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HomeMy WebLinkAbout16- Redevelopment Agency D E V E L O P MEN T D E P A R T MEN T OF THE CITY OF SAN BERNARDINO i REQUEST FOR COMMISSION/COUNCIL ACTION From: KENNETH J. HENDERSON Subject: STEWARD OWNER PARTICIPA- Executive Director TION AGREEMENT (OPA) - 570 W. FOURTH STREET, OLD Date: February 10, 1993 GAS COMPANY BUILDING ------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s): On February 4, 1993, the Redevelopment Committee recommended that this matter be forwarded to the Community Development Commission. ------------------------------------------------------------------------------- Recommended Motion(s): (Community Development Commission) MOTION: That the Community Development Commission authorize the Executive Director to execute an Owner Participation Agreement with Allan Steward, Inc. for the acquisition and renovation of the former Southern California Gas Company building located at 570 West Fourth Street in the Central City North project area, to make necessary changes in said Agreement as approved by Agency Special Counsel and determined in final negotiations, and to execute all documents necessary to implement and complete said Agreement; and authorize modification of the Agency's 1992-1993 budget to provide for a $350,000 investment by the Central City project area in the form of a secured loan to Allan Steward, Inc. C-7;22L, Administrator KE TH J. HENDERSON Executive Director ------------------------------------------------------------------------------- Contact Person(s) : Kenneth Henderson/John Hoeger Phone: 5081 Project Area(s) : Central City North Ward(s): One Supporting Data Attached: Staff Report; Owner Participation Agreement FUNDING REQUIREMENTS: Amount: $ 350,000 Source: Tax Increment Budget Authority: See agenda item . ------------------------------------------------------------------------------- Commission/Council Notes: ------------------------------------------ KJH:JBH:dle:6043R COMMISSION MEETING AGENDA Meeting Date: 02/15/1993 Agenda Item Number: D E V E L O P M E N T D E P A R T M E N T OF THE CITY OF SAN BERNARDINO STAFF REPORT STEWARD OWNER PARTICIPATION AGREEMENT - 570 WEST FOURTH STREET On September 24, 1992, and again on October 22, 1992, the Redevelopment Committee considered a request for assistance from Mr. Mark Kaufman and his partners who were renovating the old Gas Company Building at 570 West 4th Street. Assistance was not recommended by the staff due largely to the building being overencumbered by financing totaling in excess of $2.2 million. Since that time, American Commerce National Bank has continued with foreclosure proceedings and a sale was scheduled for January 28, 1993. At the request of staff, the bank continued its sale until February 19, 1993 to allow consideration by the Community Development Commission of a new proposal by Mr. Al Steward. Mr. Steward proposes to purchase the building at the foreclosure sale, complete the renovation of the building and fully occupy it by leasing to tenants he has obtained. In return for a twenty-five percent (25%) share of the returns from the project, staff proposes Agency assistance in the form of a secured $350,000 loan plus a guarantee to the bank of its mortgage. Project Proposal: American Commerce National Bank has agreed to provide a $1.3 million loan to Mr. Steward (with the Agency's guarantee) for the purchase of the building at a price of $1.5 million. As part of the transaction, the bank will also complete the tenant improvements for Concord Career College and for Inland Counties Legal Services who will, together, occupy the majority of the leasable space. While the bank is taking a substantial loss in the transaction, it has contingent guarantees from Mr. Kaufman and his partners which it will pursue. Mr. Steward has obtained Cross-Colors as a retail tenant for the remaining downstairs space so that the building will be fully leased. Additional capital, estimated at $50,000, will be required to install them as tenants. There will also be operating expenses during the "free rent" periods of both the Concord and the Inland Counties leases. These expenses are not expected to exceed $100,000. To assist in financing the transaction, staff is proposing that the Agency loan Mr. Steward $350,000 to be secured by a deed of trust, but subordinate to the bank's loan. That will result in a total encumbrance on the building of $1,650,000 which is less than the building's assessed value and which corrects the basic imbalance inherent in the earlier Kaufman proposals. ------------------------------------------------------------------------------- KJH:JBH:dle:6043R COMMISSION MEETING AGENDA Meeting Date: 02/15/1993 Agenda Item Number: 6 DEVELOPMENT DEPARTMENT STAFF REPORT RE: STEWARD OPA - 570 W. FOURTH STREET, OLD GAS COMPANY February 10, 1993 Page Number -1- Proposed Agency Participation: The Agency will loan $350,000 to Mr. Steward secured by a deed of trust. The loan will be at American Commerce National Bank's prime rate plus two points (for a total of 8% currently). The term will be three (3) years. There will be an extension available of two (2) additional years provided the note is not in default. The note will provide for interest (only) payments which are due quarterly, will contain a "due on sale" clause and will provide for a one (1) point origination fee. As mentioned above, the Agency will be guaranteeing the first trust deed to the bank and it is the most recent recommendation of Agency Special Counsel that Mr. Steward execute a second deed of trust covering the same loan as the first, to protect the Agency in case of any default by Mr. Steward. The Agency's $350,000 loan will be in second position and secured by a third deed of trust. As an incentive, the Agency will receive a twenty-five percent (25%) share of the net operating proceeds of the building, plus a twenty-five percent (25%) share from the net proceeds of any refinancing and upon sale. The Agency will have control over authorizing any payments that are made back to Mr. Steward or his associates. Additionally, the Agency would have the right to review and disapprove any improper sales costs in calculating the net proceeds from any refinance or sale. Benefits to the City and Agency: Mr. Steward has obtained leases for the entire building which include the new retail use on the ground floor. While the majority of the tenants would be relocating within the City of San Bernardino, their moves allow for expansion and, together with the new retail use, 12 to 15 new jobs would be expected initially, with the opportunity for additional jobs in the future. Utility taxes are expected to be approximately $2,400 per year and additional sales tax to the City should be about $7,000 per year. Net tax increment is not likely to change significantly, as the existing assessed value is $1,930,000. The primary benefit for the City is the filling of an empty building, providing a vital and functional use adjacent to the California Theater and across the street from the Carousel Mall and the Stater Bros. shopping center. As an incentive for the Agency, it will receive twenty-five percent (25%) of the net proceeds of the venture. ------------------------------------------------------------------------------- KJH:JBH:dle:6043R COMMISSION MEETING AGENDA Meeting Date: 02/15/1993 Agenda Item Number: l t �� DEVELOPMENT DEPARTMENT STAFF REPORT RE: STEWARD OPA — 570 W. FOURTH STREET, OLD GAS COMPANY February 10, 1993 Page Number —3— Recommendation: Agency Special Counsel is drafting an Owner Participation Agreement (OPA) that will contain the elements described above. It is to be ready for presentation at the Community Development Commission meeting of February 15, 1993. The bank has indicated that it cannot further extend its sale date and that the sale must occur on February 19, 1993. With this deadline in mind, the Committee forwarded the matter to the Commission with the understanding that the final agreement would be distributed prior to the Commission meeting. The most recent draft available at the time of distribution of this agenda item is attached. Any further progress will be reported by staff at the Commission meeting. Staff recommends adoption of the form motion. KENNETH J. HENDERSON, Executive Director Development Department ------------------------------------------------------------------- KJH:JBH:dle:6043R COMMISSION MEETING AGENDA Meeting Date: 02/15/1993 Agenda Item Number: 1 �� NORTH Not to scale FIFTH STREET 23 San Bernard no County Services Dental 2 1 - W 1341 121 7 �,... W 16 19 Bible Supply W 15 17 �— Blum Site (n 12 Lier's Music Parking Dis rict Lot#1 1 2 13 —� 16 17 11 134/131 L1.. W 4 So. California asp California Social Theatre SecurtV Vacant 12 14 10 15 6 5 FOURTH STREET �� In DRAFT SBE00001-58/Steward/df 2/10/92 1:30 OWNER PARTICIPATION AGREEMENT THIS AGREEMENT IS ENTERED INTO this day of 1993 , by and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (the "Agency") , AL STEWARD, INC. , a California corporation (the "Participant") and Al Steward, a single man ("Steward") . Agency and Participant hereby agree as follows: I. [100] SUBJECT OF AGREEMENT A. [101] Purpose of Agreement The purpose of this Agreement is to effectuate the Redevelopment Plan for the Central City North Redevelopment Project (the "Redevelopment Plan") by providing for Agency assistance to Participant in connection with the acquisition and improvement of the Site, which is located in and will benefit the Central City North Redevelopment Project Area (the "Project Area") . The acquisition and improvement of the Site pursuant to this Agreement is in the vital and best interests of the City of San Bernardino, California (the "City") and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements under which the Redevelopment Plan has been undertaken. Ile B. [102] The Redevelopment Plan kL The Redevelopment Plan was approved by ordinance of the Common Council of the City of San Bernardino; said ordinance and the Redevelopment Plan as so approved are incorporated herein by reference. C. [103] The Site The Site is that certain real property generally located at 570 West 4th Street in the City of San Bernardino and as more fully described in the "Legal Description of the Site", which is attached hereto as Attachment No. 1 and is incorporated herein by this reference. D. (104) Parties to the Agreement 1. (105) The Agency The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California (Health and Safety Code Section 33020, et seq. ) The principal office of the Agency is located at 201 North "E" Street, San Bernardino, California 92401. "Agency", as used in this Agreement, includes the Community Development Commission of the City of San Bernardino, the Economic Development Agency of the City of San Bernardino, the Redevelopment Agency of the City of San Bernardino, and any assignee of or successor to their rights, powers and responsibilities. 2 - Steward shall execute a Surety Agreement in the form of Attachment No. 2 attached hereto and incorporated herein by this reference in order to guaranty the performance of the Participant under this Agreement. 2 . [106] The Participant The principal office and mailing address of the Participant for purposes of this Agreement is as follows: Allan Steward, Inc. Schneider Commercial Real Estate 268 W. Hospitality Lane San Bernardino, California 92408 Attn: Allan Steward The Participant qualifies as an owner participant pursuant to the Redevelopment Plan and rules promulgated pursuant thereto pertaining to owner participation. 3 . [107] Steward The principal office and mailing address of Steward for the purposes of this Agreement is as follows: Allan Steward Schneider Commercial Real Estate 268 W. Hospitality Lane San Bernardino, California 92408 4. [108] Prohibition Against Change in Ownership Management and Control of the Participant The qualifications and identity of the Participant are of particular concern to the Agency. It is because of those qualifications and identity that the Agency has entered into this Agreement with the Participant. No voluntary or involuntary 3 - r successor in interest of the Participant shall acquire any rights or powers under this Agreement except as expressly set forth herein. The Participant shall not assign all or any part of this Agreement or any rights hereunder without the prior written approval of the Agency, which approval the Agency may grant, withhold or deny at its discretion. In the event of such transfer or assignment: (1) the assignee shall expressly assume the obligations of the Participant pursuant to this Agreement in writing satisfactory to the Agency; (2) the original Participant shall remain fully responsible for the performance and liable for the obligations of the Participant pursuant to this Agreement; and (3) any guarantees provided to assure the performance of the Participant's obligations under this Agreement shall remain in full force and effect. In the absence of specific written agreement by the Agency, no such transfer, assignment or approval by the Agency shall be deemed to relieve the Participant or any other party from any obligation under this Agreement. All of the terms, covenants and conditions of this Agreement shall be binding upon and shall inure to the benefit of the Participant and the permitted successors and assigns of the Participant. Whenever the term "Participant" is used herein, such YL term shall include any other permitted successors and assigns as herein provided. 4 - The restrictions of this Section 108 shall terminate and be of no further force and effect upon the later of (i) repayment in full of the Participant Loan and the Agency Loan (both as hereinafter defined) to which the Agreement applies or (ii) five (5) years from the date hereof. 5. [109] Benefit to Project Area The Agency has determined that the acquisition and development of the Site in accordance with this Agreement will eliminate blight and provide a benefit to the Project Area through the rehabilitation and renovation of an existing building which will be suitable for occupancy by commercial and business tenants. The renovation of said office building will provide , employment opportunities to residents of the Project Area while the renovation of the structure itself will help eliminate blighting conditions. II. (200) AGENCY ASSISTANCE A. [201] Participant Loan Guaranty The Agency agrees to guaranty (the "Guaranty") repayment by Participant of a certain loan in favor of American Commerce National Bank, or such other lender as the Agency may approve in writing (hereinafter referred to as the "Bank") , which loan is to be in a principal amount equal to One Million Three Hundred Thousand Dollars ($1, 300, 000) (the "Participant Loan") . The proceeds of the Participant Loan are to be used by Participant to acquire the Site and cause and complete the renovation of the existing structures on the Site (the "Project") . The Guaranty shall be reflected in a certain Guaranty Agreement in favor of the 5 - 0 lender, as provided in Section hereof, and shall be in a form substantially similar to Attachment No. 3 attached hereto and incorporated herein by reference. In consideration for the provision of the Guaranty, the Participant shall cause the completion of the Project within the time set forth in the Schedule of Performance (as hereinafter defined) and shall execute a second Deed of Trust conveying title to the Site in favor of the Agency as provided in Section hereof. The Agency's obligation with respect to the execution and provision of the Guaranty shall become binding only at such time as the Agency has received an executed original of this Agreement and a second Deed of Trust to the Site. (202) Agency Loan In addition to the provision of the Guaranty, the Agency agrees to loan to the Participant an amount equal to Three Hundred Fifty Thousand Dollars ($350, 000) (the "Agency Loan") . The proceeds of the Agency Loan are to be used by Participant to assist in the renovation of the building located on the Site. The Agency Loan shall be reflected in a certain Promissory Note in favor of the Agency, as provided in Section hereof, which shall be in a form substantially similar to Attachment No. 4 attached hereto and incorporated herein by reference. In consideration for the Agency's provision of the Agency Loan, the Participant shall cause the completion of the Project in accordance with the Schedule of Performance and shall execute a third Deed of Trust conveying title 6 - ( D Iv to the Site in favor of the Agency as provided in Section hereof. The Agency's obligation with respect to the execution and provision of the Agency Loan shall become binding only upon (i) the availability of funds provided through the Participant Loan and the funding of said Participant Loan, (ii) the Agency's receipt of an executed original of this Agreement and a third Deed of Trust and (iii) a countersigned Certificate of Insurance as provided in Section 305 hereof. (203) Agency Participation As further consideration of the provision of the Guaranty and the Agency Loan, the Participant agrees that the Agency shall share in twenty-five percent (25%) of (i) any Net Operating Proceeds, (ii) any Refinancing Proceeds or (iii) any Resale Proceeds, all as such terms are defined in Attachment attached hereto and incorporated herein by this reference. III. (300] ACQUISITION AND IMPROVEMENT OF THE SITE A. (301) Acquisition and Improvement by Participant The Participant and the Agency agree that the central purpose of this Agreement is to provide for the acquisition and renovation of a square foot building as described in the Scope of Development (see Section 302) . The Project shall enable the Participant to create additional employment opportunities in the Project Area, to produce additional tax increment for the 7 - t Project Area and to provide for additional office and retail space opportunities in the City. 1. [302] Scope of Development The Site shall be developed by the Participant as provided in the "Scope of Development", which is attached hereto as Attachment No. 5 and is incorporated herein and in a manner consistent with the provisions of the Redevelopment Plan. 2. [303] Cost of Construction The costs of acquiring and constructing the Project shall be borne solely by Participant. The Agency shall have no obligations, other than as expressly set forth herein, with respect to the funding of the Project. 3 . [304] Construction Schedule Upon execution of this Agreement, the Participant will promptly begin and diligently prosecute to complete the Project. The Participant shall begin and complete all construction and development of the Project within the times specified in the "Schedule of Performance" which is attached hereto as Attachment No. 6 and incorporated herein. The Participant shall strictly conform to all time requirements and limitations set forth in this Agreement. 8 - 4 . [305) Bodily Injury and Property Damage Insurance The Participant shall defend, assume all responsibility for and hold the Agency, the City and their respective officers, agents and employees, harmless from all claims or suits for, and damages to, property and injuries to persons, including accidental death (including attorneys ' fees and costs) , which may be caused by any of Participant's activities under this Agreement, whether such activities or performance thereof be by the Participant or anyone directly or indirectly employed or contracted with by the Participant and whether such damage shall accrue or be discovered before or after termination of this Agreement. The Participant shall take out and maintain a comprehensive liability and property damage policy in the amount of One Million Dollars ($1, 000, 000) combined single limit policy, including contractual public liability, and shall protect the Participant, the City and the Agency from claims for such damages until two (2) years after the later of expiration of the Participant Loan or the Agency Loan. The Participant shall furnish a certificate of insurance countersigned by an authorized agent of the insurance carrier on a form of the insurance carrier setting forth the general provisions of the insurance coverage. This countersigned certificate shall name the City and Agency and their respective officers, agents, and employees as additional insureds under the policy. The certificate by the insurance carrier shall contain a statement of obligation on the part of the carrier to notify the City and Agency of any material change, cancellation or termination of the coverage at 9 - least thirty (30) days in advance of the effective date of any such material change, cancellation or termination. Coverage provided hereunder by the Participant shall be primary insurance and not contributing with any insurance maintained by the Agency or City, and the policy shall contain such an endorsement. The insurance policy or the certificate of insurance shall contain a waiver of subrogation for the benefit of the City and Agency. The Participant shall furnish or cause to be furnished to the Agency evidence satisfactory to the Agency that any contractor with whom it has contracted for the performance of work on the Site or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. 5. [306) City and Other Governmental Agency Permits Prior to the disbursement of any proceeds representing the provision of the Guaranty, the Agency Loan, or commencement of the Project or other construction or development of any buildings, structures or other works of improvement upon the Site, the Participant shall, at its own expense, secure or cause to be secured any and all permits for all necessary improvements which may be required by the City or any other governmental agency having jurisdiction over such construction, development or work. Nothing contained in this Agreement shall be deemed to be an approval by the City of any application or permit required to be obtained by the Participant from the City. - 10 - f� V 6. [307] Rights of Access For the purpose of assuring compliance with this Agreement, representatives of the Agency and the City shall have the right of access to the Site, without charges or fees, at normal construction hours during the period of work for the purposes of this Agreement, including, but not limited to, the inspection of the work being performed in constructing the improvements, so long as they comply with all safety rules. Such representatives of the Agency or of the City shall be those who are so identified in writing by the Executive Director of the Agency. The Agency shall hold the Participant harmless from any bodily injury or related damages arising out of the activities of the Agency and the City as referred to in this Section 307 and resulting from the gross negligence or willful misconduct of the City or Agency. This Section 307 shall not be deemed to diminish or limit any rights which the City or Agency may have by operation of law irrespective of this Agreement. 7 . [308] Local, State and Federal Laws The Participant shall carry out the Project and all related activities on the Site in conformity with all applicable laws, including all applicable federal and state labor standards and prevailing wage and public bid procedures; provided, however, the Participant and its contractors, successors, assigns, transferees, and lessees are not waiving their rights to contest any such laws, rules, standards or procedures. Unless otherwise exempted pursuant to State or Federal law, the Participant and its I C� contractors and sub-contractors shall pay prevailing wages to all employees with respect to the Project. 8. (309) Antidiscrimination During Construction The Participant, for itself and successors and assigns, agrees that in the construction of the improvements provided for in this Agreement, the Participant shall not discriminate against any employee or applicant for employment because of race, color, creed, religion, age, sex, marital status, handicap, national origin or ancestry. 9. (310) Minority Employment Obligations. T h e Participant hereby covenants to use its best efforts to afford the opportunity to qualified Minority Business Enterprises (MBE's) to submit bids and proposals on the renovation work comprising the Project. Bidders for the Project shall be expected to solicit and use minorities in their bidding, subcontracting and material purchases. The Participant shall make positive good faith efforts to inform qualified MBE's of available business opportunities. A bona fide MBE is a business which is owned and controlled by at least fifty-one percent (51%) by minority group members. Minority group members are Blacks, Hispanics, American Indians, Orientals, females and other socially or economically disadvantaged groups. The Participant shall adhere to the goal for the participation of qualified non-women MBE's in the development of - 12 - the Project of fifteen percent (15%) of the total contract price I and of an additional five percent (5%) of the total contract price for women contractors. The Participant shall have any qualified MBE bidders document their compliance with this Section 310 in one of two ways: 1. if bidder is a qualified MBE, by a written statement to that effect; or 2 . if bidder will joint venture with a qualified MBE or subcontracts a substantial portion of the contract to a qualified MBE, by a written statement to that effect which shows the percentage of MBE participation. L The Agency will assist in locating qualified MBE's in order for the Participant to issue notices and requests for bidding and agrees to otherwise assist Participant, to the extent feasible, in order that Participant can satisfy it's obligations under this Section 310. B. [311] Taxes, Assessments, Encumbrances and Liens Prior to repayment in full of the Participant Loan and the Agency Loan, the Participant shall not place or allow to be placed on the Site or any part thereof any mortgage, trust deed, encumbrance or lien without the express prior written consent of the Agency. - 13 - v C. (312) Prohibition Against Transfer of the Site, the Buildings or Structures thereon and Assignment of Agreement Prior to expiration of the Guaranty or the Agency Loan, whichever is later, the Participant shall not, except as permitted by this Agreement, without the prior written approval of the Agency, make any total or partial sale, transfer, conveyance, assignment or lease of whole or any part of the Site or of the buildings or structures on the Site. This prohibition shall not be deemed to prevent a transfer expressly permitted pursuant to Section 108 of this Agreement, or the granting of temporary or permanent easements or permits to facilitate the development of the Site. D. [313] In Lieu of Tax Increment Fee Upon expiration of both the Guaranty and the Agency Loan, and for five (5) years thereafter, Participant agrees that in the event Participant or any of Participant's successors or assigns takes any action or through any inaction that reduces the assessed value, or in any manner causes to be reduced the assessed value of the Project, or sells, transfers, conveys, assigns, or leases all or any part of the Site or the building or structures on the Site to any entity or combination of entities whose status results in a reduction or elimination in the tax increment revenues that the Agency in its sole determination would otherwise have received upon annual valuation assessments of the Site and the Project in accordance with Article XIIIA of the California Constitution, which are attributable to the Project, then Participant or its - 14 - I successors, as applicable, shall pay the Agency semi-annually on February 1, and on August 1, an in lieu of tax increment fee equal to the amount of tax increment that the Agency would have otherwise received during the preceding six (6) month period terminating on December 31 and June 30, respectively. Such in lieu of tax increment fee shall be calculated as the difference between the tax increment revenue actually received by the Agency and the tax increment payment that would have been received attributable to the Project had not such reduction in assessed value, sale(s) , transfer(s) , conveyance(s) , assignment(s) , or lease(s) been made. This Section 313 shall remain in effect for five (5) years following the expiration of the Participant Loan and the Agency Loan and shall not be extinguished by issuance of any Certificate of Completion issued pursuant to Section 402 of this Agreement. E. [314] Guaranty; Promissory Note; Deeds of Trust 1. [315] Guaranty The Agency shall execute the Guaranty in substantially the form as attached hereto as Attachment No. 3 , which Guaranty shall be in favor of the Bank described therein. The Agency's obligation to guaranty the Participant Loan to the Participant for purposes of completing the Project shall be in an amount equal to $1, 300, 000. 2 . [316] Promissory Note The Participant shall execute a Promissory Note (the "Note") in favor of the Agency in substantially the form as attached hereto as Attachment No. 4 evidencing the Agency Loan from the Agency to the Participant in an amount equal to Three Hundred - 15 - I � Fifty Thousand Dollars ($350, 000) for the purpose of assisting in the acquisition and renovation of the Project. The outstanding balance of the Note shall bear interest from the time of funding until repayment in full equal to the rate used by American Commerce National Bank in their transactions with the Agency during such period plus two percent (2%) . Prior to the expiration of the terms of the Note, the Participant shall make payments of interest only on a quarterly basis. The term of the Note shall be three (3) years with a right to extend for an additional two (2) years provided the Note is not in default. All modifications or extensions shall be in writing and signed by both parties. 3 . [317) Deeds of Trust In consideration for the provision of the Guaranty, the Op Participant shall execute a second Deed of Trust in the form of Attachment No. 8, attached hereto and incorporated herein by this reference. The second Deed of Trust shall be subordinate only to a first Deed of Trust in the form of Attachment No. 7, attached hereto and incorporated herein by this reference, in favor of the Bank necessary to secure the Participant Loan. In order to secure the Agency Loan and corresponding Note, the Participant shall execute a third Deed of Trust in the form of Attachment No. 9, attached hereto and incorporated herein by this reference. Said third Deed of Trust shall be subordinated to the second Deed of Trust and/or such other financing as the Agency may approve in writing for the purposes of completing the Project. The Agency shall have the right, in the event of any default under the terms w 16 - of this Agreement or the Note, to foreclose on either or both Deeds of Trust as it deems appropriate in its sole discretion. F. [318] Mortgage, Deed of Trust, Sale and Lease-Back Financing; Rights of Holders 1. [319] No Encumbrances Except Mortgages, Deeds of Trust or Sale and Lease-Back for Development The Participant intends to obtain, and Agency agrees thereto, an acquisition and construction loan for the undertaking of the Project in the approximate amount of $1,300,000. Participant shall not enter into any other conveyance or lien for financing without the prior written approval of the Agency, which approval the Agency agrees to give if any such conveyance or lien for financing is given to a bank, savings and loan association, or other similar lending institution and the terms of said financing are reasonably acceptable to the Agency. Approval of such other conveyance or lien for financing by the Agency shall not constitute a subordination of either Deed of Trust to such conveyance or lien without the express written approval of the Agency. The form of approval by the Agency shall be in writing which references this Section 318, executed by the Executive Director of the Agency. In the event that the Agency fails to accept or reject such lender in writing within fifteen (15) days after written notice thereof is received by the Agency, such lender shall be deemed approved. - 17 - 1 (;1 G. (320) Right of Agency to Satisfy Other Liens On The Site Prior to the completion of the Project, and after the Participant has had written notice and has failed after a reasonable time, but in any event not less than fifteen (15) days, to challenge, cure, adequately bond against, or satisfy any liens or encumbrances on the Site which are not otherwise permitted under this Agreement, the Agency shall have the right but not the obligation to satisfy any such liens or encumbrances and to seek indemnification therefor from the Participant. H. (321) Release of Deeds of Trust Upon the expiration of the Guaranty, the Agency agrees to reconvey the second Deed of Trust. Upon repayment in full of all sums owed under the Agency Loan, the Agency agrees to reconvey the third Deed of Trust. Upon either the recording of a reconveyance of the full second Deed of Trust and the third Deed of Trust, any party then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Site or the Project shall not, as a result of such ownership, lease or acquisition, incur any obligation or liability under this Agreement except that such party shall be bound by the covenants set forth in Section 401 of this Agreement, which shall be applicable, each according to its terms. Regardless of the Participant's ability to complete construction of the Project, the Participant agrees, subject to any extensions, to repay the Agency Loan in full within three (3) years of the date of execution of this Agreement. A failure to do so - 18 - f within thirty (30) days of Agency's written demand shall constitute L a material breach of this Agreement and shall entitle the Agency to declare the Participant in default, and to foreclose upon either Deed of Trust, and/or to exercise any other remedies available under this Agreement, either Deed of Trust or at law or in equity. IV. [400] USES OF SITE A. [401] Uses - Covenants Running With the Land The Participant covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Site or any part thereof, that for a period of twenty (20) years commencing on the date of the issuance by City of the Certificate of Occupancy for the Site, that portion of the Site upon which the Project is located will be devoted to uses as an office/commercial t. building in a manner consistent with the Redevelopment Plan. The foregoing covenant shall run with the land for twenty (20) years commencing on the date that the City issues the Certificate of Occupancy. The Participant further covenants and warrants that the Participant shall develop improvements on the Site in accordance with the Scope of Development. The Participant covenants to develop the Site in conformity with all applicable laws. The covenants of this paragraph shall run with the land. The Participant covenants by and for itself and any successors in interest that there shall be no discrimination - 19 - I � 0 against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status , age, handicap, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Participant itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site. The foregoing covenants shall run with the land. All deeds, leases or contracts pertaining to the Site shall contain or be subject to substantially the following nondiscrimination or non-segregation clauses: 1. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, age, handicap, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, - 20 - J sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land. " 2 . In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, that this lease is made and accepted upon and subject to the following conditions: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, handicap, age, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practices or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased. " 3 . In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, marital status, age, handicap, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with - 21 - reference to the selection, location, number use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises. " B. [402] Certificate of Completion The Agency, its successors and assigns agree that upon the full compliance by the Participant with the terms of this Agreement which pertain to the Project, and following completion of the Project, the receipt by the Agency of a written request from the Participant for a Certificate of Completion and notification that the Site is ready for occupancy, the Agency shall provide promptly and furnish to the Participant a Certificate of Completion certifying that the Project, as required pursuant to this Agreement, has been completed to the satisfaction of the Agency, its successors and assigns. Upon issuance of the Certificate of Completion by the Agency, each of the covenants, restrictions, warranties and conditions contained in this Agreement relating to the Project, unless otherwise provided for herein, shall be deemed satisfied and shall terminate. C. [403] Maintenance of the Site The Participant shall maintain the Project and all other improvements on the Site and shall keep the Site free from any accumulation of debris or waste materials. The Participant further agrees to maintain the Site in a neat and attractive manner until construction of the improvements described in this Agreement is complete so as not to, in the - 22 - reasonable determination of an appropriate officer of the City, be a public nuisance, or be detrimental to the health, safety and welfare, or impair value of property within one thousand (1, 000) feet of the Site, and agrees that in the event Participant fails to do so, the Agency may enter upon the Site for the purposes of performing necessary and desirable maintenance and that Participant will be responsible for the cost of any such maintenance undertaken by the Agency, which shall be paid within thirty (30) days after receipt by the Participant of written demand therefor. Following the completion of the Project, the Participant shall also maintain the landscaping required to be planted under the Scope of Development (Attachment No. 5) in a healthy condition. Such obligation shall continue for the useful life of the Project and shall not be deemed satisfied upon the recordation of a Certificate of Completion as described in Section 402 hereof. If, at any time, the Participant fails to maintain said landscaping, and said condition is not corrected after expiration of thirty (30) days from date of written notice from the Agency, the Agency may perform the necessary landscape maintenance and the Participant shall pay such costs as are reasonably incurred for such maintenance. The Participant agrees to prepare and record Covenants, Conditions and Restrictions approved by Agency, consistent with this Section 403 including the maintenance responsibilities outlined in this Agreement which may not be amended nor revoked without the approval of the Agency. To the extent the Participant - 23 - I is in violation of the provisions of this Section, the Participant agrees that the Agency shall be entitled to place a lien against the Site to the extent necessary to secure payment of the costs of providing the necessary maintenance. D. [404] Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction The covenants established in this Agreement shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, as to those covenants which are for its benefit. The covenants contained in this Agreement shall remain in effect until the termination date of the Redevelopment Plan unless an earlier date is specified. The covenants against racial discrimination shall remain in perpetuity. The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. The Agreement and the covenants shall run in favor of the Agency, without regard to whether the Agency has been, remains or is an owner of any land or interest therein in the Site. The Agency shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or - 24 - 1 ( 0 suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. V. [500] GENERAL PROVISIONS A. [501] Notices, Demands and Communications Between the Parties Written notices, demands and communications between the Agency and the Participant shall be sufficiently given if delivered by hand (and a receipt therefor is obtained or is refused to be given) or dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the Agency and the Participant. Such written notices, demands and communications may be sent in the same manner to such other addresses as such party may from time to time designate by mail as provided in this Section 501. Any written notice, demand or communication shall be deemed received immediately if delivered by hand and shall be deemed received on the tenth day from the date it is postmarked if delivered by registered or certified mail. B. [502] Conflicts of Interest; Nonliability No member, official or employee of the Agency or the City shall have any personal interest, direct or indirect, in this Agreement. No member, official or employee shall participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or - 25 - association in which he is directly or indirectly interested. No member, official or employee of the Agency or the City shall be personally liable to the Participant, or any successor in interest, in the event of any default or breach by the Agency or the Participant, or for any amount which may become due to the Participant or its successor or on any obligations under the terms of this Agreement. The Participant represents and warrants that it has not - paid or given, and shall not pay or give, any third party any money or other consideration for obtaining this Agreement. C. [503] Enforced Delay; Extension of Times of Performance In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where delays or defaults are due to: war; insurrections; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; freight embargoes; governmental restrictions or priority; litigation; unusually severe weather; acts or omissions of another party; acts or failures to act of the City or any other public or governmental agency or entity (other than the acts or failures to act of the Agency which shall not excuse performance by the Agency) ; or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the - 26 - ) I period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of the Agency and the Participant. The Participant is not entitled pursuant to this Section 503 to an extension of time to perform because of past, present, or future difficulty in obtaining suitable temporary or permanent financing for the Site. D. [504] Inspection of Books and Records The Agency has the right at all reasonable times to inspect the books and records of the Participant pertaining to the Site as pertinent to the purposes of this Agreement. The Participant has the right at all reasonable times to inspect the public records of the Agency pertaining to the Site as pertinent to the purposes of the Agreement. VI. [600] DEFAULTS AND REMEDIES A. [601] Defaults - - General Subject to the extensions of time set forth in Section 503 , failure or delay by any party to perform any term or provision of this Agreement constitutes a default under this Agreement. The party who so fails or delays must immediately commence to cure, correct, or remedy such failure or delay, and shall complete such cure, correction or remedy with diligence. - 27 - ' v The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Except as required to protect against further damages, the injured party may not institute proceedings against the party in default until thirty (30) days after giving such notice. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. B. [602] Legal Actions 1. (603] Institution of Legal Actions In addition to any other rights or remedies hereunder, the Agency or the Participant may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. Any legal actions initiated pursuant to this Agreement or otherwise with respect to this subject matter must be instituted in the Superior Court of the County of San Bernardino, State of California, or in an appropriate municipal court in that county. 2 . [604] Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 3 . [605] Acceptance of Service of Process In the event that any legal action is commenced by any party against another party, service of process on such party shall be made by personal service upon such party or in such other manner - 28 - as may be provided by law, and shall be valid whether made within L or without the State of California. C. [606] Rights and Remedies are Cumulative Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by any other party. D. [607] Inaction Not a Waiver of Default Any failures or delays by any party in asserting any of its right and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies, or deprive any party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. E. [608] Remedies 1. [609] Damages If either the Participant or the Agency defaults with regard to any of the provisions of this Agreement, the non- defaulting party shall serve written notice of such default upon the defaulting party. If the default is not cured or if a cure has not been commenced and is being diligently pursued to completion by the defaulting party within thirty (30) days after service of the notice of default, the defaulting party shall be liable to the - 29 - I � other for any damages caused by such default, and the non- C defaulting party shall have the right to seek specific performance and such other remedies as are available in law or equity. VII. [700] SPECIAL PROVISIONS A. [701] Submission of Documents to the Agency for Approval Whenever this Agreement requires the Participant to submit any document to the Agency for approval, which shall be deemed approved if not acted on by the Agency within the specified time, said document shall be accompanied by a letter stating that it is being submitted and will be deemed approved unless rejected by the Agency within the stated time. If there is not a time specified herein for such Agency action, the Participant may submit a letter requiring the Agency approval or rejection of documents within thirty (30) days after submission to the Agency or such documents shall be deemed approved. B. [702] Successors in Interest The terms, covenants, conditions and restrictions of this Agreement shall extend to and shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and assigns of the Participant. 30 - 1 C� 0 VIII. (800) ENTIRE AGREEMENT, WAIVERS This Agreement is executed in four (4) duplicate originals, each of which is deemed to be an original. This Agreement includes Attachments 1 through 9, which together with this Agreement constitute the entire understanding and agreement of the parties. No private entity shall be deemed to be a third party beneficiary with respect to any provisions of this Agreement. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements among the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Agreement must be in writing by the appropriate authorities of the Agency and the Participant, and all amendments hereto must be in writing by the appropriate authorities of the Agency and the Participant, except that the Executive Director of the Agency may agree to non- substantive changes hereto with concurrence by Agency Counsel. Each individual signing below represents and warrants that he has the authority to execute this Agreement on behalf of and bind the party he purports to represent. - 31 - IV IX. (900] TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY IL A. (901] Time for Acceptance This Agreement, when executed by the Participant and delivered to the Agency, must be authorized, executed and delivered by the Agency on or before thirty (30) days after signing and delivery of this Agreement by the Participant or this Agreement shall be void, except to the extent that the Participant shall consent in writing to a further extension of time for the authorization, execution and delivery of this Agreement. The date of this Agreement shall be the date when it shall have been signed by the Agency as evidenced by the date first above shown. I - 32 - �9 IN WITNESS WHEREOF, the Agency and the Participant have executed this Agreement on the day and date first above shown. "Agency" REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO APPROVED AS TO FORM AND By: LEGAL CONTENT: Kenneth J. Henderson Executive Director By: Special Agency Counsel "Participant" ALLAN STEWARD, INC. a California corporation By: By: Allan Steward Title: "Steward" ALLAN STEWARD, a single man Allan Steward SBEO\0001-58\Steward - 33 - W STATE OF CALIFORNIA ) COUNTY OF ) On before me, personally appeared Kenneth J. Henderson, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) I MW STATE OF CALIFORNIA ) COUNTY OF ) On before me, personally appeared Allan Steward, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal)