HomeMy WebLinkAboutR31- Economic Development Agency ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
FROM: Gary Van Osdel SUBJECT: 303 THIRD STREET-OWNER
Executive Director , PARTICIPATION AGREEMENT,
t LOAN AGREEMENT,HUD108
DATE: August 2,2000 1 ' ` `°' ' 'L FINANCING
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Synopsis of Previous Commission/Council/Committee Action(s):
On January 11,2000,the Mayor and Common Council Resolution 2000-7 authorizing application for Section 108 Loan
Guarantee funding in the amount of$1,840,000 from the US Department of Housing and Urban Development.
On June 19,2000,the Mayor and Common Council discussed real property negotiation discussions in closed session.
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Recommended Motion(s):
(Mayor and Common Council)
MOTION A: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO, CALIFORNIA APPROVING THE CONTRACT FOR LOAN GUARANTEE
ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT
ACT OF 1974,AS AMENDED,42 USC SECTION 5308(CDBG SECTION 108 CONTRACT NO.B-
00-MC-06-0539) FOR THE 303 THIRD STREET PROJECT, AND AUTHORIZING THE
APPLICATION OF UP TO $344,000.00 IN ECONOMIC DEVELOPMENT INITIATIVE GRANT
PROCEEDS BY THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO FOR
THE 303 THIRD STREET PROJECT
(Motions Continued To Next Page...)
Contact Person(s): Gary Van Osdel/John Hoeger Phone: 663-1044
Project Area(s) Central City(CC) Ward(s): One(1)
Supporting Data Attached: 0 Staff Report 0 Resolution(s) Z Agreement(s)/Contract(s) ❑ Map(s) ❑Letter/Memo
FUNDING REQUIREMENTS Amount: $ 2,184,000 Source: HUD 108 Loan and EDI Grant
Budget Authority: Requested
SIGNATURE:
GaryXan Osdel,Executive Dir for
E nomic Development Age y
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Commission/Council Notes:
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GVO:JBH:Iag:08-07-00 303 3rd St COMMISSION MEETING AGENDA
Meeting Date: 08/07/2000
Agenda Item Number:
Request for Commission/Council Action
303 West Third Street
July 31, 2000
Page Number-2-
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Recommended Motion(s) Continued:
(Community Development Commission)
MOTION B: RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
CITY OF SAN BERNARDINO APPROVING T CONTRACT FOR LOAN
GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND
URBAN DEVELOPMENT ACT OF 1974, AS AMENDED, 42 USC SECTION 5308
(CDBG SECTION 108 CONTRACT NO. B-900- C-06-0539) FOR THE 303
THIRD STREET PROJECT AND AGREEING TO ADMINISTER THE
APPLICATION OF UP TO $344,000.00 IN ECONOMIC DEVELOPMENT
INITIATIVE GRANT FUNDS TO 303, L.L.C., IN SUPPORT OF THE 303 THIRD
STREET PROJECT
MOTION C: RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
CITY OF SAN BERNARDINO APPROVING THE TERMS OF AN OWNER
PARTICIPATION AGREEMENT (303 THIRD STREET PROJECT) BY AND
BETWEEN 303, L.L.C., AND THE REDEVELOPMENT AGENCY OF THE CITY
OF SAN BERNARDINO AND APPROVING THE TERMS OF A 2000
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SECTION 108
PROJECT DEVELOPMENT LOAN AGREEMENT (303 THIRD STREET
PROJECT) BY AND BETWEEN THE AGENCY AND 303, L.L.C., AND
AUTHORIZING CERTAIN OTHER ACTIONS RELATING TO THE
DISBURSEMENT OF THE PROCEEDS OF U TO $344,000.00 IN EDI
GRANT/LOAN PROCEEDS AND UP TO $1,840,00 .000 IN SECTION 108 LOAN
PROCEEDS BY THE AGENCY TO 303, L.L.C. (30 THIRD STREET PROJECT)
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GVO:JBH:1ag:08-07-00 303 3rd St COMMISSION MEETING AGENDA
Meeting Date: 08/07/2000
Agenda Item Number: �31
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
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303 Third Street Project—Owner Participation Agreement,
Loan Agreement, HUD 108 Financing
BACKGROUND
The Mayor and Common Council have previously authorized the submission of the attached
application to HUD for $1,840,000 of HUD Section 108 guaranteed loan proceeds for use in the
redevelopment of the former State Office Building located at 303 West Third Street (the "303
Third Street Project"). Renovation and leasing the Fortieth Street Building will result in an
increase in tax increment of approximately $75,000 per year. Moreover, it will result in retaining
or creating approximately 350 jobs. In order to obtain the HUD Section 108 financing, the
Deverloper commits that these will include at least 65 new jobs of which at least 51% are for low
and moderate-income persons. Operation of the Building will produce utility tax income to the
city and its occupants will contribute to the economic vitality of the Central Business District.
The HUD Section 108 application also involves a transfer or reallocation of a 1994 Economic
Development Initiative award for the Wildwood Shopping Center (Fortieth Street) Project of
$344,000. This EDI Grant cannot be used at the Wildwood before its expiration in September
this year and accordingly, a request has been filed with HUD to transfer the EDI Grant for the
303 Third Street Project. Staff is advised that HUD will issue its approval of the Section 108
Loan and the transfer of the EDI Grant for the 303 Third Street Project in the first week of
August.
Meanwhile negotiations have proceeded with the principals of 303, L.L.C., (the "Developer")
and with the State of California for the purchase of the 303 Third Street building and a separate
auxiliary parking lot. The building must be cleared of asbestos containing materials before
obtaining a conventional commercial construction loan to complete the renovation of the
building and repay certain acquisition costs to the Agency. After renovation and occupancy of
the building, permanent mortgage funds will replace the conventional lender construction loan
and pay for all remaining development costs and fees.
The Developer presently estimates that the costs associated with the complete acquisition and
renovation of the 303 Third Street Building will approach $10 million. The HUD Section 108
and EDI financing is required to fund the costs of property acquisition and asbestos containing
material remediation work and certain seismic safety improvement work before the conventional
construction loan is in place. The City and the Redevelopment Agency of the City of San
Bernardino (the "Agency") will be parties to a CDBG Section 108 Loan Guarantee Contract with
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GVO:JBH:1ag:08-07-00 303 3rd St COMMISSION MEETING AGENDA
Meeting Date: 08/07/2000
Agenda Item Number: AR__
Economic Development Agency Staff Report
303 West Third Street
August 1, 2000
Page Number-2-
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the Secretary of the Department of Housing and Urban Development ("HUD") for $1,840,000.
In turn, the Agency as the "designated public agency borrower" under the agreement with HUD
and the City, will use the proceeds of the Section 108 loan obtained from HUD to make a loan to
the Developer of$1,840,000, plus the application of the proceeds of the EDI Grant/loan -- for a
total Agency loan in support of the 303 Third Street Project of$2,184,000.
The Developer will contribute cash equity to the project at time of acquisition of the 303 Third
Street building from the State of at least $291,000. The Developer will also be responsible for
obtaining additional conventional lender construction funding and for completing the special
economic development initiative project and leasing the restored building to commercial
business tenant users. The Developer will borrow as much as $8,500,000 in conventional
financing to accomplish this.
Part of the Agency's Section 108 Loan to the Developer ($830,000) and the EDI Grant/Loan
($344,000), will be disbursed to the Borrower for the purchase of the 303 Third Street Building
from the State and the completion of the purchase of the auxiliary parking lot parcel. The
remaining balance of the Agency's Section 108 Loan ($740,000) will be disbursed in
construction draws as the work of asbestos-containing materials remediation and seismic safety
work is completed. A portion of the remaining balance under the Agency Section 108 Loan to
the Developer (approximately $270,000) will be held as a funded interest reserve to pay interest
on the Agency's Section 108 Loan for the first 24 months of the loan term.
Several agreements are required to put this initial phase of funding in place (e.g., pre-
conventional construction lender funding). The principal documents are an Owner's Participation
Agreement ("OPA") and a Community Development Block Grant Program Loan Agreement
("Loan Agreement"). In addition, there will be a HUD Section 108 Loan Agreement among
HUD, the City and the Agency for the $1,840,000 Section 108 Loan. Other items include the
environment certifications, the Personal Guaranties of the Principals of the Developer, a Letter of
Credit in favor of the Agency and the Note and Deed of Trust and related Developer Loan
security documents.
CURRENT ISSUE
Public Hearing. HUD's Section 108 regulations and the City's CDBG Citizen Participation Plan
require two advertised public hearings. During the Common Council/Community Development
Commission meeting of January 11, 2000, the first such public hearing was conducted. The
public hearing scheduled for August 7, 2000 is the second such public hearing. A copy of the
notice of the second public hearing is attached. No written comments have been received by the
Agency as of the date of this Staff Report. This second hearing provides another opportunity for
public comments regarding this use of Section 108 funds and the EDI Grant/Loan funds in
support of the 303 Third Street Project.
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GVO:JBH:1ag:08-07-00 303 3rd St COMMISSION MEETING AGENDA
Meeting Date: 08/07/2000
Agenda Item Number: 93/—
Economic Development Agency Staff Report
303 West Third Street
August 1, 2000
Page Number-3-
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Environment Review. Environmental reviews for this project have been conducted under both
the National Environmental Protection Act ("NEPA") and the California Environmental Quality
Act ("CEQA"). A statutory worksheet is attached which concludes that the 303 Third Street
Project is categorically excluded from further Federal NEPA review. Similarly, it is the
recommendation of the Agency's environmental consultant that the Mayor and Common Council
and Commission conclude that the 303 Third Street Project is also exempt from any further
review under CEQA. The 303 Third Street Project is located in a redevelopment project area
and in a fully developed downtown urban neighborhood. The project will not result in the
construction of any new building area, and will be focused upon the reuse and environmental
restoration and seismic safety improvements of an existing six-story office building.
Owner Participation Agreement and Development Section 108 Loan Agreement. The
attached Section 108 Loan Agreement provides that the Developer will use HUD Section 108
loan proceeds of$1,840,000 and EDI funds of$344,000 for property acquisition of the building
and for the remediation of asbestos containing material and seismic safety work, subject to the
satisfaction of certain conditions.
The Section 108 Loan Agreement between the Agency and the Developer carries the following
terms:
Amount: $1,840,000;
Term: 20 years with annual principal payments begin in 2002;
Interest payable from the date of initial draw of funds by Developer: Developer shall pay
the Agency the same rate of interest as charged to the Agency by HUD and the
Section 108 Loan Agreement interest payable by the Developer will be payable
quarterly under the variable interest rate term and payable bi-annually after the
permanent rate of interest is set by HUD;
Use: restricted solely to paying 303 Third Street Project costs (referred to as the
"Borrower Improvements (Phase I)")based upon the approved project budget
including financing costs;
Subordination: The Agency's Section 108 Loan to the Developer shall be subordinable to
an approved commercial construction loan of no more than $8,500,000, and later to
an approved permanent loan of no more than $8,500,000, subject to the Agency's
receipt of an approving appraisal certifying a loan-to-value ratio of 80%;
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GVO:JBH:Iag:08-07-00 303 3rd St COMMISSION MEETING AGENDA
Meeting Date: 08/07/2000
Agenda Item Number: 83/
Economic Development Agency Staff Report
303 West Third Street
August 1, 2000
Page Number-4-
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Security: First Deed of Trust on building and parking lot. In addition, the Agency will
hold the personal guarantees of the principals and an irrevocable, unconditional
Letter of Credit for $500,000 until the building is 95% occupied by rent paying
tenants;
Special Provisions: This project requires payment of"prevailing wages" under the Davis
- Bacon Prevailing Wage Law as a portion of the Agency loan to the Developer will
be disbursed for specific construction items and a "new job" covenant is also
required.
The collateral obtained by the Agency from the Developer will be pledged by the Agency to
HUD as additional security to repay the HUD Section 108 Loan.
The EDI fund loan as provided under the OPA in the amount of$344,000 will bear the same rate
of interest as the HUD 108 loan above, but it will be repaid in full at the time the conventional
construction loan is recorded. In the event that the construction loan will not yield sufficient
funds to repay the EDI loan to the Agency in full, the remainder will be paid by the Developer at
the time of funding of the Permanent Loan. The OPA also provides for the new jobs generation
count of the Developer as relates to the tenants who shall occupy the completed building.
Further, the OPA provides for the Developer to pay a Participation Fee of $200,000 to the
Agency to be paid at the same time as the EDI loan is repaid (likewise is the case of the EDI
Loan repayment, if the available proceeds of the construction loan will not fully pay the
Participation Fee, then the remaining balance will be paid at time of recordation of the
Permanent Loan. This makes the Agency whole for an offsetting reduction in the Superblock
Caltrans agreement which was required by the State as a condition of sale for selling the State
Office Building to the Developer for $1,000,000. (This sales price was required to meet the
security requirements for the HUD Section 108 loan).
FISCAL IMPACT
These agreements require the Agency to fully disperse the HUD Section 108 and the HUD
Economic Development Initiative funds to the Developer. The funds bear interest at the rate the
Agency pays for the HUD 108 funds. The separate "Developer Participation Fee" in the amount
of$200,000 will be used to offset certain costs of the Agency payable as a credit to the State of
California under an agreement to reduce the payment to be received from Caltrans for the
Superblock land.
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GVO:JBH:Iag:08-07-00 303 3rd St COMMISSION MEETING AGENDA
Meeting Date: 08/07/2000
Agenda Item Number: -U-
Economic Development Agency Staff Report
303 West Third Street
August 1, 2000
Page Number-5-
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RECOMMENDATION
Staff recommends that the Mayor and Common Council and Community Development
Commission consider the public input received at the public hearing on August 7, 2000, and take
appropriate action including the adoption of the three (3) supporting resolutions described above.
Gary an Osdel
Executive Director
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GVO:JBH:1ag:08-07-00 303 3rd St COMMISSION MEETING AGENDA
Meeting Date: 08/07/2000
Agenda Item Number: —&31—
City of San Bernardino
ECONOMIC DEVELOPMENT AGENCY
Redevelopment•Community Development•Housing•Business:Recruitment,Retention,Revitalization•Main Street, Inc.
San Bernar ino
May 24, 2000
nn
MR. JOSEPH LISANTE
US Dept of Housing and Urban Development
Los Angeles Office, Region IX
611 West Sixth Street, Suite 800
Los Angeles, CA 90017
RE: SUBMISSION OF HUD 108 LOAN APPLICATION —303 WEST THIRD
Dear Mr. Lisante:
The City of San Bernardino is pleased to submit an application for a HUD Section
108 Guaranteed Loan on our 303 WEST THIRD rehabilitation project. You will find
attachments to the application that include the required certifications, our Citizen
Participation Program, and a financial review from Scott Rodde of The National
Development Council.
In accordance with our discussions, this application includes the moving of the
existing 40ti" Street Shopping Center EDI Grant(Grant Number: B-93-ED-06-0539) to
be used in this project instead. This use of funds is covered in the attached financial
review.
We appreciate you immediate attention in this matter and thank you for your
cooperation. If you have any questions or need additional information, please do not
hesitate to call John Hoeger, Project Manager, or myself at+1(909) 663-1044.
Sincer
� ARA '
N OSDEL ECUTIVE DIRECTOR
J'
cc: Bill Seedyke, Pa I Webster
201 North E Street, Suite 301 • San Bernardino, CA 92401-1507 • (909)663-1044 •FAX(909)888-9413
201 North E Street, Suite 301 •San Bernardino, California 92401-1507•(909)663-1044•FAX(909)888-9413
Application for Federal
Assistance 0613 Approval No. 0348-0043
2.Date Submitted(mm/dd/yyyy) Applicant Identifier
05/24/2000 B-99-MC-06-0539
1.Type of Submission 3.Date Received by State(mm/dd/yyyy) State Application Identifier
Application Pre-application
Construction F] Construction 4.Date Received by Federal Agency(mm/ddtyyyy) Federal Identifier
Non-Construction El Non-Construction
5.Applicant Information
Legal Name Organizational Unit
CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY
Address (give city,county,State,and zip code) Name and telephone number of the person to be contacted on matters involving this
application(give area code)
201 NORTH E STREET SUITE 301
SAN BERNARDINO CA 92401-1507 GARY VAN OSDEL,EXECUTIVE DIRECTOR
+1 (909)663-1044
6.Employer Identification Number(EIN)(xx-yyyyyyy) 7.Type of Applicant(enter appropriate letter In box) I Cl
DE—F_
5 — 6000772 A. State J. Private University
B. County K. Indian Tribe
8.Type of Application: C. Municipal L. Individual
0 New n Continuation D Revision D. Township M.Profit Organization
E. Interstate N Nonprofit
If Revision,enter appropriate letter(s)in box(es): F. Inter-mun[cipal O Public Housing Agency
G. Special District P. Other(Specify)
A. Increase Award B.Decrease Award C.Increase Duration H. Independent School Dist.
D.Decrease Duration Other(specify) 1. State Controlled Institution of Higher Learning
9.Name of Federal Agency
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
10.Catalog of Federal Domestic Assistance Number(xx-yyy) 11.Descriptive Title of Applicant's Project
14 218
Tale' HUD SECTION 108 GUARANTEED LOAN
COMMUNITY DEVELOPMENT BLOCK GRANT (303 WEST THIRD REHABILITATION)
12 Areas Affected by Project(cities,counties,States,etc.)
CITY OF SAN BERNARDINO
13.Proposed Project 14.Congressional Districts of
Start Date(mm/dd/yyyy) Ending Date(mm/dd/yyyy) a.Applicant b.Project 4,J
08/0112000 08/01/2001 THIRTY SiXTN q2-,.0 Tki49#-44X3+t q2. --i
15.Estimated Funding 16. Is Application Subject to Review by State Executive
a. Federal $ 2,184,000 .00 Order 12372 Process?
a. Yes This pre-applicationlapplication was made available to the
b. Applicant $ 291,000 .0o State Executive Order 12372 Process for review on:
c. State $ 00 Date (mm/dd/yyyy)---_-------—-----
_____
d. Local $ .00 b. No ® Program Is not covered by E.O.12372
e. Other $ 00 or Program has not been selected by State for review.
f. Program Income $ 00 17. Is the Applicant Delinquent on Any Federal Debt?
❑ Yes If"Yes," attach an explanation ® No
g. Total $ 2,475,000 .00
18. To the best of my knowledge and belief, all data in this application/pre-application are true and correct, the document has been duly
authorized by the governing body of the applicant and the applicant will comply with the attached assurances if the assistance is awarded.
a.Typed Name of Authorized Representative b.Titre c.Telephone Number(Include Area Code)
JUDITH VALLES MAYOR 909 384-0133
d.Signature of a se f , e.Date Signed(mm/dd/yyyy)
Avl,312 P?O j C- 0504/2000
Prev ous ition UsableyV form SF-424(7/97)
Authorized for Local Woduction Prescribed by OMB Circular A-102
c
APPLICATION FOR HUD SECTION 108 LOAN GUARANTEE
Applicant:
City of San Bernardino
Economic Development Agency
201 North E Street, Third Floor
San Bernardino CA 92401-1507
Attn: John Hoeger,Project Manager
Tel: 909 663-1044 Fax: 909 888-9413
Project Name and Location:
The 303 West Third Street Office Building (303 WEST THIRD) project is located on the
southwest corner of Third Street and Arrowhead Avenue in the City of San Bernardino,
California. The project also includes an auxiliary parking lot area located 600 feet
southeasterly of the building on Second Street east of Arrowhead Avenue.
Project Description:
303 WEST THIRD involve the acquisition, remediation, renovation and reuse of an
empty, 77,165 square foot, six-story office building now owned by the State of California
together with the acquisition and improvement of an auxiliary parking area to provide
approximately 314 parking spaces. Stage 1 of the project involves acquisition and
remediation. The remediation includes seismic strengthening, asbestos and lead removal
or containment, and removal of underground hydrocarbon contamination. Stage 2 of the
project will be renovation work that includes new mechanical, new interiors and new
finishes throughout the building plus repair and replacement of parking lot
improvements.
Meeting the Community Development Objective:
The project, when fully leased, should support approximately 65 employees, 51% or
more of which will be members of low and moderate income households.
Eligible Activity:
As referenced in section 570.703(I)(1),this activity qualifies under section 570.203(b)as
a Special Economic Development Activity based upon it resulting public benefits. This
provision of assistance to a for-profit developer is based upon the City's determination
that the assistance is both necessary and appropriate to create jobs for low and moderate-
income residents in the City.
Loan Request:
Section 108 financing is requested in the amount of$1,840,000 for a term of 20 years.
Other sources of financing for the project include an EDI Grant($344,000) and the
developer($291,000). As described in Attachment C,the Section 108 financing will be
divided into two sub-recipient loans: Sub-recipient Loan#1 for $1,340,000 and Sub-
recipient Loan#2 for 500,000. Both sub-recipient loans will be needed to complete the
Stage 1 work. After acquisition and remediation are complete,the Stage 2 work will be
funded with a private construction loan($8,500,000).
EDI Grant:
This project requires HUD approval to shift an existing $344,000 EDI Grant for San
Bernardino's 40'' Street Shopping Center project. The 4& Street project will be unable to
meet the required deadline for drawing funds. Shifting the grant to this project will allow
the funds to be used for property acquisition. The source and application of funds for this
project is shown in Attachment C.
Loan Security (Collateral):
The security for the Section 108 Financing will be first and second trust deeds on the
building and parking lot properties plus personal guarantees of the principals and an A
rated, irrevocable letter of credit for $500,000. The letter of credit will be maintained
until after construction is complete, a certificate of occupancy issued, and 95% of the net
rentable space is leased to tenants who have commenced payment of monthly rent. The
Section 108 Financing may be subordinated to a construction loan of no more than
$8,500,000. Under section 570.705(b)(2)the City will pledge all grants made or for
which it may become eligible under the CDBG Entitlement Program.
Program Income:
This project is not expected to produce program income other than that which results
from payment of principal and interest on the loans. The loan interest rate will be the rate
for like maturity Treasuries plus '/zpercentage point.
Additional Information:
Additional information may be obtained by contacting the applicant at the address and
telephone number given above.
ATTACHMENT A:
CERTIFICATIONS
c:wsaMSC+vz97-io.msc
303 WEST THIRD—CERTIFICATIONS
I hereby certify to the following items, which are attached hereto and made a part hereof
1. Certification Regarding Drug-Free Workplace Requirements
2. Statement Regarding Lobbying
3. Certification of Legal Authority to Pledge Grants
4. Entitlement Public Entity Certifications
5. Certification of Efforts to Obtain Other Financing
6. Certification Regarding Debarment, Suspension and Other Responsibility
Matters
JUDITH VALLES, Mayor
City of San Bernardino
M, Pro Tem.
May 24, 2000
Date
SECTION 108 LOAN GUARANTEE
CERTIFICATION REGARDING DRUG-FREE WORKPLACE REQUIREMENTS
The certiffcation set out below is a material representation upon which reliance is placed
by the U.S. Department of Housing and Urban Development in awarding the loan
guarantee assistance. If it is later determined that the public entity knowingly rendered
a false certification, or otherwise violates the requirements of the Drug-Free Workplace
Act, the U.S. Department of Housing and Urban Development, in addition to any other
remedies available to the Federal government, may take action authorized under the
Drug-free Workplace Act.
CERTIFICATION
A The public entity certifies that it will provide a drug-free workplace by:
(a) Publishing a statement notifying employees that the unlawful
manufacture, distribution, dispensing, possession or use of a controlled
substance is prohibited in the public entity's workplace and specifying the
actions that will be taken against employees for violation of such
prohibition;
(b) Establishing a drug-free awareness program to inform employees about-
(1) The dangers of abuse in the workplace;
(2) The public entity's policy of maintaining a drug-free workplace;
(3) Any available drug counseling, rehabilitation, and employee
assistance programs; and
(4) The penalties that may be imposed upon employees for drug
abuse violations occurring in the workplace;
(c) Making it a requirement that each employee in the statement required by
paragraph (a) that, as a condition of employment under the loan
guarantee, the employee will -
(1) Abide by the terms of the statement; and
(2) Notify the employer of any criminal drug statute conviction for a
violation occurring the workplace no later than five (5) days after
such conviction;
A: Certifications-Pa¢e 2 of 9
PLACE OF PERFORMANCE
FOR CERTIFICATION REGARDING DRUG-FREE WORKPLACE
Name of Public Entity: City of San Bernardino
Program Name: Section 108 —303 WEST THIRD
Project Number: None
Date: May 25, 2000
The public entity shall insert in the space provided below the sites(s) expected to
be used for the performance of work under the assistance covered by the
certification:
Place of Performance (include street address, city, county, state, zip code for
each site):
Office Building
303 West Third Street
San Bernardino CA 92401
A: Certifications—Page 3 of 9
C
SECTION 108 LOAN GUARANTEE
STATEMENT REGARDING LOBBYING
THE AFORESIGNED STATES, TO THE BEST OF HIS OR HER KNOWLEDGE AND
BELIEF, THAT:
If any funds have been paid or will be paid to any person for influencing or attempting
to influence an officer or employee of any agency, a Member of Congress, an officer or
employee of Congress, or any employee of a Member of Congress in connection with
this commitment providing for the United States to ensure or guarantee a loan, the
aforesigned shall complete and submit Standard Form-LLL, "Disclosure Form to Report
Lobbying", in accordance with its instructions.
Submission of this statement is a prerequisite for making or entering into this
transaction imposed by Section 1352, Title 31, U.S. Code. Any person who fails to file
the required statement shall be subject to a civil penalty of not less than $10,000 and
not more than $100,000 for each such failure.
A- rPrtifinntinnc-Paon d of 0
SECTION 108 LOAN GUARANTEE
CERTIFICATION OF LEGAL AUTHORITY TO PLEDGE GRANTS
The public entity hereby certifies and assures with respect to its application for a loan
guarantee pursuant to Section 108 of the Housing and Community Development Act of
1974, as amended, that it possesses the legal authority to make the pledge of grants
required under 24 CFR Subsection 570.705(b)(2).
A: Certifications-Page 5 of 9
SECTION 108 LOAN GUARANTEE
ENTITLEMENT PUBLIC ENTITY CERTIFICATIONS
In accordance with Section 108 of the Housing and Community Development Act of
1974, as amended, (the "Act') and with 24 CFR Subsection 570.740(b) the public entity
certifies that:
(i) It possesses the legal authority to submit the application for assistance under 24
CFR Part 570, Subpart M ("Subpart M") and to use the guaranteed loan funds in
accordance with the requirements of Subpart M.
Ci Its governing body has duly adopted passed as an official act a resolution,
motion or similar action authorizing the person identified as the official
representative of the public entity to submit the application and amendments
thereto and all understandings and assurances contained therein, and directing
and authorizing the person identified as the official representative of the public
entity to act in connection with the application to provide such additional
information as may be required.
(iii) Before submission of its application to HUD, the public entity has:
(A) Furnished citizens with information required by Subsection
570.704(a)(2)(i);
(B) Held at least one public hearing to obtain the views of citizens on
community development and housing needs; and
(C) Prepared its application in accordance with Subsection 570.704(a)(1)(iv)
and made the application available to the public.
(iv) It is following a detailed citizen participation plan which meets the requirements
described in Subsection 570.704(a)(2).
(v) The public entity will affirmatively further fair housing, and the guaranteed loan
funds will be administered in compliance with:
(A) Title VI of the Civil Rights Act of 1964 (Pub. L. 88-352, 42 U.S.C. 2000d et
seq.); and
(B) The Fair Housing Act (42 U.S.C. 3601-20)
(vi) In the aggregate, at least 70 percent of all CDBG funds, as defined at
Subsection 570.3(e), to be expended during the one, two, or three consecutive
years specified by the public entity for its CDBG program will be for activities
which benefit low and moderate income persons, as described in criteria at
Subsection 570.208(a).
c_uA.sawwaMcMW
A• rertifir-atinnc-PaoP A of 9
(vii) it will comply with the requirements governing displacement, relocation, real
property acquisition, and the replacement of low and moderate income housing
described in Subsection 570.606.
(viii) It will comply with the requirements of Subsection 570.200(c)(2) with regard to
use of special assessments to recover the capital costs of activities assisted with
guaranteed loan funds.
(ix) It will comply with the other provisions of the Act and with other applicable laws.
A: Certifications-PaQe 7 of 9
SECTION 108 LOAN GUARANTEE
CERTIFICATION OF EFFORTS TO OBTAIN OTHER FINANCING
The City of San Bernardino hereby assures and certifies with respect to its application
for a loan guarantee pursuant to Section 108 of the Housing and Community
Development Act of 1974, as amended, that it has made efforts to obtain financing for
the activities described herein without the use of such guarantee, it will maintain
documentation of such efforts for the term of the loan guarantee, and it cannot
complete such financing consistent with time execution of the project without such
guarantee.
C.. 0.
A• [ Prtifiratinnc_PnaP R nfa
CERTIFICATION REGARDING DEBARMENT, SUSPENSION,
AND OTHER RESPONSIBILITY MATTERS --
PRIMARY COVERED TRANSACTIONS
(1) The prospective primary participant certifies to the best of its knowledge and
belief, that it and its principals:
(A) Are not presently debarred, suspended, proposed for debarment,
declared ineligible, or voluntarily excluded from covered transactions by
any Federal department or agency;
(B) Have not within a three-year period preceding this proposal been
convicted of or had a civil judgement rendered against them for
commission of fraud or a criminal offense in connection with obtaining,
attempting to obtain, or performing a public (Federal, State or local)
transaction or contract under a public transaction; violation of Federal or
State antitrust statutes or commission of embezzlement, theft, forgery,
bribery, falsification or destruction of records, making false statements, or
receiving stolen property;
(C) Are not presently indicated for or otherwise criminally or civilly charged by
a governmental entity (Federal, State or local) with commission of any of
the offenses enumerated in paragraph (1)(b) of this certification; and
(D) Have not within a three-year period preceding this application/proposal
had one or more public transactions (Federal, State or local) terminated
for cause or default.-
(2) Where the prospective primary participant is unable to certify to any of the
statements in this certification, such prospective participant shall attach an
explanation to this proposal.
c:n,�vasc�na.rr-,u�
A: Certifications-Page 9 of 9
n
ATTACHMENT B:
CITIZEN PARTICIPATION PLAN
c:u u*mscW2-9aomw
CITY OF SAN BERNARDINO
CITIZEN PARTICIPATION PLAN
I. INTRODUCTION AND POLICY STATEMENT
It is the policy of the City of San Bernardino to provide for community involvement in the
planning, development, implementation, monitoring and evaluation of programs funded under
the Housing and Community Development Acts of 1974 and 1977, as amended, and the
Cranston-Gonzales Act of 1990.
The Citizen Participation Plan ("Plan") sets forth the procedures and guidelines to be
implemented by the City to provide for the continuing participation by the citizens of San
Bernardino. While the City desires and recognizes the need for citizen involvement and has
appointed the Community Development Citizen Advisory Committee (CDCAC) to provide citizen
input, it is the City Council which has final determination and responsibility for all aspects of the
City's housing, community development and homeless programs. This Plan, originally adopted
in 1975, may be amended from time to time by the Common Council and shall remain in effect
until superseded by a new Plan or until the City no longer participates in the Community
Development Block Grant Program, Home Investment Partnership Program and Emergency
Shelter Grant Program, or other programs that pertain to the consolidated planning process as
required by 24 CFR parts 91, et. al.
!l. PURPOSE
A summary of the primary objectives of the Plan are provided below: (1) Ensure that citizens are
informed of the amount of funds available under the Plan, the range of activities that may be
undertaken, as well as the various program requirements; (2) Provide for public hearings on
community development and housing needs; (3) Provide citizens with adequate opportunities to
participate in the development of the Consolidated Plan with any required changes, revisions, or
amendments to the plan; (4) Provide technical assistance to citizens in developing specific
proposals for funding consideration; (5) Provide an on-going process for citizens likely to be
effected by program activities, to articulate needs, express preferences about proposed
activities, assist in selecting priorities, and participate in the overall development of the
Consolidated Plan; (6) Provide a process through which citizens may participate in the
monitoring and evaluation of community development and housing activities; and (7)
Provide a process whereby citizens may comment with respect to any aspect of the City's
housing and community development performance and be assured that oral and written
comments will be considered and responded to in accordance with federal regulations.
Ill. STANDARDS OF PARTICIPATION
All aspects of the City's citizen participation efforts shall be conducted in an open manner with
freedom of access to all interested parties. The City encourages the involvement of all income
groups, particularly those living in blighted areas, and in areas where CDBG funds are proposed
to be used including non-English speaking persons, as well as persons with mobility, visual or
hearing impairments, members of minority groups, the elderly, the disabled, the business
community, civic groups and the community at large.
1
While this Plan describes a specific citizen's organization as the mechanism to receive citizen
input (CDCAC), it is not intended to exclude any individual citizen input. All the citizens of San
Bernardino are encouraged to participate in every public meeting and to contact the
Redevelopment Agency, Housing and Community Development Division with any questions
concerning the process and the programs pertaining to the Plan including the Community
Development Block Grant Program, Home Investment Partnership Program, Emergency Shelter
Grant Program, or any other applicable future programs.
IV. COMMUNITY DEVELOPMENT CITIZEN ADVISORY COMMITTEE (CDCACJ
STRUCTURE
As a means to reach out to the community and obtain citizen input, the Mayor and Common
Council have appointed the Community Development Citizen Advisory Committee (CDCAC).
The following rules shall apply to the CDCAC:
Size and Appointment: The CDCAC shall consist of 13 members. Each member of the
Common Council shall appoint one (1) member for a total of seven (7) members. The Mayor
shall appoint the other six (6) members.
Term of Office: Each member shall serve at the pleasure of his/her appointee. The term of
office shall automatically expire with the succession of their appointees service as Common
Council member or Mayor.
The CDCAC shall have a chairperson and vice chairperson. Both shall be elected from and by
the members of the CDCAC each year.
Quorum: Member quorum is formed when majority of all the Committee members are present;
not just a majority of those positions that have been filled. [Government Code §54952(b)]
Meetings and Attendance by CDCAC Members: The CDCAC will meet as often as required for
reviewing proposals and establishing needs and priorities, and as needed during the program
year. All meetings will be conducted in the Economic Development Agency Board Room (or
other designated location as deemed necessary), located on the 3`d floor of 201 North "E"
Street, San Bernardino. All meetings are open to the public. Any member failing to attend three
(3) or more scheduled meetings per program year without being excused by the Committee
(each member shall advise Staff or CDCAC of intended absences) shall automatically cease to
be a member of the Committee and the Mayor or Common Council shall fill such vacancv
immediately.
A. Roll and responsibilities of the Community Development Citizen Advisory
Committee (CDCACJ
The CDCAC is an advisory committee to the Mayor and Common Council. The responsible
legislative body in matters relating to the programs/projects associated with the Plan. The
CDCAC responsibilities shall include the following, but not limited to:
1. Scheduling public hearings on housing and community development needs and program
performance;
2. Assisting in the identification of community needs, priorities and strategies;
2
3. Receiving and reviewing citizens' comments on housing and community development
program progress and performance;
4. Receiving and reviewing housing and community development project proposals for
specific funding to include Community Development Block Grant and other federally
funded projects.
5. Preparing specific funding and program recommendations to the Mayor and Common
Council on the use of grant funds.
6. Assisting and evaluating ongoing housing and community development program
activities.
7. Reviewing and preparing recommendations to the Mayor and Common Council on all
proposed program amendments, as necessary.
8. Receiving and answering citizen complaints regarding housing and community
development activities.
In addition to the responsibilities listed above the CDCAC will act as liaison between the
community and the City. Therefore, the CDCAC will also be responsible for meeting with citizen
groups which represent residents impacted by community development and housing activities,
providing technical assistance to citizen groups when requested, and keeping the general
community informed on housing and community development matters of importance.
V. TECHNICAL ASSISTANCE TO THE COMMUNITY DEVELOPMENT CITIZEN
ADVISORY COMMITTEE
To help facilitate citizen input, the City's Redevelopment Agency, Housing and Community
Development Division will provide technical assistance through its staff to the Community
Development Citizen Advisory Committee as well as to groups representing low and moderate
income residents who may require such assistance in developing proposals for federal funding
as required by federal regulations. Technical assistance will be provided by telephone,
meetings, and workshops throughout the year as needed.
Vl. PUBLIC INFORMATION
In order for citizens to become informed and involved in the Plan process, the City will make
available all relevant information including the following: (1) Material concerning the amounts of
funds available for proposed community development and housing activities and the range of
activities that may be taken. (2) Applicable regulations and guidelines governing all aspects of
the funding source. (3) Prior applications, final statements and amendments, grant agreements,
grantee performance reports, citizens participation plan and any other reports required by the
U.S. Department of Housing and Urban Development (HUD). (4) Documents regarding other
important program requirements such as contracting procedures, environmental policies, fair
housing and other equal opportunity requirements and relocation provisions. (5) Mailings and
promotional materials, minutes of meetings and hearings and any other documents the City
believes is necessary to the consolidated planning process.
3
The summary of the proposed Plan will be published in one or more newspapers of general
circulation in compliance with 24 CFR 570.302 and 91.105 (b)(4), providing a 30-day oral and
written comment period. Under unforeseeable circumstances, a reasonable public notice and
comment period is defined, as two weeks (15-day). The summary will provide the contents and
the purpose of the Plan and a list of locations where copies of the entire proposed Plan will be
available to the public. A summary of any oral or written comments regarding the proposed
Plan will be attached to the final Plan.
VII. SUBSTANTIAL AMENDMENTS TO THE PLAN AS DEFINED BY HUD
According to HUD, the City is required to develop criteria outlining the manner in which it will
amend its Plan should changes occur throughout the program year. An amendment to the Plan
is defined as: (1) There is change in the City's funding allocation and priority or method of
distributing funds within a program year as identified in the approved Plan. (2) There is a
change in activity/project or program description to the extent that the activity/project or program
will be perceived as a new activity/project or program not previously described in the approved
Plan. (3) There is a change in the scope, purpose, location or beneficiaries of an activity/project
or program described in the approved Plan. (4) Using funds from any activity/project or program
covered in the approved Plan (including program income) not previously described in the
approved Plan.
VIII. AMENDMENTS TO THE PLAN AS DEFINED BY CITY
In light of the fact that HUD requires jurisdictions, to set forth a written policy describing the
process it will follow when changes or amendments occur to its Plan, below is the Plan
amendment policy to be implemented by the City should any of the following occur during the
life of the Consolidated Plan and the Annual Action Plan for each program year: (1)
Unforeseeable circumstances occurs during project/program implementation and inadequate
funds are budgeted and the cost of addressing such does not exceed $25,000. (2) There is
minor programmatic change in activity/project description however, the change is not significant
for the project, program to be perceived as a new activity/project that is previously described in
the approved Plan. (3) There is a minor change in scope project/program however, the purpose,
location or beneficiaries of the activity/project or program have not change. (4) Reallocating
funds from activities/projects/programs covered in the approved Plan (including program
income) where a project/program has been completed under budget or discontinued and
remaining funds are not more than $25,000. Should any of the above issues occur, the
amendments to the Plan will be done by administratively. Should changes to the Plan occur
beyond the circumstances above, then the Plan will be amended through the formal funded by
the Public Hearing Process before the Mayor and Common Council.
IX URGENT NEED DEFINITION
Urgent need activities under the City's Consolidated Plan is defined as an activity that meets the
City's development need and it is certified that such activity is designed to alleviate existing
conditions which:
• Pose a serious and immediate threat to the health or welfare of the community,
• Are of recent origin or recently became urgent,
4
■ The City is unable to finance the activity on its own, and
• Other resources of funding are not available to carry out the activity.
A condition will generally be considered to be of recent origin if it is developed or became critical
within 18 months preceding the City's certification.
X. OUTREACH
The City will utilize the CDCAC and other forums of public participation to reach out to the
Community. Letters of invitation to attend the public hearing to receive input on housing and
non-housing community development needs will be sent to community service organizations,
business organizations, Chamber of Commerce, religious organizations and any other
applicable groups and affected parties showing an interest in the Plan. The City will also
coordinate its planning activities with the Housing Authority as well as any other applicable inter-
governmental jurisdictions impacted by the Plan.
XI. COMPLAINTS
The City will make every reasonable effort to provide written responses to complaints within 15
working days in compliance with 24 CFR 91.105(i). A copy of each written citizen comment or
complaint regarding the City's housing and community development performance under the
Plan, the City's assessment of the comment or complaint and a description of any action taken
or written response made will be kept on file as a public record.
XII. PUBLIC MEETINGS AND PUBLIC HEARINGS
The City will conduct public meetings and public hearings during various phases of the Plan
process each program year. All public meetings and public hearings shall be open to the public.
Meetings will be held at times and at locations in the City that are convenient and acceptable to
potential and actual beneficiaries. Special accommodations shall be made for persons with
disabilities upon advance notice and as necessary. In cases where a significant number of non-
English speaking residents are reasonably expected to participate, an interpreter will be
provided by the City upon advance notice.
The CDCAC will meet, confer and hold public meetings as needed, to review issues related to
the Plan and plan performances, etc. Moreover, the Common Council shall conduct a total of
two (2) public hearings during the program year. A first public hearing will be held to obtain
views on the proposed Plan prior to its review and adoption by the Common Council. A second
public hearing will be held to review Plan performance (CAPER).
Prior to each public hearing, a legal notice shall be published in a newspaper of general
circulation within a reasonable time frame. The legal notice shall contain the following
information: (1) Date, time and place of hearing. (2) Subject to be considered (3) Basic
information about the Plan program
S
- s
n
ATTACHMENT C:
FINANCIAL REVIEW
cAuumscm-7-lomte
05/23/00 15:06 FAX 7072552754 S.Rodde 16001
E N )NA
EVE )PMEN
COUN I
MEMORANDUM
TO: Mr_John Hoeger
FAX: 909-888-9413) DATE. 5/23/00
Development Director
Economic Development Agency
City of San Bernardino
201 No. E Street, Suite 301
San Bernardino, CA 92401
FROM: Scott Rodde
RE: Appropriate Review for HUD-108 financing for
Former State Office Building, 303 West Third Street,San Bernardino, CA
303, LLC has approached the City of San Bernardino for a two-stage program in connection with the
redevelopment of the former State Office Building at 303 West Third Street.The purpose of the first stage of
financing is the acquisition of the property including a related property (for parking), payment of asbestos
remediation and interest reserves totaling $2,675,000. The proposed security for the pre-development
financing is a letter of credit for $500,000 and a first deed of trust on both the parking site and the office
building site.These properties have recently been appraised by Lidgard and Associates at a Fair MarketValue
of$1,675,000.The sources and uses planned for stage one are outlined as follows:
Uses Sources
Office Building City-108 $500,000
Acquisition $1,000,000 E00 344,000
Owner Cash 156,000
Parking Lot
Acquisition 330,000 City-108 330,000
1500 Third Street,suite c
Napa,rA 94,559
TF.f.(707)257.1020
FAX(707)3;7.1500
Ncv York Ofcc
51&U 42nd Surat
05/23/00 15:06 FAX 7072552754 S.Rodde Q 002
Demolition and
Asbestos Removal 875,000 City-108 740,000
Owner Cash 135,000
HUD-108 Interest
Reserve 2_ 70,.0. 00 City-108 270,000
$2,475,000 $2,475,000
'Requires HUD approval of shift of ED[from 401'Street.
The collateral security analysis for the first stage of financing is as follows:
Fair Market Value of Real Estate Security' $1,675,000
Loan To Value Ratio 80%
Net Security Value of Real Estate Plus 1,340,000
Net Security Value of Irrevocable, Direct Pay,
A Rated Letter of Credit 500,000
Total Lendable Security $1,840,000
'MAI appraisal from Lidgard and Associates bated 9/16/99.
In order to implement this security structure, the City will break its 108 borrowing into two loans to 303 LLC.
One will be for real estate acquisition($830,000)and asbestos remediation($510,000)totaling$1,340,000.
DEVELOPMENT
NCIL
05/23/00 15:06 FAX 7072552754 S.Rodde 11003
The second loan for $500,000 will be for the interest reserve ($270,000) and the balance of the asbestos
remediation costs ($230,000)not covered by owner cash ($135,000) (which must be disbursed as the first
funding for asbestos work) and the first City loan.
Upon completion of the asbestos and soils remediation, the office building will be available for leasing and it
is anticipated that leasing activity will create a substantial value to the property(in excess of$13,000,000).
Upon completion of leasing,a construction loan is anticipated through Draper&Cramer Realty Advisor AFL-
CIO Building Investment Trust who has worked with the developer previously.The conditions to the City's
subordination to the combination construction takeout loan are 1) satisfactory review of the MAI appraisal
supporting the construction and takeout loans,2)satisfactory review of construction loan documentation and
takeout loan commitment, and 3)satisfactory review of all executed leases associated with the building_
Reasonableness of Costs
We have reviewed pro forma cost analyses which are attached in Exhibit A. Preliminary hard cost analysis
has been prepared by Inland Construction Management. Land acquisition costs are supported by executed
purchase agreements and soft costs are all reasonable given the nature of the rehabilitation project. Please
refer to the Project Manual which is attached.
Need For Financing
We have reviewed personal financial statements for the three partners in 303, LLC.The partners are Kevin
Brunk,Wilfred C. Lemann and Martin A. Matich.Although the developers have substantial cash resources,
given the size and scope of this project,those cash resources must remain in reserve to support unforeseen
DF1�I�TIONAL
DEV�jPM
ENT
COUN
05/23/00 15:06 FAX 7072552754 S.Rodde la004
contingencies which may arise during the course of construction. Without the assistance of the City in
financing the initial pre-development costs, it is highly likely that the LLC will not have the credit capacity to
support a pre-development loan in the range of$1,840,000.
Financial Feasibilit
Please see the feasibility study in Exhibit B. The study assumes a successful leasing program. Upon
completion of leasing,financial feasibility of the second stage of the project and the related public benefit will
be clearly documented. However, at this time, without leasing in place, we cannot determine financial
feasibility for stage two. The market based appraisal report by Lidgard & Associates indicates that upon
completion,the subject property will be worth$5.2.The renovation expenses, exclusive of acquisition costs,
are estimated at approximately$8.3 million. Therefore, feasibility for stage two of the project is contingent
upon pre-leasing completion. Nevertheless, the City HUD-108 loan as structured above is adequately
protected during the first stage of work as outlined above.
Public Benefit
This building,when fully leased,should support a minimum of 150 employees,51%of which will be members
of low and moderate income households.
F. NATIONAL
DEVELOPMENT
COUNCIT,
05/23/00 15:06 FAX 7072552754 S.Rodde 0005
Updated 04/04/00
PROJECT COST ANALYSIS
303 W. 3rd Street, San Bemardino
Hard costs TOTAL
Base Building 105,000 Sq ft @$37.36 sq ft 3,906,000.00
Site/Parking 135,907 Sq ft @$2.21 sq ft 300,000.00
Tenant Improvement 67,710 Sq ft @$20.00 sq ft. 1,354,000.00
Basement 7,000 Sq ft @ $20.00 sq.ft 140,000.00
Total Hard Costs 5,700,000,00
Acquisition Price
Land/Building 1,200,000
Land/Parking 330,000
Total Land 1,530,000.00
Soft Costs
Architectural 110,000
Architectural Reimb. 10,000
Engineering 50,000
Misc_ Fees and Reimb. 10,000
Survey&topo 25,650
Soils testing &compact. 4,000
Appraisal fees 10,000
Interim Taxes during contt_ 32,000
Builders Risk Ins. 40,000
Administration O/H 188,000
Legal 100,000
Accounting &Tax Consult. 10,000
Bank Inspection 25,000
Leasing Commissions 300,000
Construction Mgmt 136,910
Predevelopment Loan Fee s1.ma,000. 1 pts. 18,400
Predevelopment Loan Int stm mu.g 6%for 9 mo.x so%draw-si,aa mu.g e%for 1 151,800
Constr. Interest/12 mths $8,180,000 @ 8.5%x 80%for 13 mo. 450,840
Contt./Perm, Loan Fees 8,100,000 a 1.5 prs 122,400
Title/ins. Closing Costs 25,000
Permits 150,000
Total Soft Cost 1,970,000
Developers Fee/Contingency 800,000
Total Project Cost 10,000,000
Exhibit "A"
FAX 7077557754 S.Rodde MOOG
investment Asnsurnpdon3 $10,000,000.00
,ffoe of,properly I January 2000
)atG ofAcquisition 10 Years
joldtng Period 3%per Year
i0ation Rate 8,5% Capitalization orAI0I on Sale DStO
'GIG Prig 5%
e Method
�efflng CazU 5%
,elgng Coc&Expensed
Inveator's Assumptions 106 per Year
mrssent Value Discount Rate 39.6%
Tax Rate-First Year 39.6%
-rax Rate-Followinsq Years 20%
0aptlat Gain Rate 25% Losses CarTied Forward
Cost Recovery Recapture Rate
Depreciation Asaumptions S8,000,000.00
Mpreafa4le Amount ag Years
DeprG(.-fable Life straight Line
Imprim;latfon Method at AcqUisiWon
Depracfa 'on Start Date
I Firne Loon Aasumpt;Ons $6,462,000.00
Loon Am unt 6..5%Annually
Loan Interest Rate . 20 Yasr��
ariginal Loan Period at Acquisition
Loan ofiZfnation Date Amortizing,Monthly Payments
Loon Typ V b/
First Loan Tenant Improvigment Lo;;n Aasumptions $1,354,000.00
Lo 'kmgpunt 8.5%Annualty
Lt (efust Rate 20 yearu
On�,..,of Loan Period at Acquisition
Loan Ofilinst;,nn Data
Loon Typ Amortizina,monthly Paymonts
Section 108 Loan Assumptions
"V9 $2,184,000,00
Low Amqunt 6.75%Annu3fly
Loon IMe7st Rate 0/ 20 Years
Originsl4osr; Period I 41� at AcquWtion
Loon OrlOnation Date AmQrb�zing, MonthlyPaymcnts
Lo,on Typ
Income Revenue Aa�sumptions $1,655,400-00
Annual Rpvcnue(89,000 SqFt ED$1,551SqFt1Mbnth) at Acquisition
Revenue iSfarr Date Untff Projected Sale
Revenuo,Pcrfod Stepwi�;e at 3%Annually
Revenue GeowTh Method
I I Bzsemenf Revenue Ansumpt;ons S120,750.00
Annual RIRvenue(6,050 SqFt p$1.251SqFf1Mbnth)
Revenuv!Start Date at Acqu/sWon
Ravenue�Perfod Until Projected Sale
Revenue Growth Method Stelowise at 3%Annually
Annual I ense(96,000 SqFt $0.751SqFVYear) Operating Expense Assumptions $648,000.00
8Ve,r=921 at Acquisition
Ptart Dke Until Projected Sale
Expe�?790 Period
2panss Growth Method Zkepwise at 1.5%Annually
capit.Q1 Reserve 1-15,Fxpense Assumptions f30,000.00
Annusl ElVense
Expense ptert Date I January 2000
E. Be Period 5 Yeary
E so I Growth MeMod No Growth is PfoJected
Exhibit"B" 303,wn30
i
05/7 /oQ_�5.OS FAX 707255z759 S.Rodde Gh007
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303 WEST THIRD
PRINCIPAL AMORTIZATION SCHEDULE
Principal Principal
Year Payment Balance
2001 $ - $ 1,840,000
2002 $ - $ 1,840,000
2003 $ 100,000 $ 1,740,000
2004 $ 100,000 $ 1,640,000
2005 $ 100,000 $ 1,540,000
2006 $ 100,000 $ 1,440,000
2007 $ 100,000 $ 1,340,000
2008 $ 100,000 $ 1,240,000
2009 $ 100,000 $ 1,140,000
2010 $ 100,000 $ 1,040,000
2011 $ 100,000 $ 940,000
2012 $ 100,000 $ 840,000
2013 $ 100,000 $ 740,000
2014 $ 100,000 $ 640,000
2015 $ 100,000 $ 540,000
2016 $ 100,000 $ 440,000
2017 $ 100,000 $ 340,000
2018 $ 100,000 $ 240,000
2019 $ 100,000 $ 140,000
2020 $ 140,000 $ -
J. Kevin Brunk
Professional Experience
1988 - Present JKB Construction Management & Development, Inc.; JKB Brokerage, Inc.
Founder, Chariman of the Board and President, Los Angeles, Califomia
1992 - Present: Managing General Partner, 5401 Associates, L.P.; completed
major development project, a $6 million build-to-suit Employment
Development Department at 5401Crenshaw in Los Angeles (completed
project on budget, ahead of schedule); project included extensive toxic
remediation.
1991 - 1992: Formation, presentation and implementation of a comprehen-
sive workout strategy for a non-performing asset on behalf of a large financial
institution. Services included reversal of pending condemnation proceed-
ings; reinstatement of building permits; acquisition of adjacent lease - hold
interest; toxic soil remediation; financial analysis and lease valuation;
property management; and complete general contracting services for the
$7 million property.
1990- 1991: Managing General Partner, B& K Development, L.P., General
Contractor in the development and construction of an 80,000 square foot
storage facility and 6,000 square foot McDonald's restaurant. Construction
included shoring of the Pasadena Freeway for a zero lot line building
foundation. The $6 million construction project was completed inll
months; seven months ahead of schedule and $175,000 under budget.
1989 - 1990: Acquired, entitled, permitted and managed the disposition of
two land parcels in Venice, California. Project required Municipal and
Coastal Commission Approvals. Provided comprehensive development
and construction services for a $4 million home in Beverly Hills.
1983 - 1988 Tri-J Diversified
Vice President and Principal, Ventura, California
Responsible for all phases of construction management and supervision.
Projects included: all framing and finish carpentry for a $25 million Lincoln
Properties, 504 unit apartment development, general contracting services for
a 56,000 square foot industrial building and the construction of a dialysis
center for St. John's Hospital in Ventura. Sold interest in 1988 to found JKB
Construction Management & Development, Inc.
1980 - 1983 New Beginnings Construction
Project Manager, Los Angeles, California
Managed the remodeling and rehabilitation of over 20 commercial and
residential properties.
Licenses:
Class A General Engineering
Class B General Building Contractor
Department of Real Estate Certified Brokerage Corporation
Background:
Founder, Chairman of the Board of the Abbot Kinney Boulevard Association.
Recipient of the County of Los Angeles Finance Award of Honor and Award
of Special Recognition, and the City of Los Angeles Award of Appreciation;
served as a member of the Mayor's Model Neighborhood Development
Committee.
STATE OF CALIFORNIA—STATE AND CONSUMER SERVICES AGENCY PETE WILSON, Govemor
DEPARTMENT OF GENERAL SERVICES
O"e of Real Estate and Design ServicesI
4 1 Street, Suite 5000
Sacramento, CA 95814
(916) 322-4067 FAX (916) 445-2503
June 20, 1996
Mr. J. Kevin Brunk
5401 Associates, L.P.
2901 Ocean Park Boulevard
Santa Monica, CA., 90405
Dear Mr. Brunk:
On behalf of the project team members, Mr. Ian Ekholm, Associate Real Estate Officer, and
Mr. Ulf J. Carlsson, Associate Space Planner, and the Office of Real Estate and Design
Services, I would like to thank you and express my appreciation on the timely completion of the
build-to-suit for the Employment Development Department located at 5401 Crenshaw
Boulevard in the City of Los Angeles
Under your leadership and direction and as the developer of the project, you showed
exceptional expertise in not only securing the entitlements, the acquisition, the financing and
the remediation of soil, but also in managing the project through construction and tenant
relocation.
Through the formation of a minority community based development team, you skillfully
coordinated Federal, State and City agencies in securing the support from the local
neighborhood and it's community groups.
Although the AFL-CIO Building Investment Trust had scheduled a nine month completion
schedule for the 100% Union built project, you were able to complete the project in five months
and on budget.
Your professionalism reflects great credit on yourself and your company and we look forward
to working with you in the future.
Sincerely,
TIMOTHY W. HEFLER
Chief
TWH:UC:brunk
CITY OF LOS ANGELES
PARKER C. ANDERSON CALIFORNIA COMMUNITY DEVELOPMENT
GENERAL MANAGER DEPARTMENT
215 W. 6T+ STREET
LOS ANGELES.CA 900 14
•� (213)4851617
FAX (213) 2370531
DED
RICHARD J. RIORDAN
MAYOR
Mr. Kevin Brunk J �4 t) A
5401 Associates, L.P.
2901 Ocean Park Boulevard
Santa Monica, CA 90405
SUBJECT: HUD SECTION 108 GUARANTEE LOAN PROGRAM/5401
ASSOCIATES, L.P. PROJECT
Congratulations on a job well done in making the State of California Employment Development
office building at 54th and Crenshaw a reality. Your assistance was a prime example of the
public/private partnership effort needed to help further economic development in the City of Los
Angeles.
Our Community Development Department knew that this project demanded an experienced
developer to form a minority community-based team capable of dealing with the complex issues
of soil remediation, land acquisition, construction, etc. And it was a plus to witness you dealing
with these matters and complete the project within budget guidelines and four months ahead of
schedule. We are also gratified because this is the first project for the City's new $30,000,000
Section 108 Loan Program. Ultimately the public is the benefactor given the site clean up, use of
union labor for construction. and the valuable services provided by the Employment
Development Department staff for the residents in the area.
We commend you for an excellent job and earnestly look forward to future projects of this
tude.
PA R C. ANDERSON
General Manager
MML:RB:MS:et
c:540/commendation
AN EQUAL EMPLOYMENT OPPORTUNITY—AFFIRMATIVE ACTION EMPLOYER a.ga.eRRmaffdmft RC Sa...a
CURRICULUM VITAE
OF
WILFRID C. LEMANN
FULLERTON, LEMANN, SCHAEFER& DOMINICK Telephone: (909) 889-3691
215 North"D" Street, First Floor Fax: (909) 888-5119
San Bernardino, CA 92401-1712 E-mail: flsdr�igte.net
Wilfrid C. (Bill) Lemann is a senior partner in the San Bernardino law firm of Fullerton, Lemann, Schaefer &
Dominick. His legal concentration is in the areas of Business Law, Non-Profit Corporations, Estate Planning
and Probate.
CALIFORNIA BAR AND COURT ADMITTANCE
Admitted to the California Bar in 1978; U.S. District Court, Central District of California, 1981; U.S. Supreme
Court, Court of Appeals, Ninth Circuit and U.S. District Court, Southern District of California in 1982; U.S.
Tax Court in 1985; U.S. Claims Court in 1988.
EDUCATION
B.A., 1973, University of Santa Clara, Santa Clara, California
J.D., 1977, Loyola University,New Orleans, Louisiana
FINANCING & DEVEOPMENT
Lena Road Partners — Managing partner and developer of commercial office building leased to County of San
Bernardino. Currently negotiating expansion of leasehold interest with county to double size of building to
meet needs of the Department of Preschool Services.
CIVIC AND COMMUNITY AFFILIATIONS
California State University San Bernardino, Partnership 2000; Pfau Library Building Addition; Chair, 1993 to
present
City of San Bernardino; Co-Chairman, Seccombe Lake Regional "Parks for Kids" Program 1987 to 1988
Inland Action, Inc.; Member 1992 to present; Treasurer, 1994 to 1995
Los Padrinos of Southern California; Past Parliamentarian/Director, 1979 to 1982
National Orange Show Foundation; Founder; Director since inception
National Orange Show; Director, 1981 to present; President, 1988 to 1989
St Bernardine Medical Center Professional Building; President, 1988 to 1990
St. Bernardine Plaza Corporation HUD Section 202 Senior Housing Project; Director and Developer Counsel
Sturges Center for the Fine Arts (Sturges Foundation); Incorporator and Redevelopment Director and Counsel,
1985 to present; Co-Chair 1994 to 1995
'an Bernardino City Library Foundation; Founder and Member
,;alifornia State University San Bernardino—Adjunct Professor
St. Bernardine Church(Turn of Century building) Seismic Retrofit Manager
County Pioneer& Historical Society(Victorian Building) Relocation and Remodel
MARTIN A. MATICH
Curriculum Vitae
BIRTH
September 5, 9927
Loma Linda, California
FAMILY
Evelyn W. Matich, Wife
John M. Matich, Son
Stephen A. Matich, Son
Robert M. Matich, Son
Patrick A. Matich, Son
EDUCATION
St. Bernardne High School- San Bernardino, California
B.S.C.E. -University of Notre Dame
BUSINESS
Engineering, Construction Materials and Transportation
Chairman of the Board- Matich Corporation
President - Beckham Bros.
COMMUNITY AND CIVIC ACTIVITIES
Member - The Commission of Californias Advisory Council
Member - Advisory Council on Economic Development-State of California
City of Colton-Council and Mayor(195&9950]
Member-California State Water Commission(1983-19961
President - National Orange Show(1976 and 9985]
Board of Governors - National Orange Show-San Bernardino California
Chairman - National Orange Show Foundation
Chairman - St. Bernardine Hospital Foundation(9972 to 9975]
Finance Council - Diocese of San Bernardino
Council President - Boy Scouts ofAmeryca-Inland Empire Council
San Bernardino and Riverside Counties(9982]
Engineering Council - University of Notre Dame(9970 to 99991
Martin A. Matich
Curriculum Vitae
Page 2
PROFESSIONAL AND FRATERNAL ACTIVITIES
L ife Member-Board of Directors - Associated General Contractors of America,
Washington, DC
Member - California Contractors State License Board[9963 to 9967]
Life Member - American Society of Civil Engineers
Knight of Equestrian Omer of the Holy Sepulchre
4" Degree-Knights of Columbus
SP.O.E Lodge B36-San Bernardino, California
Native Sons of the Golden West, Parlor#I 90-San Bernardino, California
OTHER ACTIVITIES
President - Associated General Contractors of America,
Southern Califirnia Chapter(9962]
Advisory Board[Inland Division] - Bank of America-Riverside, California
President and Chairman of the Board - Inland Action/Business and Professional Association,
San Bernardino, California [9969 to 9973]
Member - Arrowhead Country Club-San Bernardino, California
Member- PGA West Country Club- La Guinta, California
AWARDS
Engineering Honor Award - University of Notre Dame(9974]
Citizen of the Year Award - San Bernardino Board of Realtors(1,97 1]
Citizen of the Year Award - Boy Scouts of America- San Bernardino and Riverside Counties(198 1]
Spirit of Leadership Award - Ernst 6 Young(999 9]
Leadership Award - Valley Group(99991
City of San Bernardino
ECONOMIC DEVELOPMENT AGENCY
Redevelopment•Community Development•Housing•Business:Recruitment,Retention,Revitalization•Main Street,Inc.
San Bernar lino
SM
September 19, 2000
(BY: FEDERAL EXPRESS)
U.S. Department of Housing
and Urban Development
ATTN: Paul D. Webster,
Director Financial Services Division
451 Seventh Street, S.W.
Room 7180
Washington, D.C. 20410
Re: City of San Bernardino, California
EDI Grant No. B-93-ED-06-0359
Section 108 Loan Contract No. B-94-MC-0539-A
(303 Third Street Project)
Dear Mr. Webster:
Transmitted to your attention under the cover of this letter are the following documents
relating to the transaction referenced in the caption which appears above:
(i) EDI Grant Agreement No. B-93-ED-06-0539 [Four (4) original copies--each
executed by the Mayor and City Clerk];
(ii) Contract for Section 108 Loan Guarantee Assistance No. B-94-MC-06-0539-A [two
(2) original copies--each executed by the Mayor and the City Clerk];
(iii) Section 108 Promissory Note No. B-94-MC-06-0539-A [original and undated
Promissory Note executed by the Mayor and City Clerk];
(iv) Legal opinion, dated September 19, 2000, of special legal counsel to the City of San
Bernardino;
201 North E Street.Suite 301•San Bernardino,California 92401-1507•(909)663-1044•Fax(909)888-9413
i
Paul D. Webster
September 19, 2000
Page 2
(v) Certified copies of each of the following resolutions:
1. Mayor and Common Council Resolution No. 2000-249, dated August 7,
2000;
2. Community Development Commission Resolution No. 2000-27, dated
August 7, 2000;
3. Community Development Commission Resolution No. 2000-28, dated
August 7, 2000;
4. Mayor and Common Council Resolution No. 2000-293,dated September 18,
2000; and
5. Community Development Commission Resolution No. 2000-33, dated
September 18, 2000.
It is our expectation to draw the full amount of$344,000.00 under the EDI Grant Amount
in support of the 303 Third Street Project at the earliest feasible time following your receipt of the
enclosed documents.
If you have any questions regarding this matter please contract either John B.Hoeger,Project
Manager at (909) 663-1044 or me at your earlie convenience.
Ve truly y s,
i
�G an Osdel
E ecutive Directo
(Enclosures)
cc: Rachel G. Clark, City Clerk
Timothy J. Sabo
Grant No. B-93-ED-06-0539
EDI GRANT AGREEMENT
U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
This Agreement is made and entered into by and between THE
SECRETARY OF HOUSING AND URBAN DEVELOPMENT, acting by and through
the Assistant Secretary for Community Planning and Development,
( "HUD" ) , and THE CITY OF SAN BERNARDINO, CALIFORNIA (the
"Recipient" ) .
1 . Background; Purpose. This Agreement is authorized by
section 108 (q) of the Housing and Community Development Act of
1974, as amended by section 232 (a) of the Multifamily Housing
Property Disposition Reform Act of 1994, codified at 42 U. S .C.
5308 (q) (collectively, "the Act" ) . Pursuant to the Act, on
August 16, 1994 , at 59 FR 42066, HUD published a Notice of
Funding Availability and Program Guidelines for the Economic
Development Initiative (the "NOFA" ) , which set forth the terms
and conditions under which units of general local government
could apply for and receive grants under section 108 (q) of the
Act ( "EDI Grants" ) and related section 108 loan guarantees from
HUD for Economic Development Projects ( "EDI Projects" ) , as
defined in the NOFA. Pursuant to the NOFA, the Recipient has
applied for, and HUD has approved, an EDI Grant for the
Recipient . The purpose of this Agreement is to set forth the
terms and conditions under which HUD will provide EDI Grant funds
to the Recipient in connection with the Approved EDI Projects
described in the Recipient ' s Approved Application, as further
defined herein. The terms and conditions of the related Section
108 Guarantee (as defined in par. 3 hereof) are, or will be, set
forth in the Recipient ' s separate section 108 loan guarantee
application, Funding Approval, and Contract for Loan Guarantee
Assistance .
2 . Approved Grant Amount , Projects and Uses of Funds .
a. By execution of this Agreement on behalf of the Secretary
in the space provided below, HUD agrees, subject to the terms of
this Agreement, to provide EDI Grant funds in the amount of
$344 , 000 . 00 ( "EDI Grant" ) .
b. This grant is approved for the following Approved EDI
Projects described in the Approved Application ( "Approved
Project") : 303 West Third Project .
2
c. The grant funds shall be used in connection with the
Approved Project for the following specifically Approved Uses
( "Approved Uses" ) :
1 . acquisition expenses pursuant to 24 CFR Section
570 . 703 (a) ;
2 . clearance and related expenses pursuant to 24 CFR
Section 570 . 703 (e) .
3 . Relationship to Section 108 Loan Guarantee Application.
This approved EDI Grant is based upon section 108 loan
guarantees, or additional guarantees, for the Approved Projects
in an amount not less than $1, 840 , 000 . 00 (the "Section 108
Guarantee" ) .
The full application (s) , or full amendatory application (s) , for
the Section 108 Guarantee in the above amount, have been approved
by HUD (HUD-7082 commitment (s) executed) on or after August 16,
1994 , or are being approved concurrently with execution on behalf
of HUD of this Grant Agreement .
EDI Grant funds may be disbursed by the Recipient for Approved
Uses in a ratio not to exceed $1 . 00 or EDI Grant funds to $5 . 35
of Section 108 loan proceeds disbursed for approved activities .
4 . Regulations ; Approved Application. This Agreement will
be governed and controlled by the following in effect as of the
date of notification to the Recipient of award of this grant : the
Act, the NOFA, and HUD regulations codified at 24 CFR Part 570 or
incorporated therein (provisions for use of CDBG funds, to the
extent applicable) (hereafter collectively referred to as the
"Regulations" ) . The Recipient ' s application submissions,
including the certifications and assurances and any documentation
required to meet any grant award conditions, and including any
amendments made in accordance with this Agreement, are hereby
incorporated in this Agreement as finally approved by HUD (herein
referred to as the "Approved Application") . Unless the context
otherwise requires, a reference to "this Agreement" herein shall
be deemed to include the Act, the Regulations, and the Approved
Application.
5 . Performance Agreement of Recipient . By execution of
this Agreement on its behalf in the space provided below, the
Recipient agrees to carry out the Approved Project (s) on a timely
basis and otherwise in compliance with this Agreement (including
the Act, the NOFA, the Regulations, and the Approved Application,
except as otherwise specifically provided in this Agreement) .
The Recipient agrees to assure, and to accept responsibility for,
such compliance by any other entities to which it makes grant
funds available for, or which it otherwise allows to participate
in, the Approved Project (s) covered by this Agreement .
3
6 . Release, Deposit , and Timing of Expenditure of Grant
Funds and Program Income . .
a. The Recipient agrees to comply with environmental review
procedures under 24 CFR § 570 . 200 (a) (4) and 24 CFR Part 58 in
order to obtain releases of grant funds under this Agreement .
b. Notwithstanding any other provision of the Regulations or
this Agreement, the Recipient may not withdraw grant funds from
the U.S . Treasury on account of the EDI Grant under this
Agreement until after execution on behalf of HUD of the Guarantee
and Contract for Loan Guarantee Assistance for the applicable
Approved Project described in paragraph 2 of this Agreement .
C . This EDI Grant must be entirely withdrawn and expended
for Approved Uses for the applicable Approved Project (s) on or
before September 30 , 2000 .
d. All program income from this EDI Grant is deemed to be
program income of the Approved Project (s) , which are jointly
financed by the Section 108 Guarantee . The Recipient agrees that
all such program income constitutes security for the repayment of
the Section 108 Guarantee, and shall be initially deposited in,
the Loan Repayment Account established by the Recipient, or its
designated public agency, under paragraph 6 of the Contract (s)
for Loan Guarantee Assistance for the Section 108 Guarantee, and
shall be disbursed for the purposes and within the time period
specified in said paragraph 6 of such Contract . Upon full and
complete repayment of the Section 108 Guarantee, all such program
income shall be used in accordance with 24 CFR 570 . 504 .
7 . Pre-Agreement Costs . Notwithstanding any other
provision of the Regulations, the EDI Grant funds provided
hereunder may be used to pay for costs incurred on or after the
date of HUD execution of the Funding Approval committing funds
for the applicable Approved Project under the Section 108
Guarantee, provided such costs otherwise comply with this
Agreement . However, use of the EDI Grant funds to actually pay
for such costs is subject to paragraph 6 of this Agreement .
8 . Amendment ; Record-Keeping.
a. This Agreement or the Approved Application may be amended
only with the prior written approval of HUD. To request approval
of an amendment, the Recipient shall attach the proposed
revisions to the applicable pages of this Agreement or the
Approved Application to a cover letter addressed as required
below (see par. 11) for notices to HUD and signed by the
Recipient ' s official representative for this grant . For any
amendment other than an increase in the amount of the approved
EDI Grant (par. 2 .a. ) , HUD may approve or disapprove the proposed
amendment by letter from the Director of the CPD Division (or
higher level official) in the applicable HUD office . In
considering proposed amendments to this Agreement or the Approved
Application, HUD shall review, among other things, whether the
amendment would have affected the ranking of the application in
4
the year it was approved sufficiently to have resulted in the
application not ranking high enough for funding, and whether the
amendment is otherwise consistent with the Act, the Regulations,
and the NOFA. Any increase in the amount of the approved EDI
Grant represents a new grant obligation by HUD and must be
documented by a formal amendment to this Agreement, or a new EDI
Grant Agreement, executed on behalf of the parties by officials
with the authority to execute the original Agreement .
b. The Recipient shall at all times maintain an up-to-date
copy of its Approved Application, including all amendments
approved in writing by HUD, and all drawdowns, deposits, and
expenditures of grant funds and program income under this
Agreement, in its files and available for audit or inspection by
duly authorized representatives of HUD or the Comptroller General
of the United States .
9 . Default ; Remedies . A default under this Agreement shall
.consist of any use of grant funds other than as authorized by
this Agreement, any other noncompliance with this Agreement
deemed material by HUD, or any misrepresentation or omission in
the application submissions which, if known to HUD, would have
resulted in this grant not being provided. If HUD determines
that the Recipient is in default, HUD will give the Recipient
written notice of this determination and the corrective or
remedial actions proposed by HUD to cure the default or mitigate
its effects, to the extent possible, and to prevent a
continuation or recurrence of the default (the "initial notice of
default" ) . Further description of the processes of audit,
performance monitoring, and the corrective and remedial actions
available to HUD which apply to grants under the Act, including
this EDI Grant, is provided in 24 CFR 570, particularly
Subpart 0. No delay or omission by HUD in exercising any right
or remedy under this Agreement shall impair HUD ' s ability to
exercise such right or remedy or constitute a waiver of, or
acquiescence in, any Recipient default .
10 . Close-out . Except as may be otherwise specifically
provided, closeout of this grant shall be subject to 24 CFR
570 . 509, or such close-out instructions as may hereafter be
issued by HUD specifically for EDI Grants .
11 . Notices . HUD notifications to the Recipient under this
Agreement may be addressed to the Recipient ' s address as stated
in the Approved Application, unless the Recipient otherwise
notifies HUD in writing. Recipient notifications to HUD shall be
to the Director of Community Planning and Development in the HUD
Office having responsibility for CDBG programs of the Recipient,
unless the Recipient is otherwise notified in writing by HUD.
The Recipient ' s rights under this Agreement may not be assigned
without the prior written approval of HUD. This Agreement
constitutes the entire Agreement between the Recipient and HUD,
and it may not be amended except in writing and executed by
authorized officials of both HUD and the Recipient, as provided
in paragraph 8 .
s '
S
12 . Binding Agreement . This Agreement is binding with
respect to HUD in accordance with its terms upon execution by HUD
in the space provided below, subject to execution on behalf of
the Recipient .
13 . Special Condition (s) .
a. In the event that all of the Section 108 funds are not
drawn down in connection with the Approved Project by September
30, 2001, the full amount of the EDI Grant ($344 , 000) shall
become immediately due and payable by Recipient to HUD.
[The remainder of this page intentionally left blank]
6
This Agreement is hereby executed on behalf of the parties
as follows :
SECRETARY OF HOUSING AND URBAN DEVELOPMENT,
BY:
(Signature of Authorized Official) ,
Jeff Ruster
Deputy Assistant Secretary
for Economic Development
(Date)
RECIPIENT,
THE CITY OF SAN BERNARDINO, CALIFORNIA ,
(Legal Name LRecipient)
BY:
(Signature A t orized Official)
Judith V. es, M yor
Title)
(Date)
956000772
[Employer Identification Number (EIN)
of Recipient]
ATTEST:
61 ,
Rachel'-Clark
City Clerk
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER
SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT
OF 1974 , AS AMENDED, 42 U.S.C. §5308
Date of Contract
This Contract for Loan Guarantee Assistance ("Contract") is
entered into between the City of San Bernardino, California, as
Borrower (the "Borrower") , and the Secretary of Housing and Urban
Development ("Secretary" ) , as guarantor for the Guarantee made
pursuant to section 108 ( "Section 108") of title I of the Housing
and Community Development Act of 1974, as amended (the "Act") and
24 CFR Part 570, Subpart M, of the promissory note executed
contemporaneously herewith and numbered B-94-MC-06-0539-A, in
the Maximum Commitment Amount of $1, 840, 000, and any amended note
or note issued in substitution for such note and having the same
note number (the "Note" ) . The funds paid or credited to the
account of the Borrower pursuant to the Note are referred to
herein as the "Guaranteed Loan Funds . " The Note (including the
Fiscal Agency Agreement and the Trust Agreement as defined in
Section I .A. of the Note and incorporated therein) is hereby
incorporated into the Contract . Terms used in the Contract with
initial capital letters and not otherwise defined in the text
hereof shall have the respective meanings given thereto in the
Note . The Fiscal Agency Agreement and the Trust Agreement are
sometimes collectively referred to herein as the "Fiscal
Agency/Trust Agreements, " and the Fiscal Agent and the Trustee
respectively are sometimes collectively referred to as the
"Fiscal Agent/Trustee . "
PART I
A. The Note: Advances and Records . The Note provides that
Advances and Conversion Date Advances shall be made
thereunder upon the written request of the Borrower and the
approval of the Secretary, pursuant to this Contract and the
Fiscal Agency Agreement . The Commitment Schedule attached to
the Note represents the principal repayment schedule for the
Maximum Commitment Amount of the Note . At all times, the
total amount of all Advances and Conversion Date Advances
under the Note for all Principal Due Dates shall not exceed
the Maximum Commitment Amount of the Note . Prior to the
Conversion Date (as defined in the Note, Section I .A. ) , the
total amount of Advances made by the Holder for each
Principal Due Date under the Note shall not exceed the
applicable Commitment Amount for such Principal Due Date set
forth in the Commitment Schedule of the Note . Prior to the
Conversion Date, the Borrower agrees that the Fiscal Agent
pursuant to the Fiscal Agency Agreement shall record the date
and amount of each payment and Advance under the Note and
2
shall maintain the books and records of all Advances and
Conversion Date Advances for each Principal Due Date,
interest rates on Advances, payments, and Principal Amounts
outstanding for each Principal Due Date. On and after the
Conversion Date, the Borrower agrees that the Trustee
pursuant to the Trust Agreement will maintain the books and
records of all payments on the Note and all Principal Amounts
and interest rates on such Principal Amounts (each as to be
set forth on Schedule P&I to the Note) . No advances of any
kind may be made on the Note after its Conversion Date .
B. Borrower' s Requests for Advances . All requests for Advances
or Conversion Date Advances by the Borrower under the Note
shall : be in writing; specify the amount of the Advance
requested; identify the Note by Borrower, number and Maximum
Commitment Amount; be addressed to the Secretary at the
address for notices specified in paragraph 12 (f) of this
Contract; be signed by an authorized official of the
Borrower; and otherwise be in the form prescribed by HUD.
Advances and Conversion Date Advances shall be requested and
will only be approved and made in increments of not less than
$1, 000 for any Principal Due Date . A request for an initial
Advance under a Note, or a request for a Conversion Date
Advance, shall be received by the Secretary at least ten
Business Days prior to the Borrower' s proposed Funding Date
or Conversion Date, as applicable . All other requests for
Advances shall be received by the Secretary not less than
five Business Days prior to the proposed Funding Date . The
Borrower may not deliver a Note or a request for an Advance
or Conversion Date Advance to the Secretary more than two
calendar months prior to the Borrower' s proposed Funding
Date . At least two Business Days prior to the proposed
Funding Date or Conversion Date if the Borrower' s request was
timely received, or the next available Funding Date for which
the request was timely received, the Secretary shall, except
as otherwise provided in paragraph 11 (c) or 12 hereof,
deliver a corresponding Authorization Order or Advance Order
(as applicable) to the Fiscal Agent in accordance with
Section 2 . 03 or 2 . 04 of the Fiscal Agency Agreement for the
applicable Funding Date or Conversion Date . If the Borrower
requests an Advance or Conversion Date Advance of less than
the outstanding Maximum Commitment Amount under the Note, the
Borrower may also specify in its written request the amount
of the Advance or Conversion Date Advance to be allocated to
each Commitment Amount or Principal Amount per Principal Due
Date under the Note . If the Borrower does not specify how
the Advance or Conversion Date Advance should be allocated
among Commitment Amounts/Principal Due Dates, the Borrower
hereby authorizes the Secretary to direct the Fiscal Agent to
allocate the Advance to the respective Commitment Amounts or
Principal Amounts in order of the earliest Principal Due
Date (s) .
3
C. Conversion; Public Offering. On the Conversion Date (if
any) , trust certificates backed by the Note (and similar
notes issued by other Section 108 borrowers) will be
purchased for a purchase price of the full principal amount
thereof by underwriters selected by the Secretary (the
"Underwriters") pursuant to an Underwriting Agreement between
the Underwriters and the Secretary, at a closing on such
Conversion Date as determined by the Secretary and the
Underwriters . The Borrower agrees that the interest rate at
which the trust certificate of a specified maturity is sold
to the Underwriters shall govern the interest rate inserted
on the Conversion Date in Schedule P&I of the Note for the
Principal Amount of corresponding maturity.
D. Consents. By execution of this Contract, the Borrower
ratifies and consents to the Secretary' s selection of the
Underwriters and authorizes the Secretary to negotiate with
the Underwriters the terms of the Underwriting Agreement and
of the public offering of interests in the trust certificates
to investors (including the applicable interest rates) . In
addition, by execution hereof the Borrower ratifies and
consents to the Secretary' s selection of the Fiscal
Agent/Trustee and agrees to the respective terms of the
Fiscal Agency/Trust Agreements . If Advances have been made
in the Maximum Commitment Amount of the Note not less than
ten Business Days prior to the proposed Conversion Date, or
if the Borrower requests a Conversion Date Advance, the
Borrower authorizes the Secretary to deliver Schedule P&I to
the Note completed in accordance herewith to the Fiscal
Agent/Trustee on the Conversion Date in accordance with the
Fiscal Agency/Trust Agreements, concurrent with delivery of
the Secretary' s Guarantee of the trust certificates at the
closing on the Conversion Date, and thereafter the Note shall
be enforceable in accordance with its terms including
Schedule P&I . In addition, the Secretary reserves the right
to notify the Borrower not less than one calendar month in
advance of a specified Conversion Date that the Note will be
sold to the Underwriters on such date, if the Secretary in
his sole discretion determines that market conditions or
program needs require the participation in the proposed
public offering of all or substantially all Borrowers with
Ioutstanding Advances .
4
PART II
1 . Receipt, Deposit and Use of Guaranteed Loan Funds.
(a) Except for funds deducted on the Conversion Date
pursuant to paragraph 4 (b) and fees and charges deducted by
the Fiscal Agent/Trustee pursuant to paragraph 4 (a) , the
Guaranteed Loan Funds shall be electronically transferred in
accordance with the Borrower' s instructions for deposit in a
separate, identifiable custodial account (the "Guaranteed
Loan Funds Account") with a financial institution whose
deposits or accounts are Federally insured. The Guaranteed
Loan Funds Account shall be established and designated as
prescribed in the attached form document entitled "Letter
Agreement for Section 108 Loan Guarantee Program Custodial
Account" (Attachment 1) and shall be continuously maintained
for the Guaranteed Loan Funds . Such Letter Agreement must be
executed when the Guaranteed Loan Funds Account is
established. (A fully executed copy of such Letter Agreement
shall be submitted to the Secretary within thirty days of its
execution. )
The Borrower shall make withdrawals from said account only
for payment of the costs of approved Section 108 activities,
for transfer to the Loan Repayment Account or for the
temporary investment of funds pursuant to this paragraph
1 (a) . Such temporary investment of funds into the Guaranteed
Loan Funds Investment Account shall be required within three
Business Days after the balance of deposited funds exceeds
the amount of the Federal deposit insurance on the Guaranteed
Loan Funds Account . At that time, any balance of funds in
the Guaranteed Loan Funds Account exceeding such insurance
coverage shall be fully (100%) and continuously invested in
Government Obligations, as defined in paragraph 10 hereof,
held in the Guaranteed Loan Funds Investment Account .
All temporary investments, whether or not required as above,
shall be limited to Government Obligations having maturities
that are consistent with the cash requirements of the
approved activities . In no event shall the investments
mature on or after October 1, 2001, or have maturities which
exceed one year. All such investments shall be held in trust
for the benefit of the Secretary by the above financial
institution in an account (the "Guaranteed Loan Funds
Investment Account" ) established and designated as prescribed
in the attached form document entitled "Letter Agreement for
Section 108 Loan Guarantee Program Custodial Investment
Account" (Attachment 2) , which account shall be maintained
for all Government Obligations purchased with funds from the
Guaranteed Loan Funds Account . The Guaranteed Loan Funds
Investment Account need only be established if and when the
Borrower is required to invest, or otherwise invests, the
5
Guaranteed Loan Funds in Government Obligations . Such Letter
Agreement must be executed when the Guaranteed Loan Funds
Investment Account is established. (A fully executed copy of
such Letter Agreement shall be submitted to the Secretary
within thirty days of its execution. ) All proceeds and
income derived from such investments shall be returned to the
Guaranteed Loan Funds Account.
All funds in the Guaranteed Loan Funds Account or the
Guaranteed Loan Funds Investment Account must be withdrawn
and disbursed by the Borrower for approved activities by
October 1, 2001 . Any funds remaining in either Account after
this date shall be immediately transferred to the Loan
Repayment Account established pursuant to paragraph 6 of this
Contract .
(b) The Borrower shall by the fifteenth day of each month
provide the Secretary with a written statement showing the
balance of funds in the Guaranteed Loan Funds Account and the
withdrawals from such account during the preceding calendar
month, and a statement identifying the obligations and their
assignments in the Guaranteed Loan Funds Investment Account .
(c) Upon the Secretary giving notice that the Borrower is in
Default under this Contract or the Note, all right, title,
and interest of the Borrower in and to the Guaranteed Loan
Funds and Guaranteed Loan Funds Investment Accounts shall
immediately vest in the Secretary for use in making payment
on the Note, purchase of Government Obligations in accordance
with paragraph 10, or payment of any other obligations of the
Borrower under this Contract or the Fiscal Agency/Trust
Agreements .
2 . Payments Due on Note. The Borrower shall pay to the Fiscal
Agent/Trustee, as collection agent for the Note, all amounts
due pursuant to the terms of the Note . In accordance with the
Note and the Fiscal Agency/Trust Agreements, payment shall be
made by 3 : 00 P.M. (New York City time) on the seventh
Business Day (the "Note Payment Date") preceding the relevant
Interest Due Date or Principal Due Date (each as defined in
the Note) . If any Note Payment Date falls on a day that is
not a Business Day, then the required payment shall be made
on the next Business Day. Payment may be made by check or
wire transfer.
3 . Selection of New Fiscal Agent or Trustee. The Secretary
shall select a new Fiscal Agent or Trustee if the Fiscal
Agent or Trustee resigns or is removed by the Secretary. The
Borrower hereby consents in advance to any such selection and
to any changes in the Fiscal Agency/Trust Agreements agreed
to by any Fiscal Agent or Trustee and the Secretary, subject
to paragraph 4 (e) of this Contract .
6
4 . Payments Due Fiscal Agent or Trustee; Documents to the
Secretary.
(a) The Borrower agrees to pay the fees of the Fiscal Agent
as required by Exhibit G to the Fiscal Agency Agreement, and
any additional amounts that may be due pursuant to Section
6 . 01 of the Fiscal Agency Agreement. If not paid by the
Borrower by any other means prior thereto, the Borrower
agrees that any such fees or additional amounts that have
been incurred prior to an Advance or a Conversion Date
Advance may be deducted by the Fiscal Agent/Trustee from the
proceeds of the Advance or Conversion Date Advance, as
applicable .
(b) The Borrower agrees to pay the Borrower' s share, as
determined by the Secretary, of the customary and usual
issuance, underwriting, and other costs related to the public
offering and future administration of the Note and the trust
certificates, as approved by the Secretary, including the
cost of reimbursement and/or compensation of the Trustee
pursuant to the Trust Agreement, including Sections 3 . 11 and
7 . 01 thereof . In connection with the public offering on the
Conversion Date, such payment shall either be made by wire
transfer to the Trustee on the day prior to the Conversion
Date or shall be deducted from the Guaranteed Loan Funds on
the Conversion Date .
(c) The Borrower shall submit to the Secretary not later than
ten Business Days prior to the Funding Date for the initial
Advance hereunder, or if not submitted earlier, prior to any
Conversion Date or Public Offering Date applicable to the
Note, this executed Contract, the executed Note, a request
for an Advance or a Conversion Date Advance (as applicable)
in proper form, and an opinion acceptable to the Secretary
from the Borrower' s counsel to the effect that : (i) the
governing body of the Borrower has authorized by resolution
or ordinance, in accordance with applicable State and local
law, the issuance of the Note and the execution of this
Contract; (ii) the Note and this Contract are valid, binding,
and enforceable obligations of the Borrower; (iii) the pledge
of funds pursuant to 24 CFR 570 .705 (b) (2) and paragraph 5 (a)
of this Contract is valid and binding; and (iv) there is no
outstanding litigation that will affect the validity of the
Note or this Contract . In addition, the Borrower shall
submit any other additional documents or opinions
specifically required by this Contract (e .g. , paragraph 5 (c) ,
or paragraph 15, et sec. . ) , at the time required thereby.
(d) The Borrower agrees to reimburse the Underwriters upon
demand by the Secretary for the Borrower' s share, as
determined by the Secretary, of all reasonable out-of-pocket
expenses (including reasonable fees and disbursements of
7
counsel) incurred in connection with a proposed public
offering, if the Underwriters incur such additional costs for
the public offering because of any refusal, inability, or
failure on the part of the Borrower timely to submit in
acceptable form any document required by this Contract
(including paragraph 4 (c) ) , or because of any withdrawal by
the Borrower from the public offering, after the Borrower has
submitted a request for a Conversion Date Advance hereunder.
By execution and delivery of this Contract to the Secretary,
the Borrower hereby expressly authorizes the Secretary to pay
amounts due under this paragraph from funds pledged under
paragraph 5 (a) of this Contract .
(e) The undertakings in paragraphs 3 and 4 of this Contract
are expressly subject to the requirement that the Fiscal
Agency/Trust Agreements shall in no event require payment of
fees or charges, reimbursement of expenses, or any
indemnification by the Borrower from any source other than
funds pledged pursuant to paragraphs 5 or 15 et seq. of this
Contract .
5 . Security. The Borrower hereby pledges as security for
repayment of the Note, and such other charges as may be
authorized in this Contract, the following:
(a) All allocations or grants which have been made or for
which the Borrower may become eligible under Section 106 of
the Act, as well as any grants which are or may become
available to the Borrower pursuant to Section 108 (q) .
(b) Program income, as defined at 24 CFR 570 . 500 (a) (or any
successor regulation) , directly generated from the use of the
Guaranteed Loan Funds .
(c) Other security as described in paragraph 15, et seq.
(d) All proceeds (including insurance and condemnation
proceeds) from any of the foregoing.
(e) All funds or investments in the accounts established
pursuant to paragraphs 1 and 6 of this Contract .
6 . Loan Repayment Account.
(a) All amounts pledged pursuant to paragraphs 5 (b) , 5 (c) ,
and 5 (d) of this Contract shall be deposited immediately on
receipt in a separate identifiable custodial account (the
"Loan Repayment Account") with a financial institution whose
deposits or accounts are Federally insured. The Loan
Repayment Account shall be established and designated as
prescribed in the attached form document entitled "Letter
Agreement for Section 108 Loan Guarantee Program Custodial
Account" (Attachment 1) and shall be maintained for such
S
pledged funds . The Loan Repayment Account need only be
established if and when the Borrower receives amounts pledged
pursuant to paragraph 5 (b) , 5 (c) or 5 (d) . Such Letter
Agreement must be executed when the Loan Repayment Account is
established. (A fully executed copy of such Letter Agreement
shall be submitted to the Secretary within thirty days of its
execution. ) Borrower shall make withdrawals from said
account only for the purpose of paying interest and principal
due on the Note (including the purchase of Government
Obligations in accordance with paragraph 10 hereof) , for
payment of any other obligation of the Borrower under this
Contract or the Fiscal Agency/Trust Agreements, or for the
temporary investment of funds pursuant to this paragraph,
until final payment and discharge of the indebtedness
evidenced by the Note, unless otherwise expressly authorized
by the Secretary in writing. Such temporary investment of
funds shall be required within three Business Days after the
balance of deposited funds exceeds the amount of the Federal
deposit insurance on the Loan Repayment Account . At that
time, the balance of funds in the Loan Repayment Account
exceeding such insurance coverage shall be fully (1000) and
continuously invested in Government Obligations, as defined
in paragraph 10 hereof .
All temporary investments, whether or not required as above,
shall be limited to Government Obligations having maturities
that are consistent with cash requirements for payment of
principal and interest as required under the Note . In no
event shall the maturities of such investments exceed one
year. All such investments shall be held in trust for the
benefit of the Secretary by the above financial institution
in an account (the "Loan Repayment Investment Account")
established and designated as prescribed in the attached form
document entitled "Letter Agreement for Section 108 Loan
Guarantee Program Custodial Investment Account" (Attachment
2) , which account shall be maintained for all Government
Obligations purchased with funds from the Loan Repayment
Account . Such Letter Agreement must be executed when the
Loan Repayment Investment Account is established. (A fully
executed copy of such Letter Agreement shall be submitted to
the Secretary within thirty days of its execution. ) All
proceeds and income derived from such investments shall be
returned to the Loan Repayment Account .
(b) Borrower shall by the fifteenth day of each month,
provide the Secretary with a written statement showing the
balance of funds in the Loan Repayment Account and the
deposits and withdrawals of all funds in such account during
the preceding calendar month and a statement identifying the
obligations and their assignments in the Loan Repayment
Investment Account .
9
(c) Upon the Secretary giving notice that the Borrower is in
Default under this Contract or the Note, all right, title,
and interest of the Borrower in and to the Loan Repayment and
Loan Repayment Investment Accounts shall immediately vest in
the Secretary for use in making payment on the Note, purchase
of Government Obligations in accordance with paragraph 10, or
payment of any other obligation of the Borrower under this
Contract or the Fiscal Agency/Trust Agreements .
7 . Use of CDBG or EDI Funds for Repayment. Any funds available to
the Borrower under Section 106 of the Act (including program
income derived therefrom) are authorized to be used by the
Borrower for payments due on the Note, Optional Redemption (as
defined in the Note) , payment of any other obligation of the
Borrower under this Contract or the Fiscal Agency/Trust
Agreements, or the purchase of Government Obligations in
accordance with paragraph 10 . Any funds specifically available
to the Borrower for such payments or as a debt service reserve
under an EDI Grant Agreement pursuant to Section 108 (q) of the
Act which supports the eligible project (s) and activities
financed by the Note may also be used therefor; any other use of
Section 108 (q) funds for such purposes shall require the prior
written approval of the Secretary. Unless otherwise
specifically provided herein or unless otherwise expressly
authorized by the Secretary in writing, the Borrower shall
substantially disburse funds available in the Loan Repayment or
the Loan Repayment Investment Accounts before funds from grants
under Section 106 of the Act are withdrawn from the U. S .
Treasury for such purposes .
8 . Secretary' s Right to Restrict Use of CDBG Funds to Repayment.
Upon a determination by the Secretary that payments required by
paragraph 2 and/or paragraph 4 of this Contract are unlikely to
be made as specified, the Secretary may give the Borrower notice
that the availability to the Borrower of funds pledged under
paragraph 5 (a) of this Contract for purposes other than
satisfaction of the pledge is being restricted. This
restriction shall be in an amount estimated by the Secretary to
be sufficient to ensure that the payments referred to in
paragraph 2 and/or paragraph 4 hereof are made when due . This
restriction may be given effect by conditioning the restricted
amounts to prohibit disbursement for purposes other than
satisfaction of the pledge at the time such restricted funds are
approved as grants, by limiting the Borrower' s ability to draw
down or expend the restricted funds for other purposes, and by
disapproving payment requests submitted with respect to such
grants for purposes other than satisfaction of the pledge .
9 . Secretary' s Right to Use Pledged Funds for Repayment. The
Secretary may use funds pledged under paragraph 5 (a) of this
Contract or funds restricted under grants pursuant to paragraph
10
8 of this Contract to make any payment required of the Borrower
under paragraph 2 and/or paragraph 4, if such payment has not
been timely made by the Borrower.
10 . Defeasance. For purposes of this Contract, after the Conversion
Date the Note shall be deemed to have been paid (defeased) if
there shall have been deposited with the Trustee either moneys
or Government Obligations (as defined below) , which in the sole
determination of the Secretary, mature and bear interest at
times and in amounts sufficient, together with any other moneys
on deposit with the Trustee for such purpose, to pay when due
the principal and interest to become due on the Note . The
Aggregate Principal Amount of the Note or any unpaid Principal
Amount may be so defeased, in whole or in part, as of any
Principal Due Date . In accordance with the Note and the Trust
Agreement, the Borrower shall give timely notice and written
instructions to the Secretary and the Trustee concerning any
principal amounts proposed to be defeased, including any
Optional Redemptions proposed, which instructions shall be
approved by the Secretary. If the unpaid Aggregate Principal
Amount of the Note guaranteed pursuant to this Contract shall be
defeased and deemed to have been paid in full, then the Borrower
shall be released from all agreements, covenants, and further
obligations under the Note .
"Government Obligation" means a direct obligation of, or any
obligation for which the full and timely payment of principal
and interest is guaranteed by, the United States of America,
including but not limited to, United States Treasury
Certificates of Indebtedness, Notes and Bonds - State and Local
Government Series or certificates of ownership of the principal
of or interest on direct obligations of, or obligations
unconditionally guaranteed by, the United States of America,
which obligations are held in trust by a commercial bank which
is a member of the Federal Reserve System and has capital and
surplus (exclusive of undivided profits) in excess of
$100, 000, 000 .
11 . Default. (a) A Default under the Note and this Contract
shall occur upon failure by the Borrower to:
(i) pay when due an installment of principal or interest
on the Note; or (ii) punctually and properly perform,
observe, and comply with any covenant, agreement, or
condition contained in: (A) this Contract, (B) any
security agreement, deed of trust, mortgage, assignment,
guarantee, or other contract securing payment of
indebtedness evidenced by the Note, or (C) any future
amendments, modifications, restatements, renewals, or
extensions of any such documents .
(b) The Borrower waives notice of Default and opportunity
for hearing with respect to a Default under paragraph 11 (a) .
(c) In addition to Defaults under paragraph 11 (a) , the
Secretary may declare the Note in Default if the Secretary
makes a final decision in accordance with the provisions of
section 111 of the Act and 24 CFR 570 . 913 (or any successor
provisions) , including requirements for reasonable notice and
opportunity for hearing, that the Borrower has failed to
comply substantially with title I of the Act.
Notwithstanding any other provision, following the giving of
such reasonable notice, the Secretary may, in the Secretary' s
sole discretion pending the Secretary' s final decision,
withhold the guarantee of any or all obligations not yet
guaranteed on behalf of the Borrower under outstanding
commitments, suspend approval of any further Advances or
Conversion Date Advances under the Note, and/or direct the
Borrower' s financial institution to: refuse to honor any
instruments drawn upon, or withdrawals from, the Guaranteed
Loan Funds Account or the Loan Repayment Account initiated by
the Borrower, and/or refuse to release obligations and
assignments by the Borrower from the Guaranteed Loan Funds
Investment Account or the Loan Repayment Investment Account .
12 . Remedial Actions. Upon a Default or declaration of Default
under this Contract, the Secretary may, in the Secretary' s sole
discretion, take any or all of the following remedial actions :
(a) With any funds or security pledged under this Contract, the
Secretary may (i) continue to make payments due on the Note,
(ii) make a prepayment under Section I . D. of the Note or make an
acceleration payment with respect to the principal amount of the
Note subject to Optional Redemption as provided in Section III
of the Note, (iii) purchase Government Obligations in accordance
with paragraph 10 of this Contract, (iv) pay any interest due
for late payment as provided in the Note, this Contract, or the
Fiscal Agency/Trust Agreements, (v) pay any other obligation of
the Borrower under this Contract or the Fiscal Agency/Trust
Agreements, and/or (vi) pay any reasonable expenses incurred by
the Secretary or the Fiscal Agent/Trustee as result of the
Borrower' s Default .
(b) The Secretary may withhold the guarantee of any or all
obligations not yet guaranteed or the disbursement of any or all
grants not yet disbursed in full under outstanding guarantee
commitments or grant approvals for the Borrower under Sections
108 and/or 106 of the Act .
(c) The Secretary may withhold approval of any or all further
Advances or Conversion Date Advances under the Note (if
applicable) ; direct the Borrower ' s financial institution to
refuse to: honor any instruments drawn upon, or withdrawals
from, the Guaranteed Loan Funds Account or the Loan Repayment
Account by the Borrower, and/or to release obligations and
assignments by the Borrower from the Guaranteed Loan Funds
12
Investment Account or the Loan Repayment Investment Account;
and/or direct the Borrower and/or the Borrower' s financial
institution to transfer remaining balances from the Guaranteed
Loan Funds Account to the Loan Repayment Account .
(d) Until the Conversion Date, or with respect to amounts
subject to Optional Redemption, the Secretary may accelerate the
Note.
(e) The Secretary may exercise any other appropriate remedies
or sanctions available by law or regulation applicable to the
assistance provided under this Contract, or may institute any
other action available under law to recover Guaranteed Loan
Funds or to reimburse the Secretary for any payment under the
Secretary' s Guarantee or any reasonable expenses incurred by the
Secretary as a result of the Default .
(f) All notices and submissions provided for hereunder shall be
in writing (including by telex, telecopier or any other form of
facsimile communication) and mailed or sent or delivered, as to
each party hereto, at its address set forth below or at such
other address as shall be designated by such party in a written
notice to the other party hereto. All such notices and other
communications shall be effective when received as follows : (i)
if sent by hand delivery, upon delivery; (ii) if sent by mail,
upon the earlier of the date of receipt or five Business Days
after deposit in the mail, postage prepaid; (iii) if sent by
telex, upon receipt by the sender of an answer back; and (iv) if
sent by telecopier, upon receipt .
The Secretary:
U. S . Dept . of Housing and Urban Development
Attention: Paul Webster Director
Financial Management Division
451 7th Street SW Room 7180
Washington, DC 20410
Borrower:
ATTN: John Hoeger
Redevelopment Agency of the City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 92401
(909) 663-1044
13 . Limited Liability. Notwithstanding any other provision of this
Contract, the Fiscal Agency/Trust Agreements or the Note, any
recovery against the Borrower for any liability for amounts due
pursuant to the Note, the Fiscal Agency/Trust Agreements or this
Contract shall be limited to the sources of security pledged in
paragraph 5 or any Special Conditions of this Contract . Neither
the general credit nor the taxing power of the Borrower, or of
13
the State in which the Borrower is located, is pledged for any
payment due under the Note, the Contract, or the Fiscal
Agency/Trust Agreements .
14 . Incorporated Grant Agreement. The Contract and the Note are
hereby incorporated in and made a part of the Grant Agreement
authorized by the Secretary on June 22, 1994 under the Funding
Approval for grant number B-94-MC-06-0539 to the Borrower. In
carrying out activities with the Guaranteed Loan Funds
hereunder, the Borrower agrees to comply with the Act and 24 CFR
Part 570, as provided in Subpart M thereof.
15 . Special Conditions and Modifications:
(a) Paragraph 5 (c) of the Contract is amended by deleting the
paragraph as written in its entirety and substituting
therefore the following:
" (c) Other security, including, but not limited to, all rights
of the Borrower (but none of the obligations of the
Borrower) in and to the `Security Documents' (as defined
in paragraph 15 (d) hereof) and to the collateral
described therein. If necessary to provide the Secretary
with a valid security interest in such other security,
the Borrower shall execute a security agreement
(the `Borrower Security Agreement' ) , which Borrower
Security Agreement shall be in a form acceptable to the
Secretary. "
(b) Guaranteed Loan Funds shall be used by the Borrower to
make a loan to 303 LLC , (the "Obligor") , for
acquisition of the property pursuant to 24 CFR
570 . 703 (i) (1) .
(c) The loan to the Obligor shall be evidenced by a
promissory note (the "Obligor Note") and a loan
agreement (the "Obligor Loan Agreement") , which
Obligor Note and Obligor Loan Agreement shall be in a
form acceptable to the Secretary. The amount of
principal and/or interest payable under the Obligor Note
during the twelve month period beginning July 1 of each
year and ending on June 30 of the next succeeding year
shall be equal to or greater than the amount of principal
and/or interest payable under the Note for the
corresponding period. The Obligor Note shall not be
subject to redemption or repayment earlier than the
earliest possible redemption date under the terms of the
Note . As security for the Obligor Note, the Borrower
shall obtain the following collateral (collectively, the
"Collateral") :
(i) A first priority lien on the real property
described in Attachment 3 hereof (the "Property") ,
14
established through an appropriate and properly
recorded deed of trust (the "Deed of Trust") . The
Deed of Trust shall contain such provisions as the
Secretary deems necessary.
(ii) Any and all rights, titles, and interests of the
Obligor in and to any leases covering the Property.
Such rights, titles, and interests of the Obligor
shall be the subject of a collateral assignment of
leases and rents (the "Collateral Assignment of
Leases and Rents") . The Collateral Assignment of
Leases and Rents shall be in a form acceptable to
the Secretary.
(iii) Any and all rights, titles, and interests of the
Obligor in and to any licenses, permits, and other
agreements covering the Property. Such rights,
titles, and interests shall be the subject of a
collateral assignment of interest in licenses,
permits, and other agreements (the "Collateral
Assignments of Interest in Licenses, Permits, and
Agreements") . The Collateral Assignment of
Interest in Licenses, Permits, and Agreements
shall be in a form acceptable to the Secretary.
(iv) Personal guaranties (collectively, the
"Personal Guaranty" ) of Mr. Kevin Brunk,
Mr. Wilfred C. Lemann and Mr. Martin A.
Matich (the "Personal Guarantors" ) . The
Personal Guaranty shall be in a form
acceptable to the Secretary.
(v) An unconditional and irrevocable letter of credit
(the "Letter of Credit") from the Obligor in favor of
the Borrower. The Letter of Credit shall be at all
times in an amount of $500, 000 . The Letter of Credit
shall be in a form acceptable to the Secretary and
shall be issued by a financial institution ("Issuer")
acceptable to the Secretary. The Issuer shall be a
member of the Federal Reserve System, have a rating
of at least "A2", as determined by Moody' s Bank
Credit Report Service ("Moody' s") , for its long term
bank deposits, and must reflect an outstanding standby
Letter of Credit balance of $50 million or more on its
most recent Call Report to its supervisory agency.
The rating must be in effect as of the date of receipt
of the Letter of Credit by the Custodian (as defined
in paragraph 15 (d) below) . The Letter of Credit shall
bear an expiration date (the "Expiration Date") one
year from the first day of the month following the
date of execution of the Obligor Agreement and shall
provide for automatic renewal for successive periods
of one year each as of the Expiration Date until such
15
time as the Obligor demonstrates to the satisfaction
of the Borrower that at least 90 per cent of the net
leasable area of the Property is leased and occupied.
At such time, the Obligor may be permitted to withdraw
the Letter of Credit. Any change with respect to the
Letter of Credit subsequent to its deposit with the
Custodian must be approved by both the Borrower and
the Secretary. The Borrower will be responsible for
demanding payment under the Letter of Credit if
necessary.
(d) The Borrower shall select a financial institution
acceptable to the Secretary (the "Custodian") to act
as custodian for the documents specified in
paragraphs 15 (e) below (the "Security Documents") .
The Borrower and the Custodian shall enter into a
written agreement containing such provisions as the
Secretary deems necessary. A fully executed copy of
such agreement, with original signatures, shall be
forwarded to the Secretary contemporaneously with the
delivery of documents pursuant to paragraph 15 (e)
below.
(e) Not later than five business days after the initial
disbursement of the Guaranteed Loan Funds to the
Obligor, the Borrower shall deliver to the Custodian
the following:
(i) The original Obligor Note, endorsed in blank and
without recourse .
(ii) The original Obligor Loan Agreement and an
assignment thereof to the Secretary, which
assignment shall be in a form acceptable to
the Secretary.
(iii) The original recorded Deed of Trust signed by the
Obligor and an assignment thereof to the
Secretary, in a recordable form but unrecorded,
which assignment shall be in a form acceptable to
the Secretary.
(iv) The original recorded Collateral Assignment of
Leases and Rents and an assignment thereof
to the Secretary, in a recordable form but
unrecorded, which assignment shall be in a form
acceptable to the Secretary.
(v) The original Collateral Assignment of Interest in
Licenses, Permits, and Agreements and an
assignment thereof to the Secretary, which
assignment shall be in a form acceptable to the
Secretary.
16
(vi) The original Personal Guaranty and an assignment
thereof, which assignment shall be in a form
acceptable to the Secretary.
(vii) The original Letter of Credit and an
assignment thereof, which assignment shall in
a form acceptable to the Secretary.
(viii)An opinion of the Borrower' s counsel, addressed
to the Secretary and on its letterhead, that :
(1) the Obligor is a limited liability company, duly
organized, validly existing, and in good standing
under the laws of the State of California;
(2) the Obligor Note has been duly executed and
delivered by a party authorized by the
Obligor to take such action and is a valid
and binding obligation of the Obligor,
enforceable in accordance with its terms,
except as limited by bankruptcy and similar
laws affecting creditors generally; and
(3) the security instruments specified in (ii)
through (vii) above are valid and legally
binding obligations, enforceable in
accordance with their respective terms .
(ix) A mortgage title policy, issued by a company
and in a form acceptable to the Secretary,
naming the Borrower as the insured party. The
policy must either include in the definition of
the "insured" each successor in ownership of the
indebtedness secured by the Deed of Trust or be
accompanied by an endorsement of the policy of
the Secretary.
(x) A certified survey with a legal description
conforming to the title policy and the Mortgage .
(xi) An appraisal of the fee simple ownership
interest in the Property specifying an estimate
of fair market value of not less than
$1, 675, 000 . The appraisal shall be completed
by an appraiser who is certified by the state and
has a professional designation (such as "SRA" or
"MAI") , and shall conform to the standards of the
Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") .
17
(f) Paragraph 12 is amended by adding at the end thereof
the following language:
" (g) The Secretary may complete the endorsement of
the Business Notes and record the assignments
referred to in paragraph 15 (e) , and thereby
effectuate the transfer of the documents
referenced and underlying indebtedness from the
Borrower to the Secretary or the Secretary' s
assignee . "
" (h) The Secretary may exercise or enforce any and
all other rights or remedies (including any and
all rights and remedies available to a secured
party under the Uniform Commercial Code)
available by law or agreement (including any of
the Security Documents, as defined in paragraph
15 (d) ) against the Borrower, against the
Obligor, or against any other person or property. "
(g) The Borrower covenants and agrees that it shall
establish and maintain a reserve (the "Debt Service
Reserve" ) in the Loan Repayment Account for payment of
principal and/or interest on the Notes upon notice from
the Secretary to the Borrower at the address specified
in paragraph 12 (f) above that the Secretary in his sole
discretion has determined that grants pledged pursuant
to paragraph 5 (a) are unlikely to be sufficient to pay
when due the amounts to become due on the Notes . Such
notice shall be hereinafter referred to as the "Notice
of Inadequate Security. " The Debt Service Reserve
shall be established in an amount determined by an
independent financial advisor acceptable to the
Secretary (the "Financial Advisor" ) in accordance with
a methodology acceptable to the Secretary. The Debt
Service Reserve shall be fully (1000) and continuously
invested in Government Obligations, as defined in
paragraph 10 hereof, which investments shall be held in
trust for the benefit of the Secretary in the
Guaranteed Loan Funds Investment Account as provided in
paragraph 6 (a) hereof . Grants pledged pursuant to
paragraph 5 (a) may be used to fund the Debt Service
Reserve in whole or in part . The Borrower shall engage
the Financial Advisor and shall instruct it to submit
to the Secretary for his review and approval the
methodology it proposes to use in determining the
amount of the Debt Service Reserve, which submission
shall include any comments and/or recommendations of
the Borrower regarding the acceptability of the
methodology. Such submission shall not be required if
the selection of the Financial Advisor and the
application of the methodology comply with guidelines
promulgated by the Secretary subsequent to the date of
18
this Contract . Within 60 days of the Notice of
Inadequate Security, the Borrower shall furnish to the
Secretary at the address specified in paragraph (12)
above acceptable evidence that the Debt Service Reserve
has been established in the manner prescribed above
(including such certifications and/or opinions by the
Financial Advisor as the Secretary deems necessary) .
The Debt Service Reserve shall be maintained in an
amount consistent with an amortization schedule
developed by the Financial Advisor and approved by the
Secretary.
(h) The Grant Agreement, dated for
the grant made to the Borrower pursuant to Section
108 (q) , under grant number B-93-ED-06-0539, is hereby
incorporated in this Contract and made a part hereof .
[Rest of Page Intentionally Left Blank]
19
IN WITNESS WHEREOF, the undersigned, as authorized officials on
behalf of the Borrower or the Secretary, have executed this Contract
for Loan Guarantee Assistance, which shall be effective as of the
date of execution hereof on behalf of the Secretary.
City of San Bernardino, California
BORROWER
ATTEST:
Rachel Clark BY: Judith V'alles
(Name) (Name)
City Clerk Mayor
(Title) (Title)
�2. /b 4 L 6111 --(Signature) (Signature)
(Date)
SECRETARY OF HOUSING AND URBAN
DEVELOPMENT
BY:
(Name)
(Title)
(Signature)
(Date)
ATTa.C� 1
U. s. =pARTmENT OF HOUSING AsD URRm DEvLwPK NT
LETTER AGR23MMMM FOR
SECTION 108 LOAM GUARANTEE. PROGRAM
CUSTODIAL ACCOUNT
Name of Institution (and Branch)
Street
City
DATE
(� This account is established for funds received by the Borrower
under notes) guaranteed by the United States Department of
Housing and Urban Development (HUD) under the Section 108 Loan
Guarantee Program, (Guaranteed Loan Funds Account. )
(� This account is established for repayment of the note guaranteed
by HUD under the Section 108 Loan Guarantee Program_ (Loan
Repayment Account) .
(J This account is established as a debt service reserve under
the Section 108 Loan Guarantee Program. (Debt Service Reserve
Account. )
You are hereby authorized and requested to establish a custodial
account to be specifically designated
P.
Trustee of United States Department of Housing and Urban
Development. " All deposits made in such account shall be subject to
withdrawal therefrom by the Borrower named below, and shall also be
subject to withdrawal therefrom by HUD. No agent of the Borrower
shall be authorized to withdraw funds from the account. You are also
authorized to pay HUD at any time upon its written demand, which need
not name a specific amount, the entire amount in such account subject
only to notice requirements contained in applicable regulations
governing this institution, but in no event to exceed seven business
days .
You are further authorized upon the request of HUD to refuse to
honor any instrument drawn upon or withdrawals from such account by
parties other than HUD and to change the name of the aforesaid
account to the 'United States Department of Housing and Urban
Development. ' In no instance shall the funds in the Custodial
Account be used to offset funds which may have been advanced to, or
on behalf of, the Borrower by the custodian institution.
This letter is submitted to you in duplicate. please execute
the duplicate copy of the certificate below, acknowledging the
existence of such account, so that we may present the copy signed by
you to HUD.
Name of Borrower
By (Signature)
Title
The undersigned institution certifies to the United States
Department of Housing and Urban Development (HUD) that the account
identified is in existence in this institution under account number
and agrees with the Borrower named above and HUD
to honor demands on such account in the manner provided in the above
letter, subject only to notice requirements contained in applicable
regulations governing this institution, but in no event to exceed
seven business days . The undersigned institution further agrees upon
the request of HUD to refuse to honor any instruments drawn upon or
withdrawals from such account by parties other than HUD and to change
the name of the aforesaid account to "United States Department of
Housing and Urban Development. " In no instance shall the funds in
the Custodial Account be used to offset funds which may have been
advanced to, or on behalf of, the Borrower by the custodian
institution. Deposits in this institution are insured by the Federal
Deposit Insurance Corporation, the Federal Savings and Loan Insurance
Corporation, or the National Credit Union Administration.
Name of Institution By
Title Date
. i
ATTACERT Z
. V. S. DBPAA OT OF ROUSIM AM ORMS DEVELOPMENT
LETTER AGREZKM FOR
SECTION 108 LOAN GMANTEE PROGRAM
CUSTODM ACCOQNT
Name of Institution (and Branch)
Street
city
DATE
() This account is established to hold obligations and their
assignments, such obligations having been purchased with funds
from the Guaranteed Loan Funds Account. (Guaranteed Loan Funds
Investment Account . )
[) This account is established to hold obligations and their
assignments, such obligations having. been purchased with funds
from the Loan Repayment Account. (Loan Repayment Investment
Account . )
() This account is established to hold obligations and their
assignments, such obligations having been purchased with funds
from the Debt Service Reserve Account. (Debt Service Reserve
Investment Account. )
You are hereby authorized and requested to hold obligations and
assignments of those obligations in trust for the United States
Department of Housing and Urban Development (HUD) in an account
specifically designated
Trustee of United States Department of Housing and Urban
Development. ' All obligations and assigTuments shall be subject to
release to the Borrower named below, and shall also be subject to
release to HUD. No agent of the Borrower shall be authorized to
release the obligations or assignments . You are also authorized to
release the obligations and assignments to HUD at any time u-pon its
written demand, which need not name specific obligations and
assignments, all obligations and assignments being held in such
account subjegL only to any notice requirements contained in
applicable regulations governing this institution, but in no event to
exceed seven business days .
you are further authorized upon the request of HUD to refuse to
honor any request for release of the obligations and assignments from
such account by parties other than HUp and to change the name of the
aforesaid account to the "United States Department of Housing and
Urban Development_ " in no instance shall the obligations in the
account be used to offset funds which may have been advanced to, or
on behalf of, the Borrower by the custodian institution.
This letter is submitted to you in duplicate. Please execute
the duplicate copy of the certificate below, acknowledging e
existence of such account, so that we may present the copy signed by
you to HUD.
Name of Borrower
By (Signature)
Title
The undersigned institution certifies to the United Stites
Department of Housing and Urban Development (HUD) that the account
identified is in existence in this institution under account number
, and agrees with the Borrower named above and h'UD
to honor demands release on such account in the manner provided in
the above letter, subject only to any notice requirements contained
in applicable regulations governing this institution, but in no event
to exceed seven business days . The undersigned institution further
agrees upon the request of HUD to refuse to honor any request for
release of the obligations and assignments from such account by
parties other than HUD and to change the name of the aforesaid
account to "United States Department of Housing and Urban
Development. ' in no instance shall the obligations in the account be
used to offset funds which may have been advanced to, or on behalf
of, the Borrower by the custodian institution. Deposits in this
institution are insured by the Federal Deposit Insurance Corporation,
the Federal Savings and Loan Insurance Corporation, or the National
Credit Union Administration.
Name of Institution By
Title Date
20
ATTACffiKENT 3
Description of Real Property
[Borrower shall insert description]
JGf. -17 UUIIUG) 1J.J0
EXHIBIT "A"
PARCEL NO. 1:
THE WEST 22 FEET OF LOT 7, BLOCK 14, CITY OF SAN BERNARDINO, IN THE CITY OF SAN
BERNARDINO, COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA, AS PER PLAT
RECORDED IN BOOK 7 OF MAPS, PAGE(S) 1. RECORDS OF SAID COUNTY.
EXCEPTING THE NORTH 35 FEET THEREOF,
ALSO EXCEPTING RIGHT OF WAY OF SAN BERNARDINO, ARROWHEAD AND WATERMAN
RAILWAY CO., IF SAME BE FOUND TO INCLUDE ANY PORTION OF SAID LOT 7.
PARCEL NO. 2:
THAT PORTION OF LOT 6, BLOCK 14, CITY OF SAN BERNARDINO, IN THE CITY OF SAN
BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT
RECORDED IN BOOK 7 OF MAPS, PAGE(S) 1, RECORDS OF SAID COUNTY, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT 22 FEET EAST OF THE NORTHWEST CORNER OF LOT 6; THENCE
SOUTH 148-1/2 FEET, MORE OR LESS, TO THE SOUTH LINE OF LOT 6; THENCE EAST ALONG
THE SOUTH LINE OF SAID LOT 6, 51.87 FEET, MORE OR LESS, TO THE WEST LINE OF LAND
BELONGING TO THE SAN BERNARDINO LODGE NO. 146 OF THE INDEPENDENT ORDER OF ODD
FELLOWS AS PER DEED RECORDED IN BOOK 'U' OF DEEDS, PAGE 415; THENCE NORTH 148-
112, MORE OR LESS, TO THE NORTH LINE OF LOT 6; THENCE WEST 51.87 FEET, MORE OR
LESS, TO THE POINT OF BEGINNING.
PARCEL NO. 3:
THAT PORTION OF LOT 6, BLOCK 14, OF THE CITY OF SAN BERNARDINO, IN THE CITY OF SAN
BERNARDINO, COUNTY OF SALT BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT
RECORDED IN BOOK 7 OF MAPS, PAGE(S) 1, RECORDS OF SAID COUNTY, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT 229.23 FEET WEST OF A POINT 41.25 FEET SOUTH OF THE
INTERSECTION OF THE CENTER LINE OF "C" STREET AND THIRD STREET OF SAID CITY;
THENCE SOUTH 148.54 FEET;THENCE WEST 37.75 FEET;THENCE NORTH 148.54 FEET; THENCE
EAST 37.75 FEET TO THE POINT OF BEGINNING.
PARCEL NO. 4
PARCEL A.
ALL THAT PORTION OF LOTS 6 AND 7, IN BLOCK 14, CITY OF SAN BERNARDINO, IN THE CITY
OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT
RECORDED IN BOOK 7 OF MAPS, PAGE(S) 1, RECORDS OF SAID COUNTY, DESCRIBED AS
FOLLOWS:
iy uutiur,! lj:jo
r. uuJ
COMMENCING AT A POINT 87 FEET WEST AND 100.70 FEET SOUTH OF THE NORTHEAST
CORNER OF SAID LOT 6; THENCE WEST 100.83 FEET, PARALLEL WITH THE NORTH LINE OF
SAID LOT 6; THENCE SOUTH 47.84 FEET, PARALLEL WITH THE EAST LINE OF SAID LOT 6;
THENCE WEST ALONG THE NORTH LINE OF LOT ?; 85.35 FEET TO A POINT WHICH IS 25.5
FEET EAST OF THE NORTHWEST CORNER OF SAID LOT 7; THENCE SOUTH PARALLEL WITH
THE WEST LINE OF SAID LOT, 35 FEET: THENCE WEST 3.5 FEET; THENCE SOUTH PARALLEL
WITH THE WEST LINE OF SAID LOT, 88,54 FEET TO A POINT 25 FEET NORTH OF THE SOUTH
LINE OF SAID LOT; THENCE EAST PARALLEL WITH THE SOUTH LINE OF SAID LOT, 190.45 NORTH
FEET TO A POINT WHICH 3T LINE OF LOTS 7 AND 6171 2 FEET,M� � LESS, THE
PARALLEL WITH THE E
POINT OF BEGINNING.
PARCEL B:
A PERPETUAL RIGHT OF WAY FOR PASSAGE OF FOOT PASSENGERS, TEAMS, AUTOMOBILES,
TRUCKS AND OTHER VEHICLES OVER AND ACROSS THE FOLLOWING PROPERTY:
THAT PORTION OF LOT 7, BLOCK 14, CITY OF SAN BERNARDINO, IN THE CITY OF SAN
BERTIARDINO, COUNTY OOIM� pAERN(ARDINR�CORDSEOO SAID COUNTY. DESCRIBED AS
RECORDED IN BOOK
FOLLOWS:
BEGINNING AT A POINT ON THE EAST LINE OF LOT 7, WHERE SAID EAST LINE IS
INTERSECTED BY THE NORTH LINE OF THE EXISTING RIGHT OF WAY OF PACIFIC ELECTRIC
RAILWAY CO.; THENCE WEST ALONG THE NORTH LINE OF SAID RIGHT OF WAY 87 FEET,
MORE OR LESS, TO THE EAST LINE OF THE PROPERTY DESCRIBED AS PARCEL NO. 3 ABOVE;
THENCE NORTH 30 FEET; THENCE EAST 87 FEET, MORE OR LESS, TO THE EAST LINE OF SAID
LOT 7; THENCE SOUTH 30 FEET, TO THE POINT OF BEGINNING, AS CONVEYED BY MARTHA
L. KIPLINGER, ET AL., TO GEORGE M_ COOLEY AS TRUSTEE, BY DEED RECORDED IN BOOK
719, PAGE 130, OF DEEDS.
PARCEL NO. 5;
ALL THAT PORTION OF LOTS 6 AND 7, BLOCK 14, OF THE CITY OF SAN BERNARDINO, IN THE
CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER
PLAT RECORDED IN BOOK 7 OF MAPS, PAGE(S) 1, RECORDS OF SAID COUNTY, DESCRIBED AS
FOLLOWS:
COMMENCING AT A POINT 87 FEET WEST OF THE NORTHEAST CORNER OF SAID LOT 6, BEING
THE NORTHEAST CORNER OF WHAT WAS KNOWN AS THE COX BUILDING; THENCE WEST
ALONG THE NORTH LINE OF SAID LOT 6, 100 FEET 10 INCHES TO THE NORTHEAST CORNER
OF THE BUILDING FORMERLY OWNED BY THE INDEPENDENT ORDER OF ODD FELLOWS;
THENCE SOUTH 100.70 FEET; THENCE EAST 100.53 FEET PARALLEL WITH THE NORTH LINE
OF SAID LOT 6; THENCE NORTH 100.70 FEET TO THE POINT OF BEGINNING.
PARCEL NO. 6;
THAT PORTION OF LOTS 6 AND 7, BLOCK 14, CITY OF SAN BERNARDINO, IN THE CITY OF SAN
BERNARDINO, COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA, AS PER PLAT
RECORDED IN BOOK 7 OF MAPS, PAGE(S) 1, RECORDS OF SAID COUNTY, DESCRIBED AS
FOLLOWS:
JGf. -17 uu�IUO) 1J;J1 i . uuY
u
COMMENCING AT THE NORTHEAST CORNER OF SAID LOT 6; THENCE WESD8�o,M KNOWN
OR LESS, TO THE NORTHEAST CORNER OF THE COX BUILDING, THENCE
AS THE CREAMERY BUILDING THENCE O �AID LOT 7&THENCE NORTHSATIOD LOT
'THE 7;
POINT OF
EAST TO THE SOS
BEGINNING.
SAVING AND EXCEPTING THEREFROM THAT PORTION EMBRACED WITHIN RIGHT OF WAY
OF PACIFIC RAILWAY COMPANY.
PARCEL.NO. 7:
THE EAST 3.5 FEET OF THE WEST 25.5 FEET OF THE NORTH 35 FEET OF LOT 7, BLOCK 14,
CITY OF SAN BERNARDINO,CALIFORNIA, AS PER PLAT RECORDED IN
BOOK 7 OF MAPS, PAGE(S)
BERNARDINO, STATE OF CALIF
1, RECORDS OF SAID COUNTY.
S-�G
EXHIBIT "A"
THAT PORTION OF BLOCK 2 OF THE CITY OF SAN BERNARDINO- COUNTY OF SAN
BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGfi(S)
1, RECORDS OF SAID COUNTY, LYING SOUTHERLY OF 2ND STREET, 82.5 FEET WIDE,
EASTERLY OF ARROWHEAD AVENUE. 82.5 FEET WIDE, (FORMERLY CRAFTObLSTREET),
WESTERLY OF MOUNTAIN VIEW AVENUE. 82.5 FEET WIDE, (FORMERLY CAMEL STREET) AS
SHOWN ON SAID PLAT DESCRIBED ABOVE AND NORTHERLY OF KING STREET, (FORMERLY
BRIDGE STREET) AS SHOWN ON BEDFORD BROTHERS SUBDMSION PER PLAT RECORDED IN
BOOK 8 OF MAPS, PAGE 30. RECORDS OF SAID COUNTY.
EXCEPT THAT PORTION OF SAID BLOCK 2, DESCRIBED IN THE QUITCLAIM DEED FROM ROY
T. COE AND HELEN C. COE, HUSBAND AND WIFE TO GEORGE EDWARD COE AND ROYNA
MAE COBB RECORDED AUGUST 24. 1967 IN BOOK 6873, PAGE 738, OFFICIAL RECORDS OF SAID
COUNTY, DESCRIBED AS FOLLOWS:
THAT UNSUBDIVIDED PORTION OF LOTS 4 AND 5. IN CITY BLOCK 2. AS RECORDED IN BOOK
7 OF MAPS, PAGE 1, OFFICIAL RECORDS OF SAN BERNARDINO COUNTY, CALIFORNIA.,
DESCRIBED AS FOLLOWS;
BEGINNING AT THE NORTHWEST CORNER OF SAID LOT 5, THENCE SOUTH 225 FEET. THENCE
NORTHEASTERLY TO A POINT 50 FEET SOUTH AND 184 FEET EAST OF THE POINT OF
BEGINNING; THENCE NORTHEASTERLY TO THE NORTHEAST CORNER OF SAID LOT 5; THENCE
WEST TO THE POINT OF BEGINNING.
A PORTION OF SAID LAND IS ALSO SHOWN AS LOTS 1 THROUGH 10, INCLUSIVE, OF BLOCK
4, AND THE ALLEY VACATED ADJACENT TO SAID LOTS, OF BEDFORD BROTHERS
SUBDIVISION, AS PER PLAT RECORDED IN BOOK 3 OF MAPS, PAGE 84 AND BOOK 8 OF MAPS,
PAGE 30, RECORDS OF SAID COUNTY.
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U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
SECTION 108 LOAN GUARANTEE PROGRAM
VARIABLE/FIXED RATE NOTE
NOTE NUMBER: B-94-MC-06-0539-A DATE OF NOTE:
BORROWER: City of San Bernardino, PRINCIPAL DUE DATES AND PRINCIPAL
California AMOUNT: Before the Conversion Date, the
aggregate of Advances made for each
applicable Principal Due Date specified in the
Commitment Schedule to this Note; on or after
the Conversion Date,the Principal Amount(if
any) listed for each Principal Due Date in
Schedule P & I hereto.
MAXIMUM COMMITMENT
AMOUNT: $1,840,000
COMMITMENT AMOUNTS: See
Commitment Schedule attached hereto
VARIABLE INTEREST RATE: As set forth below.
REGISTERED HOLDER: AFTERWATCH & CO
As Nominee for
Money Market Obligations Trust
behalf of its Government Obligations Fund
I. Terms Applicable Before the Conversion Date
A. Advances
For value received, the undersigned, the City of San Bernardino (the 'Borrower", which
term includes any successors and assigns), a public entity organized and existing under the laws
of the State (or Commonwealth, if applicable) of California promises to pay to the Registered
Holder(the "Holder", which term includes any successors or assigns), at the time, in the manner,
and with interest at the rate or rates hereinafter provided, such amounts as may be advanced
under this Note from time to time by the Holder for disbursement to, or on behalf of the
Borrower(individually, an "Advance", and collectively, "Advances"). The Holder shall make
Advances upon the written request of the Borrower and the approval of the Secretary of Housing
and Urban Development or his designee (the "Secretary"), pursuant to the Contract for Loan
Guarantee Assistance (as further defined in Section W.A. of this Note, the "Contract"), and the
Amended and Restated Master Fiscal Agency Agreement(the "Fiscal Agency Agreement") dated
as of May 17, 2000, between The Chase Manhattan Bank(formerly known as Chemical Bank),
as Fiscal Agent (the "Fiscal Agent"), and the Secretary. The total amount of Advances made for
each Principal Due Date under this Note shall not exceed the applicable Commitment Amount
for such Principal Due Date set forth on the Commitment Schedule attached hereto. The
aggregate of all Advances under this Note for all Principal Due Dates shall not exceed the
Maximum Commitment Amount specified on the attached Commitment Schedule. The Fiscal
Agent shall record the date and amount of all payments and Advances on this Note and maintain
the books and records of all such Advances and Commitment Amounts for each corresponding
Principal Due Date, and all payments. No Advances shall be made on this Note after its
Conversion Date.
As used herein, "Conversion Date" means the date (if any) upon which this Note is (i)
delivered by the Holder to the Fiscal Agent against payment therefor by the purchasers selected
by the Secretary to make such payment; and (ii) assigned to The Chase Manhattan Bank(or any
successor thereto) acting in its capacity as Trustee (the "Trustee") pursuant to a Trust Agreement
among the Secretary and the Trustee, dated as of January 1, 1995, as such agreement may be
amended or supplemented (the "Trust Agreement"). Upon the occurrence of both (i) and (ii) in
the previous sentence, Section III of this Note applies, thereby converting this Note to a fixed
rate obligation.
B. Variable Rate of Interest
From and including the date of each Advance to but excluding the earlier of(i)the
Conversion Date, and (ii) the date of redemption or prepayment of such Advance pursuant to
Section I.D. below(each such date of redemption or prepayment, a "Prepayment Date") interest
shall be paid quarterly at a variable interest rate (as set forth below) on the unpaid principal
balance of each Advance on the first day of each February, May, August and November(each, an
"Interim Payment Date"), commencing on the first Interim Payment Date after the Initial
Advance is made under this Note. Interest also shall be paid on each applicable Conversion
Date, Prepayment Date or Principal Due Date. The amount of interest payable on each Interim
Payment Date will represent interest accrued during the three-month period ending immediately
prior to such Interim Payment Date, or in the case of the first Interim Payment Date following
each Advance that is not made on an Interim Payment Date,the period from and including the
date of such Advance to but excluding the first Interim Payment Date following such Advance.
The amount of interest payable on this Note's Conversion Date, Prepayment Date, or on any
2
i
Principal Due Date that precedes such Conversion Date will represent interest accrued during the
period from the last Interim Payment Date to such Conversion Date, Prepayment Date, or
Principal Due Date, respectively.
The initial variable interest rate for each Advance will be set on the date of such Advance
and will be equal to 20 basis points (0:2%) above the Applicable LIBO Rate (as hereinafter
defined) and thereafter will be adjusted monthly on the first day of each month(each, a "Reset
Date") to a variable interest rate equal to 20 basis points (0.2%) above the Applicable LIBO Rate
(such interest rate, as reset from time to time, the "Standard Note Rate"). If the Conversion Date
for this Note has not occurred by the March 1 following the initial Advance under this Note, then
the terms of Appendix A shall be used to set the variable interest rate. If the Fiscal Agent does
not receive notice of either a Negotiated Special Interest Rate or Holder Determined Special
Interest Rate (as defined in Appendix A attached hereto) from the Secretary or Holder,
respectively, by the times specified in Appendix A to this Note,then the Standard Note Rate
shall apply for the period to which such Negotiated Special Interest Rate or Holder Determined
Special Interest Rate would otherwise apply. The Fiscal Agent may conclusively rely on any
such notice as to the correctness of any matters set forth therein. Appendix A shall be
inapplicable to this Note on or after the Conversion Date.
"LIBO Rate" for any given Business Day means, except in the case of manifest error, the
interest rate per annum published on that day in the Eastern Edition of The Wall Street Journal or
any successor publication("WSJ"), published by Dow Jones & Company, Inc., in the section
titled "Money Rates" (or any successor section) and opposite the caption "London Interbank
Offered Rates (LIBOR) --three months" (or any successor caption). If such rate does not appear
in WSJ, for each interest period, the LIBO Rate shall be the interest rate, converted to a bond-
equivalent yield basis, for deposits in U.S. dollars for three months which appears on Telerate
Page 3750 or such other page as may replace Page 3750 on that service or such other service or
services as may be nominated by the British Bankers' Association for the purpose of displaying
such rate (together, "Telerate Page 3750") as of 11:00 a.m., London time, on the day (the
"Determination Date") that is two London banking days preceding the relevant Reset Date or
Advance. If such rate does not appear on Telerate Page 3750 on such Determination Date, such
rate shall be obtained from the Reuters Screen ISDA Page as of 11:00 a.m., London time, on
such Determination Date. If, in turn, such rate does not appear on the Reuters Screen ISDA Page
on such Determination Date, the offered quotation from each of four reference banks (expressed
as a percentage per annum) as of approximately 11:00 a.m., London time, on such Determination
Date for deposits in U.S. dollars to prime banks on the London interbank market for a 3-month
period, commencing on the Reset Date or date of such Advance, shall be obtained. If at least two
such quotations are provided, the LIBO RATE for such Reset Date or date of such Advance will
be the arithmetic mean of the quotations, rounded to five decimal places. If fewer than two such
quotations are provided as requested, the LIBO RATE for that Determination Date shall be the
rate for the most recent day preceding such Determination Date for which the LIBO RATE shall
have been displayed on Telerate Page 3750. The LIBO RATE for any interest period shall be
3
converted to a bond-equivalent yield basis by multiplying such rate by the actual number of days
in such interest period and dividing that number by 180.
"Applicable LIBO Rate" means: (1) with respect to the initial interest rate for the first
Advance hereunder, the LIBO Rate two London Banking Days before the date of such first
Advance; (2) with respect to the initial interest rate for any subsequent Advance made before the
first Reset Date, the interest rate borne by the first Advance; (3) with respect to the initial interest
rate for any subsequent Advance made after the first Reset Date,the LIBO Rate two London
Banking Days before the immediately preceding Reset Date; and(4)with respect to the
subsequent interest rate at any Reset Date for any Advance, the LIBO Rate two London Banking
Days before such Reset Date.
"London Banking Day" means any day in which dealings in deposits in United States
dollars are transacted in the London interbank market. Interest payable on or before the
Conversion Date shall be calculated on the basis of a 360-day year and the actual number of days
lapsed.
C. Principal Amount
Prior to the Conversion Date, the aggregate amount of Advances under this Note for each
specified Principal Due Date shall be paid by the Borrower on such Principal Due Date (as
assigned to such Advances by the Secretary's instructions to the Fiscal Agent in accordance with
the Contract and the Fiscal Agency Agreement), unless this Note is redeemed before such
Principal Due Date as provided below.
D. Redemption before Conversion Date
At any time on or before the Conversion Date, the Borrower, with the consent of the
Secretary, may redeem this Note, in whole or in part, upon fourteen calendar days notice to the
Fiscal Agent and the Secretary, at the purchase price of one hundred percent (100%) of the
unpaid Principal Amount to be redeemed, plus accrued interest thereon to the date of redemption.
Partial redemptions shall be credited against the applicable Principal Amount(s). The related
Commitment Amounts and the Maximum Commitment Amount shall be adjusted concurrently
with any such redemptions in accordance with the Secretary's instructions to the Fiscal Agent
pursuant to the Contract and the Fiscal Agency Agreement.
Il. Conversion
The following events shall occur on the Conversion Date:
A. Schedule P&I
On the Conversion Date all Advances owed by the Borrower under this Note with the
same Principal Due Date shall be aggregated into a single Principal Amount that will accrue
4
interest at the fixed rate applicable to such Principal Due Date. Such Principal Amount may be
adjusted by the Fiscal Agent in accordance with the following paragraph or paragraph IV.H, as
applicable. Whether or not adjusted,the fixed rate applicable to each Principal Amount,together
with the applicable Principal Due Date each shall be listed by the Secretary in Schedule P&I.
Schedule P&I will be provided by the Secretary to the Fiscal Agent and attached to this Note by
the Fiscal Agent upon the Fiscal Agent's receipt of this Note on the Conversion Date.
B. Conversion Date Advances
If, on or prior to the Conversion Date, the Borrower has not utilized the entire
Commitment Amount indicated on the Commitment Schedule attached hereto for a given
Principal Due Date, the Borrower may, in accordance with the Fiscal Agency Agreement and the
Contract, and with the approval of the Secretary, utilize such Commitment Amount on the
Conversion Date to obtain a Conversion Date Advance. A "Conversion Date Advance" shall
mean any amount by which the Secretary instructs the Fiscal Agent to increase a Principal
Amount on Schedule P&I for a given Principal Due Date, effective as of the Conversion Date of
this Note. Conversion Date Advances shall be funded by the sale of this Note to the purchaser
selected by the Secretary. The proceeds of a Conversion Date Advance (net of any applicable
fees) shall be distributed to or on behalf of the Borrower on the Conversion Date. The total
amount of Conversion Date Advances shall not exceed the amount of any unused Commitment
Amounts for any Principal Due Date.
III. Terms Applicable Upon Conversion
The following terms shall apply to this Note from the Conversion Date (if any) until this
Note is canceled, or matured and paid in full:
Commencing on the Conversion Date, the Borrower promises to pay to the Holder on the
applicable Principal Due Date each Principal Amount set forth on the attached Schedule P&I,
together with interest on each such Principal Amount at the rate applicable thereto specified on
the Schedule P&I. Interest shall be calculated and payments shall be made in the manner set
forth below.
Interest on each scheduled Principal Amount of this Note due as of a given date specified
on Schedule P&I hereto shall accrue at the related per annum rate specified on Schedule P&I
from (and including)the Conversion Date to (but excluding) such Principal Due Date or, if
applicable, to the applicable Interest Due Date on which an Optional Redemption (as defined
below) occurs. Each interest amount accrued on each unpaid Principal Amount of this Note shall
be due semiannually as of February 1 and August 1 of each year(each such February 1 and
August 1, an "Interest Due Date") commencing on the first such date after the Conversion Date,
until each Principal Amount listed on Schedule P&I to this Note is paid in full. Interest shall be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
5
Certain Principal Amounts that are indicated as being eligible for Optional Redemption
on Schedule P&I may be paid, in whole or in part, at the option of the Borrower as of any
Interest Due Date after the date specified in such schedule (an "Optional Redemption"). In order
to elect an Optional Redemption of a prepayable Principal Amount, the Borrower shall give
notice of its intention to prepay a Principal Amount to the Trustee and the Secretary not less than
60 days nor more than 90 days prior to the Interest Due Date as of which the Borrower intends to
prepay the Principal Amount. The Trustee shall apply any payments received in respect of
Optional Redemptions in accordance with written instructions of the Borrower, as approved by
the Secretary. Principal Amounts that are not indicated as being eligible for Optional
Redemption on Schedule P&I may not be prepaid.
IV. General Terms
A. Additional Definitions
For purposes of this Note, the following terms shall be defined as follows:
"Business Day" shall mean a day on which banking institutions in New York City are not
required or authorized to remain closed and on which the Federal Reserve Bank and the New
York Stock Exchange are not closed. If any payment (including a payment by the Secretary) is
required to be made on a day that is not a Business Day, then payment shall be made on the next
Business Day.
"Contract" shall mean the Contract for Loan Guarantee Assistance, and any amendments
thereto, between the Secretary and the Borrower, the designated public entity named therein(if
applicable), or the State named therein (if applicable), which refers to and incorporates this Note
by the number hereof.
"Principal Amount" shall mean: (i) before the Conversion Date for this Note, the
aggregate amount of Advances made for each Principal Due Date specified in the Commitment
Schedule attached to this Note, less the amount of any redemptions pursuant to Section I.D.
hereof, and any principal repayment; and (ii) on or after the Conversion Date, the principal
amount(if any) stated for each Principal Due Date in Schedule P&I attached hereto, less the
amount of any principal repayment and any Optional Redemptions made pursuant to Section III
hereof and the Trust Agreement.
B. Timely Payment to Fiscal Agent or Trustee
Notwithstanding anything contained in Section I, Section 11, or Section 111, the Borrower,
in accordance with the Contract, shall be required to make all payments of interest and principal,
including any Optional Redemption payment, directly to the Fiscal Agent or the Trustee (as
applicable) on the seventh Business Day prior to the appropriate Interim Payment Date, Interest
Due Date, Principal Due Date, Prepayment Date, or date of Optional Redemption, as applicable.
6
C. Interest on Late Payments
If a payment of principal or interest herein provided for shall not be made by either(i)
2:30 p.m. on an Interest Due Date or Principal Due Date; or(ii) 2:30 p.m. on the second Business
Day (as herein defined) next succeeding an Interim Payment Date,then interest shall accrue on
the amount of such payment at the then applicable interest rate or rates payable on this Note,
from the relevant due date, as the case may be, until the date such payment is made. Nothing in
the immediately preceding sentence shall be construed as permitting or implying that the
Borrower may, without the written consent of the Holder and the Secretary, modify, extend, alter
or affect in any manner whatsoever the right of the Holder timely to receive any and all payments
of principal and interest specified in this Note.
D. Applicability of Fiscal Agency greement or Trust Agreement
Prior to the Conversion Date, this Note and Advances and payments made hereunder
shall be administered pursuant to the terms of the Fiscal Agency Agreement and are subject to
such agreement. On or after the Conversion Date,this Note and Advances and payments made
hereunder shall be administered pursuant to the Trust Agreement and are subject to such
agreement. The terms and provisions of the Fiscal Agency Agreement or the Trust Agreement,
insofar as they affect the rights, duties and obligations of the Holder and/or the Borrower, are
hereby incorporated herein and form a part of this Note. The Borrower hereby agrees to be
bound by all obligations of the Borrower to the Fiscal Agent set forth in the Fiscal Agency
Agreement. Capitalized terms not defined in this Note shall have the meanings ascribed to them
in the Fiscal Agency Agreement or Trust Agreement, as applicable. The Fiscal Agency
Agreement provides for the Fiscal Agent to perform certain duties, including the duties of(i)
paying agent and calculation agent for this Note until its Conversion Date, and (ii) registrar for
this Note until this Note is canceled or a new registrar appointed, each in accordance with the
Fiscal Agency Agreement. The Trust Agreement provides for the Trustee to perform certain
duties, including the duties of collection agent for this Note after its Conversion Date until a new
Trustee is appointed in accordance with the Trust Agreement. This Note may be surrendered to
the Fiscal Agent for registration of transfer or exchange, as provided in the Fiscal Agency
Agreement. The Fiscal Agent and Trustee each shall permit reasonable inspection to be made of
a copy of the Fiscal Agency Agreement or Trust Agreement kept on file at its respective
corporate trust office. Neither the Fiscal Agency Agreement nor the Trust Agreement shall
change the Borrower's payment obligations under this Note.
E. Applicability of Contract and Secretary's Guarantee
1
This Note evidences indebtedness incurred pursuant to and in accordance with the
Contract and pursuant to Section 108 of Title I of the Housing and Community Development Act
of 1974, as amended (42 U.S.C. § 5308) (the "HCD Act"). This Note is subject to the terms and
7
provisions of the Contract, to which Contract reference is hereby made for a statement of said
terms and provisions and for a description of the collateral security for this Note. The payment
of principal on the applicable Principal Due Dates and interest on the applicable Interim Payment
Dates or Interest Due Dates under this Note is unconditionally guaranteed by the Secretary to the
Holder through a guarantee (the "Guarantee"). Execution of the Secretary's Guarantee is required
before this Note is effective, and such Guarantee shall be issued pursuant to and in accordance
with the terms of the Contract and Section 108 of the HCD Act.
F. Default
A default under this Note shall occur upon failure by the Borrower to pay principal or
interest on this Note when due hereunder. If a Borrower defaults on the payment of any interest
or Principal Amounts when due, or if the Secretary gives notice of a final decision to declare the
Borrower in default pursuant to the following paragraph of this Section IVY., the Secretary may,
but is not obligated to, make on any date on or prior to the Conversion Date with fourteen
calendar days prior notice to the Fiscal Agent, or on the seventh Business Day preceding any
Interest Due Date on or after the first permissible Optional Redemption Date with seven Business
Days prior notice to the Trustee, an acceleration payment to the Fiscal Agent or the Trustee, as
applicable, equal to the Aggregate Principal Amount of the Note, together with accrued and
unpaid interest thereon to such acceleration payment date or Interest Due Date, as applicable. In
the event that any such acceleration payment is made from sources other than funds pledged by
the Borrower as security under the Contract(or other Borrower funds), the amounts paid on
behalf of the Borrower shall be deemed to be immediately due and payable to the Secretary.
Nothing in this paragraph shall be construed as permitting or implying that the Borrower may,
without the written consent of the Holder and the Secretary, modify, extend, alter or affect in any
manner whatsoever the right of the Holder timely to receive any and all payments of principal
and interest specified in this Note.
In addition, the Secretary may declare the Borrower in default under this Note if the
Secretary makes a final decision in accordance with the provisions of 24 C.F.R. § 570.913 (or
any successor regulation thereof), including requirements for reasonable notice and opportunity
for hearing, that the Borrower has failed to comply substantially with Title I of the HCD Act.
Following the giving of such reasonable notice, the Secretary may take the remedial actions
specified as available in the relevant provisions of the Contract pending the Secretary's final
decision.
G. Holder's Reliance on Guarantee
Following a default by the Borrower under the terms of this Note, the Holder agrees to
rely wholly and exclusively for repayment of this Note upon the Guarantee. The enforcement of
any instruments or agreements securing or otherwise related to this Note shall be the sole
responsibility of the Secretary, and the Holder shall not be responsible for the preparation,
contents or administration of such instruments and agreements, or for any actions taken in
8
connection with such instruments and agreement. The Holder,to the extent it is legally able to do
so, shall bind or cause to be bound its successors and assigns to all limitations imposed upon the
Holder by this Note.
H. Amendment
This Note may only be amended with the prior written consent of the Secretary and the
Borrower. No such amendment shall reduce, without the prior written consent of the Holder of
this Note, in any manner the amount of, or delay the timing of,payments required to be received
on this Note by the Holder, Fiscal Agent or Trustee, including Guarantee Payments; provided
that prior to the Conversion Date, the Commitment Amounts on the Commitment Schedule
attached hereto, and the Principal Amounts due on the corresponding Principal Due Dates may
be rescheduled pursuant to written instructions given to the Fiscal Agent by the Secretary with
the written agreement of the Borrower and the Secretary absent the consent of the Holder.
I. Waivers
The Borrower hereby waives any requirement for presentment, protest or other demand or
notice with respect to this Note. The Borrower hereby waives notice of default and opportunity
for hearing for any failure to make a payment when due.
J. Delivery and Effective Date
This Note is deemed issued, executed, and delivered on behalf of the Borrower by its
authorized official as an obligation guaranteed by the Secretary pursuant to Section 108 of the
HCD Act, effective as of the date of the Secretary's Guarantee.
V. Borrower-Specific Provisions
[This space intentionally left blank]
9
IN WITNESS WHEREOF,the undersigned, as an authorized official of the Borrower,
has executed and delivered this Note.
BORROWER j
City of San B ino, California
By: /s/
(Signature)
Judith Va s
(Name)
ATTEST:
By: /s/ yor
(Signa ) (Title)
Rachel Clnrk
(Name)
City Clerk
(Title)
10
ASSIGNMENT AND TRANSFER
For value received,the undersigned assigns and transfers this Note to
(Name and Address of Assignee)
(Social Security or Other Identifying Number of Assignee)
and irrevocably appoints
attorney-in-fact to transfer it on the books kept for registration of the Note, with full power of
substitution.
Dated:
Note: The signature to this
assignment must correspond with the
name as written on the face of the
Note without alteration or
enlargement or other change.
Signature Guaranteed:
Qualified Financial Institution
By:
Authorized Signature
APPENDIX A
Special Pre-Conversion Interest Rates.
(a) The Holder and the Secretary contemplate that the majority of the outstanding
Variable/Fixed Rate Notes will be purchased by underwriters selected by the
Secretary for sale in public offerings to occur each year. If a public offering
including this Note has not occurred by each March 1 following the initial
Advance under this Note, the Secretary shall, upon request, advise the Holder as
to when a public offering including this Note is expected to occur, and the Holder
and the Secretary agree to consult with each other as to what the interest rate on
this Note will be after May 1 of that year if a public offering has not occurred by
such May 1. The Holder shall notify the Secretary if such consultation has not
occurred by April 1 of that year. If no public offering including this Note has
occurred on or before such May 1, the applicable interest rate on this Note from
such May 1 shall be the rate (if any) negotiated and agreed upon by the Secretary
and the Holder. Such rate may be the Standard Note Rate or some other rate
agreed upon by the Holder and the Secretary at least two Business Days before
such May 1 (such other rate, the "Negotiated Special Interest Rate"). The
Secretary shall notify the Fiscal Agent and the Holder in writing of any
Negotiated Special Interest Rate within two Business Days of the determination
thereof.
(b) If the Secretary and the Holder do not, by the April 15th preceding such May 1,
negotiate and agree under Section (a) of this Appendix on an interest rate
applicable to this Note, then the Holder may, on or before the April 20th
preceding such May 1, give written notice to the Secretary of its intent to change
the interest rate on this Note and, if such notice was given during such period, the
Holder may, on such May 1, unilaterally determine (subject to the terms of this
paragraph) the interest rate that this Note will bear(such rate, the "Holder
Determined Interest Rate") from and including such May 1 to but excluding the
earliest of. (i) the Conversion Date; (ii) the date that this Note is purchased by a
new Holder (as described in Section(c) below) or(iii) a Monthly Special Reset
Date (as defined below). Interest from and including such May 1 to but excluding
the Public Offering Date shall be paid on the unpaid principal balance of all
outstanding Advances under this Note at the rate(s) to be determined by the
Holder, which, based upon then prevailing market conditions and taking into
account all the circumstances, will enable the Holder to sell this Note at one
hundred percent (100%) of the aggregate amount of all Advances hereunder prior
to the date of such sale. Such interest rate shall be determined as of such May 1
and shall be determined again on the foregoing basis on the first of each month
thereafter(the first of each month after such May 1, a "Monthly Special Reset
Date"). The Holder shall notify the Fiscal Agent and the Secretary in writing
within two Business Days following such dates of the determination of the Holder
Determined Interest Rate and each applicable interest rate determined on a
Monthly Special Reset Date.
(c) If the Secretary and the Holder have failed to agree upon an interest rate pursuant
to Section(a) of this Appendix A, the Secretary, upon seven calendar days notice
to the Holder, may arrange for the purchase of this Note in full by another entity
on the following May 1 or any Business Day thereafter. If such a purchase
occurs,the Holder shall sell and assign this Note to the purchaser thereof without
recourse to the Holder and deliver this Note and its Guarantee to the Fiscal Agent
for registration in the name of the purchaser thereof in accordance with the
Secretary's written instructions. The purchase price for this Note shall be 100% of
the aggregate amount of all Advances owing hereunder plus accrued interest to
the date of purchase. Payment to the Holder of the purchase price for this Note
shall be made by the purchaser thereof in Federal funds at the offices of the
Holder, or at such other place as shall be agreed upon by the Holder and the
Secretary, at 10:00 a.m.,New York time, on the date of purchase. After such
purchase date this Note shall bear a rate of interest negotiated between the
Secretary and the new interim Holder(the "New Purchaser Special Interest
Rate"). The Secretary shall notify the Fiscal Agent and the new purchaser in
writing of any New Purchaser Special Interest Rate within two Business Days
following the date of determination thereof.
(d) Notwithstanding Sections (a) through(c) (inclusive) of this Appendix, no
Borrower is obligated to pay interest at a variable rate exceeding the maximum
rate permitted by generally applicable law of the Borrower's state (such rate, the
"Maximum Rate"). If the Borrower receives notice of a variable interest payment
that exceeds the Maximum Rate, then the Borrower shall timely pay such amount
as does not exceed the Maximum Rate, and concurrently shall notify the Secretary
and the Fiscal Agent of the reason for any interest non-payment.
2
COMMITMENT SCHEDULE
Note No. B-94-MC-06-0539-A
Principal Due Date Commitment Amount
August 1, 2001 $ 0
August 1, 2002 0
August 1, 2003 100,000
August 1, 2004 100,000
August 1, 2005 100,000
August 1, 2006 100,000
August 1, 2007 100,000
August 1, 2008 100,000
August 1, 2009 100,000
August 1, 2010 100,000
August 1, 2011 100,000
August 1, 2012 100,000
August 1, 2013 100,000
August 1, 2014 100,000
August 1, 2015 100,000
August 1, 2016 100,000
August 1, 2017 100,000
August 1, 2018 100,000
August 1, 2019 100,000
August 1, 2020 140,000
Maximum Commitment Amount $1,840,000
SCHEDULE P&I
Note No. B-94-MC-06-0539-A
Principal Amount Principal Interest Rate Optional Redemption Available
Due Date
YES NO
$ August 1, 2001 X
August 1, 2002 X
August 1, 2003 X
August 1, 2004 X
August 1, 2005 X
August 1, 2006 X
August 1, 2007 X
August 1, 2008 X
August 1, 2009 X
August 1, 2010 X
August 1, 2011 X
August 1, 2012 X
August 1, 2013 X
August 1, 2014 X
August 1, 2015 X
August 1, 2016 X
August 1, 2017 X
August 1, 2018 X
August 1, 2019 X
August 1, 2020 X
Aggregate Principal Amount
Principal Amounts for which Optional Redemption is available may be redeemed, subject to the
terms contained herein and in the Trust Agreement, on any Interest Due Date on or after
August 1, 2010.
l
SABO & GREEN,LLP
ATTORNEYS AT LAW
A LIMITED LIABILITY PARTNERSHIP
23801 CALABAsAs ROAD 201 NORTH"E°STREET 35-325 DAME PALM DRIVE
SurrE 1015 SurrE 300 SurrE 232
CALABAsA3,CALrFoRNiA 91302 SAN BERNARDINO,CALIFORNIA 92401 CATHEDRAL CrrY,CALffORNIA 92234
(818)704-0195 (909)383-9373 (760)770-0873
FAX(818)704-4729 FAX(909)383-9378 FAX(760)770-1724
September 19, 2000
Honorable Andrew Cuomo
Secretary of Housing and Urban Development
451 7th Street, SW
Washington, D.C. 20410
Re : City of San Bernardino, California
(303 Third Street Project)
-- Contract for Loan Guarantee Assistance Under
Section 108 of the Housing and County Development
Act of 1974, as Amended (HUD Section 108 Promissory
Note No. B-94-MC-06-0539-A) --
Dear Secretary Cuomo :
The undersigned, being duly licensed and in good standing to
practice law in the State of California, is special legal counsel
to the City of San Bernardino (the "Borrower") and is a principal
of the law firm of Sabo & Green, LLP. As such, we have represented
Borrower regarding that certain Variable/Fixed Rate Note, referred
to as HUD Section 108 Note No. B-94-MC-06-0539-A in the Maximum
Commitment Amount of One Million Eight Hundred Forty Thousand
Dollars ($1, 840, 000 . 00) (the "Note") , to be executed by Borrower
payable to the order of the Registered Holder thereof, and to be
guaranteed by the Secretary of Housing and Urban Development
("HUD") under Section 108 of the Housing and Community Development
Act of 1974, as amended, 42 U.S .C. 5308 ("Section 108") . The Note
will initially be issued to the interim lender, which will make
advances to the Borrower in the amount requested by the Borrower
under the Note . HUD' s guarantee of the Note will be governed by
the Contract for Loan Guarantee Assistance under Section 108
between the Borrower and HUD (the "Contract") , in which the
Borrower pledges Community Development Block Grants pursuant to 24
CFR 570 . 705 (b) (2) , as well as any other security specified therein,
SBEO/0001/DOC/4179
Honorable Andrew Cuomo
September 19, 2000
Page 2
as security for HUD' s guarantee. It is anticipated that the Note,
as authorized by the Contract, will be included in a future trust
created by HUD (together with other Section 108 Notes issued by
other borrowers) , and participation certificates based on the trust
will ultimately be sold in a future public offering by the
underwriters selected by HUD.
In our capacity as special legal counsel, we have made an
examination and investigation of all such matters of fact and
questions of law as we consider necessary or advisable to enable us
to render the opinion hereafter set forth. Specifically, and
without limiting the generality of the foregoing, we have examined:
1 . the Constitution of the State of California;
2 . the City Charter of the City of San Bernardino;
3 . Resolution No. 2000-249 of the Mayor and Common Council
(the governing body of the Borrower) , dated August 7,
2000, and Resolution No . 2000-293, of the Mayor and
Common Council, dated September 18, 2000, authorizing the
Borrower to enter into the transaction described in such
resolutions of the Mayor and Common Council and also
referenced in the caption of this opinion and authorizing
Judith Valles, as the Mayor of the City of San
Bernardino, and Rachel G. Clark, as the City Clerk of the
City of San Bernardino, to execute on behalf of Borrower
all documents necessary or desirable to accomplish the
transaction;
4 . the Contract;
5 . the Note; and
6 . the Amended and Restated Master Fiscal Agency Agreement
dated as of May 17, 2000, the Trust Agreement dated as of
January 1, 1995, and the form of Supplement to the Trust
Agreement .
SBEO/0001/D0C/4179
Honorable Andrew Cuomo
September 19, 2000
Page 3
Based on the foregoing investigation and authorities, we are
of the opinion that :
1 . The Borrower has authorized the transaction, including
issuance of the Note, the pledge of grant funds, and the execution
of all documents necessary or desirable to accomplish the
transaction, in accordance with applicable State and local law.
2 . The Borrower has authorized Mayor Judith Valles, and City
Clerk Rachel G. Clark, to execute the Contract, the Note and all
other documents necessary or desirable to accomplish the
transaction.
3 . The Note and the Contract have been duly executed by the
aforementioned authorized officers of the Borrower, and upon
delivery thereof, due execution of the Contract and the Guarantee
on behalf of HUD, and receipt of the loan proceeds on behalf of the
Borrower, the Note and the Contract, including the obligations for
compensation and indemnification in favor of the Fiscal
Agent/Trustee as incorporated therein, shall be valid, binding and
enforceable obligations of the Borrower.
4 . The pledge of present and future Community Development
Block Grants by the Borrower pursuant to 24 CFR 570 . 705 (b) (2) and
the Contract is valid.
5 . There is no outstanding, or to our knowledge threatened,
action, suit, proceeding, investigation or litigation by or against
the Borrower which will affect the validity of the Note or the
security therefore .
Sincerely,
SABO & GREEN, LLP
�-L10
SBEO/0001/DOC/4179
(See Companion Resos. CDC/2000-27, CDC/2000-28
1 RESOLUTION NO. 2000-249
2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO, CALIFORNIA APPROVING THE CONTRACT
3 FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE
HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS
4 AMENDED, 42 U. S .C. SECTION 5308 (CDBG SECTION 108
CONTRACT NO. B-94-MC-06-0539) FOR THE 303 THIRD STREET
5 PROJECT AND AUTHORIZING THE APPLICATION OF UP TO
$344 , 000 IN ECONOMIC DEVELOPMENT INITIATIVE GRANT
6 PROCEEDS BY THE REDEVELOPMENT AGENCY OF THE CITY OF SAN
BERNARDINO FOR THE 303 THIRD STREET PROJECT
7
8 WHEREAS, the Redevelopment Agency of the City of San
9 Bernardino (the "Agency") shall concurrently with the approval of
10 this Resolution authorize and approve the terms of an owner
11 participation and Economic Development Initiative Loan agreement
12 (the "OPA") by and between 303, L. L.C . , a California limited
13 liability company (the "Owner") and the Agency and authorize and
14 approve the terms of a separate Section 108 loan agreement (the
15 "Agency Section 108 Loan Agreement") by and between the Owner and
16 the Agency which affects certain lands (the "303 Third Street
17 Property", as more particularly described in the OPA and the
18 Section 108 Loan Agreement) situated in the Central City
19 Redevelopment Project of the City of San Bernardino (the "City") ;
20 and
21 WHEREAS, the OPA sets forth the terms and conditions on
22 which the Owner shall conclude its purchase of the "303 Third
23 Street Parcel" as presently owned by the State of California, for
24 redevelopment and reuse by the Owner in accordance with the OPA
25 and the Agency Section 108 Loan Agreement; and
26 WHEREAS, the transaction contemplated under the OPA and
27 the Agency Section 108 Loan Agreement is subject to: (i) the
28
SBEO/0001/DOC/4137-1
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2000-249
1 acquisition by the Owner of the 303 Third Street Parcel from the
2 State of California; and (ii) the receipt by the City and the
3 Agency of final approval from the Secretary of the United States
4 Department of Housing and Urban Development ("HUD") for the
5 application of certain Community Development Block Grant loans by
6 the Agency to the Owner pursuant to OPA (the "EDI Loan") in an
7 original principal amount not to exceed Three Hundred Forty Four
8 Thousand Dollars ($344, 000 . 00) , and by the Agency to the Owner
9 pursuant to the Section 108 Loan Agreement in a principal amount
10 not to exceed One Million Eight Hundred and Forty Thousand
11 Dollars ($1, 840, 000 . 00) . The proceeds of the EDI Loan and the
12 Agency Section 108 Loan, together with other sources of funds as
13 provided by the Owner, shall be used and applied by the Owner for
14 the acquisition of all the lands necessary for the 303 Third
15 Street Project and the payment of certain costs of the
16 environmental remediation work, development, construction,
17 improvement and financing of the special Economic Development
18 Activity (the "303 Third Street Project") described in the
19 written revision to the Community Development Block Grant loan
20 application (CDBG Section 108 Contract No . B-94-MC-06-0539) ,
21 dated May 24 , 2000, (the "HUD Loan Application") submitted to HUD
22 by the City; and
23 WHEREAS, the sole source of funds available to the
24 Agency to provide for the disbursement to the Owner of any sums
25 from: (i) the EDI Loan; and (ii) from the Agency Section 108 Loan
26 shall be obtained by the Agency under (A) that certain United
27 States Department of Housing and Urban Development Economic
28
SBEO/0001/DOC/4137-1
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2000-249
1 Development Initiative Grant No. B-93-ED-06-0539 included within
2 the HUD Loan Application, to the 303 Third Street Project and (B)
3 a "Contract for Loan Guarantee Assistance Under Section 108 of
4 the Housing and Community Development Act of 1974, As Amended (42
5 U. S .C. Section 5308 ) " (the "HUD Section 108 Loan Agreement") by
6 and among the Secretary of HUD, the City, as the unit of local
7 government and the Agency, as the designated public agency
8 borrower under the HUD Section 108 Loan Agreement and the related
9 HUD Section 108 Loan Guarantee Program regulations of HUD set
10 forth at 24 C . F.R. Part 570 .700, et sea. ; and
11 WHEREAS, subject to the receipt of approval by HUD of
12 the 303 Third Street Project, as described in the HUD Loan
13 Application, HUD shall issue to the City and the Agency a loan
14 guarantee commitment under Section 108 of the Housing and
15 Community Development Act of 1974, as amended for HUD Section 108
16 Loan Guarantee Program Grant Number B-94-MC-06-0539 which shall
17 authorize the Agency to administer the disbursement of the EDI
18 Grant in the amount of $344, 000. 00 with a loan under the Section
19 108 Loan Guarantee Program of HUD in accordance with the terms
20 and conditions set forth in the HUD Loan Application in an amount
21 not to exceed $1, 840, 000 . 00 for the redevelopment of the 303
22 Third Street Project by the Owner; and
23 WHEREAS, the Agency shall disburse the proceeds of the
24 EDI Loan in an amount not to exceed $344, 000 . 00 for the assembly
25 of the lands necessary for the 303 Third Street Project and shall
26 also disburse the proceeds of the HUD Section 108 Loan in an
27 amount not to exceed $1, 840, 000 . 00 to the Owner for the
28
SBEO/0001/DOC/4137-1
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2000-249
1 acquisition, environmental remediation, construction, improvement
2 and financing of the 303 Third Street Project in accordance with
3 the terms and conditions of the Agency Section 108 Loan Agreement
4 by and between the Owner and the Agency; and
5 WHEREAS, the Mayor and Common Council of the City of
6 San Bernardino deem it appropriate at this time to authorize the
7 acceptance of a HUD Section 108 Loan Agreement by and among HUD,
8 the City and the Agency for the 303 Third Street Project which is
9 substantially consistent with the terms and conditions of the
10 loan as requested in the HUD Loan Application, and to authorize
11 the actions related to the Community Development Block Grant
12 funding assistance to be provided to the Agency, as the
13 designated public agency borrower, under such HUD Section 108
14 Loan Agreement and the related EDI Grant upon the approval of the
15 Secretary of HUD, as set forth in this Resolution.
16 NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE
17 CITY OF SAN BERNARDINO, CALIFORNIA, DOES HEREBY RESOLVE,
18 DETERMINE AND ORDER AS FOLLOWS :
19 Section 1 . The Mayor and Common Council have
20 previously conducted a public hearing on January 11, 2000,
21 related to the use and application of the EDI Grant and HUD
22 Section 108 Loan Guarantee Program funds for the 303 Third Street
23 Project in an aggregate amount not to exceed Two Million One
24 Hundred Eighty Four Thousand Dollars ($2, 184 , 000 . 00) and the
25 Mayor and the Common Council have previously authorized the
26 submission by the City and the Agency of the HUD Loan Application
27 for the HUD Section 108 Loan Guarantee Program assistance for the
28
SBEO/0001/DOC/4137-1
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2000-249
1 303 Third Street Project . The text of the HUD Loan Application,
2 together with the confirming correspondence of the Mayor
3 addressed to HUD as presented at the meeting at which the
4 Resolution is adopted is hereby ratified and approved by the
5 Mayor and Common Council .
6 Section 2 . On August 7, 2000, the Mayor and Common
7 Council conducted a public hearing relating to the use of the EDI
8 Grant and HUD Section 108 Loan Guarantee Program assistance and
9 funding for the 303 Third Street Project as described in the HUD
10 Loan Application and as further set forth in the Agency staff
11 report dated August 2, 2000, and Agency staff presentation as
12 submitted to the Mayor and Common Council at the meeting and
13 which this Resolution is adopted. The Mayor and Common Council
14 have considered all comments and information submitted by
15 interested persons in connection with the HUD Loan Application
16 and the HUD Section 108 Loan Agreement by and among HUD, the City
17 and the Agency and the OPA by and between the Owner and the
18 Agency and the Agency Section 108 Loan Agreement by and between
19 the Owner and the Agency.
20 Section 3 . The Common Council hereby approves the
21 terms of the HUD Section 108 Loan Agreement as set forth in the
22 HUD Loan Application as submitted to the Mayor and Common Council
23 at the meeting during which this Resolution is adopted. Upon
24 receipt of notice of written acceptance by HUD of the HUD Loan
25 Application which may contain special HUD conditions as deemed
26 consistent with such HUD Loan Application, in the determination
27 by the Mayor in consultation with the Executive Director of the
28
SBEO/0001/DOC/4137-1
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2000-249
1 Economic Development Agency and Special Legal Counsel, such
2 special conditions may be included in the form of the final HUD
3 Section 108 Loan Agreement . The Mayor and the City Clerk are
4 hereby authorized and directed to execute the final form of the
5 HUD Section 108 Loan Agreement on behalf of the City as the "Unit
6 of General Local Government" . The Mayor and the City Clerk are
7 further authorized and directed to execute on behalf of the City
8 as the "Unit of General Local Government" all of the other HUD
9 Section 108 Loan Agreement related instruments and certificates
10 as may be required by HUD in order to complete the transaction
11 contemplated under the HUD Section 108 Loan Agreement as relates
12 to the 303 Third Street Project .
13 Section 4 . Subject to the adoption of an approving
14 resolution of the Agency, upon the execution by the Agency of the
15 HUD Section 108 Loan Agreement and the related HUD Section 108
16 Loan Agreement promissory notes, instruments and certificates to
17 be executed by the Agency as the designated public agency
18 borrower under the HUD Section 108 Loan Agreement, including
19 without limitation, a fiscal agent agreement with the custodian
20 of HUD Section 108 Loan Agreement funds as shall be designated by
21 HUD, the Executive Director of the Economic Development Agency
22 shall cause the fully executed original copy of the HUD Section
23 108 Loan Agreement and the related promissory notes, instruments
24 and other certificates executed by the Agency as the designated
25 public agency borrower for the 303 Third Street Project to be
26 delivered to HUD as soon as practicable after all such documents
27 have been executed on behalf of the City and the Agency, as
28
SSEO/0001/DOC/4137-1
8/7/00 1245 jmw 6
2000-249
1 applicable . The Executive Director is further authorized and
2 directed to initiate all other ministerial actions on behalf of
3 the City relating to the delivery to HUD of all related
4 documents, wire fund transfer instructions, account fund balance
5 confirmation reports and the like, as contemplated under the HUD
6 Section 108 Loan Agreement for the 303 Third Street Project.
7 Section 5 . (a) The Mayor and Common Council hereby
8 acknowledge that the HUD Loan Application sets forth a specific
9 schedule of repayments by the Agency to HUD of the principal
10 amount of the HUD Section 108 loan funds as shall be disbursed to
11 the Agency under the HUD Section 108 Loan Agreement, as shall be
12 due and payable in the amounts and at the times provided as
13 follows :
14 Date of Principal Installment of Date of Principal Installment of
15 Installment Principal Due Installment Principal Due
16
June 1, 2001 $ -0- June 1, 2011 $100,000.00
17
18 June 1, 2002 -0- June 1, 2012 100,000.00
June 1, 2003 100, 000.00 June 1, 2013 100,000.00
19
June 1, 2004 100, 000.00 June 1, 2014 100,000.00
20 June 1, 2005 100, 000.00 June 1, 2015 100,000.00
21 June 1, 2006 100, 000.00 June 1, 2016 100, 000.00
22 June 1, 2007 100, 000.00 June 1, 2017 100,000.00
23 June 1, 2008 100, 000.00 June 1, 2018 100,000.00
24 June 1, 2009 100, 000.00 June 1, 2019 100,000.00
25 June 1, 2010 100, 000.00 June 1, 2020 140,000.00
26 Payments of interest which accrue on the outstanding
27 principal balance of the HUD Section 108 loan shall be paid by
28
SBEO/0001/DOC/4137-1
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2000-249
1 the Agency at the rates of interest per annum at the times and in
2 the amounts provided in the HUD Section 108 Loan Agreement .
3 (b) Except for the special source of funds as may be
4 available to the Agency for the 303 Third Street Project upon
5 receipt and acceptance by the Mayor of the terms and conditions
6 of the written approval by HUD of the HUD Loan Application, as
7 set forth in Section 3 (a) , above, and the execution by the Agency
8 of the HUD Section 108 Loan Agreement, no other source of funds
9 of the City shall be made available to the Agency for the 303
10 Third Street Project .
11 Section 6 . Special legal counsel to the City in
12 connection with the 303 Third Street Project, shall be the law
13 firm of Sabo & Green, L.L. P. Provided the Mayor receives the
14 written approval of HUD of the HUD Loan Application as provided
15 in Section 3 (a) of this Resolution, special legal counsel is
16 hereby authorized and directed to submit to HUD on behalf of the
17 City, as the unit of local government and a party to the HUD
18 Section 108 Loan Agreement, an approving legal opinion with
19 respect to the transaction contemplated under the HUD Section 108
20 Loan Agreement, in the form required by HUD as part of the
21 documentation associated with the HUD Section 108 Loan Agreement.
22 Section 7 . The Executive Director is hereby
23 authorized and directed to complete any necessary environmental
24 certifications relating to the 303 Third Street Project as may be
25 required under the National Environmental Protection Act, as
26 amended.
27
28
SBEO/00011DOC14117-1
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2000-249
1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO, CALIFORNIA APPROVING THE CONTRACT FOR LOAN GUARANTEE
2 ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY
DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. SECTION 5308 (CDBG
3 SECTION 108 CONTRACT NO. B-94-MC-06-0539) FOR THE 303 THIRD
STREET PROJECT AND AUTHORIZING THE APPLICATION OF UP TO $344, 000
4 IN ECONOMIC DEVELOPMENT INITIATIVE GRANT PROCEEDS BY THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO FOR THE 303
5 THIRD STREET PROJECT
6 Section 8 . This Resolution shall take effect upon
7 the date of its adoption.
8 I HEREBY CERTIFY that the foregoing Resolution was duly
9 adopted by the Mayor and Common Council of the City of
10 San Bernardino at a Joint Regular meeting thereof, held
11 on the 7th day of August 2000, by the following vote, to
12 wit .
13
14 Council : AYES NAYS ABSTAIN ABSENT
ESTRADA X
15 LIEN X
MCGINNIS X
16 SCHNETZ X
SUAREZ X
17 ANDERSON X
McCAMMACK X
18
19 .
Ci y Clerk
20
a
The foregoing resolution j' hherby approved this
21 day of August 2000 .
22
u ith Valles, Mayor
23 C ty of San Bernardino
24
Approved as fol and legal content :
25
By Q
26 special:-Ikgal counsel
to the City
27
28
SBEO/0001/DOC/4137-1
8/7/00 1245 jmw 9
(See Companion Reso. 2000-249, CDC/2000-28
1 RESOLUTION NO. CDC/2000-27
2
3 RESOLUTION OF THE COMMUNITY DEVELOPMENT
COMMISSION OF THE CITY OF SAN BERNARDINO
4 APPROVING THE CONTRACT FOR LOAN GUARANTEE
ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND
5 URBAN DEVELOPMENT ACT OF 1974, AS AMENDED, 42 USC
SECTION 5308 (CDBG SECTION 108 CONTRACT NO. B-94-
6 MC-06-0539) FOR THE 303 THIRD STREET PROJECT AND
AGREEING TO ADMINISTER THE APPLICATION OF UP TO
7 $344 , 000 . 00 IN ECONOMIC DEVELOPMENT INITIATIVE
GRANT FUNDS TO 303, L.L.C. , IN SUPPORT OF THE 303
8 THIRD STREET PROJECT
I9
i 10 WHEREAS, the Community Development Commission of the City
11 of San Bernardino (the "Commission") is the governing board of the
12 Redevelopment Agency of the City of San Bernardino, a body corporate
13 and politic (the "Agency") , organized and existing pursuant to the
I
14 Community Redevelopment Law (Part 1 of Division 24 ) commencing with
15 Section 33000 of the Health and Safety Code of the State of
16 California; and
17 WHEREAS, the Agency shall concurrently with the approval of
18 this Resolution authorize and approve the terms of an owner
19 participation and Economic Development Initiative Loan agreement (the
20 "OPA") by and between 303, L. L.C. , a California limited liability
21 company (the "Owner") and the Agency and shall also authorize and
22 approve the terms of a separate Section 108 loan agreement (the
23 "Section 108 Loan Agreement") by and between the Owner and the Agency
24 which affects certain lands (the "303 Third Street Property" as more
25 particularly described in the OPA and the Section 108 Loan Agreement)
26
27
28 SBEO/0001/DOC/4138-2 1
8/7/00 100 jmw
< CDC/2000-27
1 situated in the Central City Redevelopment Project, San Bernardino,
2 California; and
3 WHEREAS, the OPA sets forth the terms and conditions on
4 which the Owner shall conclude its purchase of the "303 Third Street
5 Parcel" as presently owned by the State of California, for
6 redevelopment and reuse by the Owner in accordance with the OPA and
7 the Section 108 Loan Agreement; and
8 WHEREAS, as part of the transaction contemplated under the
9 OPA and the Section 108 Loan Agreement, and subject to (i) the
I 10 acquisition by the Owner of the 303 Third Street Parcel from the State
11 of California; and (ii) the receipt of final approval by the City and
I
12 the Agency of certain Community Development Block Grant loan approvals
13 from the Secretary of the United States Department of Housing and
14 Urban Development ("HUD") the Agency shall make available to the Owner
15 a certain loan of funds pursuant to OPA (the "EDI Loan") in an
16 original principal amount not to exceed Three Hundred Forty Four
17 Thousand Dollars ($344 , 000 . 00) and the Agency shall also make
18 available to the Owner a separate loan of funds pursuant to the
19 Section 108 Loan Agreement in a principal amount not to exceed One
20 Million Eight Hundred Forty Thousand Dollars ($1, 840, 000 . 00) . The
21 proceeds of the EDI Loan and the Section 108 Loan, together with other
22 sources of funds as provided by the Owner shall be used and applied
23 by the Owner for the acquisition of all the land necessary for the 303
24 Third Street Project and the payment of certain costs of the
25 development, construction, improvement and financing of the Special
26 Economic Development Activity (the "303 Third Street Project")
27
28 SBEO/0001/DOC/4138-2 2
8/7/00 100 jmw
CDC/2000-27
1 described in the written revision to the Community Development Block
2 Grant loan application (CDBG Section 108 Contract No . B-94-MC-06-
3 0539) , dated May 24, 2000 (the "HUD Loan Application") submitted to
4 HUD by the City; and
5 WHEREAS, the sole source of funds available to the Agency
6 to provide for the disbursement to the Owner of any sums from: (i) the
7 EDI Loan; and (ii) from the Agency Section 108 Loan shall be obtained
8 by the Agency under : (A) that certain United States Department of
9 Housing and Urban Development Economic Development Initiative Grant
10 No. B-93-ED-06-0539 included within the HUD Loan Application and (b)
11 a "Contract for Loan Guarantee Assistance Under Section 108 of the
12 Housing and Community Development Act of 1974, As Amended (42 U. S .C .
I
13 Section 5308 ) " (the "HUD Section 108 Loan Agreement") by and among
14 HUD, the City, as the "Unit of Local Government", and the Agency, as
15 the "designated public agency borrower" under the HUD Section 108 Loan
16 Agreement and the related HUD Section 108 Loan Guarantee Program
17 regulations of HUD set forth at 24 C. F.R. Part 570 . 700, et sue. ; and
18 WHEREAS, subject to the receipt of the Mayor of the City of
19 the approval by HUD of the 303 Third Street Project as described in
20 the HUD Loan Application and the transaction as contemplated under the
21 OPA and the Agency Section 108 Loan Agreement the loan guarantee
22 commitment by HUD under Section 108 of the Housing and Community
23 Development Act of 1974, as amended for HUD Section 108 Loan Guarantee
24 Program Grant Number B-94-MC-06-0539 which shall authorize the Agency
25 to obtain a loan under the Section 108 Loan Guarantee Program of HUD
26 in accordance with the terms and conditions set forth in the HUD Loan
27
28 SBEO/0001/DOC/4138-2
8/7/00 100 jmw 3
CDC/2000-27
1 Application in an amount not to exceed $1, 840, 000 . 00 for disbursement
2 by the Agency for the redevelopment of the 303 Third Street Project
3 by the Owner; and
4 WHEREAS, the Agency shall disburse the proceeds of the EDI
5 Loan in an amount not to exceed $344, 000 for the acquisition of the
6 lands necessary for the 303 Third Street Project and shall disburse
7 the HUD Section 108 Loan in an amount not to exceed $1, 840, 000 . 00 to
8 the Owner for the acquisition, environmental remediation,
9 construction, improvement and financing of the 303 Third Street
10 Project in accordance with the terms and conditions of Agency Section
11 108 Loan Agreement; and
12 WHEREAS, the Commission acting as the governing board of the
13 Agency deems it appropriate at this time to authorize the acceptance
14 of a HUD Section 108 Loan Agreement by and among HUD, the City and the
15 Agency for the 303 Third Street Project and to authorize the actions
16 related to the Community Development Block Grant funding assistance
17 to be provided to the Agency, as the public agency designee borrower,
18 under such HUD Section 108 Loan Agreement upon approval by the
19 Secretary of HUD, as set forth in this Resolution.
20 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION, ACTING
21 ON BEHALF OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO,
22 DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS :
23 Section 1 . The Commission hereby acknowledges the action
24 taken by the Mayor and Common Council relating to the HUD Section 108
25 Loan Agreement and the 303 Third Street Project in the resolution of
26 even date herewith entitled:
27
28 SBEO/0001/DOC/4138-2
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�•w
CDC/2000-27
1 "Resolution of the Mayor and Common Council of
the City of San Bernardino, California Approving
2 the Contract for Loan Guarantee Assistance Under
Section 108 of the Housing and Community
3 Development Act of 1974, As Amended, 42 USC
Section 5308 (CDBG Section 108 Contract No. B-94-
4 MC-06-0539) for the 303 Third Street Project, And
Authorizing the Application of up to $344, 000 . 00
5 in Economic Development Initiative Grant Proceeds
by the Redevelopment Agency of the City of San
6 Bernardino for the 303 Third Street Project"
7 Section 2 . The Commission hereby approves the form of
8 terms of the HUD Section 108 Loan Agreement as set forth in the HUD
9 Loan Application, and as subject to the receipt by the Mayor of the
10 City of notice of written acceptance by HUD of the HUD Loan
11 Application, as provided in Section 3 (a) of the Resolution of the
12 Mayor and Common Council referenced in the preceding section. The
13 Chair of the Commission and the Agency Secretary are hereby authorized
14 and directed to execute the final form of the HUD Section 108 Loan
15 Agreement on behalf of the Agency, as the designated public agency
16 borrower, as provided in this Section 2 of this Resolution. The Chair
17 of the Commission and the Agency Secretary are further authorized and
18 directed to execute on behalf of the Agency, as the designated public
19 agency borrower under the HUD Section 108 Loan Agreement, all of the
20 other related instruments and certificates as may be required by HUD
21 in order to complete the transaction contemplated under the HUD
22 Section 108 Loan Agreement and this Resolution as relate to the 303
23 Third Street Project .
24 Section 3 . (a) Upon the execution of the HUD Section 108
25 Loan Agreement by the City and the Agency, and the execution by the
26 Agency of all of the related instruments and certificates, the
27
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1 Executive Director shall cause the fully executed original copy of the
2 HUD Section 108 Loan Agreement, each of the executed original
3 promissory notes and the related instruments and certificates as may
4 be required by HUD in order to complete the transaction authorized
5 under the HUD Section 108 Loan Agreement executed by the Agency as the
6 designated public agency borrower to be delivered to HUD as soon as
7 practicable .
8 (b) Subject to the satisfaction of all of the conditions
9 to the close of the escrow transaction described in Section 7 . 0 of the
10 Agency Section 108 Loan Agreement (the "Escrow") , the Executive
11 Director is hereby directed to cause the appropriate form of a
12 "Request for Advance" under the HUD Section 108 Loan Agreement to be
13 completed and submitted to HUD on behalf of the Agency such that the
14 initial disbursement of funds to the Agency under the HUD Section 108
15 Loan Agreement in an amount necessary to cause the Escrow to be closed
16 and the 303 Third Street Parcel to be acquired by the Owner from the
17 State of California . After the close of the Escrow, the Executive
18 Director is hereby further directed to prepare and submit to HUD on
19 behalf of the Agency, each additional Request for Advance under the
20 HUD Section 108 Loan Agreement, such that funds shall be made
21 available to the Agency by HUD for the Agency to make the necessary
22 course of 303 Third Street Project construction Advances at the times
23 requested by the Owner under the Agency Section 108 Loan Agreement.
24 (c) The Commission hereby designates each of the following
25 officers of the Agency to execute a Request for Advance under the HUD
26 Section 108 Loan Agreement :
27
28 SBEO/0001/DOC/4138-2 6
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CDC/2000-27
1 (i) Chair of the Commission and
2 (ii) Executive Director
3 The signatures of both of the officers of the Agency
4 identified above, shall be required for the valid execution and
5 submittal to HUD of each Request for Advance under the HUD Section 108
6 Loan Agreement .
7 (d) The Executive Director is further authorized and
8 directed to initiate all other ministerial actions on behalf of the
9 Agency relating to the delivery to HUD of all related documents, wire
10 fund transfer instructions, account fund balance confirmation reports
11 and the like, as contemplated under the HUD Section 108 Loan
12 Agreement .
13 Section 4 . (a) The Commission hereby acknowledges that
14 the scheduled repayments by the Agency to HUD of the principal amount
15 of the HUD Section 108 loan funds to be disbursed to the Agency under
16 the HUD Section 108 Loan Agreement, shall be due and payable in the
17 amounts and at the times provided as follows :
18
19
20
21
22
23
24
25
26
27
28 SBEO/0001/DOC/4138-2
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II I
CDC/2000-27
1 Date of Principal Installment of Date of Principal Installment of
2 Installment Principal Due Installment Principal Due
3
4 June 1, 2001 $ -0- June 1, 2011 $100, 000.00
5 June 1, 2002 -0- June 1, 2012 100, 000.00
June 1, 2003 100,_000.00 June 1, 2013 100, 000.00
6
June 1, 2004 100,000.00 June 1, 2014 100, 000.00
7
June 1, 2005 100, 000.00 June 1, 2015 100, 000.00
8 June 1, 2006 100, 000.00 June 1, 2016 100, 000.00
9 June 1, 2007 100, 000.00 June 1, 2017 100, 000.00
10 June 1, 2008 100, 000.00 June 1, 2018 100, 000.00
11 June 1, 2009 100, 000.00 June 1, 2019 100, 000.00
12 June 1, 2010 100, 000.00 June 1, 2020 140, 000.00
III The Chair of the Commission and the Agency Secretary are
14 hereby authorized and directed to execute and deliver on behalf of the
15 Agency to the order and instruction of HUD, each of the promissory
16 notes of the Agency as the designated public agency borrower under the
17 terms of the HUD Section 108 Loan Agreement .
18 Payments of accrued interest on the outstanding principal
19 balance of the sums disbursed to the Agency under the HUD Section 108
20 Loan Agreement shall be paid by the Agency at the rates of interest
21 per annum and at the times and in the amounts provided in the HUD
22 Section 108 Loan Agreement .
23 Section 5 . The Chair of the Commission and the Agency
24 Secretary are hereby authorized and directed to execute on behalf of
25 the Agency the appropriate form(s) of documents necessary to
26 accomplish an assignment to HUD of the "Agency Security Interest" and
27
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1 other collateral obtained by the Agency from the Owner under the
2 Agency Section 108 Loan Agreement, including without limitation the
3 "Borrower Guaranties" and the "Letter of Credit" as these terms are
4 defined in the Agency Section 108 Loan Agreement .
5 The Chair of the Commission and the Agency Secretary are
6 hereby authorized and directed to execute on behalf of the Agency,
7 each of the documents referenced in the preceding paragraph of this
8 Resolution, together with such conforming changes to each such
9 document as recommended by the Executive Director and Agency Special
10 Counsel, as necessary or appropriate to conform to the requirements
11 of the the Agency Section 108 Loan Agreement, the OPA and the
12 satisfaction of the conditions to close of the Escrow under Section
13 7 . 0 of the Agency Section 108 Loan Agreement .
14 Section 6 . The Executive Director is hereby authorized
15 and directed to establish and maintain financial records and accounts
16 for the administration of the disbursements of advances to the Agency
17 under the EDI Grant and the HUD Section 108 Loan Agreement for the 303
18 Third Street Project and the corresponding disbursements of advances
19 to the Owner under the OPA and the Agency Section 108 Loan Agreement .
20 All payments of principal and interest received by the
21 Agency from the Owner under "Borrower Section 108 Promissory Note, "
22 as this term is described in the Agency Section 108 Loan Agreement,
23 shall be promptly deposited by the Agency in such "Loan Repayment
24 Account" as may be required by HUD under the HUD Section 108 Loan
25 Agreement .
26
27
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1 Section 7 . The Agency Special Counsel is hereby
2 authorized and directed to submit to HUD on behalf of the Agency, as
3 the designated public agency borrower and a party to the HUD Section
4 108 Loan, an approving legal opinion with respect to the transaction
5 contemplated under the HUD Section 108 Loan Agreement in the form
6 required under the HUD Section 108 Loan Agreement .
7 Section 8 . The Executive director is hereby authorized and
8 directed to complete the filing of any necessary environmental
9 certifications relating to the 303 Third Street Project as may be
10 required under the California Environmental Quality Act, as amended.
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
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II I
CDC/2000-27
1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN
BERNARDINO APPROVING THE CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER
2 SECTION 108 OF THE HOUSING AND URBAN DEVELOPMENT ACT OF 1974, AS
AMENDED, 42 USC SECTION 5308 (CDBG SECTION 108 CONTRACT NO. B-94-MC-
3 06-0539) FOR THE 303 THIRD STREET PROJECT AND AGREEING TO ADMINISTER
THE APPLICATION OF UP TO $344, 000 . 00 IN ECONOMIC DEVELOPMENT
4 INITIATIVE GRANT FUNDS TO 303, L.L.C. , IN SUPPORT OF THE 303 THIRD
STREET PROJECT
5
Section 9 . This Resolution shall take effect upon the
6
date of its adoption.
7
I HEREBY CERTIFY that the foregoing Resolution was duly adopted
8
by the Community Development Commission of the City of San Bernardino
9
at a Joint Regular meeting thereof, held on the 7th day
10
of August 2000 , by the following vote, to wit :
11
12
Commission AYES NAYS ABSTAIN ABSENT
13 ESTRADA X
LIEN X
14 MCGINNIS X
SCHNETZ g
15 SUAREZ R
ANDERSON X />
16 McCAMMACK g /
17
18 86cr e ry
19 The foregoing Resolution is he eby approved this IC?,t� day
20 of August 2000 .
21
'Xidilth Valles, Chairperson
22 Com unity Development Commission
f
23 he City of San Bernardino
Approved as to form
24 and legal content :
25 By
Agency cial Counsel
26
27
28 SBEO/0001/DOC/4138-2 1 1
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(See Companion Resos. 2000-249, CDC/2000-27
1 RESOLUTION NO. CDC/2000-28
2
3 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
CITY OF SAN BERNARDINO APPROVING THE TERMS OF AN OWNER
4 PARTICIPATION AGREEMENT (303 THIRD STREET PROJECT) BY AND
BETWEEN 303, L.L.C . , AND THE REDEVELOPMENT AGENCY OF THE
5 CITY OF SAN BERNARDINO AND APPROVING THE TERMS OF A 2000
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SECTION 108
6 PROJECT DEVELOPMENT LOAN AGREEMENT (303 THIRD STREET
PROJECT) BY AND BETWEEN THE AGENCY AND 303, L.L.C. , AND
7 AUTHORIZING CERTAIN OTHER ACTIONS RELATING TO THE
DISBURSEMENT OF THE PROCEEDS OF UP TO $344 , 000 . 00 IN EDI
8 GRANT/LOAN PROCEEDS AND UP TO $1, 840, 000 . 000 IN SECTION 108
LOAN PROCEEDS BY THE AGENCY TO 303, L. L.C . (303 THIRD
9 STREET PROJECT)
10
11 WHEREAS, the Community Development Commission of the City
12 of San Bernardino (the "Commission") is the governing board of the
13 Redevelopment Agency of the City of San Bernardino, a body corporate
14 and politic (the "Agency" ) , organized and existing pursuant to the
15 Community Redevelopment Law (Part 1 of Division 24 ) commencing with
16 Section 33000 of the Health and Safety Code of the State of
17 California; and
18 WHEREAS, the Agency shall concurrently with the approval of
19 this Resolution authorize and approve the terms of a "Contract for
20 Loan Guarantee Assistance Under Section 108 of the Housing and
21 Community Development Act of 1974 , As Amended (42 U . S .C . Section
22 5308 ) " by and among the Secretary of the United States Department of
23 Housing and Urban Development ("HUD") , the City of San Bernardino, as
24 the "Unit of Local Government" (the "City") and the Agency as the
25 "Designated Public Agency Borrower" under such contract (the "HUD
26 Section 108 Loan Agreement' ) ; and
27
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1 WHEREAS, the Agency shall use and apply the Community
2 Development Block Grant funds it obtains under such HUD Section 108
3 Loan Agreement to provide certain community redevelopment assistance
4 to 303, L.L.C. , a California limited liability company (the "Owner")
5 in support of a Special Economic Development Project (the "303 Third
6 Street Project") pursuant to the terms and conditions of an Owner
7 Participation and Economic Development Initiative Loan Agreement (the
8 "OPA") by and between the Owner and the Agency and pursuant to the
9 terms of a separate Section 108 loan agreement (the "Agency Section
10 108 Loan Agreement") by and between the Owner and the Agency; and
11 WHEREAS, the OPA and the Agency Section 108 Loan Agreement
12 affect certain lands (the "303 Third Street Property" as more
13 particularly described in the OPA and the Agency Section 108 Loan
14 Agreement) situated in the Central City Redevelopment Project, San
15 Bernardino, California; and
16 WHEREAS, the OPA sets forth the terms and conditions on
17 which the Owner shall conclude its purchase of the "303 Third Street
18 Parcel" as presently owned by the State of California, for
19 redevelopment and reuse by the Owner in accordance with the OPA and
20 the Agency Section 108 Loan Agreement; and
21 WHEREAS, as part of the transaction contemplated under the
22 OPA and the Section 108 Loan Agreement, and subject to: (i) the
23 acquisition by the Owner of the 303 Third Street Parcel from the State
24 of California; and (ii) the receipt of final approval by the City and
25 the Agency of certain related Community Development Block Grant loan
26 approvals from HUD, the Agency shall make available to the Owner a
27
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CDC/2000-28
1 certain loan of funds pursuant to the OPA (the "EDI Loan") in an
2 original principal amount not to exceed Three Hundred Forty Four
3 Thousand Dollars ($344, 000 . 00) and the Agency shall also make
4 available to the Owner a separate loan of funds pursuant to the Agency
5 Section 108 Loan Agreement in a principal amount not to exceed One
6 Million Eight Hundred Forty Thousand Dollars ($1, 840, 000 . 00) . The
7 proceeds of the EDI Loan and the Agency Section 108 Loan, together
8 with other sources of funds as provided by the Owner shall be used and
9 applied by the Owner for the acquisition of all the land necessary for
10 the 303 Third Street Project and the payment of certain costs of the
11 development, construction, improvement and financing of the 303 Third
12 Street Project, as described in the written Community Development
13 Block Grant loan application, dated May 24, 2000, as supplemented byt
14 he City (the "HUD Loan Application") submitted to HUD by the City; and
15 WHEREAS, the sole source of funds available to the Agency
16 to provide for the disbursement to the Owner of any sums from: (i) the
17 EDI Loan; and (ii) the Agency Section 108 Loan, shall be obtained by
18 the Agency under the HUD Section 108 Loan Agreement (including the
19 Economic Development Improvement Grant component thereof as originally
20 authorized under United States Department of Housing and Urban
21 Development Economic Development Initiative Grant No. B-93-ED-06-0539,
22 as amended) ; and
23 WHEREAS, subject to the receipt of the Mayor of the City of
24 the approval by HUD of the 303 Third Street Project as described in
25 the HUD Loan Application and the transaction as contemplated under the
26 OPA and the Agency Section 108 Loan Agreement, the loan guarantee
27
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CDC/2000-28
1 commitment by HUD under Section 108 of the Housing and Community
2 Development Act of 1974, as amended for HUD Section 108 Loan Guarantee
3 Program Grant Number B-94-MC-06-0539 which shall authorize the Agency
4 to obtain a loan under the Section 108 Loan Guarantee Program of HUD
5 (and apply the proceeds of the Economic Development Initiative Grant)
6 in accordance with the terms and conditions set forth in the HUD Loan
7 Application in an amount not to exceed $1, 840, 000 . 00 for disbursement
8 by the Agency for the redevelopment of the 303 Third Street Project
9 by the Owner; and
10 WHEREAS, the Agency shall disburse the proceeds of the EDI
11 Loan under the terms and conditions of the OPA in an amount not to
12 exceed $344, 000 for the acquisition of the lands necessary for the 303
13 Third Street Project and shall disburse the proceeds of the HUD
14 Section 108 Loan under the terms and conditions of the Agency Section
15 108 Loan in an amount not to exceed $1, 840, 000. 00 to the Owner for the
16 acquisition, environmental remediation, construction, improvement and
17 financing of the 303 Third Street Project; and
18 WHEREAS, the Commission acting as the governing board of the
19 Agency deems it appropriate at this time to authorize the approval of
20 the OPA and the Agency Section 108 Loan Agreement by and between the
21 Agency and the Owner in support of the 303 Third Street Project, as
22 set forth in this Resolution .
23 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION, ACTING
24 ON BEHALF OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO,
25 DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS :
26
27
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1 Section 1 . The Commission hereby acknowledges the action
2 taken by the Mayor and Common Council relating to the HUD Section 108
3 Loan Agreement, the EDI Grant and the 303 Third Street Project in the
4 resolution of even date herewith entitled:
5 `Resolution of the Mayor and Common Council of
the City of _San Bernardino, California Approving
6 the Contract for Loan Guarantee Assistance Under
Section 108 of the Housing and Community
7 Development Act of 1974 , As Amended, 42 USC
Section 5308 (CDBG Section 108 Contract No . B-00-
8 MC-06-0539) for the 303 Third Street Project, And
Authorizing the Application of up to $344 , 000 . 00
9 in Economic Development Initiative Grant Proceeds
by the Redevelopment Agency of the City of San
10 Bernardino for the 303 Third Street Project"
11 Section 2 . (a) The Commission hereby approves the OPA
12 in the form as submitted to the Commission at the meeting at which
13 this Resolution is adopted. The Chairperson of the Commission and the
14 Agency Secretary are hereby authorized and directed, subject to the
15 provisions of Section 2 (c) of this Resolution, to execute the OPA on
16 behalf of the Agency, together with technical and conforming changes
17 to the text of the OPA and each of the attachments and exhibits
18 thereto as may be recommended by the Executive Director and Agency
19 Special Counsel in order to conform the provisions of the OPA to the
20 HUD Section 108 Loan Agreement and the EDI Grant, as applicable .
21 (b) The Commission hereby approves the Agency Section 108
22 Loan Agreement in the form as submitted to the Commission at the
23 meeting at which this Resolution is adopted. The Chairperson and the
24 Agency Secretary are hereby authorized and directed subject to the
25 provisions of Section 2 (c) of this Resolution to execute the Agency
26 Section 108 Loan Agreement on behalf of the Agency, together with
27
28 SBEO/0001/DOC/4144
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CDC/2000-28
1 technical and conforming changes to the text of the Agency Section 108
2 Loan Agreement, and each of the attachments and exhibits thereto, as
3 may be recommended by the Executive Director and Agency Special
4 Counsel in order to conform the provisions of the Agency Section 108
5 Loan Agreement to the HUD Section 108 Loan Agreement and the EDI
6 Grant, as applicable.
7 (c) Neither the OPA or the Agency Section 108 Loan
8 Agreement shall be executed on behalf of the Agency or be deemed to
9 have any force or effect until such time as the City and the Agency
10 have each caused the HUD Section 108 Loan Agreement and the EDI Grant
11 to be executed and delivered to HUD.
12 Section 3 . (a) Subject to the satisfaction of the
13 conditions for the disbursement of the EDI Loan to the Owner under the
14 OPA, the Executive Director is hereby authorized to disburse the
15 proceeds of the EDI Loan to the Owner.
16 (b) Subject to the satisfaction of the conditions to the
17 close of the escrow transaction described in Section 7 . 0 of the Agency
18 Section 108 Loan Agreement (the `Escrow") , the Executive Director is
19 hereby directed to cause the "Initial Disbursement" thereunder to be
20 made to the Owner. After the close of the Escrow, the Executive
21 Director is hereby further authorized and directed to cause each
22 subsequent "Advance" under the Agency Section 108 Loan to by disbursed
23 to the Owner in accordance with the applicable terms and conditions
24 for each such disbursement of loan proceeds under the Agency Section
25 108 Loan Agreement .
26
27
28 SBEO/0001/DOC/4144
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CDC/2000-28
1 (c) The Executive Director is further authorized and
2 directed to initiate all other ministerial actions on behalf of the
3 Agency relating to the implementation of the 303 Third Street Project
4 as contemplated under the OPA and the Agency Section 108 Loan
5 Agreement, as applicable, including the delivery of all related
6 documents, wire fund transfer instructions, account fund balance
7 confirmation reports and the like, as contemplated under the OPA and
8 the Agency Section 108 Loan Agreement .
9 Section 4 . The Commission hereby acknowledges that the
10 scheduled repayments by the Owner to the Agency of the principal
11 amount of the Agency Section 108 loan funds shall be due and payable
12 to the Agency by the Owner in the amounts and at the times provided
13 as follows :
14 Date of Principal Installment of Date of Principal Installment of
15 Installment Principal Due Installment Principal Due
16
17 June 1, 2001 $ -0- June 1, 2011 $100,000.00
18 June 1, 2002 -0- June 1, 2012 100, 000.00
June 1, 2003 100, 000.00 June 1, 2013 100, 000.00
19
June 1, 2004 100, 000.00 June 1, 2014 100, 000.00
20 June 1, 2005 100, 000.00 June 1, 2015 100, 000.00
21 June 1, 2006 100, 000.00 June 1, 2016 100, 000.00
22 June 1, 2007 100, 000.00 June 1, 2017 100,000.00
23 June 1, 2008 100, 000.00 June 1, 2018 100,000.00
24 June 1, 2009 100, 000.00 June 1, 2019 100, 000.00
25 June 1, 2010 100, 000.00 June 1, 2020 140, 000.00
26
27
28 SBEO/0001/DOC/4144
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CDC/2000-28
1 Payments of accrued interest on the outstanding principal
2 balance of the sums disbursed by the Agency to the Borrower under the
3 Agency Section 108 Loan Agreement shall be paid to the Agency at the
4 rates of interest per annum and at the times and in the amounts
5 provided in the "Borrower Section 108 Promissory Note" as attached to
6 the Agency Section 108 Loan Agreement .
7 Section 5 . The Chair of the Commission and the Agency
8 Secretary are hereby authorized and directed to execute on behalf of
9 the Agency the appropriate form(s) of documents necessary to
10 accomplish an assignment to HUD of the "Agency Security Interest" and
11 other collateral obtained by the Agency from the Owner under the
12 Agency Section 108 Loan Agreement, including without limitation the
13 "Borrower Guaranties" and the "Borrower Letter of Credit" as these
14 terms are defined in the Agency Section 108 Loan Agreement, as
15 necessary or appropriate to conform to the requirements of the HUD
16 Section 108 Loan Agreement and the satisfaction of the conditions to
17 close of the Escrow under Section 7 . 0 of the Agency Section 108 Loan
18 Agreement .
19
20
21
22
23
24
25
26
27
28 SBEO/0001/DOC/4144 8
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CDC/2000-28
1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN
BERNARDINO APPROVING THE TERMS OF AN OWNER PARTICIPATION AGREEMENT
2 (303 THIRD STREET PROJECT) BY AND BETWEEN 303, L.L.C . , AND THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND APPROVING THE
3 TERMS OF A 2000 COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SECTION 108
PROJECT DEVELOPMENT LOAN AGREEMENT (303 THIRD STREET PROJECT) BY AND
4 BETWEEN THE AGENCY AND 303, L.L.C . , AND AUTHORIZING CERTAIN OTHER
ACTIONS RELATING TO THE DISBURSEMENT OF THE PROCEEDS OF UP TO
5 $344 , 000 . 00 IN EDI GRANT/LOAN PROCEEDS AND UP TO $1, 840, 000 . 000 IN
SECTION 108 LOAN PROCEEDS BY THE AGENCY TO 303, L.L .C . (303 THIRD
6 STREET PROJECT)
7 Section 6 . This Resolution shall take effect upon the
8 date of its adoption.
9 I HEREBY CERTIFY that the foregoing Resolution was duly adopted
10 by the Community Development Commission of the City of San Bernardino
11 at a Joint Regular meeting thereof, held on the 7th day
12 of August 2000 , by the following vote, to wit :
13 Commission AYES NAYS ABSTAIN ABSENT
ESTRADA X
14 LIEN X
MCGINNIS X
15 SCHNETZ X
SUAREZ X i
16 ANDERSON X
McCAMMACK X
17
18
Secretary
19
The foregoing Resolution is hereby approved this day
20 of August , 2000 .
21
22 Judith lles, Chairperson
Commu it Development Commission
23 of t e C' ty of San Bernardino
24 Approved as to form
and legal content :
25 1 •
By:
26 Agency Special Counsel
28 SBEO/0001/DOC/4144
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(See Companion Reso. CDC/2000-33)
1 RESOLUTION NO. 2000-293
2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPROVING CERTAIN MODIFICATIONS TO
3 MAYOR AND COMMON COUNCIL RESOLUTION NO. 2000-249 AND
AUTHORIZING THE EXECUTION BY THE MAYOR OF ECONOMIC
4 DEVELOPMENT GRANT AGREEMENT NO. B-93-ED-06-0539 AND
CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION
5 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF
1974 , AS AMENDED (303 WEST THIRD STREET PROJECT)
6
7 WHEREAS, Mayor and Common Council of the City of San
8 Bernardino (the "City") and the Community Development Commission
9 of the City of San Bernardino (the "Commission") as the governing
10 board of the Redevelopment Agency of the City of San Bernardino
11 (the "Agency") have previously adopted the following resolutions :
12 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
13 SAN BERNARDINO, CALIFORNIA APPROVING THE CONTRACT FOR LOAN
14 GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND
15 COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U. S .C.
16 SECTION 5308 (CDBG SECTION 108 CONTRACT NO. B-94-MC-06-0539)
17 FOR THE 303 THIRD STREET PROJECT AND AUTHORIZING THE
18 APPLICATION OF UP TO $344, 000 IN ECONOMIC DEVELOPMENT
19 INITIATIVE GRANT PROCEEDS BY THE REDEVELOPMENT AGENCY OF THE
20 CITY OF SAN BERNARDINO FOR THE 303 THIRD STREET PROJECT
21 ("City Resolution No. 2000-249") ;
22
23 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
24 CITY OF SAN BERNARDINO APPROVING THE TERMS OF AN OWNER
25 PARTICIPATION AGREEMENT (303 THIRD STREET PROJECT) BY AND
26 BETWEEN 303, L.L.C . , AND THE REDEVELOPMENT AGENCY OF THE
27 CITY OF SAN BERNARDINO AND APPROVING THE TERMS OF A 2000
28
SBEO/0001/DOC/4173
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2000-293
1 COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SECTION 108
2 PROJECT DEVELOPMENT LOAN AGREEMENT (303 THIRD STREET
3 PROJECT) BY AND BETWEEN THE AGENCY AND 303, L.L.C. , AND
4 AUTHORIZING CERTAIN OTHER ACTIONS RELATING TO THE
5 DISBURSEMENT OF THE PROCEEDS OF UP TO $344, 000 . 00 IN EDI
6 GRANT/LOAN PROCEEDS AND UP TO $1, 840, 000 . 000 IN SECTION 108
7 LOAN PROCEEDS BY THE AGENCY TO 303, L.L.C. (303 THIRD STREET
8 PROJECT) ("Commission Resolution No. 2000-27") ;
9
10 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
11 CITY OF SAN BERNARDINO APPROVING THE CONTRACT FOR LOAN
12 GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND
13 URBAN DEVELOPMENT ACT OF 1974, AS AMENDED, 42 USC SECTION
14 5308 (CDBG SECTION 108 CONTRACT NO. B-94-MC-06-0539) FOR THE
15 303 THIRD STREET PROJECT AND AGREEING TO ADMINISTER THE
16 APPLICATION OF UP TO $344, 000 . 00 IN ECONOMIC DEVELOPMENT
17 INITIATIVE GRANT FUNDS TO 303, L.L.C. , IN SUPPORT OF THE 303
18 THIRD STREET PROJECT ("Commission Resolution No. 2000-28") ;
19 and
20 WHEREAS, on September 14, 2000, the Secretary of the United
21 States Department of Housing and Urban Development (%NHUD")
22 delivered the following instruments to the City in connection
23 with the 303 Third Street Project as previously approved by City
24 Resolution No. 2000-249 and Commission Resolution No. 2000-27 and
25 Commission Resolution No. 2000-28 :
26 (i) "Contract for Loan Guarantee Assistance Under Section
27 108 of the Housing and Community Development Act of
28
SBEO/0001/DOC/4173
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2000-293
1 1974 , As Amended (42 U.S.C. Section 5308 ) [HUD Grant
2 No. B-94-MC-06-5039-A] (the "HUD Section 108 Loan
3 Agreement") "; and
4 (ii) "EDI Grant Agreement [Grant No. B-93-ED-06-0539] (the
5 "EDI Grant Agreement") "
6 WHEREAS, in order to authorize the Mayor to execute the HUD
7 Section 108 Loan Agreement and the EDI Grant Agreement on behalf
8 of the City in support of the 303 Third Street Project, it is
9 necessary to modify certain provisions of City Resolution No.
10 2000-249 and to acknowledge conforming changes by the Commission
11 to Commission Resolution No. 2000-27 and Commission Resolution
12 No . 2000-28, and to take the following actions as set forth in
13 this Resolution.
14 NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE
15 CITY OF SAN BERNARDINO, CALIFORNIA, DOES HEREBY RESOLVE,
16 DETERMINE AND ORDER AS FOLLOWS :
17 Section 1 . The text of City Resolution No. 2000-
18 249, the text of Commission Resolution No. 2000-27 and the text
19 of Commission Resolution No. 2000-28 are hereby incorporated by
20 this reference into this Resolution of the Mayor and Common
21 Council . Unless the specific context of usage of a particular
22 defined term as used in this Resolution may otherwise require,
23 the meaning of defined terms and phrases as set forth in City
24 Resolution No. 2000-249 shall apply to this Resolution.
25 Section 2 . The Common Council hereby acknowledges
26 receipt from HUD as of September 14, 2000, of the HUD Section 108
27 Loan Agreement and the EDI Grant Agreement for the 303 Third
28
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2000-293
1 Street Project. The HUD Section 108 Loan Agreement and the EDI
2 Grant Agreement are on file with the City Clerk and the Agency
3 Secretary.
4 Section 3 . The Common Council hereby approves the
5 HUD Section 108 Loan Agreement as received at the meeting at
6 which this Resolution is adopted, and the Mayor and Common
7 Council are hereby authorized and directed to execute the HUD
8 Section 108 Loan Agreement on behalf of the City as the
9 "Borrower" under the HUD Section 108 Loan Agreement . The
10 provisions of Section 3 and Section 4 of the City Resolution No.
11 2000-249 are hereby modified so as to conform to the approval and
12 authorizations set forth in the first sentence of this Section 3 .
13 Accordingly, all other related instruments referenced in Section
14 3 and Section 4 of City Resolution No. 2000-249 and Commission
15 Resolution No. 2000-27 shall be executed by the Mayor on behalf
16 of the City as the Borrower under the HUD Section 108 Loan
17 Agreement .
18 Section 4 . The Common Council hereby approves the
19 EDI Grant Agreement as received at the meeting at which this
20 Resolution is adopted, and the Mayor and City Clerk are hereby
21 authorized and directed to execute the EDI Grant Agreement on
22 behalf of the City. The provisions of Section 3 and Section 4 of
23 City Resolution No. 2000-249 are hereby modified so as to conform
24 to the approval and authorizations set forth in the first
25 sentence of this Section 4 .
26 Section S . Section 5 of City Resolution No. 2000-
27 249 is hereby modified to conform to the approval of the HUD
28
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2000-293
1 Section 108 Loan Agreement with the City as the Borrower under
2 said transaction as set forth in Section 3 of this Resolution.
3 Section 6. Section 6 of City Council Resolution No.
4 2000-249 is hereby modified to conform to the approval of the HUD
5 Section 108 Loan Agreement with the City as the Borrower under
6 said transaction.
7 Section 7 . The Common Council hereby authorizes and
8 directs the Mayor and the City Clerk to execute the Agency
9 Section 108 Loan Agreement as the "lender" in the form as
10 originally approved by Section 2 (b) of Commission Resolution No.
11 2000-28 by and between 303 L.L.C. , a California limited liability
12 company (the "Owner") and the Agency. Accordingly, the
13 provisions of Section 2 (b) , and Section 3 through Section 5
14 inclusive of Commission Resolution No. 2000-28 are hereby
15 modified so as to substitute the City in place of the Agency as
16 the lender in the transaction contemplated under the Agency
17 Section 108 Loan Agreement. The Common Council hereby approved
18 technical and conforming changes to the text of the Agency
19 Section 108 Loan Agreement and related documents so as to conform
20 to the City as the lender under said transaction.
21 Section 8 . Subject to the adoption of an approving
22 resolution of the Commission as relates to the terms and
23 conditions of the Owner Participation and Economic Development
24 Initiative Loan Agreement (the "OPA") by and between the Owner
25 and the Agency, which shall govern the administration of the
26 proceeds of the EDI Grant in support of the 303 Third Street
27 Project (also referred to as the "303 West Third Street Project"
28
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2000-293
1 in the EDI Grant Agreement) , the Common Council hereby authorizes
2 and directs the Executive Director of the Economic Development
3 Agency to transfer the proceeds of the EDI Grant to First
4 American Title Insurance Company Escrow No. AD-AM 289 with
5 appropriate written instructions to the escrow holder (First
6 American Title Company--Escrow Department) for final disbursement
7 for the account and credit of the Owner under the OPA at such
8 time as all of the related conditions for the close of the
9 pending real estate transfer by and between the State of
10 California and the Owner and the loan disbursement escrow
11 established under Section 7 . 0 of the Section 108 Loan Agreement
12 have been satisfied. Upon maturity of the EDI Loan, the Agency
13 shall promptly remit the proceeds of such loan under the OPA to
14 the City for the credit and account of the City CDBG Program.
15 Section 9 . The Executive Director of the Economic
16 Development Agency is hereby authorized and directed to request
17 that HUD approve a modification to Paragraph 15 (c) of the HUD
18 Section 108 Loan Agreement in order to accommodate the senior
19 security interest of a construction lender and later, a permanent
20 lender in an original principal amount not to exceed $8, 500, 000,
21 subject to the terms and conditions as set forth in the text of
22 Section 14 . 0 and Section 15 . 0 of the Agency [now City] Section
23 108 Loan Agreement .
24 Section 10 . Except to the extent as modified in this
25 Resolution all other provisions of City Resolution No. 2000-249
26 shall remain in full force and effect .
27
28
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2000-293
1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO APPROVING CERTAIN MODIFICATIONS TO MAYOR AND COMMON
2 COUNCIL RESOLUTION NO. 2000-249 AND AUTHORIZING THE EXECUTION BY
THE MAYOR OF ECONOMIC DEVELOPMENT GRANT AGREEMENT NO. B-93-ED-06-
3 0539 AND CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108
OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED
4 (303 WEST THIRD STREET PROJECT)
5 Section 11 . This Resolution shall take effect upon
6 the date of its adoption.
7 I HEREBY CERTIFY that the foregoing Resolution was duly
8 adopted by the Mayor and Common Council of the City of
9 San Bernardino at a Joint Regular meeting thereof, held
10 on the 18th day of September 2000, by the following vote, to
11 wit :
12
13 Council : AYES NAYS ABSTAIN ABSENT
ESTRADA X
14 LIEN X
MCGINNIS %
15 SCHNETZ %
SUAREZ X
16 ANDERSON X
McCAMMACK X
17
18
Cit - Clerk
19
The foregoing resolution is hereby approved this ,'qtr'
20 day of September 2000 .
21
Judi h Valles, Mayor
22 i ,y of San Bernardino
23
Approved as to form and legal content :
24
By: • �1���u L t'.
25 Special legal counsel
to the City
26
27
28
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(See Companion Reso. 2000-293)
1 RESOLUTION NO. CDC/2000-33
2
3 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
CITY OF SAN BERNARDINO APPROVING CERTAIN MODIFICATIONS TO
4 COMMON COUNCIL RESOLUTION NO. 2000-27 AND COMMON COUNCIL
RESOLUTION NO. 2000-28 AND AUTHORIZING THE EXECUTION BY THE
5 CHAIRPERSON OF THE OWNER PARTICIPATION AGREEMENT (303 THIRD
STREET PROJECT) -BY AND BETWEEN 303 THIRD STREET, L.L.C. ,
6 AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
7
8 WHEREAS, Mayor and Common Council of the City of San
9 Bernardino (the "City") and the Community Development Commission of
10 the City of San Bernardino (the "Commission") as the governing board
11 of the Redevelopment Agency of the City of San Bernardino (the
12 "Agency") have previously adopted the following resolutions :
13
14 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
15 BERNARDINO, CALIFORNIA APPROVING THE CONTRACT FOR LOAN GUARANTEE
16 ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY
17 DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U . S .C. SECTION 5308
18 (CDBG SECTION 108 CONTRACT NO. B-94-MC-06-0539) FOR THE 303
19 THIRD STREET PROJECT AND AUTHORIZING THE APPLICATION OF UP TO
20 $344, 000 IN ECONOMIC DEVELOPMENT INITIATIVE GRANT PROCEEDS BY
21 THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO FOR THE
22 303 THIRD STREET PROJECT ("City Resolution No . 2000-249") ;
23
24 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY
25 OF SAN BERNARDINO APPROVING THE TERMS OF AN OWNER PARTICIPATION
26 AGREEMENT (303 THIRD STREET PROJECT) BY AND BETWEEN 303, L.L.C. ,
27
28 SBEO/0001/DOC/4175
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CDC/2000-33
1 AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND
2 APPROVING THE TERMS OF A 2000 COMMUNITY DEVELOPMENT BLOCK GRANT
3 PROGRAM SECTION 108 PROJECT DEVELOPMENT LOAN AGREEMENT (303
4 THIRD STREET PROJECT) BY AND BETWEEN THE AGENCY AND 303, L.L.C. ,
5 AND AUTHORIZING CERTAIN OTHER ACTIONS RELATING TO THE
6 DISBURSEMENT OF THE PROCEEDS OF UP TO $344, 000 . 00 IN EDI
7 GRANT/LOAN PROCEEDS AND UP TO $1, 840, 000 . 000 IN SECTION 108 LOAN
8 PROCEEDS BY THE AGENCY TO 303, L.L.C. (303 THIRD STREET PROJECT)
9 ("Commission Resolution No. 2000-27") ;
10
11 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY
12 OF SAN BERNARDINO APPROVING THE CONTRACT FOR LOAN GUARANTEE
13 ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND URBAN
14 DEVELOPMENT ACT OF 1974, AS AMENDED, 42 USC SECTION 5308 (CDBG
15 SECTION 108 CONTRACT NO. B-94-MC-06-0539) FOR THE 303 THIRD
16 STREET PROJECT AND AGREEING TO ADMINISTER THE APPLICATION OF UP
17 TO $344, 000 . 00 IN ECONOMIC DEVELOPMENT INITIATIVE GRANT FUNDS TO
18 303, L. L.C . , IN SUPPORT OF THE 303 THIRD STREET PROJECT
19 ("Commission Resolution No . 2000-28") ; and
20
21 WHEREAS, on September 14, 2000, the Secretary of the United
22 States Department of Housing and Urban Development ("HUD") delivered
23 the following instruments to the City in connection with the 303 Third
24 Street Project as previously approved by City Resolution No . 2000-249
25 and Commission Resolution No. 2000-27 and Commission Resolution No.
26 2000-28 :
27
28 SBEO/0001/DOC/4175
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CDC/2000-33
1 (i) "Contract for Loan Guarantee Assistance Under Section 108
2 of the Housing and Community Development Act of 1974, As
3 Amended (42 U.S .C. Section 5308) [HUD Grant No. B-94-MC-06-
4 5039-A] (the "HUD Section 108 Loan Agreement") "; and
5
6 (ii) "EDI Grant Agreement [Grant No. B-93-ED-06-0539] (the "EDI
7 Grant Agreement") "
8
9 WHEREAS, in order to authorize the Chairperson of the Commission
10 to execute the Owner Participation and Econ6mic Development Initiative
11 Loan Agreement on behalf of the Commission in support of the 303 Third
12 Street Project, it is necessary to modify certain provisions of
13 Commission Resolution No. 2000-27 and Commission Resolution No. 2000-
14 28 and to acknowledge conforming changes by the Mayor and Common
15 Council to City Resolution No. 2000-249, and to take the following
16 actions as set forth in this Resolution.
17
18 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
19 CITY OF SAN BERNARDINO, CALIFORNIA, DOES HEREBY RESOLVE, DETERMINE AND
20 ORDER AS FOLLOWS :
21
22 Section 1 . The text of City Resolution No. 2000-249, the
23 text of Commission Resolution No. 2000-27 and the text of Commission
24 Resolution No. 2000-28 are hereby incorporated by this reference into
25 this Resolution of the Commission. Unless the specific context of
26 usage of a particular defined term as used in this Resolution may
27
28 SBEO/0001/DOC/4175
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CDC/2000-33
1 otherwise require, the meaning of defined terms and phrases as set
2 forth in City Resolution No. 2000-249 shall apply to this Resolution.
3
4 Section 2 . The Commission hereby acknowledges receipt
5 from HUD as of September 14, 2000, of the HUD Section 108 Loan
6 Agreement and the EDI Grant Agreement for the 303 Third Street
7 Project . The HUD Section 108 Loan Agreement and the EDI Grant
8 Agreement are on file with the City Clerk and the Agency Secretary.
9
10 Section 3 . The Commission hereby acknowledges receipt
11 from the Common Council of its Resolution dated September 18, 2000,
12 entitled:
13
14 "RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
15 BERNARDINO APPROVING CERTAIN MODIFICATIONS TO MAYOR AND COMMON
16 COUNCIL RESOLUTION NO. 2000-249 AND AUTHORIZING THE EXECUTION BY
17 THE MAYOR OF ECONOMIC DEVELOPMENT GRANT AGREEMENT NO. B-93-ED-
18 06-0539 AND CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION
19 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS
20 AMENDED (303 WEST THIRD STREET PROJECT) " .
21
22 The Commission hereby concurs and accepts the modifications to
23 Commission Resolution No. 2000-27 and Commission Resolution No. 2000-
24 28 as set forth in the September 18, 2000, Resolution of the Common
25 Council, as referenced above .
26
27
28 SBEO/0001/DOC/4175
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CDC/2000-33
1 Section 4 . The Commission hereby approves the OPA in the
2 form as submitted to the Commission at the meeting at which this
3 Resolution is adopted. The Chairperson of the Commission and the
4 Agency Secretary are hereby authorized and directed, to execute the
5 OPA on behalf of the Agency, together with technical and conforming
6 changes to the text of the OPA and each of the attachments and
7 exhibits thereto as may be recommended by the Executive Director and
8 Agency Special Counsel in order to conform the provisions of the OPA
9 to the special conditions of the HUD Section 108 Loan Agreement and
10 the EDI Grant, as applicable, as delivered to the City as of September
11 14 , 2000 . The Executive Director is hereby authorized and directed
12 to transfer the sum of $344, 000. 00, as drawn by the City under the EDI
13 Grant Agreement to the property transfer escrow account established
14 by the State of California and 303 L.L.C. , identified as First
15 American Title Escrow No. AD AM 289, at the earliest feasible time .
16 The escrow by and between the State of California and 303 L.L.C. shall
17 close upon satisfaction of each of the conditions described in Section
18 7 . 0 of the Section 108 Loan Agreement as approved by the Resolution
19 of the Common Council as referenced in Section 3 of this Resolution
20 of the Commission.
21
22 Section 5 . Except to the extent as modified in this
23 Resolution all other provisions of Commission Resolution No. 2000-27
24 and Commission Resolution No. 2000-28 shall remain in full force and
25 effect .
26
27
28 SBEO/0001/DOC/4175
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CDC/2000-33
1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN
BERNARDINO APPROVING CERTAIN MODIFICATIONS TO COMMON COUNCIL
2 RESOLUTION NO. 2000-27 AND COMMON COUNCIL RESOLUTION NO. 2000-28 AND
AUTHORIZING THE EXECUTION BY THE CHAIRPERSON OF THE OWNER
3 PARTICIPATION AGREEMENT (303 THIRD STREET PROJECT) BY AND BETWEEN 303
THIRD STREET, L.L.C. , AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN
4 BERNARDINO
5 Section 6 . This Resolution shall take effect upon the
6 date of its adoption.
7 I HEREBY CERTIFY that the foregoing Resolution was duly adopted
8 by the Community Development Commission of the City of San Bernardino
9 at a Joint Regular meeting thereof, held on the 18th day
10 of September 2000, by the following vote, to wit :
11 Commission AYES NAYS ABSTAIN ABSENT
ESTRADA R
12 LIEN
MCGINNIS X
13 SCHNETZ X
SUAREZ %
14 ANDERSON X
McCAMMACK X
15
16
ecr tary
17
The foregoing Resolution is hereby approved this /c1�+`_ day
18 of September 2000 .
19
20 Judith a les, Chairperson
Co m n' ty Development Commission
21 of the City of San Bernardino
22 Approved as to form
and legal content :
24 Agency Special Counsel
25
26
27
28 SBEO/0001/DOC/4175
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v�
--REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO--
2000
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SECTION 108
PROJECT DEVELOPMENT LOAN AGREEMENT
(303 Third Street Project)
-- Section 108 Loan Guarantee Program of the
Secretary of the United States Department of Housing
and Urban Development Grant Number 3-94-MC-06-0539 --
THIS 2000 COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SECTION 108
DEVELOPMENT LOAN AGREEMENT (the "Agreement") is dated as of August 2000,
between 303, L.L.C. , a California limited liability company (the "Borrower") and
the Redevelopment Agency of the City of San Bernardino, a body corporate and
politic (the "Agency") is made and executed in light of the following facts:
RECITALS
The Borrower and the Agency have entered into an agreement entitled
"Owner Participation and EDI Loan Agreement", dated as of August _, 2000, (the
"OPA") which affects certain improved lands (the "303 Third Street Property")
situated in the Central City Redevelopment Project Area of the City of San
Bernardino (the "City") .
The OPA sets forth the terms and conditions on which the Borrower
(identified in the OPA as the "Owner") shall operate and maintain the 303 Third
Street Property following the acquisition of the 303 Third Street Parcel by the
Borrower from the State of California (the "State") .
As part of the transaction contemplated under the OPA, and subject
to the acquisition by the Borrower of the 303 Third Street Parcel from the State
the Agency shall make available to the Borrower a loan of funds pursuant to this
Agreement (the "Section 108 Loan") in an original principal amount not to exceed
One Million Eight Hundred Forty Thousand Dollars ($1, 840, 000.00) . The proceeds
of the Section 108 Loan, together with other sources of Borrower funds, shall be
used and applied by the Borrower for the payment of the costs of the acquisition
of the 303 Third Street Parcel, environmental remediation work relating to the
abatement and management of asbestos containing materials and certain interior
demolition work in the structure on the 303 Third Street Parcel and the plans,
permits and financing costs related thereto which are collectively referred to
herein as the "Borrower Improvements (Phase I) ".
Following the completion of the Borrower Improvements (Phase I) , the
Borrower shall undertake certain further improvements of the 303 Third Street
Property for certain specific commercial business tenant use and occupancy
(referred to herein as the "Borrower Improvements (Phase II) ") using equity funds
provided by the Borrower and the proceeds of the Construction Loan, subject to
the terms and conditions set forth in this Agreement.
The sole source of funds available to the Agency to provide for the
disbursement to Borrower of any sums from the Section 108 Loan shall be obtained
by the Agency under a "Contract for Loan Guarantee Assistance Under Section 108
of the Housing and Community Development Act of 1974, as amended (42 U.S.C.
Section 5308) " (the "HUD Section 108 Loan Agreement") by and among the Secretary
of the United States Department of Housing and Urban Development ('THUD") , the
City, as the unit of local government, and the Agency, as the designated public
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agency borrower under the HUD Section 108 Loan Agreement and the Section 108 Loan
Guarantee Program regulations of HUD set forth at 24 CFR Part 570.700, et sea.
The City and the Agency have received a letter, and the accompanying
documents, from HUD dated , 2000, for ". . . a loan guarantee commitment
by HUD under Section 108 of the Housing and Community Development Act of 1974,
as amended . . . [HUD Section 108 Loan Guarantee Program Grant Number B-94-MC-06-
0539) . . ." which authorizes the Agency to obtain a loan under the Section 108
Loan Guarantee Program of the Secretary in an amount not to exceed $1, 840,000.00
for disbursement by the Agency for the redevelopment of the 303 Third Street
Property and the development and improvement of the 303 Third Street Project.
Provided that the conditions of this Agreement are satisfied, the Agency shall
disburse the proceeds of the HUD Section 108 Loan which it obtains from HUD to
the Borrower which together with other sources of funds as set forth below shall
be used and applied by the Borrower to pay for certain costs of the 303 Third
Street Project.
In this Agreement, the words "Section 108 Loan" refer to the loan and
the disbursement of funds to be made by the Agency to the Borrower under this
Agreement in an original principal amount not to exceed the sum of One Million
Eight Hundred Forty Thousand Dollars ($1, 840, 000.00) .
In addition to the definition of certain terms and phrases set forth
in the preceding six (6) paragraphs of "RECITALS" to this Agreement, certain
other words and phrases which are denoted by a capitalized initial letter shall
have the particular meanings set forth in Section 1.0 of this Agreement.
NOW THEREFORE, AND FOR GOOD AND VALUABLE CONSIDERATION, THE PARTIES
ENTER INTO THIS AGREEMENT IN ORDER TO SATISFY CERTAIN CONDITIONS OF THE HUD
SECTION 108 LOAN AGREEMENT AND TO PROVIDE FOR THE COMPLETION OF THE REDEVELOPMENT
OF THE 303 THIRD STREET PARCEL AND THE IMPROVEMENT OF THE 303 THIRD STREET
PROJECT:
Section 1.0. DEFINITIONS. In addition to the usage of the
defined terms and phrases set forth in the RECITALS of this Agreement, the words
and phrases which appear below in this Section 1.0 shall have the following
meanings when used in this Agreement:
• 303 Third Street Project. The words "303 Third Street Project" refer to
the acquisition of the 303 Third Street Parcel by the Borrower from the
State and the performance by the Borrower of certain environmental
remediation work relating to asbestos containing materials management and
abatement work and the construction and completion of all of the other
improvements to the 303 Third Street Parcel as indicated to make such
property suitable for use and occupancy by commercial business tenants.
The 303 Third Street Project includes the elements of work described in
the Scope of Development which is presented in the OPA.
• 303 Third Street Project Costs. The words "303 Third Street Project
Costs" refer to any cost or expense item identified in the Approved 303
Third Street Project Budget, for which the Borrower may apply to proceeds
of the Section 108 Loan, including financing costs and payments of
principal and interest under the Section 108 Loan.
• 303 Third Street Property. The words "303 Third Street Property" refer to
the 303 Third Street Parcel and the Parking Lot Parcel, together with all
accessions, parts, and additions to, all replacements of, and all
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substitutions for any of such property, and all proceeds (including
insurance proceeds and refunds of premiums) from any sale or other
disposition of such property.
• Advance. The word "Advance" refers to each credit, draw or disbursement
of a portion of the available balance of the Section 108 Loan to pay 303
Third Street Project Costs as authorized under this Agreement. Each
Advance of cash or immediately available funds disbursed under the Section
108 Loan to pay for 303 Third Street Project Costs shall be paid to the
Escrow Holder for the account of the Borrower from monies held by the
Agency, in the case of the Initial Advance, or tendered by the Agency to
the Fiscal Agent for disbursement to the Borrower for such purposes on or
before the date of an Advance subsequent to the Initial Advance.
• Agency Deed of Trust. The words "Agency Deed of Trust" mean and refer to
the deed of trust and assignment of leases and rents executed by the
Borrower and "Trustor" in favor of the Agency as the "Lender" or
"Beneficiary" under the Section 108 Loan. The Agency Deed of Trust shall
encumber the 303 Third Street property. At the time of the close of the
Escrow, the Agency Deed of Trust shall be in a first lien position on the
303 Third Street Parcel and the Parking Lot Parcel subject only to title
exception matters approved by the Agency prior to the close of the Escrow.
The form of the Agency Deed of Trust is attached to this Agreement.
• Agency Security Interest. The words "Agency Security Interest" mean and
refer to each of the following instruments executed by the Borrower in
favor of the Agency:
(i) the Agency Deed of Trust and Assignment of Leases and Rents;
(ii) the Agency UCC-1;
(iii) the EDI Loan Performance Deed of Trust;
(iv) the Borrower Assignment of Agreements (Phase I) ; and
(v) the Tenant Subordination, Nondisturbance and Attornment
Agreements (as applicable) .
The form of each of the instruments which evidence the Agency Security
Interest in the 303 Third Street Property is attached to this Agreement.
• Agreement. The word "Agreement" means this 2000 Community Development
Block Grant Project Section 108 Development Loan Agreement by and between
the Borrower and the Agency, and all amendments and modifications of this
Agreement, together with all exhibits and schedules attached to this
Agreement from time to time.
• Application for Loan Disbursement. The words "Application for Loan
Disbursement" refer to the form of the written application of the Borrower
for disbursement of an Advance to pay for 303 Third Street Project Costs.
After the Initial Advance, each Application for Loan Disbursement shall be
submitted to the Agency in the form required under the Fiscal Agent
Agreement at least ten (10) business days before the date on which the
receipt of disbursement of the Advance is requested by the Borrower. The
general form of the Application for Loan Disbursement is attached as an
exhibit to the Fiscal Agent Agreement.
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• Approved 303 Third Street Project Budget. The words "Approved 303 Third
Street Project Budget" refer to the budget of the elements of the 303
Third Street Project Costs as prepared by the Borrower and the Agency
which shall be subject to confirmation by the parties prior to the close
of the Escrow as provided in Section 7.0 of this Agreement. The Approved
303 Third Street Project Budget shall also include an estimated draw
schedule for 303 Third Street Project Costs (identified as a percentage of
each budgeted line item) based upon the Borrower's forecast of the 303
Third Street Project construction progress between the Commencement Date
and the Completion Date (Phase II) . The Approved 303 Third Street Project
Budget shall include line items for Advances or draws from funded debt
service reserve accounts under the Construction Loan and the Section 108
Loan for the Borrower Improvements (Phase I) , and shall be subject to
certain adjustments approved by the Agency.
• Borrower. The word "Borrower" means each and every person or entity
signing the Borrower Section 108 Loan Promissory Note.
• Borrower Architect Contract. The words "Borrower Architect Contract" mean
the contract between Borrower and WWCOT, who designed the Borrower
Improvements (Phase I) .
• Borrower Contractor. The words "Borrower Contractor" means Inland
Construction Management, Inc. , the general contractor for the
construction, improvement and installation of the Borrower Improvements
(Phase I) .
• Borrower Guaranties. The words "Borrower Guaranties" refer collectively
to the joint and several personal guaranty of J. Kevin Brunk, Wilfred C.
Lemann and Martin A. Matich, each of whom shall unconditionally guarantee
the repayment of the Section 108 Loan to the Agency. Each of the Borrower
Guaranties shall be delivered to the Agency prior to the close of the
Escrow and the disbursement of the Initial Advance. The form of the
Borrower Guarantee is attached to this Agreement.
• Borrower Improvement Costs (Phase I) . The words "Borrower Improvement
Costs (Phase I) " mean and refer to the Borrower Improvements to be
undertaken using the proceeds of the Section 108 Loan and equity funds
'contributed by the Borrower. Borrower Improvement Costs (Phase I) are
costs incurred by the Borrower for work performed under the Borrower
Improvements Construction Contract (Phase I) for the environmental
remediation work and demolition work at the 303 Third Street Parcel as set
forth in the Borrower Improvement Plans and Specifications for such work
promptly following the close of the Escrow.
• Borrower Improvement Costs (Phase II) . The words "Borrower Improvement
Costs (Phase II) " mean and refer to the Borrower Improvements to be
undertaken using the proceeds of the Construction Loan and equity funds
contributed by the Borrower. Borrower Improvement Costs (Phase II) are
costs incurred by the Borrower following the completion of all of the work
associated with the Borrower Improvements (Phase I) .
• Borrower Improvement Plans and Specifications. The words "Borrower
Improvement Plans and Specifications" mean the plans and specifications
for the Borrower Improvements. Prior to the first Advance following the
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close of the Escrow the Borrower shall submit Borrower Improvement Plans
and Specifications to the Agency for the Borrower Improvements (Phase I) .
• Borrower Improvements. The words "Borrower Improvements" mean and include
without limitation all existing and future site improvements, facilities,
fixtures, additions, and similar construction to be undertaken by the
Borrower as part of the 303 Third Street Project--e.g. both the Borrower
Improvements (Phase I) and Borrower Improvements (Phase II) . The scope of
the Borrower Improvements does not include improvements and the
installation of furnishing and equipment, which are undertaken at the sole
cost and directly paid for by Tenants. The Borrower is responsible for
the design, construction and installation of the Borrower Improvements and
the integration of the Borrower Improvements with any improvements which
may be undertaken by Tenants.
• Borrower Improvements Construction Contract. The words "Borrower
Improvements Construction Contract" mean and include the contract between
Borrower and Inland Construction Management, Inc. , the general contractor
for the construction and improvement of the Borrower Improvements (Phase
I) , and any subcontractors, materialmen, laborers, or any other person or
entity for performance of work on the Borrower Improvements (Phase I) or
the delivery of materials relating to any Borrower Improvements, and
later, the contract by and between the Borrower and its general contractor
for the performance of the work relating to the Borrower Improvements
(Phase II) .
• Borrower Improvements (Phase I) . The words "Borrower Improvements (Phase
I) " mean and refer to the portion of the Borrower Improvements to be
undertaken by the Borrower using the proceeds of the Section 108 Loan and
certain equity contributions of the Borrower as set forth in the Approved
303 Third Street Project Budget. The Borrower Improvements (Phase I)
include the asbestos containing materials remediation work and demolition
work to be performed by the Borrower on the 303 Third Street Parcel
promptly following the close of the Escrow. The work of the Borrower
Improvements (Phase I) shall be completed before any work may commence
under the Borrower Improvements (Phase II) .
• Borrower Indebtedness. The words "Borrower Indebtedness" means and
includes all outstanding principal and accrued and unpaid interest thereon
and other costs and charges of the Borrower Section 108 Loan Promissory
Note and the Agency Deed of Trust.
• Borrower Letter of Credit. The words "Borrower Letter of Credit" mean and
refer to the irrevocable direct payment letter of credit in the original
principal amount of Five Hundred Thousand Dollars ($500, 000.00) issued to
the Agency by a commercial bank whose debt obligation is rated not less
than "A" by Standard and Poors, or other similar rating service, . The
Borrower Letter of Credit shall be in a form which the issuing bank
acknowledges its assignment by the Agency to the Secretary of HUD as part
of the Section 108 Loan Collateral. The Borrower Letter of Credit shall
secure the obligation of the Borrower to the Agency under the OPA and this
Agreement. The Borrower shall maintain the Borrower Letter of Credit
until a date which is set forth in Section 15.0 (e) .
• Borrower Section 108 Promissory Note. The words "Borrower Section 108
Promissory Note" mean the promissory note of even date with the close of
the Escrow in the original principal amount not to exceed $1, 840, 000.00,
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together with all renewals of, extensions, modifications, refinancings,
consolidations, substitutions and additional advances authorized under
this Agreement. The Borrower Section 108 Promissory Note shall be secured
by a deed of trust and assignment of rents in favor of the Agency.
• Commencement Date. The words "Commencement Date" mean the date on which
the proceeds of the EDI Loan are disbursed for the account and credit of
the Borrower for the 303 Third Street Project.
• Completion Date (Phase I) . The words "Completion Date (Phase I) " refer to
the date on which the environmental remediation work and improvement of
the 303 Third Street Project (e.g. : the Borrower Improvements (Phase I) )
is completed by the Borrower; provided however, such date shall occur no
later than eighteen (18) months following the close of the Escrow.
• Completion Date (Phase II) . The words "Completion Date (Phase II) " mean
and refer to the date on which the Agency confirms that the Borrower
Improvements (Phase II) have been completed.
• Construction Lender. The words "Construction Lender" mean and refer to
the commercial lending institution which shall provide the Construction
Loan to the Borrower.
• Construction Lender Subordination Agreement. The words "Construction
Lender Subordination Agreement" refer to the agreement by and among the
Agency and the Borrower, and consented to by such Construction Lender, to
acknowledge a subordination of the Agency Security Interest in the 303
Third Street Project to the lien of Construction Lender in the 303 Third
Street Property and related security; provided however, that the Agency
has reviewed and approved in its reasonable discretion, the terms and
conditions of the Construction Loan, and that the principal amount thereof
shall not exceed a sum as permitted under Section 14.0.
0 Construction Loan. The words "Construction Loan" refer to the commercial
construction loan financing to be provided to the Borrower by a commercial
lending institution in an original principal amount not to exceed the
principal amount thereof shall not exceed a sum as permitted under Section
14 .0. The proceeds of the Construction Loan shall be disbursed by the
commercial lending institution to the Borrower for the purpose of paying
for Borrower Improvement Costs (Phase II) as indicated on the Approved 303
Third Street Project Budget.
• Disbursement Control Service. The words "Disbursement Control Service"
refer to Escrow Mart, or the successor to Escrow Mart, approved by the
Agency, which shall perform the customary functions of a construction
lender disbursement control and payment verification service. The
Disbursement Control Service shall monitor the progress of the work of the
Borrower Improvements on behalf of the Agency, and shall verify the
completeness and accuracy of each Application for Payment submitted by the
Borrower Contractor prior to the submittal by the Borrower of an
Application for Loan Disbursement for any Advance by the Fiscal Agent
(except for the Initial Advance) , and shall perform other customary
construction cost control and audit functions requested by the Agency (and
later by the Construction Lender) . The designation of the Disbursement
Control Service following the completion of the Borrower Improvements
(Phase I) shall be subject to the mutual approval of the Construction
Lender and the Agency.
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• EDI Loan. The words "EDI Loan" refer to a separate loan of funds for the
303 Third Street Project to the Borrower in the amount of Three Hundred
Forty Four Thousand Dollars ($344,000.00) which shall be evidenced by a
promissory note and secured by a deed of trust in favor of the Agency
affecting the 303 Third Street Property, or portion thereof. The proceeds
of the EDI Loan shall be disbursed to the Borrower for the 303 Third
Street Project as promptly as feasible following the acceptance of the HUD
Section 108 Loan Agreement by HUD. The EDI Loan shall bear no interest
prior to its materials and is payable prior to maturity at the time of
recordation of the Construction Loan, all as more particularly set forth
in the OPA.
• Escrow. The word "Escrow" means the escrow transaction established by the
Borrower under that certain agreement by and between the Borrower and the
State of California (SSL-524) , dated October 2, 1998, as amended (the
"State Sale Agreement") , pursuant to which the State of California shall
transfer fee title interest to the Borrower in the 303 Third Street Parcel
upon the satisfaction of the conditions relating to the sale of the 303
Third Street Parcel by the State of California to the Borrower. It is a
condition to the close of the Escrow under the State Sale Agreement that
the Agency disburse the proceeds of the EDI Loan and the Section 108 Loan
to the Borrower. The Agency shall disburse such proceeds of the EDI Loan
and the Section 108 Loan upon the satisfaction of the conditions of
Section 7.0 of this Agreement.
• Escrow Holder. The words "Escrow Holder" mean and refer to First American
Title Insurance Company, escrow department, or such successor to the
Escrow Holder as may be designated by the Borrower and the State of
California.
• Events of Default. The words "Events of Default" mean and include any of
the events or occurrences set forth below in Section 13.0 (a) of this
Agreement.
• Final Advance. The words "Final Advance" refer to the last disbursement
of funds to the Borrower to pay for Borrower Improvement Costs (Phase I)
upon completion of the environmental remediation work at the 303 Third
Street Parcel as described in Section 8.0 (a) (13) .
• Fiscal Agent. The words "Fiscal Agent" mean and refer to First American
Title Insurance Company, as fiscal agent of the parties, or the successor
to First American Title Insurance Company designated under the Fiscal
Agent Agreement, which shall serve as the fiscal agent of the Agency from
and after the date of the Commencement Date for the purpose of
coordinating the disbursement of funds which have been deposited or
tendered to the Fiscal Agent from the Borrower and the Agency as
applicable, for disbursement to the Borrower by the Fiscal Agent as an
Advance for the payment of Borrower Improvement Costs (Phase I) .
• Fiscal Agent Agreement. The words "Fiscal Agent Agreement" refer to the
construction loan disbursement control agreement by and among the Fiscal
Agent, the Borrower and the Agency. All disbursements of cash or
immediately available funds of the Section 108 Loan to pay Borrower
Improvement Costs (Phase I) shall be remitted by the Agency to the Fiscal
Agent pending disbursement to the Borrower by the Fiscal Agent pursuant to
the terms and conditions of the Fiscal Agent Agreement.
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• Initial Advance. The words "Initial Advance" refer to the first draw or
disbursement by the Agency to the Borrower under the Section 108 Loan.
The Initial Advance shall occur concurrently upon the close of the Escrow
as provided in Section 7.0 of this Agreement. The Borrower shall submit
its completed Application for Loan Disbursement (Initial Advance) to the
escrow holder and the Agency, at least five (5) business days preceding
the close of the Escrow. The contents of the Application for Loan
Disbursement (Initial Advance) shall otherwise conform to the requirements
of this Agreement and the Fiscal Agent Agreement, and shall contain an
appropriately detailed itemization of the proposed application of the
Initial Advance to pay 303 Third Street Project Costs.
• Parking Lot Parcel. The words "Parking Lot Parcel" mean and refer to the
lands located at the southwest corner of 2nd Street and Mountain View
Avenue in the City, which the Borrower has previously acquired. At the
time of the close of the Escrow, the Borrower shall cause to be recorded
a covenant enforceable by the Agency (the "Parking Lot Parcel Covenant")
which joins the use of the Parking Lot Parcel, or permitted substitute
off-street vehicle parking to the use of the 303 Third Street Parcel for
a term of not less than twenty (20) years in a form acceptable to the
Agency.
• Participation Fee. The words "Participation Fee" mean and refer to the
sum of Two Hundred Thousand Dollars ($200,000.00) payable by the Borrower
to the Agency as provided under the OPA. The participation Fee shall be
payable at the time of recordation of the Permanent Loan, and shall not
bear interest.
• Permanent Loan. The words "Permanent Loan" refer to the permanent
mortgage loan for the 303 Third Street Project which shall be obtained by
the Borrower by no later than the maturity date of the Construction Loan.
The Permanent Loan shall be in a principal amount not to exceed Eight
Million Five Hundred Thousand Dollars ($8, 500, 000.00) and shall have a
term of at least ten (10) years from its date and shall be in a form and
substance as provided in Section 15.0, below. The proceeds of the
Permanent Loan shall be used and applied by the Borrower solely to
discharge the outstanding balance of the Construction Loan, discharge the
remaining balance, if any of the EDI Loan, pay the Participation Fee and
the necessary and reasonable loan costs of the Permanent Lender and the
Agency. The lien of the Agency Deed of Trust shall be subordinate to the
security lien of the Permanent Loan in the 303 Third Street Property.
• Related 303 Third Street Project Documents. The words "Related 303 Third
Street Project Documents" mean and include without limitation, the
Borrower Improvement Plans and Specifications (Phase I) , all studies, data
and drawings relating to the 303 Third Street Project, whether prepared by
or for Borrower, the Borrower Improvements Construction Contract, the
Borrower Improvements Architect Contract and all other contracts and
agreements relating to the 303 Third Street Project or the construction of
the Borrower Improvements, all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with
any of the Related 303 Third Street Project Documents. A complete and
fully executed set of the Related 303 Third Street Project Documents shall
be delivered by the Borrower and the Agency to the Escrow Holder by no
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later than three (3) business days preceding the date of the close of the
Escrow. Such additional Related 303 Third Street Project Documents shall
be delivered by the Borrower and the Agency concurrently upon the
recordation of the Construction Lender Subordination Agreement, and later
upon the recordation of the Permanent Lender Subordination Agreement, as
applicable.
0 Section 108 Loan. The words "Section 108 Loan" refer to a loan by the
Agency to the Borrower in an amount not to exceed $1, 840, 000.00 which
shall be disbursed to the Borrower on and after the Commencement Date in
installments pursuant to the terms and conditions of this Agreement.
• Section 108 Loan Collateral. The words "Section 108 Loan Collateral" mean
and include without limitation all property and assets granted by the
Borrower to the Agency as security for the repayment of the Section 108
Loan under an Agency Security Interest, whether real or personal property,
whether granted directly or indirectly, whether granted now or in the
future, and whether granted in the form of a security interest, mortgage,
deed of trust, assignment, pledge, chattel mortgage, chattel trust,
factor' s lien, equipment trust, conditional sale, trust receipt, lien,
charge, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise. The Section 108 Loan
Collateral includes the Section 108 Loan Deed of Trust and Assignment of
Rents of even date with the Borrower Section 108 Loan Promissory Note, all
monies remitted by the Borrower to the Fiscal Agent pending disbursement
as part of an Advance pursuant to the Fiscal Agent Agreement, and the
collateral assignment to the Agency of the interest of the Borrower in the
Personal Guaranties and the Borrower Letter of Credit and the other
Related 303 Third Street Project Documents which the Agency shall in turn
assign to the Secretary of HUD as security for the repayment of the HUD
Section 108 Loan Agreement. Following the completion of the Borrower
Improvements (Phase I) , elements of the Section 108 Loan Collateral which
consist of the Agency Security Interest, shall initially be subordinate to
the security interest of the Construction Lender in the 303 Third Street
Property and later shall be subordinate to the security interest of the
Permanent Lender in the 303 Third Street Property.
• State Sale Agreement. The words "State Sale Agreement" mean and refer to
the land sale agreement (SSL-524)dated October, 2; 1.998{""2's "amended by and
between the Borrower and the State of California affecting the 303 Third
Street Parcel.
• Tenants. The word "Tenants" refers to each of the commercial business
tenants who shall use and occupy the 303 Third Street Project upon the
completion of the Borrower Improvements (Phase II) . Each Tenant shall
execute a Tenant Subordination, Nondisturbance and Attornment Agreement
with the Agency.
Section 2.0. SECTION 108 LOAN. The terms and conditions of this
Agreement supersede all other prior oral or written agreements or understandings
of the Borrower and the Agency relating to the terms on which the Agency (or any
other entity related to City of San Bernardino) may provide the Section 108 Loan
in the principal not to exceed $1,840,000.00 to the Borrower in connection with
the 303 Third Street Project. The Agency is willing to provide the Section 108
Loan to the Borrower solely under the terms and conditions specified in this
Agreement and the Related 303 Third Street Project Documents and the Borrower
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hereby agrees and accepts these terms and conditions. The Borrower further
understands and agrees that: (i) in providing the Section 108 Loan, the Agency
is relying upon the representations, warranties, and agreements of the Borrower
set forth in this Agreement, and (ii) the Section 108 Loan shall be and remain
subject to the terms and conditions of this Agreement. The obligation of the
Borrower to repay the Section 108 Loan and all accrued interest thereon shall be
absolute and unconditional.
Section 3.0. TERM. (a) This Agreement shall take effect on the
date set forth in the motion or resolution adopted by the governing board of the
Agency which approves this Agreement, and thereafter this Agreement shall remain
in effect until the first of the following events shall occur:
(1) the escrow established by the Borrower and the State under the State
Sale Agreement for the transfer of the 303 Third Street Parcel from
the State to the Borrower is canceled or fails to close for any
reason by a date no later than September 30, 2000, unless such date
is extended by the Borrower and the State and is approved by the
Executive Director of the Agency as a new date which is not in
conflict with any provision of the HUD Section 108 Loan Agreement
and further provided however that any such extended date shall be
not later than December 29, 2000;
(2) the Secretary of Housing and Urban Development cancels or rescinds
the HUD Section 108 Loan Agreement for any reason (other than by
virtue of a default by the Agency under the HUD Section 108 Loan
Agreement) prior to the date on which the Agency receives its
initial draw of funds for the 303 Third Street Project under the HUD
Section 108 Loan Agreement;
(3) the proceeds of the EDI Loan are disbursed for the account of the
Borrower by a date no later than September 30, 2000, unless such
later date is not in conflict with any provision of the HUD Section
108 Loan Agreement and such date is extended in writing by the
Executive Director of the Agency to a new date which is not later
than December 29, 2000 or the proceeds of the Section 108 Loan are
not disbursed under the Initial Draw to the Borrower by a date not
later than December 29, 2000; or
(4) the outstanding principal balance, together with all accrued and
unpaid interest and other sums as may then be due the Agency under
the Borrower Section 108 Loan Promissory Note, HUD Section 108 Loan
Agreement defeasance costs, if any, are paid in full to the Agency.
(b) Upon the occurrence of any of the events set forth in Section 3.0 (a) ,
the parties shall each acknowledge the termination of this Agreement in writing.
Section 4.0. SPECIAL NOTICE TO BORROWER OF CONDITIONS OF SECTION
108 LOAN FOR DEVELOPMENT AND IMPROVEMENT OF THE 303 THIRD STREET PROJECT. The
Borrower specifically acknowledges and agrees that each disbursement of an
Advance is subject to the following requirements imposed on the Agency under the
HUD Section 108 Loan Agreement, including without limitation the following:
(1) the satisfaction of the requirements of paragraph _(_) of the HUD
Section 108 Loan Agreement;
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(2) the proceeds of each Advance received by the Borrower, shall be used
and applied by the Borrower for 303 Third Street Project Costs in
accordance with the Approved 303 Third Street Project Budget;
(3) the Borrower shall certify in writing to the Agency at the time of
submission of each Application for Loan Disbursement that all labor
and construction trades personnel employed by either the Borrower,
or the Borrower Contractor and all subcontractors of any of them,
who perform work on the 303 Third Street Property from and after the
Commencement Date during the course of improvement of the 303 Third
Street Project have been paid not less than "prevailing wages" as
this term is defined under 40 U.S.C. Section 276a - 276a-5 (Davis-
Bacon Prevailing Wage Law, as amended) within each construction
trade craft or skill classification employed or used as labor for
the improvement of the 303 Third Street Project; and
(4) compliance by the Borrower with the applicable requirements of 24
CFR Part 570 as these regulations pertain to the community
development activities undertaken by the Borrower pursuant to the
OPA and this Agreement excluding such portions of 24 CFR Part 570
which by their nature either do not apply to the Section 108 Loan or
the 303 Third Street Project or which concern compliance with
requirements which must be satisfied by the Agency and not the
Borrower.
The Borrower covenants with the Agency that it will cooperate with
the Agency as reasonably necessary to maintain compliance with such
requirements including without limitation taking such specific
action by the Borrower as follows:
(i) Borrower shall take affirmative action to ensure that the 303
Third Street Project shall provide equal employment and career
advancement opportunities for minorities and women and, to the
greatest extent feasible, to provide opportunities for
training and employment of lower income persons residing
within the area of the 303 Third Street Project. In
furtherance of the foregoing Borrower shall, prior to the
commencement of the installation of the Borrower Improvements
(Phase I) deliver to the City a list, reasonably acceptable to
the Agency setting forth affirmative steps taken by Borrower,
or to be taken by Borrower, to assure that minority business
and women' s business enterprises are offered an equal
opportunity to obtain or compete for contracts and
subcontracts as sources of supplies, equipment, construction
and services. Such affirmative steps may include, but are not
limited to, technical assistance open to all businesses but
designed to enhance opportunities for these enterprises and
special outreach efforts to inform them of contract
opportunities. Such steps shall not include preferring any
business in the award of any contract or subcontract solely or
in part on the basis of race or gender. Borrower shall
deliver to the Agency semiannually, prior to April 30 and
October 31 of each fiscal year, a report summarizing the
nature of the businesses with which Borrower has entered into
contracts and subcontracts in connection with the 303 Third
Street Project (for both Borrower Improvements (Phase I) and
(Phase II) during the preceding six (6) month period ending
March 31 or September 30, as applicable. The obligation of
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Borrower to deliver the report specified in this Section
4.0 (4) (1) shall expire upon delivery of the report summarizing
the last contracts and subcontracts entered into by Borrower
in connection with the 303 Third Street Project prior to the
Completion Date (Phase I) .
(ii) Borrower agrees that in the event this Agreement or the
Section 108 Loan is subjected to audit, monitoring or other
inspections by appropriate state and federal agencies,
Borrower shall be responsible for complying with such
inspections and for paying, on behalf of itself the full
amount of the liability assessed or imposed by the auditing
agency on the City, the Agency and/or the Borrower as a result
of an adverse finding or regulatory action following any such
inspection in the event such liability results from a failure
by Borrower to satisfy applicable law or its obligations under
this Agreement.
(iii) Borrower shall, during regular business hours, allow
authorized personnel of the Agency to inspect and monitor its
facilities and program operations as they relate to the 303
Third Street Project or this Agreement, including the
interview of Borrower's staff and program participants, as
reasonably required by the Agency.
(iv) The Borrower is prohibited under 24 CFR Part 570. 601 (24 CFR
Part 87) from using federally appropriated funds for the
purpose of influencing or attempting to influence an officer
or employee of any agency, a Member of Congress, an Officer or
employee of Congress, or an employee of a Member of Congress
in connection with the awarding of any Federal contract, the
making of any Federal grant, loan or cooperative agreement,
and any extension, continuation, renewal, amendment or
modification of said documents. The Borrower shall certify in
writing as of the close of Escrow that it is familiar with the
`Federal Lobbyist Requirements' and that the Borrower
Contractor (and the subcontractors of each of them) shall
comply with the Federal Lobbyist Requirements at all times
prior to the Completion Date (Phase II) . Failure on the part
of the Borrower or the Borrower Contractor ,: (and the-
subcontractors of each of them) to fully comply with the
Federal Lobbyist Requirements shall constitute a material
breach of this Agreement by the Borrower.
(v) Borrower agrees that no person shall, on the grounds of race,
sex, creed, color, religion, national origin, or age be
excluded from participation in, be refused the benefits of, or
otherwise be subjected to discrimination in any activities,
programs, or employment supported by this Agreement. Borrower
shall comply with all applicable regulations set forth in 24
CFR 570.600-602, including without limitation, the requirement
that Borrower comply with Title VI of the Civil Rights Act of
1964 (Public Law 88-352) and the regulations set forth at 24
CFR Part 1 and the Age Discrimination Act of 1975 (42 U.S.C.
6101-07) and Executive Order 11246 and the regulations issued
pursuant thereto (41 CFR Part 60) , if applicable; and the
requirements of the Americans With Disabilities Act, as
amended (42 U.S.C. 12101-12213) .
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i
i
(vi) Borrower acknowledges that it is aware of and understands the
provisions of Paragraph _ of the HUD Section 108 Loan
Agreement, which states in relevant part:
The Secretary may exercise or enforce any and all other
rights or remedies (including any and all rights and remedies
available to a secured party under the Uniform Commercial
Code) available by law or agreement (including any of the
Security Documents, as defined in paragraph _(_) ) against the
Collateral, against the Borrower, [e.g. : the Agency] against
the Obligor, [e.g. : the Borrower] or against any other person
or property."
Section 5.0. SECTION 108 LOAN.
(a) The Section 108 Loan shall be in an amount not to exceed the
principal sum of One Million Eight Hundred Forty Thousand Dollars United States
currency ($1, 840, 000.00) and shall bear interest on so much of the principal sum
as shall be drawn by the Agency under its HUD Section 108 Loan Agreement for
disbursement to the Borrower from time-to-time from and after the date of the
Initial Draw. The outstanding principal balance of the Section 108 Loan shall
bear interest payable to the Agency by the Borrower from the date of each
disbursement of principal under the HUD Section 108 Loan Agreement at the
variable rate of interest specified in the Borrower Section 108 Loan Promissory
Note until such time as such variable rate of interest may be reset as a
permanent rate of interest following the "Public Offering Date" as this term is
set forth under the HUD Section 108 Loan Agreement. Payments of interest on the
Section 108 Loan shall be due and payable by the Borrower to the Agency in
installments at the times set forth in the Borrower Section 108 Loan Promissory
Note. Installments of principal disbursed to the Borrower shall be payable to
the Agency prior to maturity or the acceleration of the Section 108 Loan,
(assuming that the Borrower has received disbursements of the aggregate principal
sum of $1, 840, 000.00) from and after the close of Escrow on the dates and in the
amounts scheduled for payment as follows:
Date of Principal Installment of Date of Principal Installment of
Installment Principal Due Installment Principal Due
June 1, 2001 $ -0- June 1, 2011 $100, 000.00
June 1, 2002 -0- June 1, 2012 100, 000.00
June 1, 2003 100,000.00 June 1, 2013 100, 000.00
June 1, 2004 100, 000.00 June 1, 2014 100, 000.00
June 1, 2005 100, 000.00 June 1, 2015 100, 000.00
June 1, 2006 100, 000.00 June 1, 2016 100, 000.00
June 1, 2007 100, 000.00 June 1, 2017 100, 000.00
June 1, 2008 100,000.00 June 1, 2018 100, 000.00
June 1, 2009 100, 000.00 June 1, 2019 100, 000.00
June 1, 2010 100, 000.00 June 1, 2020 140, 000.00
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(b) The Borrower shall use the proceeds disbursed by the Agency
under the Section 108 Loan (either disbursed directly from the Agency at the time
of the close of Escrow or from any amount remitted by the Agency to the Fiscal
Agent pending disbursement to the Borrower) , solely for the purpose of paying for
303 Third Street Project Costs in the amounts authorized for each element or
budgeted line item for the 303 Third Street Project as shown in the Approved 303
Third Street Project Budget.
(c) The Approved 303 Third Street Project Budget may include as an
element of the "Pretransfer Costs" of the Borrower all sums incurred or payable
by the Borrower in connection with Borrower Improvement Costs (Phase I) (plans,
permits and environmental investigations for the 303 Third Street Project) ,
Escrow costs and the like. The aggregate amount of such Pretransfer Costs shall
not exceed $200, 000.00. The approved 303 Third Street Project Budget shall also
include a funded interest reserve in the amount of not less than Two Hundred
Thousand Dollars ($200, 000.00) for payments of interest to the Agency when due
under the Borrower Section 108 Loan Promissory Note.
(d) Except for the "Pretransfer Costs" described in Section 5.0(c) ,
above, the Borrower will not permit any other work or materials to be furnished
on the 303 Third Street Property until: (i) Borrower has executed and delivered
this Agreement to the Agency; (ii) the Escrow conditions relating to the transfer
of title in the 303 Third Street Parcel from the State to the Borrower have been
satisfied; and (iii) the Agency Deed of Trust has been duly recorded and
perfected and is a valid and perfected lien against the 303 Third Street
Property, subject only to the title exceptions previously approved by the Agency.
(d) The HUD Section 108 Loan Agreement and the EDI Grant Agreement
shall be the sole source of funds available to either the City or the Agency for
the Borrower and the 303 Third Street Project. No other source of funds of the
City or the Agency is pledged or is otherwise made available for such purposes
under this Agreement. The Agency covenants to the Borrower under this Agreement
that the Agency shall comply with all of the terms and conditions of the HUD
Section 108 Loan Agreement applicable to the Agency, to the end that for the
eighteen (18) month period of time commencing with the close of Escrow, the
Agency may draw upon funds in the amount of One Million Eight Hundred Forty
Thousand Dollars ($1, 840, 000.00) , under the HUD Section 108 Loan Agreement which,
in turn, shall be made available for disbursement to the-Borrower- by ,the Agency_.
subject to this Agreement.
Section 6.0. REPRESENTATIONS AND WARRANTIES OF BORROWER UNDER
THIS AGREEMENT.
(a) Borrower represents and warrants to the Agency, as of the date
of this Agreement and thereafter as of the date of each Application for Loan
Disbursement, and at all other times any Borrower Indebtedness exists:
(1) Borrower is a California limited liability company which is duly
organized, validly existing, and in good standing under the laws of
the State of California and is validly existing and in good standing
in the State of California and in all other states in which Borrower
is doing business.
(2) The execution, delivery, and performance of this Agreement by the
Borrower, has been duly authorized by all necessary action by
Borrower; do not require the consent or approval of any other
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person, regulatory authority or governmental body; and do not
conflict with, result in a violation of, or constitute a default
under (i) any provision of any agreement or other instrument binding
upon the Borrower or (ii) any law, governmental regulation, court
decree, or order applicable to Borrower.
(3) Each financial statement of Borrower supplied to the Agency by the
Borrower truly and completely disclosed Borrower's financial
condition as of the date of the statement, and there has been no
material adverse change in Borrower's financial condition subsequent
to the date of the most recent financial statement supplied to the
Agency. The Borrower has no material contingent obligations, except
as disclosed in such financial statements.
(4) No litigation, claim, investigation, administrative proceeding or
similar action (including those for unpaid taxes) against the
Borrower is pending or threatened, and no other event has occurred
which may materially adversely affect Borrower's financial condition
or properties, other than litigation, claims, or other events, if
any, that have been disclosed to and acknowledged by the Agency in
writing.
(5) (A) The terms "hazardous waste, " "hazardous substances, "
"disposal, " "release, " and "threatened release, " as used in this
Agreement, shall have the same meanings as set forth in the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA") , the Superfund Amendments and Reauthorization Act of
1986, Pub. L. No. 99-499("SARA") , the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, et seq. , the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq. ,
Chapters 6.5 through 7.7 of Division 20 of the California Health and
Safety Code Section 25100, et seq. , or other applicable state or
Federal laws, rules, or regulations adopted pursuant to any of the
foregoing.
(B) The Borrower represents and warrants to the Agency that the
Borrower Contractor (and any successor to the Borrower Contractor)
has satisfied and shall remain in compliance with the provisions of
California Labor Code Section 6501.5 at all times during the-course
of the performance of the Borrower Improvements (Phase I) . The
Borrower further represents and warrants to the Agency that prior to
the commencement of any work of the Borrower Improvements (Phase I) ,
the Borrower Contractor shall deliver to the Borrower a suitably
detailed health and safety asbestos abatement and demolition plan,
prepared by a certified asbestos consultant for the abatement,
demolition and disposal of asbestos and asbestos-containing
materials on and from the 303 Third Street Property. Such plan
shall contain the employee training and employee health
certifications for asbestos workers as required by California Labor
Code Section 6501 et seQ. , and other applicable law. Such plan
shall also contain all other information as necessary to obtain
demolition permits from the City for the abatement and removal of
asbestos-containing materials, lead-based paint and other hazardous
substances from the 303 Third Street Property, including without
limitation the following information:
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(1) the method of transport of hazardous wastes and asbestos-
containing waste materials and lead-based paint wastes from
the 303 Third Street Property to the waste disposal facility,
including the transporter's name, address, telephone number
and USEPA identification number/state transportation
identification number;
(2) the name and address of the waste disposal facility to be
used;
(3) names and daytime and emergency telephone numbers of asbestos
abatement and the demolition superintendent, foreman, project
manager and other key personnel for the performance of the
Borrower Improvements (Phase I) ;
(4) a description of environmental engineering and other work
controls to be used in the performance of the Borrower
Improvements (Phase I) ;
(5) personal respirator-air equipment procedures and work-place
air monitoring procedures for the asbestos-related work;
(6) work schedule, including milestones in sufficient detail for
the Disbursement Control Servicer to verify the percentage of
the Borrower Improvements (Phase I) covered by each
application for progress payment;
(7) emergency evacuation plan for injured workers; and
(8) other relevant information as required by the Borrower and the
City Demolition Guidelines and the other applicable law.
The Borrower further represents and warrants to the Agency at all
times during the course of the performance of the Borrower
Improvements (Phase I) , hazardous wastes and asbestos-containing
waste shall be properly labeled and prepared for transport and
disposal in accordance with applicable law. Hazardous wastes,
asbestos-containing waste materials and shall not be combined for
storage or transport with any other waste generated on-site. When
physically- possible, asbestos-containing waste materials generated
by the Borrower Improvements (Phase I) shall not be combined with
other demolition waste which does not contain detectable quantities
of asbestos or lead-based paint.
(C) The Borrower represents and warrants that except for the
performance of the environmental remediation work component of the
Borrower Improvements (Phase I) , and other environmental remediation
work as may be undertaken by third parties, including without
limitation the Southern California Gas Company as provided in the
Environmental Indemnity, neither the Borrower nor any contractor,
agent or other authorized user of any of the 303 Third Street
Property, including Tenants shall use, generate, manufacture, store,
treat, dispose of, or release any hazardous waste or hazardous
substance on, under, about or from any of the 303 Third Street
Property during term of this Agreement, except in compliance with
all applicable law relating to the transportation, storage, disposal
or lawful use of any hazardous waste or hazardous substance. The
Borrower shall comply and cause its tenants and all contractors,
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agents or other authorized users of the 303 Third Street Property
to comply with all applicable laws relating to any hazardous wastes
or hazardous substances, including without limitation, obtaining and
filing all applicable notices, licenses, permits and similar
authorizations. The Borrower shall establish and maintain a
hazardous wastes and hazardous substances management and operations
policy for the 303 Third Street Property in order to assure and
monitor continued compliance by the Borrower and its Tenants and all
contractors, agents, or other authorized users of the 303 Third
Street Property with all such laws relating to hazardous wastes or
substances. The Borrower authorizes the Agency and its agents to
enter upon the 303 Third Street Property upon reasonable notice to
make such inspections and tests as the Agency may deem appropriate
to determine compliance of the 303 Third Street Property with this
Section 6.0(5) ; if the Agency reasonably believes a violation of law
has occurred. Any inspections or tests made by the Agency shall be
at the Borrower' s expense and for the Agency' s purposes only and
shall not be construed to create any responsibility or liability on
the part of the Agency to the Borrower or to any other person. The
Borrower hereby agrees to indemnify and hold harmless the Agency
against any and all claims, losses, liabilities, damages, penalties,
and expenses which the Agency may directly or indirectly sustain or
suffer resulting from breach of this Section 6.0 (5) as a consequence
of the performance of the Borrower Improvements (Phase I) and
thereafter from any use, generation, manufacture, storage, disposal,
release or threatened release of any hazardous substance. The
provisions of this Section 6.0 (5) , including the obligation of the
Borrower to indemnify the Agency, shall survive the repayment of the
Borrower Indebtedness to the Agency and the satisfaction of this
Agreement and shall not be affected by the Agency' s acquisition of
any interest in any of the 303 Third Street Property, whether by
foreclosure or otherwise.
(6) On the close of the Escrow, the costs set forth in the Approved 303
Third Street Project Budget shall be, to the best knowledge of the
Borrower, true and accurate estimates of the costs necessary to
complete the 303 Third Street Project in a good and workmanlike
manner and the Borrower shall take all steps necessary after the
Commencement Date to prevent the actual cost of the 303 Third Street
Project, from exceeding the amount- shown in the Approved 30.3 Third
Street Project Budget.
(7) [RESERVED: NO TEXT]
(8) As of the close of Escrow, the Borrower shall have examined and
shall be familiar with and accept all the easements, covenants,
conditions, restrictions, reservations and other matters affecting
the condition of title of the 303 Third Street Property and the
building laws, regulations, zoning ordinances, and federal, state,
and local requirements affecting the 303 Third Street Property. The
303 Third Street Project will at all times and in all respects
conform to and comply with the requirements of such easements,
covenants, conditions, restrictions, reservations, building laws,
regulations, zoning ordinances, and federal, state, and local
requirements.
(9) This Agreement, the Borrower Section 108 Loan Promissory Note, the
Agency Security Interest, and the Related 303 Third Street Project
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Documents when delivered to the Agency will constitute, legal, valid
and binding obligations of the Borrower enforceable against the
Borrower in accordance with the terms of such documents.
(10) The Borrower understands and agrees that the Agency shall rely upon
the accuracy of each of the above representations and warranties in
approving or authorizing each disbursement of funds to the Borrower
from the 303 Third Street Project Improvement Fund. The Borrower
further agrees that the foregoing representations and warranties
shall be continuing in nature and shall remain in full force and
effect until such earlier time as: (i) the 303 Third Street Project
is completed and the other obligations of the Borrower under this
Agreement are satisfied; or (ii) all outstanding principal and all
accrued and unpaid interest disbursed to the Borrower under the
Section 108 Loan shall be paid in full; or (iii) this Agreement
shall be terminated by the parties, whichever is the first to occur.
Section 7.0. CONDITIONS PRECEDENT TO THE DISBURSEMENT OF INITIAL
ADVANCE OF FUNDS UNDER THE SECTION 108 LOAN TO THE BORROWER AND EACH SUBSEQUENT
ADVANCE OF THE AVAILABLE BALANCE OF THE SECTION 108 LOAN.
(a) The obligation of the Agency to provide or make funds available
for the disbursement of the Initial Advance to the Borrower, shall be subject to
the satisfaction of all of the following matters:
(1) The Borrower and the Agency have each accepted and approved the
final form of the Approved 303 Third Street Project Budget.
(2) [RESERVED--NO TEXT] .
(3) The Borrower shall have deposited in cash, available funds or credit
with the Escrow Holder under the Escrow, the amount of the "Borrower
Equity Contribution" as set forth in the Approved 303 Third Street
Project Budget (presently estimated to be $291, 000.00--composed of
$156, 000.00 for property-related equity contributions plus
$135, 000.00 for Borrower Improvements (Phase I) ) . The Escrow Holder
shall upon the close of the Escrow, transfer a portion of the
Borrower Equity Contribution which corresponds to the Borrower
equity contribution for Borrower Improvements (Phase I) to the
Fiscal Agent (presently estimated to be approximately $=135-, 000.00} -who shall deposit such funds of the Borrower to the Fiscal Agent
Account for the account and credit of the Borrower pending
disbursement to the Borrower for the installation of the Borrower
Improvements (Phase I) under the Fiscal Agent.Agreement.
(4) The Borrower shall have delivered to the Agency a certificate not
less than three (3) business days prior to the close of the Escrow
acknowledging that no breach or default of the Borrower exists under
the State Sale Agreement and that the State is in a position to
satisfy all conditions of the State Sale Agreement for the transfer
of the fee title interest in the 303 Third Street Parcel to the
Borrower.
(5) The Borrower shall have delivered a legal opinion of counsel to the
Borrower addressed to HUD and the Agency, in form and substance
satisfactory to the Agency, which states that the Borrower has taken
all required action to duly authorize the execution and delivery of
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{ this Agreement, the Borrower Section 108 Loan Promissory Note, the
Agency Security Interest, the 303 Third Street Project Related
Documents, the Fiscal Agent Agreement and such other authorizations
and other documents as the Agency may require.
(6) The Agency shall have reviewed and accepted the form of the Parking
Lot Parcel Covenant.
(7) The Borrower shall have provided the Agency with an ALTA extended
coverage policy of title insurance issued by a title insurance
company acceptable to the Agency, in a form, amount and content
satisfactory to the Agency, insuring or agreeing to insure that the
Agency Deed of Trust and the Agency Security Interest is or will
each be upon recordation, a valid lien on the 303 Third Street
Property, free and clear of all defects, liens, encumbrances, and
exceptions, specifically accepted by the Agency in writing.
(8) The Borrower shall have submitted applications for and obtained the
approval of the City Building Department for the issuance of all
necessary building permits for the Borrower Improvements (Phase I) ,
subject only to the payment by the Borrower of the building permit
issuance fees of the City for the Borrower Improvements (Phase I) .
(9) The Borrower shall have delivered to the Agency a copy of the
agreement by and between the Borrower Contractor and the Borrower
for installation of the Borrower Improvements (Phase I) .
(10) The Agency shall have received and approved a list of all
contractors employed in connection with the construction of the
Borrower Improvements (Phase I) , showing the name, address, and
telephone number of each contractor and subcontractor, a general
description of the nature of the work to be done, the labor and
materials to be supplied, the names of materialmen, if known, and
the approximate dollar value of the labor, work, or materials with
respect to each contractor or materialman. After such a list has
been submitted to the Agency, the Borrower shall promptly notify the
Agency of any material change of information in such list.
(11) The Borrower shall have delivered to the Agency the following
insurance policies or evidence thereof relating to:. the , 303 Third,
Street Project: (i) an all risk course of construction insurance
policy (builder's risk) , with extended coverage covering: the
Borrower Improvements (Phase I and Phase II) ; (ii) owners and
general contractor general liability insurance, public liability and
workmen's compensation insurance; (iii) flood insurance if required
by applicable law; and (iv) all other insurance required by this
Agreement or by the Related 303 Third Street Project Documents. All
such insurance shall be issued in amounts of liability approved by
the Agency by insurance companies which are qualified to do business
in the State which are rated not less than "B+ (xii) " in the most
recent edition of Bests Insurance Guide, naming the Agency, its
officers and employees as additional insured and containing loss
payable and other endorsements satisfactory to the Agency insuring
the Agency as mortgagee, together with such other endorsements as
may be required by the Agency, including stipulations that coverages
will not be canceled or diminished without at least thirty (30) days
prior written notice to the Agency.
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(12) Each of the following documents or acknowledgments shall have been
executed by the Borrower and delivered to the Escrow Holder in a
form acceptable to the Agency, including without limitation, the
following:
(i) the Disbursement Control Service Agreement;
(ii) the Fiscal Agent Agreement;
(iii) Borrower Section 108 Loan Promissory Note;
(iv) Borrower EDI Loan Promissory Note;
(v) Agency Deed of Trust;
(vi) EDI Loan Performance Deed of Trust;
(vii) Borrower Environmental Indemnity Agreement;
(viii) Borrower Guaranties;
(ix) Borrower Letter of Credit;
(x) Parking Lot Parcel Covenant;
(xi) Borrower Assignment of Contracts and Permits, including copies
of each contract as assigned as security for the Section 108
Loan including the Borrower Contractor agreement;
(xii) Agency UCC-1 Filing (Fixtures) ;
(xiii) other documents related to Agency Security Interest or the
Related 303 Third Street Project Documents.
(13) The Escrow Holder shall have received an executed Section 108 Loan
disbursement request from the Borrower for the Initial Advance and
the final escrow closing instructions, in customary form from the
State, the Borrower and the Agency which instruct the Escrow Holder
to close the Escrow upon its receipt of sufficient available funds,
and documents and the confirmation by the Escrow Holder that the
title insurance company shall issue at the close of the Escrow each
of the applicable policies of title insurance in favor of, the
Borrower and the Agency, as their respective interests in the 303
Third Street Property appear.
(14) HUD shall have disbursed to the Agency : (i) the proceeds of the EDI
Loan in the amount of $344,000.00 and; (ii) an initial draw of funds
under the HUD Section 108 Loan Agreement for the 303 Third Street
Project.
(15) The Borrower shall have paid as of the close of Escrow all expenses
of the Borrower.
(16) There shall not exist on the close of the Escrow any condition which
would constitute an Event of Default by the Borrower under this
Agreement.
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(17) The Escrow shall be otherwise in a condition to close and the
Borrower shall acquire the fee title interest in the 303 Third
Street Parcel in accordance with the requirements of this Agreement.
(b) After the close of the Escrow and the disbursement of the
proceeds of the Initial Advance to the Borrower, the obligation of the Agency to
provide or make available for disbursement to the Borrower (either directly by
the Agency at any time after the Initial Advance or from the Fiscal Agent from
funds remitted by the Agency to the Fiscal Agent pending disbursement to the
Borrower) of funds to pay Borrower Improvement Costs (Phase I) , shall be subject
to the following:
(1) The Borrower has complied with the applicable requirements of
Section 8.0 of this Agreement and has submitted an Application for
Loan Disbursement to the Fiscal Agent with a copy to the Agency.
(2) At the time of submission of the Application for Loan Disbursement
and at the time of the disbursement of the Advance corresponding to
such application, there shall not exist any condition which
constitutes an Event of Default by the Borrower under this
Agreement.
(c) As of the close of the Escrow no Tenant lease shall be in force
or effect unless the Borrower has caused to be delivered to the Escrow Holder
prior to the close of the Escrow a Tenant Subordination, Nondisturbance and
Attornment Agreement in customary form acceptable to the Agency.
(d) As used in Section 7.0 (a) , words or phrases "approval by the
Agency, " "approved by the Agency, " "demand by the Agency," "satisfaction of the
Agency," "acceptable to the Agency," "disapproved by the Agency, " "rejection by
the Agency, " and the like, refer to actions and determinations which shall be
performed on behalf of the Agency by the Executive Director pursuant to the
authority delegated to the Executive Director by the Agency.
Section 8.0. PAYMENT OF ADVANCES TO THE BORROWER FOR THE
BORROWER IMPROVEMENT COSTS (PHASE I)
(a) The following provisions relate to the disbursement of funds
by the Agency under this Agreement after the Initial Advance to pay each
subsequent Advance to the Borrower -.for Improvement -Costs -(Phase =ly =
(1) An Application for Loan Disbursement shall have first been submitted
by the Borrower to the Fiscal Agent with copies to the Agency.
(2) Each Application for Loan Disbursement shall be presented on a
standard AIA payment request form, or such other form acceptable to
the Agency. Each shall be executed by the Borrower, and supported
by the applicable information required by this Agreement. The
Borrower shall apply only for an Advance of Borrower Improvement
Costs (Phase I) with respect to the percentage of work actually done
by the Borrower Contractor and Borrower Architect, as applicable, or
for regulatory permit charges, construction service agreement
amounts payable, or for materials, fixtures or equipment actually
incorporated into the 303 Third Street Project or delivered to the
303 Third Street Property, accrued construction interest or
financing charges payable by the Borrower to the Agency or other 303
Third Street Project Cost items authorized under the Approved 303
Third Street Project Budget, in the itemized amount set forth in the
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Application for Loan Disbursement. Each Application for Loan
Disbursement shall indicate the date (not less than ten (10)
business days following receipt by the Agency and the Fiscal Agent)
for which the disbursement of the Advance is requested. Each
Application for Loan Disbursement shall be deemed a certification of
the Borrower to the Agency that, as of its date, all representations
and warranties required in this Agreement are true and correct, and
that the Borrower is in compliance with all of the provisions of and
this Agreement.
(3) Each Application for Loan Disbursement shall be accompanied with a
certificate of payment in the form set forth in the Disbursement
Control Service agreement, relating to compliance with applicable
laws, progress of the work completed to date, freedom of the 303
Third Street Property from liens, and the basis for the amount of
303 Third Street Project Costs requested to be disbursed under the
Advance, and appropriate certification by an engineer, architect, or
other qualified inspector acceptable to the Agency that the
construction of the Borrower Improvements (Phase I) complies and
will continue to comply with all applicable statutes, ordinances,
codes, regulations, and similar requirements.
(4) The Borrower shall attach to each Application for Loan Disbursement,
executed acknowledgments of payments of all sums due and releases of
mechanic's and materialmen's liens, satisfactory to the Fiscal Agent
to confirm issuance of mechanic's lien endorsements to the
applicable lender's policies of title insurance, from any party
having lien rights, which acknowledgments of payment and releases of
liens shall cover all work, labor, equipment, materials done,
supplied, performed, or furnished prior to the date of submission of
such Application for Loan Disbursement.
(5) Each Application for Loan Disbursement shall include an appropriate
form of written certification that prevailing wages have been paid
for all labor performed.
(6) The amount disbursed under each Advance shall be based upon the 303
Third Street Project construction progress completion schedule
included as part of the Approved 303 Third Street Project Budget.
Before the Borrower may submit an Application for Loan Disbursement,
the Disbursement Control Service shall review each contractor' s
application for payment of 303 Third Street Project Costs submitted
to the Borrower in order to verify that the Application for Loan
Disbursement to which the contractor' s application relates is
complete. The evaluation, verification and processing of each such
application shall be conducted in accordance with the procedures set
forth in the Disbursement Contract Service agreement. Within thirty
(30) days following receipt of each contractor's application for
payment, the Disbursement Control Service shall issue a certificate
of payment to the Borrower and the Agency that either: (i) the
information included in the application conforms with the applicable
requirements of this Agreement and that such information is complete
and no exceptions or adjustments to the amount requested are
indicated; or (ii) the Disbursement Control Service shall identify
the relevant information which is missing, incomplete or which may
otherwise be subject to exception or adjustment in order for the
application to be deemed complete for the purpose of authorizing a
disbursement of an Advance of funds. The Disbursement Control
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Service and the Agency shall each have the right to communicate with
any contractor, subcontractor or construction service or materials
provider to be paid for any item of 303 Third Street Project Costs
in order to verify the information included in each such application
for payment and the particular Application for Loan Disbursement to
which such payment application of a contractor may relate. All work
described in each such contractor's application for payment to which
the Application for Loan Disbursement relates shall have been done
in a good and workmanlike manner and all materials and fixtures
usually furnished and installed at that stage of construction shall
have been furnished and installed, all in compliance with the
Borrower Improvement Plans and Specifications. Upon completion of
the verification process relating to all of the contractor
applications for payment included in a particular Application for
Loan Disbursement, the Disbursement Control Service shall issue its
certificate of payment to the Borrower and the Agency.
(7) Upon receipt of an Application for Loan Disbursement, the Fiscal
Agent shall verify that the applicable conditions of the Fiscal
Agent Agreement have also been satisfied and the Fiscal Agent shall
issue a notice to the Borrower and the Agency to remit funds to the
Fiscal Agent in accordance with the Fiscal Agent Agreement, in an
amount sufficient to pay the Advance. Each Advance shall be paid by
the Fiscal Agent as of 12:00 noon on the first business day which is
24 hours following the date of receipt by the Fiscal Agent of the
necessary funds, unless prior to that time the Agency instructs the
Fiscal Agent to suspend the disbursement of the Advance.
(8) [RESERVED: NO TEXT]
(9) Notwithstanding any other provision of this Agreement to the
contrary, after the Initial Advance, the Agency may retain pending
the disbursement of the Final Advance as provided in Section
8.0 (a) (13) ten percent (10%) of the amount of each remittance of
funds required to be transferred by the Agency to the Fiscal Agent
for Borrower Improvement Costs (Phase I) ; provided however, that for
Borrower Improvement Costs (Phase I) amounts payable by the Borrower
for building permit fees or fees and other regulatory charges of
public agencies with jurisdiction over the construction of the
Borrower Improvements (Phase I) , no• such retainage pending Final . :.
Advance shall be applicable.
(10) (RESERVED: NO TEXT]
(11) Sight drafts or authorized payments to the Borrower of Borrower
Improvement Costs (Phase I) under each Advance shall be made by the
Fiscal Agent following receipt of an Application for Loan
Disbursement and certification by the Fiscal Agent that the
applicable terms and conditions relating to each such payment have
been satisfied as set forth in the Fiscal Agent Agreement. The
Borrower hereby appoints the Fiscal Agent and each authorized
successor of the Fiscal Agent pursuant to the terms of the Fiscal
Agent Agreement, as the attorney-in-fact of the Borrower to make
such payments. This power shall be deemed to be coupled with an
interest, shall be irrevocable, and shall survive an Event of
Default under this Agreement. Upon written instruction from the
Agency, the available proceeds of the Fiscal Agent Account may be
paid by the Fiscal Agent under any Advance in the joint names of
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Borrower and the Borrower Contractor or their subcontractor(s) , or
supplier(s) , or either of them, as applicable.
(12) After the Commencement Date, if the Agency determines in its
reasonable discretion that the remaining available balance of funds
under the Section 108 Loan (exclusive of the funded interest reserve
as established under the Approved 303 Third Street Project Budget,
after application of the Borrower Equity Contribution transferred to
the Fiscal Agent under Section 7.0 (a) (3) , is insufficient, or will
be insufficient, to complete the Borrower Improvements (Phase I) ,
then within ten (10) business days after receipt of a written
request from the Agency, the Borrower shall tender to the Fiscal
Agent the portion of such estimated excess Borrower Improvement
Costs (Phase I) payable by the Borrower in cash as may then be
payable by the Borrower as an "Additional Contribution". Any such
amounts deposited by the Borrower with the Fiscal Agent under this
Section 8.0 (12) shall be credited as a Borrower equity contribution
and such amounts shall be remitted by the Borrower to the Fiscal
Agent before any other sums shall be remitted by the Agency to the
Fiscal Agent as an Advance to the Borrower.
(13) Upon completion of the Borrower Improvements (Phase I) , the Borrower
shall submit an Application for Loan Disbursement for the Final
Advance with respect to such improvements. The proceeds of the
Final Advance shall be used and applied to make the final payment of
Borrower Improvement Costs (Phase I) as may then be due under the
Borrower Improvements Construction Contract and the other Related
303 Third Street Project Documents. No disbursement of the Final
Advance shall be made until the Agency has received written
certifications addressed to the Agency in form and substance
reasonably satisfactory to the Agency as follows:
(i) with respect to the Final Advance from the Borrower
Improvements (Phase I) , from the Borrower Architect stating
that the Borrower Improvements (Phase I) have been completed
substantially in accordance with the Borrower Improvements
Plan and Specifications;
(ii) cause a notice of completion for the Borrower Improvements
(Phase I) to be recorded;
(iii) from the title insurance company, confirmation that all
completion notices have been posted and recorded as required
by law and that the title company is prepared to issue its
final endorsement under the Agency ALTA lender' s policy for
the Section 108 Loan.
The Application for Loan Disbursement for the Final Advance shall be
reviewed and processed as provided in Section 8.0 (2)- (8) , inclusive.
(14) Upon the occurrence of an Event of Default by the Borrower prior to
the date on which the Agency has received the Certificate described
in Section 8.0 (a) (13) (i) the obligation of the Agency to tender any
further sums to the Fiscal Agent for disbursement to the Borrower
shall abate and the Agency may instruct the Fiscal Agent to suspend
any pending disbursement of an Advance to the Borrower until further
notice from the Agency. Thereafter, and until further notice from
the Agency, all sums tendered by the Agency to the Fiscal Agent, if
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any, shall be accounted for by the Agency as a draw under the
Section 108 Loan Account, and such sums which have been so accounted
for by the Agency and remitted in cash to the Fiscal Agent pending
disbursement for payment of an Advance, shall not be deemed to be an
"Additional Borrower Contribution". Upon the occurrence of an Event
of Default by the Borrower, and in addition to the exercise of any
of its other remedies under this Agreement, enter into possession of
the 303 Third Street Property and perform or cause to be performed
any and all work and labor necessary to complete the Borrower
Improvements (Phase I) .
(15) The Agency may instruct the Fiscal Agent to suspend the disbursement
of an Advance and the Agency may withhold the remittance of any sum
to the Fiscal Agent to pay an Advance if the Agency reasonably
determines that an event has occurred which is likely to endanger
completion of the Borrower Improvements (Phase I) or result in the
default of the Borrower under this Agreement or the failure of any
condition to an Advance under this Agreement and the Borrower has
failed to furnish, within ten (10) business days after delivery of
a written request describing the nature of such event and the
specific steps which the Borrower may take to address the occurrence
of such an event, to furnish the Agency with reasonable assurance
that the completion of the Borrower Improvements (Phase I) is not
endangered. The delivery by the Borrower to the Agency of an
adequate surety or additional security in a principal amount
sufficient to eliminate, reduce, or indemnify the Agency against,
such danger, shall be deemed to provide the Agency with conclusive
satisfactory evidence of such assurances.
(16) After notice of default and the failure by the Borrower to cure such
default within the applicable notice period, the Agency, in its
discretion, may upon thirty (30) days prior written notice to the
Borrower pay or agree to pay to any person to cure the matter which
is the basis of a default of the Borrower and upon the payment of
such a sum by the Agency to a third person pursuant to this Section
8 .0 (16) , such sum shall be deemed paid by the Agency for the
Borrower' s account and added to the balance of the funds disbursed
to the Borrower under the Section 108 Loan; provided however, any
such payment by the Agency shall be without prejudice. to, the
Borrower's rights, if any, to recover such funds from the party to
whom the Agency makes such a payment. All sums expended by the
Agency pursuant to this Section 8.0 (16) shall be payable by the
Borrower to the Agency on demand, together with interest from the
date of the such payment at the rate applicable to sums disbursed
under the Section 108 Loan as of the date of such a payment. In
addition, any payment of funds by the Agency under this Section
8 .0 (16) , including without limitation direct disbursements to the
Borrower Contractor or other persons in payment of sums due, shall
be deemed to have been expended by or on behalf of Borrower and to
have been secured by the Agency Deed of Trust.
(b) If any of the 303 Third Street Property is damaged or destroyed
by a casualty loss of any nature at any time during the course of the Borrower
Improvements (Phase I) or later during the course of the Borrower Improvements
(Phase II) , then within sixty (60) days after the occurrence of such an event of
casualty loss (regardless of whether such loss is an "insured loss" under any
insurance policy described in Section 7.0 (a) (ii) , above) , the Borrower shall
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commence and diligently pursue to completion and restoration (or cause to be
restored) the 303 Third Street Property to the condition in which it was before
the occurrence of such casualty loss, using either the proceeds of such
insurance, or if such insurance proceeds are insufficient or unavailable,
additional funds as shall then be contributed by the Borrower; provided however,
the Agency shall not be obligated to approve any Advance to the Borrower for the
repair or replacement of such casualty loss, from and after the date of such
casualty loss.
(c) Sums necessary to pay accrued interest when due under the
Borrower Section 108 Loan Promissory Note may be included in an Application for
Loan Disbursement and in the Final Advance. Any balance remaining in the funded
interest reserve account for the Section 108 Loan, as shown in the Approved 303
Third Street Project on and after the Completion Date (Phase I) , shall be applied
by the Agency to pay accrued interest when due under the Borrower Section 108
Loan Promissory Note, with a confirming written credit notice sent by the Agency
to the Borrower.
Section 9.0. LIMITATION OF RESPONSIBILITY. Neither the approval
or funding in whole or in part of any Advance by the Agency shall constitute or
be interpreted as either: (i) an approval or acceptance by the Agency of the work
done through the date of the Advance, or (ii) a representation or indemnity by
the Agency to any person against any deficiency or defect in the work or against
any breach of any contract. Inspections and approvals by the Agency of the
Borrower Improvements (Phase I) as completed, the workmanship and materials used,
and the exercise of any other right of inspection, approval, or inquiry granted
to the Agency in this Agreement in connection with any of these, are acknowledged
to be solely for the protection of the Agency's interests, and under no
circumstance shall any such inspection, approval or funding by the Agency be
construed to impose any responsibility or liability of any nature whatsoever on
the Agency to any person. Neither the Borrower nor any contractor,
subcontractor, materialman, laborer, or any other person may claim any right to
rely upon the appropriateness of any Advance based upon either the funding or
approval of such Advance by the Agency.
Section 10.0. AFFIRMATIVE COVENANTS. The Borrower covenants and
agrees with the Agency that, while this Agreement is in effect, the Borrower
shall:
(1) Promptly inform the Agency in writing -o-f (i) all material adverse_:
changes in the financial condition of the Borrower, and (ii) all
exiting and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting the Borrower
or any guarantor of the obligations of the Borrower either to the
Agency or, later, which arises under the Construction Loan or the
Permanent Loan and which could materially affect the financial
condition of the Borrower or the financial condition of any
guarantor of an obligation of the Borrower either to the Agency or
which arises under the Construction Loan or the Permanent Loan, as
applicable.
(2) Maintain its books and records in accordance with generally accepted
accounting principles, applied on a consistent basis, and permit the
Agency to examine and audit the books and records of the Borrower at
all reasonable times.
(3) Furnish such additional information and statements, lists of assets
and liabilities, agings of receivables and payables, inventory
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schedules, budgets, forecasts, tax returns, and other reports with
respect to Borrower's financial condition and business operations as
the Agency may request from time to time.
(4) Comply with all laws, ordinances, and regulations, now or hereafter
in effect, of all governmental authorities applicable to the use or
occupancy of the 303 Third Street Property, including without
limitation, the Americans With Disabilities Act. The Borrower may
contest in good faith any such law, ordinance, or regulation and
withhold compliance during any proceedings, including appropriate
appeals, so long as the Borrower has notified the Agency in writing
prior to doing so and so long as, in the Agency' s reasonable
opinion, the Agency Security Interest in the 303 Third Street
Property is not jeopardized. The Agency may require the Borrower to
post additional security in cash or other form reasonably
satisfactory to the Agency, to protect the Agency Security Interest
in the 303 Third Street Property during any such contest by the
Borrower.
(5) Commence construction of the Borrower Improvements (Phase I) within
sixty (60) days following the close of the Escrow but in no event by
a date later than , 2001, and cause the 303 Third Street
Project to be constructed and equipped in a diligent and orderly
manner and in strict accordance with the Borrower Improvement Plans
and Specifications subject only to such changes or modifications
after the close of Escrow which have been approved by the Agency.
(6) Use the funds disbursed to the Borrower under the Section 108 Loan,
and later under the Construction Loan or solely for payment of
Approved 303 Third Street Project Budget costs. The aggregate
amount of the fees, costs and expenses paid to the Borrower as a
"developer fee" or the like, from the proceeds of the Section 108
Loan, and later, from the Construction Loan, shall not exceed the
sum of $450, 000.00. The maximum amount of such developer fee which
shall be payable to the Borrower under the Section 108 Loan shall be
set forth in the Approved 303 Third Street Project Budget.
(7) Upon demand of the Agency, promptly correct (or cause to be
corrected) any defect in the Borrower Improvements (Phase I) and
(P-hase •II)� as applicable.
(8) Promptly inform the Agency when the Borrower is notified or obtains
knowledge of any of the following: (i) any material adverse changes
in the financial condition of the Borrower Contractor or the; (ii)
any litigation and claims, actual or threatened, affecting the 303
Third Street Project or the Borrower Contractor which could
materially affect the successful completion of the Borrower
Improvements; (iii) any condition or event which constitutes a
breach or default under any of the Related 303 Third Street Project
Documents or any contract to which the Borrower is a party related
to the 303 Third Street Project or the Construction Loan, or the
Permanent Loan, as applicable.
(9) Cause all claims for labor done and materials and services furnished
in connection with the Borrower Improvements (Phase I) and Borrower
Improvements (Phase II) to be fully paid and discharged in a timely
manner; diligently file or procure the filing of a valid notice of
completion of the Borrower Improvements or such comparable document
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as may be permitted under applicable lien laws; diligently file or
procure the filing of a notice of completion, or such comparable
document as may be permitted under applicable lien laws, upon the
happening of cessation of labor on the Borrower Improvements for a
continuous period of thirty (30) days or more, and take all
reasonable steps necessary to remove all claims of liens against the
303 Third Street Property or any portion thereof. Upon the Agency's
request, the Borrower shall make such demands or claims upon or
against laborers, materialmen, subcontractors, or other persons who
have furnished or claim to have furnished labor, services, or
materials in connection with the Borrower Improvements, which
demands or claims shall under the laws of the State of California
require diligent assertions of lien claims upon penalty of loss or
waiver thereof. The Borrower shall, within thirty (30) days after
the filing of any claim of lien that is disputed or contested by the
Borrower (or such shorter period of time required under the
Construction Loan) , record or cause the Borrower Contractor to
record in the Office of the San Bernardino County Recorder, a surety
bond pursuant to California Law sufficient to release the claim of
lien and, within five (5) days of the Agency's demand, make suitable
provision by deposit of funds with the Agency in an amount
satisfactory to the Agency or by bond satisfactory to the Agency for
the possibility that the contest will be unsuccessful. If the
Borrower fails to remove any such lien affecting the 303 Third
Street Property or fails to provide a bond or deposit pursuant to
this provision, the Agency may at its option proceed under Section
8.0 (a) (16) to pay such lien, or the Agency may contest the validity
of the lien, and in either such case, the Borrower shall pay all
costs and expenses of such contest, including the Agency's
reasonable attorneys' fees; provided however, that the rate of
interest which the Agency shall charge the Borrower under Section
8 .0 (a) (16) , in the case of the payment of a lien arising from the
Borrower Improvements (Phase II) shall be at the rate of interest
then in effect under the Borrower Section 108 Loan Promissory Note.
(10) Pay and discharge or cause to be paid and discharged when due all
other indebtedness, obligations, and claims against the Borrower
that, if unpaid by the Borrower, might become a lien or charge upon
the 303 Third Street Property; provided however, that the Borrower
shall not be required to pay and discharge. any such indebtedness,
obligation, or claim so long as: (i) its legality shall be contested
in good faith by appropriate proceedings, (ii) the indebtedness,
obligation, or claim does not become a lien or charge upon the 303
Third Street Property, and (iii) the Borrower shall have established
on its books adequate reserves with respect to the amount contested
in accordance with generally accepted accounting practices. If the
indebtedness, obligation or claim against the Borrower does become
a lien or charge upon the 303 Third Street Property, the Borrower
shall remove the lien or charge as provided in Section 10.0 (10) .
(11) Perform and comply with all terms, conditions, and provisions
applicable to the Borrower, as set forth in this Agreement, the
Agency Security Interest and the Related 303 Third Street Project
Documents. The Borrower shall notify the Agency immediately in
writing of any default in connection with any such agreement which
involves a third party.
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(12) Promptly provide such information as may be requested by the
Disbursement Control Service Agent or the Fiscal Agent, including
without limitation, supplemental information and written
verifications relating to the payment of prevailing wages for the
portion of any Advance used to pay for labor services performed in
connection with the 303 Third Street Project at any time between the
Commencement Date and the Completion Date (Phase II) .
(13) Make, execute, and deliver to the Agency such security agreements,
instruments, documents, and other agreements reasonably necessary to
further document and secure the Borrower Indebtedness and to perfect
the Agency Security Interest in the 303 Third Street Property.
Section 11.0. NEGATIVE COVENANTS. Borrower covenants and
agrees with the Agency that while this Agreement is in effect, Borrower shall
not, without the prior written consent of the Agency:
(1) Except for the Construction Loan, the Permanent Loan and trade debt
incurred in the normal course of business of the Borrower, create,
incur or assume other indebtedness for borrowed money, including
capital leases or sell, transfer, mortgage, assign, pledge, lease,
grant a security interest in, or encumber any of the Borrower' s
assets in the 303 Third Street Property, or sell any of the
Borrower' s accounts, except to the Agency.
(2) Engage in any business activities substantially different than those
in which Borrower is presently engaged, cease operations, liquidate,
merge, transfer, acquire, or consolidate with any other entity,
change ownership, change its name, dissolve, transfer or sell its
interest in any property which is subject to the Agency Security
Interest with the prior written approval of the Agency, and such
approval shall not be unusually withheld.
(3) Loan, invest in or advance money or assets, or purchase, create or
acquire any interest in or any other enterprise or entity (except
for any such loan, investment or advance of the Borrower which
relates to the Borrower Improvements) , or incur any obligation as
surety or guarantor other than in the ordinary course of business.
(4) Make or permit to be made -any material modification of the=-Ro-rrower
Improvement Plans and Specifications (Phase I) or the Borrower
Improvements (Phase I) Construction Contract, except upon the
approval of the Agency, and such approval shall not be unreasonably
withheld.
(5) Make or permit to be made any material modification or amendment to
the State Purchase Agreement without the prior written approval of
the Agency in its sole discretion.
(6) Make or permit to be made any material modification or amendment to
the Borrower Improvement Plans and Specifications for the Borrower
Improvements (Phase II) after those have been approved by the
Agency;
(7) Make or permit to be made any modification or amendment to the
Construction Loan following approval of its terms by the Agency.
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(8) Create or allow to be created any lien or charge upon the 303 Third
Street Property, except as may arise under the Construction Loan,
the Permanent Loan, the OPA, this Agreement, or a Tenant loan.
(9) Enter into a lease of any potion of the 303 Third Street Project
with the State of California, unless such a lease has been approved
by the Agency in its sole and absolute discretion.
Section 12.0. GENERAL PROVISIONS APPLICABLE TO THE BORROWER
IMPROVEMENTS (PHASE I) . The following provisions relate to the construction and
completion of the Borrower Improvements (Phase I) 303 Third Street Project from
and after the close of the Escrow:
(1) All requests for changes in the applicable plans and specifications,
other than a Minor Change, must be in writing, signed by the
Borrower and the Borrower Improvements Architect and delivered to
the Agency for its approval. The Borrower will not permit the
performance of any work pursuant to any change order or modification
of either the Borrower Improvements Construction Contract or any
related subcontract, except for a Minor Change, without the written
approval of the Agency. The Borrower will obtain any required
permits or authorizations from governmental authorities having
jurisdiction before approving or requesting a change order or a
Minor Change, as applicable.
(2) Unit such time as the work of the Borrower improvements (Phase I) is
complete (as evidenced by the recordation by the Borrower of a
notice of completion for such work under Civil Code Section 3117) ,
no materials, equipment, fixtures, or articles of personal property
shall be placed in or incorporated into the 303 Third Street
Property under any security agreement or other agreement whereby the
seller reserves or purports to reserve title or the right of removal
or repossession, or the right to consider such items as personal
property after their incorporation into the 303 Third Street
Project, unless otherwise authorized by the Agency in writing.
(3) The Agency, the Disbursement Control Service Agent and all other
agents of the Agency shall have at all times upon reasonable prior
notice to the Borrower, the right of entry and free access to the
303 Third Street Property for the purpose of- conducting inspections -
to verify compliance by the Borrower with this Agreement, and the
right to inspect all work done, labor performed, and materials
furnished with respect to the Borrower Improvements. The Agency
shall have unrestricted access to and the right to copy all records,
accounting books, contracts, subcontracts, bills, statements,
vouchers, and supporting documents of the Borrower relating in any
way to the Borrower Improvements upon reasonable prior notice to the
Borrower.
(4) If the Agency is informed by the Disbursement Control Service, or if
the Agency may otherwise reasonably determine in good faith that any
work or materials do not conform to the approved plans and
specifications (exclusive of Minor Changes) or sound building
practices, the Agency may give the Borrower notice of breach under
Section 13.0 (b) and if such breach is not cured within the
applicable period of time following such notice, the Agency may
require the Borrower Improvement work described in such notice to be
stopped and the Agency may instruct the Fiscal Agent to withhold
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further disbursement of Advances to the Borrower until the matter is
corrected. The Borrower will promptly correct any such work to the
reasonable satisfaction of the Agency. No such action by the Agency
will affect Borrower's obligation to complete the Borrower
Improvements on or before the Completion Date.
(5) The Borrower shall indemnify and hold the Agency harmless from any
and all claims for personal injury or death or damage to property
occurring upon the 303 Third Street Property which may be asserted
against the Agency by any person, entity, or governmental body where
such claim is not found to be based upon the willful misconduct or
gross negligence of the Agency. The Agency shall be entitled to
appear in any action or proceeding to defend itself against such a
claim, and all reasonable costs incurred by the Agency in connection
with the defense against such a claim, including attorneys' fees,
shall be paid by Borrower to the Agency. In the event that the
Borrower may fail to provide the Agency with confirmation of the
financial capacity, suitable surety or other undertaking of the
Borrower to pay such a claim, plus costs, on behalf of the Agency in
a form and substance reasonably satisfactory to the Agency, the
Agency shall, in its discretion, be entitled to settle or compromise
any claim for personal injury or death or damage to property
asserted against the Agency, and the terms of such a settlement by
the Agency shall be binding upon Borrower for purposes of this
indemnification. All amounts paid by the Agency under this Section
12.0 (5) shall be the sole obligation of the Borrower and, if paid by
the Agency, shall be deemed to be an additional Advance to the
Borrower from the Section 108 Loan Account, plus interest from the
date of such advance at the rate specified in the Borrower Section
108 Loan Promissory Note and secured by the Agency Deed of Trust and
payable to the Agency upon demand.
(6) The Agency shall have the right to commence, appear in, or defend
any action or proceeding purporting to affect the rights, duties or
liabilities of the parties to this Agreement, the Borrower
Indebtedness, the Section 108 Loan Collateral, the Related 303 Third
Street Project Documents and the OPA, or the disbursement of funds
under the Section 108 Loan. In connection with this right, the
Agency may incur and pay reasonable costs and expenses, including,
but not limited to, attorneys' fees,, for both -trial sand appellate
proceedings.
(7) The Agency may display a sign on the 303 Third Street Property
informing the public that the Agency is providing the Section 108
Loan and the EDI Loan to the Borrower for the 303 Third Street
Project. The Agency may obtain other publicity in connection with
the 303 Third Street Project in consultation with the Borrower,
through press releases and participation in ground-breaking and
opening ceremonies and similar events.
Section 13.0. BREACH OF THIS AGREEMENT, NOTICE OF BREACH AND
EVENTS OF DEFAULT.
(a) Failure or delay by either party to perform any material term
or provision of the Agreement shall constitute a breach and if not cured within
the period of time following notice of such breach set forth in Section 13.0 (b) ,
such a breach shall be deemed to be an Event of Default of this Agreement by the
applicable party.
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(A) Each of the following shall constitute an Event of Default by
the Borrower under this Agreement:
(1) Failure of the Borrower to make any payment to the Agency when due
on the Borrower Indebtedness.
(2) Failure of the Borrower to make any payment to the Construction
Lender when due on the Construction Loan after notice from the
Construction Lender under the applicable notice and cure terms of
the Construction Loan.
(3) Failure of the Borrower to make any payment to the Agency when due
under the EDI Loan or the OPA after notice from the Agency under the
applicable notice and cure terms of the OPA.
(4) Failure of the Borrower to make any payment to the Permanent Lender
when due under the Permanent Loan after notice from such lender
under the applicable notice and cure terms of the Permanent Loan.
(5) Failure of Borrower to comply with or to perform when due any other
term, obligation, covenant or condition contained in this Agreement,
the OPA or the Agency Security Interest after notice from the
Agency, or the Secretary of HUD, under the applicable notice and
cure terms of any of these documents.
(6) Failure of the Borrower to comply with or to perform when due any
term, obligation, covenant or condition of the Construction Loan,
other than a failure of the Borrower to make any payment to such
Construction Lender when due under Section 13.0 (a) (A) (2) , or to
comply with or to perform when due any term, obligation, covenant or
condition of the Permanent Loan, other than a failure of the
Borrower to make any payment to such lender when due under Section
13. 0 (a) (A) (4) , after notice from such Permanent Lender under the
applicable notice and cure terms of such obligations of the
Borrower.
(7) Any warranty, representation or statement made or furnished to the
Agency by or on behalf of the Borrower pursuant to this Agreement is
false or misleading in any material respect at the time made or
furnished.
(8) This Agreement, the OPA or the Agency Security Interest ceases to be
in full force and effect at any time and for any reason other than
by virtue of the repayment in full of the Section 108 Loan.
(9) The dissolution or the termination of the Borrower' s existence as a
going business (except in the case of a permitted transfer under the
OPA) or the insolvency of the Borrower, or the appointment of a
receiver for any part of the Borrower's property, any assignment for
the benefit of creditors under any type of creditor workout, or the
commencement of any proceeding under any bankruptcy or insolvency
laws, unless such proceedings are discharged or dismissed within
ninety (90) days following commencement by or against the Borrower.
(10) Commencement of foreclosure or forfeiture proceedings, whether by
judicial proceeding, self-help, repossession or any other method, by
any creditor or the Borrower or by any governmental agency, against
any collateral securing the Borrower Indebtedness, or by any
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u
i
governmental agency unless such proceedings are discharged or
dismissed by the Borrower within ninety (90) days following
commencement by or against the Borrower (other than by either the
Agency, or the Construction Lender or the Permanent Lender as
applicable) . However, this Event of Default shall not be deemed to
have occurred if there is a good faith dispute by the Borrower as to
the validity or reasonableness of the claim which is the basis of
the creditor or forfeiture proceeding, and if the Borrower gives the
Agency written notice of the creditor or forfeiture proceeding and
furnishes reserves or a surety bond for the creditor or forfeiture
proceeding satisfactory to the Agency and proceeds to vigorously
defend against such a claim.
(11) The Borrower Improvements are not constructed substantially in
accordance with the applicable plans and specifications (except for
Minor Changes) or substantially in accordance with the terms of the
applicable construction contract.
(12) After the Commencement Date, if the construction of the Borrower
Improvements (Phase I) is not promptly commenced or once commenced
such work is abandoned or work thereon ceases for a period of more
than ninety (90) days for any reason, excepting the occurrence of an
Event of Default by the Agency under this Agreement, or a default by
the Agency under the OPA, or if the Borrower Improvements (Phase I)
are not completed within twenty four (24) months following the close
of the Escrow.
(13) After the Construction Lender Subordination Agreement is executed by
the Borrower and the Agency and field for recordation, if the
construction of the Borrower Improvements (Phase II) is not promptly
commenced or once commenced such work is abandoned or work thereon
ceases for any reason for a period of more than ninety (90) days for
any reason, or if the Borrower Improvements (Phase II) are not
completed within one (1) year following the recordation of the
Construction Lender Subordination Agreement.
(14) The Borrower fails to maintain, or fails to renew or replace the
Borrower Letter of Credit within ninety (90) days prior to its
expiring date at any time prior to the Completion Date.
(15) Sale, transfer, hypothecation, assignment, or conveyance of the 303
Third Street Property or any portion thereof or interest therein by
the Borrower without the Agency' s prior written consent, except as
may be permitted under the OPA.
(16) The Borrower is in default under the terms of any lease with a
Tenant and fails to cure such a default after notice from such
Tenant under the applicable notice and cure terms of such Tenant
lease.
(17) All or any material portion of the 303 Third Street Property is
condemned, seized, or appropriated without compensation, and
Borrower does not within sixty (60) days after such condemnation,
seizure, or appropriation, initiate and diligently prosecute
appropriate action to contest in good faith the validity of such
condemnation, seizure, or appropriation.
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(B) Each of the following shall constitute an Event of Default by
the Agency under this Agreement:
(1) Failure by the Agency to remit an Advance when required under this
Agreement when all the conditions for an Application for Loan
Disbursement have been satisfied by the Borrower.
(2) Any warranty, representation or statement made or furnished by the
Agency to the Borrower pursuant to this Agreement is false or
misleading in any material respect at the time made or furnished.
(3) Failure by the Agency to perform or comply with any other obligation
imposed on the Agency under this Agreement, the HUD Section 108 Loan
Agreement or the Fiscal Agent Agreement, after notice from the
Borrower under the applicable notice and cure terms of this
Agreement or the Fiscal Agent Agreement, as applicable.
(4) Insolvency of the Agency, or the appointment of a receiver for any
part of the Agency' s property, any assignment for the benefit of
creditors under any type of creditor workout, or the commencement of
any proceedings under any bankruptcy or insolvency laws, unless such
proceedings are discharged or dismissed within ninety (90) days
following commencement by or against the Agency.
(b) Except in the case of the occurrence of a breach under Section
13.0 (a) (A) (7) or Section 13.0 (a) (B) (2) which shall be deemed to be an Event of
Default of the Borrower or the Agency, as applicable, on the date of such false
statement, or except in the case of a breach covered by a different cure period
set forth in Section 13.0 (e) , below, no other Event of Default shall be deemed
to exist, if within thirty (30) days following written notice of such breach and
demand by the party sending such notice that the breach be cured, the party
alleged to be in breach of this Agreement: (i) cures the breach; or (ii) if the
cure of the breach cannot be satisfied by the payment of a liquidated sum of
money or requires more than thirty (30) days to complete the cure, the party
which receives such notice of breach immediately initiates reasonable steps to
cure such breach and thereafter continues and completes all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably practical.
(c) Upon the occurrence of any Event of Default:
(A) if the Event of Default is by the Borrower and at any time
thereafter, the Agency may, at its option, but without any
obligation to do so, and in addition to any other right the Agency
may have, do any" one or more of the following without further notice
to the Borrower:
(i) recover its damages against the Borrower;
(ii) institute appropriate proceedings to enforce the terms of this
Agreement;
(iii) withhold further Advances to the Borrower;
(iv) expend funds of the Agency necessary to remedy the Event of
Default or to protect the Agency Security Interest, the
Borrower Guaranties and/or the Borrower Letter of Credit in
the 303 Third Street Property;
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(v) accelerate the Borrower Indebtedness and demand payment of all
sums then due;
(vi) exercise any right or remedy of the Agency as granted or
permitted under the terms of the Section 108 Loan Collateral
or the Agency Security Interest in the manner authorized or
made available under law;
(vii) exercise any other right or remedy which it has under the OPA,
the Fiscal Agent Agreement, the Construction Lender
Subordination Agreement, the Permanent Lender Subordination
Agreement or which is otherwise available at law or in equity
or by statute;
(viii) exercise any other right or remedy which it has under this
Agreement or which is otherwise available at law or equity or
by statute; and
(xi) the Secretary of HUD may exercise any of the foregoing (i) -
(viii) , inclusive under the terms of the Agency' s assignment
of its rights of the Section 108 Loan collateral to the
Secretary of HUD.
(B) if the Event of Default is by the Agency and at any time thereafter,
the Borrower may, at its option, but without any obligation to do
so, and in addition to any other right the Borrower may have, do any
one or more of the following without further notice to the Agency:
(i) recover its damages against the Agency;
(ii) institute appropriate proceedings to enforce the terms of this
Agreement;
(iii) expend funds of the Borrower necessary to remedy the Event of
Default or to protect its interest in the 303 Third Street
Property;
(iv) exercise any right or remedy of the Borrower under the OPA,
the Fiscal Agent Agreement, the Construction Loan or whichever
is otherwise available at-, law or -equity or byt-statute;• and-
(v) exercise any other right or remedy which it has under this
Agreement or which is otherwise available at law or equity or
by statute.
(d) If the Agency (or the Secretary of HUD) takes possession of the 303
Third Street Property under this Agreement after the occurrence of an Event of
Default by the Borrower, then in such event, the Agency may take any and all
actions necessary in its judgment to complete construction of the Borrower
Improvements, including but not limited to making changes in the applicable plans
and specifications, work, or materials and entering into, modifying, or
terminating any contractual arrangements, subject to the right of the Agency at
any time to discontinue any such work without further liability to the Borrower.
The Borrower irrevocably appoints the Agency as its attorney-in-fact, with full
power of substitution, to complete the Borrower Improvements at the Agency' s
option, either in the Borrower's name or in its own name. In any event, all sums
expended by the Agency after the occurrence of an Event of Default in completing
the construction of the Borrower Improvements will be considered to have been
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disbursed to the Borrower as part of the Section 108 Loan and shall be secured
by the Agency Security Interest, and any such sums expended by the Agency shall
not be deemed to be a Borrower Contribution. Any such sums that cause the
principal amount of the sums disbursed the Agency for the 303 Third Street
Project to exceed the face amount of the Borrower Section 108 Loan Promissory
Note will be considered to be an additional loan to the Borrower under this
Agreement, bearing interest at the rate of the Borrower Section 108 Loan
Promissory Note and secured by the Agency Security Interest. For these purposes,
the Borrower assigns to the Agency all of its right, title and interest in and
to the Related 303 Third Street Project Documents, and, if applicable, the
Construction Loan; provided however, the Agency will not have any obligation
under the Construction Loan to complete the Borrower Improvements (Phase II)
unless the Agency has agreed in writing, after the occurrence of an Event of
Default, to assume such an obligation to the Construction Lender. The Agency
will have the right to exercise any rights of the Borrower under the Related 303
Third Street Project Documents upon the occurrence of an Event of Default. All
rights, powers, and remedies of the Agency under this Agreement are cumulative
and alternative, and are in addition to all rights which the Agency may have
under the OPA or under applicable law.
(e) Notwithstanding the general thirty (30) day cure period for a
breach of this Agreement under Section 13.0 (b) , if a longer period of time may
I apply to the cure of the same breach or default by a party to this Agreement
under the terms of the Construction Loan, the Permanent Loan or the OPA, as
applicable, then the cure period preceding the occurrence of an Event of Default
for such party under this Agreement shall be of the same duration following
notice under Section 13.0 (b) of this Agreement, as set forth under the
Construction Loan, the Permanent Loan or the OPA, as applicable.
SECTION 14.0. CONSTRUCTION LOAN.
(a) Upon the completion of the Borrower Improvements (Phase I) the
Agency hereby agrees to subordinate the Agency Security Interest in the 303 Third
Street Property to the Construction Loan as provided in this Section 14 .0,
subject to the satisfaction of the following conditions:
(i) the maximum principal amount of the Construction Loan (including
funded interest reserves and customary and reasonable costs of
financing) shall not exceed $8, 500,000.00 unless the proposed amount
of the Construction Loan in excess of $8,500, 000.00 does-mot- cause- -«- - -
the loan-to-value ratio referenced in Section 14.0 (a) (viii) to
exceed 80% and is acceptable to HUD under the HUD Section 108 Loan
Agreement, if applicable;
(ii) at the time of the Agency's execution of the Construction Lender
Subordination Agreement, there shall be no default of the Borrower
under the OPA, this Agreement or the Agency Security Interest;
(iii) the Borrower shall repay the EDI Loan to the Agency upon recordation
of the Construction Lender Subordination Agreement;
(iv) [RESERVED: NO TEXT] ;
(v) the Borrower shall have paid all financing costs charged by HUD to
the Agency under the HUD Section 108 Loan through the date of the
recordation of the Construction Lender Subordination Agreement
(including HUD underwriter costs presently estimated to be
$25, 000.00) if not previously paid by the Borrower to the Agency;
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(vi) no provision of the Construction Lender Subordination Agreement
shall require the Agency (or HUD) to waive or suspend its right to
receive payments of principal and interest when due under the
Section 108 Loan, or waive or suspend the enforcement of any right
or remedy of the Agency under the CPA, this Agreement or the Agency
Security Interest, the Borrower Letter of Credit or the Borrower
Guaranties in the event of a default by the Borrower to the
Construction Lender; and in the event of a default by the Borrower
under the Construction Loan or the CPA or this Agreement, no
provision of the Construction Loan shall require the Agency to first
obtain the consent of such Construction Lender before the Agency may
assert any such remedy against the Borrower or realize upon the
value of any security given by the Borrower to the Agency under this
Agreement or the CPA;
(vii) the Construction Loan documents shall contain provisions reasonably
satisfactory to the Agency which assure the Agency that:
(1) an independent lender's disbursement control service shall be
used to perform the customary functions of a construction
lender disbursement control and payment verification;
(2) the Construction Lender, and the construction lender
disbursement control service, shall require the Borrower to
provide the Construction Lender as part of each application
for a disbursement of funds under the Construction Loan for
labor performed on the 303 Third Street Property, a written
certification (with a copy to the Agency) that all labor and
construction trades personnel employed by either the Borrower
or the Borrower Contractor and all subcontractors of either of
them who perform work on the 303 Third Street Project have
been paid not less than "prevailing wages" as this term is
defined under 40 U.S.C. Section 276a-276a-5 (Davis-Bacon
Prevailing Wage Law, as amended) ;
(3) the Construction Loan documents shall not be materially
modified or amended following the approval of the Construction
Loan by the Agency under Section 14.0 (b) without the Borrower
first obtaining the written approval of the Agency, and such
approval shall not be reasonably withheld;
(4) the Construction Loan documents shall provide that not more
than $400, 000 in "developer fees, costs, expenses, overhead
and profit" and the like (less any amount of such expense
items previously included in an Advance paid by the Agency
under the Section 108 Loan) shall be payable from the proceeds
of the Construction Loan to the Borrower;
(viii) receipt by the Agency of a MAI appraisal prepared in accordance with
real property standards acceptable to a federally chartered lending
institution, and otherwise reasonably acceptable in form to the
Agency, which indicates that the loan-to-value ratio of the 303
Third Street Project under the proposed Construction Loan and the
Section 108 Loan shall not exceed 80% of the appraised value of the
303 Third Street Property.
(b) The Borrower shall be solely responsible for obtaining the
Construction Loan and nothing herein shall be deemed to be an undertaking or
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commitment by the Agency to arrange for or obtain or participate in any such
Construction Loan. The Borrower agrees to exercise best faith efforts to obtain
the necessary Construction Loan for the 303 Third Street Project. The
Construction Loan shall be obtained by the Borrower from a reputable, recognized
and well established financial institution or commercial lending source,
including but not limited to a bank, savings and loan institution, insurance
company, real estate investment trust, pension fund and the like. When the
proposed source of the Construction Loan is any source other than Borrower
capital contribution to the 303 Third Street Project, the Borrower shall promptly
submit the following the Agency:
(1) copy of the written Construction Loan commitment received by
the Borrower;
(2) proof of acceptance by the Borrower of the commitment of the
Construction Lender, subject only to payment by the Borrower
of any up-front Construction Loan commitment fees, if any, and
confirmation by the Agency that the specific terms of the
Construction Loan contain the provisions set forth in Section
14 .0 (a) .
The Executive Director of the Agency shall approve, disapprove or
conditionally approve items (1) and (2) in the preceding paragraph within fifteen
(15) days of receipt of such documents and the other information required by this
Section 14 .0.
(c) [RESERVED: NO TEXT] .
Section 15.0. PERMANENT LOAN FOR THE 303 THIRD STREET PROJECT.
(a) Upon the completion of the Borrower Improvements (Phase II) the
Agency hereby agrees to subordinate the Agency Security Interest in the 303 Third
Street Property to the Permanent Loan as provided in this Section 15.0, subject
to the repayment of the Construction Loan and the release and reconveyance of all
of the security interests of the Construction Lender in the 303 Third Street
Property and the satisfaction of the following conditions:
(i) the maximum principal amount of the Permanent Loan (including funded
interest reserves and customary and reasonable-costs-of financing) -
shall not exceed $8, 500, 000.00 unless the proposed amount of the
Permanent Loan in excess of $8,500,000.00 does not cause the loan-
to-value ratio referenced in Section 15.0 (a) (vi) to exceed 80% and
is acceptable to HUD under the HUD Section 108 Loan Agreement, if
applicable;
(ii) at the time of the Agency's execution of the Permanent Lender
Subordination Agreement, there shall be no default of the Borrower
under the OPA, this Agreement or the Agency Security Interest;
(iii) the Borrower shall have paid all financing costs charged by HUD to
the Agency under the HUD Section 108 Loan through the date of the
recordation of the Permanent Lender Subordination Agreement
(including HUD underwriter costs which shall be due on the "Public
Offering Date" as provided in the Borrower Section 108 Promissory
Note presently estimated to be $25,000.00) if not previously paid by
the Borrower to the Agency;
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(iv) no provision of the Permanent Lender Subordination Agreement shall
require the Agency (or HUD) to waive or suspend its right to receive
payments of principal and interest when due under the Section 108
Loan, or waive or suspend the enforcement of any right or remedy of
the Agency under the OPA, this Agreement or the Agency Security
Interest, the Borrower Letter of Credit or the Borrower Guaranties
in the event of a default by the Borrower to the Permanent Lender;
and in the event of a default by the Borrower under the Permanent
Loan or the OPA or this Agreement, no provision of the Permanent
Loan shall require the Agency to first obtain the consent of such
Permanent Lender before the Agency may assert any such remedy
against the Borrower or realize upon the value of any security given
by the Borrower to the Agency under this Agreement or the OPA;
(v) the Permanent Loan documents shall contain provisions reasonably
satisfactory to the Agency which assure the Agency that the
Permanent Loan documents shall not be materially modified or amended
following the approval of the Permanent Loan by the Agency under
Section 15.0 (b) without the Borrower first obtaining the written
approval of the Agency, and such approval shall not be reasonably
withheld;
(vi) receipt by the Agency of a MAI appraisal prepared in accordance with
real property standards acceptable to a federally chartered lending
institution, and otherwise reasonably acceptable in form to the
Agency, which indicates that the loan-to-value ratio of the 303
Third Street Project under the proposed Permanent Loan and the
Section 108 Loan shall not exceed 800 of the appraised value of the
303 Third Street Property;
(vii) (RESERVED: NO TEXT] ;
(viii) the Borrower shall pay the remaining balance of the Participation
Fee to the Agency, if any, upon recordation of the Permanent Lender
Subordination Agreement;
(ix) the Agency shall have confirmed that all liens shall be released
except as approved by the Agency, that Tenants have executed
subordination and attornment agreements in favor of the Agency in
customary form, if requested by the Agency, land that the Agency
Security Interest shall remain a valid lien on the 303 Third Street
Property, subject only to the lien of the Permanent Lender and other
matters as approved by the Agency.
(b) The Borrower shall be solely responsible for obtaining the
Permanent Loan and nothing herein shall be deemed to be an undertaking or
commitment by the Agency to arrange for or obtain or participate in any such
Permanent Loan. The Borrower agrees to exercise best faith efforts to obtain the
necessary Permanent Loan for the 303 Third Street Project. The Permanent Loan
shall be obtained by the Borrower from a reputable, recognized and well
established financial institution or commercial lending source, including but not
limited to a bank, savings and loan institution, insurance company, real estate
investment trust, pension fund and the like. When the proposed source of the
Permanent Loan is any source other than Borrower capital contribution to the 303
Third Street project the Borrower shall promptly submit the following the Agency:
(1) copy of the written Permanent Loan commitment received by the
Borrower;
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(2) proof of acceptance by the Borrower of the commitment of the
Permanent Lender, subject only to payment by the Borrower of
any up-front Permanent Loan commitment fees, if any, and
confirmation by the Agency that the specific terms of the
Permanent Loan contain the provisions set forth in Section
15.0 (a) .
The Executive Director of the Agency shall approve, disapprove or
conditionally approve items (1) and (2) in the preceding paragraph within fifteen
(15) days of receipt of such documents and the other information required by this
Section 15.0.
(c) For the purposes of this Section 15.0(c) , the words "permitted
assumption" refer to the assumption of the Borrower's obligations under the
Permanent Loan by an assignee or successor in interest of the Borrower who: (i)
satisfies the requirements of an eligible assignee of the Borrower under
Permanent Loan; and (ii) satisfies the requirement of an eligible assignee or
successor in interest of the Borrower under the terms of the OPA. For the
purposes of this Section 15.0 (c) , the words "permitted refinancing" refer to one
or more refinancings of the Permanent Loan by the Borrower, or by an assignee or
successor in interest of the Borrower who satisfies the requirements of
subsentence (i) and subsentence (ii) , above, in the preceding sentence; provided
that such refinancing of the Permanent Loan also complies, with the following
conditions:
(i) the principal amount of the permitted refinancing on the
earlier date of the maturity, acceleration or prepayment of
the original Permanent Loan shall not exceed the remaining
unpaid principal balance of the Permanent Loan on such date
which was scheduled to be due and payable under the original
terms of the Permanent Loan;
(ii) the terms of the permitted refinancing shall include a payment
schedule of level-debt amortization of principal and current
payments of interest in monthly installments which does not
exceed twenty (20) years;
(iii) the rate of interest payable under the permitted refinancing
shall be commercially reasonable and comparable to other
commercial real estate lending transactions involving similar
terms; and
(iv) the Agency shall not be obligated as a term or condition of
such a permitted refinancing to enter into a subordination
agreement or execute other documents, which contain provisions
which do not comply with the OPA or this Agreement.
(d) The Borrower shall pay for all costs incurred by the Agency
including title insurance charges for issuance of appropriate lender' s policies
of title insurance in favor of the Agency under the Section 108 Loan , escrow
fees and expenses and reasonable attorneys' fees payable by the Agency for the
preparation and review of the appropriate documents, in connection with the
execution and recordation of the Permanent Loan Subordination Agreement under
Section 15.0 (a) or (c) . The Borrower shall pay such amount promptly upon receipt
of a written invoice therefore from the Agency.
(e) The Agency shall release the Borrower Guaranties and shall
return the Borrower Letter of Credit to the issuing bank following the
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recordation of the Permanent Loan when the Borrower has provided the Agency with
written confirmation in reasonably satisfactory form to the Executive Director
that the following conditions have been satisfied:
(i) the City has issued one or more certificates of occupancy to
Tenants who shall, in the aggregate, occupy 95% of the net
rentable space in the building under one or more leases and
who have each paid at least six (6) month's rent under such
leases; or
(ii) the City has issued one or more certificates of occupancy to
Tenants who shall, in the aggregate, occupy space in the
building under one or more leases and who have each paid rent
for at least six (6) months, such that the net operating
income of the 303 Third Street Project shall produce a secured
debt service coverage ratio of 1.2 to 1.0 as acceptable to
HUD.
Section 16.0. MISCELLANEOUS PROVISIONS. The following
miscellaneous provisions are a part of this Agreement:
(1) Nothing in this Agreement shall be construed to constitute the
creation of a partnership or joint venture between the Agency and
the Borrower or any contractor or other person relating to the 303
Third Street Project. The Agency is not an agent or representative
of the Borrower. This Agreement does not create a contractual
relationship between the Agency and any such person and shall not be
construed to benefit or bind the Agency in any way with or create
any contractual duties by the Agency to any contractor,
subcontractor, materialman, laborer, or any other person.
(2) This Agreement, together with the Related 303 Third Street Project
Documents, constitutes the entire understanding and agreement of the
parties as to the matters set forth in this Agreement. No
alteration of or amendment to this Agreement or the OPA shall be
effective unless given in writing and signed by the party or parties
sought to be charged or bound by the alteration or amendment.
(3) This Agreement has been delivered to the Agency and accepted by the
Agency in the State of California. If there is a lawsuit, the
Borrower agrees upon the Agency' s request to submit to the
jurisdiction of the courts of San Bernardino County, the State of
California. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
(4) The Borrower appoints and designates the Agency as its attorney-in-
fact to file for record any notice that the Agency deems necessary
to protect its interest under this Agreement. This power shall be
deemed coupled with an interest and shall be irrevocable while any
sum or performance remains due and owing under any of the Related
303 Third Street Project Documents.
(5) Caption headings for the various sections or provisions of this
Agreement are for convenience purposes only and are not to be used
to interpret or define the provisions of this Agreement.
(6) All notices required to be given under this Agreement shall be given
in writing, may be sent by telecopy, and shall be effective when
SBEO/0001/DOC/4130-3
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actually delivered or when deposited with a nationally recognized
overnight courier or deposited in the United States mail, first
class, postage prepaid, addressed to the party to whom the notice is
to be given at the address shown above. Any party may change its
address for notices under this Agreement by giving formal written
notice to the other parties, specifying that the purpose of the
notice is to change the party's address. The agent for the service
of process and the persons who shall receive notice on behalf of
each party for purposes of this Agreement are presented as follows:
Agency: Borrower:
For Service of Process: For Service of Process:
Agency Secretary Fullerton, Lemann, Schaefer
Dominick
For Notice under the 215 North "D" Street
Agreement: San Bernardino, California 92401
Development Director
Redevelopment Agency of For Notice under the
the City of San Bernardino Agreement:
201 North "E" Street Martin A. Matich
Suite 301 P.O. Box 50000
San Bernardino, California 92401 San Bernardino, California 92412
with copy to: with copy to:
Sabo & Green J. Kevin Brunk
201 North "E" Street 3121 Stanford Avenue
Suite 300 Marina Del Rey, California 90292
San Bernardino, California 92401
Attention: Mr. Timothy J. Sabo
(7) All covenants and agreements contained by or on behalf of each party
shall bind its respective successors and assigns and shall inure to
the benefit of the other party, its respective successors and
assigns. The Borrower shall not, however, have the right to assign
its rights under this Agreement or any interest therein, without the
prior written consent of the Agency, except for such transfers
permitted without Agency consent under the OPA.
(8) If a court of competent jurisdiction finds any provision of this
Agreement 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;
however, if the offending provision cannot be so modified, it shall
be stricken and all other provisions of this Agreement in all other
respects shall remain valid and enforceable.
(9) Time is of the essence in the performance of this Agreement.
(10) In addition to specific provisions of this Agreement, performance by
either party hereunder shall not be deemed to be in default where
delays or defaults are due to war; insurrection; strikes; lockouts;
riots; floods; earthquakes; fires; casualties; acts of God; acts of
public enemy; epidemics; quarantine restrictions; freight embargoes
or lack of transportation; weather-caused delays; acts of the other
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party other than as permitted or required by the terms of this
Agreement; acts or failure to act of any public or governmental
agency or entity other than as permitted or required by the terms of
this Agreement (except that action or failure to act by the City or
the Agency shall not extend the time for the Agency to act unless
such extension is otherwise expressly authorized herewith unless
such action or failure to act is the result of a lawsuit or
injunction including by way of illustration, but not limited to,
lawsuits pertaining to the adoption of the Agreement and any other
environmental documentation and procedures and the like) or any
other causes beyond the control or without the fault of the party
claiming an extension of time to perform; provided however, that the
failure or inability of the Borrower to obtain the Construction
Loan, or later, the Permanent Loan for any reason, shall not be
deemed to be an action, event or delay which excuses the performance
of the Borrower under this Section 16.0(10) . Any extension of time
for any such cause hereunder shall be for the period of the enforced
delay and shall commence to run from the time of the commencement of
the cause, if notice by the party claiming such extension is sent to
the other party within thirty (30) calendar days of the commencement
of the cause. Times of performance under this Agreement may also be
extended by mutual agreement in writing by and between the Agency
and the Borrower.
(11) If either party hereto files any action or brings any action or
proceeding against the other arising out of this Agreement, or is
made a party to any action or proceeding brought by a third person,
then as between the Borrower and the Agency, the prevailing party
shall be entitled to recover as an element of its costs of suit and
not as damages, its reasonable attorneys' fees as fixed by the Court
or other forum, in such action or proceeding or in a separate action
or proceeding brought to recover such attorneys' fees. For the
purposes hereof the attorneys' fees of the Agency shall include the
salaries, benefits and costs of attorneys employed by the Office of
the City Attorney of the City.
(12) Except as provided in Section 7.0(d) or as specifically provided in
the OPA, the words "approval by the Agency, " "approved by the
Agency, " "demand of the Agency," "satisfaction of the Agency, "
"acceptable to the Agency," "disapproval by the Agency, " "rejection
by the Agency, " and the like, refer to actions and determinations
which shall be performed on behalf of the Agency by the Executive
Director.
(13) Neither party shall be deemed to have waived any right under this
Agreement unless such waiver is given in writing and signed in the
case of the Agency by the Chairperson of the Community Development
Commission and the Executive Director and in the case of the
Borrower, signed by authorized principals/managing members of the
Borrower. No delay or omission on the part of either party in
exercising any right shall operate as a waiver of such right or any
other right. A waiver by either party of a provision of this
Agreement shall not prejudice or constitute a waiver of the right of
such party to otherwise demand strict compliance with that provision
or any other provision of this Agreement. No prior waiver by either
party, nor any course of dealing between the Agency and the
Borrower, shall constitute a waiver of any of the rights of either
party or of any of their obligations under any future transactions.
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Whenever the consent of the Agency is required under this Agreement,
the granting of such consent by the Agency in any instance shall not
constitute continuing consent in subsequent instances where such
consent is required, and in all cases such consent may be granted or
withheld in the sole discretion of the Agency.
(14) Each of the following documents is an attachment to this Agreement
and is incorporated herein by this reference:
Borrower Section 108 Loan Promissory Note;
Agency Deed of Trust;
Borrower Assignment of Agreements and Permits;
Tenant Subordination, Nondisturbance and Attornment Agreement
(general form) ;
Borrower Guaranties (general form) ;
Borrower Environmental Indemnity;
Fiscal Agency Agreement;
Construction Lender Subordination Agreement (general form) ;
Permanent Lender Subordination Agreement (general form) .
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r
IN WITNESS WHEREOF, the parties hereto have duly executed this 2000
Community Development Block Grant Section 108 Development Loan Agreement as of
the date set forth below.
AGENCY
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
Date: By:
Chair of the Community Development
Commission
APPROVED AS TO FORM: By:
Secretary
By: By:
Agency Counsel Executive Director
BORROWER
303, L.L.C. , a California limited liability
company
Date: By:
Martin A. Matich, its manager
By:
J. Kevin Brunk, its manager
By:
Wilford C. Lemann, its manager
APPROVED AS TO FORM:
By:
Attorneys for Borrower
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PROMISSORY NOTE
PAYABLE TO A PUBLIC AGENCY
(303 Third Street Project)
BORROWER: LENDER:
303, L.L.C. Redevelopment Agency of the City
a California limited of San Bernardino
liability company 201 North "E" Street, Third Floor
San Bernardino, California
92401-1507
PRINCIPAL AMOUNT: DATE OF PROMISSORY NOTE:
Not to exceed $1, 840, 000 2000
[Close of the Escrow referenced
-- SEE ANNEX "A" in the Loan Agreement]
RECORD OF ADVANCES
INITIAL INTEREST RATE: MATURITY DATE:
Variable at rate set forth June 1, 2020
below
PERMANENT INTEREST RATE: PAYMENT DATES
OF PRINCIPAL AND INTEREST:
Fixed at rate to be confirmed
to Borrower at the Public Installment Payment Schedule
Offering Date as set forth set forth herein
below
PROMISE TO PAY. 303, L.L.C. , a California limited liability
company (the "Borrower") , promises to pay to the Redevelopment
Agency of the City of San Bernardino (the "Agency") , or order, in
lawful money of the United States of America, at the time, in the
manner, and with interest payable per annum at the rate or rates
hereinafter provided, such amounts as may be advanced under this
Promissory Note Payable to a Public Agency (the "Promissory
Note") from time to time by the Agency to the Borrower
(individually, an "Advance" and collectively, the "Advances") . The
Agency shall make each Advance hereunder upon the written request
of the Borrower pursuant to the provisions of the 2000 Community
Development Block Grant Program Section 108 Project Development
Loan Agreement (303 Third Street Project) , dated as of August _,
2000 (the "Loan Agreement") by and between the Borrower and the
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Agency. The text of the Loan Agreement is incorporated into the
Promissory Note by this reference . (A copy of the Loan Agreement
is on file with the Agency Secretary as a public record of the
Agency. ) This Promissory Note is described in the Loan Agreement
as the "Borrower Section 108 Promissory Note . "
The aggregate amount of all of the Advances to the
Borrower under the Promissory Note shall not exceed the principal
sum of One Million Eight Hundred Forty Thousand Dollars
($1, 840, 000) . The Agency shall record the date and amount of each
Advance hereunder on the form attached hereto entitled "ANNEX A
Record of Advances", and the Agency shall maintain the books and
records of all such Advances . The date of each Advance shall be
the day on which the Agency receives the principal sum of the
Advance in cash or immediately available funds from the United
States Secretary of Housing and Urban Development (herein "HUD")
under the terms of the "HUD Section 108 Loan Agreement" dated
, 2000, for the order or account of the Borrower as the
"Initial Advance", or thereafter, for deposit to the "Fiscal Agent
Account" pending disbursement to the Borrower by the "Fiscal
Agent, " as each of these terms are defined in the Loan Agreement .
INTEREST PAYMENTS AND INITIAL INTEREST RATES : From the date of
each Advance under this Promissory Note to the "Public Offering
Date", as the term "Public Offering Date" is defined in the note (s)
issued by the Agency in favor of HUD under the HUD Section 108 Loan
Agreement (the "HUD Notes") , interest shall accrue on the unpaid
principal balance of this Promissory Note at a variable rate of
interest which shall be the same variable rate (s) per annum as the
rate of interest payable by the Agency under the HUD Notes, and
such interest shall be paid by the Borrower to the Agency in
quarterly installments on the unpaid principal balance on the first
day of March, June, September and December (each, an "Interim
Payment Date") , and accrued and unpaid interest shall also be paid
by the Borrower on the Public Offering Date, if any. The amount of
interest payable on each Interim Payment Date will represent
interest accrued on the unpaid balance during the three-month
period ending before the Interim Payment Date, or in the case of
the first Interim Payment Date, the period from the date of this
Promissory Note to the day before the first Interim Payment Date .
The amount of interest payable by the Borrower on the unpaid
principal balance on the Public Offering Date will represent
interest accrued during the period of time beginning on the last
Interim Payment Date to the day before the Public Offering Date .
The initial interest rate for each Advance payable by the
Borrower will be set on the date of such Advance at a rate per
annum equal to the rate of interest payable by the Agency under HUD
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Notes, and thereafter, the rate of interest shall be adjusted on
the first day of each calendar month (each, a "Reset Date") to an
interest rate equal to the same rate of interest payable by the
Agency on the outstanding principal balance of the HUD Notes on
such Reset Date .
In the event that the Public Offering Date is a date
subsequent to December 31, 2001, interest from and after such
December 31, 2001 to the Public Offering Date shall be paid on the
unpaid principal balance of all Advances under this Promissory Note
at a rate to be determined by reference to the rate of interest set
by the initial holder of the HUD Notes, which, based upon then
prevailing market conditions and taking into account all the
circumstances, will enable the initial holder of the HUD Notes to
sell the HUD Notes at one hundred percent (100%) of the aggregate
amount of all principal amounts owing thereunder. Such interest
rate shall be determined as of January 1, 2002, and shall be
determined again on each March 1, June 1, September 1 and December
1 thereafter.
PERMANENT INTEREST RATE AND PAYMENT DATES . The interest rate on
Advances made under this Promissory Note, from and after the Public
Offering Date with respect to such Advances (the "Permanent
Interest Rate") , shall be the interest rate which the underwriters
selected by the Secretary of HUD to conduct the public offering
determine will enable them to sell the HUD Notes under then
prevailing market conditions as of the Public Offering Date at one
hundred percent (100%) of the aggregate principal amount owing
thereunder (the "Public Offering Interest Rate") . The Permanent
Interest Rate which shall occur on the Advances made under the
Promissory Note shall, as soon as practicable following the
determination of the Public Offering Interest Rate, be confirmed by
the Agency to the Borrower by facsimile transmission, followed by
delivery to the Borrower by a nationally-recognized overnight
delivery service of a written addendum to Annex A Record of
Advances stating the Permanent Interest Rate for the Advances under
this Promissory Note .
From and after the Public Offering Date, interest shall
accrue on the unpaid balance of the Advances made under this
Promissory Note at the Permanent Interest Rate and such interest
shall be paid on (a) June 1 and December 1 of each year (each, a
"Payment Date") , commencing on the Payment Date next following the
occurrence of the Public Offering Date and (b) the Maturity Date .
Interest payable by the Borrower on or before the Public Offering
Date shall be calculated on the basis of a 360-day year and the
actual number of days elapsed. Interest after the Public Offering
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Date shall be calculated on the basis of a 360-day year consisting
of twelve 30-day months .
PRINCIPAL INSTALLMENT PAYMENTS OF UNPAID PRINCIPAL PRIOR TO THE
MATURITY DATE . Installments of unpaid principal shall be due and
payable to the Agency annually prior to the Maturity Date in the
amounts as follows :
Date of Unpaid Principal Installment of Unpaid
Installment Principal Due
June 1, 2001 $ -0-
June 1, 2002 -0-
June 1, 2003 100, 000 . 00
June 1, 2004 100, 000 . 00
June 1, 2005 100, 000 . 00
June 1, 2006 100, 000 . 00
June 1, 2007 100, 000 . 00
June 1, 2008 100, 000 . 00
June 1, 2009 100, 000 . 00
June 1, 2010 100, 000 . 00
June 1, 2011 100, 000 . 00
June 1, 2012 100, 000 . 00
June 1, 2013 100, 000 . 00
June 1, 2014 100, 000 . 00
June 1, 2015 100, 000 . 00
June 1, 2016 100, 000 . 00
June 1, 2017 100, 000 . 00
June 1, 2018 100, 000 . 00
June 1, 2019 100, 000 . 00
June 1, 2020 140, 000 . 00
PAYMENTS; LATE PAYMENTS . Borrower will make all payments of
principal and interest to the Agency at the address of the Agency:
201 North "E" Street, Third Floor, San Bernardino, California
92401-1507, or at such other place as the Agency or the Secretary
of HUD may designate in writing. If an interest payment is not made
by the close of business on the second Business Day next succeeding
an Interim Payment Date or a Payment Date, as the case may be,
interest shall accrue on the amount of such unpaid interest after
such date at the then applicable interest rate payable on the
Advances under this Promissory Note, from the relevant Interim
Payment Date or Payment Date, as the case may be, until the date
such payment is made .
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PREPAYMENT . Borrower may prepay the unpaid principal amount of
this Promissory Note, in whole or in part, upon sixty (60) days
written notice to the Agency and tender of a purchase price in cash
or immediately available funds which enables the Agency to prepay,
within the meaning of paragraph 10 of the HUD Section 108 Loan
Agreement, a like amount of the unpaid principal amount of the HUD
Notes . The Borrower acknowledges that depending upon the financial
market conditions affecting interest rates payable to the holders
of obligations which are backed by the full faith and credit of the
United States Government, at the time proposed by the Borrower for
a prepayment, that any such prepayment of this Promissory Note by
the Borrower, may require the Borrower to also tender to the Agency
a sum in cash which is in excess of the amount of the unpaid
principal as proposed for prepayment under this Promissory Note by
the Borrower in light of the provisions of Paragraph 10 of the HUD
Section 108 Loan Agreement . Paragraph 10 of the HUD Section 108
Loan Agreement provides as follows :
"Paragraph 10 . For purposes of this Contract, the
Notes shall be deemed to have been paid if there
shall have been deposited with the Fiscal Agent
either moneys or Government Obligations, which in
the sole determination of the Secretary, mature and
bear interest at times and in amounts sufficient,
together with the moneys on deposit with the Fiscal
Agent for such purpose, to pay when due the
principal and interest to become due on the Notes .
All of the Notes or all Notes of any maturity may
be so defeased, provided that all Notes having the
longest maturities are defeased before those with
shorter maturities . If any Note defeased is
subject to redemption, the due date of all the
principal due on the Note on the date of defeasance
shall be assumed to be the earliest possible
redemption date under the terms of the Note, for
purposes Of calculating the amount of money or
government obligations to be deposited with the
Fiscal Agent . "
[CONFORM TO TEXT OF HUD SECTION 108 LOAN AGREEMENT]
Notwithstanding the provisions of the preceding paragraph, the
Borrower shall remain obligated to pay all accrued interest on this
Promissory Note through the date on which the Secretary of HUD may
confirm to the Agency that the HUD Notes have been defeased.
DEFAULT . Failure or delay by the Borrower to perform the
following, if not cured within the period of time following notice
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of such failure as set forth below, shall be an event of default
under this Promissory Note :
(1) failure to make any payment to the Agency when due
on this Promissory Note within thirty (30) days
after written notice from the Agency of such
failure;
(2) failure to make any payment to the "Construction
Lender" (as defined in the Loan Agreement) within
thirty (30) days after written notice from the
Construction Lender (or such longer period of time
provided for under the Construction Loan) ;
(3) failure by Borrower to make any required payment
when due under the OPA dated , 2000 (the
"OPA") by and between the Agency and the Borrower
within thirty (30) days after written notice from
the Agency of such failure;
(4 ) failure to make any payment to the lender when due
under the "Permanent Loan" (as defined in the Loan
Agreement) within thirty (30) days after written
notice from such lender (or such longer period of
time provided for under the Permanent Loan) ;
(5) failure to comply with or to perform when due any
other term, obligation, covenant or condition
contained in the Loan Agreement or any other
agreement which secures this Promissory Note, or
the OPA;
(6) failure to comply with or perform when due any
term, obligation, covenant or condition of the
Construction Loan, other than a failure to make any
payment thereunder, which is covered by
subparagraph (2) , above, or to comply with or to
perform when due any term, obligation, covenant or
condition of the Permanent Loan, other than a
failure relating to the Permanent Loan under
subparagraph (4 ) , above, after notice from the
lender for Permanent Loan, as applicable, under the
relevant notice and cure terms pertaining to such
obligations of the Borrower;
(7) any material warranty, representation or statement
made or furnished to the Agency by or on behalf of
the Borrower pursuant to the Loan Agreement is
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i
false or misleading in any material respect at the
time made or furnished;
(8 ) the Loan Agreement, the Construction Loan, the OPA
or the "Section 108 Loan Collateral" (as that term
is defined in the Loan Agreement) ceases to be in
full force and effect (including failure of any
collateral document to create a valid and perfected
security interest or lien) at any time due to a
default by Borrower and failure to cure during any
applicable cure period and other than by virtue of
the repayment, satisfaction and/or mutual release
of any such obligation;
( 9) the dissolution or the termination of the
Borrower' s existence as a going business (except as
may occur as the result of a transfer of assets
permitted under the OPA) or the insolvency of the
Borrower, or the appointment of a receiver for any
part of the Borrower' s property, any assignment for
the benefit of creditors under any type of creditor
workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws, unless
such proceedings are discharged or dismissed by the
Borrower within ninety (90) days following
commencement by or against the Borrower.
(10) Commencement of foreclosure of forfeiture
proceedings, whether by judicial proceeding, self-
help, repossession or any other method, by any
creditor of the Borrower or by any governmental
agency against any collateral securing the
indebtedness evidenced by this Promissory Note
unless such proceedings are discharged or dismissed
by the Borrower.
(11) The sale, transfer, hypothecation, assignment, or
conveyance of the 303 Third Street Property or any
portion thereof or interest therein by the Borrower
without the Agency' s prior written consent, except
as may be permitted under the OPA.
(12) All or any material portion of the 303 Third Street
Property is condemned, seized, or appropriated
without compensation, and Borrower does not within
thirty (30) days after such condemnation, seizure,
or appropriation, initiate and diligently prosecute
appropriate action to contest in good faith the
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validity of such condemnation, seizure, or
appropriation.
RIGHTS OF THE AGENCY. Upon the happening of an event of default,
the Agency may exercise any of its rights provided under the Loan
Agreement, including without limitation, the declaration by the
Agency that the entire unpaid principal balance on this Promissory
Note and all accrued and unpaid interest is immediately due and
payable . The Agency may hire or pay someone else to help collect
this Promissory Note if Borrower does not pay. Borrower will pay
all reasonable costs and expenses incurred by the Agency in the
collection of this Promissory Note, including reasonable attorneys'
fees and other legal expenses of the Agency (including attorneys'
fees and legal expenses in connection with any bankruptcy
proceedings involving the Borrower) . This Promissory Note has been
delivered to the Agency and accepted by the Agency in the State of
California . If there is a lawsuit arising under this Promissory
Note, the Superior Court of San Bernardino County, the State of
California, shall have jurisdiction of such lawsuit . This
Promissory Note shall be governed by and construed in accordance
with the laws of the State of California .
COLLATERAL. Borrower acknowledges this Promissory Note is
secured by a Deed of Trust and Assignment of Rents of even date
herewith. The Deed of Trust and Assignment of Rents affects
certain real property commonly known as , San
Bernardino, California . The Deed of Trust and Assignment of Rents
contains the following due on sale provision:
"Lender may, at its option, declare immediately due and
payable all sums secured by this Deed of Trust upon the
sale or transfer, without the Lender' s prior written
approval, of all or any part of the Property or any
interest in the Property; provided, however, that a sale
or transfer to: (ii) the mortgage under the "Permanent
Loan" (as the term Permanent Loan is defined in the Loan
Agreement) , (iii) an assignee or successor of the Trustor
assuming all the obligations of Trustor under the
Permanent Loan in a permitted assumption pursuant to
Section 15 . 0 of the Loan Agreement or (iv) a mortgage in
connection with a permitted refinancing pursuant to
Section 15 . 0 of the Loan Agreement may be made by the
Trustor and shall not cause the due on sale provisions of
this Section 3 . 3 to become operative; and provided
further that a sale or transfer of leasehold interests in
the Property to prospective tenants whose use of the
Property is in conformity with the OPA and the Loan
Agreement and all applicable zoning laws or ordinances,
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may be made by Trustor and shall not cause the due on
sale provision of this Section 3 . 3 to become operative.
A `sale or transfer' means the conveyance of the Property
or any right, title or interest therein; whether legal,
beneficial, or equitable; whether voluntary or
involuntary; whether by outright sale, deed, installment
sale contract, land contract, contract for deed,
leasehold interest with a term greater than one (1) year,
lease-option contract, or by sale, assignment, or
transfer of any beneficial interest in or to any land
trust holding title to the Property, or by any other
method of conveyance of property interest . This option
shall be exercised by the Lender in accordance with the
provisions of Section 5. 1 hereof; provided, however, this
option shall not be exercised if such remedy is
prohibited by applicable law. Lender shall grant
approval with respect to certain transfers by Trustor in
the circumstances set forth in and in accordance with the
OPA. "
GENERAL PROVISIONS : The Agency may delay or forego enforcing any of
its rights or remedies under this Promissory Note without losing
them. Borrower and any other person who signs, guarantees or
endorses the Promissory Note, to the extent allowed by law, waive
any applicable statute of limitations, presentment, demand for
payment, protest and notice of dishonor. Upon any change in the
terms of this Promissory Note, unless otherwise expressly stated in
writing, no party who signs this Promissory Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released from
liability. Notwithstanding the foregoing, no action taken by the
Agency shall result in the imposition of personal liability on any
of the members, partners, directors, shareholders and officers, as
applicable, of Borrower. All such parties agree that the Agency
may renew or extend (repeatedly and for any length of time) this
Promissory Note, or release any party, or guarantor or collateral;
or impair, fail to realize upon or perfect the Agency' s security
interest in the collateral; and take any other action deemed
necessary by the Agency in its sole discretion without the consent
of or notice to anyone .
RIGHTS OF THE SECRETARY OF HUD. Pursuant to the provisions of
paragraph _ (_) (_) of the HUD Section 108 Loan Agreement, the
Agency shall endorse in blank and without recourse this Promissory
Note, and as so endorsed by the Agency, the Promissory Note shall
be delivered to the "Custodian" (as this term is defined in the HUD
Section 108 Loan Agreement) . Paragraph 12 of the HUD Section 108
Loan Agreement provides in relevant part :
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" (f) The Secretary may complete the endorsement of the Obligor
Note [e .g. : this Promissory Note] and record the
assignments referred to in paragraphs _(_) (_) and
thereby effectuate the transfer of the documents
referenced and underlying indebtedness from the Borrower
y g
[e . g. : the Agency] to the Secretary or the Secretary' s
assignee .
(g) The Secretary may exercise or enforce any and all other
rights or remedies (including any and all rights and
remedies available to a secured party under the Uniform
Commercial Code) available by law or agreement (including
any of the Security Documents, as defined in paragraph
_(_) ) against the collateral, against the Borrower [e .g. :
the Agency] against the Obligor [e.g. : the Borrower under
this Promissory Note] , or against any other person or
property. "
PRIOR TO SIGNING THIS PROMISSORY NOTE, THE BORROWER HAS READ AND
UNDERSTANDS ALL OF ITS PROVISIONS . BORROWER AGREES TO THE TERMS OF
THIS PROMISSORY NOTE AND ACKNOWLEDGES RECEIPT OF A COPY HEREOF.
,
BORROWER
303, L.L .C . , a California
limited liability company
By:
Martin A. Matich, its manager
By:
P. Kevin Brunk, its manager
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PROMISSORY NOTE PAYABLE TO
A PUBLIC AGENCY
Dated , 2000
ANNEX "A"
RECORD OF ADVANCES
This Record of Advances under the Promissory Note shall be
maintained by the Agency.
Authorized
Official
Initial Advance : Name :
Amount of Advance : $ Title :
[Note : Not to exceed $830, 000]
Date Made :
Initial Interest Rate on the
date of Initial Advance : %
Advance Number : Name :
Amount of Advance : $ Title :
Date Made :
Initial Interest Rate on the
date of this Advance : %
Advance Number: Name :
Amount of Advance : $ Title:
Date Made :
Initial Interest Rate on the
date of this Advance : %
Advance Number: Name :
Amount of Advance : $ Title:
Date Made :
Initial Interest Rate on the
date of this Advance : %
Advance Number : Name :
Amount of Advance : $ Title :
Date Made :
Initial Interest Rate on the
date of this Advance : %
Advance Number : Name :
Amount of Advance : $ Title :
Date Made :
Initial Interest Rate on the
date of this Advance : %
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RECORDATION REQUESTED BY:
REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO
WHEN RECORDED MAIL TO:
201 North E Street
Third Floor
San Bernardino, California 92401-1507
Attn: Development Director
Space Above This Line is
For Recorder's Use Only
DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF RENTS AND FIXTURE FILING
(303 Third Street Project)
THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF
RENTS AND FIXTURE FILING (the "Deed of Trust") is dated
2000, among 303 LLC, a California limited liability company
(the "Trustor") , whose address is ,
the Redevelopment Agency of the City of San Bernardino, a body
corporate and politic whose address is 201 North E Street, Third
Floor, San Bernardino, California 92401-1507 (the "Lender" or the
"Beneficiary") ; and First American Title Insurance Company (the
"Trustee") .
1 . 0 CONVEYANCE AND GRANT. For valuable consideration, Trustor
irrevocably grants, transfers and assigns to Trustee in trust,
with power of sale, for the benefit of Lender as Beneficiary,
all of Trustor ' s right, title, and interest in and to the
following described real property, together with all existing
or subsequently erected or affixed buildings, improvements and
fixtures; all easements, rights of way, and appurtenances and
all other rights, royalties, and profits relating to the real
property, including and without limitation all minerals, oil,
gas, geothermal and similar matters located in San Bernardino
County, State of California (the "Property") :
SEE EXHIBIT "A" LEGAL DESCRIPTION ATTACHED
HERETO
Trustor presently assigns to the Lender all of Trustor ' s right,
title and interest in and to all present and future leases of
the Property and all Rents from the Property. In addition,
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Trustor grants Lender a Uniform Commercial Code security
interest in the Rents and the Personal Property defined below.
2 . 0 DEFINITIONS . The following words shall have the following
meanings when used in this Deed of Trust . Terms not otherwise
defined in this Deed of Trust shall have the meanings
attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money
of the United States of America:
Beneficiary. The word "Beneficiary" means the Redevelopment
Agency of the City of San Bernardino, a body corporate and
politic, its successors and assigns . The Agency is also
referred to herein as "Beneficiary" and "Lender . "
Deed of Trust. The words "Deed of Trust" mean this Deed of
Trust and Assignment of Rents among Trustor, Lender, and
Trustee, and includes without limitation all assignment and
security interest provisions relating to the Personal Property
and Rents .
Improvements . The word "Improvements" means and includes all
existing improvements on the Property and all improvements to
be constructed on the Property.
Indebtedness . The word "Indebtedness" means all principal and,
if applicable, interest payable under the Promissory Note and
any amounts expended or advanced by Lender to discharge
obligations of Trustor or expenses incurred by Trustee or
Lender to enforce obligations of Trustor under the Promissory
Note and this Deed of Trust, together with interest on such
amounts . This Deed of Trust secures, in addition to the
amounts specified in the Promissory Note, any future advances,
together with all interest thereon, that may be made by the
Lender pursuant to the Loan Agreement and/or the Related
Documents so long as Trustor complies with all the terms and
conditions of the Promissory Note, Loan Agreement and/or the
Related Documents; provided, however that this Deed of Trust
does not secure the obligations of the Trustor to the
Redevelopment Agency of the City of San Bernardino evidenced by
that certain Economic Development Improvement Grant promissory
note dated r 2000, in the principal amount of
$340, 000 . 00, which is secured by that certain Economic
Development Improvement Grant performance deed of trust dated
2000 by and among the Trustor, the Redevelopment
Agency of the City of San Bernardino and Trustee .
Lender. The word "Lender" means the Agency, its successors
and assigns .
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Loan Agreement. The words "Loan Agreement" mean that
certain 2000 Community Development Block Grant Program Section
108 Project Development Loan Agreement dated as of - -,
2000, by and between the Trustor and the Lender which provides
for the loan to the Trustor which is secured by this Deed of
Trust .
OPA. The words "OPA" mean and refer to that certain Owner
Participation and Economic Development Improvement Grant
Agreement dated as of August —r 2000, by and between the
Trustor and the Redevelopment gency of the City of San
Bernardino.
Personal Property. The words "Personal Property" mean all of
the right, title and interest of Trustor now or hereafter
existing in and to the following now or hereafter located in,
upon, within or about, or used in connection with or generated
by the construction, use, operation or occupancy of the
Property and any business or activity conducted thereon or
therein, together with all accessories, additions, accessions,
renewals, replacements and substitutions thereto or therefor
and the proceeds and products thereof: (1) all materials,
supplies, furniture, floor coverings window coverings,
furnishings, appliances, office supplies, equipment,
construction materials, vehicles, machinery, computer hardware
and software, maintenance equipment, window washing, equipment,
repair equipment and other equipment, tools, telephone and
other communications equipment, food service preparation
equipment and utensils, chinaware, glassware, silverware and
hollowware, food and beverage service equipment, food items and
food stuffs; (b) all books, ledgers, records accounting
records, files, tax records and returns, policy manuals,
papers, correspondence, and electronically recorded data; (c)
all "General Intangibles" (as defined in the California Uniform
Commercial Code) , instruments, money, "Accounts" (as defined in
the California Uniform Commercial Code) , accounts receivable,
notes, certificates of deposit, chattel paper, letters of
credit, chooses in action, good will, rights to pay of money,
rents, rental fees, equipment fees and other amounts relating
to the development or use of the Property or payable by persons
who utilize the Property or any of the Improvements or paid by
persons in order to obtain the right to use the Property and
any of the Improvements, whether or not so used; trademarks,
service marks, trade dress, trade names, licenses, sales
contracts, deposits, plans and specifications, drawings,
working drawings, studies, maps, surveys; soils, environmental
engineering or other reports, architectural and engineering
contracts, construction contracts, construction management
contracts, surety bonds, feasibility and market studies,
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i
management and operating agreements, service agreements and
contracts, landscape maintenance agreements, security service
and other services agreements and vendors agreements; (d) all
compensation, awards and other payments of relief (and claims
therefor) made for a taking by eminent domain, or by any event
in lieu thereof (including, without limitation, property and
rights and interests in property received in lieu of any such
taking) , of all or any part of the Property (including without
limitation, awards for severance damages) , together with
interest thereon, and any and all proceeds (or claims for
proceeds) of casualty, liability or other insurance pertaining
to the Property, together with interest thereon; (e) any and
all claims or demands against any person with respect to damage
or diminution in value to the Property or damage or diminution
in value to any business or other activity conducted on
Property; (f) any and all security deposits, deposits of
security or advance payments made to others with respect to:
(i) insurance policies relating to the Property; (ii)
prepayments and/or periodic deposits or improvements for
property taxes or assessments of any kind or nature affecting
the Property; (iii) utility services for the Property and/or
the Improvements; (iv) maintenance, repair or similar services
for the Property or any other services or goods to be used i
any business or other activity conducted on the Property; (g)
any and all authorizations, consents, licenses, permits and
approvals of and from all persons required from time to time in
connection wit the construction, use, occupancy or operation of
the Property, the improvements, or any business or activity
conducted thereon or therein or in connection with the
operation, occupancy or use thereof; (h) all warranties,
guaranties, utility or street improvement bonds, utility
contracts, telephone exchange numbers, yellow page or other
directory advertising and the like; (i) all goods, contract
rights, and inventory; (j ) all leases and use agreements of
machinery, equipment and other personal property; (k) all
insurance policies covering all or any portion of the Property;
(1) all reserves and funds held in escrow by the Lender or
other persons for the Lender' s benefit and all funds deposited
with the Lender pursuant to the Loan Agreement, all accounts
into which such funds are deposited and all accounts, contract
rights and general intangibles or other rights relating
thereto; (m) all names by which the Property is now or
hereafter known; (n) all interests in the security deposits of
tenants; (o) all management agreements, blueprints, plans,
maps, documents, books and records relating to the Property;
(p) the proceeds from sale, assignment, conveyance or transfer
of all or , any portion of the Property or any interest
therein, or from the sale of any goods, inventory or services
from upon or within the Property and/or the Improvements; ) (q)
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all documents of membership in an owner or members association
or similar group having responsibility for managing or
operating any part of the Property; (r) all other property
(other than "Fixtures, " as defined in the Uniform Commercial
Code) of any kind or character as defined in or subject to the
provisions of the California Uniform Commercial Code, Secured
Transactions, as amended and; (s) all proceeds of the
conversions, voluntarily or involuntarily, of any of the
foregoing into cash or liquidated claims .
Promissory Note. The words "Promissory Note" mean the
Promissory Note of even date herewith, in the principal amount
of One Million Eight Hundred and Forty Thousand Dollars
($1, 840, 000 . 00) from Trustor to the Agency, as Lender, together
with all renewals, extensions, modifications, refinancing, and
substitutions for the Promissory Note .
Property. The word "Property" means collectively the Property
and the Personal Property, and the rights described above in
the "Conveyance and Grant" section of the Deed of Trust .
Related Documents . The words "Related Documents" mean and
include without limitation all promissory notes, credit
agreements, loan agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments,
agreements and documents, by and between the Trustor and the
Lender whether now or hereafter existing, evidencing or
securing the Indebtedness .
Rents . The word "Rents" means all present and future rents,
revenues, income, issues, royalties, profits, and other
benefits derived from the Property.
Trustee. The word "Trustee" means First American Title
Insurance Company, and any substitute or successor trustees .
Trustor. The word "Trustor" means the Trustor named above and
its successors and assigns .
3 . 0 THIS DEED OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS AND THE
SECURITY INTEREST IN THE RENTS AND PERSONAL PROPERTY, IS GIVEN
TO SECURE ( 1) PAYMENT OF THE INDEBTEDNESS AND (2) PERFORMANCE
OF ANY AND ALL OBLIGATIONS OF TRUSTOR UNDER THE PROMISSORY
NOTE, THE RELATED DOCUMENTS, AND THIS DEED OF TRUST. THIS DEED
OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY
INTEREST IN THE RENTS AND PERSONAL PROPERTY, IS ALSO GIVEN TO
SECURE ANY AND ALL OBLIGATIONS OF TRUSTOR UNDER THAT CERTAIN
2000 COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SECTION 108
PROJECT DEVELOPMENT LOAN AGREEMENT DATED AS OF AUGUST 2000
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BETWEEN TRUSTOR AND LENDER. ANY EVENT OF DEFAULT BY TRUSTOR
UNDER THE LOAN AGREEMENT, OR ANY OF THE RELATED DOCUMENTS,
SHALL ALSO BE AN EVENT OF DEFAULT UNDER THIS Deed of Trust.
THE PROMISSORY NOTE AND THIS DEED OF TRUST ARE GIVEN AND
ACCEPTED ON THE FOLLOWING TERMS :
3 . 1 PAYMENT AND PERFORMANCE. Except as otherwise provided in this
Deed of Trust, Trustor shall pay to Lender all amounts secured
by this Deed of Trust as they become due, and shall strictly
and in a timely manner perform all of Trustor ' s obligations
under the Promissory Note, this Deed of Trust, the Loan
Agreement and the Related Documents .
3 . 2 POSSESSION AND MAINTENANCE OF THE PROPERTY. Trustor agrees
that Trustor ' s possession and use of the Property shall be
governed by the following provisions :
Possession and Use. Until the occurrence of an Event of
Default, Trustor may (a) remain in possession and control of
the Property and collect Rents as they become due and (b) use,
develop, operate or manage the Property for the purposes
authorized in the OPA.
Duty to Maintain. Trustor shall maintain the Property in
tenantable conditions and promptly perform all repairs,
replacements, and maintenance necessary to preserve its value .
Hazardous Substances .
(a) The terms "hazardous wastes", "hazardous substance",
"disposal, " "release", and "threatened release", as used in
this Deed of Trust, shall have the same meanings as set forth
in the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U. S . C. Section 9601, et
sew. ( "CERCLA") , the Superfund Amendments and Reauthorization
Act of 1986, Pub . L. No. 99-499 ( "SARA") , the Hazardous
Materials Transportation Act . 49 U. S .C. Section 1801, et sea. ,
the Resource Conservation and Recovery Act, 49 U. S .C. Section
6901, et sea. , Chapters 6 . 5 through 7 .7 of Division 20 of the
California Health and Safety Code, Section 25100, et sea. , or
other applicable state or Federal laws, rules, or regulations
adopted pursuant to any of the foregoing.
(b) [ASBESTOS REMEDIATION WORK]
(c) Trustor represents and warrants that following the
completion of the "Borrower Improvements (Phase I) " in the
Property, as this term is defined in the Loan Agreement,
neither the Trustor nor any tenant of Trustor occupying and
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1
improving any portion of the Property or any contractor, agent
or other authorized user of any such tenant shall use,
generate, manufacture, store, treat, dispose of, or release any
hazardous waste or substance on, under, about or from any of
the Property, except in compliance with all applicable law
relating to the transportation, storage, disposal or lawful use
of any hazardous waste or substance . Trustor shall comply and
cause each of its tenants and all contractors, agents or other
authorized users of the Property to comply with all applicable
laws relating to any hazardous wastes or substances, including
without limitation, obtaining and filing all applicable
notices, licenses, permits and similar authorizations . Trustor
shall establish and maintain a hazardous wastes and substances
management and operations policy for the Property in order to
assure and monitor continued compliance by the Trustor and each
of its tenants and all contractors, agents, or other authorized
users of the Property with all laws relating to hazardous
wastes or substances .
(d) Trustor authorizes Lender and its agents to enter upon the
Property upon reasonable notice to make such inspections and
tests as Lender may deem appropriate to determine compliance by
the Trustor with this paragraph of Section 3 . 2 relating the
work of abatement and remediation of asbestos containing
materials and lead-based paint under subparagraph (b) , above,
and subparagraph (c) , above; if Lender reasonably believes a
violation of law has occurred. Any inspections or tests made
by Lender shall be at Trustor' s expense and for Lender' s
purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Trustor or
to any other person. Trustor hereby releases and waives any
future claim against Lender for indemnity or contribution
arising from any exposure to asbestos containing materials or
lead-based paint in the Property and from any release or
threatened release of any hazardous wastes or substances on the
Property (including any unprotected exposure to asbestos
containing materials or lead-based paint) first occurring after
recordation of this Deed of Trust, in the event Trustor becomes
liable for response, cleanup or other costs under any such
laws, and Trustor hereby agrees to indemnify and hold harmless
Lender against any and all claims, losses, liabilities,
damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from breach of this
paragraph of Section 3 . 2 as a consequence of any abatement or
management of any asbestos containing materials or lead-based
paint and the use, generation, manufacture, storage, disposal,
release or threatened release of any hazardous substance first
occurring after recordation of this Deed of Trust, whether or
not the same was or should have been known to Trustor. The
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provisions of this paragraph of Section 3 . 2 of the Deed of
Trust, including the obligation to indemnify the Lender, shall
survive the payment of the Indebtedness and the satisfaction
and reconveyance of the lien of this Deed of Trust and shall
not be affected by Lender' s acquisition of any interest in the
Property, whether by foreclosure or otherwise .
Compliance with Governmental Requirements. Trustor shall
promptly comply with all laws, ordinances, and regulations, now
or hereafter in effect, of all governmental authorities
applicable to the use or occupancy of the Property. Trustor
may contest in good faith any such law, ordinance, or
regulation and withhold compliance during any proceeding,
including appropriate appeals, so long as Trustor has notified
Lender in writing prior to doing so and so long as, in Lender' s
reasonable opinion, Lender ' s interests in the Property are not
jeopardized. Lender may require Trustor to post adequate
security or a surety bond, reasonably satisfactory to Lender,
to protect Lender ' s interest .
Duty to Protect. Trustor agrees neither to abandon nor leave
unattended the Property. Trustor shall do all other acts, in
addition to those acts set forth above in this section, which
from the character and use of the Property are reasonably
necessary to protect and preserve the Property.
3 . 3 DUE ON SAFE. Lender may, at its option, declare immediately
due and payable all sums secured by this Deed of Trust upon the
sale or transfer, without the Lender ' s prior written approval,
of all or any part of the Property, or any interest in the
Property; provided, however that a sale or transfer to: (i) the
mortgagee under the "Construction Loan" (as the term
"Construction Loan" is defined in the Loan Agreement) : or (ii)
the mortgagee under the "Permanent Loan" (as the term
"Permanent Loan" is defined in the Loan Agreement) ; or (iii) an
assignee or successor of the Trustor assuming all the
obligations of the Trustor under the Permanent Loan in a
permitted assumption pursuant to Section 15 . 0 of the Loan
Agreement; or (iv) a mortgagee in connection with a permitted
refinancing of the Permanent Loan pursuant to Section 15 . 0 of
the Loan Agreement, may be made by the Trustor and shall not
cause the due on sale provisions of this Section 3 . 3 to become
operative; and provided further, that a sale or transfer of
leasehold interests in the Property to prospective tenants
whose use of the Property is in conformity with the OPA and the
Loan Agreement and all applicable zoning laws or ordinances may
be made by Trustor and shall not cause the due on sale
provision of this Section 3 . 3 to become operative . A "sale or
transfer" means the conveyance of the Property or any right,
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title or interest therein; whether legal or equitable; whether
voluntary or involuntary; whether by outright sale, deed,
installment sale contract, land contract, contract for deed,
leasehold interest with a term greater than one (1) year,
lease-option contract, or by sale, assignment or transfer of
any beneficial interest in or to any land trust holding title
to the Property or by any other method of conveyance of the
property interest . This option shall be exercised by the
Lender in accordance with the provisions of Section 5 . 1 hereof;
provided however, this option shall not be exercised if such
remedy is prohibited by applicable law. Lender shall grant
approval with respect to certain transfers by Trustor in the
circumstances set forth in and in accordance with the OPA.
3 . 4 TAXES AND LIENS. The following provisions relating to the
taxes and liens on the Property are part of this Deed of Trust :
Payment. Trustor shall pay when due (and in all events prior
to delinquency) all taxes, special taxes, assessments, charges
(including water and sewer) , fines and impositions levied
against or on account of the Property, and shall pay when due
all claims for work done on or for services rendered or
material furnished to the Property. Trustor shall maintain the
Property free of all liens having priority over or equal to the
interest of Lender under this Deed of Trust, except for the
lien of property taxes and assessments not due .
Right to Contest. Trustor may withhold payment of any tax,
assessment, or claim in connection with a good faith dispute
over the obligation to pay, so long as Lender ' s interest in the
Property is not jeopardized. If a lien arises or is filed as
a result of nonpayment, Trustor shall within sixty ( 60) days
after the lien arises or, if a lien is filed, within sixty ( 60)
days after Trustor has notices of the filing, secure the
discharge of the lien, or if requested by Lender, deposit with
Lender cash or a sufficient corporate surety bond or other
security satisfactory to Lender in an amount sufficient to
discharge the lien plus any costs and attorneys ' fees or other
charges that could accrue as a result of a foreclosure or sale
under the lien; provided, however, that Trustor shall not be
required to pay or make provisions for the payment of any tax,
assessment, lien or charge so long as the Trustor in good faith
shall contest the validity or amount thereof and so long as
such delay in payment does not subject the Property to
forfeiture or sale . In any contest, Trustor shall defend
itself and Lender and shall satisfy any adverse judgment before
enforcement against the Property. Trustor shall name Lender as
an additional obligee under any surety bond furnished in the
contest proceedings .
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Evidence of Payment. Trustor shall upon demand furnish to
Lender satisfactory evidence of payment of the taxes or
assessments and shall authorize the appropriate governmental
official to deliver to Lender at any time a written statement
of the taxes and assessments against the Property.
3 . 5 PROPERTY DAMAGE INSURANCE. The following provisions relating
to insuring the Property are a part of this Deed of Trust :
Maintenance of Insurance. Trustor shall procure and
maintain policies of fire insurance with standard extended
coverage endorsements on a replacement basis for the full
insurable value covering all Improvements on the Property in an
amount sufficient to avoid application of any coinsurance
clause, and with a standard mortgagee clause in favor of
Lender, together with such other insurance, including but not
limited to hazard, liability, business interruption and boiler
insurance, as Lender may reasonably require . Notwithstanding
the foregoing, in no event shall Trustor be required to provide
hazard insurance in excess of the replacement value of the
improvements on the Property. Policies shall be written in
form, amounts, coverages and basis reasonably acceptable to
Lender and issued by a company or companies whose policies of
insurance qualify for inclusive in the State insurance
guarantee fund, are rated not less than "B+ (xii) " in Best
Insurance Guide, current edition and are in other respects
reasonably acceptable to Lender. Trustor, upon request of
Lender, will deliver to Lender from time to time the policies
or certificates of insurance in form satisfactory to Lender,
including stipulations that coverages will not be canceled or
diminished without at least thirty (30) days ' s prior written
notice to Lender.
Application of Proceeds . Trustor shall promptly notify Lender
of any material loss or damage to the Property. Lender may make
proof of loss if Trustor fails to do so within sixty (60) days
of the casualty. The Lender may, at its election, receive and
retain the proceeds and apply the proceeds as required under
California law. If Lender is required to or elects to apply
the proceeds to restoration and repair, Trustor shall repair or
replace the damaged or destroyed improvements in a manner
reasonably satisfactory to Lender . Lender shall, upon
satisfactory proof of such expenditure, pay or reimburse
Trustor from the proceeds for the reasonable cost of repair or
restoration if Trustor is not in default under this Deed of
Trust . Any proceeds which have not been disbursed after repair
or restoration of the Property shall be used first to pay any
amount owing to Lender under this Deed of Trust, then to pay
accrued interest, and the remainder, if any, shall be applied
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to the principal balance of the Indebtedness . If Lender holds
any proceeds after payment in full of the Indebtedness, such
proceeds shall be paid to Trustor.
Unexpired Insurance at Sale. Any unexpired insurance shall
inure to the benefit of, and pass to, the purchaser for the
Property covered by this Deed of Trust at any trustee' s sale or
other sale held under the provisions of this Deed of Trust, or
at any foreclosure sale of such Property.
3 . 6 EXPENDITURES BY LENDER. If Trustor fails to comply with any
provision of this Deed of Trust, or if any action or proceeding
is commenced against the Property that would materially affect
Lender' s interests in the Property, Lender on Trustor' s behalf
may, but shall not be required to, take any action that Lender
reasonably deems appropriate . Any amount that Lender expends
in do doing will bear interest at the rate charged under the
Promissory Note from the date incurred or paid by Lender to the
date of repayment by Trustor. All such expenses, at Lender' s
option, will (a) be payable on demand, (b) be added to the
balance of the Promissory Note and be apportioned among and be
payable with any installment payments to become due during the
remaining term of the Promissory Note, or (c) be treated as a
balloon payment which will be due and payable at the Promissory
Note ' s maturity. This Deed of Trust also will secure payment
of these amounts . The rights provided for in this paragraph
shall be in addition to any other rights or any remedies to
which Lender may be entitled on account of the default . Any
such action by Lender shall not be construed as curing the
default so as to bar Lender from any remedy that it otherwise
would have had.
3 . 7 WARRANTY. Trustor warrants that the Property and Trustor' s use
of the Property complies with all existing applicable laws,
ordinances, and regulations of governmental authorities .
3 . 8 CONDEMNATION. The following provisions relating to
condemnation proceedings are a part of this Deed of Trust :
Application of Net Proceeds . If all or any part of the
Property is condemned by eminent domain proceedings or by an
proceeding or purchase in lieu of condemnation, all of the net
proceeds of the award shall be applied first to the repair or
restoration of the Property, next to any liens prior to this
Deed of Trust and then to the Indebtedness . If any net
proceeds remain, such proceeds shall be paid to Trustor. The
net proceeds of the award shall mean the award after payment of
all reasonable costs, expenses, and attorneys ' fees, Trustee or
Lender in connection with the condemnation.
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Proceedings. If any proceeding in condemnation is filed,
Trustor shall promptly notify Lender in writing, and Trustor
shall promptly take such steps as may be necessary to defend
the action and obtain the award. Trustor may be the nominal
party in such proceeding, but Lender shall be entitled to
proceeding and to be
participate in the p g represented in the
proceeding by counsel of its own choice, and Trustor will
deliver or cause to be delivered to Lender such instruments as
may be requested by it from time to time to permit such
participation.
3 . 9 IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL
AUTHORITIES. The following provisions relating to
governmental taxes, fees and charges are a part of this Deed of
Trust :
Current Taxes, Fees and Charges . Upon request by Lender,
Trustor shall execute such documents in addition to this Deed
of Trust and take whatever other action is requested by Lender
to perfect and continue Lender' s lien and security interest on
the Property. Trustor shall reimburse Lender for all taxes, as
described below, together with all expenses incurred in
recording, perfecting or continuing this Deed of Trust,
including without limitation all taxes, fees, documentary
stamps, and other charges for recording or registering this
Deed of Trust .
Taxes. The following shall constitute taxes to which this
section applies : (a) a specific tax upon this type of Deed of
Trust or upon all or any part of the Indebtedness secured by
this Deed of Trust; (b) a specific tax on Trustor which Trustor
is authorized or required to deduct from payments on the
Indebtedness secured by this type of Deed of Trust; (c) a tax
on this type of Deed of Trust chargeable against the Lender or
the holder of the Promissory Note; and (d) a specific tax on
all or any portion of the Indebtedness or on payments of
principal and interest made by Trustor.
Subsequent Taxes . If any tax to which this section applies is
enacted subsequent to the date of this Deed of Trust, this
event shall have the same effect as an Event of Default (as
defined below) , and Lender may exercise any or all of its
available remedies for an Event of Default as provided below
unless Trustor either (a) pays the tax before it becomes
delinquent, or (b) contests the tax as provided above in the
Taxes and Liens section and deposits with Lender cash or a
sufficient corporate surety bond or other security satisfactory
to Lender.
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3 . 10 SECURITY AGREEMENT; FINANCING STATEMENTS. The following
provisions relating to this Deed of Trust as a security
agreement are a part of this Deed of Trust :
Security Agreement. This instrument shall constitute a security
agreement to the extent of any of the Property constitutes
fixtures or other personal property, and Lender shall have all
of the rights of a secured party under the Uniform Commercial
Code as amended from time to time .
Security Interest. Upon request by Lender, Trustor shall
execute financing statements and take whatever other action is
requested by Lender to perfect and continue Lender ' s security
interest in the Rents and Personal Property in a manner and at
a place reasonably convenient to Trustor and Lender and make it
available to Lender within ten (10) days after receipt of
written demand from Lender .
Addresses . The mailing addresses of Trustor (debtor) and
Lender (secured party) , from which information concerning the
security interest granted by this Deed of Trust may be obtained
(each as required by the Uniform Commercial Code) , are as
stated on the first page of this Deed of Trust .
3 . 11 FURTHER ASSURANCES; ATTORNEY-IN-FACT. T h e f o l l o w i n g
provisions relating to further assurances and attorney-in-fact
are a part of this Deed of Trust :
Further Assurances . At any time, and from time to time, upon
request of Lender, Trustor will make, execute and deliver, or
will cause to be made, executed or delivered, to Lender or to
Lender ' s designee, and when requested by Lender, cause to be
filed, recorded, refiled, or rerecorded, as the case may be, at
such times and in such offices and places as Lender may deem
appropriate, any and all such mortgages, deeds of trust,
security deeds, security agreements, financing statements,
continuation statements, instruments of further assurance,
certificates, and other documents as may, in the sole opinion
of Lender, be necessary or desirable in order to effectuate,
complete, perfect, continue, or preserve (a) the obligations of
Trustor under the Promissory Note, this Deed of Trust, and the
Related Documents, and (b) the liens and security interests
created by this Deed of Trust as second priority liens on the
Property, whether now owned or hereafter acquired by Trustor .
Unless prohibited by law or agreed to the contrary by Lender in
writing. Trustor shall reimburse Lender for all costs and
expenses incurred in connection with the matters referred to in
this paragraph.
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Attorney-In-Fact. If Trustor fails to do any of the things
referred to in the preceding paragraph, Lender may do so for
and in the name of Trustor and at Trustor' s expense. For such
purposes, Trustor hereby irrevocably appoints Lender as
Trustor ' s attorney-in-fact for the purpose of making,
executing, delivering, filing, recording, and doing all other
things as may be necessary or desirable, in Lender' s sole
opinion, to accomplish the matters referred to in the preceding
paragraph.
4 . 0 FULL PERFORMANCE AND RECONVEYANCE. If Trustor pays all the
Indebtedness, including without limitation, all future
advances, when due, and otherwise performs all the obligations
imposed upon Trustor under the Loan Agreement, the Promissory
Note and this Deed of Trust, Lender shall execute and deliver
to Trustee a request for full reconveyance and shall execute
and deliver to Trustor suitable statements of termination of
any financing statement on file evidencing Lender ' s security
interest in the Rents and Personal Property. Lender may charge
Trustor a reasonable reconveyance fee at the time of
reconveyance .
5 . 0 DEFAULT. Each of the following, at the option of Lender, shall
constitute an event of default ("Event of Default") under this
Deed of Trust :
Default on Indebtedness. Failure of Trustor to make any payment
when due under the Promissory Note if not cured within thirty
(30) days after written notice from the Lender.
Default on Other Payments . Failure of Trustor within the
time required by this Deed of Trust to make any payment for
taxes or insurance, or any other payment necessary to prevent
filing of or to effect discharge of any lien.
Compliance Default. Failure of Trustor to comply with any other
term, obligation, covenant or condition contained in this
Second Deed of Trust, the Promissory Note, the Loan Agreement,
the Related Documents including without limitation the OPA,
after notice and any applicable cure period has expired.
Breaches . Any warranty, representation or statement made or
furnished to Lender by or on behalf of Trustor under this Deed
of Trust, the Promissory Note, the Loan Agreement, or any of
the Related Documents is, or at the time made or furnished was,
false in any material respect.
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Insolvency. The insolvency of Trustor, appointment of a
receiver for any part of Trustor' s property, any assignment for
the benefit of creditors, the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Trustor,
which is not discharged or dismissed within ninety (90) days,
or the dissolution or termination of Trustor' s existence as a
going business (if Trustor is a business) .
Foreclosure, etc. Commencement of foreclosure, whether by
judicial proceeding, self-help, repossession or any other
method, by any creditor of Trustor against any of the Property.
However, this subsection shall not apply in the event of a good
faith dispute by Trustor as to the validity or reasonableness
of the claim which is the basis of the foreclosure, provided
that Trustor gives Lender written notice of such claim and
furnishes reserves or a surety bond for the claim satisfactory
to Lender .
Breach of Construction Loan or Breach of Permanent Loan. 41
breach by Trustor under the terms of the `Construction Loan" or
the "Permanent Loan", as these terms are defined in the Loan
Agreement, which is not remedied after notice and within any
grace period, if any, as provided in the Construction Loan or
the Permanent Loan, as applicable .
5 . 1 RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of any
Event of Default and at any time thereafter, Trustee or Lender,
at its option, may exercise any one or more the following
rights and remedies, in addition to any other rights or
remedies provided by law:
Foreclosure by Sale. Upon an Event of Default under this
Deed of Trust, Beneficiary may declare the entire Indebtedness
secured by this Deed of Trust immediately due and payable by
delivery to Trustee of written declaration of default and
demand for sale and of written notice of default and of
election to cause to be sold the Property, which notice Trustee
shall cause to be filed for record. Beneficiary also shall
deposit with Trustee this Deed of Trust, the Promissory Note,
other documents requested by Trustee, and all documents
evidencing expenditures secured hereby. After the lapse of
such time may then be required by law following the recordation
of the notice of default, and notice of sale having been given
as then required by law, Trustee, without demand on Trustor,
shall sell the Property at the time and place fixed by it in
the notice of sale, either as a whole or in separate parcels,
and in such order as it may determine, at public auction to the
highest bidder for cash in lawful money of the United States,
payable at time of sale. Trustee may postpone sale of all or
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any portion of the Property by public announcement at such time
and place of sale, and from time to time thereafter may
postpone such sale by public announcement at the time filed by
the preceding postponement in accordance with applicable law.
Trustee shall deliver to such purchaser its deed conveying the
Property so sold, but without any covenant or warranty, express
or implied. The recitals in such deed of any matters or facts
shall be conclusive proof of the truthfulness thereof . Any
person, including Trustor, Trustee or Beneficiary may purchase
at such sale. After deducting all costs, fees and expenses of
Trustee and of this Trust, including cost of evidence of title
in connection with sale, Trustee shall apply the proceeds of
sale to payment of: all sums expended under the terms hereof,
not then repaid, with accrued interest at the amount allowed by
law in effect at the date hereof; all other sums then secured
hereby; and the remainder, if any, to the person or persons
legally entitled thereto .
Judicial Foreclosure. With respect to all or any part of the
Property, Lender shall have the right in lieu of foreclosure by
power of sale to foreclose by judicial foreclosure in
accordance with and to the full extent provided by California
law. It is understood and agreed by the parties hereto that no
action taken by the Lender shall result in the imposition of
personal liability on any of the members, partners, directors,
shareholders and officers, as applicable, of Trustor or on
Trustor itself or its constituent members .
UCC Remedies. With respect to all or any part of the Property,
Lender shall have the rights and remedies of a secured party
under the Uniform Commercial Code, including without limitation
the right to recover any deficiency in the manner and to the
full extent provided by California law.
Collect Rents . Lender shall have the right, without notice to
Trustor, to take possession of and manage the Property and
collect the Rents, including amounts past due and unpaid, and
apply the net proceeds, over and above Lender' s costs, against
the indebtedness . In furtherance of this right, Lender may
require any tenant or other user of the Property to make
payments of rent or use fees directly to Lender. If the Rents
are collected by Lender, then Trustor irrevocably designates
Lender as Trustor ' s attorney-in-fact to endorse instruments
received in payment thereof in the name of Trustor and to
negotiate the same and collect the proceeds . Payments by
tenants or other users to Lender in response to Lender ' s demand
shall satisfy the obligations for which the payments are made,
whether or not any property grounds for the demand existed.
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Lender may exercise its rights under this subparagraph either
in person, by agent, or through a receiver.
Appoint Receiver. Lender shall have the right to have a
receiver appointed to take possession of all or any part of the
Property, with the power to protect and preserve the Property,
to operate the Property preceding foreclosure or sale, and to
collect the Rents from the Property and apply the proceeds,
over and above the cost of the receivership against the
Indebtedness . The receiver may serve without bond if permitted
by law. Lender' s right to the appointment of a receiver shall
exist whether or not the apparent value of the Property exceeds
the indebtedness by a substantial amount . Employment by Lender
shall not disqualify a person from serving as a receiver.
Tenancy at Sufferance. If Trustor remains in possession of
the Property after the Property is sold as provided above or
Lender otherwise becomes entitled to possession of the Property
upon default of Trustor, Trustor shall become a tenant at
sufferance of Lender or the purchaser of the Property and
shall, at Lender ' s option, either (a) pay a reasonable rental
for the use of the Property, or (b) vacate the Property
immediately upon the demand of Lender.
Other Remedies . Trustee or Lender shall have any other
right or remedy provided in this Deed of Trust or the
Promissory Note or by law.
Notice of Sale. Lender shall give Trustor reasonable notice
of the time and place of any public sale of the Personal
Property or of the time after which any private sale or other
intended disposition of the Personal Property is to be made .
Reasonable notice shall mean notice given at least thirty (30)
days before the time of the sale or disposition . Any sale of
Personal Property may be made in conjunction with any sale of
the Property.
Sale of the Property. To the extent permitted by applicable
law, Trustor hereby waives any and all rights to have the
Property marshaled. In exercising its rights and remedies, the
Trustee or Lender shall be free to sell all or any part of the
Property together or separately, in one sale or by separate
sales . Lender shall be entitled to bid at any public sale on
all or any portion of the Property.
Waiver; Election of Remedies . A waiver by any party of a breach
of a provision of this Deed of Trust shall not constitute a
waiver of or prejudice the party' s rights otherwise to demand
strict compliance with that provision or any other provision .
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Election by Lender to pursue any remedy provided in this Deed
of Trust, the Promissory Note, in any Related Document, or
provided by law shall not exclude pursuit of any other remedy,
and an election to make expenditures or to take action to
perform an obligation of Trustor under this Deed of Trust
after failure of Trustor to perform shall not affect Lender' s
right to declare a default and to exercise any of its remedies .
Attorneys ' Fees; Expenses. If Lender institutes any suit or
action to enforce any of the terms of this Deed of Trust,
Lender shall be entitled to recover such sum as the court may
adjudge reasonable as attorneys ' fees at trial and on any
appeal . Whether or not any court action is involved, all
reasonable expenses incurred by Lender which in Lender' s
opinion are necessary at any time for the protection of its
interest or the enforcement of its rights shall become a part
of the Indebtedness payable on demand and shall bear interest
at the Promissory Note rate from the date of expenditure until
repaid. Expenses covered by this paragraph include, without
limitation, however subject to any limits under applicable law,
Lender ' s attorneys ' fees whether or not there is a lawsuit,
including attorneys ' fees for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction) ,
appeals and any anticipated post-judgment collection services,
the cost of searching records, obtaining title reports
(including foreclosure reports) , surveyors ' reports, appraisal
fees, title insurance, and fees for the Trustee, to the extent
permitted by applicable law. Trustor also will pay any court
costs, in addition to all other sums provided by law.
Rights of Trustee. Trustee shall have all of the rights and
duties of Lender as set forth in this section.
6 . 0 POWERS AND OBLIGATIONS OF TRUSTEE. The following provisions
relating to the powers and obligations of Trustee are part of
this Deed of Trust :
Powers of Trustee. In addition to all powers of Trustee
arising as a matter of law, Trustee shall have the power to
take the following actions with respect to the Property upon
the written request of Lender and Trustor: (a) join in
preparing and filing a map or plat of the Property, including
the dedication of streets or other rights to the public; and
(b) join in granting any easement or creating any restriction
on the Property.
Obligations to Notify. Trustee shall not be obligated to
notify any other party of a pending sale under any other trust
deed or lien, or of any action or proceeding in which Trustor,
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Lender, or Trustee shall be a party, unless the action or
proceeding is brought by Trustee .
Trustee. Trustee shall meet all qualifications required for
Trustee under applicable law. In addition to the rights and
remedies set forth above, with respect to all or any part of
the Property, the Trustee shall have the right to foreclose by
notice and sale, and Lender shall have the right to foreclose
by judicial foreclosure, in either case in accordance with and
to the full extent provided by applicable law.
Successor Trustee. Lender, at Lender ' s option, may from time
to time appoint a successor Trustee to any Trustee appointed
hereunder by an instrument executed and acknowledged by Lender
and recorded in the office of the recorder of San Bernardino
County, California. The instrument shall contain, in addition
to all other matters required by state law, the names of the
original Lender, Trustee, and Trustor the book and page where
this Deed of Trust is recorded, and the name and address of the
successor trustee, and the instrument shall be executed and
acknowledged by Lender or its successors in interest . The
successor trustee, without conveyance of the Property, shall
succeed to all the title, power, and duties conferred upon the
Trustee in this Deed of Trust and by applicable law. This
procedure for substitution of trustee shall govern to the
exclusion of all other provisions for substitution.
7 . 0 NOTICES TO TRUSTOR AND OTHER PARTIES . Any notice under this
Deed of Trust shall be in writing and shall be effective when
actually delivered or, if mailed, shall be deemed effective
three business days after it is deposited in the United States
mail first class, registered mail, postage prepaid, directed to
the addresses shown near the beginning of this Deed of Trust .
Any party may change its address for notices under this Deed of
Trust by giving formal written notice to the other parties,
specifying that the purpose of this notice is to change the
party' s address . All copies of notices of foreclosure from the
holder of any lien which has priority over this Deed of Trust
shall be sent to Lender' s address, as shown near the beginning
of this Deed of Trust. For Notice purposes, Trustor agrees to
keep Lender and Trustee informed at all times of Trustor ' s
current address . Each Trustor requests that copies of any
notices of default and sale be directed to Trustor ' s address
shown near the beginning of this Deed of Trust .
8 . 0 STATEMENT OF OBLIGATION. Lender may collect a fee, in an mount
not to exceed the statutory maximum, for furnishing the
statement of obligation as provided by Section 2943 of the
Civil Code of California .
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9 . 0 [RESERVED]
10 . 0 ASSIGNMENT OF CONTRACTS. In addition to any other grant,
transfer or assignment effectuated hereby, without in any
manner limiting the generality of the grants in the conveyance
and grant section hereof, Trustor shall assign to Beneficiary,
as security for the indebtedness secured hereby, Trustor' s
interest in all agreements, contracts, leases, licenses and
permits affecting the Property in any manner whatsoever, such
assignments to be made, if so requested by Beneficiary, by
instruments in form satisfactory to Beneficiary; but no such
assignment shall be construed as a consent by Beneficiary to
any agreement, contract license or permit so assigned, or to
impose upon Beneficiary any obligations with respect thereto.
11 . 0 BOOKS AND RECORDS. Trustor shall maintain, or cause to be
maintained, proper and accurate books, records and accounts
reflecting all items of income and expense in connection with
the operation of the Property or in connection with any
services, equipment or furnishings provided in connection with
the operation of the Property, whether such income or expense
be realized by Trustor or by any other person or entity
whatsoever excepting persons unrelated to and unaffiliated with
Trustor and who leased from Trustor portions of the Property
for the purposes of occupying the dame . Upon the request of
Beneficiary, Trustor shall prepare and deliver to Beneficiary
such financial statements regarding operation of the Property
as Beneficiary may reasonably request . Beneficiary, or its
designee, shall have the right from time to time during normal
business hours to examine such books, records and accounts and
to make copies or extracts therefrom.
12 . 0 MISCELLANEOUS PROVISIONS. The following miscellaneous
provisions are a part of this Deed of Trust :
Amendments . This Deed of Trust, together with any Related
Documents, constitutes the entire understanding and agreement
of the parties as to the matters set forth in this Deed of
Trust . No alteration of or amendment to this Deed of Trust
shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the
altercation or amendment .
Acceptance by Trustee. Trustee accepts this Trust when this
Deed of Trust, duly executed and acknowledged, is made a public
record as provided by law.
Applicable Law. This Deed of Trust has been delivered to
Lender and accepted by Lender in the State of California. This
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Deed of Trust shall be governed by and construed in accordance
with the laws of the State of California .
Caption Headings . Caption headings in this Deed of Trust are
for convenience purposes only and are not to be used to
interpret or define the provisions of this Deed of Trust .
Merger. There shall be no merger of the interest or estate
created by this Deed of Trust with any other interest or estate
in the Property at any time held by or for the benefit of
Lender in any capacity, without the written consent of Lender .
Severability. If a court of competent jurisdiction finds any
provision of this Deed of Trust 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; however, if the offending provision
cannot be so modified, it shall be stricken and all other
provisions of this Deed of Trust in all other respects shall
remain valid and enforceable .
Successors and Assigns . Subject to the limitations stated in
this Deed of Trust on transfer of Trustor' s interest, this Deed
of Trust shall be binding upon and inure to the benefit of the
parties, their successors and assigns . If ownership of the
Property becomes vested in a person other Trustor, Lender,
without notice to Trustor, may deal with Trustor ' s successors
with reference to this Deed of Trust and the indebtedness by
way of forbearance or extension without releasing Trustor from
the obligations of this Deed of Trust or liability under the
Indebtedness .
Time is of the Essence. Time is of the essence in the
performance of this Deed of Trust .
Waivers and Consents . Lender shall not be deemed to have
waived any rights under this Deed of Trust (or under the
Related Documents) unless such waiver is in writing and signed
by Lender. No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or
any other right . A waiver by and any party of a provision of
this Deed of Trust shall not constitute a waiver of or
prejudice the party' s right otherwise to demand strict
compliance with that provision or any other provision . No
prior waiver by Lender, nor any course of dealing between
Lender and Trustor, shall constitute a waiver of any of
Lender ' s rights or any of Trustor ' s obligations as to any
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future transactions . Whenever consent by Lender is required in
this Deed of Trust, the granting of such consent by Lender in
any instance shall not constitute continuing consent to
subsequent instances where such consent is required.
Fixture Filing. This Deed of Trust also constitutes a
fixture filing as defined in the California Uniform Commercial
Code, as amended or recodified from time to time. This Deed of
Trust is to be recorded in the real estate records of San
Bernardino County, California, and covers goods which are to
become fixtures .
Agreement to Subordinate. The Lender agrees that it will
enter into subordination agreements, and execute such other
documents which are reasonably required to effect such
subordination, on terms reasonably acceptable to it, with the
"Construction Lender" for the financing of the "Borrower
Improvements (Phase II) " and the "Permanent Lender", as these
terms are defined under the Loan Agreement, under deeds of
trust issued by the Trustor in favor of such Construction
Lender or Permanent Lender, as applicable, which are in
compliance with the provisions of the Loan Agreement and the
OPA as relate to the specific terms on which the Lender may
agree to execute any such subordination agreement .
Rights of the Secretary of HUD. Pursuant to the provisions
of paragraph _ (_) (_) of that certain Contract for Loan
Guarantee Assistance under Section 108 of the Housing and
community Development Act of 1974 , as amended (the "HUD
Contract") , by and among the Agency, the City of San Bernardino
California and the Secretary of Housing and Urban Development
(the "Secretary") , the Agency shall deliver this Deed of Trust
in recorded form to the "Custodian" (as this term is defined in
the HUD Contract) , together with an assignment thereof to the
Secretary. Paragraph _ of the HUD Contract provides in
relevant part :
" (f) The Secretary may complete the endorsement of the
Obligor Note [e . g. : the Promissory Note] and record the
assignments referred to in paragraphs _(_) (_) and thereby
effectuate the transfer of the documents referenced and
underlying indebtedness from the Borrower [e . g . : the
Agency] to the Secretary or the Secretary' s assignee .
(g) The Secretary may exercise or enforce any and all
other rights and remedies (including any and all rights
and remedies available to a secured party under the
Uniform Commercial Code) available by law or agreement
(including any of the Security Documents, as defined in
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paragraph _(_) ) against the collateral, against the
Borrower [e.g. : the Borrower under the Promissory Note and
this Deed of Trust] , or against any other person or
property. "
THE TRUSTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS Deed
of Trust, AND THE TRUSTOR AGREES TO ITS TERMS, AND THE TERMS OF THE
PROMISSORY NOTE SECURED BY THIS Deed of Trust.
TRUSTOR:
303 LLC, a California limited liability company
By.
By:
[SIGNATURES MUST BE ACCOMPANIED BY NOTARY JURAT]
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■
s
■
■ ;
■ -
■
PERSONAL GUARANTEE OF $1,840,000 NOTE
1. For valuable consideration, the undersigned Kevin Brunk, Wilfred C. Lemann and
Martin A. Matich (hereinafter, "Guarantors")jointly and severally unconditionally guarantee and
promise to pay to the Redevelopment Agency of the City of San Bernardino (hereinafter, "Lender"),
or order,on demand, in lawful money of the United States, any and all indebtedness of 303, L.L.C.,
a California limited liability company,as borrower(hereinafter,"Borrower")to Lender in connection
with the Note(as defined below). The word"indebtedness"is used herein in its most comprehensive
sense and includes any and all advances, debts, obligations and liabilities of Borrower or any one
or more of them, heretofore, now, or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, and whether Borrower may be liable individually or
jointly with others, or whether recovery upon such indebtedness may be or hereafter become barred
by any statute of limitations, or whether such indebtedness may be or hereafter become otherwise
unenforceable.
2. The Lender has approved at a duly called and held meeting of the Lender on August
7, 2000, a loan of$1,840,000 to the Borrower (the "Loan") evidenced by a note dated of even date
herewith (the "Note") and secured by, among other things, this personal guarantee (the "Personal
Guarantee"). The liability of Guarantors shall not exceed at any one time the sum of One Million
Eight Hundred Forty Thousand Dollars ($1,840,000) for principal, together with all interest upon
the indebtedness or upon such part thereof as set forth in the Note. Notwithstanding the foregoing,
Lender may permit the indebtedness of Borrower to exceed Guarantors' liability. This is a
continuing guaranty relating to any indebtedness,including that arising under successive transactions
which shall either continue the indebtedness or from time to time renew it after it has been satisfied.
This Personal Guarantee shall not apply to any indebtedness created after actual receipt by Lender
of written notice of its revocation as to future transactions. Any payment by Guarantors shall not
reduce their maximum obligation hereunder unless written notice to that effect be actually received
by Lender at or prior to the time of such payment and agreed to in writing by Lender.
3. The obligations hereunder are joint and several, and independent of the obligations
of Borrower, and a separate action or actions may be brought and prosecuted against Guarantors
whether action is brought against Borrower or whether Borrower be joined in any such action or
actions; and Guarantors waive the benefit of any statute of limitations affecting their liability
hereunder or the enforcement thereof.
4. Guarantors authorize Lender, without notice or demand and without affecting their
liability hereunder, from time to time to (a) renew, compromise, extend, accelerate or otherwise
change the time for payment of, or otherwise change the terms of the indebtedness or any part
thereof, including increase or decrease of the rate or rates of interest thereon; (b) take and hold
security for the payment of this Personal Guarantee or the indebtedness guaranteed, and exchange,
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enforce,waive and release any such security; (c) apply such security and direct the order or manner
of sale thereof as Lender in its discretion may determine; and (d) release or substitute any one or
more of the endorsers or guarantors. Lender may without notice assign this Personal Guarantee in
whole or in part.
Rights of the Secretary of Housing and Urban Development ("HUD"): Pursuant to the
provisions of paragraph _U (__) of that certain Contract for Loan Guarantee Assistance under
Section 108 of the Housing and Community Development Act of 1974, as amended (the "HUD
Contract"), by and among the Lender, the City of San Bernardino, California and the Secretary of
Housing and Urban Development(the"Secretary"),the Lender shall deliver this Personal Guarantee
to the "Custodian" (as this term is defined in the HUD Contract), together with an assignment
thereof to the Secretary. Paragraph_of the HUD Contract provides substantially as follows: the
Secretary may complete the endorsement of the Obligor Note [e.g.: the Note] and record the
assignments referred to in paragraphs_U (_) and thereby effectuate the transfer of the documents
referenced and the underlying indebtedness from the Borrower [e.g.: the Agency] to the Secretary
or the Secretary's assignee and the Secretary may exercise or enforce any and all other rights and
remedies (including any and all rights and remedies available to a secured party under the Uniform
Commercial Code) available by law or agreement (including any of the Security Documents, as
defined in paragraph_U) against the collateral, against the Borrower [e.g.: the Borrower under the
Note] or against any other person or property.
5. Guarantors acknowledge that, pursuant to the provisions of the 2000 Community
Development Block Grant Program Section 108 Development Loan Agreement with respect to the
Loan(the"Section 108 Development Loan Agreement"), Lender and Borrower may, at such time
as the Borrower Improvements (Phase I) (as that term is defined in the Section 108 Development
Loan Agreement)have been completed, enter into a Construction Lender Subordination Agreement
(as that term is defined in the Section 108 Development Loan Agreement) acknowledging a
subordination of the Agency Security Interest (as that term is defined in the Section 108
Development Loan Agreement) to the lien of the Construction Loan obtained by the Borrower in
accordance with Section 14.0 of the Section 108 Development Loan Agreement(the "Construction
Loan"). Section 14.0 of the Section 108 Development Loan Agreement provides that no provision
of the Construction Lender Subordination Agreement shall require the Lender (or HUD) to waive
or suspend its right to receive payments of principal and interest when due under the Loan, or waive
or suspend the enforcement of any right or remedy of the Agency under the Owner Participation and
EDI Loan Agreement dated as of August _, 2000 (the "OPA") by and between Borrower and
Lender, the Section 108 Development Loan Agreement or the Agency Security Interest, the
Borrower Letter of Credit(as that term is defined in the Section 108 Development Loan Agreement)
or this Personal Guarantee in the event of a default by the Borrower under the Construction Loan
and that in the event of a default by the Borrower under the Construction Loan or the OPA or the
Section 108 Development Loan Agreement, no provision of the Construction Loan shall require the
Lender to first obtain the consent of the Construction Lender (as that term is defined in the Section
108 Development Loan Agreement) before the Lender may assert any such remedy against the
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Borrower or realize upon the value of any security given by the Borrower to the Lender under the
Section 108 Development Loan Agreement or the OPA.
6. Guarantors waive any right to require Lender to (a) proceed against Borrower; (b)
proceed against or exhaust any security held from Borrower; or (c) pursue any other remedy in
Lender's power whatsoever. Guarantors waive any defense arising by reason of any disability or
other defense of Borrower or by reason of the cessation from any cause whatsoever of the liability
of Borrower. Until all indebtedness of Borrower to Lender shall have been paid in full, even though
such indebtedness is in excess of Guarantors' liability hereunder, Guarantors shall have no right of
subrogation, and waive any right to enforce any remedy which Lender now has or may hereafter
have against Borrower, and waive any benefit of, and any right to participate in, any security now
or hereafter held by Lender. Guarantors waive all presentments, demands for performance, notices
of nonperformance,protests,notices of protest,notices of dishonor and notices of acceptance of this
Personal Guarantee and of the existence, creation or incurring of new or additional indebtedness.
7. No lien or right of setoff shall be deemed to have been waived by any act or conduct
on the part of Lender, or by any neglect to exercise such right of setoff or to enforce such lien, or by
any delay in so doing; and every right of setoff and lien shall continue in full force and effect until
such right of setoff or lien is specifically waived or released by an instrument in writing executed
by Lender.
8. Guarantors agree to pay reasonable attorneys' fees and all other costs and expenses
which may be incurred by Lender in the enforcement of this Personal Guarantee.
9. This Personal Guarantee shall remain in effect until such time as all principal,accrued
interest and penalty charges, as applicable, and all other costs, fees and expenses incurred by Lender
pursuant to the Note secured by this Personal Guarantee as executed and delivered by the Borrower
to Lender have been paid in full;provided,however,that pursuant to Section 15.0 of the Section 108
Development Loan Agreement,Lender shall, following recordation of the Permanent Loan (as that
term is defined in the Section 108 Development Loan Agreement), release this Personal Guarantee
upon written confirmation from the Borrower to the Executive Director of the Lender that the
following conditions have been satisfied:
(a) the City of San Bernardino, California, has issued one or more certificates of
occupancy to commercial business tenants occupying,in the aggregate,95%of the net rentable space
of the 303 Third Street Project (as that term is defined in the Section 108 Development Loan
Agreement) under one or more leases and each of said tenants has paid at least six (6) months' rent
under such leases; and
(b) the net operating income of the 303 Third Street Project is producing a debt
service coverage ratio with respect to the Loan of 1.2 to 1.0.
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10. In all cases where there is but a single Borrower or a single Guarantor,then all words
used herein in the plural shall be deemed to have been used in the singular where the context and
construction so require; and when there is more than one Borrower named herein, or when this
Personal Guarantee is executed by more than one Guarantor, the word"Borrowers" and the word
"Guarantors"respectively shall mean all and any one or more of them.
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IN WITNESS WHEREOF,the undersigned Guarantors have executed this Personal
Guarantee on 2000.
GUARANTORS
Kevin Brunk
Wilfred C. Lemann
Martin A. Matich
ACCEPTED BY LENDER:
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
By:
Executive Director
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PERSONAL GUARANTEE OF$1,840,000 NOTE
COVENANT OF SPOUSE
I ,as the wife of Kevin Brunk,hereby expressly
guarantee the obligations of Kevin Brunk and I jointly and severally guarantee the obligations of
Kevin Brunk, a married man. I, the undersigned, as a married woman executing the Personal
Guarantee, hereby expressly agree that recourse may be had against my community property only,
and not against my sole and separate property,for all my obligations under the Personal Guarantee.
Signed:
Dated:
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i
PERSONAL GUARANTEE OF $1,840,000 NOTE
COVENANT OF SPOUSE
as the wife of Wilfred C. Lemann, hereby expressly
guarantee the obligations of Wilfred C. Lemann and I jointly and severally guarantee the obligations
of Wilfred C. Lemann, a married man. I, the undersigned, as a married woman executing the
Personal Guarantee, hereby expressly agree that recourse may be had against my community
property only, and not against my sole and separate property, for all my obligations under the
Personal Guarantee.
Signed:
Dated:
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1
PERSONAL GUARANTEE OF $1,840,000 NOTE
COVENANT OF SPOUSE
I , as the wife of Martin A. Matich, hereby expressly
guarantee the obligations of Martin A. Matich and I jointly and severally guarantee the obligations
of Martin A. Matich,a married man. I,the undersigned, as a married woman executing the Personal
Guarantee,hereby expressly agree that recourse may be had against my community property only,
and not against my sole and separate property,for all my obligations under the Personal Guarantee.
Signed:
Dated:
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r
i
Recording Requested By: )
and After Recording Mail To: )
Executive Director )
201 North "E" Street )
Suite 301 )
San Bernardino, CA 92401 )
(Space above for Recorder' s Use)
CONSTRUCTION LOAN
SUBORDINATION AGREEMENT
NOTICE: THIS CONSTRUCTION LOAN SUBORDINATION AGREEMENT
RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY
BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN
OF SOME OTHER OR LATER SECURITY INSTRUMENT.
THIS CONSTRUCTION LOAN SUBORDINATION AGREEMENT, made
2000, by and among as
owner of the land hereinafter described and is hereinafter referred
to as the "Owner", and the Redevelopment Agency of the City of San
Bernardino, present owner and holder of the deed of trust and note
first hereinafter described and hereinafter referred to as the
"Beneficiary";
WITNESSETH
THAT WHEREAS, Owner has executed a deed of trust, dated
to as trustee, covering that
certain real property described as : See Attached Legal Exhibit to
secure a note in the sum of $ . 00, dated ,
2000, in favor of Beneficiary, which deed of trust is to be
recorded concurrently herewith; and
WHEREAS, Owner has executed, or is about to execute, a
construction loan, deed of trust and note in the original principal
sum of $ . 00, dated 1 2000, in favor of
hereinafter referred to as "Lender",
payable with interest and upon the terms and conditions described
therein, which deed of trust is also to be recorded concurrently
herewith; and
WHEREAS, it is a condition precedent to obtaining said loan
from Lender that said deed of trust last above mentioned shall be
and remain at all times a lien or charge upon the land hereinbefore
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described, prior and superior to the lien or charge of the deed of
trust first above mentioned; and
WHEREAS, Lender is willing to make said loan provided the deed
of trust securing the same is a lien or charge upon the above
described property prior and superior to the lien or charge of the
deed of trust first above mentioned and provided that Beneficiary
will specifically subordinate the lien or charge of the deed of
trust first above mentioned to the lien or charge of the deed of
trust in favor of Lender; and
WHEREAS, it is to the mutual benefit of the parties hereto
that Lender make such loan to Owner; and Beneficiary is willing
that the deed of trust securing the same shall, when recorded,
constitute a lien or charge upon said land which is prior and
superior to the lien or charge of the deed of trust first above
mentioned.
NOW, THEREFORE, in consideration of the mutual benefits
accruing to the parties hereto and other valuable consideration,
the receipt and sufficiency of which consideration is hereby
acknowledged, and in order to induce Lender to make the loan above
referred to, it is hereby declared, understood and agreed as
follows :
(1) That said deed of trust securing said note in favor
of Lender, be and remain at all times a lien or charge on the
property therein described, prior and superior to the lien or
charge of the deed of trust first above mentioned.
(2) That Lender would not make its loan above described
without this subordination agreement.
(3) That this subordination agreement shall be the whole
and only agreement with regard to the subordination of the
lien or charge of the deed of trust first above mentioned to
the lien or charge of the deed of trust in favor of Lender
above referred to and shall supersede and cancel, but only
insofar as would affect the priority between the deeds of
trust herein before specifically described, any prior
agreements as to such subordination including, but not limited
to, those provisions, if any, contained in the deed of trust
first above mentioned, which provide for the subordination of
the lien or charge thereof to another deed or deeds of trust
or to another mortgage or mortgages .
(4) That Lender and Owner shall not materially amend or
modify any agreements between them to, or in any other manner
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or form, increase the outstanding principal amount secured by
the deed of trust last above mentioned to an amount in excess
of the original principal sum, set forth above, without the
prior written consent of the Beneficiary.
Beneficiary declares, agrees and acknowledges that :
(a) It consents to and approves (i) all provisions of
the note and deed of trust in favor of Lender above referred
to, and (ii) all agreements, including but not limited to any
loan or escrow agreements, between owner and Lender for the
disbursement of the proceeds of Lender' s loan;
(b) Lender in making disbursements pursuant to any such
agreement is under no obligation or duty to, nor has Lender
represented that it will, see to the application of such
proceeds by the person or persons to whom Lender disburses
such proceeds and any application or use of such proceeds for
purposes other than those provided for in such agreement or
agreements shall not defeat the subordination herein made in
whole or in part;
(c) It intentionally waives, relinquishes and
subordinates the lien or charge of the deed of trust first
above mentioned in favor of the lien or charge upon said land
of the deed of trust in favor of Lender above referred to and
understands that in reliance upon, and in consideration of
this waiver, relinquishment and subordination specific loans
and advances are being and will be made and, as part and
parcel thereof, specific monetary and other obligations are
being and will be entered into which would not be made or
entered into but for said reliance upon this waiver,
relinquishment and subordination; and
(d) An endorsement has been placed upon the note secured
by the deed of trust first above mentioned that said deed of
trust has by this instrument been subordinated to the lien or
charge of the deed of trust in favor of Lender above referred
to .
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w
E
NOTICE : THIS CONSTRUCTION LOAN SUBORDINATION AGREEMENT
CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON
YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN A PORTION OF
WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT
OF THE LAND.
BENEFICIARY OWNER
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
BY: BY:
BY: BY:
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FISCAL AGENT
SECTION 108 LOAN DISBURSEMENT CONTROL AGREEMENT
BORROWER IMPROVEMENTS (PHASE I)
THIS FISCAL AGENT SECTION 108 LOAN DISBURSEMENT CONTROL
AGREEMENT (the "Fiscal Agent Agreement") is entered into as of this_day of ,
2000, by and among 303, L.L.C., a California limited liability company (`Borrower"); the
Redevelopment Agency of the City of San Bernardino ("Agency"); and First American Title
Company ("Fiscal Agent").
RECITALS
A. Borrower and Agency have executed a 2000 Community Development Block Grant
Program Section 108 Project Development Loan Agreement dated August_, 2000 (the "Section
108 Development Loan Agreement"), under which the Agency has agreed to advance up to One
Million Eight Hundred Forty Thousand Dollars ($1,840,000.00) (the "Agency Loan") for the
development of `Borrower Improvements (Phase I)"to that certain property known to the parties
as the 303 Third Street Parcel (a legal description of which is attached to this Fiscal Agent
Agreement as Exhibit A). "Borrower Improvements(Phase I)"include(i)the acquisition of the 303
Third Street Parcel, (ii)environmental remediation work relating to the abatement and management
of asbestos containing materials and lead-based paints in the structure on the 303 Third Street Parcel
and (iii) seismic retrofitting and safety improvement work.
B. The Section 108 Loan is evidenced by the Borrower's promissory note in the amount
of One Million Eight Hundred Forty Thousand Dollars($1,840,000.00)and is secured by a first lien
Deed of Trust, Security Agreement, Assignment of Rents and Fixture Filing dated
2000 (the "Deed of Trust"), encumbering the 303 Third Street Parcel and certain lands located at
which the Borrower has previously acquired (the 303 Third Street Parcel
and such other lands being hereinafter referred to from time to time as the "303 Third Street
Property").
C. The Borrower and the Agency have previously entered into an agreement entitled
"Owner Participation and Economic Development Initiative Loan Agreement" dated as of August
2000 (the "OPA")which affects the 303 Third Street Property.
D. As part of the transaction contemplated under the OPA,and subject to the acquisition
by the Borrower of the 303 Third Street Parcel from the State of California(the"State"),the Agency
is required to make available to the Borrower the Agency Loan.
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E. The Agency has entered into an agreement entitled "Contract for Loan Guarantee
Assistance Under Section 108 of the Housing and Community Development Act of 1974, as
amended (42 U.S.C. Section 5308" (the "HUD Section 108 Agreement"), by and among the
Secretary of the United States Department of Housing and Urban Development("HUD"), the City
of San Bernardino, California(the "City"), as the unit of local government, and the Agency, as the
designated public agency borrower under the HUD Section 108 Agreement and the Section 108
Loan Guarantee Program regulations of HUD set forth at 24 CFR Part 570.700 et seq., which
authorizes the Agency to obtain a loan under the Secretary's Section 108 Loan Guarantee Program
in an amount not to exceed$1,840,000 ("HUD Loan") for disbursement by the Agency to Borrower
for the development of the Borrower's Improvements (Phase 1). The Section 108 Development
Loan Agreement provides for the disbursement of the HUD Loan proceeds by Agency to Borrower
as the Agency Loan.
F. The Borrower is obligated to construct the Borrower's Improvements (Phase I) in
accordance with the Borrower Improvements Plans and Specifications referenced in Exhibit B, as
such may be modified in accordance with the Section 108 Development Loan Agreement.
G. The parties have entered into this Fiscal Agent Agreement to coordinate
disbursements to Borrower of the proceeds of the Agency Loan to pay for"Borrower Improvement
Costs (Phase I)"(as defined below) as and when required under the Section 108 Development Loan
Agreement and to obtain the title insurance coverage for the Deed of Trust as required under the
Section 108 Development Loan Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of their mutual agreements and covenants, and for
other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Definitions. In addition to the definitions contained elsewhere in this Fiscal Agent
Agreement, as used herein the following capitalized terms shall have the meaning described below:
(a) "303Third Street Project"means the acquisition of the 303 Third Street Parcel
by the Borrower from the State and the performance by the Borrower of certain environmental
remediation work relating to asbestos containing materials, management and abatement work, lead-
based paint remediation and seismic retrofitting and safety improvement work and the construction
and completion of all of the other improvements to the 303 Third Street Parcel as indicated to make
such property suitable for use and occupancy by commercial business tenants.
(b) "303 Third Street Project Costs"means any cost or expense item identified
in the "Approved 303 Third Street Project Budget" (as defined in this Section 1) for which the
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i
Borrower may apply the proceeds of the Agency Loan, including financing costs and payments of
principal and interest under the Agency Loan.
(c) "Approved 303 Third Street Project Budget"means the budget of the elements
of the 303 Third Street Project Costs as prepared by the Borrower and the Agency. The Approved
303 Third Street Project Budget shall also include an estimated draw schedule for 303 Third Street
Project Costs (identified as a percentage of each budgeted line item) based upon the Borrower's
forecast of the 303 Third Street Project Costs(identified as a percentage of each budgeted line item)
based upon the Borrower's forecast of the 303 Third Street Project construction progress between
the Commencement Date and the Completion Date (Phase II). The Approved 303 Third Street
Project Budget shall include line items for Advances or draws from funded debt service reserve
accounts under the Construction Loan and the Agency Loan for the Borrower Improvements (Phase
I) and shall be subject to certain adjustments.
(d) `Borrower Architect Contract" means the contract between Borrower and
(the "Architect"), who designed the Borrower Improvements (Phase 1).
(e) `Borrower Contractor" means , the general
contractor for the Borrower Improvements(Phase 1)under the Borrower Improvements Construction
Contract.
(f) `Borrower Improvements(Phase I)Construction Contract"means the contract
between Borrower and Borrower Contractor and any subcontractors, materialmen, laborers or any
other person or entity for performance of work on the Borrower Improvements (Phase I) or the
delivery of materials relating to any Borrower Improvements (Phase I).
(g) "Commencement Date"means the date on which all of the conditions for the
escrow for the transfer of the fee title interest in the 303 Third Street Parcel to the Borrower pursuant
to the land sale contract between the Borrower and the State are deemed satisfied and the fee title
interest in the 303 Third Street Parcel is transferred by the State to the Borrower.
(h) "Completion Date (Phase 1)" means the date on which the environmental
remediation work and improvement of the 303 Third Street Project is completed by the Borrower.
(i) "Completion Date(Phase 11)"means the date on which the Agency confirms
that Tenants have taken occupancy of ninety five percent (95%) of the net rentable space in the
improvements on the 303 Third Street Parcel.
0) "Construction Lender Subordination Agreement"means the agreement by and
among the Agency and the Borrower, and consented to by such Construction Lender, to
acknowledge a subordination of the Agency's security interest in the 303 Third Street Property to
the lien of the Construction Lender in the 303 Third Street Property and related security.
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(k) "Construction Loan" means the commercial construction loan financing to
be provided to the Borrower by a commercial lending institution in an original principal amount not
to exceed Eight Million Five Hundred Thousand Dollars ($8,500,000.00). The proceeds of the
Construction Loan shall be disbursed by the commercial lending institution to the Borrower for the
purpose of paying for Borrower Improvements Costs (Phase II) as indicated on the Approved 303
Third Street Project Budget.
(1) "Disbursement Control Agent"means Escrow Mart,Inc.,which shall perform
the customary functions of a construction lender disbursement control and payment verification
service. The Disbursement Control Agent shall monitor the progress of the Borrower Improvements
(Phase I) on behalf of the Agency and shall verify the completeness and accuracy of each
"Contractor's Application" (as defined in Section 3(b)(iv) below) submitted by the Borrower
Contractor prior to the submittal by the Borrower of a"Disbursement Application" (as defined in
Section 3 below) and shall perform other customary construction cost control and audit functions
requested by the Agency pursuant to that certain Agreement dated _, 2000 by and
between the Disbursement Control Agent and the Agency.
(m) "Fiscal Agent Account"means the account which the Fiscal Agent shall open
with a bank, savings and loan or other financial institution acceptable to the parties and administer
for the benefit of the parties to this Fiscal Agent Agreement. All sums tendered to the Fiscal Agent
by a party to the Fiscal Agent Agreement,pending disbursement under the applicable Disbursement
Application, shall be deposited and invested by the Fiscal Agent in the Fiscal Agent Account and
all interest accruing thereon shall be for the benefit of Borrower except as otherwise provided in
Section 5(d) below.
2. Documents at Closing. The Fiscal Agent acknowledges receipt of the following
documents:
(a) A copy of the Borrower Improvements Construction Contract.
(b) A copy of the Section 108 Development Loan Agreement.
(c) A copy of the Construction Lender Subordination Agreement.
(d) A written statement signed by the Borrower Contractor certifying to Borrower
and the Agency: (i) the names of all of the subcontractors and suppliers: (A) who are scheduled to
provide labor and/or materials with respect to the development of the Borrower Improvements
(Phase I) being constructed by the Borrower Contractor under the Borrower Improvements
Construction Contract and (B) who have signed contracts relative to the Borrower Improvements
(Phase I) as of the date of this Fiscal Agent Agreement and(ii)that no work has been performed and
no materials have been furnished with respect to the development of the Borrower Improvements
(Phase 1) under the Borrower Improvements Construction Contract.
3. Applications for Draw. Borrower shall submit an Application for Loan Disbursement
("Disbursement Application") in the form attached hereto as Exhibit C-1, from time to time,
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requesting draws on the Agency Loan ("Advance Request") subject to compliance with the
following procedures:
(a) Concurrently with or prior to submitting a Disbursement Application to the
Fiscal Agent, Borrower shall submit a copy to the Agency and the Disbursement Control Agent;
(b) Each Disbursement Application shall be executed by Borrower (except as
provided in Section 10 below) and include the following:
(i) the date (not less than ten (10) business days after the date of such
Disbursement Application) on which the disbursement of the Advance Request is required ("Date
of Disbursement");
(ii) a certification of the Borrower("Borrower's Certification") that(A)
as of the date of such Disbursement Application, all representations and warranties of Borrower
under the Section 108 Development Loan Agreement relating to such Disbursement Application are
true and correct and that,to the best of Borrower's knowledge, the Borrower is in compliance with
all of the provisions of the Section 108 Development Loan Agreement and (B) prevailing wages
have been paid for all labor performed, including all improvements constructed or installed to the
date of such Disbursement Application by the Borrower Contractor under the Borrower
Improvements Construction Contract and a Sworn Owner's Statement,executed by Borrower, in the
form of Exhibit C-2.
(iii) an itemized schedule ("Borrower's Schedule") showing the amount
and general description of"soft costs"to be paid out of the Advance Request, including copies of
any invoices, contracts, receipts and other evidence which may be requested by the Agency
reasonably required to evidence "soft cost" items;
(iv) a copy of Borrower's Contractor Application for Payment
("Contractor's Application") in the form and including the information and certifications required
under the Borrower Improvements Construction Contract, including (A) a certification as to the
schedule of values and percentage of completion; (B) a complete AIA Form G702CMa and G703,
as to the Borrower Improvements Construction Contract; (C) the name and address of the payee
entitled to payment of each such advance; (D) a description of all labor and material incorporated
into the Borrower's Improvements (Phase I) to the date of such application and any unpaid
subcontractors, suppliers and/or materialmen, and the amount due each of them; (E) a description
of any Changes to the Borrower Improvement Plans and Specification and a copy of Borrower's
authorization of such change; and (F) a certification, executed by Borrower's Contractor, with
respect to the Borrower Improvements Construction Contract, stating that:
"The Application for Payment is consistent with the Construction
Progress Schedule of the Work and the Approved 303 Third Street
Project Budget and that all Work for which such Application for
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Payment is made has been done in a good and workmanlike manner
in compliance with the Borrower Improvement Plans and
Specifications(including any changes thereto authorized, in writing,
by Borrower). The Application for Payment represents a just
estimate of the cost reimbursable to Borrower Contractor under the
terms of the Borrower Improvements Construction Contract and there
are no known mechanics' or materialmen's liens outstanding as of the
date of the Application for Payment, that all due and payable bills
with respect to the Work have been paid to date or are included in the
amount requested by the current Application for Payment, and that
except for such bills not paid and so included,there is no known basis
for the filing of any mechanics' or materialmen's liens on the Work.
Contractor also certifies that Prevailing Wages under all state and
federal laws, including but not limited to 40 U.S.C., Section 276A-5
(Davis-Bacon Prevailing Wage Law,as amended,and Contract Work
Hours and Safety Standards Act, 40 U.S.C. Sections 276A-276A-5
and 40 U.S.C. 317, et seq., respectively) have been paid for all labor
performed, including all improvements constructed or installed in
connection with the Work, up to the date of the Application for
Payment."
(v) Instructions from Borrower which shall include:
(A) a direction to the Agency to deposit with the Fiscal Agent for
disbursement(or provide authorization to Fiscal Agent to release from funds previously deposited
with Fiscal Agent and not yet disbursed) an amount equal to the Advance Request(the "Draw").
(B) Borrower's authorization permitting Fiscal Agent to disburse
the Draw as required under the Disbursement Application.
(vi) Mechanic's lien waivers, fully completed and executed by each
subcontractor, supplier and materialman identified in Contractor's Application. Except for the final
Draw with respect to the Borrower Improvements Construction Contract(as to which waivers must
be unconditional for all progress payments to the date thereof and conditioned only on final
payment), all other waivers may be conditioned only against receipt of payment from such Advance
Request. Each waiver shall state the period during which labor or materials were furnished and the
amount paid. The Fiscal Agent shall have the right, in its discretion,to limit waivers required under
this subparagraph (vi) to waivers from subcontractors, suppliers and materialme listed in one or
more of the preceding Application(s).
(vii) With respect to an Advance Request for amounts payable under the
Borrower Improvements Construction Contract, a Certificate of Payment from the Disbursement
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Control Agent, in the form of Exhibit D-1 attached,with respect to"hard costs" and with respect to
an Advance Request for amounts payable for"soft costs", a letter from the Agency, in the form of
Exhibit D-2 authorizing disbursement of"soft costs". The Agency agrees to review and approve or
disapprove of Borrower's request for approval of"soft costs"within ten(10)business days of receipt
of such request.
(viii) Any addition information or documents which the Fiscal Agent or the
Agency reasonably requires from the Borrower Contractor or subcontractors or suppliers to identify
items of work and materials completed or furnished to date,the persons performing the work and/or
furnishing the materials, amounts paid or owing to those persons and other persons paying or
obligation to pay those amounts including, but not limited to, work itemized sheets, subcontractors'
and suppliers' mechanic's lien affidavits, mechanic's lien waivers, materialmen's certificates,
receipted invoices and canceled checks or other evidence of payment.
(ix) Evidence that the required Notice of Commencement has been
recorded and remains posted at the job site.
(x) Certificates of Payment, executed by the Architect and Project
Manager in the form of Exhibit E attached, stating that, based upon Architect's and Project
Manager's respective review of the Borrower Improvements (Phase I), Borrower's Certification,
Borrower's Schedule and the Contractor's Application,and after such inspections of the Third Street
Parcel and inquiries of Borrower's Contractor, Engineer and others which it deems appropriate, the
stated percentage of work has been performed to the date of such Disbursement Application, and
such work has been done in a good and workmanlike manner, all in substantial compliance with the
Borrower Improvement Plans and Specifications and the Approved 303 Third Street Project Budget,
and all such work and materials and/or other costs are included in the Contractor's Application
and/or Borrower's Schedule, as applicable. A joint Certificate of Payment, executed by the
Architect, Project Manager and Disbursement Agent, satisfying the criteria of Paragraph 3(b)(vii)
may be submitted in lieu of separate Certificates. In the event of any discrepancy between the
Certificates submitted pursuant to this Section and the Certificate submitted pursuant to Section
3(b)(vii), the Certificate submitted under Section 3(b)(vii) shall control.
4. Title Update. Upon its receipt of the items described in Section 3, the Fiscal Agent
shall cause an examination of title to the Third Street Parcel and advise the Agency and the Borrower
of the condition of title, including the requirements, if any (the "Title Insurance Requirements"),
which are conditions precedent to the issuance of an endorsement("Endorsement')to the Agency
Title Policy, as of the Date of Disbursement insuring the first lien priority of the Deed of Trust in
the total amount of loan proceeds disbursed by the Agency with respect to the Agency Loan,without
exceptions other than the Permitted Exceptions. Fiscal Agent shall notify the Borrower and the
Agency within three (3) business days of submittal of a Disbursement Application of any Title
Insurance Requirements.
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5. Fiscal Agent's Notice.
(a) Fiscal Agent shall advise the Agency and the Borrower ("Fiscal Agent's
Notice") within one (1) business day of the day upon which all Title Insurance Requirements are
satisfied with respect to the Disbursement Application.
(b) The Agency shall deliver to the Fiscal Agent certified funds in the amount
which the Agency is required to disburse with respect to each Advance Request, via wire transfer;
the Agency shall deliver the Advance Request funds within five(5)business days of receipt of Fiscal
Agent's Notice; unless, under the terms and conditions of the Agency Loan, the Agency is not then
obligated to make a disbursement.
(c) If for any reason,Fiscal Agent is not in a position to deliver the Fiscal Agent's
Notice within the earlier of ten (10) business days after receipt of a Disbursement Application or
three (3) business days prior to the Date of Disbursement, the Fiscal Agent promptly shall advise
Borrower and the Agency of the reason for such delay, including a description of any requirements
to issuance of such notice which have not been satisfied by the Borrower or the Agency.
(d) Fiscal Agent shall deposit all funds received under this Fiscal Agent
Agreement pending disbursement of each Draw in the Fiscal Agent Account. Funds held by the
Fiscal Agent in the Fiscal Agent Account shall be invested as provided in Section 1(m) above;
provided, however, funds received from the Agency which are held by the Fiscal Agent for more
than three (3) business days pending disbursement shall be invested by the Fiscal Agent in
accordance with the terms and provisions of that certain funds deposit agreement entitled "Letter
Agreement for Section 108 Loan Guarantee Program Custodial Investment Account" in the form
attached hereto as Exhibit F ("Investment Account"). Interest income which accrues on the invested
balance of such funds shall be credited and reinvested by the fiscal Agent for the account of the
Borrower pending disbursement by the Fiscal Agent.
6. Disbursement of Advances.
(a) The Fiscal Agent shall disburse each Draw within one (1) business day of
receipt of applicable funds (i)to the persons and in amounts directed in Borrower's Schedule and/or
the Contractor's Application (to the extent that Certificates of Payment for such sums and to such
persons are included in the Certificate of Payment issued by the Disbursement Control Agent) or(ii)
if any subcontractor(s) and/or supplier(s) under any prior Disbursement Application have not been
paid,jointly to Borrower and such payee and the Borrower hereby appoints the Fiscal Agent, and
each successor of the Fiscal Agent approved by the Agency, as its attorney-in-fact to make such
payments. This power shall be deemed to be coupled with an interest, and shall be irrevocable.
(b) Upon completion of the Borrower Improvements(Phase I),the Borrower shall
submit an Application for the"Final Payment",including all retentions with respect to the Borrower
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Improvements Construction Contract. The proceeds of the Final Payment shall be used and applied
to make the final payment of Borrower Improvement Costs (Phase I) as may then be due under the
Borrower Improvements Construction Contract and the related Borrower Improvements (Phase I)
documents. In addition to the requirements in Section 3,the Application for the Final Payment shall
include all of the following:
(i) written certifications addressed to the Fiscal Agent and the Agency,
as follows:
(A) from the Architect, stating that the Borrower Improvements
(Phase I) have been completed substantially in accordance with the Borrower Improvement Plans
and Specifications and the Approved 303 Third Street Project Budget;
(B) from the commercial lending institution providing the
Construction Loan to the Borrower("Construction Lender"), stating that it is prepared to disburse
the proceeds of the Construction Loan, subject only to satisfaction by the Borrower of the final
conditions to such construction loan funding,or provide the parties with a statement setting forth the
basis for the refusal to funds the Construction Loan. (The Construction Lender agrees to deliver
such statement to Fiscal Agent within three (3) business days of request by the Borrower.);
(ii) confirmation that the City has issued a permanent certificate of
occupancy or other permit for the Borrower Improvements (Phase 1) permitting the use and
occupancy of the 303 Third Street Parcel by Tenants;
(iii) any other information reasonably required by the Agency with respect
to the disbursement of the retention under the Agency Loan.
(c) As a condition precedent to making payment directly to the Borrower
Contractor, the Fiscal Agent may, at its sole option or upon direction by the Agency, issue checks
payable,jointly, to the Borrower Contractor and each of the applicable payees.
7. Title Endorsement. Upon disbursement of each Advance Request,the Fiscal Agent
will immediately cause to be issued the Endorsement to the Agency Title Policy, which shall
increase the amount insured under the Agency Title Policy to the total of all loan proceeds advanced
with respect to the Agency Loan. Neither the Agency Title Policy, nor any Endorsement, shall be
subject to an exception other than the Permitted Exceptions.
8. Costs and Expenses. Borrower agrees to pay the following costs and expenses
associated with each Application, which amounts may be included in the Advance Request under
such Application:
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(a) All costs advanced by Fiscal Agent for recording under prior disbursements
of Advance Requests.
(b) A disbursement fee not exceeding$10.00 per check(the"Disbursement Fee").
Borrower authorizes Fiscal Agent to withhold this Disbursement Fee from each Advance Request
in any case where Borrower or the Borrower Contractor does not give Fiscal Agent a separate check
for the Disbursement Fee at the time of the Draw.
(c) A sub-escrow fee not to exceed $100 to be paid to Fiscal Agent as
reimbursement for all work, if any, the Fiscal Agent is required to perform to resolve any
discrepancies between the Applications and any preliminary notices that the Fiscal Agent has
received.
9. Authorizations to the Fiscal Agent. To induce the Fiscal Agent to act under this
Fiscal Agent Agreement, Borrower and the Agency agree that the Fiscal Agent: (a) may act in
reliance upon any instrument or signature believed to be genuine; (b) may assume that any person
identified as the "Authorized Person" for each party in Paragraph 14(g) below, when giving any
writing, notice, advice or instruction in connection with the provisions of this Fiscal Agent
Agreement has been duly authorized to do so; and (c) shall not be responsible or liable for: (i) any
loss of documents or funds which are not in its custody (and documents or funds deposited in the
United States mail shall not be construed to be in the Fiscal Agent's custody); (ii) any loss caused
by any error or misstatement in any document furnished to it, unless that document is prepared by
the Fiscal Agent; (iii)the completion of the Borrower Improvements (Phase I); (iv) the sufficiency
of the funds deposited with it to pay the Borrower Contractor, subcontractors or suppliers; or(v)the
quality or sufficiency of any labor, material or any other work or products used in the construction
of the Borrower Improvements (Phase I).
10. Disputes. All parties acknowledge that the Fiscal Agent cannot act as mediator
or arbitrator in any dispute between the Borrower,the Agency,the Borrower Contractor or any other
person. In case of any dispute as to the disbursement of funds in the Fiscal Agent Account, the
Fiscal Agent may, in its discretion, turn the funds to the Agency or, if deposited by the Borrower,
to the Borrower(except for funds held in the Investment Account under Section 5,which funds shall
be disbursed in accordance with the direction of the Agency) and be released and relieved of any
further obligations under this Fiscal Agent Agreement.
11. Acknowledgment. Neither the approval or funding in whole or in part of any
Advance Request shall constitute or be interpreted as either: (A) an approval or acceptance by the
Agency of the work done through the date of the Advance Request or (b) a representation or
indemnity by the Fiscal Agent or the Agency to any person against any deficiency or defect in the
work or against any breach of any contract. Inspections and approvals by the Agency of the
Borrower Improvements(Phase 1)as installed,the workmanship and materials used and the exercise
of any other right of inspection, approval or inquiry granted to the Fiscal Agent or the Agency in this
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Fiscal Agent Agreement in connection with any of these are acknowledged to be solely for the
protection of such party's respective interests,and under no circumstances shall any such inspection,
approval or funding be construed to impose any responsibility or liability of any nature whatsoever
on Fiscal Agent or the Agency to any person,and no person,including Tenants,the Borrower or any
contractor, subcontractor, materialman or laborer may claim any right to rely upon the
appropriateness of any Advance Request based upon either the funding or approval of such Advance
Request by the Fiscal Agent or the Agency.
12. Notices. All notices required to be given under this Fiscal Agent Agreement shall
be given in writing,may be sent by facsimile and shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier or deposited in the United States mail, first
class,postage prepaid,addressed to the party to whom the notice is to be given at the address shown
below. Any party may change its address for notices under this Fiscal Agent Agreement by giving
formal written notice to the other parties, speifing that the purpose of the notice is to change the
party's address. The agent for the service of process and the persons who shall receive notice on
behalf of each party for purposes of this Fiscal Agent Agreement are presented as follows:
Agency: Fiscal Agent:
Redevelopment Agency of the First American Title Insurance Company
City of San Bernardino 323 Court Street
201 North"E" Street, Suite 301 San Bernardino, CA 92412
San Bernardino, CA 92401-1507 Attention: Lee Ann Adams
Attention: Gary Van Osdel
with copy to: Borrower:
Sabo & Green, LLP 303, L.L.C.
201 North"E" Street, Suite 300
San Bernardino, CA 92401
Attention: David F. Gondek, Esq. with copy to:
13. Additional Provision Concerning Fiscal Agent.
(a) Except as provided in Section 10,the Fiscal Agent may not suspend or assign
its duties under the Fiscal Agent Agreement without prior notice to the Agency and the Borrower.
If the Fiscal Agent desires to be relieved of its duties under this Fiscal Agent Agreement, Fiscal
Agent shall give thirty (30) days' prior written notice to the Agency and the Borrower; provided,
however, no such cessation of the duties of the Fiscal Agent shall take effect until such time as the
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Agency and the Borrower have appointed a mutually acceptable replacement or successor to the
Fiscal Agent, and such successor or replacement in function to the Fiscal Agent has agreed with the
Agency and the Borrower to accept the duties of fiscal agent under the same terms and conditions
as this Fiscal Agent Agreement, and all funds, documents and other items in Fiscal Agent's
possession in connection with this Fiscal Agent Agreement are concurrently assigned and transferred
to the successor fiscal agent and confirmation of the foregoing is received by the Agency and the
Borrower. The Agency and the Borrower shall use best efforts to obtain the services of a successor
or replacement to the Fiscal Agent under such circumstances. The parties agree to cooperate in the
completion of the arrangements as necessary to accomplish the succession or replacement of the
Fiscal Agent hereunder.
(b) Within ninety (90) days following the Date of Disbursement of the Final
Draw, the parties shall jointly acknowledge in writing the termination of this Fiscal Agent
Agreement. Upon such termination of the Fiscal Agent Agreement, any sums as may then be held
by the Fiscal Agent shall be disbursed to the Borrower.
14. Miscellaneous Provisions.
(a) Nothing contained in this Fiscal Agent Agreement shall be construed to
constitute the creation of a partnership or joint venture between the Fiscal Agent and/or the Agency
or the Borrower. Fiscal Agent is not an agent or representative of the Borrower. This Fiscal Agent
Agreement does not create a contractual relationship with and shall not be construed to benefit or
bind Fiscal Agent in any way with or create any contractual duties by the Fiscal Agent to any
contractor, subcontractor, materialman, laborer or any other person.
(b) This Fiscal Agent Agreement constitutes the entire understanding and
agreement of the parties as to the matters set forth herein. No alteration of or amendment to this
Fiscal Agent Agreement shall be effective unless given in writing and signed by the party or parties
sought to be charged or bound by the alteration or amendment.
(c) This Fiscal Agent Agreement shall be governed by the laws of the State.
(d) If a court of competent jurisdiction finds any provision of this Fiscal Agent
Agreement 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; however, if the offending provision cannot be so modified, it shall be stricken and all
other provisions of this Fiscal Agent Agreement in all other respects shall remain valid and
enforceable.
(e) Time is of this essence of this Fiscal Agent Agreement.
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(f) The following persons are the Authorized Persons for each party as noted
(which Authorized Person may be changed by the applicable party by written notice to the other
parties):
(i) Agency:
(ii) Borrower:
(g) The following exhibits are attached hereto and incorporated herein:
Exhibit A Legal Description of 303 Third Street Parcel
Exhibit B Borrower Improvements Plans and Specifications
Exhibit C-1 Form of Disbursement Application
Exhibit C-2 Owner's Sworn Statement
Exhibit D-1 Form of Certificate of Payment-Disbursement Control Agent
Exhibit D-2 Form of Agency "soft costs" Approval Letter
Exhibit E Form of Certificate of Payment - Architect and Project
Manager
Exhibit F Letter Agreement for Section 108 Loan Guarantee Program
Custodian Investment Account
IN WITNESS WHEREOF, the parties have executed this Fiscal Agent Agreement on the
date written above.
BORROWER
303, L.L.C., a California limited liability company
By:
Member
By:
Member
[Signatures continued on the following page]
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[Signatures continued from the previous page]
AGENCY
REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO
By:
Its: Chair of the Governing Board of the Agency
By:
Its: Secretary
By:
Its: Executive Director
APPROVED AS TO FORM:
SABO & GREEN, LLP
Agency Special Counsel
FISCAL AGENT
FIRST AMERICAN TITLE INSURANCE COMPANY
By:
Its:
By:
Its:
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2000
ENVIRONMENTAL INDEMNITY AGREEMENT
(Affects 303 Third Street Property; Section 108 Development Loan
from Redevelopment Agency of the City of San Bernardino to
303, L.L.C. )
THIS ENVIRONMENTAL INDEMNITY AGREEMENT ("Indemnity") is made
a and entered into as of 2000, by 303, L.L.C. , a
California limited liability company ("Indemnitor") , in favor of
and for the benefit of the Redevelopment Agency of the City of San
Bernardino, a body corporate and politic ("Agency") and its
respective successors, assigns and participants and their
respective directors, officers, agents, attorneys, and employees
(each individually hereinafter referred to as an "Indemnitee" and
collectively hereinafter referred to as the "Indemnitees") .
RECITALS:
A. Indemnitor and Agency have entered into a 2000
Community Development Block Grant Program Section 108 project
Development Loan Agreement dated August , 2000 (the "Section 108
Development Loan Agreement") , under which Agency has agreed to
advance to Indemnitor up to ONE MILLION EIGHT HUNDRED FORTY
THOUSAND DOLLARS ($1, 840, 000) (the "Agency Loan") for the
development of "Borrower Improvements (Phase I) to that certain
property known to the Agency and the Indemnitor as the 303 Third
Street Parcel and more specifically described in Exhibit "A"
hereto. "Borrower Improvements (Phase I) " include (i) the
acquisition of the 303 Third Street Parcel, (ii) environmental
remediation work relating to the abatement and management of
asbestos containing materials and lead-based paints in the
structure on the 303 Third Street Parcel and (iii) seismic
retrofitting and safety improvement work.
B. The Agency Loan is to be evidenced by that certain
promissory note in favor of the Agency of even date herewith
("Note") which is secured by, among other things, that certain Deed
of Trust, Security Agreement, Assignment of Rents and Fixture
Filing of even date herewith (the "Deed of Trust") executed by
Indemnitor in favor of the Agency and encumbering the 303 Third
Street Parcel and certain lands previously acquired by Indemnitor
located at in the City of San Bernardino,
California and more specifically described in Exhibit "B" hereto
(the "Additional Property") . The Section 108 Development Loan
Agreement, the Note, Deed of Trust and any and all other documents
and instruments now or hereafter evidencing or relating to the
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Agency Loan are sometimes referred to herein collectively as the
"Agency Loan Documents" .
C . In connection with the Agency Loan, Indemnitor has
agreed to execute and deliver this Indemnity.
D. As a result of the future exercise of Agency' s
rights and remedies in connection with the Agency Loan transaction,
the Agency and/or an Indemnitee may hereafter become the owner of
the 303 Third Street Parcel and/or the Additional Property pursuant
to a transfer of title to the 303 Third Street Parcel and/or the
Additional Property, or any portion thereof, at a foreclosure sale
under the Deed of Trust, either pursuant to judicial decree or by
power of sale or by deed in lieu of foreclosure (hereinafter
referred to as a "Foreclosure") . In such event, one or more of the
Indemnitees may incur certain liabilities, costs and expenses in
connection with the 303 Third Street Parcel and/or the Additional
Property relating to or arising out of any of the "Environmental
Matters" as this term is hereinafter described. The parties intend
by this Indemnity to protect the Agency and the Indemnitees from
any such liabilities, costs and expenses as herein provided.
NOW, THEREFORE, IN CONSIDERATION OF THE MAKING OF THE
AGENCY LOAN AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED,
INDEMNITOR HEREBY AGREES AS FOLLOWS :
1 . Indemnity. Indemnitor hereby agrees, at its sole
cost and expense, to indemnify, protect, hold harmless and defend
(with counsel of Agency' s choice) Indemnitees, from and against any
and all claims, demands, damages, losses, liabilities, obligations,
penalties, fines, actions, causes of action, judgments, suits,
proceedings, costs, disbursements and expenses (including, without
limitation, fees, disbursements and costs of attorneys,
environmental consultants and experts) , and all foreseeable and
unforeseeable consequential damages of any kind or of any nature
whatsoever (collectively, "Losses") which may at any time be
imposed upon, incurred or suffered by, or asserted or awarded
against, any Indemnitee directly or indirectly relating to or
arising from any of the following "Environmental Matters" :
(a) Any past, present or future presence of any
"Hazardous Materials" (as such term is defined in Exhibit "C"
attached hereto) on, in, under or affecting all or any portion of
the 303 Third Street Parcel and/or the Additional Property or on,
in, under or affecting all or any portion of any property adjacent
or proximate to the 303 Third Street Parcel and/or the Additional
Property if such Hazardous Materials originated on or from the 303
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Third Street Parcel and/or the Additional Property prior to
Foreclosure;
(b) Any past, present or future storage, holding,
handling, release, threatened release, discharge, generation, leak,
abatement, removal or transportation of any Hazardous Materials on,
in, under or from the 303 Third Street Parcel and/or the Additional
Property or any portion thereof occuring prior to Foreclosure;
(c) Any violation at any time prior to Foreclosure
of laws, rules, regulations, judgments, orders, permits, licenses,
agreements, covenants, restrictions, requirements or the like now
or hereafter relating to or governing in any way the environmental
condition of the 303 Third Street Parcel and/or the Additional
Property or the presence of Hazardous Materials on, in, under of
affecting all or any portion of the 303 Third Street Parcel and/or
the Additional Property including, without limitation, all statutes
referenced in Exhibit `NC" attached hereto (collectively,
"Environmental Laws") ;
(d) The failure of Indemnitor to properly complete,
obtain, submit and/or file any and all notices, permits, licenses,
authorizations, covenants and the like relative to any
Environmental Matters described herein in connection with the 303
Third Street Parcel and/or the Additional Property or the
ownership, use, operation or enjoyment thereof;
(e) The extraction, removal, containment,
transportation or disposal of any and all Hazardous Materials from
any portion of the 303 Third Street Parcel and/or the Additional
Property or any other property adjacent or proximate to the 303
Third Street Parcel and/or the Additional Property if such
Hazardous Materials originated on or from the 303 Third Street
Parcel and/or the Additional Property prior to Foreclosure;
(f) Any past, present or future presence,
permitting, operation, closure, abandonment or removal from the 303
Third Street Parcel and/or the Additional Property of any storage
tank which at any time contains or contained Hazardous Materials
located on, in or under the 303 Third Street Parcel and/or the
Additional Property or any portion thereof occurring prior to
Foreclosure;
' (g) The implementation and enforcement of any
monitoring, notification or other precautionary measures which may
at any time become necessary to protect against the release or
discharge of Hazardous Materials on, in under or affecting the 303
Third Street Parcel and/or the Additional Property or in the air,
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any body of water, any other public domain or any property adjacent
or proximate to the 303 Third Street Parcel and/or the Additional
Property ;
(h) Any failure of any Hazardous Materials
generated or moved from the 303 Third Street Parcel and/or the
Additional Property to be removed, contained, transported and
disposed of in compliance with all applicable Environmental Laws;
or
(i) Any investigation, inquiry, order, hearing,
action or other proceeding by or before any governmental agency in
connection with any Hazardous Materials or violation of any
Environmental Law occurring or allegedly occurring at any time
prior to Foreclosure .
2 . Separate Obligation. Indemnitees shall have no
rights against Indemnitor under this Indemnity prior to
Foreclosure . This Indemnity is given solely to protect Agency and
the other Indemnitees against Losses occurring after Foreclosure,
and not as additional security for, or as a means of repayment of,
the Agency Loan. The obligations of Indemnitor under this Indemnity
are independent of, and shall not be measured or affected by (i)
any amounts at any time owing under the Agency Loan or Section 108
Development Loan Agreement or secured by the Deed of Trust, (ii)
the sufficiency or insufficiency of any collateral (including,
without limitation, the Deed of Trust secured by the 303 Third
Street Parcel and the Additional Property given to Agency to secure
repayment of the Agency Loan) , (iii) the consideration given by
Agency or any other party in order to acquire the 303 Third Street
Parcel and/or the Additional Property, or any portion thereof, (iv)
the discharge or repayment in full of the Agency Loan (including,
without limitation, by amounts paid or credit bid at a foreclosure
sale or by discharge in connection with the deed in lieu of
foreclosure) or (v) any exculpatory provision in any of the Agency
Loan Documents limiting Agency' s recourse to the 303 Third Street
Parcel and/or the Additional Property or to any other security,
and/or otherwise limiting Agency' s rights to recover a deficiency
judgment . Notwithstanding the provisions of any of the Agency Loan
Documents or other instruments, none of the obligations of the
Indemnitor hereunder shall be in any way secured by the lien of the
Deed of Trust or any other document or instrument securing the
Agency Loan or the Section 108 Development Loan Agreement . Prior
to Foreclosure, Indemnitor' s obligations with respect to the
subject matter contained herein shall be governed by the Section
108 Development Loan Agreement and related Agency Loan Documents .
Since Indemnitor' s obligations under this Indemnity only arise in
the event of Foreclosure, Indemnitor acknowledges and agrees that
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said obligations shall not be subject to California Code of Civil
Procedure Sections 580a, 580d, 726, any successor statute or law,
any other antideficiency laws or any judicial decisions construing
the effect or operation of the same prior to the date of this
Indeminity. Indemnitor agrees that any payments made under this
Indemnity shall not limit or in any way impair any deficiency
judgment obtained against Indemnitor and shall not reduce any
obligations and liabilities of Indemnitor under any of the Agency
Loan Documents which survive Foreclosure.
3 . Amendment of Aaency Loan Documents/Sale of 303 Third
Street Parcel and/or the Additional Property. The liability and
obligations of Indemnitor under this Indemnity shall in no way be
limited or impaired by any amendment, modification, expiration or
termination of the provisions of the Agency Loan Documents . In
addition, the liability of Indemnitor under this Indemnity shall in
no way be limited or impaired by (i) any extensions of time for
performance required by any of the Agency Loan Documents, (ii) any
sale or transfer of all or any part of the 303 Third Street Parcel
and/or the Additional Property prior to Foreclosure, (iii) the
accuracy or inaccuracy of the representations and warranties made
by Indemnitor under any of the Agency Loan Documents, (v) the
release of Indemnitor or any other person from the performance or
observance of any of the agreements, covenants, terms or conditions
contained in any of the Agency Loan Documents by operation of law,
Agency' s voluntary act or otherwise, (vi) the release or
substitution, in whole or in part, of any security for the Note, or
(vii) Agency' s failure to record the Deed of Trust (or Agency' s
improper recording or filing of any thereof) or Agency' s failure to
otherwise perfect, protect, secure or insure any security interest
or lien given as security for the Note; and, in any such case,
whether with or without notice to Indemnitor and with or without
consideration.
4 . Delay in Enforcement . In the event of Foreclosure,
no failure or delay on the part of any Indemnitee to exercise any
right, power or privilege under this Indemnity shall operate as a
waiver of any privilege, power or right contained in this
Indemnity.
5 . Successors and Assigns . Except as herein provided,
this Indemnity shall be binding upon the Indemnitor and inure to
the benefit of the Agency and each Indemnitee, its successors,
endorsees and assigns, any party to whom an Indemnitee assigns a
participating interest in the Agency Loan, and to their respective
heirs, personal representatives, successors and assigns, including,
as to Indemnitees, without limitation, any holder of the Note and
any party which acquires all or part of the 303 Third Street Parcel
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and/or the Additional Property by any sale, assignment or
Foreclosure .
6 . Waivers . No provision of this Indemnity may be
changed, waived, discharged or terminated orally, by telephone or
by any other means except by an instrument in writing signed by the
party against whom enforcement of the change, waiver, discharge or
termination is sought .
7 . Severability. Every provision of this Indemnity is
intended to be severable . If any provision of this Indemnity or the
application of any provision hereof to any party or circumstance is
declared to be illegal, invalid or unenforceable for any reason
whatsoever by a court of competent jurisdiction, such invalidity
shall not affect the balance of the terms and provisions hereof or
the application of the provision in question to any other party or
circumstance, all of which shall continue in full force and effect .
8 . Payment of Obligations . All obligations of
Indemnitor hereunder shall be payable on demand, and any amount due
and payable hereunder to any Indemnitee by Indemnitor which is not
paid within thirty (30) days after written demand therefor from an
Indemnitee with an explanation of the amounts demanded shall bear
interest from the date of such demand at the rate of eight percent
(8%) per anum.
9 . Attorney' s Fees . The Indemnitor shall pay to the
Agency and each Indemnitee all costs and expenses (including,
without limitation, the reasonable attorney' s fees and costs)
incurred by such Indemnitee in connection with this Indemnity or
the enforcement hereof. For the purposes of the preceding sentence
the words "reasonable attorney' s fees and costs" includes the
salary, wages, benefits and overhead of Agency Special Counsel .
10 . Governing Law. This Indemnity shall be governed by
and construed in accordance with the laws of the State of
California .
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IN WITNESS WHEREOF, Indemnitor has caused this Indemnity
to be executed as of the date first written above .
INDEMNITOR:
303, L.L.C. , a California limited
liability company
By:
Member
By:
Member
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EXHIBIT "A"
LEGAL DESCRIPTION OF 303 THIRD STREET PARCEL
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EXHIBIT "B"
LEGAL DESCRIPTION OF ADDITIONAL_ PROPERTY
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EXHIBIT "C"
HAZARDOUS MATERIALS DEFINED
"Hazardous Materials" as used in this Indemnity shall mean any
hazardous or toxic materials, pollutants, effluents, contaminants,
radioactive materials, flammable explosives, chemicals known to
cause cancer or reproductive toxicity, emissions or wastes and any
other chemical, material or substance, the handling, storage,
release, transportation, or disposal of which is or becomes
prohibited, limited or regulated, is or becomes known to pose a
hazard to the health and safety of the occupants of the 303 Third
Street Parcel and/or the Additional Property including, without
limitation, (i) asbestos, (ii) petroleum and petroleum by-products,
(iii) urea formaldehyde foam insulation, (iv) polychlorinated
biphenyls, (v) all substances now or hereafter designated as
"hazardous substances", "hazardous materials", or "toxic
substances" pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") , 42 U. S .C .
Section 9601, et seq. , as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA") , the Federal Water Pollution
Control Act, 33 U.S .C. Section 1251 et seq. , the Clean Air Act, 42
U.S .C. Section 7401 et seq. , the Hazardous Materials Transportation
Act, 49 U. S .C. Section 1801 et seq. , or the Resource, Conservation
and Recovery Act, 42 U. S .C . Section 6901 et seq. ; (vi) all
substances now or hereafter designated as "hazardous wastes" in
Section 25117 of the California Health and Safety Code; (vii) all
substances now or hereafter designated by the Governor of the State
of California pursuant to the Safe Drinking Water and Toxic
Enforcement Act of 1986 as being known to cause cancer or
reproductive toxicity, or (viii) all substances now or hereafter
designated "hazardous substances", "hazardous materials" or "toxic
substances" under any other federal, state or local laws or in any
regulations adopted and publications promulgated pursuant to said
laws .
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REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
2000
OWNER PARTICIPATION AND EDI LOAN
AGREEMENT
(303 Third Street Project)
THIS OWNER PARTICIPATION AND EDI LOAN AGREEMENT (the
"Agreement") is dated as of August _, 2000, by and between 303,
L.L.C. , a California limited liability company (the "Owner") , and
'r the Redevelopment Agency of the City of San Bernardino, a public
body corporate and politic (the "Agency") , with respect to the
following facts :
RECITALS
1 . The Owner has previously acquired certain lands (the
"Parking Lot Parcel") located near the southwest corner of the
intersection of 2nd Street and Mountain View Avenue in the Central
City Redevelopment Project; and
2 . The Owner has previously entered into a land sale
agreement, dated October 2, 1998, as amended (SSL-524) by and
between the State of California and the Owner (the "State Sale
Agreement") . The State Sale Agreement affects the lands referred
to herein as the "303 Third Street Parcel"; and
3 . A legal description of the Parking Lot Parcel and a legal
description of the 303 Third Street Parcel are included in Exhibit
"A" of this Agreement . Collectively, the Parking Lot Parcel and
the 303 Third Street Parcel are referred to herein as the "303
Third Street Property"; and
4 . The Owner has previously submitted a proposal to the City
of San Bernardino (the "City") and the Agency which sets forth a
general description of "Special Economic Development Project", as
this term is defined at 24 Code of Federal Regulations Part
570 . 203 (b) involving the acquisition of the property, including
asbestos-containing materials abatement and demolition and
environmental remediation and commercial reuse of the 303 Third
Street Project for commercial and office-professional business and
institutional users (the "Tenants") . The 303 Third Street Project
is more particularly described in the Scope of Development attached
hereto as Exhibit "B"; and
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5 . Subject to the satisfaction of the terms and conditions
of this Agreement and a related loan agreement by and between the
Owner and the Agency of even date herewith for certain property
acquisition and construction financing (the "Agency Section 108
Loan Agreement") , the Owner shall proceed with the implementation
of the 303 Third Street Project; and
6 . The Owner for itself and its successors and assigns, and
the Agency for itself and its successors and assigns, enter into
this Agreement in order to implement the Redevelopment Plan and for
the benefit of the redevelopment project area of the Central City
Redevelopment Project and the 303 Third Street Property, as
authorized under Health and Safety Code Section 33339 .
NOW THEREFORE IN CONSIDERATION OF THE MUTUAL PROMISES AND
COVENANTS OF THE PARTIES, THE OWNER FOR ITSELF AND ITS SUCCESSORS
AND ASSIGNS, AND THE AGENCY FOR ITSELF AND ITS SUCCESSORS AND
ASSIGNS, AGREE :
Section 1 . Defined Terms . In addition to the definitions
of certain terms set forth in the Recitals or following sections of
this Agreement, the meaning of other defined words and phrases as
used herein shall be the same as set forth in the Agency Section
108 Loan Agreement, unless the specific context of usage of a
particular term or phrase in this Agreement may otherwise require .
Section 2 . Effective Date of Agreement . This Agreement
shall have no force or effect in the event that HUD, the City and
the Agency fail to execute the HUD Section 108 Loan Agreement for
any reason. Provided that the HUD Section 108 Loan Agreement has
been fully executed by the parties, this Agreement shall take
effect following its approval by the governing board of the Agency
and execution by the authorized officers of the Owner and the
Agency. The provisions and covenants of this Agreement which are
intended by the parties to run with the land and the 303 Third
Street Property, and each part thereof, as provided in Section 12,
shall take effect on the day when the Notice of Memorandum of
Agreement is executed by the parties and filed for recordation in
the Office of the Recorder, San Bernardino County and such
provisions and covenants shall have no further force or effect on
the twentieth (20th) anniversary following such date . The form of
the Notice of Memorandum of Agreement is attached as Exhibit "E" .
Section 3 . The 303 Third Street Protect Is Consistent With
The RedeveloQment Plan. The Agency has found and determined that,
as of the date of this Agreement, the improvement of the 303 Third
Street Project described in the Scope of Development, and
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thereafter, the operation of a the 303 Third Street Project on the
303 Third Street Property is consistent with the Redevelopment
Plan.
Section 4 . Covenant of the Agency to Provide the EDI Loan
to the Owner.
(a) Subject to the terms and conditions of this Agreement the
Agency hereby agrees to disburse the proceeds of the EDI Loan to
the Owner in the aggregate amount not to exceed Three Hundred
Forty-four Thousand Dollars ($344, 000 . 00) in support of the 303
Third Street Project and in consideration of the community
redevelopment covenants of the Owner as set forth in this
Agreement .
(b) The Owner specifically acknowledges and agrees that its
receipt of the proceeds of the EDI Loan is subject to the following
requirements imposed on the Agency under the HUD Section 108 Loan
Agreement, including without limitation the following:
(1) the satisfaction of the requirements of paragraph _(_) of
the HUD Section 108 Loan Agreement;
(2) the proceeds of the EDI Loan, shall be used and applied
by the Owner for 303 Third Street Project Costs in
accordance with the Approved 303 Third Street Project
Budget, including the discharge (including the full
release and reconveyance of all related security
agreements) of the purchase money mortgage financing of
the Owner affecting the Parking Lot Parcel;
(3) the Owner shall certify in writing to the Agency that to
the extent that the proceeds of the EDI Loan may be used
by the Owner in whole or in part for the payment of any
"Borrower Improvements (Phase I) " construction costs
associated with the 303 Third Street Project, that all
labor and construction trades personnel employed by
either the Owner, or the Owner Contractor and all
subcontractors of any of them, who perform work on the
303 Third Street Property from and after the Commencement
Date during the course of improvement of the 303 Third
Street Project have been paid not less than "prevailing
wages" as this term is defined under 40 U. S .C. Section
276a - 276a-5 (Davis-Bacon Prevailing Wage Law, as
amended) within each construction trade craft or skill
classification employed or used as labor for the
improvement of the 303 Third Street Project; and
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t
(4) compliance by the Owner with the applicable requirements
of 24 CFR Part 570 as these regulations pertain to the
community development activities undertaken by the Owner
pursuant to this Agreement, excluding such portions of 24
CFR Part 570 which by their nature either do not apply to
the EDI Loan or the Section 108 Loan or the 303 Third
Street Project or which concern compliance with
requirements which must be satisfied by the Agency , or
the City, but not the Owner. The Owner covenants with
the Agency that it will cooperate with the Agency as
reasonably necessary to maintain compliance with such
requirements including without limitation taking such
specific action by the Owner as follows :
(i) Owner shall take affirmative action to ensure that
the 303 Third Street Project shall provide equal
employment and career advancement opportunities for
minorities and women and, to the greatest extent
feasible, to provide opportunities for training and
employment of lower income persons residing within
the area of the 303 Third Street Project . In
furtherance of the foregoing Owner shall, prior to
the commencement of the installation of the Owner
Improvements (Phase I) deliver to the Agency a
list, reasonably acceptable to the Agency setting
forth affirmative steps taken by Owner, or to be
taken by Owner, to assure that minority business
and women' s business enterprises are offered an
equal opportunity to obtain or compete for
contracts and subcontracts as sources of supplies,
equipment, construction and services . Such
affirmative steps may include, but are not limited
to, technical assistance open to all businesses but
designed to enhance opportunities for these
enterprises and special outreach efforts to inform
them of contract opportunities . Such steps shall
not include preferring any business in the award of
any contract or subcontract solely or in part on
the basis of race or gender. The Owner shall
deliver to the Agency semiannually, prior to April
30 and October 31 of each fiscal year, a report
summarizing the nature of the businesses with which
Owner has entered into contracts and subcontracts
in connection with the 303 Third Street Project
(for both Borrower Improvements (Phase I) and
(Phase II) during the preceding six ( 6) month
period ending March 31 or September 30, as
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applicable. The obligation of the Owner to deliver
the report specified in this Section 4 (b) (4) (i)
shall expire upon delivery of the report
summarizing the last contracts and subcontracts
entered into by Owner in connection with the 303
Third Street Project prior to the Completion Date
(Phase II) .
(ii) Owner agrees that in the event this Agreement or
the EDI Loan is subjected to audit, monitoring or
other inspection by appropriate state and federal
agencies, the Owner shall be responsible for
complying with such inspections and for paying, on
behalf of itself the full amount of the liability
assessed or imposed by the auditing agency on the
City, Agency and/or the Owner as a result of an
adverse finding or regulatory action following any
such inspection in which such liability results
from a failure by Owner to satisfy applicable law
or its obligations under this Agreement .
(iii) Owner shall, during regular business hours, allow
authorized personnel of the Agency to inspect and
monitor its facilities and operations as they
relate to the 303 Third Street Project or this
Agreement, including the interview of Owner' s
staff, Tenants, contractors, subcontractors and the
employees of any of them as reasonably required by
the Agency.
(iv) The Owner is prohibited under 24 CFR Part 570 . 601
(24 CFR Part 87) from using federally appropriated
funds for the purpose of influencing or attempting
to influence an officer or employee of any agency,
a Member of Congress, an Officer or employee of
Congress, or an employee of a Member of Congress in
connection with the awarding of any Federal
contract, the making of any Federal grant, loan or
cooperative agreement, and any extension,
continuation, renewal, amendment or modification of
said documents . The Owner shall certify in writing
as of the close of Escrow that it is familiar with
the `Federal Lobbyist Requirements' and that the
Owner Contractor (and the subcontractors of each of
them) shall comply with the Federal Lobbyist
Requirements at all times prior to the Completion
Date (Phase II) . Failure on the part of the Owner
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or the Borrower Contractor (and the subcontractors
of each of them) to fully comply with the Federal
Lobbyist Requirements shall constitute a material
breach of this Agreement by the Owner.
(v) Owner agrees that no person shall, on the grounds
of race, sex, creed, color, religion, national
origin, or age be excluded from participation in,
be refused the benefits of, or otherwise be
subjected to discrimination in any activities,
programs, or employment supported by this
Agreement . Owner shall comply with all applicable
regulations set forth in 24 CFR 570 . 600-602,
including without limitation, the requirement that
Owner comply with Title VI of the Civil Rights Act
of 1964 (Public Law 88-352) and the regulations set
forth at 24 CFR Part 1 and the Age Discrimination
Act of 1975 (42 U. S .C. 6101-07) and Executive Order
11246 and the regulations issued pursuant thereto
(41 CFR Part 60) , if applicable; and the
requirements of the Americans With Disabilities
Act, as amended (42 U. S .C. 12101-12213) .
(vi) Owner acknowledges that it is aware of and
understands the provisions of Paragraph — of the
HUD Section 108 Loan Agreement, which states in
relevant part :
[INSERT APPLICABLE TEXT FROM HUD SECTION 108 LOAN
AGREEMENT AND EDI GRANT AGREEMENT]
(vii) In addition to the compliance by the Owner with the
covenant set forth in Section 4 (b) (4 ) (i)-, above,
the Owner also agrees to implement all necessary
and appropriate action to ensure that the operation
of the 303 Third Street Project shall generate, and
thereafter maintain a new jobs employment level
among its Tenants, which benefits persons of low-
and moderate income in satisfaction of the special
conditions of the HUD Section 108 Loan Agreement,
if any, relating to the new jobs as part of the 303
Third Street Project .
(viii) From and at the close of the Escrow the Owner shall
not enter into any lease of the 303 Third Street
Property, in whole or in part, with the State of
California unless such a proposed lease or other
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form of possessory or equitable interest to be
created by the Owner in favor of the State of
California, is first approved in writing by the
Agency in its sole and absolute discretion.
(c) The EDI Loan shall be evidenced by EDI Loan Promissory
Note in the form attached as Exhibit "C". The EDI Loan Promissory
Note shall mature twenty four (24) months following its date and
shall bear no interest prior to its maturity or prepayment (except
in the case of a default as provided in the EDI Loan Promissory
Note) . The EDI Loan Promissory Note shall be secured by the EDI
Loan Performance Deed of Trust in the form attached as Exhibit "D",
which affects the 303 Third Street Property, or such portion
thereof as HUD may authorize and approve . The EDI Loan Performance
Deed of Trust shall be subject only to the senior security
interests of the Agency in the 303 Third Street Property under the
terms of the Agency Section 108 Loan Agreement, and such other non-
monetary lien exceptions to title in the 303 Third Street Property
as approved by the Executive Director, in consultation with legal
counsel, as permitted or consistent with all applicable provisions
of the HUD Section 108 Loan Agreement .
(d) The delivery of the EDI Loan Promissory Note and the
recordation of the fully executed copy of the Notice of Memorandum
of Agreement and the EDI Loan Performance Deed of Trust shall be
coordinated for the parties by the Escrow Holder under the Escrow
as provided in Section 7 . 0 of the Agency Section 108 Loan
Agreement .
Section S . State Sale Agreement and Participation Fee
Payable By the Owner to the Agency. Not less than five (3) days
prior to the date when the Owner may request the Agency to disburse
the proceeds of the -EDI -Loan, the Owner shall deliver a complete
and fully executed copy of State Sale Agreement and all amendments,
modifications and final escrow instructions relating thereto as
approved by the State of California and the Owner, to the Executive
Director for verification of the final terms thereof.
In consideration for the agreement of the Agency to grant to
the State of California an off-setting credit acceptable to the
State of California in the reduction of the sales price of the 303
Third Street Parcel payable by the Owner under the State Sale
Agreement in the amount of Two Hundred Thousand Dollars
($200, 000 . 00) , the Owner hereby agrees to pay to the Agency the
Participation Fee of Two Hundred Thousand Dollars ($200, 000 . 00) .
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The Participation Fee shall be due and payable to the Agency
by the Owner on the third (3rd) anniversary following the date of
the close of the Escrow, or sooner upon the acceleration or
prepayment of the Construction Loan or the recordation of the
Permanent Loan. Provided that the Participation Fee is paid to the
Agency when due, no interest shall be payable by the Owner to the
Agency on the Participation Fee prior to the time when it is due
and payable. If not paid to the Agency in full when due, the
outstanding balance of the Participation Fee shall bear interest at
the maximum rate per annum permitted by law, until paid to the
Agency in full .
The proceeds realized by the Agency upon receipt of the
Participation Fee shall be used and applied by the Agency for the
off-setting credit granted by the Agency to the State of California
for the reduction in the sales price of the 303 Third Street Parcel
payable by the Owner .
Section 6 . Representations and Warranties of the Owner.
(a) The Owner represents and warrants to the Agency, as of
the date of this Agreement :
(1) The Owner is a California limited liability company which
is duly organized, validly existing, and in good standing
under the laws of the State of California and is validly
existing and in good standing in the State of California
and in all other states in which the Owner is doing
business .
(2) The execution, delivery, and performance of this
Agreement by the Owner, has been duly authorized by all
necessary action by the Owner; do 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 under: (i) any
provision of any agreement or other instrument binding
upon the Owner or (ii) any law, governmental regulation,
court decree, or order applicable to the Owner.
(3) Each financial statement of the Owner supplied to the
Agency by the Owner truly and completely disclosed
Owner' s financial condition as of the date of the
statement, and there has been no material adverse change
in Owner' s financial condition subsequent to the date of
the most recent financial statement supplied to the
Agency. The Owner has no material contingent
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obligations, except as disclosed in such financial
statements .
(4) No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid
taxes) against the Owner is pending or threatened, and no
other event has occurred which may materially adversely
affect Owner' s financial condition or properties, other
than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by the Agency in
writing.
(5) (A) The terms "hazardous waste, " "hazardous substances, "
"disposal, " "release, " and "threatened release, " as used
in this Agreement, shall have the same meanings as set
forth in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42
U . S .C . Section 9601, et seq. ("CERCLA") , the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No.
99-499 ("SARA") , the Hazardous Materials Transportation
Act, 49 U. S .C . Section 1801, et seq. , the Resource
Conservation and Recovery Act, 42 U. S .C. Section 6901, et
seq. , Chapters 6 . 5 through 7 . 7 of Division 20 of the
California Health and Safety Code Section 25100, et seq. ,
or other applicable state or Federal laws, rules, or
regulations adopted pursuant to any of the foregoing.
(B) The Owner represents and warrants to the Agency that
any person who may perform any work relating to the
processing or handling of asbestos-containing materials
on the 303 Third Street Property shall first satisfy and
shall remain in compliance with the provisions of
California Labor Code Section 6501 . 5 at all times during
the course of the performance of any such work. To the
extent applicable, such compliance may include without
limitation the preparation and approval by the Owner
prior to the commencement of any such work on the 303
Third Street Property of a suitably detailed health and
safety asbestos abatement and demolition plan, prepared
by a certified asbestos consultant for the abatement,
demolition and disposal of asbestos and asbestos-
containing materials on and from the 303 Third Street
Property. Such plan shall contain the employee training
and employee health certifications for asbestos workers
as required by California Labor Code Section 6501 et
seq. , and other applicable law. Such plan shall also
contain all other information as necessary to obtain
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demolition permits from the City for the abatement and
removal of asbestos-containing materials and other
hazardous substances from the 303 Third Street Property,
including without limitation the following information:
(i) the method of transport of hazardous wastes and
asbestos-containing waste materials from the 303
Third Street Property to the waste disposal
facility, including the transporter ' s name,
address, telephone number and USEPA identification
number/state transportation identification number;
(ii) the name and address of the waste disposal facility
to be used;
(iii) names and daytime and emergency telephone numbers
of asbestos abatement and demolition
superintendent, foreman, project manager and other
key personnel for the performance of such work;
(iv) a description of environmental engineering and
other work controls to be used in the performance
of such work;
(v) personal respirator-air equipment procedures and
work-place air monitoring procedures for the
asbestos-related work;
(vi) emergency evacuation plan for injured workers; and
(vii) other relevant information as required by the Owner
and the City Demolition Guidelines and the other
applicable law.
The Owner further represents and warrants to the Agency
1 at all times during the course of the performance of any
such work, hazardous wastes and asbestos-containing waste
shall be properly labeled and prepared for transport and
disposal in accordance with applicable law. Hazardous
wastes and asbestos-containing waste materials shall not
be combined for storage or transport with any other waste
generated on-site . When physically possible, asbestos-
containing waste materials generated by such work shall
not be combined with other demolition waste which does
not contain detectable quantities of asbestos .
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(C) The Owner represents and warrants that except for
the performance of the environmental remediation work
component of 303 Third Street Project described in the
Scope of Development and the preceding subparagraph
" (B) ", above, and other environmental remediation work as
may be undertaken by third parties, including without
limitation the Southern California Gas Company as
provided in the Environmental Indemnity, neither the
Owner nor any contractor, agent or other authorized user
of any of the 303 Third Street Property, including
Tenants shall use, generate, manufacture, store, treat,
dispose of, or release any hazardous waste or hazardous
substance on, under, about or from any of the 303 Third
Street Property during term of this Agreement, except in
compliance with all applicable law relating to the
transportation, storage, disposal or lawful use of any
hazardous waste or hazardous substance. The Owner shall
comply and cause its Tenants and all contractors, agents
or other authorized users of the 303 Third Street
Property to comply with all applicable laws relating to
any hazardous wastes or hazardous substances, including
without limitation, obtaining and filing all applicable
notices, licenses, permits and similar authorizations .
The Owner shall establish and maintain a hazardous wastes
and hazardous substances management and operations policy
for the 303 Third Street Property in order to assure and
monitor continued compliance by the Owner and its Tenants
and all contractors, agents, or other authorized users of
the 303 Third Street Property with all such laws relating
to hazardous wastes or substances . The Owner authorizes
the Agency and its agents to enter upon the 303 Third
Street Property upon reasonable notice to make such
inspections and tests as the Agency may deem appropriate
to determine compliance of the 303 Third Street Property
with this Section 6; if the Agency reasonably believes a
violation of law has occurred. Any inspections or tests
made by the Agency shall be at the Owner' s expense and
for the Agency' s purposes only and shall not be construed
to create any responsibility or liability on the part of
the Agency to the Owner or to any other person. The
Owner hereby agrees to indemnify and hold harmless the
Agency against any and all claims, losses, liabilities,
damages, penalties, and expenses which the Agency may
directly or indirectly sustain or suffer resulting from
breach of this Section 6 from any use, generation,
manufacture, storage, disposal, release or threatened
release of any hazardous substance . The provisions of
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this Section 6, including the obligation of the Owner to
indemnify the Agency, shall survive the repayment of the
EDI Loan to the Agency and the satisfaction of this
Agreement and shall not be affected by the Agency' s
acquisition of any interest in any of the 303 Third
Street Property, whether by foreclosure or otherwise .
(6) At the time of disbursement of the EDI Loan to the Owner,
the costs set forth in the Approved 303 Third Street
Project Budget shall be, to the best knowledge of the
Owner, true and accurate estimates of the costs necessary
to complete the 303 Third Street Project in a good and
workmanlike manner and the Owner shall take all steps
necessary after the Commencement Date to prevent the
actual cost of the 303 Third Street Project, from
exceeding the amount shown in the Approved 303 Third
Street Project Budget .
(7) At the time of disbursement of the EDI Loan to the Owner,
the Owner shall have examined and shall be familiar with
and accept all the easements, covenants, conditions,
restrictions, reservations and other matters affecting
the condition of title of the 303 Third Street Property
and the building laws, regulations, zoning ordinances,
and federal, state, and local requirements affecting the
303 Third Street Property. The 303 Third Street Project
will at all times and in all respects conform to and
comply with the requirements of such easements,
covenants, conditions, restrictions, reservations,
building laws, regulations, zoning ordinances, and
federal, state, and local requirements .
(8) This Agreement, the EDI Loan Promissory Note and the EDI
Loan Performance Deed of Trust, when delivered to the
Agency will constitute, legal, valid and binding
obligations of the Owner enforceable against the Owner in
accordance with the terms of such documents .
(9) The Owner hereby covenants and agrees that the work of
the Borrower Improvements (Phase I) shall be undertaken
and completed in a good and workman-like manner within
twenty four (24 ) months following the disbursement of
the EDI Loan to the Owner. The Owner further covenants
and agrees that the work of the Borrower Improvements
(Phase II) shall be undertaken and completed in a good
and workman-like manner within thirty six (36) months
following the disbursement of the EDI Loan to the Owner.
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Section 7 . Chanae in Ownership Manaaement and Control of
the Owner--Assignment and Transfer.
(a) Transfer as used in this Section 7, the term "Transfer"
means :
(1) Any total or partial sale, assignment or conveyance,
or any trust or power, or any transfer in any other mode or
form by the Owner of more than 49% interest (or series of such
sales, assignments and the like which in the aggregate exceed
a disposition of more than a 49% interest) with respect to its
interest in this Agreement, the 303 Third Street Property or
any portion thereof, or any interest therein or of the
improvements constructed thereon, or any contract or agreement
to do any of the same; or
(2) Any total or partial sale, assignment, conveyance,
or transfer in any other mode or form, of or with respect to
any ownership interest in Owner (or series of such sales,
assignments and the like which in the aggregate exceeded a
disposition of more than a 49% interest) ; or
(3) Any merger, consolidation, sale or lease of all or
substantially all of the assets of the Owner in the Agreement,
the 303 Third Street Property (or series of such sales,
assignments and the like which in the aggregate exceeded a
disposition of more than a 49% interest) ; or
(4 ) The leasing of part or all of the 303 Third Street
Property except for the lease by the Owner to one or more
Tenants .
(b) This Agreement is entered into solely for the purpose of
the redevelopment of the 303 Third Street Property and the
improvement of the 303 Third Street Project . The Owner recognizes
that the qualifications and identity of Owner are of particular
concern to the Agency, in view of:
(1) The importance of the redevelopment of the 303 Third
Street Property to the general welfare of the community;
(2) The fact that a Transfer is for all practical
purposes a transfer or disposition of the responsibilities of
the Owner, as applicable, with respect to the redevelopment of
the 303 Third Street Property and the 303 Third Street
Project;
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(3) The importance of the representations, warranties
and covenants of the Owner under Section 6 to assure
realization of the 303 Third Street Project in favor of the
Agency.
The Owner further recognizes and acknowledges that it is
because of the qualifications and identity of the Owner that the
Agency is entering into this Agreement with the Owner, and, as a
consequence, Transfers are permitted only as provided in this
Agreement .
(c) The limitations on a Transfer as set forth in this
Section 7 by the Owner shall apply until such time as the Permanent
Loan is recorded. Except as expressly permitted in this Agreement,
the Owner represents and agrees that it has not made or will create
or suffer to be made or created, any Transfer, either voluntarily
or by operation of law without the prior written approval of the
Agency until such time as the Permanent Loan recorded. After the
date of recordation of the Permanent Loan, certain provisions of
this Agreement shall nonetheless be applicable to subsequent
conveyances of interest in the 303 Third Street Property, or
portions thereof, as provided in the Notice of Memorandum of
Agreement . Any Transfer made in contravention of this Section 7
shall be deemed to be a default under this Agreement whether or not
the Owner knew of or participated in such Transfer, and shall be
voidable at the election of the Agency.
(d) The following types of a Transfer shall be permitted and
approved by the Agency and are referred to herein as a "Permitted
Transfer" :
(1) Any Transfer by the Owner creating a "Security
Financing Interest" in the 303 Third Street Property in - favor
of the Construction Lender or the Permanent Lender which
conforms to the provisions of the Agency Section 108 Loan
Agreement;
(2) Any Transfer directly resulting from the foreclosure
of a Security Financing Interest created by the Owner in the
303 Third Street Property or the granting of a deed in lieu of
foreclosure of a Security Financing Interest;
(3) Any Transfer of stock or equity of the Owner which
does not change management or operational control of the 303
Third Street Property;
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(4 ) Any Transfer of any interest in Owner to any
affiliate of or other entity related to the Owner.
(e) No Permitted Transfer of this Agreement or any interest
in the 303 Third Street Property or the 303 Third Street Project by
the Owner (other than a Permitted Transfer created pursuant to a
Security Financing Interest under Section 3 . 3) shall be effective
unless, at the time of the Permitted Transfer, the person or entity
to which such Transfer is made, shall expressly assume the
obligations of Owner under this Agreement and such person also
agrees to be subject to the conditions and restrictions to which
Owner is subject under this Agreement . Such an assumption of
obligation shall be evidenced by a written instrument delivered to
the Agency in a recordable form which is satisfactory to the
Agency.
Section 8 . Covenant of the Owner Reciardina Property Tax
Assessed Valuation of the 303 Third Street Property.
(a) The redevelopment of the 303 Third Street Project by the
Owner is of special interest and concern to the Agency. The
redevelopment of the 303 Third Street Project in accordance with
the Agreement shall generate a special source of property tax
increment funds payable to the Agency in accordance with Health and
Safety Code Section 33760 to fund certain redevelopment activities
of the Agency and the affordable housing development programs of
the Agency which benefit persons and families of low-and moderate
income .
The Owner hereby covenants and agrees that upon the
recordation of the Permanent Loan or January 1, 2003, whichever
date shall first occur, the assessed valuation of the 303 Third
Street Property as improved by the Owner, for ad valorem property
taxation purposes, shall be not less than Ten Million Dollars
($10, 000, 000 . 00) . Said ad valorem assessed valuation figure for
the 303 Third Street Project and the 303 Third Street Property upon
the completion of the Borrower Improvements (Phase II) , is referred
to herein as the "Site Base Year Value" . For purposes of
satisfying the obligations of this Section 8, the aggregate amount
of the assessed value of property as reported by the Office of the
County Assessor as public record information relating to property
tax assessments for the 303 Third Street Property (on both the
secured, plus unsecured property tax rolls of the Office of the
County Assessor on the January 1, 2003 property tax lien date)
shall be deemed to provide conclusive evidence of the satisfaction
and compliance by the Owner of this Section 8 . The Owner for
itself, its heirs, successors and assigns hereby agrees that for
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the term of seventeen (17) years from the date on which Site Base
Year Value is established, the Owner shall not seek to obtain or
authorize a reduction or other adjustment of the assessed valuation
of the 303 Third Street Property for ad valorem property tax
purposes from the Office of the County Assessor, to an assessed
valuation amount which is less than the Site Base Year Value, plus
an amount as determined in accordance with Subdivision (b) of
Section 2 of Article XIIIA of the California Constitution and
Section 51 (a) of the Revenue and Taxation Code for each succeeding
tax year .
(b) The Owner further covenants and agrees that in the event
that the 303 Third Street Property, or any portion thereof, shall
be conveyed or transferred or sold by the Owner, its successors or
assigns, to any entity or party, that is partially or wholly exempt
from the payment of ad valorem property taxes pertinent to the 303
Third Street Property, or any portion thereof, within twenty (20)
years from the date of the disbursement of the EDI Loan and the
recordation of the Notice of Memorandum of Agreement, the Owner,
its heirs or assigns shall pay the Agency a fee in lieu of payment
of such taxes each year in an amount which is determined by the
Agency to be one percent (1 . 0%) of the full cash value of the 303
Third Street Property, or portion thereof, as may be subject to
such exemption from payments of ad valorem property taxes . Such
determination of "full cash value" for such in-lieu payment
purposes under this Section 8 shall be established by the Agency
each year, if necessary, by reference to the ad valorem property
tax valuation principles and practices as generally applicable to
a county property tax assessor under Section 2 of Article XIIIA of
the California Constitution. In the event that the Agency may
hereafter determine that an amount is payable by the Owner to the
Agency as an in-lieu payment under this Section 8 of the Agreement
in any tax year, then such amount shall be paid to the Agency for
that tax year within ninety (90) days following transmittal of
notice of invoice for payment of the in-lieu amount by the Agency
to the Owner.
(c) The provisions of this covenant shall be referenced in
the Notice of Memorandum of Agreement .
Section 9 . Covenant Against Unlawful Discrimination. The
following terms and provisions of Health and Safety Code Section
33436 which prohibit various types of unlawful discrimination are
hereby made applicable to the 303 Third Street Project . Further,
the Owner shall refrain from restricting the sale, lease, sublease,
rental, transfer, use, occupancy, tenure or enjoyment of the 303
Third Street Project (or part thereof) on the basis of sex, marital
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I
status, race, color, religion, creed, ancestry or national original
of any person. All such deeds, leases or contracts pertaining
thereto shall contain or be subject to substantially the following
nondiscrimination or nonsegregation clauses :
(1) [in deeds] :
"The grantee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or
through them, that there shall be no discrimination
against or segregation of, any person or group of persons
on account of sex, marital status, race, color,
religion, creed, national origin or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the land herein conveyed, nor shall the
grantee 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 of occupancy of tenants,
lessees, subtenants, 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 itself, its
successors and assigns, and al persons claiming under or
through them, and this lease is made and accepted upon
and subject to the following conditions : That there
shall be no discrimination against or segregation of any
person or group of persons, on account of sex, marital
status, race, color, religion, creed, national origin or
ancestry, in the leasing, subleasing, renting,
transferring, use, occupancy, tenure or enjoyment of the
land herein lease, nor shall lessee itself, or any person
claiming under or through it, establish or permit such
practice or practices of discrimination or segregation
with reference to the selection, location, number or
occupancy of tenants, lessees, sublessees, tenants or
vendees in the land herein lease . "
(3) [in material contracts] :
"There shall be no discrimination against or segregation
of, any person or group of persons on account of sex,
marital status, race, color, religion, creed, national
origin or ancestry in the sale, lease, sublease, rental,
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transfer, use, occupancy, tenure or enjoyment of the
land, nor shall the transferee 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 land. "
Section 10 . Maintenance Condition of the 303 Third Street
Property. Subject to the satisfaction of the conditions of Section
4 of this Agreement, the Owner for itself, its successors and
assigns hereby covenants and agrees that :
(a) The areas of the Property which are subject to public
view (including all existing improvements, paving, walkways,
landscaping, exterior signage and ornamentation) shall be
maintained in good repair and a neat, clean and orderly condition,
ordinary wear and tear excepted. In the event that at any time
within twenty (20) years following the date of recordation of the
Notice of Memorandum of Agreement there is an occurrence of an
adverse condition on any area of the 303 Third Street Property
which is subject to public view in contravention of the general
maintenance standard described above, (a "Maintenance Deficiency")
then the Agency shall notify the Owner in writing of the
Maintenance Deficiency and give the Owner thirty (30) days from
receipt of such notice to cure the Maintenance Deficiency as
identified in the notice . In the event the Owner fails to cure or
commence to cure the Maintenance Deficiency within the time
allowed, the Agency may conduct a public hearing following
transmittal of written notice thereof to the Owner ten (10) days
prior to the scheduled date of such public hearing in order to
verify whether a Maintenance Deficiency exists and whether the
Owner has failed to comply with the provisions of this Section
10 (a) . If upon the conclusion of a public hearing, the Agency
makes a finding that a Maintenance Deficiency exists and that there
appears to be non-compliance with the general maintenance standard,
described above, thereafter the Agency shall have the right to
enter the 303 Third Street Property and perform all acts necessary
to cure the Maintenance Deficiency, or to take other action at law
or in equity which the Agency may then have to accomplish the
abatement of the Maintenance Deficiency. Any sum expended by the
Agency for the abatement of a Maintenance Deficiency on the 303
Third Street Property authorized by this Section 10 (a) shall become
a lien on the 303 Third Street Property. If the amount of the lien
is not paid within thirty (30) days after written demand for
payment by the Agency to the Owner, the Agency shall have the right
to enforce the lien in the manner as provided in Section 10 (c) .
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(b) Graffiti, as this term is defined in Government Code
Section 38772, which has been applied to any exterior surface of a
structure or improvement on the 303 Third Street Property which is
visible from any public right-of-way adjacent or contiguous to the
303 Third Street Property, shall be removed by the Owner by either
painting over the evidence of such vandalism with a paint which has
been color-matched to the surface on which the paint is applied, or
graffiti may be removed with solvents, detergents or water as
appropriate . In the event that such graffiti may become visible
from an adjacent or contiguous public right-of-way but is not
removed within 72 hours following the time of such application, the
Agency shall have the right to enter the 303 Third Street Property
and remove the graffiti without notice to the Owner. Any sum
expended by the Agency for the removal of graffiti from the 303
Third Street Property authorized by this Section 10 (b) in an amount
not to exceed $250 . 00 per entry by the Agency, shall become a lien
on the 303 Third Street Property. If the amount of the lien is not
paid within thirty (30) days after written demand to the Owner by
the Agency, the Agency shall have the right to enforce its lien in
the manner provided in Section 10 (c) .
(c) The parties hereto further mutually understand and agree
that the rights conferred upon the Agency under this Section 10
expressly include the power to establish and enforce a lien or
other encumbrance against the 303 Third Street Property, or any
portion thereof, in the manner provided under Civil Code Sections
2924, 2924b and 2924c in an amount reasonably necessary to restore
the 303 Third Street Property to the maintenance standard required
under Section 10 (a) or Section 10 (b) , including the reasonable
attorneys' fees and costs of the Agency associated with the
abatement of the Maintenance Deficiency or removal of graffiti .
For the purposes of the preceding sentence the words "reasonable
attorneys' fees and costs of the Agency" mean and include the
salaries, benefits and costs of the City Attorney and the lawyers
employed in the Office of the City Attorney The provisions of this
Section 10, shall be a covenant running with the land for a term of
twenty (20) years following the date of recordation of the Notice
of Memorandum of Agreement, and shall be enforceable by the Agency.
Nothing in the foregoing provisions of this Section 10 shall be
deemed to preclude the Owner from making any alteration, addition,
or other change to any structure or improvement or landscaping on
the 303 Third Street Property, provided that any such changes
comply with applicable zoning and building regulations of the City
of San Bernardino .
Section 11 . Defaults and Breach - General . Failure or
delay by either party to perform any material term or provision of
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i
this Agreement shall constitute a default under this Agreement;
provided however, that if the party who is otherwise claimed to be
in default by the other party commences to cure, correct or remedy
the alleged default within thirty (30) calendar days after receipt
of written notice specifying such default and shall diligently
complete such cure, correction or remedy, such party shall not be
deemed to be in default hereunder.
The party which may claim that a default has occurred shall
give written notice of default to the party in default, specifying
the alleged default . Delay in giving such notice shall not
constitute a waiver of any default nor shall it change the time of
default; provided, however, the injured party shall have no right
to exercise any remedy for a default hereunder without delivering
the written default notice as specified herein.
Any failure or delay by a party in asserting any of its rights
and remedies as to any default shall not operate as a waiver of any
default or of any rights or remedies associated with a default .
Except with respect to rights and remedies expressly declared to be
exclusive in this Agreement, the rights and remedies of the parties
are cumulative and the exercise by either party of one or more of
such rights or remedies shall not preclude the exercise by it, at
the same or different times, of any other rights or remedies for
the same default or any other default by the other party.
In the event that a default of either party may remain uncured
for more than thirty (30) calendar days following written notice,
as provided above, a "breach" shall be deemed to have occurred. In
the event of a breach, the party who is not in default shall be
entitled to seek any appropriate remedy or damages by initiating
legal proceedings .
Section 12 . Covenants Running With the Land. The
provisions of this Agreement shall be covenants which run with the
land and the 303 Third Street Property for a term of twenty (20)
years from the date of recordation of the Notice of Memorandum of
Agreement, and shall bind the successors and assigns of the Agency
and the successors and assigns of the interests of the Owner in the
303 Third Street Property. This Agreement is expressly declared by
the parties to be for the benefit of the 303 Third Street Property
and the redevelopment project area of the Central City
Redevelopment Project .
Section 13 . Notice of Memorandum of Agreement. The parties
hereby agree and declare that the successors and assigns of each
shall be bound by the terms of this Agreement . The parties shall
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i
execute and the Agency shall cause to be recorded a Notice of
Memorandum of this Agreement substantially in the form as attached
hereto as Exhibit "E" and incorporated herein by this reference .
Section 14 . Attorneys' Fees . If either party hereto files
any action or brings any action or proceeding against the other
arising out of this Agreement, then the prevailing party shall be
entitled to recover as an element of its costs of suit and not as
damages, its reasonable attorneys' fees as fixed by the Court in
such action or proceeding or in a separate action or proceeding
brought to recover such attorneys' fees . For the purposes of this
Agreement, the phrase "reasonable attorneys' fees" shall include
the salaries, overhead and benefits of the City Attorney of the
City of San Bernardino and all attorneys employed in the office of
the City Attorney as well as any special legal counsel retained by
the City or the Agency for such purpose .
Section 15 . Headings and Attachments . The headings of each
section of this Agreement are provided for purposes of reference
and convenience only and do not have any meaning which is
independent of the text of the section of the Agreement to which
they may generally correspond. The following list of attached
documents are part of this Agreement :
Exhibit "A" - Vicinity Map and Legal Description of the
303 Third Street Property
Exhibit "B" - Scope of Development
Exhibit "C" - EDI Loan Promissory Note
Exhibit "D" - EDI Loan Promissory Deed of Trust
Exhibit "E" - Notice of Memorandum of Agreement
Section 16 . Execution of Counterparts . This Agreement may
be executed by the parties in counterpart and when fully executed
by each of the parties, each such counterpart shall be deemed to be
part of one (1) original document .
Section 17 . Governing Law; Venue; Jurisdiction . This
Agreement shall be governed by the laws of the State of California.
In any proceeding to enforce or interpret any provision of this
Agreement, the Superior Court of the County of San Bernardino
and/or the United States District Court Central District of
California, shall have jurisdiction and venue, as applicable, to
consider any such matter .
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THIS 2000 OWNER PARTICIPATION AND EDI LOAN AGREEMENT is dated
as of August , 2000, and this Agreement shall have no force nor
effect unless it has been approved by the governing body of the
Agency and executed on behalf of the Agency by its authorized
officers .
OWNER
303, L.L.C. , a California
limited liability company
Dated: By:
Martin A. Matich, its manager
By:
P. Kevin Brunk, its manager
By.
Wilford C. Lemann, its manager
AGENCY
Redevelopment Agency of the
City of San Bernardino
Dated: By:
Chair of the Governing
Board of the Agency
By:
Agency Secretary
Approved As To Form:
By:
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EXHIBIT "A"
Vicinity Map and Legal Description
of the 303 Third Street Property
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EXHIBIT "B"
Scope of Development
for the 303 Third Street Project
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APPLICATION FOR HUD SECTION 108 LOAN GUARANTEE
Applicant:
City of San Bernardino
Economic Development Agency
201 North E Street,Third Floor
San Bernardino CA 92401-1507
Attn: John Hoeger, Project Manager
Tel: 909 663-1044 Fax: 909 888-9413
Project Name and Location:
The 303 West Third Street Office Building (303 WEST THIRD) project is located on the
southwest corner of Third Street and Arrowhead Avenue in the City of San Bernardino,
California. The project also includes an auxiliary parking lot area located 600 feet
southeasterly of the building on Second Street east of Arrowhead Avenue.
Project Description:
303 WEST THIRD involve the acquisition, remediation, renovation and reuse of an
empty, 77,165 square foot, six-story office building now owned by the State of California
together with the acquisition and improvement of an auxiliary parking area to provide
approximately 314 parking spaces. Stage 1 of the project involves acquisition and
remediation. The remediation includes seismic strengthening, asbestos and lead removal
or containment, and removal of underground hydrocarbon contamination. Stage 2 of the
project will be renovation work that includes new mechanical, new interiors and new
finishes throughout the building plus repair and replacement of parking lot
improvements.
Meeting the Community Development Objective:
The project, when fully leased, should support approximately 65 employees, 51% or
more of which will be members of low and moderate income households.
Eligible Activity: L y
As referenced in section 570.703(1)(1),this activity qualifies under section 570.203(b) as
a Special Economic Development Activity based upon it resulting public benefits. This
provision of assistance to a for-profit developer is based upon the City's determination
that the assistance is both necessary and appropriate to create jobs for low and moderate-
income residents in the City.
Loan Request:
Section 108 financing is requested in the amount of$1,840,000 for a term of 20 years.
Other sources of financing for the project include an EDI Grant($344,000) and the
developer($291,000). As described in Attachment C,the Section 108 financing will be
divided into two sub-recipient loans: Sub-recipient Loan 91 for$1,340,000 and Sub-
recipient Loan 92 for 500,000. Both sub-recipient loans will be needed to complete the
Stage 1 work After acquisition and remediation are complete,the Stage 2 work will be
funded with a private construction loan($8,500,000).
EDI Grant:
This project requires HUD approval to shift an existing $344,000 EDI Grant for San
Bernardino's 40`s Street Shopping Center project. The 4e Street project will be unable to
meet the required deadline for drawing funds. Shifting the grant to this project will allow
the funds to be used for property acquisition. The source and application of funds for this
project is shown in Attachment C.
Loan Security (Collateral):
The security for the Section 108 Financing will be first and second trust deeds on the
building and parking lot properties plus personal guarantees of the principals and an A
rated, irrevocable letter of credit for $500,000. The letter of credit will be maintained
until after construction is complete, a certificate of occupancy issued, and 95% of the net
rentable space is leased to tenants who have commenced payment of monthly rent. The
Section 108 Financing may be subordinated to a construction loan of no more than
$8,500,000. Under section 570.705(b)(2)the City will pledge all grants made or for
which it may become eligible under the CDBG Entitlement Program.
Program Income:
This project is not expected to produce program income other than that which results
from payment of principal and interest on the loans. The loan interest rate will be the rate
for like maturity Treasuries plus '/zpercentage point.
Additional Information:
Additional information may be obtained by contacting the applicant at the address and
telephone number given above.
05/23/00 15:06 FAX 7072552754 S.Rodde 005
Updated 04/04100
PROJECT COST ANALYSIS
303 W. 3rd Street,San Bemardlno
Hard costs TOTAL
Base Building 105,000 Sq ft @$3736 sq ft 3,906,000.00
Sitei'Parking 135.907 Sq ft CIS$2.21 sq ft 300,000.00
Tenant Improvement 67,710 Sq ft @$20.00 sq ft_ 1,354,000.00
Basement 7,000 Sq ft Q 520.00 sq.ft 140,000.00
Total Hard Costs 5,700,000,00
Acquisition Price
LandBuilding 1,200,000
LandJPari<ing 330,000
Total Land 1,530,000.00
Soft Costs
Architectural 110,000
Architectural Reimb. 10,000
Engineering 50,000
Misc. Fees and Reimb. 10,000
Survey &topo 25,650
Soils testing &compact_ 4,000
Appraisal fees 10,000
Interim Taxes during ccnst 32,000
Builders Risk Ins. 40,000
Administration 0/1-1 188,000
Legal 100,000
Accounting &Tax Consult„ 10,000
Bank Insoection 25,000
Leasing Commissions 300,000
Construction Mgmt 136,910
Predevelopment Loan Fee s1.a4o.wo.a 1 pts. 18.400
Predevelopment Loan Int_ s1.Bd mU.9 8%for 9 mo.x So%draw-51.84 m0. 8%for 1 151,800
Constr. Interest/12 mths s8.150.000 @ 8.5%x BOX for 13 mm 450,840
ConstJPerm. Loan Fees meo,ow a 1.5 pts 122,400
TideJlns_ Closing Costs 25,000
permks 150,000
Total Soft Cost 1,970,000
Ceveiopers Fee/Contingency 800,000
Total Project Cost 10,000,000
Exhibit "A"
1�
INLAND CONSTRUCTION MANAGEMENT
PRELIMINARY BUDGET PER DIVISION
PROJECT: 303LLC
Division
Division Description Quantity Type Unit Subtotal Total
2.000 SITEWORK (SEISMIC) $183,028
2.200 demolition /clearing
2.242 drill/doweling 1 Is $64,368.00 $64,368.00
2.315 remove concrete walls 1 Is $91,264.00 $91,264.00
2.405 saw masonry 1 Is $1,882.00 $1,882.00
2.460 remove concrete block wall 1 Is $25,514.00 $25,514.00
2.000 SITEWORK (SHELL& CORE) $1,200,000
2.200 demolition / clearing
2.238 asbestos abatement 1 Is $1,200,000.00 $1,200,000.00
2.000 SITEWORK (AUXILLIARY PARKING) $185,225
2.000 sitework
2.025 asphalt paving 1 Is $61,122.00 $61,122.00
2.029 site concrete 1 Is $1,400.00 $1,400.00
2.107 filter fabric 1 Is $0.00 $0.00
2.135 fencing 1 Is $6,237.00 $6,237.00
2.140 landscape aux. parking 1 Is $50,000.00 $50,000.00
2.141 landcape 303 building 1 Is $50,000.00 $50,000.00
2.150 earthwork/sitework 1 Is $16,466.00 $16,466.00
3.000 CONCRETE (SEISMIC) $60,382
3.000 concrete
3.141 column concrete 1 Is $4,104.00 $4,104.00
3.210 concrete reinforcement 1 Is $18,284.00 $18,284.00
3.365 pneumatic concrete 1 Is $37,994.00 $37,994.00
3.000 CONCRETE (AUXILLIARY PARKING) $6,988
3.000 concrete
3.045 site concrete 1 Is $6,988.00 $6.988.00
5.000 STEEL (SHELL & CORE) $36,660
5.500 steel
5.520 pipe handrails 1 Is $36,660.00 $36,660.00
5.000 STEEL (AUXILLIARY PARKING) $50,000
5.500 steel
5.710 ornamental fence 1 Is $50,000.00 $50.000.00
6.000 WOOD (SHELL& CORE) $14,000
6.000 wood
6.405 cabinet, mill, fix 1 Is $14,000.00 $14,000.00
Page 1
im�m
INLAND CONSTRUCTION MANAGEMENT
PRELIMINARY BUDGET PER DIVISION
PROJECT: 303LLC
7.000 THERMAL& MOISTURE (SHELL& CORE) $105,000
7.000 thermal & moisture
7.140 single ply roof 1 Is $105,000.00 $105,000.00
7.248 waterproofing 1 Is $0.00 $0.00
8.000 DOOR &WINDOWS (SHELL& CORE) $153,275
8.000 doors &windows
8.010 doors.frames, hardware 1 Is $80,000.00 $80,000.00
8.326 fire rated swing doors 1 Is $36,000.00 $36,000.00
8.400 aluminum &glass 1 Is $37,275.00 $37,275.00
9.000 FINISHES (SHELL & CORE) $327,062
9.000 finishes
9.250 drywall 1 Is $66,945.00 $66,945.00
9.300 ceramic the 1 Is $129,845.00 $129,845.00
9.900 painting 1 Is $119,167.00 $119,167.00
9.950 wallcovering 1 Is $11,105.00 $11,105.00
9.000 FINISHES (SEISMIC) $21,114
9.000 finishes
9..200 plaster 1 Is $15,306.00 $15,306.00
9.250 drywall 1 Is $5,808.00 $5,808.00
10.000 SPECIALTIES (SHELL& CORE) $83,947
10.000 specialties
10.160 toilet partition 1 Is $35,119.00 $35,119.00
10..161 urinal screens 1 Is $4,523.00 $4,523.00
10.430 signage 1 Is $722.00 $722.00
10.523 fire extinguisher cabinets 1 Is $1,697.00 $1,697.00
10.810 toilet accessories 1 Is $41,886.00 $41,886.00
13.000 SPECIAL CONSTRUCTION (INTERIORS) $1,452,700
13.000 special construction
13.001 interior development 1 Is $1,452,700.00 $1,452,700.00
14.000 CONVEYING SYSTEM (SHELL& CORE) $62,000
14.000 conveying system
14.210 elevator finish 1 Is $62,000.00 $62,000.00
15.000 MECHANICAL (SHELL& CORE) $1,199,040
15.000 mechanical
15.001 plumbing 1 Is $258,034.00 $258,034.00
15.300 fire protection 1 Is $157,700.00 $157,700.00
15.500 heat vent & ac 1 Is $783,306.00 $783,306.00
Page 2
INLAND CONSTRUCTION MANAGEMENT
PRELIMINARY BUDGET PER DIVISION
PROJECT: 303LLC
15.000 MECHANICAL(AUXILLIARY PARKING) $20,000
15.000 mechanical
15.300 fire protection 1 Is $20,000.00 $20,000.00
16.000 ELECTRICAL (SHELL&CORE) $72,868
16.000 electrical
16.001 electrical 1 Is $20,000.00 $20,000.00
16.400 lighting 1 Is $52,868.00 $52,868.00
16.000 ELECTRICAL (AUXILLIARY PARKING) $15,000
16.000 electrical
16.001 electrical 1 Is $15,000.00 $15,000.00
17.000 BUILDING CONTROL(SHELL& CORE) $224,750
17.000 building control
17.200 temperature control 1 Is $183,750.00 $183,750.00
17.300 life safety 1 Is $38,000.00 $38,000.00
17.400 communication system 1 Is $3,000.00 $3,000.00
SUBTOTAL $5,473,039
GENERAL CONDITIONS $162,000
CONTRACTORS FEE $320,905
CONTINGENCY $294,056
TOTAL $6,250,000
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EXHIBIT "C"
EDI Loan Promissory Note
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PROMISSORY NOTE SECURED BY DEED OF TRUST
$344, 000 .00 Place: Redevelopment Agency of the
City of San Bernardino
20 North "E" Street
Suite 301
San Bernardino, CA 92401
Attn: Executive Director
Date: , 2000
FOR VALUE RECEIVED, 303, L.L.C. , a California limited
liability company (the "Borrower") promises to pay to Redevelopment
Agency of the City of San Bernardino (the "Agency") or its
successors, the sum of Three Hundred Forty Four Thousand Dollars
($344, 000 . 00) .
1 . This Note shall mature and be payable in full twenty
four (24 ) months from its dated date (the "Second Anniversary
Date") ; provided, however, that this Note shall mature and be
payable prior to the Second Anniversary Date upon the occurrence of
either of the following events : (a) the sale or transfer of the
property subject to the Deed of Trust and Assignment of Leases and
Rents (the "Deed of Trust") securing the obligations of the
Borrower under this Note or (b) the recordation of the Construction
Lender Subordination Agreement provided for in Section 14 of that
certain 2000 Community Development Block Grant Program Section 108
Development Loan Agreement dated as of August f 2000 (the
"Section 108 Development Loan Agreement") by and between the Agency
and the Borrower. The Second Anniversary Date or, if applicable,
the date of the occurrence of either (a) or (b) above, shall be
hereinafter referred to as the "Maturity Date" .
2 . Provided the Borrower is not in default with respect
to this Note, as set forth in Section 4 below, this Note shall bear
no interest . In the event of a default, interest shall accrue on
the principal balance of this Note commencing on the dated date of
this Note at the rate of Eight Percent (80) per annum.
3 . A late charge of five percent (50) of the amount due
shall be paid by the Borrower with respect to the payment of
principal (and, if applicable, interest) , if such payment is not
made by the fifth (5th) day following the Maturity Date .
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4 . Borrower will be in default if any of the following
happens :
(a) Borrower fails to pay the principal hereof
(and any and all interest accrued with respect
thereto) on the Maturity Date.
(b) Borrower breaks any promise Borrower has made
to the Agency in that certain Owner
Participation and Economic Development
Initiative Loan Agreement dated as of August
2000 (the "OPA") by and between the
Borrower and the Agency or in the Section 108
Loan Development Agreement, or Borrower fails
to comply with or to perform when due any
term, obligation, covenant or condition
contained in the OPA, the Section 108 Loan
Development Agreement, this Note or any
agreement related to this Note .
(c) Borrower defaults under any loan, extension of
credit, security agreement, purchase or sale
agreement or any other agreement in favor of
any other creditor or person that may
materially affect any of Borrower' s property
or Borrower' s ability to repay this Note or
the ability of Borrower to perform its other
obligations under the OPA, the Section 108
Loan Development Agreement, this Note or the
Deed of Trust .
(d) Any representation or statement made or
furnished to the Agency by Borrower or on
Borrower' s behalf is false or misleading in
any material respect .
(e) Any creditor tries to take any of Borrower' s
property with respect to which the Agency has
a lien or security interest .
(f) A material adverse change occurs in Borrower' s
financial condition or the Agency believes the
prospect of payment or performance of the
indebtedness evidenced by this Note is
impaired.
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If any default (other than a default in payment) is
curable and if Borrower has not been given a notice of a breach of
the same provision of this Note within the preceding twelve (12)
months, it may be cured (and in such event no default will be
deemed to have occurred) if Borrower, after receiving written
notice from the Agency demanding cure of such default:
(a) cures the default within fifteen (15) days; or
(b) if the cure requires more than fifteen (15)
days, immediately initiates steps which the
Agency deems in its sole discretion to be
sufficient to cure the default, and thereafter
Borrower continues and completes all
reasonable and necessary steps sufficient to
produce compliance as soon as reasonably
practical .
Upon default, interest shall accrue on the principal
balance of this Note as provided in Section 2 hereof. Upon
default, the entire principal amount of this Note, together with
all accrued interest, shall become due and payable, at the option
of the Agency, without notice to the Borrower. Failure of the
Agency to exercise such option shall not constitute a waiver of
such default .
5 . All payments due under this Note shall be made in
lawful money of the United States at the principal office of the
Agency, 20 North "E" Street, Suite 301, San Bernardino, California
92401 or at such other place as may from time to time be
designated by the Agency in writing.
6 . In no event shall the interest and late charge
payable hereunder exceed the maximum amount of interest permitted
under the usury laws of the State of California.
7 . The Borrower reserves the right to prepay at any
time all or any part of the principal amount of this Note without
the payment of penalties or premiums .
8 . If suit is instituted by the Agency to recover on
this Note, the Borrower agrees to pay all costs Of such collection
including reasonable attorneys' fees and court costs .
This Note is secured by the Deed of Trust, duly filed for
record in the office of the County Recorder of the County of
San Bernardino, State of California.
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Demand, protest and notice of demand and protest are
hereby waived and the Borrower hereby waives, to the extent
authorized by law, any and all homestead and other exemption rights
which otherwise would apply to the debt evidenced by this Note.
IN WITNESS WHEREOF, THIS NOTE has been duly executed by
the Borrower, as of its date.
303, L.L.C. , a California limited
liability company
By:
Member
By:
Member
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I
EXHIBIT "D"
EDI Loan Performance Deed of Trust
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EXHIBIT "E"
Notice of Memorandum of Agreement
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RECORDING REQUESTED BY )
AND WHEN RECORDED MAIL TO: )
Redevelopment Agency of the )
City of San Bernardino )
201 North "E" Street, Suite 301 )
San Bernardino, California 92401 )
Attn: Executive Director )
(Space Above Line For Use By Recorder)
[Recordation of this Document Is
Exempt From Fees Payable to the
Recorder Under Government Code
Section 6103]
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
Notice of Memorandum of Agreement
2000 Owner Participation and EDI Loan Agreement
(303 Third Street Project)
TO ALL INTERESTED PERSONS PLEASE TAKE NOTICE that as of
, 2000, 303, L.L.C . , a California limited
liability company (the "Owner") and the Redevelopment Agency of the
City of San Bernardino, a body corporate and politic (the "Agency")
have entered into an agreement entitled "2000 Owner Participation and
Economic Development Loan Agreement" (the "Agreement") . A copy of the
Agreement is on file with the Secretary of the Agency and is available
for inspection and copying by interested persons as a public record of
the Agency during regular business hours .
The Agreement affects the real property (the "Property")
described in Exhibit "A" attached hereto. The meaning of defined
terms which are used in this Notice of Memorandum of Agreement shall
be the same as set forth in the Agreement .
PLEASE TAKE FURTHER NOTICE that the Agreement contains certain
community redevelopment covenants and agreements of the parties which
affect the Property as set forth below:
Section 12 of the Agreement provides as follows :
"Section 12. Covenants Running With the Land. The provisions
of this Agreement shall be covenants which run with the land and
the 303 Third Street Property for a term of twenty (20) years from
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the date of recordation of the Notice of Memorandum of Agreement,
and shall bind the successors and assigns of the Agency and the
successors and assigns of the interests of the Owner in the 303
Third Street Property. This Agreement is expressly declared by
the parties to be for the benefit of the 303 Third Street Property
and the redevelopment project area of the Central City
Redevelopment Project."
Section 3 of the Agreement provides as follows :
"Section 3. The 303 Third Street Project Is Consistent With The
Redevelopment Plan. The Agency has found and determined that, as
of the date of this Agreement, the improvement of the 303 Third
Street Project described in the Scope of Development, and
thereafter, the operation of a the 303 Third Street Project on the
303 Third Street Property is consistent with the Redevelopment
Plan."
Section 8 of the Agreement provides as follows :
"Section 8. Covenant of the Owner Regarding Property Tax
Assessed Valuation of the 303 Third Street Property.
(a) The redevelopment of the 303 Third Street Project by
the Owner is of special interest and concern to the Agency. The
redevelopment of the 303 Third Street Project in accordance with
the Agreement shall generate a special source of property tax
increment funds payable to the Agency in accordance with Health
and Safety Code Section 33760 to fund certain redevelopment
activities of the Agency and the affordable housing development
programs of the Agency which benefit persons and families of low-
and moderate income.
The Owner hereby covenants and agrees that upon the
recordation of the Permanent Loan or January 1, 2003, whichever
date shall first occur, the assessed valuation of the 303 Third
Street Property as improved by the Owner, for ad valorem property
taxation purposes, shall be not less than Ten Million Dollars
($10, 000,000.00) . Said ad valorem assessed valuation figure for
the 303 Third Street Project and the 303 Third Street Property
upon the completion of the Borrower Improvements (Phase II) , is
referred to herein as the "Site Base Year Value". For purposes
of satisfying the obligations of this Section 8, the aggregate
amount of the assessed value of property as reported by the Office
of the County Assessor as public record information relating to
property tax assessments for the 303 Third Street Property (on
both the secured, plus unsecured property tax rolls of the Office
of the County Assessor on the January 1, 2003 property tax lien
date) shall be deemed to provide conclusive evidence of the
satisfaction and compliance by the Owner of this Section 8 . The
Owner for itself, its heirs, successors and assigns hereby agrees
that for the term of seventeen (17) years from the date on which
Site Base Year Value is established, the Owner shall not seek to
obtain or authorize a reduction or other adjustment of the
assessed valuation of the 303 Third Street Property for ad valorem
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property tax purposes from the Office of the County Assessor, to
an assessed valuation amount which is less than the Site Base Year
Value, plus an amount as determined in accordance with Subdivision
(b) of Section 2 of Article XIIIA of the California Constitution
and Section 51(a) of the Revenue and Taxation Code for each
succeeding tax year.
(b) The Owner further covenants and agrees that in the
event that the 303 Third Street Property, or any portion thereof,
shall be conveyed or transferred or sold by the Owner, its
successors or assigns, to any entity or party, that is partially
or wholly exempt from the payment of Id valorem property taxes
pertinent to the 303 Third Street Property, or any portion
thereof, within twenty (20) years from the date of the
disbursement of the EDI Loan and the recordation of the Notice of
Memorandum of Agreement, the Owner, its heirs or assigns shall pay
the Agency a fee in lieu of payment of such taxes each year in an
amount which is determined by the Agency to be one percent (1.03)
of the full cash value of the 303 Third Street Property, or
portion thereof, as may be subject to such exemption from payments
of ad valorem property taxes. Such determination of "full cash
value" for such in-lieu payment purposes under this Section 8
shall be established by the Agency each year, if necessary, by
reference to the ad valorem property tax valuation principles and
practices as generally applicable to a county property tax
assessor under Section 2 of Article XIIIA of the California
Constitution. In the event that the Agency may hereafter
determine that an amount is payable by the Owner to the Agency as
an in-lieu payment under this Section 8 of the Agreement in any
tax year, then such amount shall be paid to the Agency for that
tax year within ninety (90) days following transmittal of notice
of invoice for payment of the in-lieu amount by the Agency to the
Owner. "
Section 9 of the Agreement provides as follows :
"Section 9. Covenant Against Unlawful Discrimination. The
terms and provisions of Health and Safety Code Section 33436 which
prohibit various types of unlawful discrimination are hereby
incorporated into this Agreement by this reference. . . "
Section 10 of the Agreement provides as follows :
"Section 10. Maintenance Condition of the 303 Third Street
Property. Subject to the satisfaction of the conditions of
Section 4 of this Agreement, the Owner for itself, its successors
and assigns hereby covenants and agrees that:
(a) The areas of the Property which are subject to public
view (including all existing improvements, paving, walkways,
landscaping, exterior signage and ornamentation) shall be
maintained in good repair and a neat, clean and orderly condition,
ordinary wear and tear excepted. In the event that at any time
within twenty (20) years following the date of recordation of the
Notice of Memorandum of Agreement there is an occurrence of an
adverse condition on any area of the 303 Third Street Property
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which is subject to public view in contravention of the general
maintenance standard described above, (a "Maintenance Deficiency")
then the Agency shall notify the Owner in writing of the
Maintenance Deficiency and give the Owner thirty (30) days from
receipt of such notice to cure the Maintenance Deficiency as
identified in the notice. In the event the Owner fails to cure
or commence to cure the Maintenance Deficiency within the time
allowed, the Agency may conduct a public hearing following
transmittal of written notice thereof to the Owner ten (10) days
prior to the scheduled date of such public hearing in order to
verify whether a Maintenance Deficiency exists and whether the
Owner has failed to comply with the provisions of this Section
10 (a) . If upon the conclusion of a public hearing, the Agency
makes a finding that a Maintenance Deficiency exists and that
there appears to be non-compliance with the general maintenance
standard, described above, thereafter the Agency shall have the
right to enter the 303 Third Street_ Property and perform all acts
necessary to cure the Maintenance Deficiency, or to take other
action at law or in equity which the Agency may then have to
accomplish the abatement of the Maintenance Deficiency. Any sum
expended by the Agency for the abatement of a Maintenance
Deficiency on the 303 Third Street Property authorized by this
Section 10 (a) shall become a lien on the 303 Third Street_
Property. If the amount of the lien is not paid within thirty
(30) days after written demand for payment by the Agency to the
Owner, the Agency shall have the right to enforce the lien in the
manner as provided in Section 10(c) .
(b) Graffiti, as this term is defined in Government Code
Section 38772, which has been applied to any exterior surface of
a structure or improvement on the 303 Third Street Property which
is visible from any public right-of-way adjacent or contiguous to
the 303 Third Street Property, shall be removed by the Owner by
either painting over the evidence of such vandalism with a paint
which has been color-matched to the surface on which the paint is
applied, or graffiti may be removed with solvents, detergents or
water as appropriate. In the event that such graffiti may become
visible from an adjacent or contiguous public right-of-way but is
not removed within 72 hours following the time of such
application, the Agency shall have the right to enter the 303
Third Street Property and remove the graffiti without notice to
the Owner. Any sum expended by the Agency for the removal of
graffiti from the 303 Third Street Property authorized by this
Section 10 (b) in an amount not to exceed $250.00 per entry by the
Agency, shall become a lien on the 303 Third Street Property. If
the amount of the lien is not paid within thirty (30) days after
written demand to the Owner by the Agency, the Agency shall have
the right to enforce its lien in the manner provided in Section.
10 (c) .
(c) The parties hereto further mutually understand and
agree that the rights conferred upon the Agency under this Section
10 expressly include the power to establish and enforce a lien or
other encumbrance against the 303 Third Street Property, or any
portion thereof, in the manner provided under Civil Code Sections
2924, 2924b and 2924c in an amount reasonably necessary to restore
the 303 Third Street Property to the maintenance standard required
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under Section 10 (a) or Section 10 (b) , including the reasonable
attorneys' fees and costs of the Agency associated with the
abatement of the Maintenance Deficiency or removal of graffiti.
For the purposes of the preceding sentence the words "reasonable
attorneys' fees and costs of the Agency" mean and include the
salaries, benefits and costs of the City Attorney and the lawyers
employed in the Office of the City Attorney The provisions of
this Section 10, shall be a covenant running with the land for a
term of twenty (20) years following the date of recordation of the
Notice of Memorandum of Agreement, and shall be enforceable by the
Agency. Nothing in the foregoing provisions of this Section 10
shall be deemed to preclude the Owner from making any alteration,
addition, or other change to any structure or improvement or
landscaping on the 303 Third Street Property, provided that any
such changes comply with applicable zoning and building
regulations of the City of San Bernardino."
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THIS NOTICE OF MEMORANDUM OF AGREEMENT is dated as of
, 2000, and has been executed on behalf of the
parties to the Agreement on the date indicated next to the signatures
of their authorized officers. This Notice of Memorandum of Agreement
may be executed in counterparts and when fully executed each
counterpart shall be deemed to be one original instrument .
OWNER
303, L.L.C. , a California
limited liability company
Date : By:
Martin A. Matich, its manager
By:
P. Kevin Brunk, its manager
By:
Wilford C. Lemann, its manager
AGENCY
Redevelopment Agency of the
City of San Bernardino
Date : By:
Chairperson of the Community
Development Commission
By:
Agency Secretary
Approved As To Form
By:
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** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT **
RESOLUTION AGENDA ITEM TRACKING FORM
Meeting Date(Date Adopted): (-`l- Item# iL3 A Resolution# `24M- ZA9
Vote: Ayes t 3,(o, '7 Nays -G- Abstain `, rJ Absent_ ?_
Change to motion to amend original documents: — CDCJ Z Z"1 r
ZC /Qq a coC12t
Reso. #On Attachments: — Contract term: NUIWOid After:
Date Sent to Mayor: `j-C7" Date Returned from Mayor: -".ic Date of Mayor's Signature:
-"IG-
Date of Clerk's Signature: Reso.Log Updated: , -` Seal Impressed:
Date Memo Sent to Department for Signature: = l See Attached:-- Date Returned:
Date Letter Sent to Outside Party for Signature: See Attached: Date Returned:
60 Day Reminder Letter Sent on 30th day: See Attached:
90 Day Reminder Letter Sent on 45th day: See Attached:
Note on Resolution of Attachment stored separately:---
Direct City Clerk(circle 1): PUBLISH, POST, RECORD W/COUNTY Date: See Attached:
Request for Council Action& Staff Report Attached: Yeses, No By
Updated Prior Resolutions(Other Than Below): Yes No_� By
Updated CITY Personnel Folders(6413,6429,6433, 10584, 10585, 12634): Yes No ✓ By
Updated CDC Personnel Folders(5557): Yes No f By
Updated Traffic Folders(3985, 8234,655,92-389): Yes No— - By
Copies Distributed to:
City Attorney �'"� Code Compliance Dev. Services EDA Finance MIS
Parks&Rec. Police Public Services Water Others: Sam-: rt CQ.c-eq" (G-e-",ricf)
Notes:
,S
CIA, �}f-'"rL, .J
BEFORE FILING, REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE
YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE (Contract Term etc.)
Ready to File: Date: