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HomeMy WebLinkAboutR31- Economic Development Agency CITY OF SAN BERNARDINO ORIGINAL ECONOMIC DEVELOPMENT AGENCY FROM: Emil A.Marzullo SUBJECT: CMB Infrastructure Investment Group III, Interim Executive Director L.P. - Loan Agreement for a $15,000,000 Loan under the EB-5 Program DATE: September 30,2009 Synopsis of Previous Commission/Council/Committee Action(s): On August 20,2009,Redevelopment Committee Members Johnson,Baxter and Brinker unanimously voted to recommend that the Community Development Commission consider this action for approval. Recommended Motion(s): (Community Development Commission) Resolution of the Community Development Commission of the City of San Bernardino authorizing that certain Redevelopment Agency of the City of San Bernardino Tax Exempt Promissory Note Series 2009 (CMB Infrastructure Investment Group III, L.P.)in the amount not to exceed$15,000,000,approving the form of legal documents related thereto and authorizing and directing preparation, execution and delivery of the final form thereof Contact Person(s): Brian Turnbull Phone: (909)663-1044 Project Area(s): N/A Ward(s): All Supporting Data Attached: Rl Staff Report 0 Resolution(s)0 Agreement(s)/Contract(s)❑Map(s) ❑Letter(s) Funding Requirements: Amount: $ -0- Source: N/A Budget Authority: N/A /� - .�. i� Signature: �/�n., ) Fiscal Review: J Emil A.Marzullo,Interim Exe 've ctor Ru DeJesu 1! In m Admims rve Services Director Commission/Council Notes: X300 - PdAgendas\Comm Dev Commission\CDC 2009\10.05-09 CMB Inkmmmrt-E&5 Program Loan Agmemem SRdoc COMMISSION MEETING AGENDA Meeting Date: 10/05/2009 Agenda Item Number: ;( ECONOMIC DEVELOPMENT AGENCY STAFF REPORT CMB INFRASTRUCTURE INVESTMENT GROUP 1II,L.P.- LOAN AGREEMENT FOR A $15,000,000 LOAN UNDER THE EB-5 PROGRAM BACKGROUND: CMB Infrastructure Investment Group 111, L.P. ("CMB"), was formed in the mid-1990's to establish a "regional center" for the counties of San Bernardino, Riverside and Sacramento to assist in financings for the closed military bases in these counties. The Inland Valley Development Agency ("IVDA") entered into the initial loan transaction with CMB in 1997, for the first loan of this type pursuant to the EB-5 Program administered initially by the Immigration and Naturalization Services ("INS") which has since been restructured into the United States Citizenship and Immigration Services ("USCIS"). Since late 2007, the IVDA and the San Bernardino International Airport Authority ("SBIAA") have jointly entered into four additional loans with other affiliates of CMB for a total principal amount of$46,000,000. It is anticipated that an additional $6 million loan with another affiliate of CMB will additionally be submitted to the IVDA for consideration in September 2009. The loan proceeds have been used by the IVDA/SBIAA in part for various Airport and roadway infrastructure projects, and in most instances, the proceeds were used to partially fund cost overruns or local matching fund requirements of other federal grants. CURRENT ISSUE: The EB-5 Program for the CMB regional center for San Bernardino County allows foreign nationals to obtain permanent residency status in the United States through an investment of$500,000 in a qualified investment activity that generates U.S. jobs. Typically, the minimum investment amount is $1,000,000 but the lower amount of $500,000 per investor applies in San Bernardino County due to the higher unemployment rates and the closure of the Norton Air Force Base ("NAFB"). The use of the USCIS approved economic model for infrastructure investments allows for the use of indirect job creation based upon infrastructure expenditures by governmental entities. CMB establishes separate limited liability companies for each investment pool and requires that there be no prepayment by the borrowing governmental entity of the principal amount for at least forty-two months. This restriction allows adequate time for the investors to meet all criteria required by the USCIS for obtaining the permanent residency status. Rather than investing in private businesses as virtually all other regional centers have elected to undertake, CMB will only place loans into infrastructure and public improvement investments with governmental agencies whereby the necessary jobs that are required to be generated can be demonstrated utilizing an economic model approved by the USCIS. In San Bernardino County,the model provides that for each $1,000,000 of infrastructure and public improvement construction dollars expended by governmental agencies, 5.7 indirect jobs are generated in the local economy resulting from the construction expenditures on the infrastructure and other public improvements. Each investor must demonstrate that their $500,000 investment has generated 10 new American jobs. $1.5 million of additional City/Agency and other public agency infrastructure costs will thus generate 11.4 indirect jobs thereby qualifying the investor for permanent residency status. P:Ugen&s\Comm Dv CommimionTM2 009\1M5-09 CM Infiastmame-E&5 Pmgmm Loan Agrxment SR.&c COMMISSION MEETING AGENDA Meeting Date: 10/05/2009 Agenda Item Number: Iz 7I Economic Development Agency Staff Report CMB Infrastructure—EB-5 Program Loan Agreement Page 2 The City of San Bernardino Economic Development Agency("EDA") Staff has caused the preparation of certain documents to provide for the issuance of a tax exempt note entitled "Redevelopment Agency of the City of San Bernardino Tax Exempt Promissory Note Series 2009 (CMB Export, LLC)" (the "Note") to CMB in the aggregate principal amount of not to exceed $15,000,000. The Note will be secured by a Loan Agreement between CMB and the EDA in the form as included in this agenda item (the "Loan Agreement'). Several of the projects that the EDA anticipates funding with the CMB loan proceeds will include: 1. Omnitrans soft costs for the construction of the sbX federally funded bus rapid transit project, including temporary relocation of the transit center and parking lots. 2. Sewer line relocation and construction for the State Court Complex on Third Street and Arrowhead. 3. Solar projects for the EDA building and other City and EDA buildings to reduce energy costs. 4. Infrastructure costs for the La Placita parking structure. 5. Infrastructure cost reimbursements and additional interchange expenditures for the I-215/University Boulevard interchange. 6. Restoration of the California Theatre. 7. Other projects identified by the Community Development Commission of the City of San Bernardino. The terms of the proposed loan are as follows, subject to change in the final documents: 1. Interest Rate: 5.25%, tax-exempt. 2. Principal: $15,000,000. 3. Repayment: Interest only payable quarterly; principal payable at the 6-year maturity date. 4. Security: No specific pledge of EDA real estate assets but a limited pledge of surplus tax increment revenues and commitment to refinance the loan; at the time of loan closing there must be a demonstration of ability to undertake a refinancing at the 6-year maturity date. 5. Closing Costs: No points or costs other than document preparation utilizing existing forms. 6. Closing Date: October, 2009. 7. Funding: Increments of$500,000 will be advanced to the EDA as investors are obtained who submit the proper documentation to the USCIS for approval; all funds should be available to the EDA by the second quarter of 2010. The federal legislation that allows for this type of financing under the EB-5 program is currently scheduled to sunset as of September 30, 2009, at the end of the current federal fiscal year. However, the authorizing legislation has been extended previously at each point in time prior to the expiration of the authorizing legislation, and it is assumed that the EB-5 program will again be extended as part of the federal budget process in September 2009. A loan closing would only occur if the federal legislation is extended and in effect at the time of the proposed loan closing in October 2009. Additional information can be obtained on the CMB website at www.cmbeb5visa.com and it contains descriptions and photographs of the projects undertaken at both the former NAFB with the IVDA and SBIAA in addition to those current projects at the former McClellan Air Force Base in Sacramento. e:Ageodae\Co=n vCommissan%CM2z v]M5-W CMB mk eetructwe_ee4vropvoLomAgmmmSR.&c COMMISSION MEETING AGENDA Meeting Date: 10�//0J5/2009 Agenda Item Number: /-/27/ Economic Development Agency Staff Report CMB Infrastructure—EB-S Program Loan Agreement Page 3 ENVIRONMENTAL IMPACT: This action does not meet the definition of a "project" under Section 15378 of the California Environmental Quality Act (CEQA). FISCAL IMPACT: Repayment of this loan would be interest only and payable quarterly. Repayment or refinance of the principal would take place at the 6-year maturity date. There is no impact to the City's General Fund. RECOMMENDATION: That the Community Development Commission adopt the attached Resolution. 21, (,/,/,j Emil A. Marzullo, Interim WectAtive Director P:Agee \Comm D,Commission\CDC 2009\10-05-09 CMB InBmtmmure-EB 5 Program LOav Agreemem Sft.doc COMMISSION MEETING AGENDA Meeting Date: 100/ 1 /05/2009 Agenda Item Number: I�3 COPY f 1 RESOLUTION NO. \ 2 3 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING THAT CERTAIN 4 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO TAX EXEMPT PROMISSORY NOTE SERIES 2009 (CMB INFRASTRUCTURE 5 INVESTMENT GROUP III, L.P.) IN THE AMOUNT NOT TO EXCEED $15,000,000,APPROVING THE FORM OF LEGAL DOCUMENTS RELATED 6 THERETO AND AUTHORIZING AND DIRECTING PREPARATION, 7 EXECUTION AND DELIVERY OF THE FINAL FORM THEREOF 8 WHEREAS, the Community Development Commission of the City of San Bernardino (the 9 "Commission") is authorized under Health and Safety Code Section 33000, et seq., to issue bonds, 10 notes and other obligations for the purpose of financing public capital improvements within the City 11 of San Bernardino (the"City"); and 12 13 WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency") 14 desires to finance certain infrastructure costs, including, but not limited to: (i) Omnitrans soft costs 15 for the construction of the sbX rapid bus project, including temporary relocation of the transit center 16 and parking lots; (ii) sewer line relocation and construction for the State Court Complex; (iii) solar 17 projects for the Agency building and other City and Agency buildings; (iv) infrastructure costs for 18 the La Placita project; (v) infrastructure cost reimbursements and additional interchange 19 expenditures for the I-215/University Boulevard Interchange (the "Project'); and (vi) restoration of 20 the California Theatre in accordance with the California Community Redevelopment Law, in 21 addition to such other expenditures and projects as may be approved by this Commission; and 22 WHEREAS, in order to raise the funds required for the Project, the Agency has determined 23 to issue its Redevelopment Agency of the City of San Bernardino Tax Exempt Promissory Note 24 Series 2009 (CMB Infrastructure Investment Group III, L.P.) (the "Note") in the aggregate principal 25 amount of not to exceed $15,000,000, pursuant to and secured by that certain Loan Agreement 26 (CMB Infrastructure Investment Group III, L.P.) dated as of October 1, 2009, by and between CMB © 27 Infrastructure Investment Group III, L.P., a limited partnership organized under the laws of the State 28 of California(the "Lender") and the Agency(the "Loan Agreement'); and P:URendasUlezolutbnsVteaoWSionaQOMA I M5O CMB bft..mm,.-loan ABmnnem CDC Rao Doc I WHEREAS, the Agency has considered the terms of the transaction as contemplated herein 2 and desires at this time to approve the terms of said transaction in the public interests of the Agency. 3 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE 4 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS 5 FOLLOWS: 6 Section 1. The Commission hereby approves the Loan from the Lender to the Agency in 7 an amount not to exceed $15,000,000, pursuant to the terms of the Loan Agreement and as further 8 evidenced by the Note. The proposed term of the Note shall be six (6) years at a rate of interest not 9 to exceed 5.25%. Interest on the Note shall be paid quarterly until maturity and principal shall be 10 paid in full on the maturity date. The Note shall be paid with available funds of the Agency as 11 further provided in the Loan Agreement. 12 Section 2. The Commission hereby approves the Note and Loan Agreement in the forms 13 as attached to this Resolution with such changes thereto as may be approved by the Interim O14 Executive Director of the Agency when such terms and conditions have been ascertained. The 15 Commission hereby further authorizes and directs that the forms of the Note and Loan Agreement as 16 attached hereto be converted into the final forms thereof together with such changes or 17 modifications as deemed necessary or desirable by the Chairman or Interim Executive Director of 18 the Agency, upon the recommendation of Lewis Brisbois Bisgaard & Smith LLP ("Agency 19 Counsel"). The Interim Executive Director or such other authorized officer of the Agency is hereby 20 authorized and directed to execute and deliver, and the Secretary is hereby authorized and directed 21 to attest to, the final forms of the Note and the Loan Agreement when the same has been prepared 22 for and in the name of the Agency, and such execution and delivery shall be deemed to be 23 conclusive evidence of the approval thereof. The Agency hereby authorizes the delivery and 24 performance of the obligations under the Note and Loan Agreement to accomplish the financing as 25 contemplated herein. 26 Section 3. The Interim Executive Director, Agency Counsel and any and all other 27 officers of the Agency are hereby authorized and directed, for and in the name and on behalf of the 28 Agency, to do any and all things and take any and all actions, including execution and delivery of 2 P.WWnduV olutonsU esolutmsU2 IM5.9 CMB Idrul u ure-lean Agreement CDC Ruo doc 1 any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of 2 conveyance, warrants and other documents, which they, or any of them, may deem necessary or 3 advisable in order to consummate the Loan as described herein. Whenever, in this Resolution any 4 officer of the Agency is authorized to execute or countersign any document or take any action, such 5 execution, countersigning or action may be taken on behalf of such officer by any person designated 6 by such officer to act on his or her behalf in the case such officer shall be absent or unavailable. The 7 Commission hereby appoints its Chairman and Interim Executive Director as agents of the Agency 8 for purposes of executing any and all documents and instruments which any officer of the Agency is 9 authorized to execute hereunder. 10 Section 4. This Resolution shall take effect from and after its date of adoption by this 11 Commission. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 P lAxcndasUta9lmbns�Remlmbns0009U 0.-05-09 CM6 lnf.M=1m -tuan A mm.em CDC R.doc I RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING THAT CERTAIN I. 2 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO TAX 3 EXEMPT PROMISSORY NOTE SERIES 2009 (CMB INFRASTRUCTURE INVESTMENT GROUP III, L.P.) IN THE AMOUNT NOT TO EXCEED 4 $15,000,000, APPROVING THE FORM OF LEGAL DOCUMENTS RELATED THERETO AND AUTHORIZING AND DIRECTING PREPARATION, 5 EXECUTION AND DELIVERY OF THE FINAL FORM THEREOF 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 meeting 8 thereof, held on the day of 2009, by the following vote to wit: 9 Commission Members: Aves Nays Abstain Absent 10 ESTRADA 11 BAXTER 12 BRINKER _ 13 SHORETT 14 KELLEY 15 JOHNSON _ 16 MC CAMMACK 17 18 Secretary 19 20 The foregoing Resolution is hereby approved this day of 2009. 21 22 23 Patrick J. Morris, Chairperson Community Development Commission 24 of the City of San Bernardino 25 Approved as to Form: 26 27 BY: Agency C nsel n 28 epc-semen P\Af mu\Resolutions\Resolutions\]009\10-0S.WCMB Infrutrunure-Loan Agreement CDC 4 so d. J� �.r LOAN AGREEMENT (CMB Infrastructure Investment Group III, L.P.) THIS LOAN AGREEMENT (this "Agreement') is entered into as of this 5th day of October, 2009, by and between CMB Infrastrucure Investment Group 111, L.P., a limited partnership organized under the laws of the State of California (the "Lender") and the Redevelopment Agency of the City of San Bernardino (the"Borrower"), as follows: WHEREAS, the Borrower is a public body corporate and politic organized and existing under the Community Redevelopment Law (Part 2 of Division 24 of the Health and Safety Code of the State of California; and WHEREAS, the Lender was organized in accordance with the requirements for regional centers as set forth under the Immigration Act of 1990, as amended, and for the purpose of promoting economic growth through, among other things, increased export sales, improved regional productivity, job creation and increased domestic capital investment, and to generate jobs through the immigrant investor visa program of the United States Citizenship and Immigration Service("USCIS"); and WHEREAS, the Lender desires to lend to the Borrower for the purpose of increasing domestic capital investment, and the Borrower seeks to borrow funds from the Lender to assist the Borrower in the economic development, redevelopment and revitalization of the Borrower's Project Areas (the `Project Areas"). NOW, THEREFORE, in consideration of the promises contained herein, and for such other good and valuable consideration receipt of which is hereby acknowledged, the parties hereto agree, as follows: 1. The Loan. The Lender shall loan to the Borrower a principal amount equal to Fifteen Million Dollars ($15,000,000.00) (the "Loan"). The Loan shall bear interest at the rate of 5.25% per annum, accruing from and after each date of funding of a portion of the total principal amount the Loan to the Borrower. Interest shall be calculated on the number of actual days that the principal amount of the Loan is outstanding in each year on the basis of 365/366 days in a calendar year. The Loan shall be represented by the "Redevelopment Agency of the City of San Bernardino Tax Exempt Promissory Note Series 2009 (CMB Infrastructure Investment Group III, L.P.)" substantially in the form attached hereto as Exhibit "A" (the "Note") executed by the Borrower in favor of the Lender. The Lender shall charge the Borrower no origination points or loan fees, nor require the payment of any prepaid interest, in connection with making the Loan. 2. Use of Funds. (a) The Borrower shall use and apply the proceeds of the Loan for any legal purposes of the Borrower pursuant to the California Community Redevelopment Law. Such legal purposes include, but are not limited to, (i) Omnitrans soft costs for the construction of the sbX rapid bus project, including temporary relocation of the transit center and parking lots; (ii) sewer line relocation and construction for the State Court Complex; (iii) solar projects for the Borrower building and other 4811-3323-1369.1 1 i3 P A,.dns Ag.&Atwhments At rn.Auxchmrn,s A,mts-Amend 2IX IM5-W CMB InfiastMmre-I an Aprcemem u iih Prnmiunry Nwc. rc City and Borrower buildings; (iv) infrastructure costs for the La Placita project; (v) infrastructure cost reimbursements and additional interchange expenditures for the 1-215/University Boulevard Interchange (the "Project'); and (vi) restoration of the California Theatre in accordance with the California Community Redevelopment Law. (b) The Agency hereby represents and warrants that it presently intends to undertake and complete the Projects as have been previously submitted to the Lender and accepted by the Lender for purposes of obtaining the necessary approvals from the USCIS and to allow the Lender to cause to be prepared the required economic analysis of the indirect job impacts resulting from the Agency undertaking said Projects. (c) The Borrower shall not fund any other redevelopment activities or other construction undertakings of the Borrower or the City of San Bernardino that deviate in any respect whatsoever from the Projects as identified above without first having requested and obtained the prior written approval of the Lender with such approval being granted or denied by the Lender at its sole and absolute discretion. The Borrower recognizes that additional costs may be incurred by the Lender to modify any submittal to the USCIS or to amend other marketing materials prepared by the Lender in connection with the obtaining of necessary moneys to fund the Loan to the Borrower. For this reason, any such Borrower request may require the payment by the Borrower in advance of costs to be incurred by the Lender to consider any such request. 3. Funding of the Loan. (a) Acknowledgement. The Borrower acknowledges that (i) the Lender, as an approved and federally-designated "regional center", is authorized, and intends, to raise capital from foreign investors who seek to obtain permanent residency in the United States in accordance with the EB-5 investor visa program of the Immigration and Nationality Act (the "EB-5 Program"), and (ii) it is anticipated that each foreign investor will make an investment with the Lender of Five Hundred Thousand Dollars ($500,000.00). In that regard, the Borrower further acknowledges that the principal amount of the Loan to be disbursed by the Lender to the Borrower is dependent on the amount of capital raised by the Lender from foreign investors, and, accordingly, the Borrower agrees that the Lender does not guarantee that the entire principal amount of the Loan, or any portion thereof, shall be disbursed to the Borrower. Additionally, the Borrower further acknowledges that to maintain compliance with the rules and regulations promulgated under the EB-5 Program, the Lender is required to lend to and/or invest its funds with third parties, other than the Borrower, located within the geographic area that constitutes the Lender's "regional center", and accordingly, the Borrower further agrees that a portion of the funds raised by the Lender will be allocated to such third parties, which allocation shall be made in the sole and absolute discretion of the Lender. (b) Funding. Subject to Section 3(a), above, and the other terms and conditions of this Agreement, the Loan shall be disbursed to the Borrower by the Lender in no more than thirty (30) tranches, each in the minimum principal amount of Five Hundred Thousand Dollars ($500,000.00) (each, a "Tranche"), and each Tranche will be disbursed to the Borrower at such time as determined by the Lender, in its sole and absolute discretion, provided that the Lender anticipates that each Tranche will be disbursed when the funds invested by an investor in the Lender become available to the Lender for disbursement to the Borrower. If, and when, the Lender determines it is able to disburse a Tranche to the Borrower, the Lender shall provide the Borrower with notice thereof, and the Borrower agrees that it will accept and borrow such funds. Each Tranche shall be disbursed by wire transfer to an 4811-3323-1364.1 2 P:Ag Was Agnda Anachmnts AgeMa Attachmn¢Agrmts-Amend 2W IM5-W CMB Inhassmctme-Lan Agrenncm whh Pmmis$O,NMc.dnc account of the Borrower pursuant to written instructions to be provided by the Borrower. The Lender shall not be required to disburse any Tranche to the Borrower if an Event of Default by the Borrower hereunder has occurred and is continuing. The date on which the initial Tranche is disbursed to the Borrower under this Agreement shall be referred to herein as the `Initial Funding Date". 4. Repayment of the Loan. (a) Principal. Payment of principal shall be due and payable on September 30, 2015 (the "Maturity Date"), and shall be paid in immediately available funds. The Borrower may, without penalty, prepay solely as to the entire outstanding principal balance of this Note at anytime on or after April 1, 2013, and on any other date thereafter, or prior to such date upon the mutual consent of the parties. (b) Interest. Interest shall be paid quarterly throughout the term of the Loan on each January 1, April 1, July 1, and October I (each such date is defined herein as an "Interest Payment Date"), commencing on January 1, 2010, with the final interest payment being due and payable on the Maturity Date. Interest shall be payable in arrears based upon the principal balance outstanding as of each Interest Payment Date for the immediately preceding interest accrual period for the actual number of days that principal was then outstanding on the Loan. The Lender shall submit invoices to the Borrower on a quarterly basis prior to each Interest Payment Date. All interest shall be calculated on the basis of the actual number of days during each quarterly interest payment period that any principal amount of the Loan was then outstanding. (c) Late Charees. A late charge of three percent (3%) of the amount due shall be paid by the Borrower with respect to each payment of interest not made within thirty (30) calendar days from and after receipt of an invoice from the Lender ("Delinquent Interest") delivered to the Borrower but such payment shall not be made earlier than an Interest Payment Date. A late charge of three percent (3%) of the amount due shall be paid by the Borrower with respect to the late payment of principal on the Maturity Date, if such payment of principal is not made by September 30, 2015 (`Delinquent Principal"). Each amount of Delinquent Interest and Delinquent Principal plus the applicable late charge (together, a "Delinquent Payment") shall bear interest at 5.25% per annum until such Delinquent Payment is made in full to the Lender. (d) Acceleration of Certain Interest Payments. In the event the Borrower fails to make two (2) consecutive interest payments to the Lender, or two (2) interest payments in any twelve- month period, the Lender may accelerate payment of the amount of interest coming due on the next two (2) succeeding Interest Payment Dates, so that all such interest, together with all delinquent payments and interest due on such delinquent payments, shall be due and payable on the tenth (10th) calendar day of the month following the month in which the second (2nd) consecutive interest payment was not made or the second (2nd) interest payment in a twelve-month period was not made. Such amounts of interest that are subject to acceleration shall only be payable upon invoice from the Lender delivered to the Borrower. Thereafter, the Borrower shall continue to remit quarterly interest payments in accordance with this Agreement and the Note. l 5. No Security: Payment Covenant of Borrower. v (a) The Loan is not secured by the pledge of, the assignment of, or the granting of any security interest in, the assets, funds, revenues or properties of the Borrower, and the Borrower 4811-3323-1364.1 3 P AgetWas Agenda AnachmentsAgenda Attachmeres Agnuts-Amead 2M IQni.pq CMS Infnarvemrc-Lnan Abreamenl nflh Pmmiswm Role drc Chereby pledges to undertake a refinancing, refunding or other repayment of this Loan on or before the Maturity Date from the then available surplus tax increment revenues of the Borrower generated within the Project Areas. Nothing contained herein shall limit or other preclude the Borrower from using and applying the annual surplus tax increment revenues of the Borrower from the Project Areas for undertaking other redevelopment activities and the payment of administrative expenses of the Borrower prior to the Maturity Date; provided, however, that the Borrower covenants and agrees not to commit any such surplus tax increment revenues from the Project Areas in such manner as would preclude the Borrower from issuing such refunding bonds or undertaking any other refinancing of this Loan on or prior to the Maturity Date. (b) The Borrower hereby agrees and covenants to appropriate funds with respect to each fiscal year throughout the term of this Agreement in an amount sufficient to make required interest payments during the applicable fiscal year. In addition, the Borrower agrees and covenants to appropriate funds with respect to the fiscal year in which the Maturity Date occurs in an amount sufficient to pay the outstanding principal of the Loan on the Maturity Date whether from the annual surplus tax increment revenues of the Project Areas or from a refunding or other refinancing of this Loan. (c) The Borrower hereby represents that certain tax increment revenues are legally available to the Borrower for the payments required pursuant to this Agreement after and subordinate to the payments of all other required amounts as identified in the following sentence which may become available to the Borrower as surplus tax increment revenues if and when received all prior and senior debt has been paid by the Borrower. Surplus tax increment revenues may be applied to pay principal and interest on the Loan. The Borrower agrees and covenants that it shall use its best efforts to refinance the Loan prior to, or on the Maturity Date. On January 1, 2010, and each year thereafter until the Maturity Date, the Borrower shall deliver its audited financial statements to the Lender for the immediately prior fiscal year of the Borrower in an effort to show Lender that Borrower has the ability to refinance the Loan on or prior to the Maturity Date. (d) The Borrower further represents that the surplus tax revenues, based upon current estimates of assessed value growth for real property in the Borrower's Project Areas, will be sufficient for the Borrower to issue additional tax increment indebtedness to repay in whole the principal portion of the Loan as the same becomes due and payable as of the Maturity Date. (e) The obligations of the Borrower under this Agreement and under the Note are not guaranteed by, nor payable either directly or indirectly by the City of San Bernardino, California, State of California or any of its subdivisions, but are the unsecured obligations solely of the Borrower. 6. Prior Indebtedness. The Lender hereby acknowledges that the Borrower has incurred certain prior indebtedness. The Lender acknowledges receipt of the financial audits of the Borrower for the period ending June 30, 2008, and the budgets for the past and current fiscal years and has reviewed the financial condition of the Borrower and the other notes as contained in the audit statements and the budgets. C7. Representations of Borrower. (a) The Borrower has been duly organized under the laws of the State of California and have the power to enter into this Agreement and to incur the obligations under the Note. 4811-3323-1364.1 4 P Agcnd.s Agenda Annh, e.%Agenda Anach.m,Agrmta-Amead 2009 10-05-W('MA In(mumdure-Loan Agrccmrnl ai@ Promiamr 5acdrc (b) Execution of this Agreement and of the Note has been duly authorized by the Board of the Borrower. (c) No governmental or regulatory approvals that have not been previously obtained by the Borrower are required for the due approval, execution and delivery by the Borrower of this Agreement and the Note. (d) This Agreement has been, and the Note will be, duly executed and delivered by the Borrower and this Agreement does, and the Note will, constitute valid and binding obligations of the Borrower, payable from the revenues, funds and assets, generally, of the Borrower as set forth herein and in the Note. (e) The Borrower shall provide to the Lender copies of reports prepared periodically by the Borrower regarding the status of(i) all expenditures of the proceeds of the Loan prior to the commencement of construction of a project for eligible engineering and project design costs, (ii) the commencement date for each of the identified projects for which the proceeds of the Loan will be expended together with a description of the other sources of project funds and the dollar amounts thereof, and (iii) either submittal to the Lender of the notice of completion as issued by the Borrower or such other written confirmation to the Lender as to the date of completion of each such project and the final costs for each of said projects as funded, whether in whole or in part by the proceeds of the Loan, together with the sources and dollar amounts of all other funding sources used to complete such Cproject. (f) The audit statements and budgets referred to in Section 6, above, present fairly, in all material respects, the financial condition of the Borrower at such dates and the results of operations for the periods then ended. Since the end of the periods covered by the audit statements, there has been no known change in the financial condition of the Borrower which has materially or adversely affected the ability of the Borrower to conduct its business as presently heretofore conducted. (g) The representations of the Borrower contained in this Agreement shall be true and correct in all material respects on and as of the Initial Funding Date as referred to in Section 3, above, with the same force and effect as though such representations and warranties had been made on and as of such date. (h) On and as of the Initial Funding Date as referred to in Section 3, above, the Borrower is not in default under any other indebtedness of the Borrower, and the execution, delivery or performance of the Borrower of this Agreement and the Note shall not, to the best of the Borrower' knowledge, contravene any provision of law, statute, rule or regulation of any governmental instrumentality and shall not, to the best of the Borrower' knowledge, conflict or be inconsistent with or result in any breach of any terns, covenants or provisions of, or constitute a default under, or result in the creation or imposition of a lien pursuant to the terms of, any loan agreement, credit agreement or any other agreement, contract or instrument to which the Borrower is a party or by which it is bound or to which it may be subject. C (i) The Borrower recognizes that the investors comprising the Lender are required to demonstrate the creation of jobs through the expenditure of the funds as invested by such investors with the Lender pursuant to the rules and regulations of the USCIS. The Borrower covenants and 4811-3323-1364.1 5 P:AFerdas Agenda Attachments Aecoda Attachments Agrmts-Amend 200 1 0.0-W CMB In6astmetme-Iran Agotemem ssnh Promissory Note doe agrees that the proceeds of each Tranche shall be expended on qualifying projects within twenty-four (24)months after receipt of such Tranche from the Lender. 8. Tax Exempt Interest. The interest payable to the Lender under the Note shall not be included in the gross income of the Lender for Federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"), and shall be exempt from present State of California personal income taxes. In order to maintain such tax exemptions, the Borrower hereby covenants to, and for the benefit of, the Lender, as follows: (a) Arbitrage. The Borrower will not directly or indirectly use or permit the use of proceeds of the Loan, or any other funds of the Borrower from whatever source derived, to acquire any investment, and it will not take or permit to be taken any other action, which would cause the Note to be characterized as an "arbitrage bond" within the meaning of Section 148 of the United States Internal Revenue Code ("Code") or which would otherwise cause the interest on the Note to be includable in gross income for federal income tax purposes. To this end, in the event that at any time the Borrower is of the opinion that, for purposes of this paragraph, it is necessary to restrict or limit the yield on the investment of any moneys held under this Agreement, the Borrower shall take such action as may be necessary. (b) Rebate. Under the Agreement, the Borrower has agreed that within forty-five © (45) days after each computation date it will (i) calculate or cause the calculation of the rebate amount for the Note for the period commencing on the date of issue of the Note and ending on such computation date, such rebate amount to be calculated in the manner required by Section 148 of the Code and the Tax Regulations thereunder, and (ii) pay any such rebate amount to the United States government pursuant to the Code. Within sixty (60) days after each computation date (other than the final computation date), the Borrower will pay to the United States government an amount equal to 90% of the rebate amount calculated as of such date, and within sixty (60) days after the final computation date, the Borrower will pay over to the United States government an amount equal to 100% of the rebate amount calculated as of such date. Such payments shall be made in accordance with Section 148 of the Code and the Tax Regulations thereunder. The Borrower shall keep and retain for a period of six (6) years following the retirement of the Note records of the determinations made pursuant hereto. Notwithstanding any other provision in this Agreement, the obligation to pay rebatable arbitrage to the United States of America and to comply with all other requirements of this Section shall survive the defeasance or payment in full of the Note. (c) Information Reporting. The Borrower will timely file a federal information return with respect to the Note as required by section 149(e) of the Code. (d) Federal Guarantee Prohibition. The Borrower will take no action, nor permit or suffer any action to be taken, if the result of the same would be to cause the Note to be "federally guaranteed"within the meaning of Section 149(b) of the Code. 4811-3323-1364.1 6 P:Agendas Agenda Attachments Agenda AnachmemsAgnals-Amend 2W4 I0 05-M(T(N Inkasuwmre-Loan Agteemem mith P nissnm Nme.dne (e) Private Activity Bond. The Borrower will take no.action, nor permit or suffer any action to be taken, if the result of the same would be to cause the Note to be become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations. (f) Not Hedge Bond. The Borrower reasonably expects that the Note will not be a "hedge bond" within the meaning of section 149(g) of the Code and the Borrower shall comply with all expenditure requirements imposed by said section 149(g) including the investment, if any, in nonpurpose investments as defined in the Code. (g) Elections. The Borrower hereby agrees to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations as the Borrower (after consultation with Bond Counsel) deems necessary or appropriate in connection with the Loan and the Note. (h) Closing Certificate. The Borrower agrees to execute and deliver in connection with the issuance of the Bonds a Tax Certificate as to Arbitrage and the Provisions of Sections 141-150 of the Internal Revenue Code of 1986, or similar document containing additional representations and covenants pertaining to the exclusion of interest on the Note from the gross income of the Lender for federal income tax purposes, which representations and covenants are incorporated as though expressly set forth herein. (i) Further Actions. The Borrower will take all actions within their power and permitted by law which are or may be necessary to assure that interest on the Note at all times remains excludable from gross income for federal income tax purposes, including complying. with the �./ provisions of the Borrower's Arbitrage and Tax Matters Certificate, the covenants set forth herein and all requirements of the Code that must be satisfied subsequent to the issuance of the Note for interest on the Note to be, or continue to be, excluded from gross income for federal income tax purposes. Notwithstanding any provision of this Section, the Borrower may rely conclusively on an opinion of Bond Counsel in complying, or in any deviation from complying, with the provisions hereof. 9. Events of Default. (a) By Lender. The following shall constitute a default by the Lender: failure to fund the Loan as provided in Section 3 of this Agreement within thirty (30) calendar days after written request by the Borrower for the Initial Funding Date or any subsequent funding date to occur. The Lender shall ensure that the first $500,000.00 shall be disbursed to the Borrower by January 15, 2010, and that the full $15,000,000.00 shall be disbursed by the Lender to the Borrower on or before June 30, 2010. (b) By Borrower. Each of the following shall constitute a default by the Borrower: (i) failure to pay the principal of, interest on, and any other payments with respect to, the Note, on or before the tenth (]0'h) calendar day following an Interest Payment Date or the fifteenth (15") calendar day following the Maturity Date, as applicable, as each payment of interest and principal is required to be made; and 4811-3323-1364.1 7 P:A,e ..Agenda Aunhments Ageeda Altuhmmis Agnnu-Amend''-Ofq IIH15.py CMB Infnstmnure-Loan Agreemeni Penh Promisson 4oteda (ii) failure to perform or a delay in performing any term or provision of this Agreement and such failure or delay is not corrected within thirty (30) calendar days after receipt of notice thereof from the Lender. 10. Remedies. Upon a default by the Lender, (i) the Borrower shall be released from any further obligations under this Agreement or the Note except for the repayment of the principal of and interest on any dollar amounts previously advanced, if any, by the Lender to the Borrower, and (ii) the Borrower may seek appropriate legal, injunctive or equitable relief. Upon a default by the Borrower, the Lender may institute any proceeding at law or in equity to enforce the obligations of the Borrower under the Note and/or any covenants and obligations of the Borrower contained in this Agreement. In any action brought under this Agreement, the prevailing party shall be entitled to reimbursement from the other party of its costs and expenses (including reasonable attorney's fees) in bringing such action. Additionally, the Lender shall be entitled to any costs, including reasonable attorney's fees, incurred in collecting amounts due and payable to the Lender under the Note. 11. No Assignment. The Lender shall not be entitled to, and shall not, assign the Note nor its right to receive payments under the Note to any other party without the prior written consent of the Borrower first having been obtained which consent shall not be unreasonably withheld. 12. Term. This Agreement shall terminate upon the payment in full by the Borrower of all amounts due under the Note. 13. Notices. Notices shall be presented in person or by certified or registered United States mail, return receipt requested, postage prepaid, or by overnight delivery made by a nationally recognized delivery service to the addresses noted below. Notice presented by United States mail shall be deemed effective the second business day after deposit with the United States Postal Service. This Section shall not prevent giving notice by personal service or telephonically verified fax transmission, which shall be deemed effective upon actual receipt of such personal service or telephonic verification. Either party may change their address for receipt of written notice by so notifying the other party in writing. TO LENDER: CMB Infrastructure Investment Group III, L.P. Attention: Patrick Hogan 4507 491"Avenue Moline, Illinois 61265 TO BORROWER: Redevelopment Agency of the City of San Bernardino Attention: Emil A. Marzullo, Interim Executive Director 201 North "E" Street, Suite 301 San Bernardino, California 92401 4811-3323-1364.1 8 P:A,.&a Agcnde AOaahmnn,s Agenda AnaeMnrnn Aemns-Amend 2000 1 U n Agme 1 schh Pmmiswry Nmedw 14. Governing Law; Jurisdiction. This Agreement shall be governed by the laws of the State of California, and in the event any party seeks judicial relief or to enforce or to interpret any provision of this Agreement and the Note, such actions shall be filed in the Superior Court of San Bernardino County, California, Main Branch, in the City of San Bernardino, California. 15. Entire Agreement. This Agreement constitutes the entire agreement among the parties and may not be amended without the prior written consent of the parties hereto. This Agreement supersedes all prior negotiation, discussions and previous agreements between the parties concerning the subject matter herein. The parties intend this Agreement to be the final expression of their agreement with respect to the terms herein and a complete and exclusive statement of such terms. No modification, amendment or waiver of any term herein shall be binding unless executed in writing by the parties hereto. 16. Amendment. This Agreement may be amended as deemed necessary by written instruments duly approved and executed by the parties hereto. Any such amendments or modifications shall be valid, binding and legally enforceable only if in written form and executed by the parties hereto after the same have been duly approved and authorized for execution. 17. Severabilitv. Each and every section of this Agreement shall be construed as a separate and independent covenant and agreement. If any term or provision of this Agreement or the application thereof shall be declared invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to circumstances other than those to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the extent permitted by law. [SIGNATURE PAGE FOLLOWS] V 4811-3323-1364.1 9 P:Agendas Agenda ANachmcnts Agenda Anachmeats Agemts-Amend_W)I0-03-N CNN Infiaslmaum-Inan Agreemanl miih Namismn Nmcdnc IN WITNESS WHEREOF, the parties hereto have executed this Loan Agreement on the date 1r/ first written above. LENDER I� CMB Infrastructure Investment Group 111, L.P. By: General Partner BORROWER Redevelopment Agency of the City of San Bernardino By: Emil A. Marzullo, Interim Executive Director Approved as to Form: By: Agency c nsel 4811-3323-1364.1 10 P\Agendas\Agenda Attachments\Agenda Anachm.Bn Agrmts-Amcdd 200M10-05A CMB Idtraswmme-Load Agreement with Promissoq Nme ddc EXHIBIT"A" PROMISSORY NOTE 4811-3323-1364.1 J P_'Agendas Agcmda Attachments Agenda Attachments Agnms-Amend 2009 1 MS-09 CMR Inhashncture-Imn Agreemem tcnh Pmmissnry VmeA¢ REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO PROMISSORY NOTE (CMB Infrastructure Investment Group III. L.P.) RATE OF MATURITY ISSUE INTEREST DATE DATE 5.25% September 30,2015 October 1, 2009 REGISTERED OWNER: CMB Infrastrucure Investment Group III, L.P. PRINCIPAL AMOUNT: $15,000,000.00 The REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (the "Agency"), duly organized and existing as a community redevelopment agency of the City of San Bernardino, California, for value received, hereby promises to pay to CMB Infrastrucure Investment Group 111, L.P., duly organized and existing under the laws of the State of California (the "Holder") the principal sum of Fifteen Million Dollars ($15,000,000.00) plus interest at a rate of 5.25% per annum in accordance with the terms and provisions of that certain Loan Agreement entered into as of October 1, 2009 (the "Loan Agreement"), by and among the Agency and the Holder, to which reference is hereby made for a more complete statement of the terms and conditions under which the loan evidenced by this Promissory Note (this "Note") is made and is to be repaid. This Note shall be paid in full on the Maturity Date, except to the extent prepayment whether in whole or in part has been sooner made. This Promissory Note evidences the obligations incurred by the Agency pursuant to the Loan Agreement for the general redevelopment purposes of the Agency. The provisions of California Health & Safety Code Section 33640, et seq., shall not be applicable to the execution and delivery of this Promissory Note by the Borrower. The Agency agrees to pay the aforesaid principal plus interest in accordance with the terms hereinafter set forth: 1. This Note shall be payable as follows: (a) On or before September 30, 2015, the undersigned shall pay in lawful money of the United States of America Fifteen Million Dollars ($15,000,000.00) to the Holder at 4507 49`h Avenue, Moline, IL 61265, or to such other address or to such account and in such manner as the Holder shall direct in writing to the Agency. (b) Interest shall be paid quarterly on each January 1, April 1, July 1 and October 1 with the first interest payment due on January 1, 2010, and quarterly thereafter (each such date being an "Interest Payment Date"), and the final interest payment shall be due and payable on the Maturity Date. Interest shall be payable in arrears based upon the principal balance of the Note outstanding as of each Interest Payment Date for the precise number of days calculated on a 365/366 year basis that the applicable principal balance of this Note was outstanding during the applicable Interest Payment Calculation Period (as defined below). The Holder shall provide invoices to the Agency with respect to and as a condition precedent to all payments due and payable pursuant to this Note except as 4811-3323-1364.1 12 P.WgendasVAyenda AttachmentslAeenda Attachments\ACrmts-Amend 2CM 10-05.09 CMB InBastmoure.Iaan Agreement with Promissory Note.dnc p n f PAY RBI provided in Section 2 below. The Holder shall calculate the interest as shall be due and payable by the Agency on each such Interest Payment Date and provide written notice of such payment amount to the Agency in writing. Interest shall be calculated in arrears for the applicable calendar quarter ending as of the calendar day immediately prior to each January 1, April 1, July 1 and October 1 (each such calendar quarter being defined herein as an "Interest Payment Calculation Period"). (c) The Agency may, without penalty, prepay solely as to the entire outstanding principal balance of this Note at anytime on or after April 1, 2013, and on any other date thereafter, or prior to such date upon the mutual consent of the parties. 2. If a payment not timely made remains overdue for a period of thirty (30) days after the same becomes due and payable after notice as provided in Section 1(b) above (a "Delinquent Payment"), the Agency, without further notice or demand by the Holder, shall pay a late charge in an amount equal to three percent (3%) of the Delinquent Payment due and owing to Holder (the "Late Charge"). The Agency agrees that an amount equal to the Late Charge is a reasonable estimate of the damage to the Holder in the event of a late payment under this Note. Each delinquent payment plus the applicable Late Charge shall bear interest at a rate equal to 5.25% per annum until such amount is paid in full to the Holder. 3. In the event the Agency fails to make two (2) consecutive interest payments to the Holder, or two (2) interest payments in any twelve-month period, the Holder may accelerate payment of the amount of interest coming due on the next two (2) succeeding interest payment dates, so that all such interest, together with all Delinquent Payments, Late Charges and interest due thereon, shall be due and payable on the tenth (10th) day of the month following the month in which, the second (2nd) consecutive interest payment was not made or the second (2nd) interest payment in a twelve-month period for which the required payment was not made. Thereafter, the Agency shall continue to remit quarterly interest payments in accordance with this Note. 4. This Note is solely the debt of the Agency. This Note is not a debt of the City of San Bernardino, California, nor of the State of California or any other political subdivisions of the State of California, and neither said City, said State nor any other of said political subdivisions shall be liable hereon in any manner. This Note does not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Neither the members of the Agency nor any persons executing this Note shall be liable personally on this Note by reason of its issuance. 5. This Note is not secured by the pledge of, the assignment of, or the granting of any security interest in,the assets, funds, revenues or properties of the Agency. 6. It is hereby recited, certified and declared that any and all acts, conditions and things required to exist, to happen and to be performed precedent to and in the issuance of this Note exist, have happened and have been performed in due time, form and manner as required by the California Constitution and the laws of the State of California. 7. This Note shall not be assigned by the Holder without the prior written consent of the Agency, which consent shall not be unreasonably withheld. 4811-3323-1364.1 13 P1A,eelu A,Me A,,.hments\Agenda Attnhments\Agrmts-Amend 300o\I0-05.09 CMB Wnswnuree.lum Agreement with Pmmissory Note doc 8. The execution, delivery and performance of this Note have been duly authorized by all rr,.. necessary actions of the Agency, does not require the consent or approval of any other person, regulatory authority or governmental body, and do not conflict with, result in a violation of or constitute a default of: (a) any provision of any agreement or other instrument binding upon the Agency, or(b) any law, governmental regulation, court decree or order applicable to the Agency. 9. This Note, when delivered, shall constitute a legal, valid and binding obligation of the Agency, enforceable in accordance with its terms. 10. Payment of the principal amount of this Note may not be accelerated by the Holder. 11. This Note and the Loan Agreement constitute the entire understanding and agreement of the parties as to the matters set forth herein and therein. No alteration of or amendment to this Note shall be effective unless given in writing and signed by the Holder and the Agency. 12. This Note has been delivered to the Holder and accepted by the Holder in the State of California. In the event of a lawsuit, the Holder and the Agency agree to submit to the jurisdiction of the Superior Court of San Bernardino County, California, Main Branch, in the City of San Bernardino, California. This Note shall be governed by the laws of the State of California. 13. If a court of competent jurisdiction finds any provision of this Note to be invalid or unenforceable as to any person or circumstance, such finding shall not render that provision invalid or unenforceable as to any other persons or circumstances. If feasible, any such offending provision shall be deemed to be modified to be within the limits of enforceability or validity: provided, however, in the event that the offending provision cannot be so modified, it shall be stricken and all other provision of this Note in all respects shall remain valid and enforceable. IN WITNESS WHEREOF, the Agency have caused the Note to be executed as of this 151 day of October, 2009. REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO By: Interim Executive Director of the Redevelopment Agency of the City of San Bernardino C 4811-3323-1364.1 14 P\Agemdas\Agende Atruhments\Agenda Av¢hmems\Agrmts-Amend 20 IMi-09 CN1B Infrastructure-Loan Agreement with Promissory Nom doc CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY `�. FROM: Emil A. Marzullo SUBJECT: CMB Infrastructure Investment Group III, Interim Executive Director L.P. - Loan Agreement for a $15,000,000 Loan under the EB-5 Program DATE: September 30,2009 Synopsis of Previous Commission/Council/Committee Action(s): On August 20,2009, Redevelopment Committee Members Johnson, Baxter and Brinker unanimously voted to recommend that the Community Development Commission consider this action for approval. Recommended Motion(s): (Community Development Commission) Resolution of the Community Development Commission of the City of San Bernardino authorizing that certain Redevelopment Agency of the City of San Bernardino Tax Exempt Promissory Note Series 2009 (CMB Infrastructure Investment Group III, L.P.) in the amount not to exceed $15,000,000, approving the form of legal documents related thereto and authorizing and directing preparation, execution and delivery of the final form ' thereof Contact Person(s): Brian Turnbull Phone: (909)663-1044 Project Area(s): N/A Ward(s): All Supporting Data Attached: 0 Staff Report 0 Resolution(s) 0 Agreements)/Contract(s) ❑Map(s) ❑ Letter(s) Funding Requirements: Amount: $ -0- Source: N/A Budget Authority: N/A _ \ Signature: /L ) Fiscal Review: Emil A.Marzullo,Interim Exe 've Director Ru DeJesu Int m Admims r rve Services Director Commission/Council Notes: PoA,,.dnsCnmm DC\('Dminin51n0 CDP 2W910-05-09 CA1a I.knnmmme-EB5 Pmgmm Lunn Ag,..m SRAd, COMMISSION MEETING AGENDA Meeting Date: 10/05//J2009 7 Agenda Item Number: R ECONOMIC DEVELOPMENT AGENCY STAFF REPORT CMB INFRASTRUCTURE INVESTMENT GROUP III,L.P. -LOAN AGREEMENT FOR A $15,000,000 LOAN UNDER THE EB-5 PROGRAM BACKGROUND: CMB Infrastructure Investment Group III, L.P. ("CMB"), was formed in the mid-1990's to establish a "regional center" for the counties of San Bernardino, Riverside and Sacramento to assist in financings for the closed military bases in these counties. The Inland Valley Development Agency ("IVDA") entered into the initial loan transaction with CMB in 1997, for the first loan of this type pursuant to the EB-5 Program administered initially by the Immigration and Naturalization Services ("INS") which has since been restructured into the United States Citizenship and Immigration Services ("USCIS"). Since late 2007, the IVDA and the San Bernardino International Airport Authority ("SBIAA") have jointly entered into four additional loans with other affiliates of CMB for a total principal amount of$46,000,000. It is anticipated that an additional $6 million loan with another affiliate of CMB will additionally be submitted to the IVDA for consideration in September 2009. The loan proceeds have been used by the IVDA/SBIAA in part for various Airport and roadway infrastructure projects, and in most instances, the proceeds were used to partially fund cost overruns or local matching fund requirements of other federal grants. CURRENT ISSUE: The EB-5 Program for the CMB regional center for San Bernardino County allows foreign nationals to obtain permanent residency status in the United States through an investment of$500,000 in a qualified investment activity that generates U.S. jobs. Typically, the minimum investment amount is $1,000,000 but the lower amount of $500,000 per investor applies in San Bernardino County due to the higher unemployment rates and the closure of the Norton Air Force Base ("NAFB"). The use of the USCIS approved economic model for infrastructure investments allows for the use of indirect job creation based upon infrastructure expenditures by governmental entities. CMB establishes separate limited liability companies for each investment pool and requires that there be no prepayment by the borrowing governmental entity of the principal amount for at least forty-two months. This restriction allows adequate time for the investors to meet all criteria required by the USCIS for obtaining the permanent residency status. Rather than investing in private businesses as virtually all other regional centers have elected to undertake, CMB will only place loans into infrastructure and public improvement investments with governmental agencies whereby the necessary jobs that are required to be generated can be demonstrated utilizing an economic model approved by the USCIS. In San Bernardino County, the model provides that for each $1,000,000 of infrastructure and public improvement construction dollars expended by governmental agencies, 5.7 indirect jobs are generated in the local economy resulting from the construction expenditures on the infrastructure and other public improvements. Each investor must demonstrate that their $500,000 investment has generated 10 new American jobs. $1.5 million of additional City/Agency and other public agency infrastructure costs will thus generate 11.4 indirect jobs thereby qualifying the investor for permanent residency status. P.A,,.d.s Cmmn Dcc Commission CDC 2009 10.05-W CMB Infnshm1me E65 P 11 Loan A,,e ,.i SR kc COMMISSION MEETING AGENDA Meeting Date: 10/05/2009 Avenda Item Nnmherc Economic Development Agency Staff Report CMB 1nfrastructure—EB-5 Program Loan Agreement Page 2 The City of San Bernardino Economic Development Agency ("EDA") Staff has caused the preparation of certain documents to provide for the issuance of a tax exempt note entitled "Redevelopment Agency of the City of San Bernardino Tax Exempt Promissory Note Series 2009 (CMB Export, LLC)" (the "Note") to CMB in the aggregate principal amount of not to exceed $15,000,000. The Note will be secured by a Loan Agreement between CMB and the EDA in the form as included in this agenda item (the "Loan Agreement'). Several of the projects that the EDA anticipates funding with the CMB loan proceeds will include: 1. Omnitrans soft costs for the construction of the sbX federally funded bus rapid transit project, including temporary relocation of the transit center and parking lots. 2. Sewer line relocation and construction for the State Court Complex on Third Street and Arrowhead. 3. Solar projects for the EDA building and other City and EDA buildings to reduce energy costs. 4. Infrastructure costs for the La Placita parking structure. 5. Infrastructure cost reimbursements and additional interchange expenditures for the 1-215/University Boulevard interchange. 6. Restoration of the California Theatre. 7. Other projects identified by the Community Development Commission of the City of San Bernardino. The terms of the proposed loan are as follows, subject to change in the final documents: 1. Interest Rate: 5.25%, tax-exempt. 2. Principal: $15,000,000. 3. Repayment: Interest only payable quarterly; principal payable at the 6-year maturity date. 4. Security: No specific pledge of EDA real estate assets but a limited pledge of surplus tax increment revenues and commitment to refinance the loan; at the time of loan closing there must be a demonstration of ability to undertake a refinancing at the 6-year maturity date. 5. Closing Costs: No points or costs other than document preparation utilizing existing forms. 6. Closing Date: October, 2009. 7. Funding: Increments of$500,000 will be advanced to the EDA as investors are obtained who submit the proper documentation to the USCIS for approval; all funds should be available to the EDA by the second quarter of 2010. The federal legislation that allows for this type of financing under the EB-5 program is currently scheduled to sunset as of September 30, 2009, at the end of the current federal fiscal year. However, the authorizing legislation has been extended previously at each point in time prior to the expiration of the authorizing legislation, and it is assumed that the EB-5 program will again be extended as part of the federal budget process in September 2009. A loan closing would only occur if the federal legislation is extended and in effect at the time of the proposed loan closing in October 2009. Additional information can be obtained on the CMB website at www.cmbeb5visa.com and it contains descriptions and photographs of the projects undertaken at both the former NAFB with the IVDA and SBIAA in addition to those current projects at the former McClellan Air Force Base in Sacramento. P:AgcrWzs Comm D CommissbmCDC Mo)10 US-0 CMS Inhaswnurc-EQS Program Lon Agreemrnm SR COMMISSION MEETING AGENDA Meeting Date: 10/05/2009 Aeenda Item Numher: Economic Development Agency Staff Report CMB Infrastructure—EB-5 Program Loan Agreement Page 3 ENVIRONMENTAL IMPACT: This action does not meet the definition of a "project" under Section 15378 of the California Environmental Quality Act (CEQA). FISCAL IMPACT: Repayment of this loan would be interest only and payable quarterly. Repayment or refinance of the principal would take place at the 6-year maturity date. There is no impact to the City's General Fund. RECOMMENDATION: That the Community Development Commission adopt the attached Resolution. Emil A. Marzullo, Interim Mecubve Director P:A,M.s Cnn.D,Cnmmmw CIX-'_009 10-05-M CMB Inhestma..E&S Pmpmm loan A,,c.,w SR&I COMMISSION MEETING AGENDA Meeting Date: 10/05/2009 Agenda Item Nnmher- 1 RESOLUTION NO. 2 3 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING THAT CERTAIN 4 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO TAX EXEMPT PROMISSORY NOTE SERIES 2009 (CMB INFRASTRUCTURE 5 INVESTMENT GROUP 111, L.P.) IN THE AMOUNT NOT TO EXCEED $15,000,000, APPROVING THE FORM OF LEGAL DOCUMENTS RELATED 6 THERETO AND AUTHORIZING AND DIRECTING PREPARATION, 7 EXECUTION AND DELIVERY OF THE FINAL FORM THEREOF 8 WHEREAS, the Community Development Commission of the City of San Bernardino (the 9 "Commission") is authorized under Health and Safety Code Section 33000, et seq., to issue bonds, 10 notes and other obligations for the purpose of financing public capital improvements within the City 11 of San Bernardino (the "City"); and 12 13 WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency") 14 desires to finance certain infrastructure costs, including, but not limited to: (i) Omnitrans soft costs 15 for the construction of the sbX rapid bus project, including temporary relocation of the transit center 16 and parking lots; (ii) sewer line relocation and construction for the State Court Complex; (iii) solar 17 projects for the Agency building and other City and Agency buildings; (iv) infrastructure costs for 18 the La Placita project; (v) infrastructure cost reimbursements and additional interchange 19 expenditures for the I-215/University Boulevard Interchange (the "Project'); and (vi) restoration of 20 the California Theatre in accordance with the California Community Redevelopment Law, in 21 addition to such other expenditures and projects as may be approved by this Commission; and 22 WHEREAS, in order to raise the funds required for the Project, the Agency has determined i 23 to issue its Redevelopment Agency of the City of San Bernardino Tax Exempt Promissory Note 24 Series 2009 (CMB Infrastructure Investment Group ITI, L.P.) (the "Note") in the aggregate principal 25 amount of not to exceed $15,000,000, pursuant to and secured by that certain Loan Agreement 26 (CMB Infrastructure Investment Group 111, L.P.) dated as of October 1, 2009, by and between CMB 27 Infrastructure Investment Group III, L.P., a limited partnership organized under the laws of the State 28 of California(the "Lender") and the Agency (the"Loan Agreement'); and P:UyenOasVtewWtionsV lesolutronss2W9\IO-05-O4 CMB Infiasw Lo qurc- en Ayrecmms CDC Reso Eoc 1 WHEREAS, the Agency has considered the terms of the transaction as contemplated herein 2 and desires at this time to approve the terms of said transaction in the public interests of the Agency. 3 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE 4 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS 5 FOLLOWS: 6 Section 1. The Commission hereby approves the Loan from the Lender to the Agency in 7 an amount not to exceed $15,000,000, pursuant to the terms of the Loan Agreement and as further 8 evidenced by the Note. The proposed term of the Note shall be six (6) years at a rate of interest not 9 to exceed 5.25%. Interest on the Note shall be paid quarterly until maturity and principal shall be 10 paid in full on the maturity date. The Note shall be paid with available funds of the Agency as 11 further provided in the Loan Agreement. 12 Section 2. The Commission hereby approves the Note and Loan Agreement in the forms 13 as attached to this Resolution with such changes thereto as may be approved by the Interim 14 Executive Director of the Agency when such terns and conditions have been ascertained. The (fir/ 15 Commission hereby further authorizes and directs that the forms of the Note and Loan Agreement as 16 attached hereto be converted into the final forms thereof together with such changes or 17 modifications as deemed necessary or desirable by the Chairman or Interim Executive Director of 18 the Agency, upon the recommendation of Lewis Brisbois Bisgaard & Smith LLP ("Agency 19 Counsel'). The Interim Executive Director or such other authorized officer of the Agency is hereby 20 authorized and directed to execute and deliver, and the Secretary is hereby authorized and directed 21 to attest to, the final forms of the Note and the Loan Agreement when the same has been prepared 22 for and in the name of the Agency, and such execution and delivery shall be deemed to be 23 conclusive evidence of the approval thereof The Agency hereby authorizes the delivery and 24 performance of the obligations under the Note and Loan Agreement to accomplish the financing as 25 contemplated herein. 26 Section 3. The Interim Executive Director, Agency Counsel and any and all other C27 officers of the Agency are hereby authorized and directed, for and in the name and on behalf of the 28 Agency, to do any and all things and take any and all actions, including execution and delivery of P WgenduUtaoWtionsUtesoWtionaV009t I M5-09 CMB Infrsst Mau re-Loan Agreement CDC Ruo.doc 1 any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of 2 conveyance, warrants and other documents, which they, or any of them, may deem necessary or 3 advisable in order to consummate the Loan as described herein. Whenever, in this Resolution any 4 officer of the Agency is authorized to execute or countersign any document or take any action, such 5 execution, countersigning or action may be taken on behalf of such officer by any person designated 6 by such officer to act on his or her behalf in the case such officer shall be absent or unavailable. The 7 Commission hereby appoints its Chairman and Interim Executive Director as agents of the Agency 8 for purposes of executing any and all documents and instruments which any officer of the Agency is 9 authorized to execute hereunder. 10 Section 4. This Resolution shall take effect from and after its date of adoption by this 11 Commission. 12 13 ,„. 14 (� 15 16 17 18 19 20 21 22 23 24 25 26 27 28 P\AgendasU mlwbnsU esolotmns\i0 IM5-0a CMB Infrastmcture-Loan Agreement CDC Res.doc 1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING THAT CERTAIN 2 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO TAX 3 EXEMPT PROMISSORY NOTE SERIES 2009 (CMB INFRASTRUCTURE INVESTMENT GROUP III, L.P.) IN THE AMOUNT NOT TO EXCEED 4 $15,000,000, APPROVING THE FORM OF LEGAL DOCUMENTS RELATED THERETO AND AUTHORIZING AND DIRECTING PREPARATION, 5 EXECUTION AND DELIVERY OF THE FINAL FORM THEREOF 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 meeting 8 thereof, held on the day of 2009, by the following vote to wit: 9 Commission Members: Ayes Nays Abstain Absent 10 ESTRADA 11 BAXTER 12 BRINKER i 13 SHORETT 14 KELLEY 15 JOHNSON _ 16 MC CAMMACK 17 18 Secretary 19 20 The foregoing Resolution is hereby approved this day of 2009. 21 22 23 Patrick J. Morris, Chairperson Community Development Commission 24 of the City of San Bernardino 25 Approved as to Form: 26 27 By: Agency C nsel p/J 28 /1B)5��'am2n P\AgendasVteso1ution s\Reso1u6omUW9\10-05-09CMB Infrastmeturc-Iran Agreement CDC R oAoc h� 31 LOAN AGREEMENT (CMB Infrastructure Investment Group III, L.P.) THIS LOAN AGREEMENT (this "Agreement') is entered into as of this 5th day of October, 2009, by and between CMB Infrastrucure Investment Group III, L.P., a limited partnership organized under the laws of the State of California (the "Lender") and the Redevelopment Agency of the City of San Bernardino (the "Borrower"), as follows: WHEREAS, the Borrower is a public body corporate and politic organized and existing under the Community Redevelopment Law (Part 2 of Division 24 of the Health and Safety Code of the State of California; and WHEREAS, the Lender was organized in accordance with the requirements for regional centers as set forth under the Immigration Act of 1990, as amended, and for the purpose of promoting economic growth through, among other things, increased export sales, improved regional productivity, job creation and increased domestic capital investment, and to generate jobs through the immigrant investor visa program of the United States Citizenship and Immigration Service ("USCIS"); and WHEREAS, the Lender desires to lend to the Borrower for the purpose of increasing domestic capital investment, and the Borrower seeks to borrow funds from the Lender to assist the Borrower in the economic development, redevelopment and revitalization of the Borrower's Project Areas (the "Project Areas"). NOW, THEREFORE, in consideration of the promises contained herein, and for such other good and valuable consideration receipt of which is hereby acknowledged, the parties hereto agree, as follows: 1. The Loan. The Lender shall loan to the Borrower a principal amount equal to Fifteen Million Dollars ($15,000,000.00) (the "Loan"). The Loan shall bear interest at the rate of 5.25% per annum, accruing from and after each date of funding of a portion of the total principal amount the Loan to the Borrower. Interest shall be calculated on the number of actual days that the principal amount of the Loan is outstanding in each year on the basis of 365/366 days in a calendar year. The Loan shall be represented by the "Redevelopment Agency of the City of San Bernardino Tax Exempt Promissory Note Series 2009 (CMB Infrastructure Investment Group 111, L.P.)" substantially in the form attached hereto as Exhibit"A" (the "Note") executed by the Borrower in favor of the Lender. The Lender shall charge the Borrower no origination points or loan fees, nor require the payment of any prepaid interest, in connection with making the Loan. 2. Use of Funds. (a) The Borrower shall use and apply the proceeds of the Loan for any legal purposes �..i of the Borrower pursuant to the California Community Redevelopment Law. Such legal purposes include, but are not limited to, (i) Omnitrans soft costs for the construction of the sbX rapid bus project, including temporary relocation of the transit center and parking lots; (ii) sewer line relocation and construction for the State Court Complex; (iii) solar projects for the Borrower building and other 4811-3323-1364.1 1 P:Agcndns Agent Anachments Agc Ma Auachwnts Agnnts-Anend 229 10-05-09 CMB 1nf mmu,c-L.an Agacmem ,Rh Prnmusnry Nme doc \.i City and Borrower buildings; (iv) infrastructure costs for the La Placita project; (v) infrastructure cost reimbursements and additional interchange expenditures for the I-215/University Boulevard Interchange (the "Project'); and (vi) restoration of the California Theatre in accordance with the California Community Redevelopment Law. (b) The Agency hereby represents and warrants that it presently intends to undertake and complete the Projects as have been previously submitted to the Lender and accepted by the Lender for purposes of obtaining the necessary approvals from the USCIS and to allow the Lender to cause to be prepared the required economic analysis of the indirect job impacts resulting from the Agency undertaking said Projects. (c) The Borrower shall not fund any other redevelopment activities or other construction undertakings of the Borrower or the City of San Bernardino that deviate in any respect whatsoever from the Projects as identified above without first having requested and obtained the prior written approval of the Lender with such approval being granted or denied by the Lender at its sole and absolute discretion. The Borrower recognizes that additional costs may be incurred by the Lender to modify any submittal to the USCIS or to amend other marketing materials prepared by the Lender in connection with the obtaining of necessary moneys to fund the Loan to the Borrower. For this reason, any such Borrower request may require the payment by the Borrower in advance of costs to be incurred by the Lender to consider any such request. 3. Funding of the Loan. (a) Acknowledgement. The Borrower acknowledges that (i) the Lender, as an approved and federally-designated "regional center", is authorized, and intends, to raise capital from foreign investors who seek to obtain permanent residency in the United States in accordance with the EB-5 investor visa program of the Immigration and Nationality Act (the "EB-5 Program"), and (ii) it is anticipated that each foreign investor will make an investment with the Lender of Five Hundred Thousand Dollars ($500,000.00). In that regard, the Borrower further acknowledges that the principal amount of the Loan to be disbursed by the Lender to the Borrower is dependent on the amount of capital raised by the Lender from foreign investors, and, accordingly, the Borrower agrees that the Lender does not guarantee that the entire principal amount of the Loan, or any portion thereof, shall be disbursed to the Borrower. Additionally, the Borrower further acknowledges that to maintain compliance with the rules and regulations promulgated under the EB-5 Program, the Lender is required to lend to and/or invest its funds with third parties, other than the Borrower, located within the geographic area that constitutes the Lender's "regional center", and accordingly, the Borrower further agrees that a portion of the funds raised by the Lender will be allocated to such third parties, which allocation shall be made in the sole and absolute discretion of the Lender. (b) Fundine. Subject to Section 3(a), above, and the other terms and conditions of this Agreement, the Loan shall be disbursed to the Borrower by the Lender in no more than thirty (30) tranches, each in the minimum principal amount of Five Hundred Thousand Dollars ($500,000.00) (each, a "Tranche"), and each Tranche will be disbursed to the Borrower at such time as determined by the Lender, in its sole and absolute discretion, provided that the Lender anticipates that each Tranche will be disbursed when the funds invested by an investor in the Lender become available to the Lender for disbursement to the Borrower. If, and when, the Lender determines it is able to disburse a Tranche to the Borrower, the Lender shall provide the Borrower with notice thereof, and the Borrower agrees that it will accept and borrow such funds. Each Tranche shall be disbursed by wire transfer to an 4811-3323-1364.1 2 R Agendas Agenda Anachmm6 Agenda Anachmenu Agrmu-Anund 2W9 10.0504 CMB Infnslmmure-Iran Agreanud I'M Rnmiss9sy 4de.&i .. account of the Borrower pursuant to written instructions to be provided by the Borrower. The Lender shall not be required to disburse any Tranche to the Borrower if an Event of Default by the Borrower hereunder has occurred and is continuing. The date on which the initial Tranche is disbursed to the Borrower under this Agreement shall be referred to herein as the "Initial Funding Date". 4. Repayment of the Loan. (a) Principal. Payment of principal shall be due and payable on September 30, 2015 (the "Maturity Date"), and shall be paid in immediately available funds. The Borrower may, without penalty, prepay solely as to the entire outstanding principal balance of this Note at anytime on or after April 1, 2013, and on any other date thereafter, or prior to such date upon the mutual consent of the parties. (b) Interest. Interest shall be paid quarterly throughout the term of the Loan on each January 1, April 1, July 1, and October 1 (each such date is defined herein as an "Interest Payment Date"), commencing on January 1, 2010, with the final interest payment being due and payable on the Maturity Date. Interest shall be payable in arrears based upon the principal balance outstanding as of each Interest Payment Date for the immediately preceding interest accrual period for the actual number of days that principal was then outstanding on the Loan. The Lender shall submit invoices to the Borrower on a quarterly basis prior to each Interest Payment Date. All interest shall be calculated on the basis of the actual number of days during each quarterly interest payment period that any principal amount of the Loan was then outstanding. (c) Late Charees. A late charge of three percent (3%) of the amount due shall be paid by the Borrower with respect to each payment of interest not made within thirty (30) calendar days from and after receipt of an invoice from the Lender ("Delinquent Interest") delivered to the Borrower but such payment shall not be made earlier than an Interest Payment Date. A late charge of three percent (3%) of the amount due shall be paid by the Borrower with respect to the late payment of principal on the Maturity Date, if such payment of principal is not made by September 30, 2015 ("Delinquent Principal"). Each amount of Delinquent Interest and Delinquent Principal plus the applicable late charge (together, a 'Delinquent Payment") shall bear interest at 5.25% per annum until such Delinquent Payment is made in full to the Lender. (d) Acceleration of Certain Interest Payments. In the event the Borrower fails to make two (2) consecutive interest payments to the Lender, or two (2) interest payments in any twelve- month period, the Lender may accelerate payment of the amount of interest coming due on the next two (2) succeeding Interest Payment Dates, so that all such interest, together with all delinquent payments and interest due on such delinquent payments, shall be due and payable on the tenth (10th) calendar day of the month following the month in which the second (2nd) consecutive interest payment was not made or the second (2nd) interest payment in a twelve-month period was not made. Such amounts of interest that are subject to acceleration shall only be payable upon invoice from the Lender delivered to the Borrower. Thereafter, the Borrower shall continue to remit quarterly interest payments in accordance with this Agreement and the Note. 5. No Security, Payment Covenant of Borrower. (a) The Loan is not secured by the pledge of, the assignment of, or the granting of any security interest in, the assets, funds, revenues or properties of the Borrower, and the Borrower 4811-3323-1364.1 3 P-Agendas Agenda Anachments Agenda Auachmcnia A gnus-Amend 20091"5WCMO Infiasmnnum-Lnan Agrccmcm Ifth P nnmsryNnne, rc C, hereby pledges to undertake a refinancing, refunding or other repayment of this Loan on or before the Maturity Date from the then available surplus tax increment revenues of the Borrower generated within the Project Areas. Nothing contained herein shall limit or other preclude the Borrower from using and applying the annual surplus tax increment revenues of the Borrower from the Project Areas for undertaking other redevelopment activities and the payment of administrative expenses of the Borrower prior to the Maturity Date; provided, however, that the Borrower covenants and agrees not to commit any such surplus tax increment revenues from the Project Areas in such manner as would preclude the Borrower from issuing such refunding bonds or undertaking any other refinancing of this Loan on or prior to the Maturity Date. (b) The Borrower hereby agrees and covenants to appropriate funds with respect to each fiscal year throughout the term of this Agreement in an amount sufficient to make required interest payments during the applicable fiscal year. In addition, the Borrower agrees and covenants to appropriate funds with respect to the fiscal year in which the Maturity Date occurs in an amount sufficient to pay the outstanding principal of the Loan on the Maturity Date whether from the annual surplus tax increment revenues of the Project Areas or from a refunding or other refinancing of this Loan. (c) The Borrower hereby represents that certain tax increment revenues are legally available to the Borrower for the payments required pursuant to this Agreement after and subordinate to the payments of all other required amounts as identified in the following sentence which may become available to the Borrower as surplus tax increment revenues if and when received all prior and senior debt has been paid by the Borrower. Surplus tax increment revenues may be applied to pay principal and interest on the Loan. The Borrower agrees and covenants that it shall use its best efforts to refinance the Loan prior to, or on the Maturity Date. On January 1, 2010, and each year thereafter until the Maturity Date, the Borrower shall deliver its audited financial statements to the Lender for the immediately prior fiscal year of the Borrower in an effort to show Lender that Borrower has the ability to refinance the Loan on or prior to the Maturity Date. (d) The Borrower further represents that the surplus tax revenues, based upon current estimates of assessed value growth for real property in the Borrower's Project Areas, will be sufficient for the Borrower to issue additional tax increment indebtedness to repay in whole the principal portion of the Loan as the same becomes due and payable as of the Maturity Date. (e) The obligations of the Borrower under this Agreement and under the Note are not guaranteed by, nor payable either directly or indirectly by the City of San Bernardino, California, State of California or any of its subdivisions,but are the unsecured obligations solely of the Borrower. 6. Prior Indebtedness. The Lender hereby acknowledges that the Borrower has incurred certain prior indebtedness. The Lender acknowledges receipt of the financial audits of the Borrower for the period ending June 30, 2008, and the budgets for the past and current fiscal years and has reviewed the financial condition of the Borrower and the other notes as contained in the audit statements and the budgets. C7. Representations of Borrower. (a) The Borrower has been duly organized under the laws of the State of California and have the power to enter into this Agreement and to incur the obligations under the Note. 4811-3323-1364.1 4 P:AgeMas AgcMa Anachmmns AgeMa Attachmmis Agrm%-AI.rtM 2009 10.115.00 CMA Inhaurumurc-Loan Agreement x uh Promissory RmeMoc (b) Execution of this Agreement and of the Note has been duly authorized by the Board of the Borrower. (c) No governmental or regulatory approvals that have not been previously obtained by the Borrower are required for the due approval, execution and delivery by the Borrower of this Agreement and the Note. (d) This Agreement has been, and the Note will be, duly executed and delivered by the Borrower and this Agreement does, and the Note will, constitute valid and binding obligations of the Borrower, payable from the revenues, funds and assets, generally, of the Borrower as set forth herein and in the Note. (e) The Borrower shall provide to the Lender copies of reports prepared periodically by the Borrower regarding the status of(i) all expenditures of the proceeds of the Loan prior to the commencement of construction of a project for eligible engineering and project design costs, (ii) the commencement date for each of the identified projects for which the proceeds of the Loan will be expended together with a description.of the other sources of project funds and the dollar amounts thereof, and (iii) either submittal to the Lender of the notice of completion as issued by the Borrower or such other written confirmation to the Lender as to the date of completion of each such project and the final costs for each of said projects as funded, whether in whole or in part by the proceeds of the Loan, together with the sources and dollar amounts of all other funding sources used to complete such project. (0 The audit statements and budgets referred to in Section 6, above, present fairly, in all material respects, the financial condition of the Borrower at such dates and the results of operations for the periods then ended. Since the end of the periods covered by the audit statements, there has been no known change in the financial condition of the Borrower which has materially or adversely affected the ability of the Borrower to conduct its business as presently heretofore conducted. (g) The representations of the Borrower contained in this Agreement shall be true and correct in all material respects on and as of the Initial Funding Date as referred to in Section 3, above, with the same force and effect as though such representations and warranties had been made on and as of such date. (h) On and as of the Initial Funding Date as referred to in Section 3, above, the Borrower is not in default under any other indebtedness of the Borrower, and the execution, delivery or performance of the Borrower of this Agreement and the Note shall not, to the best of the Borrower' knowledge, contravene any provision of law, statute, rule or regulation of any governmental instrumentality and shall not, to the best of the Borrower' knowledge, conflict or be inconsistent with or result in any breach of any terms, covenants or provisions of, or constitute a default under, or result in the creation or imposition of a lien pursuant to the terms of, any loan agreement, credit agreement or any other agreement, contract or instrument to which the Borrower is a party or by which it is bound or to which it may be subject. (i) The Borrower recognizes that the investors comprising the Lender are required to demonstrate the creation of jobs through the expenditure of the funds as invested by such investors with the Lender pursuant to the rules and regulations of the USCIS. The Borrower covenants and 4811-3323-1364.1 5 P:Agendas Agenda Attachment Agenda Attachments A,.Il-Amend 2N,9 IM3 M CMB M.M.dme-Lme Agreement M.1t Pmm...nry Nmedn, agrees that the proceeds of each Tranche shall be expended on qualifying projects within twenty-four (24) months after receipt of such Tranche from the Lender. 8. Tax Exempt Interest. The interest payable to the Lender under the Note shall not be included in the gross income of the Lender for Federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"), and shall be exempt from present State of California personal income taxes. In order to maintain such tax exemptions, the Borrower hereby covenants to, and for the benefit of, the Lender, as follows: (a) Arbitrage. The Borrower will not directly or indirectly use or permit the use of proceeds of the Loan, or any other funds of the Borrower from whatever source derived, to acquire any investment, and it will not take or permit to be taken any other action, which would cause the Note to be characterized as an "arbitrage bond" within the meaning of Section 148 of the United States Internal Revenue Code ("Code") or which would otherwise cause the interest on the Note to be includable in gross income for federal income tax purposes. To this end, in the event that at any time the Borrower is of the opinion that, for purposes of this paragraph, it is necessary to restrict or limit the yield on the investment of any moneys held under this Agreement, the Borrower shall take such action as may be necessary. (b) Rebate. Under the Agreement, the Borrower has agreed that within forty-five (45) days after each computation date it will (i) calculate or cause the calculation of the rebate amount for the Note for the period commencing on the date of issue of the Note and ending on such computation date, such rebate amount to be calculated in the manner required by Section 148 of the Code and the Tax Regulations thereunder, and (ii) pay any such rebate amount to the United States government pursuant to the Code. Within sixty (60) days after each computation date (other than the final computation date), the Borrower will pay to the United States government an amount equal to 90% of the rebate amount calculated as of such date, and within sixty (60) days after the final computation date, the Borrower will pay over to the United States government an amount equal to 100% of the rebate amount calculated as of such date. Such payments shall be made in accordance with Section 148 of the Code and the Tax Regulations thereunder. The Borrower shall keep and retain for a period of six (6) years following the retirement of the Note records of the determinations made pursuant hereto. Notwithstanding any other provision in this Agreement, the obligation to pay rebatable arbitrage to the United States of America and to comply with all other requirements of this Section shall survive the defeasance or payment in full of the Note. (c) Information Reporting. The Borrower will timely file a federal information return with respect to the Note as required by section 149(e) of the Code. C (d) Federal Guarantee Prohibition. The Borrower will take no action, nor permit or suffer any action to be taken, if the result of the same would be to cause the Note to be "federally guaranteed" within the meaning of Section 149(b) of the Code. 4811-3323-1364.1 6 P.Ageadas Agenda Anachnnen¢Agenda Anachmems Agnnb-Amend 2W9 10-05- CAIN Intraswcmre-Lnan A,rt nnera o ish P nnn.n-Nme dnc (e) Private Activity Bond. The Borrower will take no action, nor permit or suffer any action to be taken, if the result of the same would be to cause the Note to be become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations. (f) Not Hedge Bond. The Borrower reasonably expects that the Note will not be a "hedge bond" within the meaning of section 149(g) of the Code and the Borrower shall comply with all expenditure requirements imposed by said section 149(g) including the investment, if any, in nonpurpose investments as defined in the Code. (g) Elections. The Borrower hereby agrees to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations as the Borrower(after consultation with Bond Counsel) deems necessary or appropriate in connection with the Loan and the Note. (h) Closing Certificate. The Borrower agrees to execute and deliver in connection with the issuance of the Bonds a Tax Certificate as to Arbitrage and the Provisions of Sections 141-150 of the Internal Revenue Code of 1986, or similar document containing additional representations and covenants pertaining to the exclusion of interest on the Note from the gross income of the Lender for federal income tax purposes, which representations and covenants are incorporated as though expressly set forth herein. (i) Further Actions. The Borrower will take all actions within their power and permitted by law which are or may be necessary to assure that interest on the Note at all times remains excludable from gross income for federal income tax purposes, including complying with the provisions of the Borrower's Arbitrage and Tax Matters Certificate, the covenants set forth herein and all requirements of the Code that must be satisfied subsequent to the issuance of the Note for interest on the Note to be, or continue to be, excluded from gross income for federal income tax purposes. Notwithstanding any provision of this Section, the Borrower may rely conclusively on an opinion of Bond Counsel in complying, or in any deviation from complying, with the provisions hereof. 9. Events of Default. (a) By Lender. The following shall constitute a default by the Lender: failure to fund the Loan as provided in Section 3 of this Agreement within thirty (30) calendar days after written request by the Borrower for the Initial Funding Date or any subsequent funding date to occur. The Lender shall ensure that the first $500,000.00 shall be disbursed to the Borrower by January 15, 2010, and that the full $15,000,000.00 shall be disbursed by the Lender to the Borrower on or before June 30, 2010. (b) By Borrower. Each of the following shall constitute a default by the Borrower: (i) failure to pay the principal of, interest on, and any other payments with respect to, the Note, on or before the tenth (I O'h) calendar day following an Interest Payment Date or the fifteenth (15"i) calendar day following the Maturity Date, as applicable, as each payment of interest and principal is required to be made; and 4811-3323-1364.1 7 P:Age as AgcM Anachmems Agc Ma Attazhments AgnntrAmeM'_MW 10-03- CMB Inf .1.0 m-Ivan Agr<anent e'ith Pmmisanr,N.t,dac (ii) failure to perform or a delay in performing any term or provision of this Agreement and such failure or delay is not corrected within thirty (30) calendar days after receipt of notice thereof from the Lender. 10. Remedies. Upon a default by the Lender, (i) the Borrower shall be released from any further obligations under this Agreement or the Note except for the repayment of the principal of and interest on any dollar amounts previously advanced, if any, by the Lender to the Borrower, and (ii) the Borrower may seek appropriate legal, injunctive or equitable relief. Upon a default by the Borrower, the Lender may institute any proceeding at law or in equity to enforce the obligations of the Borrower under the Note and/or any covenants and obligations of the Borrower contained in this Agreement. In any action brought under this Agreement, the prevailing party shall be entitled to reimbursement from the other party of its costs and expenses (including reasonable attorney's fees) in bringing such action. Additionally, the Lender shall be entitled to any costs, including reasonable attorney's fees, incurred in collecting amounts due and payable to the Lender under the Note. 11. No Assignment. The Lender shall not be entitled to, and shall not, assign the Note nor its right to receive payments under the Note to any other party without the prior written consent of the Borrower first having been obtained which consent shall not be unreasonably withheld. 12. Term. This Agreement shall terminate upon the payment in full by the Borrower of all amounts due under the Note. 13. Notices. Notices shall be presented in person or by certified or registered United States mail, return receipt requested, postage prepaid, or by overnight delivery made by a nationally recognized delivery service to the addresses noted below. Notice presented by United States mail shall be deemed effective the second business day after deposit with the United States Postal Service. This Section shall not prevent giving notice by personal service or telephonically verified fax transmission, which shall be deemed effective upon actual receipt of such personal service or telephonic verification. Either party may change their address for receipt of written notice by so notifying the other party in writing. TO LENDER: CMB Infrastructure Investment Group III, L.P. Attention: Patrick Hogan 4507 49`h Avenue Moline, Illinois 61265 TO BORROWER: Redevelopment Agency of the City of San Bernardino Attention: Emil A. Marzullo, Interim Executive Director 201 North "E" Street, Suite 301 San Bernardino, California 92401 4811-3323-1364.1 8 P:Al.&n AgasNe AnxahmcrosA,.dz Atuchmrnu Agnms-Amend ZM 10-03-0 CMB Infnstmdum.Lnnn AgTmincnl with Promissory\medm 14. Governing Law; Jurisdiction. This Agreement shall be governed by the laws of the State of California, and in the event any party seeks judicial relief or to enforce or to interpret any provision of this Agreement and the Note, such actions shall be filed in the Superior Court of San Bernardino County, California, Main Branch, in the City of San Bernardino, California. 15. Entire Agreement. This Agreement constitutes the entire agreement among the parties and may not be amended without the prior written consent of the parties hereto. This Agreement supersedes all prior negotiation, discussions and previous agreements between the parties concerning the subject matter herein. The parties intend this Agreement to be the final expression of their agreement with respect to the terms herein and a complete and exclusive statement of such terms. No modification, amendment or waiver of any term herein shall be binding unless executed in writing by the parties hereto. 16. Amendment. This Agreement may be amended as deemed necessary by written instruments duly approved and executed by the parties hereto. Any such amendments or modifications shall be valid, binding and legally enforceable only if in written form and executed by the parties hereto after the same have been © duly approved and authorized for execution. 17. Severabilitv. Each and every section of this Agreement shall be construed as a separate and independent covenant and agreement. If any term or provision of this Agreement or the application thereof shall be declared invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to circumstances other than those to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the extent permitted by law. SIGNATURE PAGE FOLLOWS) 4811-3323-1364.1 9 P:Agendas Agent Mwhmems Agcnda Aneehments AgM%-Ain dZ'W))0.03 9CMH I0/451mtlurc-Iran Agrecmenl nith Prnmbsen No¢.dn< IN WITNESS WHEREOF, the parties hereto have executed this Loan Agreement on the date i first written above. LENDER CMB Infrastructure Investment Group III, L.P. By: General Partner BORROWER Redevelopment Agency of the City of San Bernardino By: Emil A. Marzullo, Interim Executive Director Approved as to Form: By: Agency sel O 4811-3323-1364.1 10 P.\Agendas\Ag,mdi Anachmems\Agenda Anachmems\Agrmts-Amend 2009\I0-05-00 CMB Infrastructure-Loan Agreement wish Promisor,Nom doc EXHIBIT "A" PROMISSORY NOTE Q G 4811-3323-1364.1 ]j P:Agendas Agenda Attachments Agenda Aunhmcnn Agnnls-Amend 2009 1005.09[MA Inhnnmcsum-l.s an Agreement mnh Pranussary Nmcdac REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO PROMISSORY NOTE (CMB Infrastructure Investment Group III. L.P.) RATE OF MATURITY ISSUE INTEREST DATE DATE 5.25% September 30, 2015 October 1, 2009 REGISTERED OWNER: CMB Infrastructure Investment Group III, L.P. PRINCIPAL AMOUNT: $15,000,000.00 The REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (the "Agency"), duly organized and existing as a community redevelopment agency of the City of San Bernardino, California, for value received, hereby-promises to pay to CMB Infrastrucure Investment Group III, L.P., duly organized and existing under the laws of the State of California (the "Holder") the principal sum of Fifteen Million Dollars ($15,000,000.00) plus interest at a rate of 5.25% per annum in accordance with the terms and provisions of that certain Loan Agreement entered into as of October 1, 2009 (the "Loan Agreement"), by and among the Agency and the Holder, to which reference is hereby made for a more complete statement of the terms and conditions under which the loan evidenced by this Promissory Note (this "Note") is made and is to be repaid. This Note shall be paid in full on the Maturity Date, except to the extent prepayment whether in whole or in part has been sooner made. This Promissory Note evidences the obligations incurred by the Agency pursuant to the Loan Agreement for the general redevelopment purposes of the Agency. The provisions of California Health & Safety Code Section 33640, et seq., shall not be applicable to the execution and delivery of this Promissory Note by the Borrower. The Agency agrees to pay the aforesaid principal plus interest in accordance with the terms hereinafter set forth: I. This Note shall be payable as follows: (a) On or before September 30, 2015, the undersigned shall pay in lawful money of the United States of America Fifteen Million Dollars ($15,000,000.00) to the Holder at 4507 49'" Avenue, Moline, IL 61265, or to such other address or to such account and in such manner as the Holder shall direct in writing to the Agency. (b) Interest shall be paid quarterly on each January 1, April 1, July I and October I with the first interest payment due on January 1, 2010, and quarterly thereafter (each such date being an "Interest Payment Date"), and the final interest payment shall be due and payable on the Maturity Date. Interest shall be payable in arrears based upon the principal balance of the Note outstanding as of each Interest Payment Date for the precise number of days calculated on a 365/366 year basis that the applicable principal balance of this Note was outstanding during the applicable Interest Payment Calculation Period (as defined below). The Holder shall provide invoices to the Agency with respect to and as a condition precedent to all payments due and payable pursuant to this Note except as 4811-33231 12 P vpmEas\ApaMa ann].A AnechmemsUpenEa Avechmmis\Aerms-Amend IOOMIO-0?-W CMB Infnstvnure-Loan Ayrmment wish Promisson Node Anc R31 provided in Section 2 below. The Holder shall calculate the interest as shall be due and payable by the Agency on each such Interest Payment Date and provide written notice of such payment amount to the Agency in writing. Interest shall be calculated in arrears for the applicable calendar quarter ending as of the calendar day immediately prior to each January 1, April 1, July 1 and October I (each such calendar quarter being defined herein as an "Interest Payment Calculation Period"). (c) The Agency may, without penalty, prepay solely as to the entire outstanding principal balance of this Note at anytime on or after April 1, 2013, and on any other date thereafter, or prior to such date upon the mutual consent of the parties. 2. If a payment not timely made remains overdue for a period of thirty (30) days after the same becomes due and payable after notice as provided in Section 1(b) above (a "Delinquent Payment"), the Agency, without further notice or demand by the Holder, shall pay a late charge in an amount equal to three percent (3%) of the Delinquent Payment due and owing to Holder (the "Late Charge"). The Agency agrees that an amount equal to the Late Charge is a reasonable estimate of the damage to the Holder in the event of a late payment under this Note. Each delinquent payment plus the applicable Late Charge shall bear interest at a rate equal to 5.25% per annum until such amount is paid in full to the Holder. 3. In the event the Agency fails to make two (2) consecutive interest payments to the Holder, or two (2) interest payments in any twelve-month period, the Holder may accelerate payment of the amount of interest coming due on the next two (2) succeeding interest payment dates, so that all such interest, together with all Delinquent Payments, Late Charges and interest due thereon, shall be due and payable on the tenth (10th) day of the month following the month in which, the second (2nd) consecutive interest payment was not made or the second (2nd) interest payment in a twelve-month period for which the required payment was not made. Thereafter, the Agency shall continue to remit quarterly interest payments in accordance with this Note. 4. This Note is solely the debt of the Agency. This Note is not a debt of the City of San Bernardino, California, nor of the State of California or any other political subdivisions of the State of California, and neither said City, said State nor any other of said political subdivisions shall be liable hereon in any manner. This Note does not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Neither the members of the Agency nor any persons executing this Note shall be liable personally on this Note by reason of its issuance. 5. This Note is not secured by the pledge of, the assignment of, or the granting of any security interest in,the assets, funds, revenues or properties of the Agency. 6. It is hereby recited, certified and declared that any and all acts, conditions and things required to exist, to happen and to be performed precedent to and in the issuance of this Note exist, have happened and have been performed in due time, form and manner as required by the California Constitution and the laws of the State of California. 7. This Note shall not be assigned by the Holder without the prior written consent of the Agency, which consent shall not be unreasonably withheld. 4811.3323-1364.1 13 P\AgWas\ ,Ma Attachments\A,Ma Attachments\A,,mU-Amend 2W IM5-0 CMBInfmsmaurz-Inm Agnew wish Pmmisso,,Note d. 8. The execution, delivery and performance of this Note have been duly authorized by all `.. necessary actions of the Agency, does not require the consent or approval of any other person, regulatory authority or governmental body, and do not conflict with, result in a violation of, or constitute a default of: (a) any provision of any agreement or other instrument binding upon the Agency, or(b) any law, governmental regulation, court decree or order applicable to the Agency. 9. This Note, when delivered, shall constitute a legal, valid and binding obligation of the Agency, enforceable in accordance with its terms. 10. Payment of the principal amount of this Note may not be accelerated by the Holder. 11. This Note and the Loan Agreement constitute the entire understanding and agreement of the parties as to the matters set forth herein and therein. No alteration of or amendment to this Note shall be effective unless given in writing and signed by the Holder and the Agency. 12. This Note has been delivered to the Holder and accepted by the Holder in the State of California. In the event of a lawsuit, the Holder and the Agency agree to submit to the jurisdiction of the Superior Court of San Bernardino County, California, Main Branch, in the City of San Bernardino, California. This Note shall be governed by the laws of the State of California. 13. If a court of competent jurisdiction finds any provision of this Note to be invalid or unenforceable as to any person or circumstance, such finding shall not render that provision invalid or unenforceable as to any other persons or circumstances. If feasible, any such offending provision shall be deemed to be modified to be within the limits of enforceability or validity, provided, however, in the event that the offending provision cannot be so modified, it shall be stricken and all other provision of this Note in all respects shall remain valid and enforceable. IN WITNESS WHEREOF, the Agency have caused the Note to be executed as of this 151 day of October, 2009. REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO By: Interim Executive Director of the Redevelopment Agency of the City of San Bernardino C 4811-3323-1364.1 14 P\Agendas\AgeMa Anachmeots\Agenda Altachments\Agrmts-Amend 20 10-05-W CNIB Infras0oaure-loan Agreement with Promissory Note doc ECONOMIICYDEOF SAN VELOPPMENITOAGENCY C0 p FROM: Emil A.Marzullo SUBJECT: CMB Infrastructure Investment Group III, Interim Executive Director L.P. - Loan Agreement for a $15,000,000 Loan under the EB-5 Program DATE: September 30,2009 Synopsis of Previous Commission/Council/Committee Action(s): On August 20,2009,Redevelopment Committee Members Johnson,Baxter and Brinker unanimously voted to recommend that the Community Development Commission consider this action for approval. Recommended Motion(s): (Community Development Commission) Resolution of the Community Development Commission of the City of San Bernardino authorizing that certain Redevelopment Agency of the City of San Bernardino Tax Exempt Promissory Note Series 2009 (CMB Infrastructure Investment Group III, L.P.) in the amount not to exceed$15,000,000, approving the form of legal documents related thereto and authorizing and directing preparation, execution and delivery of the final form thereof Contact Person(s): Brian Turnbull Phone: (909)663-1044 Project Area(s): N/A Ward(s): All Supporting Data Attached: 0 Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) ❑Map(s) ❑ Letter(s) Funding Requirements: Amount: $ -0- Source: N/A Budget Authority: N/A /�/ \ Signature: � � Fiscal Review: Emil A. Marzullo,Interim Exe 've Director Ru DeJesu Int in Adminrs ra rve Services Director Commission/Council Notes: Po Agcndas,Cmnmracv('nmmiuiomCIX'_'IX1910.05-W CMa InGesvuctm.E&SPmgmm Loan Agrttmem SRdoc COMMISSION MEETING AGENDA Meeting Date: 10//05//L2009 J Agenda Item Number: /I 7 ECONOMIC DEVELOPMENT AGENCY STAFF REPORT CMB INFRASTRUCTURE INVESTMENT GROUP III, L.P.-LOAN AGREEMENT FOR A $15,000,000 LOAN UNDER THE EB-5 PROGRAM BACKGROUND: CMB Infrastructure Investment Group III, L.P. ("CMB"), was formed in the mid-1990's to establish a "regional center" for the counties of San Bernardino, Riverside and Sacramento to assist in financings for the closed military bases in these counties. The Inland Valley Development Agency ("IVDA") entered into the initial loan transaction with CMB in 1997, for the first loan of this type pursuant to the EB-5 Program administered initially by the Immigration and Naturalization Services ("INS") which has since been restructured into the United States Citizenship and Immigration Services ("USCIS"). Since late 2007, the IVDA and the San Bernardino International Airport Authority ("SBIAA") have jointly entered into four additional loans with other affiliates of CMB for a total principal amount of$46,000,000. It is anticipated that an additional $6 million loan with another affiliate of CMB will additionally be submitted to the IVDA for consideration in September 2009. The loan proceeds have been used by the IVDA/SBIAA in part for various Airport and roadway infrastructure projects, and in most instances, the proceeds were used to partially fund cost overruns or local matching fund requirements of other federal grants. CURRENT ISSUE: The EB-5 Program for the CMB regional center for San Bernardino County allows foreign nationals to obtain permanent residency status in the United States through an investment of$500,000 in a qualified investment activity that generates U.S. jobs. Typically, the minimum investment amount is $1,000,000 but the lower amount of $500,000 per investor applies in San Bernardino County due to the higher unemployment rates and the closure of the Norton Air Force Base ("NAFB"). The use of the USCIS approved economic model for infrastructure investments allows for the use of indirect job creation based upon infrastructure expenditures by governmental entities. CMB establishes separate limited liability companies for each investment pool and requires that there be no prepayment by the borrowing governmental entity of the principal amount for at least forty-two months. This restriction allows adequate time for the investors to meet all criteria required by the USCIS for obtaining the permanent residency status. Rather than investing in private businesses as virtually all other regional centers have elected to undertake, CMB will only place loans into infrastructure and public improvement investments with governmental agencies whereby the necessary jobs that are required to be generated can be demonstrated utilizing an economic model approved by the USCIS. In San Bernardino County, the model provides that for each $1,000,000 of infrastructure and public improvement construction dollars expended by governmental agencies, 5.7 indirect jobs are generated in the local economy resulting from the construction expenditures on the infrastructure and other public improvements. Each investor must demonstrate that their $500,000 investment has generated 10 new American jobs. $1.5 million of additional City/Agency and other public agency infrastructure costs will thus generate 11.4 indirect jobs Othereby qualifying the investor for permanent residency status. P.A,,.d.,CO.Der fommissb"CD(-2009 10-0i-N CMR FI5 P.I.U..ft,c.nem SR.dw COMMISSION MEETING AGENDA Meeting Date: 10/05/2009 Aeenda Item Number: Economic Development Agency Staff Report CMB In/rastructure—EB-5 Program Loan Agreement Page 2 The City of San Bernardino Economic Development Agency("EDA") Staff has caused the preparation of certain documents to provide for the issuance of a tax exempt note entitled "Redevelopment Agency of the City of San Bernardino Tax Exempt Promissory Note Series 2009 (CMB Export, LLC)" (the "Note") to CMB in the aggregate principal amount of not to exceed $15,000,000. The Note will be secured by a Loan Agreement between CMB and the EDA in the form as included in this agenda item (the "Loan Agreement'). Several of the projects that the EDA anticipates funding with the CMB loan proceeds will include: 1. Omnitrans soft costs for the construction of the sbX federally funded bus rapid transit project, including temporary relocation of the transit center and parking lots. 2. Sewer line relocation and construction for the State Court Complex on Third Street and Arrowhead. 3. Solar projects for the EDA building and other City and EDA buildings to reduce energy costs. 4. Infrastructure costs for the La Placita parking structure. 5. Infrastructure cost reimbursements and additional interchange expenditures for the I-215/University Boulevard interchange. 6. Restoration of the California Theatre. 7. Other projects identified by the Community Development Commission of the City of San Bernardino. The terms of the proposed loan are as follows, subject to change in the final documents: 1. Interest Rate: 5.25%, tax-exempt. 2. Principal: $15,000,000. 3. Repayment: Interest only payable quarterly; principal payable at the 6-year maturity date. 4. Security: No specific pledge of EDA real estate assets but a limited pledge of surplus tax increment revenues and commitment to refinance the loan; at the time of loan closing there must be a demonstration of ability to undertake a refinancing at the 6-year maturity date. 5. Closing Costs: No points or costs other than document preparation utilizing existing forms. 6. Closing Date: October, 2009. 7. Funding: Increments of$500,000 will be advanced to the EDA as investors are obtained who submit the proper documentation to the USCIS for approval; all funds should be available to the EDA by the second quarter of 2010. The federal legislation that allows for this type of financing under the EB-5 program is currently scheduled to sunset as of September 30, 2009, at the end of the current federal fiscal year. However, the authorizing legislation has been extended previously at each point in time prior to the expiration of the authorizing legislation, and it is assumed that the EB-5 program will again be extended as part of the federal budget process in September 2009. A loan closing would only occur if the federal legislation is extended and in effect at the time of the proposed loan closing in October 2009. Additional information can be obtained on the CMB website at www.cmbeb5visa.com and it contains descriptions and photographs of the projects undertaken at both the former NAFB with the IVDA and SBIAA in addition to those current projects at the former McClellan Air Force Base in Sacramento. P:Agendas Comm na CommissionfIX-I004 10-0S-W CMB 1nhnswnum-Mi Pmgmm lnan Agnmunm SR doe COMMISSION MEETING AGENDA Meeting Date: 10/05/2009 Anenda item Nnmhor- Economic Development Agency Staff Report CMB Infrastructure—EB-5 Program Loan Agreement Page 3 ENVIRONMENTAL IMPACT: This action does not meet the definition of a "project" under Section 15378 of the California Environmental Quality Act (CEQA). FISCAL IMPACT: Repayment of this loan would be interest only and payable quarterly. Repayment or refinance of the principal would take place at the 6-year maturity date. There is no impact to the City's General Fund. RECOMMENDATION: That the Community Development Commission adopt the attached Resolution. Emil A. Marzullo,Interim Wecdtive Director P.Agendas CommD Commission'CDC]W91O-Oi-W CMB InGasvunure-EgS Program Loan Ag,mmem SR.doc COMMISSION MEETING AGENDA Meeting Date: 10/05/2009 Aeenda Item Number: CITY OF SAN BERNARDINO Interoffice Memorandum CITY CLERK'S OFFICE DATE: October 7, 2009 TO: Wasana Chantha, Executive Secretary Economic Development Agency FROM: Margaret Fedor, Executive Assistant to the City Clerk RE: Transmitting Documents for Signature—Resolution No. CDC/2009-61 At the Mayor and Common Council meeting of October 5, 2009, the City of San Bernardino adopted Resolution No. CDC/2009-61 —Resolution of the Community Development Commission of the City of San Bernardino authorizing that certain Redevelopment Agency of the City of San Bernardino Tax Exempt Promissory Note Series 2009 (CMB Infrastructure Investment Group III, L.P.) in the amount not to exceed $15,000,000, approving the form of legal documents related thereto and authorizing and directing preparation, execution and delivery of the final form thereof. Attached are one (1) original agreement and two (2) duplicate originals to be executed. Please obtain signatures in the appropriate locations and return the original agreement to Margaret Fedor in the City Clerk's Office, as soon as possible. Please retain one duplicate agreement for your records and forward the other copies to the appropriate party. Thank you. I hereb e e recei the a -mentioned documents: N e: PLEASE SIGN AND RETURN Date: