatched by registered or certified mail through the United State Postal Service shall be deemed to be given three (3} business days after deposit with the United States Postal Service, and notices which are given by personal delivery shall be deemed given upon such personal deliver. Notices dispatched by express delivery service shall be deemed to have been given upon receipt by the party receiving such notice and execution of the deliver receipt, and notices dispatched through electronic transmittals shall be deemed to have given upon telephonic verification of receipt. Section 7. Indemnification and Hold Harmless. The City and the Agency hereby agree to indemnify, defend and hold harmless the IVDA and each of its officers, officials and employees from any and all Ioss, liability, claim, cost, expense or judgment, including attorney's fees, that may result from the implementation of this Agreement by the City and the Agency. The City and the Agency will also defend, indemnify and provide the cost of defense on behalf of the IVDA with respect to any third party challenge to the legality or enforceability of this Agreement pursuant to the CRL. Such indemnification and hold harmless shall apply whether or not the City and/or the Agency, or either of them was at fault or in any manner contributed to any such loss,liability,claim,cost,expense or judgment. Section 8. Entire Agreement of the Parties. This Agreement represents the entire agreement by and among the IVDA, the City and the Agency with respect to the transfer of the redevelopment powers of the IVDA affecting the Arden-Guthrie Implementation Area. Section 9. Invalidity of Any Provision. In the event it is determined that any provision of this Agreement is invalid or unenforceable as between the parties, the remaining provisions which are determined to be valid and enforceable shall remain in full force and effect. Section 10. Approval and Effective Date of Agreement. This Agreement has been duly approved and authorized for executioft and delivery by the governing board of the IVDA, by the Council on behalf of the City and by the Commission on behalf of the Agency, and this Agreement has been duly executed and delivered by the parties hereto. This Agreement may be executed in counterparts and when fully executed by the parties it shall be effective for all purposes as of the date set forth in the introductory paragraph. 8 C\WINDOWS\TEMPD34)9-I5 IVDA i CDC/2003-29 THIS AGREEMENT HAS BEEN DULY EXECUTED BY THE AUTHORIZED REPRESENTATIVES OF THE PARTIES HERETO AS SET FORTH BELOW. IVDA Inland Valley Development Agency Date: October 8, 2003 B r C i rt Christ an By: /lc;--Chair udith Valles (SEAL) ATTE By: r Clerk of the o d i Approved as to Form: By: C- Gener C unsel a [200') Redevelopment Cooperation Agreement: Arden-Guthrie] 9 C:1W ft4WW SNTEh1Px03-09-1 S t V DR CDC/2003-29 AGENCY Redevelopment Agency of the City of San Bernardino Date: October 28, 2003 By: NV e Community Development mission (SEAL) ATf ; By: Se�fetary Approv s to Form: By: Agency sel [2003 Redevelopment Cooperation Agreement: Arden-Guthrie] 10 P.NCLI.1 Smx Dcpi\Mwprn\AVMI tWt AmrndmemsVWg w-A.=w M 0)-09-15 IVDA Agrew.r A.DOC CDC/2003-29 CITY City of San Bmfirdino Date: October 28, 2003 By ayor (SEAL) ATTEST: LL By: City Clerk Approved"to Form: By: City Attorney [2003 Redevelopment Cooperation Agreement:Arden-Guthrie] 11 P-%Ckr W Services DW\M xVrLi%AgraDxm>An 4mentAAgruAsAmerA 2o3b34o9-]5 rvnA Agrcemar.noc CDC/2003-29 EXHIBIT"A" Map of Arden-Guthrie Study Area i 1 12 C-\WINDOW SNTEMM03-09-15 IYDA CDC/2003-29 R rz M N N N N NGG N N ry N N /yid »anS Qoucgama H W M b n0 O N `tl� V �i yp i N N N N N N N N H N ry N M W ^^ q trN �ar7S~Iv'A+W N f. N N N ^ erg y� �ryp N ^ N a N O O� n Yp1 N g f1 N N N N N O N ,V 0 N N h N jao7)S`N�QIO�AU� N h `MT N O N N N N N N N ry ry N M N N N N v4 N ryry ry eeyy h N N N N N N N COj N N N N N ry N N Y e0 R W N N N 7 N N N N R � b a ti b x N N O n C6 y� N n ,nr N N N N ry M v N b b n N N N O ol N Nbi .^r •��W N h N O� .R N fV aD N O r N N N N O r\\\ N N O O p9 O N N N N �0 N r ry n H an `2 N O b O CDC/2003-29 EXHIBIT"B" Map of Arden-Guthrie Implementation Area i i 0 13 CAVVINDOWSiTEMPl03-09-15 1 VDA . r CDC/2003-29 - m O N W N O 00 N O N N N N N N N N co X W 1I\ V1 M •-� G1 1f1 N N N N N N N N N N hang uomqumQ 't %D 00 O N 't `d' N O 00 N N N N (4 N N N N N N C) O N N N N N N N N N N N hang.(aiul}jay� v \.O 00 O N W' `r N O 00 `W a C1 h V� N O N N N N N N N N N N N (n O N w Vl `cN N 01% ^ O.r .-� r4 r O l ' N N N N N N N N N N N hang aguioam-,N Q d V' 00 O N V' N O co d' O\ O N N N N N N N N N N N z wm U h O zz M h M v-4 -4 ° 0 0 0 Cl °o cy N N N N N N N N N N hang alJlpnq v b x T RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Lewis Brisbois Bisgaard & Smith LLP 650 East Hospitality Lane Suite 600 San Bernardino, California 92408 Attn: Carol J. Fogelman NOTICE OF AMENDMENT AND AMENDMENT OF DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND SECURITY AGREEMENT (Arden-Guthrie Neighborhood Redevelopment Project) (HUD Section 108 Loan Agreement No. B-03-MC-06-0539) THIS NOTICE OF AMENDMENT AND AMENDMENT OF DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,FIXTURE FILING AND SECURITY AGREEMENT ("Amendment to the Agency Deed of Trust")is made as of March 22,2007,by the Redevelopment Agency of the City of San Bernardino,a public body corporate and politic(hereinafter referred to as "Trustor" and the "Agency"), whose address is 201 North "E" Street, Suite 301, San Bernardino, California 92401, to LandAmerica NCS Insurance Company(hereinafter referred to as"Trustee"), whose address is 888 West 6th Street,4th Floor,Los Angeles,California 90017,for the benefit of the City of San Bernardino, a municipal corporation, its successors and assigns (herein called `Beneficiary"),whose address is 201 North"E"Street,Suite 301, San Bernardino,California 92401 and this Amendment to this Agency Deed of Trust amends that certain instrument recorded on March 16, 2007, as Instrument No. 2007-0166755, in the Official Records of San Bernardino County, entitled: "Deed of Trust, Assignment of Leases and Rents, Fixture Filing and Security Agreement"(the"Agency Deed of Trust") A. The text of the Agency Deed of Trust is hereby incorporated by this reference into this Amendment to the Agency Deed of Trust. Unless the usage of a particular term or phrase used in this Amendment to the Agency Deed of Trust may otherwise require, the meaning of terms and phrases used in this Amendment to the Agency Deed of Trust shall be the same as set forth in the Agency Deed of Trust. B. For good and valuable consideration, the Agency, as the Trustor under the Agency Deed of Trust, hereby grants, bargins, sells, conveys and warrants to the Trustee, in trust with power of sale, that property in the City of San Bernardino,County of San Bernardino, State of California, more particularly described in Exhibit "A-1"attached hereto and made a part hereof. 4830-9269-2481.1 1 03/22/07 jmm v C. The word"Land"as this term is defined in the Agency Deed of Trust,means and includes the real property described in Exhibit"A"to the Agency Deed of Trust together with the real property described in Exhibit"A-1"attached to this Amendment to Agency Deed of Trust. D. The word"Mortgaged Property,"as the term is defined in the Agency Deed of Trust,means and includes the estate and property rights of the Agency as the Trustor,as described in Paragraph A through Paragraph D,including the Agency Deed of Trust in both: (i)the real property described in Exhibit"A" to the Agency Deed of Trust and (ii) the real property described in Exhibit"A-1"to this Amendment to the Agency Deed of Trust. E. The Agency as the Trustor, hereby amends the Agency Deed of Trust to include the real property described in Exhibit"A-1"to this Amendment to the Agency Deed of Trust as part of the Land and the Mortgage Property. F. The purpose of this Amendment to the Agency Deed of Trust is to implement the obligations of the Agency in favor of the City as they arise under the 2006 Redevelopment Cooperation Loan Agreement (Arden-Guthrie Neighborhood Redevelopment Project) dated as of July 1, 2006 by and between the Trustor and the City with respect to the use by the Trustor of the proceeds of the"City Section 108 Loan"as the term is defined in the Agency Deed of Trust. Except as expressly amended by this Amendment to the Agency Deed of Trust,the text of this Agency Deed of Trust is hereby restated in its entity and remains in full force and effect. G. RIGHTS OF THE SECRETARY OF HUD. This Amendment to the Agency Deed of Trust is part of the "City Section 108 Loan Collateral" as this term is defined in the City Section 108 Loan Agreement. Pursuant to the provisions of paragraph 15(f)of that certain Contract for Loan Guarantee assistance under Section 108 of the Housing and Community Development Act, of 1974,as amended(the"HUD Section 108 Loan Agreement")by and between the Beneficiary and the United States Secretary of Housing and Urban Development(the"Secretary"),the Beneficiary shall make a collateral assignment in favor of the Secretary, or its assignee,in this Agency Deed of Trust to the"Custodian"(as this term is defined in the HUD Section 108 Loan Agreement). Paragraph 15(i)of the HUD Section 108 Loan Agreement provides in relevant part: "The Secretary may complete the endorsement of the Subrecipient Note [e.g., the Promissory Note from Trustor to Beneficiary] and record the assignments referred to in paragraph 15(e) and thereby effectuate the transfer of the documents referenced and underlying indebtedness [e.g., the City Section 108 Loan Collateral including without limitation this Agency Deed of Trust] from the Borrower [e.g., the Beneficiary] to the Secretary or the Secretary's assignee." Paragraph 15(i) of the HUD Section 108 Loan Agreement further provides: "The Borrower [e.g., the City/Beneficiary] agrees that it shall promptly notify the Secretary [of HUD] in writing upon the occurrence of any event which constitutes a default (an "Event of 4830-9269-2481.1 2 03/22/07 jmm DRAFT Default")under(and as defined in)any of the Security Documents,as defined in paragraph 15(d) [e.g., the City Section 108 Loan Collateral, including without limitation this Agency Deed of Trust]. Notification of an Event of Default shall be delivered to the Secretary [of HUD] as directed in paragraph 12(f)above. Upon the occurrence of an Event of Default, the Secretary [of HUD] may(without prior notice or hearing, which Borrower [e.g., the Beneficiary] hereby expressly waives), in addition to (and not in lieu of) exercising any and all remedies that may be available under the Security Documents [e.g., the City Section 108 Loan Collateral] declare the [HUD] Note in Default and exercise any and all remedies available under paragraph 12. This paragraph shall not affect the right of the Secretary[of HUD] to declare the[HUD]Note in default pursuant to paragraph 11 and to exercise in connection therewith any and all remedies available under paragraph 12." The Agency as the Trustor acknowledges and agrees that this Amendment to the Agency Deed of Trust is and shall be enforceable by the Secretary of HUD as part of the Agency Deed of Trust and the City Section 108 Loan Collateral upon the completion of the endorsement by the Secretary of HUD of the Promissory Note. 4830-9269-2481.1 3 03/22/07 jmm r IN WITNESS WHEREOF, Trustor hereby duly executes this Amendment of the Agency Deed of Trust as of the day and year first above written. TRUSTOR Redevelopment Agency of the City of San Bernardino, a public body corporate and politic By: Chairperson of the Community Development Commission of the City of San Bernardino, its governing body [NOTARY ACKNOWLEDGMENT ATTACHED] CONSENT OF BENEFICIARY The City of San Bernardino, as the Beneficiary of the Agency Deed of Trust,hereby consents and accounts the delivery of this Amendment to the Agency Deed of Trust by the Agency. BENEFICIARY City of San Bernardino, a municipal corporation By: Manager of the City of San Bernardino [NOTARY ACKNOWLEDGMENT ATTACHED] 4830-9269-2481.1 4 03/22/07jnun EXHIBIT"A-1" LEGAL DESCRIPTION OF ADDITIONAL AGENCY PROPERTY [INSERT COMPOSITE LEGAL DESCRIPTION OF EACH ADDITIONAL AGENCY-OWNED PARCEL OF LAND IN THE ARDEN-GUTHRIE NEIGHBORHOOD AS ACQUIRED BY THE AGENCY AFTER SEPTEMBER 1,2006 USING THE PROCEEDS OF THE $7.5M HUD SECTION 108 LOAN] 4830-9269-2481.1 5 03/22/07 jmm A ; a 1 STATE OF CALIFORNIA ) 2 COUNTY OF SAN BERNARDINO ) SS CITY OF SAN BERNARDINO ) 3 4 I, RACHEL G. CLARK, City Clerk for the City of San Bernardino, 5 DO HEREBY CERTIFY that the foregoing and attached copy of the City of 6 San Bernardino Resolution No. 2006-271 is a full, true and correct copy of that now on file in the Office of the City Clerk. 7 8 IN WITNESS WHEREOF, I have hereunto set my hand and affixed 9 the official seal of the City of San Bernardino this 12th day of January, 2007. 10 11 � � 2� 12 Rach G. Clark, City Clerk 13 14 15 By: Margaret(*F'edo , Deputy City Clerk 16 17 18 19 20 21 22 23 24 25 26 27 28 a , 11 1 RESOLUTION NO. 2006-271 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE 3 CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE CONTRACT AND RELATED DOCUMENTS 4 FOR THE LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS 5 AMENDED, 42 USC SECTION 5308 (CDBG SECTION 108 CONTRACT NO. B-03-MC-06-0539) - NORTH ARDEN GUTHRIE COMMERCIAL 6 DEVELOPMENT PROJECT (IVDA REDEVELOPMENT PROJECT AREA) 7 WHEREAS, for the past several years the City of San Bernardino (the "City") and the 8 Redevelopment Agency of the City of San Bernardino (the "Agency") have been engaged in 9 efforts to address blighting conditions in a portion of the City known as the Arden-Guthri 10 neighborhood; and I1 12 WHEREAS, the Arden-Guthrie neighborhood has been afflicted with a number o 13 physical and economic conditions of blight over the years, as these terms are defined in Health 14 and Safety Code Section 33032, including without limitation, conditions of substandard 15 structures and dwellings, residential overcrowding, substandard property maintenance 16 conditions, inadequate design of improvements, abandonment of property, depreciating an t 17 stagnant property values, and criminal activity which has occurred at rates substantially higher 18 than crime rates in other neighborhoods of the City; and 19 WHEREAS, the Agency, in cooperation with the City, has previously embarked on 20 program to acquire properties in the Arden-Guthrie neighborhood and to relocate the persons an 21 households occupying such property into safe, sanitary and decent housing at other suitable 22 23 locations; and 24 WHEREAS, as of June 30, 2006, the Agency has incurred a redevelopment indebtedness 25 in excess of$10,000,000 in connection with its previous efforts to address conditions of blight in 4829-3957-2993.1 -1- P:\AeeudasMesolutions\Rewlutions\2006\07-2406 Arden Guthrie Section 108 Loan MCC Reso A.doc I the Arden-Guthrie neighborhood and to prevent the spread of blight from the Arden-Guthri 2 neighborhood into nearby neighborhoods and communities; and 3 WHEREAS, the City believes it is necessary and appropriate for the Agency to acquire 4 additional lands in the Arden-Guthrie neighborhood in order to foster a commercially viable an 5 economically sustainable plan of redevelopment and reuse of the Arden-Guthrie neighborhood 6 and to prevent the spread of blight in the Arden-Guthrie neighborhood into other surrounding 7 neighborhoods and communities; and 8 9 WHEREAS, the Arden-Guthrie neighborhood is situated within the redevelopment 10 Project area of the Inland Valley Development Project (the "Project Area") which is a special 11 redevelopment project area administered by the Inland Valley Development Agency (the 12 "IVDA"); and 13 . WHEREAS, the IVDA has been established pursuant to a joint exercise of powe 14 agreement in January 1990, as a former military base civilian reuse local redevelopment 15 authority as recognized by the United States Secretary of the Air Force, for the purpose o 16 assisting in the conversion, redevelopment and civilian reuse of the former Norton Air Force 17 > ase located within the City of San Bernardino; and 18 WHEREAS, the IVDA has been granted specific powers by the State Legislature in 198 19 (Stats. 1989 c.545 and See Now Stats 1997, c.580 and Health and Safety Code Section 33492.40 20 et seq.) to assist in the redevelopment of the former Norton Air Force Base and the lands in 21 proximity thereto pursuant to the Community Redevelopment Law (Health and Safety Cod 22 Section 33000, et seq.); and 23 WHEREAS, the IVDA has adopted the Redevelopment Plan for the Inland Valle 24 Redevelopment Project Area (the "Redevelopment Plan") in accordance with the provisions o 25 the CRL, and the Redevelopment Plan provides for certain redevelopment activities to be undertaken within the Project Area as more fully described in the Redevelopment Plan; and 4829-3957-2993.1 -2- P:Ugendas\Reaoiutiom\Re intions\2006\07-24-06 Arden Guthrie Section 108 Loan MCC Re"A.doc l I WHEREAS, the IVDA, the City and the Agency have entered into an agreement entitled 2 "2003 Redevelopment Cooperation Agreement", dated as of October 8, 2003 (the "ND 3 Redevelopment Cooperation Agreement') to assist the City and the Agency to accomplish the 4 redevelopment of the Arden-Guthrie neighborhood. 5 WHEREAS, at the request of the Agency, the City has made arrangements with the 6 United States Secretary of the Department of Housing and Urban Development ("HUD"), to 7 provide the City with a "Section 108 Loan Guarantee" under the provisions of the Housing an 8 Community Development Act of 1974, as amended (42 USC Section 5308) and HUD Section 9 108 Loan Program regulations set forth at 24 CFR Part 570.700 (the "2006 HUD Section 10 10 Loan") in an amount of Seven Million Five Hundred Thousand Dollars ($7,500,000), and in tum 11 the City proposes to loan to the Agency the proceeds of the 2006 HUD Section 108 Loan to the 12 Agency in support of the Project; and 13 WHEREAS, HUD has confirmed it is prepared to provide a Section 108 Loan to the City 14 in the maximum principal sum of Seven Million Five Hundred Thousand Dollars ($7,500,000 15 under HUD Section 108 Loan Program Guarantee No. B-03-MC-06-0539 (the "2006 HUD 16 Section 108 Loan Contract'); and a 17 WHEREAS, the City shall provide the Agency with the proceeds of the 2006 City 18 Section 108 Loan, as the authorized Subrecipient of the City under the terms of the 2006 City 19 Section 108 Loan Contract, for the following activities in connection with the Arden-Guthri 20 Redevelopment Project: 21 (1) site acquisition, pursuant to 24 CFR Part 570.703(a); 22 (ii) completing the acquisition by the Agency of certain lands in the "Project Site" 23 this term is defined in the 2006 HUD Section 108 Loan Contract); 24 (iii) residential relocation assistance, pursuant to 24 CFR Part 570.703(d); 25 4829-3957-2993.1 -3- P:W eendasUtesolutiom\Re"lutio"\2006107-24-06 Arden Guthrie Section 108 Loan MCC Reso A.doc I (iv) demolition and clearance, pursuant to 24 CFR Part 570.703(e) (See 2006 HUD 2 Section 108 Loan Contract Paragraph 15(b)). 3 NOW, THEREFORE, IT IS HEREBY RESOLVED,DETERMINED AND ORDERED 4 BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS 5 FOLLOWS: 6 Section 1. The Recitals of this Resolution are true and correct. The Mayor an 7 Common Council have previously authorized the submission by the City of the HUD Loan 8 Application in support of the Arden-Guthrie Redevelopment Project, and the Mayor an 9 Common Council have previously conducted public hearings related to the use and application 10 of the HUD Section 108 Loan Guarantee Program and the 2006 HUD Section 108 Loan Contract I1 for the Arden-Guthrie Redevelopment Project in an aggregate amount not to exceed Seven 12 Million Five Hundred Thousand Dollars ($7,500,000.00), including the public hearing 13 conducted on February 23, 2006, May 1, 2006 and July 24, 2006. The text of the HUD Loa 14 15 Application and the text of the 2006 HUD Section 108 Loan Contract, together with the 16 confirming correspondence of the City addressed to HUD as relates thereto, is incorporate a 17 herein by this reference. 18 Section 2. The Mayor and Common Council have conducted public hearings relating 19 to the use of the HUD Section 108 Loan Guarantee Program assistance and funding for the 20 Arden-Guthrie Redevelopment Project as described in the HUD Loan Application and as furthe 21 set forth in the staff report dated July 24, 2006, and during each such public hearing the Mayo 22 and Common Council considered all comments and information submitted by interested person 23 in connection with the HUD Loan Application, the Arden-Guthrie Redevelopment Project an 24 the 2006 HUD Section 108 Loan Contract. 25 4829-3957-2993.1 -4- i:4 l4eadas UtesolutioosUtesolutioasXZ006\07-24-06 Arden Guthrie Section 108 Loan MCC Re"A,doe I Section 3. The Mayor and Common Council hereby finds and declares that several 2 conditions of blight exist in the Arden-Guthrie neighborhood and that the approval of the 200 3 HUD Section 108 Loan Contract and the implementation of the community redevelopment 4 activities contemplated thereunder, shall substantially and materially assist the City to prevent 5 and eliminate the spread of blight which adversely affects the Arden-Guthrie neighborhood an 6 the community generally. The redevelopment of the Arden-Guthrie neighborhood is in the vita 7 8 and best interests of the City. 9 Section 4. The Mayor and Common Council hereby approve the terms of the 200 10 HUD Section 108 Loan Contract for the Arden-Guthrie Redevelopment Project in the form as 11 submitted to the Mayor and Common Council at the meeting at which this Resolution is adopted 12 The Mayor or his designee are hereby authorized and directed to execute the form of the 200 13 HUD Section 108 Loan Contract on behalf of the City as the "Borrower", all as set forth in the 14 2006 HUD Section 108 Loan Contract. The Mayor or his designee are further authorized an 15 directed to execute on behalf of the City as the Borrower the $7,500,000 HUD Section 108 Loa 16 promissory Note and all of the other 2006 HYD Section 108 Loan Contract-related instrument 17 and certificates as may be required by HUD in order to complete the transaction contemplate 18 under the 2006 HUD Section 108 Loan Contract as relates to the Arden-Guthrie Redevelopmen 19 Project. 20 21 Section 5. Upon execution by the City as the Borrower, the Mayor or his designee 22 shall cause the fully executed original copy of the 2006 HUD Section 108 Loan Contract and the 23 $7,5000,000 HUD Section 108 Loan Promissory Note, and the related instruments and othe 24 certificates, to be delivered to HUD as soon as practicable, including without limitation the 25 collateral assignment of the Agency Lands by the City to HUD as initially pledged as security by 4829-3957-2993.1 -5- P:Wtend*sU4 olutiom\Renlutione\2006\07-24-06 Arden Guthrie Section 108 Loan MCC Re"A.doc r . I the Agency to the City under the terms of the 2006 Redevelopment Cooperation Loan 2 Agreement, dated as of July 24, 2006, by and between the City and the Agency. The Mayor of 3 his designee are further authorized and directed to initiate all other ministerial actions on behal 4 of the City relating to the delivery to HUD of all related documents in support of the Arden - 5 Guthrie Redevelopment Project, including authorized City offer signature certificates, wire fun 6 transfer instructions, the establishment of custodial account agreements among HUD, Well 7 8 Fargo Bank NTSA, and the City, account fund balance confirmation reports and the like, 9 contemplated under the 2006 HUD Section 108 Loan Contract. 10 Section 6. (a) The Mayor and Common Council hereby acknowledges that the 11 $7,500,000 HUD Section 108 Loan Promissory Note sets forth a specific schedule of repaymen 12 by the City to HUD of the principal amount of the loan under the 2006 HUD Section 108 Loan 13 Contract, as shall be due and payable in the amounts and at the times provided as follows: 14 Principal Due Date Commitment Principal Due Date Commitment 15 Amount Amount 16 August 1, 2006 $0 August 1, 2016 $424,000 17 August 1, 2007 $0 August 1, 2017 $454,000 18 August 1, 2008 $0 August 1, 2018 $494,000 August 1,2009 $0 August 1, 2019 $534,000 19 August 1, 2010 $0 August 1, 2020 $574,000 20 August 1, 2011 $334,000 August 1, 2021 $624,000 21 August 1, 2012 $344,000 August 1, 2022 $654,000 22 August 1, 2013 $354,000 August 1, 2023 $654,000 23 August 1, 2014 $384,000 August 1, 2024 $634,000 24 August 1, 2015 $404,000 August 1, 2025 $634,000 25 (Aggregate Principal Amount= $7,500,000) 4829-3957-2993.1 -6_ P:\Agendas\ResolutionsUU30lutions\2006\07-2406 Arden Guthrie Section 108 Loan MCC Reso Adoe 1 Payments of interest which accrue on the outstanding principal balance of the 2006 HUD Sectio 2 108 loan from the date of the $7,500,000 HUD Section 108 Loan Promissory Note (e.g., the 3 "Interim Interest Rate" and later, the "Public Offering Date", as these terms are defined in th 4 $7,500,000 HUD Section 108 Loan Promissory Note) shall be paid by the City at the rate of 5 interest per annum determined in accordance with the interim HUD financing and later on th 6 Public Offering Date to be inserted by HUD or its fiscal agent, in the Schedule "P&I" of the 7 $7,500,000 HUD Section 108 Loan Promissory Note, all as provided in the 2006 HUD Sectio 8 108 Loan Contract. 9 (b) Except for the special source of funds as may be available to the City by virtue of 10 the collateral assignments by: 11 (i) the Agency to the City of the Agency's beneficial interest in the Agency Land 12 pursuant to the 2006 Redevelopment Cooperation Loan Agreement; 13 (ii) the Agency to the City for the collateral assignment to HUD of the Agency' 14 beneficial interest in the "Annual Agency Site Tax Increment Payment" which 15 16 arises in favor of the Agency under the terms of the 2003 Redevelopmen 17 Cooperation Agreement, dated October 1, 2003, by and among the City, ND 18 and the Agency; 19 (iii) the Agency to the City for the collateral assignment to HUD of the Agency' 20 beneficial interest in the "Annual Agency Site Sales Tax Payment" which arise 21 in favor of the Agency under the terms of Section 6 of the 2006 Redevelopmen 22 Cooperation Loan Agreement; 23 (iv) the Agency to the City for collateral assignment to HUD of the Agency' 24 beneficial interest in the "Annual Agency Grant Assistance Revenue Payment' 25 4829-3957-2993.1 -7- i:l AgendaslReh tiow\Resolutions12006W7-24-06 Arden Guthrie Section 108 Loan MCC Re"A.doc 1t I which arises in favor of the Agency under the terms of Section 7 of the 200 2 Redevelopment Cooperation Loan Agreement; 3 (v) the Agency to the City for collateral assignment to HUD of the Agency' 4 beneficial interest in "Developer Grant Agreement Revenues", which arises in 5 favor of the Agency under the terms of Section 9 of the 2006 Redevelopmen 6 7 Cooperation Loan Agreement or otherwise under the Developer Gran Agreement; 8 9 The sole source of funds of the City available to repay the 2006 HUD Section 108 Loan shall b 10 the CDBG Program revenues of the City, all as more fully provided under the 2006 HUD 11 Section 108 Loan Contract and no other source of funds of the City is pledged or shall be 12 available for the repayment of the 2006 HUD Section 108 Loan. For the purposes of the 200 13 HUD Section 108 Loan Contract, the source of funds identified above in subsection (b)(ii), (iii) 14 and (iv), are referred to collectively as "Pledged Revenues". 15 Section 7. The disbursement of the proceeds of the 2006 HUD Section 108 Loan b 16 the City to the Agency shall be subject to and conditional upon the satisfaction by the Agency o 17 each and every condition of Section 4 the 2006 Redevelopment Cooperation Loan Agreement 18 substantially in the form as such loan agreement is presented to the City at the meeting at whic 19 20 this Resolution is adopted. The final form of the 2006 Redevelopment Cooperation Loan 21 Agreement (Arden-Guthrie Redevelopment Project) shall be subject to approval by the Mayo 22 and Common Council, in its sole discretion, as evidenced by a separate resolution of the Mayo 23 and Common Council approving the final form of such 2006 Redevelopment Cooperation Loain 24 Agreement (Arden-Guthrie Redevelopment Project). 25 4829-3957-2993.1 _8- P:Weeadas\Re"lutionsXResolution=\2006\07-2406 Arden Guthrie Section 108 Loan MCC Reno Adoc I Section 8. Special legal counsel to the City in connection with the Arden-Guthrie 2 Redevelopment Project and the 2006 HUD Section 108 Loan Contract is the law firm of Lewis 3 Brisbois Bisgaard & Smith, LLP. Special legal counsel, in consultation with the City Attorney, 4 is hereby authorized and directed to submit to HUD on behalf of the City, an approving legal 5 opinion with respect to the transaction contemplated under the 2006 HUD Section 108 Loan 6 Contract, in the form required by HUD as part of the documentation associated with the 200 7 HUD Section 108 Loan Contract. 8 9 Section 9. This Resolution shall take effect upon its adoption and execution in the 10 manner as required by the City Charter. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4829-3957-2993.1 -9- P:Weendss\RewlutiomVtewlutiomUO06107-2406 Arden Guthrie Section 108 Loan MCC Rem A.doc i RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE 2 MAYOR TO EXECUTE THE CONTRACT AND RELATED DOCUMENTS 3 FOR THE LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS 4 AMENDED, 42 USC SECTION 5308 (CDBG SECTION 108 CONTRACT NO. B-03-MC-06-0539) — NORTH ARDEN GUTHRIE COMMERCIAL 5 DEVELOPMENT PROJECT (IVDA REDEVELOPMENT PROJECT AREA) 6 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 7 Common Council of the City of San Bernardino at a joint regular meeting thereof, held 8 on the 24th day of July , 2006, by the following vote to wit: 9 Council Members: Ayes Nays Abstain Absent 10 ESTRADA x 11 BAXTER x 12 MCGINNIS _x 13 DERRY x 14 KELLEY x JOHNSON x- 15 MC CAMMACK x 16 18 Rach 4 G. Clark, City Clerk 19 The foregoing resolution is hereby approved this day of July ,2006. 20 22 atrick . Morris,n�'ayar_� San Bernardino 23 Approved as to Form: 24 / 25 By: J es F. Penman, City Attorney t 4829-3957-2993.1 -10- F.\A4endas\RewhitionsUtcsolutions\2006\07-2406 Arden Guthrie Section 108 Loan MCC Reso A.doc I 1 STATE OF CALIFORNIA ) 2 COUNTY OF SAN BERNARDINO) SS CITY OF SAN BERNARDINO ) 3 4 I, RACHEL G. CLARK, City Clerk for the City of San Bernardino, 5 DO HEREBY CERTIFY that the foregoing and attached copy of the City of 6 San Bernardino Resolution No. CDC/2006-31 is a full, true and correct copy 7 of that now on file in the Office of the City Clerk. 8 IN WITNESS WHEREOF, I have hereunto set my hand and affixed 9 the official seal of the City of San Bernardino this 12th day of January, 2007. 10 11 '- 12 Rachel G. Clark, City Clerk 13 14 15 By: Margaret Fedor, Deputy City Clerk 16 17 18 19 20 21 22 23 24 25 26 27 28 1 RESOLUTION NO. CDC/2006-31 2 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION 3 OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE EXECUTIVE - DIRECTOR OF THE 4 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE THE 2006 REDEVELOPMENT 5 COOPERATION LOAN AGREEMENT BY AND BETWEEN THE AGENCY AND THE CITY OF SAN BERNARDINO - NORTH ARDEN 6 GUTHRIE COMMERCIAL DEVELOPMENT PROJECT (IVDA 7 REDEVELOPMENT PROJECT AREA) 8 WHEREAS, for the past several years the City of San Bernardino (the "City") and the 9 Redevelopment Agency of the City of San Bernardino (the "Agency") have been engaged in 10 efforts to address blighting conditions in a portion of the City known as the Arden-Guthrie 11 neighborhood; and 12 WHEREAS, the Arden-Guthrie neighborhood has been afflicted with a number o 13 physical and economic conditions of blight over the years, as these terms are defined in Health 14 and Safety Code Section 33032, including without limitation, conditions of substandard 15 structures and dwellings, residential overcrowding, substandard property maintenance 16 conditions, inadequate design of improvements, abandonment of property, depreciating an 17 18 stagnant property values, and criminal activity which has occurred at rates substantially higher 19 than crime rates in other neighborhoods of the City; and 20 WHEREAS, the Agency, in cooperation with the City, has previously embarked on 21 program to acquire properties in the Arden-Guthrie neighborhood and to relocate the persons an 22 households occupying such property into safe, sanitary and decent housing at other suitable 23 locations; and 24 WHEREAS, as of June 30, 2006, the Agency has incurred a redevelopment indebtedness 25 in excess of$10,000,000 in connection with its previous efforts to address conditions of blight in 4810-7894 417.1 -1- P:1AgendasUResolutions\Resolutions12 00 6107-2 4 06 Arden Guthrie Section 108 Loan CDC Reso C.doc I the Arden-Guthrie neighborhood and to prevent the spread of blight from the Arden-Guthrie 2 neighborhood into nearby neighborhoods and communities; and 3 WHEREAS, the City believes it is necessary and appropriate for the Agency to acquire 4 additional lands in the Arden-Guthrie neighborhood in order the foster a commercially viable 5 and economically sustainable plan of redevelopment and reuse of the Arden-Guthri 6 7 neighborhood and to prevent the spread of blight in the Arden-Guthrie neighborhood into othe surrounding neighborhoods and communities; and 8 9 WHEREAS, the Arden-Guthrie neighborhood is situated within the redevelopment 10 Project area of the Inland Valley Development Project (the "Project Area") which is a special 11 redevelopment project area administered by the Inland Valley Development Agency (the 12 "IVDA"); and 13 WHEREAS, the IVDA has been established pursuant to a joint exercise of power 14 agreement in January 1990, as a former military base civilian reuse local redevelopment 15 authority as recognized by the United States Secretary of the Air Force, for the purpose o 16 assisting in the conversion, redevelopment and civilian reuse of the former Norton Air Force ° 17 Base located within the City of San Bernardino; and 18 WHEREAS, the IVDA has been granted specific powers by the State Legislature in 198 19 (Stats. 1989 c.545 and See Now Stats 1997, c.580 and Health and Safety Code Section 33492.40 20 et seq.) to assist in the redevelopment of the former Norton Air Force Base and the lands i 21 proximity thereto pursuant to the Community Redevelopment Law (Health and Safety Cod 22 Section 33000, et seq.); and 23 WHEREAS, the IVDA has adopted the Redevelopment Plan for the Inland Valle 24 Redevelopment Project Area (the "Redevelopment Plan") in accordance with the provisions o 25 the CRL, and the Redevelopment Plan provides for certain redevelopment activities to be undertaken within the Project Area as more fully described in the Redevelopment Plan; and 4810-7894417.1 -2- P.Wgendas\Resolutions\Rcsolutions\2006\07-2406 Arden Guthrie Section 108 Loan CDC Reso C.doc I WHEREAS, the IVDA, the City and the Agency have entered into an agreement entitled 2 "2003 Redevelopment Cooperation Agreement", dated as of October 8, 2003 (the "IVD 3 Redevelopment Cooperation Agreement") assist the City and the Agency to accomplish the 4 redevelopment of the Arden-Guthrie neighborhood. 5 WHEREAS, at the request of the Agency, the City has made arrangements with the 6 United States Secretary of the Department of Housing and Urban Development ("HUD"), to 7 provide the City with a "Section 108 Loan Guarantee" under the provisions of the Housing an 8 Community Development Act of 1974, as amended (42 USC Section 5308) and HUD Section 9 108 Loan Program regulations set forth at 24 CFR Part 570.700 (the "2006 HUD Section 10 10 Loan") in an amount of Seven Million Five Hundred Thousand Dollars ($7,500,000), and in turn 11 the City proposes to loan to the Agency the proceeds of the 2006 HUD Section 108 Loan to the 12 Agency in support of the Project; and 13 WHEREAS, HUD has confirmed it is prepared to provide a Section 108 Loan to the City 14 in the maximum principal sum of Seven Million Five Hundred Thousand Dollars ($7,500,000 15 under HUD Section 108 Loan Program Guarantee No. B-03-MC-06-0539 (the "2006 HUD 16 Section 108 Loan Contract"); and 17 � WHEREAS, the City shall provide the Agency with the proceeds of the 2006 City 18 Section 108 Loan, as the authorized Subrecipient of the City under the terms of the 2006 City 19 Section 108 Loan Contract, for the following activities in connection with the Arden-Guthrie 20 Redevelopment Project: 21 (1) Site acquisition, pursuant to 24 CFR Part 570.703(a); 22 (ii) Completing the acquisition by the Agency of certain lands in the "Project Site" 23 this term is defined in the 2006 HUD Section 108 Loan Contract; 24 (iii) Residential relocation assistance, pursuant to 24 CFR Part 570.703(d); 25 4810-7894417.1 -3- P Wgendas\R"olutiow\Rc olutions\2 006 10 7-2 4-06 Aid-Guthrie Section 108 Loan CDC Reso C.doc 1 (iv) Demolition and clearance, pursuant to 24 CFR Part 570.703(e) (See 2006 HUID 2 Section 108 Loan Contract Paragraph 15(b)); and i 3 WHEREAS, the Mayor and Common Council have adopted a resolution entitled 4 "Resolution of the Mayor and Common Council of the City of San Bernardino approving an 5 authorizing the Mayor to execute the contract and related documents for the Loan Guarante 6 Assistance under Section 108 of the Housing and Community Development Act of 1974, as 7 amended, 42 USC Section 5308 (CDBG Section 108 Contract No. B-03-MC-06-0539) — North 8 Arden Guthrie Commercial Development Project(IVDA Redevelopment Project Area)". 9 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMN41SSION OF THE 10 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS 11 FOLLOWS: 12 Section 1. The Recitals of this Resolution are true and correct. 13 Section 2. The. Commission hereby finds and declares that severe conditions of 14 blight exist in the Arden-Guthrie neighborhood and that the approval of the 2006 HUD Section 15 108 Loan Contract and the 2006 Redevelopment Cooperation Loan Agreement, and the 16 implementation of the community redevelopment activities contemplated under each such 17 agreement shall substantially and materially assist the Agency to prevent and eliminate the 18 spread of blight which adversely affects the Arden-Guthrie neighborhood and the community 19 generally. The redevelopment of the Arden-Guthrie neighborhood is in the'vital and best 20 interests of the City. Section 3. The Commission hereby approves the terms of the 2006 Redevelopment 21 22 Cooperation Loan Agreement for the Arden-Guthrie Redevelopment Project in the form as submitted to the Commission at which this Resolution of the Commission is adopted. The 23 Executive Director of the Agency are hereby authorized and directed to execute the 2006 24 Redevelopment Cooperation Loan Agreement on behalf of the Agency. 25 4810-7894417.1 -4- P.4 Wgendas\Resolutions\Resolutions12006107-2406 Arden Guthrie Section 108 Loan CDC Reso C.doc rrr.� I Section 4. The Executive Director of the Agency is hereby authorized and directed 2 to obtain a written appraisal report of the "Agency Collateral Lands", as this term is defined in 3 the 2006 Redevelopment Cooperation Loan Agreement, which are owned by the Agency as of 4 July 1, 2006, from a qualified real estate appraiser. The "highest and best use" of the Agency 5 Collateral Lands, for the purposes of the written appraisal, shall be commercial/retail use of 6 such lands. The form of such appraisal shall otherwise be in compliance with the provisions of 7 paragraph 15(e)(ix) of the 2006 HUD Section 108 Loan Contract. Provided that the appraisal of 8 the Agency Collateral Lands indicates a fair market value thereof of not less than Four Million 9 Three Hundred Thousand Dollars ($4,300,000) the Executive Director of the Agency are 10 authorized and directed to execute the following instruments on behalf of the Agency and deliver each of them to the City pursuant to Section 4 of the 2006 Redevelopment Cooperation 11 Loan Agreement: 12 (i) Note-A in the principal sum of$7,500,000; 13 (ii) Agency Deed of Trust; 14 (iii) Consent by the Agency of the Collateral Assignment to HUD of Note-A and the 15 Agency Deed of Trust; 16 (iv) Subsequent modifications to the Agency Deed of Trust to acknowledge the 17 collateral assignment to the City and to HUD, of any additional lands in the 18 "Project Site", as this term is defined in the 2006 Redevelopment Cooperation 19 Loan Agreement, which the Agency may acquire using the proceeds of the 2006 20 HUD Section 108 Loan; and 21 (v) Requests for draws of loan proceeds from the City upon the satisfaction of the 22 applicable provisions of Section 4 of the 2006 Redevelopment Cooperation Loan 23 Agreement. 24 Section 5. Prior to the time that the Agency may approve an agreement with the 25 Developer for the disposition of the Agency Collateral Lands to the Developer for the implementation of the Arden-Guthrie Redevelopment Project as required under Health and 4810-7894417.1 -5- P.-\Agendas\Rc olutioms Resolutions\2006\07-2406 Arden Guthrie Section 108 Loan CDC Reso C.doc - =..r.. _ 1 Safety Code Section 33431 and other applicable law, the Agency shall provide a written 2 certification to the City that the "Developer Grant Agreement" as this term is defined in the 3 2006 Redevelopment Cooperation Loan Agreement, contains provisions consistent with Section 4 9 of the 2006 Redevelopment Cooperation Loan Agreement and consistent with Paragraph 5 15(c)(iv) of the 2006 HUD Section 108 Loan Contract, and is, in the opinion of legal counsel to 6 the Agency, otherwise in a form satisfactory to HUD. 7 Section 6. This Resolution shall take effect upon adoption. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4810-7894417.1 -6- P:Wgendms Rmolutiom\Resolutl ns\2006\07-2406 Arden Guthrie Section 108 Loan CDC Reso C.doc I RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND 2 AUTHORIZING THE EXECUTIVE DIRECTOR OF THE 3 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE THE 2006 REDEVELOPMENT 4 COOPERATION LOAN AGREEMENT BY AND BETWEEN THE AGENCY AND THE CITY OF SAN BERNARDINO - NORTH ARDEN 5 GUTHRIE COMMERCIAL DEVELOPMENT PROJECT (IVDA REDEVELOPMENT PROJECT AREA) 6 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community 7 Development Commission of the City of San Bernardino at a joint regular meeting 8 thereof,held on the 24th day of July , 2006, by the following vote to wit: 9 Commission Members: Ayes Nays Abstain Absent 10 ESTRADA x 11 BAXTER x 12 MCGINNIS x 13 DERRY x 14 KELLEY x 15 JOHNSON x 16 MC CAMMACK x 17 18 Secretary T� 19 The foregoing resolution is hereby approved this (� , day of July , 2006. 20 21 Patri J. Morris, eYson 22 CU-m-munity Development Commission 23 of the City of San Bernardino Approved as to Form and Legal Content: 24 25 By: Agency Co sel 4810-7894417.1 —7- P:W gendas\Resolutions\R"olutions\2006\07-2406 Arden Guthrie Section 108 Loan CDC Reso C.doc N y. 1 STATE OF CALIFORNIA ) 2 COUNTY OF SAN BERNARDINO ) SS CITY OF SAN BERNARDINO ) 3 4 I, RACHEL G. CLARK, City Clerk for the City of San Bernardino, 5 DO HEREBY CERTIFY that the foregoing and attached copy of the City of 6 San Bernardino Resolution No. 2006-272 is a full, true and correct copy of 7 that now on file in the Office of the City Clerk. 8 IN WITNESS WHEREOF, I have hereunto set my hand and affixed 9 the official seal of the City of San Bernardino this 29th day of January, 2007. 10 1 12 Rachett3. Clark, City Clerk 13 14 15 By. M •gare edor, Deputy City Clerk 16 17 18 19 20 21 22 23 24 25 26 27 28 �i 1 RESOLUTION NO. 2006-272 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE 3 CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE 2006 REDEVELOPMENT COOPERATION 4 LOAN AGREEMENT BY AND BETWEEN THE CITY OF SAN BERNARDINO AND THE REDEVELOPMENT AGENCY OF THE CITY 5 OF SAN BERNARDINO ("AGENCY") - NORTH ARDEN GUTHRIE COMMERCIAL DEVELOPMENT PROJECT (IVDA REDEVELOPMENT 6 PROJECT AREA) 7 WHEREAS, for the past several years the City of San Bernardino (the "City") and the 8 Redevelopment Agency of the City of San Bernardino (the "Agency") have been engaged in 9 efforts to address blighting conditions in a portion of the City known as the Arden-Guthri 10 neighborhood; and 11 12 WHEREAS, the Arden-Guthrie neighborhood has been afflicted with a number o 13 physical and economic conditions of blight over the years, as these terms are defined in Health 14 and Safety Code Section 33032, including without limitation, conditions of substandard 15 structures and dwellings, residential overcrowding, substandard property maintenance 16 conditions, inadequate design of improvements, abandonment of property, depreciating an 17 stagnant property values,and criminal activity which has occurred at rates substantially highe 18 than crime rates in other neighborhoods of the City; and 19 WHEREAS, the Agency, in cooperation with the City, has previously embarked on 20 program to acquire properties in the Arden-Guthrie neighborhood and to relocate the persons an 21 households occupying such property into safe, sanitary and decent housing at other suitable 22 locations; and 23 24 WHEREAS, as of June 30, 2006, the Agency has incurred a redevelopment indebtedness 25 in excess of$10,000,000 in connection with its previous efforts to address conditions of blight in 4810-7894417.1 -1- P:\Agendas\Resolutions\Rcsolutions\2006\07-2406 Arden Guthrie Section 108 Loan MCC Reso B.doc I. 1 the Arden-Guthrie neighborhood and to prevent the spread of blight from the Arden-Guthri 2 neighborhood into nearby neighborhoods and communities; and 3 WHEREAS, the City believes it is necessary and appropriate for the Agency to acquire 4 additional lands in the Arden-Guthrie neighborhood in order to foster a commercially viable an 5 economically sustainable plan of redevelopment and reuse of the Arden-Guthrie neighborhood 6 and to prevent the spread of blight in the Arden-Guthrie neighborhood into other surroundin 7 neighborhoods and communities; and 8 9 WHEREAS, the Arden-Guthrie neighborhood is situated within the redevelopment 10 Project area of the Inland Valley Development Project (the "Project Area") which is a special 11 redevelopment project area administered by the Inland Valley Development Agency (the 12 "IVDA"); and 13 WHEREAS, the IVDA has been established pursuant to a joint exercise of power 14 agreement in January 1990, as a former military base civilian reuse local redevelopment 15 authority as recognized by the United States Secretary of the Air Force, for the purpose o 16 assisting in the conversion, redevelopment and civilian reuse of the former Norton Air Force 17 Base located within the City of San Bernardino; and 18 WHEREAS, the IVDA has been granted specific powers by the State Legislature in 198 19 (Stats. 1989 c.545 and See Now Stats 1997, c.580 and Health and Safety Code Section 33492.40 20 et seq.) to assist in the redevelopment of the former Norton Air Force Base and the lands in 21 proximity thereto pursuant to the Community Redevelopment Law (Health and Safety Cod 22 Section 33000, et seq.); and 23 WHEREAS, the IVDA has adopted the Redevelopment Plan for the Inland Valle 24 Redevelopment Project Area (the "Redevelopment Plan") in accordance with the provisions o 25 the CRL, and the Redevelopment Plan provides for certain redevelopment activities to b undertaken within the Project Area as more fully described in the Redevelopment Plan; and 4810-7894417.1 -2- P:\Agendas\Resohuions\Rcsolutions\2006\07-2406 Arden Guthrie Section 108 Loan MCC Reso B.doc I WHEREAS, the IVDA, the City and the Agency have entered into an agreement entitled 2 "2003 Redevelopment Cooperation Agreement", dated as of October 8, 2003 (the "ND 3 Redevelopment Cooperation Agreement") assist the City and the Agency to accomplish the 4 redevelopment of the Arden-Guthrie neighborhood. 5 WHEREAS, at the request of the Agency, the City has made arrangements with the 6 United States Secretary of the Department of Housing and Urban Development ("HUD"), to 7 provide the City with a "Section 108 Loan Guarantee" under the provisions of the Housing an 8 Community Development Act of 1974, as amended (42 USC Section 5308) and HUD Sectio 9 108 Loan Program regulations set forth at 24 CFR Part 570.700 (the "2006 HUD Section 10 10 Loan") in an amount of Seven Million Five Hundred Thousand Dollars ($7,500,000), and in turn 11 the City proposes to loan to the Agency the proceeds of the 2006 HUD Section 108 Loan to the 12 Agency in support of the Project; and 13 WHEREAS, HUD has confirmed it is prepared to provide a Section 108 Loan to the City 14 in the maximum principal sum of Seven Million Five Hundred Thousand Dollars ($7,500,000 15 under HUD Section 108 Loan Program Guarantee No. B-03-MC-06-0539 (the "2006 HUD 16 Section 108 Loan Contract"); and 17 ' WHEREAS, the City shall provide the Agency with the proceeds of the 2006 City 18 Section 108 Loan, as the authorized Subrecipient of the City under the terms of the 2006 City 19 Section 108 Loan Contract, for the following activities in connection with the Arden-Guthrie 20 Redevelopment Project: 21 (i) Site acquisition,pursuant to 24 CFR Part 570.703(a); 22 (ii) Completing the acquisition by the Agency of certain lands in the "Project Site" as 23 this term is defined in the 2006 HUD Section 108 Loan Contract; 24 (iii) Residential relocation assistance,pursuant to 24 CFR Part 570.703(d); 25 4810-7894417.1 —3- P:W gendas\Resolutions\Resolutions\2006\07-24-06 Arden Guthrie Section 108 Loan MCC Reso B.doc 1 (iv) Demolition and clearance, pursuant to 24 CFR Part 570.703(e) (See 2006 HUE 2 Section 108 Loan Contract Paragraph 15(b)); and 3 WHEREAS, the Mayor and Common Council have adopted a resolution entitled 4 "Resolution of the Mayor and Common Council of the City of San Bernardino approving an 5 authorizing the Mayor to execute the contract and related documents for the Loan Guarantee 6 Assistance under Section 108 of the Housing and Community Development Act of 1974, 7 amended, 42 USC Section 5308 (CDBG Section 108 Contract No. B-03-MC-06-0539) — North 8 Arden Guthrie Commercial Development Project (IVDA Redevelopment Project Area)". 9 NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED 10 BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS 11 FOLLOWS: 12 Section 1. The Recitals of this Resolution are true and correct. 13 Section 2. The Mayor and Common Council hereby finds and declares that severe 14 conditions of blight exist in the Arden-Guthrie neighborhood and that the approval of the 2006 15 HUD Section 108 Loan Contract and the 2006 Redevelopment Cooperation Loan Agreement, 16 and the implementation of the community redevelopment activities contemplated under each 17 such agreement shall substantially and materially assist the Agency to prevent and eliminate the is spread of blight which adversely affects the Arden-Guthrie neighborhood and the community 19 generally. The redevelopment of the Arden-Guthrie neighborhood is in the vital and best 20 interests of the City. 21 Section 3. The Mayor and Common Council hereby approves the terms of the 2006 22 Redevelopment Cooperation Loan Agreement for the Arden-Guthrie Redevelopment Project in 23 the form as submitted to the Mayor and Common Council at which this Resolution of the Mayor and Common Council is adopted. The Mayor or his designee are hereby authorized and 24 directed to execute the 2006 Redevelopment Cooperation Loan Agreement on behalf of the 25 City. 4810-7894417.1 -4- P\Agendas\Resolutions\Resolutions\2006\07-2406 Arden Guthrie Section 108 Loan MCC Reso Wdoc I Section 4. Prior to the time that the Agency may approve an agreement with the 2 Developer for the disposition of the Agency Collateral Lands to the Developer for the 3 implementation of the Arden-Guthrie Redevelopment Project as required under Health and 4 Safety Code Section 33431 and other applicable law, the Agency shall provide a written 5 certification to the City that the "Developer Grant Agreement' as this term is defined in the 6 2006 Redevelopment Cooperation Loan Agreement, contains provisions consistent with Section 7 9 of the 2006 Redevelopment Cooperation Loan Agreement and consistent with Paragraph 8 15(c)(iv) of the 2006 HUD Section 108 Loan Contract, and is, in the opinion of legal counsel to 9 the Agency, otherwise in a form satisfactory to HUD. 10 Section 5. This Resolution shall take effect upon adoption. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4810-7894417.1 -5- P.-\Agendas\Resolutions\Resolutions\2006\07-2406 Arden Guthrie Section 108 Loan MCC Reso B.doc I RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE 2 MAYOR TO EXECUTE THE 2006 REDEVELOPMENT COOPERATION LOAN AGREEMENT BY AND BETWEEN THE CITY OF SAN 3 BERNARDINO AND THE REDEVELOPMENT AGENCY OF THE CITY 4 OF SAN BERNARDINO ("AGENCY") - NORTH ARDEN GUTHRIE COMMERCIAL DEVELOPMENT PROJECT (IVDA REDEVELOPMENT 5 PROJECT AREA) 6 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 7 Common Council of the City of San Bernardino at a joint regular meeting thereof, g held on the 24th day of July , 2006, by the following vote to wit: 9 Council Members: Ayes Nays Abstain Absent 10 ESTRADA x BAXTER x 11 MCGINNIS x 12 DERRY x 13 KELLEY x 14 JOHNSON x 15 MC CAMMACK x 16 e Rac el G. Clark, City Clerk 18 t rr The foregoing resolution is hereby approved this c)- day of July , 2006. 19 20 21 atri k J. Morris, Ma � 22 Cl y of San Bernardino 23 Approved as to Form: 24 Le 25 es F. Penman, City Attorney 4810-7894417.1 -6- P W gendwacsolutiom\Rcsolutiom\200,6\07-2406 Arden Guthrie Section 108 Loan MCC Reso B.doc OUTLINE The Secretary of HUD shall disburse up to$7,500,000 in loan proceeds to the City in support of the Arden-Guthrie Project under the terms of the HUD Section 108 Loan Contract. The City may draw the$7.5M in funds from HUD to originate a$7.5M loan by the City to the Agency in order for the Agency to pay for land purchase costs, demolition expenses and relocation costs as part of the implementation of the Arden-Guthrie Project. The Agency is referred to in the HUD Section 108 Loan Contract as the"Subrecipient". The loan documents identified in the listing below address the various terms and conditions which need to be satisfied in order for the City to draw loan proceeds from the HUD Section 108 Loan and then apply those loan proceeds as the City Loan to implement the Arden-Guthrie Project. The Section 108 Loan Contract provides the basic structure of a conduit-type loan pursuant to which HUD shall loan the sum of$7.5M to the City under the terms set forth in Document I-1,and the City shall, in turn, loan the sum of $7.5M to the Agency under the terms set forth in the 2006 Redevelopment Cooperation Loan Agreement (Document II-1). There are two(2)general categories of documents which set forth the proposed terms of the$7.5M HUD Section 108 Loan: Category I HUD Section 108 Loan documents by and between HUD and the City; and Category II Redevelopment Cooperation Loan Agreement Documents by and between the City and the Agency The Mayor and Common Council will need to adopt resolutions approving the Category I documents and the Category 1I documents. The Community Development Commission will need to approve the Category II documents by separate resolution. The resolutions of the Mayor and Common Council and the Community Development Commission will need to be adopted concurrently. As these terms are used in this Outline,the words"HUD Section 108 Loan"mean and refer to the $7.5M loan between HUD and the City, and the words "City Loan"mean and refer to the loan of $7.5M by the City to the Agency in support of the Arden-Guthrie Project. Listing of HUD Section 108 Loan Category I Documents: 1-1 Contract for Loan Guarantee Assistance Under Section 108 of the Housing and Community Development Act of 1974, as amended Attachment No. 1 Letter Agreement for Section 108 Loan Guarantee Program Custodial Account Attachment No. 2 Letter Agreement for Section 108 Loan Guarantee Program Custodial Investment Account Attachment No. 3 Description of Annual Grant Revenues Attachment No. 4 Description of Annual Agency Site Sales Tax Payment 4834-8771-6097.1 1 Attachment No. 5 Description of Annual Agency Site Tax Increment Payment Attachment No. 6 Description of the Pledged Property I-2 $7,500,000 Section 108 Loan Guarantee Program Variable/Fixed Rate Note I-3 Section 108 Note Commitment Schedule I-4 Section 108 Note Schedule P&I I-5 Trust Agreement by and between Chemical Bank and HUD; I-6 Supplement to Trust Agreement by and between JP Morgan Chase Bank,as successor to Chemical Bank, and HUD; I-7 Collateral Assignment of Deed of Trust; I-8 Borrower Security Agreement and Collateral Assignment of Documents Listing of f Cit agency Redevelopment Cooperation Loan Agreement Category II Documents II-1 2006 City of San Bernardino and Redevelopment Agency of the City of San Bernardino Redevelopment Cooperation Loan Agreement II-2 Exhibit"A" Vicinity Map Showing Project Site II-3 Exhibit"B" Description of the Project II-4 Exhibit"C" Listing of Agency Collateral Lands II-5 Exhibit"D" Form of Agency Note—A II-6 Exhibit`B" Form of Agency Deed of Trust II-7 Exhibit "F" HUD Section 108 Loan Covenants Applicable to the Project II-8 Exhibit"G-1" Agency Collateral Assignment to the City of Developer Grant Agreement Security Documents II-9 Exhibit"G-2" City Collateral Assignment to HUD of Documents (same as Document No. l-7) II-10 2003 Redevelopment Cooperation Agreement Among IVDA,the City and the Agency 4834-8771-6097.1 2 Overview of Conduit Loan Structure of the$7.5M HUD Section 108 Loan The HUD Section 108 Loan Contract follows a standard HUD format,with special loan conditions applicable to the Arden-Guthrie Project financing set out in Paragraph 15 of the HUD Section 108 Loan Contract(See pages 13-23 of Document I-1). The HUD Section 108 Loan is evidenced by the$7.5M HUD Variable/Fixed Rate Note(Document I-2). The City is required to provide HUD with certain supplemental security for the repayment of the HUD Section 108 Loan under certain loan collateral documents which the City shall obtain from the Agency(Document I-7 and Document I-8)under the terms of the City Loan (Document II-1). The City Loan shall be evidenced by the$7.5M Agency Note-A(Document II-5). It is important to observe that the HUD Section 108 Loan provides the community with a source of funds to complete the land assembly program for the Arden-Guthrie Project before the Agency has completed the process for designating a specific Developer for the project. Accordingly,HUD has authorized the City,and the Agency as the Subrecipient of the HUD Section 108 Loan,to draw HUD Section 108 Loan funds before the private development component of the Arden-Guthrie Project is finalized on condition that the Agency pledges the lauds which the Agency already owns in the site to the City and to HUD (See Document I-7). Both the HUD Section 108 Loan and the City Loan will include a number of additional items of pledged collateral as security for repayment. In essence,the City will pledge to HUD as security for repayment of the HUD Section 108 Loan all of the project-based loan repayment security which the City obtains from the Agency under the City Loan. Under the economic planning assumptions for the Arden-Guthrie Project,the redevelopment of the site will completely repay the HUD Section 108 Loan. The HUD Section 108 Loan is a special fund secured obligation of the City. The primary security for the repayment of the HUD Section 108 Loan is the collateral pledge of the City's CDBG entitlement funds and CDBG"program income"(see page 7 of Document I-1),as well as additional items of loan collateral referred to as "Pledged Revenues" (See page 13-16 of Document I-1). Pledged Revenues arise from the Arden-Guthrie Project and consist of the following items: (1) Annual Grant Assistance Revenues (See Section 7 of Document II-1) (ii) Annual Agency Site Sales Tax Payments (See Section 6 of Document II-1) (iii) Annual Agency Site Tax Increment(See Section 7 of Document II-1 and Section 4 of Document II-2) (iv) Developer Completion Security(See Section 9 of Document II-1) In general, Pledged Revenues are sources of funds of the Agency which shall result from the implementation of the Arden-Guthrie Project once the Developer has been selected to undertake the project. Annual Agency Site Sales Tax Payments will be a new revenue source which shall result from the implementation of the Arden-Guthrie Project and the creation of new retail sales oriented 4834-8771-6097.1 3 businesses on the site. Likewise, Annual Agency Site Tax Increment will be a new source of property tax increment revenues which shall result from the commercial redevelopment of this vacant and blighted site. Annual Grant Assistance Revenues are a special source of funds payable to the Agency each year by the City as identified in Section 7 of the Redevelopment Cooperation Loan Agreement(Document II-2). The City agrees to provide Annual Grant Assistance Revenues to the Agency each year during the term'of the HUD Section 108 Loan and the City Loan, if required, as a current expense of the City, subject to the annual appropriation by the City. In essence,this pledge of"Annual Grant Assistance Revenues"payable by the City to the Agency is a standby or back-fill funding commitment of the City. If, at any time during the operation of the Arden-Guthrie Project,the sum of the"Agency Site Sales Tax Payment'plus the"Agency Site Tax Increment Payment'derived by the Agency in any year from the project,is not sufficient to pay the full amount of annual debt service of the City Loan,the City will need to advance the difference to the Agency under Section 7 of the Redevelopment Loan Cooperation Agreement. During the first five (5) years followbing the date of the HUD Section 108 Promissory Note (see Document I-2)interest only will be payable by the City to HUD under the HUD Section 108 Loan. In turn, interest only will be payable by the Agency to the City under Agency Note — A (see Document II-5). Thus, the maximum amount of any potential Agency Grant Assistance Revenue Payment by the City to the Agency under Section 7 of the Redevelopment Cooperation Loan Agreement, during the first (5).years of the City Loan to the Agency, will be limited to accrued interest only. Assuming that the fixed rate of interest payable by the City to HUD as of the "Conversion Date"under the HUD Section 108 Promissory Note will be approximately 5.75%per annum, the Agency Grant Assistance Revenue Payments during the first five (5) year term of the HUD Section 108 Loan should be approximately$431,250 per year. After the fifth(5th)year,when loan principal repayment begins under the HUD Section 108 Promissory Note,annual payments by the City to HUD and in turn by the Agency to the City under the City Loan will increase to be approximately$750,000 per year until both the HUD Section 108 Promissory Note and the Agency Note-A are both repaid in full(see HUD Section 108 Loan Commitment Schedule and Schedule P&I in Document 1-2). It is assumed that prior to the fifth (5th) year of the HUD Section 108 Loan, the Arden-Guthrie Project will be providing new retail sales tax revenues payable to the City(Section 6 of Document II-1) and new property tax unit revenues which are payable to the Agency under the terms of the 2003 IVDA Redevelopment Cooperation Agreement(Section 4 of Document I1-10). When these two (2) separate sources of funds of the Agency are added together, no amounts of Agency Grant Assistance Payments by the City to the Agency are anticipated to be necessary in support of HUD Section 108 Loan or the City Loan. The amounts of the new retail sales tax revenues (e.g. the "Annual Agency Site Sales Tax Payments") are forecast for the Arden-Guthrie Project in Attachment No.4 of the HUD Section 108 Loan Contract(Document I-1). The amounts of the new property tax increment revenues (e.g. the "Annual Agency Site Tax Increment' revenues) are forecast for the Arden-Guthrie Project in Attachment No.5 of the HUD Section 108 Loan Contract. 4834-8771-6097.1 4 2006 Redevelopment Cooperation Loan Agreement This is the document provides for the City Loan to the Agency in support of the Arden-Guthrie Project. This transaction is specifically addressed in the HUD Section 108 Loan Contract and the Agency is the approved "Subrecipient" under the HUD Section 108 Loan. In addition, Redevelopment Cooperation Loan Agreement also commits the City to provide certain other funds to the Agency each year during the term of the City Loan to the Agency. These City funds shall be derived from the Arden-Guthrie Project itself. These two (2) separate sources of City funds in support of the Arden-Guthrie Project are: (i)Annual Agency Site Sales Tax Payments(see Section 6 of Document No. II-1)and(ii)Agency Grant Assistance Revenues(see Section 7 of Document II-1). The Annual Agency Site Sales Tax Payments are in essence a percentage of the total retail sales taxes paid to the City by the operation of the Arden-Guthrie Project each year. During the first two (2)years after the Arden-Guthrie Project has been completed,80%of the retail sales taxes produced by the project shall be transferred by the City to the Agency. During the third (3`d) through the twentieth(201h)years of the project,the City will transfer 50%of the retail sales taxes produced by the project to the Agency. The Agency will use the Agency Sales Tax Payments it receives each year from the City, plus the Agency Site Tax Increment Revenues, the Agency receives each year from the IVDA, to repay the City Loan. In addition, if the Agency collects any sums under the Developer Completion Surety,then the Agency would also transmit those funds to the City to prepay the City Loan. The 2006 Redevelopment Cooperation Loan Agreement also sets out some minimum criteria for the selection by the Agency of the Developer for the Arden-Guthrie Project. These conditions as relate to the selection of the Developer are set forth in Section 9 of the 2006 Redevelopment Cooperation Loan Agreement. These include: a covenant by the Developer in favor of the Agency that the completed project will have a minimum assessed property tax valuation of at least$17.OM;that the Developer shall provide the Agency with a project-completion surety(e.g.a letter of credit and/or a continuous business operation covenant)and that the final form of the disposition and development agreement between the Developer and the Agency for the Arden Guthrie Project shall contain a "profit participation fee"payable to the Agency(of other comparable features) in an amount to be determined by negotiation between the Developer and the Agency. The Developer selection criteria relate to the delivery of the Developer Completion Surety which the Agency is required to pledge to the City as supplemental collateral for the repayment of the City Loan. In turn,the City shall pledge the Developer Completion Surety to HUD as additional security for the final repayment of the HUD Section 108 Loan. HUD Section 108 Loan Note and Agency Note-A The HUD Section 108 Loan and the City Loan are each evidenced by promissory notes (See Document I-2 and Document II-5). The HUD Section 108 Note shall interest at a variable rate per annum(90-day LIBOR plus 20 basis points),and then after the full line of credit has been drawn on July 1,2008,the rate of interest shall be subject to conversion to a fixed rate per annum. As of June 28, 2006, the 90-day LIBOR rate of interest was 5.49875%. The Agency Note-A contains terms which essentially mirror the interest rate and principal payment terms set forth in the HUD Section 108 Note. 4834-8771-6097.1 5 It is important to note that after the interest rate has been converted to a fixed rate, the City cannot prepay the HUD Section 108 Loan until 2015. One of these negotiated points in discussion between the Agency and the Developer will be whether the Developer may seek to arrange for project financing which would in essence take-out the HUD Section 108 Loan before the conversion date to a fixed rate of interest occurs. Any Collateral Assignment to the City of Developer Grant Agreement Security Documents (Developer Completion Surety) and City Collateral Assignment to HUD of Documents Once the Agency transfers the lands which it has acquired in the site to the Developer (both the $4,300,000 in appraisal value property which the Agency owns as of June 1, 2006, as well as any additional lands which it may acquire using the proceeds of the City Loan), the Agency Deed of Trust will be released and reconveyed by the City. The value and function of the Agency Deed of Trust as a security interest will in essence be replaced by the Developer Completion Surety under the terms of the final DDA by and between the Developer and the Agency(See Section 9 of Document II-1). The Agency will assign or move a collateral security pledge of its interest in the Developer Completion Surety to the City (Document II-8) and in turn the City will assign this collateral to HUD as additional security for the repayment of the HUD Section 108 Loan(Document II-9). Deed of Trust Assignment of Leases and Rents This instrument secures the Agency's obligation to repay the City Loan. The Deed of Trust encumbers all of the land which the Agency currently owns in the Arden-Guthrie neighborhood. The City will,in turn,assign its security interest in the Agency lands to HUD as partial security for repayment of the HUD Section 108 Loan. (See Document I-I Attachment No.6 and Document 1-5) The Agency staff currently estimates that the Agency lands have an appraised fair market value of not less than$4,300,000. All of the remaining lands in the Arden-Guthrie neighborhood which the Agency acquires using the proceeds of the City Loan, will be added as additional security to the Deed of Trust. Thus,the value of land acquired by the Agency in the neighborhood will provide the single largest source of loan repayment collateral under the proposed structure of the overall HUD Section 108 Loan financing. The City will release the Deed of Trust in the Agency lands when the Agency is ready to transfer the Agency lands to the Developer under the final development project DDA,when the Developer gives the Agency the"Developer Completion Surety"or begins the actual construction of the project(see Section 9 of the 2006 Redevelopment Loan Cooperation Agreement,Document II-1 and Document 1-6). When the City releases its security interest in the Deed of Trust when the Developer takes title to the Agency lands under the project DDA,the Agency will provide the City with a collateral assignment of the Agency's security interest in the Developer's project(See Document 11-9). In turn,the City 4834-8771-6097.1 6 shall assign to HUD the Agency's collateral pledge of the DDA to the City under the City Loan, as security for repayment of the HUD Loan. 4834-8771-6097.1 7 ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO FROM: Maggie Pacheco SUBJECT: Public Hearing - HUD Section 108 Loan Executive Director Guarantee Contract and related documents - North Arden Guthrie Commercial Redevelopment Project(IVDA Redevelopment DATE: July 6,2006 Project Area) Synopsis of Previous Commission/Council/Committee Action(s)- On July 5,2006, Redevelopment Committee Members Estrada,McGinnis and Johnson unanimously voted to recommend that the Mayor and Common Council and the Community Development Commission consider this action for approval. Recommended Motion(s): T -- ----` — — --- - --- Open/Close Public Hearing (Mayor and Common Council) A: Resolution of the Mayor and Common Council of the City of San Bernardino approving and authorizing the Mayor to execute the contract and related documents for the Loan Guarantee Assistance under Section 108 of the Housing and Community Development Act of 1974, as amended,42 USC Section 5308 (CDBG Section 108 Contract No. B-03-MC-06-0539) - North Arden Guthrie Commercial Development Project (IVDA Redevelopment Project Area) B: Resolution of the Mayor and Common Council of the City of San Bernardino approving and authorizing the Mayor to execute the 2006 Redevelopment Cooperation Loan Agreement by and between the City of San Bernardino and the Redevelopment Agency of the City of San Bernardino ("Agency") - North Arden Guthrie Commercial Development Project(IVDA Redevelopment Project Area) (Community Development Commission) C: Resolution of the Community Development Commission of the City of San Bernardino approving and authorizing the Executive Director of the Redevelopment Agency of the City of San Bernardino ("Agency") to execute the 2006 Redevelopment Cooperation Loan Agreement by and between the Agency and the City of San Bernardino - North Arden Guthrie Commercial Development Project(IVDA Redevelopment Project Area) --- ------------------- _ Contact Person(s): _ Maggie Pacheco Phone: (909)663-1044 Project Area(s): IVDA Redevelopment Project Area Ward(s): All Supporting Data Attached: 0 Staff Report 0 Resolution(s)0 Agreement(s)/Contract(s)0 Map(s)0 Letters FUNDING REQUIREMENTS: Amount: $ 7.5 Million Source: Section 108 Loan(CDBG) Budget Authority: 2006/2007 EDA Budget SIGNATURE: 4B.rbara M—ds4cth,Maggi Pa eco,Executive Director Admin.Services Director -------- ------------------------------- ---- - -- ----------------------------------------------- ---- Commission/Council PAAgendas\Comm Dev Commission\CDC 2006\07-24-06 Arden Gutluie Seuion 102 L. n SR&, COMMISSION MEETING AGENDA Meeting Date: 0724/2006 Agenda Item Number: ECONOMIC DEVELOPMENT AGENCY STAFF REPORT HUD SECTION 108 LOAN GUARANTEE CONTRACT AND RELATED DOCUMENTS- NORTH ARDEN GUTHRIE COMMERCIAL REDEVELOPMENT PROJECT (IVDA REDEVELOPMENT PROJECT AREA) BACKGROUND: On March 20, 2003, the Redevelopment Committee discussed the idea of pledging annual CDBG funds for the annual debt service payments on a proposed $10 million Section 108 Loan from the U.S. Department of Housing and Urban Development (HUD) that would be essentially used to acquire necessary properties to facilitate certain redevelopment projects and subsequently forwarded an approval recommendation to the Council. On April 21, 2003, the Mayor and Common Council ("Council") adopted a Resolution authorizing the preparation and submittal of the proposed $10 million Section 108 Loan Application to HUD and agreed to hold a workshop to discuss, clarify and prioritize the use of the 108 funds. On May 13, 2003, the Council held a workshop and discussed the gamut of uses for the Section 108 Loan proceeds and further identified the areas in which the proposed Section 108 Loan funds would be used and directed Staff to submit a final application to the Council. At this workshop, there was a consensus amongst the members that if the Agency was successful in obtaining the loan that it would be utilized in one or more of the eight (8) council selected target neighborhoods: A) Old .Towne; B) Meadowbrook; C) Seccombe Lake;D)North Lake; E)Arden-Guthrie Soccer Complex;F)Uptown; G) Westside; and H)40`h Street Project Area. On June 2, 2003, the Council ratified and approved a proposed Section 108 Loan Application entitled the "Focused Neighborhood Revitalization Program" and authorized and approved Staff to submit the final application to HUD. Since June 2003, Staff held numerous discussions with HUD representatives regarding the Agency's application. As a follow-up to these discussions, in February 2004, Staff received two letters from HUD expressing the issues that concerned them and proposed solutions to their concerns. Specifically, HUD's letter dated February 18, 2004, wherein, they opined that in order for the Washington Office to recommend approval of the Agency's/City's Section 108 Loan Application, certain changes to the application needed to occur; in particular, HUD discouraged a "shotgun approach" and highly recommended that the Agency: (1) Narrow its focus of the Section 108 Loan Application to two or preferably one Target Area, and (2) Identify the Project (s) in sufficient detail. Most importantly, HUD requested specificity such as how will the funds be used, what type of project will be accomplished, i.e., housing, retail, commercial, etc., how many jobs will be created, what blighted conditions will be eradicated, etc., and what is the end result of said use of Section 108 Loan funds. HUD practice has been for cities to use their Section 108 Loan Application funds for specific and tangible projects such as when the Agency used the Section 108 Loan program for the Cinema Star and to assist with remediation improvements to the 303 3`d Street Project. This way HUD is able to quantify the impacts of the project and measure the results in comparison to the national objectives under the HUD guidelines. P_\AgmdasNC.m Dcv C°mmsS'n%C C 200607-24-06 Arden Ginhnc Section log L, SRA&c COMMISSION MEETING AGENDA Meeting Date: 07/244//20�0.6 Aanndn Item Nnmh.r- K.3 r Economic Development Agency Staff Report Arden Guthrie—HUD Section 108 Loan Guarantee Page 2 On September 15, 2003, the Council and Community Development Commission approved a Redevelopment Cooperation Agreement ("2003 Agreement") by and among the Inland Valley Development Agency(IVDA),the Agency and the City in order to allow the Agency to initiate studies for the redevelopment of the Arden Guthrie Area and to transfer or delegate redevelopment authority to the Agency. Essentially, this 2003 Agreement allowed the Agency to exercise all redevelopment powers legally available to IVDA per the Redevelopment Plan to the Agency, including, but not limited to, acquiring property by eminent domain directly or on behalf of the IVDA. This 2003 Agreement also transferred any net tax increment generated from a proposed project in the Arden Guthrie Area to the Agency for any debt incurred after July,1,2003 and continuing thereafter until July 1,2040. Consequently, on March 20, 2004, Staff discussed this subject with the Redevelopment Committee and after considering all of the previously approved 2003 Target Areas, and examining other projects in the pipeline, the Committee recommended forwarding a recommendation to the Council that a revised Section 108 Loan Application be resubmitted to HUD for two specific projects that were in the conceptual or planning stages. These projects included the redevelopment of the North Arden Guthrie Area and the Mercado Santa Fe(El Tigre- Sub area B/Uptown Redevelopment Project Area). On April 19, 2004, the Council approved and authorized the submittal of a revised Section 108 Loan Application to facilitate the two projects. The $10 million would be used to fund the two projects on a 50/50 basis. Finally, on January 2005, HUD advised the City/Agency that they had approved a$7.5 million Section 108 Loan for the Arden Guthrie Project and on March 29, 2005, former Mayor Judith Valley executed the Funding Approval/Agreement by and between the City and HUD. Again, HUD insisted that the City and Agency focus on one project and given the fact that the loan proceeds were insufficient to accomplish both projects, the priority loan emphasis was placed on the need to complete the land assembly in Arden Guthrie due to the number of years the Agency has spent in acquiring properties and the high level of investment. It should be further noted that in the event the project on 2nd Street between "K" Street and Mount Vernon Avenue (formerly known as the Mercado Santa Fe Project) proceeds,sufficient funds have been budgeted in the 2006/2007 EDA Budget to deal with this project. CURRENT ISSUE• On May 16, 2006, the Agency received the final loan documents and contracts related to the Section 108 Loan. HUD approved the $7.5 million loan proceeds to the City to support the Arden Guthrie Project and the loan proceeds may be used for land purchase costs,demolition and relocation expenses. The Agency will be the Subrecipient to the Section 108 Loan from the City. Unlike prior HUD 108 Loans to the City, or for that matter most cities, this loan to the City from HUD is unique in that HUD has actually permitted the use of a Section 108 Loan for land assembly without identification of a specific project or development entity upfront. P.Ugc�sW*n*n Der Conniff-wMCDC 2006107-24-06 Arden Guthrie Section 108 loan SR.doc COMMISSION MEETING AGENDA Meeting Date: 07/24/2`006 Avenda Ttem Nnmhnr• IR 3 67 Economic Development Agency Staff Report Arden Guthrie—HUD Section 108 Loan Guarantee Page 3 The Arden Guthrie Project Site ("Site") is illustrated on Exhibit "A". The Site consists of approximately 17 acres of which the Agency owns more than 50%of the vacant parcels within the Site and the remainder of the parcels are owned by other parties (approximately 48 owned by the Agency and 25 parcels are privately owned and occupied by tenants). The proceeds of the Section 108 Loan are intended to be used by the City/Agency to primarily acquire the remaining 25 parcels ("Private Properties") which if all of these Private Properties are acquired could cost approximately$13 million. The additional estimated relocation and demolition costs are approximately $2 million, for an estimated total Project Cost of$15 million. Funds for this project are intended to come from: (1) $7.5 million Section 108 Loan; (2) $2 million from the Agency Low/Mod Housing Fund (to be exclusively for relocation costs for the tenants to be relocated); (3) land sale proceeds of not less than$4.3 million which will be derived from the sale of the Site by the Agency; and (4) any shortfalls (approximately $1.4 million)will be covered by discretionary funds of the Agency or CDBG funds. Per the HUD 108 Contract, the Section 108 Loan is proposed to be structured as follows: • HUD will loan the $7.5 million to the City and the City will in turn loan the$7.5 trillion to the Agency ("Conduit Loan")under a Cooperation Agreement("2006 Redevelopment Cooperation Loan Agreement"). The Agency will use the loaned funds to the purpose outlined above; the collateral for the Conduit Loan will initially be the Agency Owned Property and the Private Properties to be acquired by the Agency ("Agency Deed of Trust"), together with other sources described below. • The Conduit Loan shall be endorsed by a Variable/Fixed Rate Note per annum and during the first'5 years following the date of the execution of the 108 Promissory Note, interest only is payable by the City to HUD of approximately $432,000 per year; After the 5rh year, when the loan principal repayment begins, the principal and interest payments will increase to approximately $750,000 per year. The variable rate per annul is based on 90-day LIBOR, plus 20 basis points, and then after the full line of credit($7.5 million)has been drawn on or by July 1, 2008, the rate of interest shall be subject to conversion to a fixed rate per annum. As of June 28, 2006, the 90-day LIBOR interest rate is 5.49875%. The primary source of repayment for the Conduit Loan is the annual CDBG funds appropriated to the City by HUD annually, and the additional collateral value of the Agency lands comprising.the Site. The Conduit Loan term is 20 years. Based on prior actions of the Council, the Council has agreed to use the City's annual CDBG in the amount not to exceed $500,000 per year for the Conduit Loan. • The back-up repayment for the Conduit Loan will be Annual Sales Tax from the eventual Arden Guthrie retail/commercial project ("Proposed Project") and the Annual Property Tax Increment from IVDA to the Agency specifically generated from the Proposed Project. For example, during the 2 years after the Proposed Project is completed, 80% of the retail sales taxes produced by the Proposed Project will be transferred from the City to the Agency; from year 3 to 20, the City will then transfer 50% of the retail sales taxes to the Agency. However, Staff is optimistic that by the time a development agreement is executed for the Arden Guthrie Site, land values will increase, and that a portion of the unbudgeted land sales proceeds will be used to pay down the Conduit Loan. Ptiae�NC*im rev Commission\CDC 2006107-24-06 area,c�ahk s«t�los L Dm Sp&C y COMMISSION MEETING AGENDA Meeting Date: 07/24/220/06 Agenda Item Number: Economic Development Agency Staff Report Arden Guthrie—HUD Section 108 Loan Guarantee Page 4 Another important ingredient of the Conduit Loan is that once the Agency identifies a developer for the development of the Proposed Project pursuant to a disposition and development agreement ("DDN), the Agency will require that the development entity ("Developer"), maintain a minimum assessed property tax value of$17 million, require the Developer to provide a completion surety("Surety Bond")and a minimum operating covenant, and potentially a profit participation fee. The Surety Bond will be used as supplemental collateral for the repayment of the Conduit Loan and will eventually replace the Agency Deed of Trust. It should be noted, that presently, Staff is having preliminary discussions with Home Depot who desire to construct approximately 102,000 square feet of a home improvement center, together with other ancillary uses for up to 150,000 square feet (estimated value $25 million). It is anticipated that a preliminary agreement, which will take these Conduit Loan conditions into consideration, between the Agency and Home Depot will be forthcoming to the Redevelopment Committee within the next 30-45 days. ENVIRONMENTAL IMPACT: All NEPA reviews have been completed for the release of the $7.5 million for acquisition of the remaining properties in North Arden Guthrie. FISCAL IMPACT• As noted above in this Staff Report. RECOMMENDATION: That the Mayor and Common Council and the Community Development Commission adopt the attached Resolutions. Maggie Pacheco,Executive Director P-\AgmdnWor Dev C°n°=t W-W 2006\07-24-06 Atdm Cmdh Swim 108 Loan SR-&c COMMISSION MEETING AGENDA Meeting Date: 077,C44,/2006 Agenda Item Numher! f 1� & $7.5M HUD Section 108 Loan (Arden-Guthrie Project) THUD Annual City CDB(f $7.5M loan proceeds t City 1) Annual Agency Site " Sales Tax Payments ' 2) Agency Tax ' Increment Revenues $7.5M loan proceeds Agency D/T on all Arden-Guthrie properties—released when land is sold to Developer IVDA—2003 Co-op Agreement, pledge of IVDA site tax increment revenues 'A, Ageny $7.5M loan proceeds Developer: 1)repayments and Agency Land acquisition collateral,2)project completion in Arden-Guthrie area surety, 3)profit participation fee,if applicable VVUgcnduXAgm&Anadmcw T-xhP its12006107-24-06 HM 108 Lose adline.aoc PERSONAL AND PROFESSIONAL SERVICES AGREEMENT FINANCIAL AND DOCUMENT CUSTODIAN AND TRUSTEE AGREEMENT FOR THE HUD SECTION 108 LOAN GUARANTEE ASSISTANCE PROGRAM (CITY OF SAN BERNARDINO, CALIFORNIA: ARDEN-GUTHRIE NEIGHBORHOOD IMPROVEMENT PROJECT) Contract for Loan Guarantee Assistance Under Section 108 HUD Contract No. B-03-MC-06-0539 This Personal and Professional Services Agreement is dated as of September 1, 2006 (the "Agreement") is executed by and between the City of San Bernardino (the "City") and Wells Fargo Bank, National Association, as custodian (the "Custodian"), and is entered into in light of the facts set forth in the Recitals below: RECITALS a WHEREAS, the City requires custodian services for the delivery and retention of documents and moneys associated with the United States Department of Housing and Urban Development (the "HUD") Section 108 Loan Guarantee Program for the Arden-Guthrie Neighborhood Improvement Project as required by HUD, wherein the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic, shall be the obligor (the "Obligor") under the terms and conditions of a certain agreement entitled "Redevelopment Loan Cooperation Agreement", dated as of July 1, 2006, by and between the Obligor and the City; and \ WHEREAS, the City desires to engage the Custodian to provide certain document custodial and other fiscal agent services in favor of HUD, in light of the qualifications, experience, and facilities of the Custodian for doing the type of work herein contemplated and Custodian, has offered to provide the required services to the City in favor of HUD on the terms set forth herein. NOW, THEREFORE, IT IS AGREED BETWEEN THE PARTIES HERETO AS FOLLOWS: Section 1.01 Investments. The Custodian shall be permitted, and is hereby directed, to deposit, transfer, hold and invest all funds received under this Agreement, including principal and interest, in the Wells Fargo Advantage Money Market Fund (the "Wells Fargo Funds") that the City shall direct in writing in the form of Exhibit A to this Agreement. The City has initially caused HUD to remit to the Custodian as of September 15, 2006, for the account of the City and HUD under this Agreement the sum of Seven Million Four Hundred Sixty Two Thousand Seven Hundred Thirty Dollars ($7,462,730). The Custodian shall invest such funds in alternative investments in accordance with written instructions as may from time to time be provided to the Custodian by the City. In the absence of the receipt by the Custodian of written instructions from the City, the Custodian is 4813-3048-5761.2 1 Custodian is hereby directed to invest the funds which it holds in the account of the City and HUD hereunder, in the Wells Fargo Advantage 100% Treasury Money Market Fund, Service Class Shares. Any investment earnings on the funds shall not become part of the trust account and shall be disbursed to the City, as directed in writing by the City. The Custodian shall be entitled to sell or redeem any such investments as necessary to make any payments or distributions required under the Services Agreement. The Custodian shall have no responsibility or liability for any loss which may result from any investment made pursuant to the Services Agreement, or for any loss resulting from the sale of such investment. The City acknowledges that the Custodian is not providing investment supervision, recommendations, or advice. Section 1.02 Disbursements/Withdrawals of Funds. Upon written direction from a designated representative of the City or HUD, Custodian may disburse or release funds, obligations, assignments or other documents held in custody in accordance with such instructions. Section 1.03 Delivery of Certain Documents By the City to the Custodian. Concurrently upon the execution of this Agreement by the Custodian and the City, the City shall deliver to the Custodian the documents identified in Exhibit "C" attached hereto and incorporated herein by this reference. Each of the documents in Exhibit "C" shall be held by the Custodian for the benefit of the Secretary,of HUD pending the Custodian's receipt of written instructions from the Secretary of HUD regarding the delivery to the Secretary of HUD, or order of such documents. The Custodian shall have no responsibility for the sufficiency or contents of the documents in Exhibit "C" and/or such other documents as may be subsequently delivered by the City to the Custodian as a supplement or replacement of any such document identified in Exhibit"C"or to otherwise interpret the provisions of any such documents. Section 1.04 Tax Reporting. (a) Tax Reporting The City agrees that, for tax reporting purposes, all interest or other taxable income earned from the investment of the funds in any tax year shall be taxable to the City. (b) Certification of Tax Identification Number. The City shall provide the Custodian with certified tax identification numbers by furnishing appropriate forms W-9 or W-8 and other forms and documents that the Custodian may reasonably request. The City understands that if such tax reporting documentation is not so certified to the Custodian, the Custodian may be required by the Internal Revenue Code of 1986, as amended, to withhold a portion of any interest or other income earned on the investment of monies or other property held by the Custodian pursuant to the Services Agreement. 4813-3048-5761.2 2 Section 1.05 Contact Information for HUD and the City. The following persons are hereby designated by the City for the purpose of transmitting instructions to the Custodian concerning the documents held by the Custodian Under Section 1.03: For the City: For the Secretary of HUD: (1) Mayor of the City Finance Management Division Paul Webster, or designee Director, and 451 Seventh Street, S. W. Room 7180 (ii) Executive Director of the Economic Washington, DC 20410 Development Agency of the City of San (202) 708 1871 Bernardino (909) 663-1044 The City and the Secretary of HUD may, upon written notice to the Custodian which references this Section 1.05, dgsignate other persons to give instruction to the Custodian concerning the handling, retention or delivery of the documents held by the Custodian under Section 1.03. The Custodian shall be entitled to rely on the oral advice as confirmed in writing or written advice of any such persons set forth above. Custodian shall treat as genuine and may rely upon any notice or communication without further verification, which is reasonably believes is from the property party and the Custodian shall be protected in doing so by the City. Section 2.01 Compensation of the Custodian. The Custodian shall receive compensation and expense reimbursement for its services hereunder in accordance with the schedule attached hereto as Exhibit B' which shall be paid by the City. The fee agreed upon for the services rendered hereunder is intended as full compensation for the Custodian's services as contemplated by this Agreement; provided, however, that in the event that the conditions for the disbursement of funds hereunder are not fulfilled, or the Custodian renders any material service not contemplated in this Agreement, or there is any assignment of interest in the subject matter of this Agreement, or any material modification hereof, or if any material controversy arises hereunder, or the Custodian is made a party to any litigation pertaining to this Agreement, or the subject matter hereof, then the Custodian shall be reasonably compensated for such extraordinary services and reimbursed for all costs and expenses, including reasonable attorney's fees, occasioned by any delay, controversy, litigation or event, and the same shall be payable by the City. If fees or expenses are not paid within 30 days of the date due, the Custodian in its sole discretion may charge interest on the fees or expenses at the rate of 10% per annum. The Custodian shall have, and is hereby granted, a prior lien upon the interest earned on the funds and any moneys that the City becomes entitled to under this Agreement, with respect to its unpaid fees, non-reimbursed expenses and unsatisfied indemnification rights, superior to the interests of any other persons or entities and is hereby granted the right to set off and deduct any unpaid fees, non-reimbursed expenses and unsatisfied indemnification rights from such amounts. 4813-3048-5761.2 3 Section 3.01 Custodian Duties. The following provisions shall control with respect to the rights, duties, liabilities, privileges, and immunities of the Custodian: (a) The Custodian shall be obligated only to perform the duties specifically set forth in this Agreement, which shall be deemed purely ministerial in nature, and shall under no circumstances be deemed to be a fiduciary to any party or any other person. The City agrees that the Custodian shall not assume any responsibility for its failure to perform in accordance with this Agreement. This Agreement sets forth all matters pertinent to the trust contemplated thereunder and hereunder, and no additional obligations of the Custodian shall be inferred from the terms of this Agreement or any of the documents delivered to the custodian by the City under Section 1.03. IN NO EVENT SHALL THE CUSTODIAN BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (i) DAMAGES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES WHICH RESULT FROM THE CUSTODIAN'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (ii) SPECIAL, INDIRECT OR CQNSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST PROFITS), EVEN IF THE CUSTODIAN HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OF ACTION. (b) No provision of this Agreement shall require the Custodian to risk or advance its own funds or otherwise incur any financial liability in the performance of its duties or the exercise of its rights under this Agreement. (c) In the event of any disagreement between any of the parties to this Agreement, or HUD, or between them or any of them and any other person or entity resulting in conflicting or adverse claims or demands being made in connection with the funds, or in the event that Custodian, in good faith, shall be in doubt as to what action it should take thereunder or hereunder, the Custodian at its option may refuse to comply with any claims or demands on it, or refuse to take any other action hereunder, so long as such disagreement continues or such doubt exists, and, in any such event, the Custodian shall not be or become liable in any way or to any person or entity for its failure or refusal to act, and the Custodian shall be entitled to either: (i) continue so to refrain from acting until (A) the rights of all parties shall have been determined by a final and unappealable order of a court of competent jurisdiction or by a final and unappealable award of arbitrators, or (B) all differences shall have been resolved by written agreement among all of the interested persons or entities, and the Custodian shall have been notified thereof in writing signed by all such persons or entities; or 4813-3048-5761.2 4 (ii) file an interpleader action in any court of competent jurisdiction, and be indemnified by the City for the legal fees and expenses of pursuing such court action. Section 3.02 Indemnification. The City hereby agrees to indemnify, defend and hold harmless the Custodian from and against any and all losses, liabilities, costs, damages and expenses, including, without limitation, counsel fees and expenses, which the Custodian may suffer or incur by reason of any action, claim or proceeding brought against the Custodian arising out of or relating in any way to this Agreement or any transaction to which this Agreement relates, unless such losses, liabilities, costs, damages and expenses shall have been finally adjudicated to have been primarily caused by the gross negligence or willful misconduct of the Custodian. The Custodian may consult counsel of its choice with respect to any question arising under this Agreement and the Custodian shall not be liable for any action taken or omitted in good faith upon advice of such counsel. The provisions of this Section 3.02 shall survive the resignation or removal of the Custodian and the termination of this Agreement. Section 3.03 Limitation of Liability. The Custodian shall not be liable for any act or omission while acting in good faith. Any act or omission by the Custodian pursuant to the advice of its attorneys shall be conclusive evidence of such good faith. The Custodian shall not be liable for the alteration, modification or elimination of any right permitted or given under any instructions and/or in any document deposited under this Agreement due to any delay, any statute of limitations or due to any other reason. The Custodian shall not incur any liability with respect to any act or omission in reliance upon any document, including any written notice or instruction provided for in this Agreement. In performing its obligations hereunder, the Custodian shall be entitled to presume, without investigation or inquiry, the due execution, validity, effectiveness and enforceability of all documents it receives and shall be entitled to rely upon the genuineness of the signatures of the signatories of such documents, dnd also the truth and accuracy of any information contained therein. The Custodian assumes no responsibility for the validity or sufficiency of any instrument which it may hold under Section 1.03 of this Agreement. Section 3.04 Resignation of Custodian. The Custodian may at any time resign by giving written notice of its resignation to the City and the Secretary of the HUD at least thirty (30) days prior to the date specified for such resignation to take effect. Upon the effective date of such resignation, the funds or assets then held under this Agreement by the Custodian shall be delivered by it to such person as may be designated in writing by the City and the Secretary of the HUD, whereupon all of the Custodian's duties and obligations thereunder and hereunder shall cease and terminate. If no such person shall have been designated by such time, all duties and obligations of the Custodian shall nevertheless cease and terminate. Custodian's sole responsibility thereafter shall be to keep safely all funds and assets then held by it pursuant to this Agreement and to deliver the same to a person or persons designated by the City and the Secretary of the HUD or in accordance with the directions of a final order or judgment of a court of competent jurisdiction. 4813-3048-5761.2 5 Section 3.05 Notices. All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of service if served personally to the party to whom notice is to be given, (b) on the day of transmission if sent by facsimile transmission to the facsimile number given below, and telephonic confirmation or receipt is obtained promptly after completion of transmission, (c) on the day after delivery to Federal Express or similar overnight courier service or the Express Mail service maintained by the United States Postal Service, or (d) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed, return receipt requested, to the party as follows: If to City: City of San Bernardino 201 North"E" Street, Suite 301 San Bernardino, California 92408 • Attn: Executive Director of the Economic Development Agency Tel: (909) 663-1044 Fax: (909) 888-9413 If to the Custodian: Wells Fargo Bank, National Association 707 Wilshire Boulevard 17th Floor Los Angeles, California 90017 Attn: Scott C. Emmons Tel: (213) 614-3349 Fax: (213) 614-3355 If to the Secretary of HUD: Secretary of the United Stated Department of ® Housing and Urban Development 451 Seventh Street, S.W., Room 7180 Washington, DC 20410 Attn: Director, Financial Management Division Tel: (202) 708 1871 Fax: (202) 708 1798 Section 3.06 Term. This Agreement shall remain in full force and effect during the time that certain HUD Section 108 Contract of Loan Guarantee Assistance (Arden-Guthrie Neighborhood Improvement Project) (B-03-MC-06-0517) or until such earlier time the Custodian receives written notification from either the Secretary of HUD or such termination date or a written notice from the City that its obligations as arise under the contract described in this sentence have been satisfied in full. Upon termination, the Custodian shall deliver to the City or the Secretary of HUD, as applicable, all documents and securities held in the account at the written direction of the City. Any fees 4813-3048-5761.2 6 remaining outstanding and balance owing to Custodian may be withheld from the assets of the account prior to delivery to the City or as the City directs. Section 3.07 Governing Law. This Agreement and all transactions hereunder shall be governed by, interpreted, construed and enforced in accordance with the laws of the State of California. Section 3.08 Entire Agreement. This Agreement, including the documents incorporated by reference, if any, expresses the entire agreement of the parties hereto, and supersedes all prior promises, representations, understandings, arrangements and agreements between the parties, to the extend inconsistent, with respect to the subject matter contained herein. Section 3.09 Section Headings and References. The headings or titles of the several Sections hereof, shall be solely for convenience of reference and shall not affect the meaning,construction or effect t of the Agreement. Section 3.10 Secretary of HUD is the Beneficiary of This Agreement. The Secretary of HUD is the beneficiary of this Agreement. The Secretary of HUD is not required to execute or otherwise approve or consent to the execution of this Agreement by the Custodian and the City, and the Custodian shall assume its duties and obligations as arise under this Agreement without further instruction from the Secretary of HUD. Section 3.11 Execution in Counterparts. This Agreement may be executed by the Custodian and the City in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 4813-3048-5761.2 7 IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed by their duly authorized officers on the day and year first set forth above. CITY City of San Bernardino By: Its: CUSTODIAN Wells Fargo Bank, National Association By: Its: 4813-3048-5761.2 g Exhibit A g Agency and Custody Account Direction For Cash Balances Direction to use Wells Fargo Advantage Funds for cash balances for the following account(s): 1 Account Name: City of San Bernardino/HUD (Arden Guthrie Project) Account Number(s): 20347200 and sub-accounts thereof You are hereby directed to invest, as indicated below or as I shall direct further from time to time, all cash in the Account in the following money market portfolio of Wells Fargo Advantage Funds (the "Fund") or another permitted investment of my choice (Check One): Wells Fargo Advantage Funds, 100% Treasury Money Market Fund _Wells Fargo Advantage Funds, Government Money Market Fund Wells Fargo Advantage Funds, Cash Investment Money Market Fund Wells Fargo Advantage Funds, Prime Investment Money Market Fund Wells Fargo Advantage Funds, Treasury Plus Money Market Fund I acknowledge that I have received, at my request, and reviewed the Fund's prospectus and have determined that the Fund is an appropriate investment for the Account. Each Fund's prospectus can be downloaded from the Wells Fargo website at http://www.wellsfargo.com/funds/fins fund/fund type/fundtype jhtml?fundType=MoneyMarket& tab=literature I understand from reading the Fund's prospectus that Wells Fargo Funds Management, LLC, ("Wells Fargo Bank"), a wholly-owned subsidiary of Wells Fargo & Company, provides investment advisory and other administrative services for the Wells Fargo Advantage Funds. Other affiliates of Wells Fargo & Company provide sub-advisory and other services for the Funds. Boston Financial Data Services serves as transfer agent for the Funds. The Funds are distributed by Stephens Inc., Member NYSE/SIPC. Wells Fargo & Company and its affiliates are not affiliated with Stephens Inc. I also understand that Wells Fargo & Company will be paid, and its bank affiliates may be paid, fees for services to the Funds and that those fees may include Processing Organization fees as described in the Fund's prospectus. I understand that you will not exclude amounts invested in the Fund from Account assets subject to fees under the Account agreement between us. I understand that investments in the Fund are not obligations of, or endorsed or guaranteed by, Wells Fargo Bank or its affiliates and are not insured by the Federal Deposit Insurance City. I acknowledge that I have full power to direct investments of the Account. 4813-3048-5761.2 9 I understand that I may change this direction at any time and that it shall continue in effect until revoked or modified by me by written notice to you. I understand that if I choose to communicate this investment direction solely via facsimile, then the investment direction will be understood to be enforceable and binding. CITY City of San Bernardin Date: �-- Executive Director of the Economic Development Agency of the City of San Bernardino [City of San Bernardino HUD Section 108 Loan Contract No. B-03-MC-06-0539] 4813-3048-5761.2 10 Exhibit "B" Schedule of Fees to act as Custodian for the Economic Development Agency of the City of San Bernardino Acceptance Fee: WAIVED Initial Fees as they relate to Corporate Trust Services acting in the capacity of Custodian. Includes an examination of the Custodian Documents; acceptance of the Custodian appointment; setting up of all applicable Custody Accounts and accounting records; receipt of the Security documents; and the coordination of receipt of funds for deposit to the proper Custody Accounts. Annual Administration Fee: $1,500.00 For ordinary services of the Custodian, including normal administration of the Custody Accounts. Ordinary services include: daily routine account management; investment transactions; holding of Section 108 application and closing documents; disbursement of the funds in accordance with the agreement; and trust account statements sent to all applicable parties. Payable in advance, with 0 the first installment payable at the time of funding. This fee will not be prorated in the case of early termination. This is an "all inclusive" Annual Fee. No additional add-on or transactional fees for tasks performed such as the delivery or receipt of wires or the processing of requisitions will be billed. Wells Fargo's bid is based on the following assumptions: • Number of Custodial funds/accounts to be established: Not more than Four(4) • City of San Bernardino will be the sole Borrower of HUD Proceeds Out of Pocket Expenses: At Cost We will charge for out-of-pocket expenses in response to specific tasks assigned by the client or provided for in the custody agreement. Possible expenses would be, but are not limited to, express mail and messenger charges, travel expenses to attend closing or other meetings. There are no charges for indirect out-of-pocket expenses. This fee schedule is based upon the assumptions listed above which pertain to the responsibilities and risks involved in Wells Fargo undertaking the role of Custodian. These assumptions are based on information provided to us as of the date of this fee schedule. Our fee schedule is subject to review and acceptance of the final documents. Should any of the assumptions, duties or responsibilities change, we reserve the right to affirm, modify or rescind our fee schedule. Extraordinary services (services other than the ordinary administration services of Custodian described above) are not included in the annual administration fee and will be billed as incurred at the rates in effect from time to time. Submitted on: August 2,2006 4813-3048-5761.2 1 1 Exhibit "C" Arden-Guthrie Redevelopment Project Transcript List Listing of HUD Section 108 Loan Category I Documents: I-1 Contract for Loan Guarantee Assistance Under Section 108 of the Housing and Community Development Act of 1974, as amended (Editor's Note: HUD Document) Attachment No. 1 Letter Agreement for Section 108 Loan Guarantee Program Custodial Account(Editor's Note: HUD Document) Attachment No. 2 Letter Agreement for Section 108 Loan Guarantee Program Custodial Investment Account(Editor's Note: HUD Document) Attachment No. 3 Description of Annual Grant Revenues (Editor's Note: Agency Cash Flow) Attachment No. 4 Description of Annual Agency Site Sales Tax Payment (Editor's Note: Agency Cash Flow) a Attachment No. 5 Description of Annual Agency Site Tax Increment Payment (Editor's Note: Description from 2006 Redevelopment Cooperation Loan Agreement) Attachment No. 6 Description of the Pledged Property (Legal Description of Agency Lands owned by Agency as of June 30, 2006) I-2 $7,500,000 Section 108 Loan Guarantee Program Variable/Fixed Rate Note (Editor's Note: HUD Document) 1-3 Section 108 Note Commitment Schedule (Editor's Note: HUD Document) 1-4 Section 108 Note Schedule P&I (Editor's Note: HUD Document) 1-5 Trust Agreement by and between Chemical Bank and HUD (Editor's Note: HUD Document) I-6 Supplement to Trust Agreement by and between JP Morgan Chase Bank, as successor to Chemical Bank, and HUD (Editor's Note: HUD Document) I-7 Legal Opinion in Favor of HUD and the City, dated August 8, 2006 I-8 Collateral Assignment of Deed of Trust (4850-4647-0400) I-9 Allonge to $7.5M Agency Promissory Note (4812-6638-8225) (Executed original) 1-10 $7.5M Agency Promissory Note (4831-5221-7856) (Executed original) I-11 Deed of Trust(4821-4420-8640) (Executed original) 4813-3048-5761.2 12 I-12 Borrower Security Agreement and Collateral Assignment of Documents (4834-7498-1120) (Executed original) I-13 Agency Appraisal Report on Fair Market Value of Agency Lands Listing of City and Agency Redevelopment Cooperation Loan Agreement Category II Documents II-1 2006 City of San Bernardino and Redevelopment Agency of the City of San Bernardino Redevelopment Cooperation Loan Agreement(4815-4167-0656) II-2 Exhibit"A" Vicinity Map Showing Project Site II-3 Exhibit"B" Description of the Project II-4 Exhibit"C" Listing of Agency Collateral Lands (Editor's Note: Same as Document I-1, Attachment No. 6) 4 II-5 Exhibit"D" Form of Agency Note—A (4831-5221-7856) II-6 Exhibit"E" Form of Agency Deed of Trust(4821-4420-8640) II-7 Exhibit"F" HUD Section 108 Loan Covenants Applicable to the Project II-8 Exhibit"G-1" Agency Collateral Assignment to the City of Developer Grant Agreement Security Documents (4823-7297-3585) II-9 Exhibit"G-2" City Collateral Assignment to HUD of Documents (same as Document No. I-7) (4834-7498-1120) II-10 2003 Redevelopment Cooperation Agreement Among IVDA, the City and the Agency (4834-7147-0080) Listing of Other Documents III-1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE CONTRACT AND RELATED DOCUMENTS FOR THE LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 USC SECTION 5308 (CDBG SECTION 108 CONTRACT NO. B-03-MC-06-0539) — NORTH ARDEN GUTHRIE COMMERCIAL DEVELOPMENT PROJECT (IVDA REDEVELOPMENT PROJECT AREA) (4829-3957-2993) 4813-3048-5761.2 13 III-2 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY TO EXECUTE THE 2006 REDEVELOPMENT COOPERATION LOAN AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND THE CITY OF SAN BERNARDINO (NORTH ARDEN GUTHRIE COMMERCIAL DEVELOPMENT PROJECT) (4810-7894-0417) III-3 [Mayor and Common Council Resolution Approving 2006 Redevelopment Cooperation Loan Agreement] III-4 2006 HUD Section 108 Loan Term Outline(4815-4167-0656) III-5 City Staff Report [OTHER DOCUMENTS AS MAY BE DELIVERED BY THE CITY TO THE CUSTODIAN FOR THE BENEFIT OF THE SECRETARY OF HUD WHICH REFERENCE SECTION 1.03 OF THE PERSONAL AND PROFESSIONAL SERVICES AGREEMENT, DATED AS OF SEPTEMBER 1, 2006, BY AND BETWEEN WELLS FARGO BANK,N.A. AND THE CITY] 4813-3048-5761.2 14