HomeMy WebLinkAbout2015-216 RESOLUTION NO. 2015-216
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2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING AND DIRECTING THE EXECUTION OF A LEASE
3 OF 1,011 PARKING SPACES IN A STRUCTURED PARKING FACILITY AT THE
INLAND CENTER MALL, GENERALLY LOCATED EAST OF STATE ROUTE 215
4 AND NORTH OF ORANGE SHOW ROAD.
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6 WHEREAS, the Inland Center Mall ("Inland Center") is a major retail center in the City
of San Bernardino ("City");
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8 WHEREAS, the City receives substantial sales tax revenue from sales occurring at the
9 Inland Center;
WHEREAS, one of the anchor tenant retail buildings at the Inland Center, suitable for
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11 the operation of a department store, is currently vacant;
WHEREAS, the owner of the Inland Center ("Macerich") is negotiating with J.C.
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Penney Corporation, Inc. ("JCP") for JCP to operate a retail department store in the currently
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vacant building;
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WHEREAS, it is anticipated that the addition of JCP as a retail tenant and the continued
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development of the Inland Center will create an increase need for public parking at the Inland
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Center;
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WHEREAS, the Inland Center currently has one parking structure, which is privately
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owned by Macerich;
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WHEREAS, the City desires to secure for public parking the parking spaces contained
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within the parking structure for a period of 25 years;
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WHEREAS, the Mayor and Common Council have been presented with a proposed
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Lease Agreement for 1,011 parking spaces within the parking structure, a copy of which is
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attached to this Resolution as Exhibit A;
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WHEREAS, the Lease Agreement would provide for a lease of the 1,011 parking spaces
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to the City for a term of 25 years;
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I WHEREAS, the leased parking spaces would be available to members of the general
2 public who may be patronizing other retailers in the vicinity of Inland Center and visiting or
3 shopping at Inland Center;
4 WHEREAS, the City would be required under the proposed Lease Agreement to pay
5 rent which will be measured and limited by a percentage of sales tax received by the City and
6 generated by anticipated retail sales from a the new JCP retail store and by other non-J.C.
7 Penney-generated sales tax over and above the existing $800,000 currently received by the City
in annual sales tax from Inland Center;
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9 WHEREAS, the City's annual rent payment obligation will be conditioned on the receipt
10 by the City of the applicable sales tax revenues, before the rent has been paid;
WHEREAS, it is in the best interests of the City and its residents for the City to control
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12 the leased parking spaces, so that public parking is assured as the business climate in and around
Inland Center improves.
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NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
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COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
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17 SECTION 1. The Mayor and Common Council find that the above-stated Recitals are
18 true and hereby adopt and incorporate them herein.
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SECTION 2. The Mayor and Common Council hereby approve the Lease Agreement,
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attached hereto as Exhibit "A," and authorize and direct the City Manager to take such steps and
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sign such documents as may be necessary to execute the Lease Agreement, including but not
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limited to the making of clerical or non-substantive revisions to the Lease Agreement as may be
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necessary to effectuate its intent.
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25 SECTION 3. Compliance with the California Environmental Quality Act.
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Approval of the Lease Agreement is within the scope of environmental documents
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previously approved in connection with the redevelopment of Inland Center.
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I SECTION 4. Severability. If any section, subsection, subdivision, sentence, or clause or
2 phrase in this Resolution or any part thereof is for any reason held to be unconstitutional, invalid
3 or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or
4 effectiveness of the remaining portions of this Resolution or any part thereof. The Mayor and
5 Common Council hereby declares that it would have adopted each section irrespective of the fact
6 that any one or more subsections, subdivisions, sentences, clauses, or phrases be declared
7 unconstitutional, invalid, or ineffective.
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I RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING AND DIRECTING THE EXECUTION OF A LEASE
2 OF 1,011 PARKING SPACES IN A STRUCTURED PARKING FACILITY AT THE
INLAND CENTER MALL, GENERALLY LOCATED EAST OF STATE ROUTE 215
3 AND NORTH OF ORANGE SHOW ROAD.
4 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
5 Common Council of the City of San Bernardino at a joint regular meeting thereof, held on the
6 5th day of October, 2015, by the following vote to wit:
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8 AYES NAYS ABSTAIN ABSENT
9 Council Members
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11 MARQUEZ X
12 BARRIOS X
13 VALDIVIA X
14 SHORETT X
15 NICKEL X
16 JOHNSON X
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MULVIHILL X
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20 Georgea Hanna, C
City Clerk
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The foregoing Resolution is hereby approved this day October, 2015
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CAREY AVIS, Mayor
25 City of SarfBernardino
26 Approved as to form:
Gary D. Saenz, City Attorney
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28 By:
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2015-216
LEASE AGREEMENT
This Lease Agreement ("Lease") is entered into effective October 5 , 2015,
between WM INLAND INVESTORS IV LP, a Delaware limited partnership, and WM INLAND
(MAY) IV, L.L.C., a Delaware limited liability company (collectively, "Lessor"), and the CITY
OF SAN BERNARDINO, a municipal corporation("Lessee").
RECITALS
A. Lessor is the owner or lessee of certain real property located within the City of
San Bernardino, which consists of portions of the shopping center commonly known as "Inland
Center", and which is more particularly described in Exhibit A attached hereto. Inland Center is
improved with an approximately 989,000 square foot retail center (sometimes referred to as the
"Retail Center"), which Lessor intends to remodel. The Retail Center includes (i) an
approximately 240,000 square foot building, currently occupied by Sears, Roebuck and Co.
("Sears"), (ii) an approximately 165,000 square foot building, currently occupied by Macy's, Inc.
("Macy's"), (iii) an approximately 94,000 square foot building, currently leased to Forever 21,
Inc. ("Forever 21"), and (iv) an approximately 204,000 square foot vacant building ("Vacant
Anchor Building"), currently intended to be partially leased by Lessor to J.C. Penney
Corporation, Inc. ("JCP,"which term includes J.C. Penney Corporation, Inc. and any alternative,
replacement or successor retailer to whom Lessor or JC Penney Corporation, Inc., acting in their
sole and absolute discretion, leases or conveys all or a portion of the Vacant Anchor Building)
(Sears, Macy's, Forever 21 and JCP are sometimes collectively referred to herein as the "Anchor
Tenants"). Lessor and Lessee acknowledge that Lessor may modify and/or expand the Retail
Center from time to time during the term of this Lease and, in that event, such expanded or
modified portion, whether owned or ground leased by Lessor or its affiliates(s), shall be deemed
part of the"Retail Center" for purposes of this Lease.
B. Lessor constructed and owns an approximately 1,011-space, 4-level structured
parking facility ("Parking Facility") located on the Retail Center property. The location of the
Parking Facility is depicted on Exhibit B attached hereto.
C. Because increased business activity within and in the vicinity of the Retail Center
will create the need for public parking, Lessee has asked Lessor to make parking available to the
general public who may be patronizing other retailers in the immediate vicinity of the Retail
Center and visiting or shopping at the Retail Center, by leasing one thousand eleven (1,011)
parking spaces ("Leased Spaces") within the Parking Facility to Lessee.
D. Because Lessor's planned business activities will generate increased sales tax
revenues, thereby providing revenues to Lessee in the long term that may be used to satisfy its
public service needs, and because providing additional public parking to support the increased
business activity within and in the vicinity of the Retail Center provides a public benefit, Lessee
agrees to lease the Leased Spaces from Lessor on the terms and conditions in this Lease.
E. Lessee has determined that the activities authorized by this Lease are within the
scope of environmental documents previously approved in connection with the Retail Center.
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NOW THEREFORE,the parties agree as follows:
OPERATIVE PROVISIONS
1. Demise. Lessor hereby leases the Leased Spaces to Lessee and Lessee hereby
leases the Leased Spaces from Lessor, on the terms and conditions in this Lease. Subject to
Lessor's rights as described in this Lease to relocate, replace or substitute the original Leased
Spaces anywhere within the Retail Center, the Leased Spaces include and are limited to one
thousand eleven (1,011) parking spaces within the Parking Facility. Lessee shall also have the
appurtenant, non-exclusive right for the term of this Lease to use the parking lot traffic lanes of
the Retail Center as the same exist from time to time as are necessary for ingress and egress
between the Parking Facility and the public rights of way adjacent to the Retail Center, on the
terms and conditions provided herein. The Leased Spaces will be available on a first-come, first-
served, non-exclusive basis to all members of the general public while those members are
visiting or shopping at the Retail Center or are patronizing other retailers in the immediate
vicinity of the Retail Center.
Notwithstanding the foregoing, Lessor reserves the right in its sole and absolute
discretion to relocate any of the Leased Spaces anywhere within the Retail Center and to modify
the size and configuration of some or all of the Leased Spaces or the Parking Facility itself, from
time to time during the Term of this Lease, and Lessee acknowledges that the benefit to Lessee
shall remain as identified herein, so long as the total number of Leased Spaces shall never be less
than one thousand eleven (1,011) parking spaces. Notwithstanding the foregoing, Lessor's right
to modify the size and configuration of some or all of the Leased Spaces is subject to Lessor's
compliance with applicable City parking codes. Lessor's election to modify the location, size
and configuration of some or all of the Leased Spaces or the Parking Facility itself may be
exercised upon thirty (30) days prior written notice by Lessor to Lessee of such election, which
written notice shall be accompanied by a new Exhibit B to be attached to this Lease, to depict the
location of the Leased Spaces as modified. If any portion of the Parking Facility is relocated to
property that is deemed by Lessor to be part of the Retail Center and that is owned by an affiliate
of Lessor, then Lessor shall cause its affiliate to also undertake the rights and obligations of the
Lessor under to this Lease. All references in this Lease to "Leased Spaces" shall refer to those
parking spaces within the Parking Facility, as they or it may be modified from time to time
during the Term of this Lease.
2. Possession. Possession of the Leased Spaces shall be delivered to Lessee on or
before the Lease Start Date (as defined in Paragraph 3 below).
3. Term.
(a) As used in this Lease,the following terms have the following meanings:
(i) "Lease Start Date" means the date that JCP opens for business to
the general public in the Vacant Anchor Building.
(ii) "Term" means, collectively, the twenty-five (25) years
immediately following first day of the first full quarter following
the Lease Start Date.
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(iii) "Lease Year" means 12 months from the first day of the first full
quarter following the Lease Start Date, and each 12 months
thereafter for the Term of this Lease.
(b) Unless terminated sooner as allowed by any provision of this Lease, this
Lease will be in effect for the Term. Rent will be payable for each Lease Year, as well as for the
period from the Lease Start Date until the first day of the first full quarter following the Lease
Start Date, and will be calculated as provided in Paragraph 4.
(c) Notwithstanding anything in this Lease to the contrary, Lessor (but not
Lessee) shall have the right to terminate this Lease at any time and for any reason (including
Lessor's convenience) during the Term upon ninety (90) days' advance written notice to Lessee.
If Lessee exercises its right to terminate this Lease, then this Lease shall terminate as of the date
set forth in Lessor's termination notice. In the event of any early termination of this Lease, all
Rent (as hereinafter defined) accruing prior to such termination date shall be fully due and
payable, on a prorated basis with respect to any partial Lease Year, and on the terms and
conditions set forth in this Lease.
(d) It is acknowledged that the City is entering into this Lease in anticipation
of increased business activity within and in the immediate vicinity of the Retail Center, in part
driven by occupancy of the Vacant Anchor Building by JCP as an active retail store. To that
end, should JCP cease to occupy the Vacant Anchor Building as an active retail store before the
expiration of ten (10) years following the Lease Start Date, Lessee may elect to terminate this
Lease and in that event, from and after the date of termination, Lessee's obligations under this
Lease shall terminate. In the event of termination, Lessee shall have no right to recover rent or
other charges paid prior to the date of termination. Notwithstanding the foregoing, in the event
that the Vacant Anchor Building is closed during said ten (10) year period for repair, remodel,
structural upgrading or as a result of any event of force majeure, such shall not constitute JCP
ceasing to occupy the Vacant Anchor Building.
4. Rent.
(a) Definitions. As used in this Lease, the following terms have the following
meanings:
(i) "Excluded Retailers"means Sears and Macy's.
(ii) "JCP Base Sales Taxes" means the sum of zero dollars. The JCP
Base Sales Taxes are not subject to modification.
(iii) "JCP-Generated Sales Taxes" means the Sales Taxes generated by
retail sales and use transactions occurring at the JCP store.
(iv) "JCP Sales Tax Increment" means, as to each Lease Year, the
amount by which the JCP-Generated Sales Taxes exceed the JCP
Base Sales Taxes.
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(v) "Lessor's Share of the JCP Sales Tax Increment" means, as to each
Lease Year, an amount equal to a percentage of the JCP Sales Tax
Increment determined by reference to the following Table 1:
JCP Sales Tax Increment for Lease Year Lessor's Share
First$185,000 100%
$185,001 and above 90%
(vi) "Lessor's Share of the Non-JCP Sales Tax Increment" means, as to
each Lease Year, an amount equal to a percentage of the Non-JCP
Sales Tax Increment determined by reference to the following
Table 2:
Non-JCP Sales Tax Increment for Lease Year Lessor's Share
First$100,000 50%
$100,001 - $200,000 55%
$200,001 - $300,000 60%
$300,001 - $400,000 65%
$400,001 and above 70%
(vii) "Maximum Rent" means the sum of Twenty Million Dollars
($20,000,000), or such lesser amount as Lessor spends in making,
or paying JCP for, tenant improvements made to the Vacant
Anchor Building prior to JCP's occupancy thereof. It is
acknowledged that said tenant improvements are a material
inducement for Lessee to enter into this Lease. Within one
hundred eighty (180) days after the completion of said tenant
improvements, Lessor shall provide Lessee with vendor invoices
for work done by or at the request of Lessor and proof of payment
to JCP for work performed by or at the request of JCP. However,
Lessor's failure to deliver proof of payment due to JCP's failure to
timely request payment from Lessor or due to delay in receipt of
confirmation of any payment made to JCP, shall not constitute a
default by Lessor. In that event, Lessor shall make diligent, good
faith efforts to obtain JCP's request for payment, to make payment
to JCP and to provide proof of payment to Lessee and Lessee shall
have the right to delay payment of Rent pursuant to Section 4(c),
until proof of payment is delivered. The total amount paid for said
tenant improvements shall constitute "Maximum Rent" in the
event said amount is less than $20,000,000.
(viii) "Non-JCP Base Sales Taxes" means the sum of Eight Hundred
Thousand Dollars ($800,000). The Non-JCP Base Sales Taxes are
not subject to modification.
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(ix) "Non-JCP Generated Sales Taxes" means the Sales Taxes
generated by retail sales and use transactions occurring at the
Retail Center, excluding JCP and the Excluded Retailers.
(x) "Non-JCP Sales Tax Increment" means, as to each Lease Year, the
amount in each Lease Year by which the Non-JCP Generated Sales
Taxes exceed the Non-JCP Base Sales Taxes.
(xi) "Rent" means, for each Lease Year, the sum of. (i) Lessor's Share
of the Non-JCP Sales Tax Increment for that Lease Year, plus
(ii) Lessor's Share of the JCP Sales Tax Increment for that Lease
Year. The term "Rent" also means the Rent as prorated or adjusted
in accord with a specific provision of this Lease. An example
illustrating how Rent is calculated pursuant to the terms hereof is
attached as Exhibit C. Lessee's obligation for payment of Rent
under this Lease will not exceed the Maximum Rent.
(xii) "Sales Taxes" means, with respect to a Lease Year, the sales and
use taxes accrued on account of retail sales and use transactions
made from the Retail Center during such Lease Year and that
would be payable to Lessee from the California State Board of
Equalization ("SBOE," which term includes any successor
agency); provided that such sales or use taxes are or will be legally
available for use by Lessee's General Fund and are not otherwise
restricted by the state or federal government or by the Bradley-
Burns Uniform Local Sales and use Tax Law (commencing with
Section 7200 of the California Revenue and Taxation Code, as
amended) ("Sales and Use Tax Law"). As used in this definition,
the phrase "on account of sales and use transactions made from the
Retail Center" means all sales and use taxes that are derived from,
accrue, arise in connection with or are on account of any and all
transactions conducted from the Retail Center or with the Retail
Center as the point of sale, including, without limitation, the sales
of goods and services at or from the Retail Center, determined in
accordance with existing law or any subsequent changes to the
applicable provisions of the Sales and Use Tax Law. For purposes
of clarity, the term "Sales Taxes" is intended to mean only the
portion of sales and use tax receipts disbursed from the SBOE to
Lessee and is not intended to mean all sales tax amounts required
to be collected by retailers for taxable sales and use transactions.
(b) Proration of Rent. Lessee shall be obligated to pay Rent for its use of the
Leased Spaces. Lessor and Lessee represent to one another that, in their good faith opinion, the
Rent payments which Lessee is required to make pursuant to this Lease correspond to the benefit
which Lessee shall derive by having the legal right to use the Leased Spaces for the purpose
described in Paragraph 5 below and from the other rights available to Lessee under this Lease.
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If the application of any provision of this Lease results in a proration of
the Rent payable for any period (for example, in accordance with Paragraph 28), then the Non-
JCP Base Sales Taxes will be, for the period of Rent proration, prorated equally. Rent will not
be prorated if Lessor exercises its right to relocate, replace or substitute the Leased Spaces as
permitted by this Lease.
(c) Payment of Rent. Rent shall commence to accrue as of the Lease Start
Date, and shall be due and payable annually during the Term, in arrears and without offset or
demand, no later than thirty (30) days ("Due Date") after the date that Lessee receives from the
SBOE a report (or a series of reports) that permits the determination of the Sales Taxes
attributable to the Lease Year immediately preceding the Due Date (collectively, "SBOE
Report"). Subject to any limitations in Revenue and Taxation Code Section 7056 and its
implementing regulations and executive orders, Lessee shall deliver to Lessor a copy of each
SBOE Report, along with a statement showing Lessee's calculation of the Rent due for such
Lease Year, with each annual payment of Rent due hereunder. Subject to any limitations in
Revenue and Taxation Code Section 7056 and its implementing regulations and executive
orders, Lessor shall have the right to conduct an audit of the data and methodology used by
Lessee to calculate the Rent payments due hereunder, including without limitation, the right to
audit the Sales Taxes paid or payable by the SBOE to Lessee with respect to any Lease Year.
Lessee shall pay Lessor any amounts of underpayment by Lessee revealed by any such audit. In
addition, if any such audit reveals that Lessee is entitled to receive additional Sales Taxes from
SBOE, Lessee shall use its best efforts to collect all of the Sales Taxes that the audit indicates
Lessee should have received.
The calculation of Rent (and the related financial performance measures
applicable to that calculation, including, without implied limitation, the Non-JCP Base Sales
Taxes) for the less than full calendar year period described in Section 3(b) above will be
fractionally prorated, with the numerator of such fraction equal to the number of calendar days in
the less than full calendar year period referred to in Section 3(b)and a denominator of 365.
If the Sales and Use Tax Law is repealed or modified after the date of this
Lease and if Lessee's portion of the Sales Taxes which is based on sales and use transactions
occurring at or from the Retail Center is totally or partially replaced with another source of
revenue, then Lessee's obligation to pay Rent shall continue to accrue and the limitations in this
Lease on Lessee's obligation to pay Rent shall be deemed modified and shall thereafter be based
on any form of tax or other revenue which Lessee receives with regard to the applicable Lease
Year in total or partial replacement of Sales Taxes. If the replacement source produces less Rent
than the Rent provided in this Paragraph 4, then the number of Leased Spaces will be
immediately reduced by multiplying the original number of parking spaces by a fraction, the
numerator of which is the total annual Rent produced by the replacement source and the
denominator of which is the total amount of Rent payable pursuant to this Lease immediately
preceding substitution of the replacement source. In addition, in the event of any such change,
Lessor and Lessee shall fully cooperate with one another in amending this Lease as is necessary
or appropriate to implement any reduction of Leased Spaces and otherwise facilitate the timely
and full payment of Rent pursuant to this Lease so that the intent of this Lease can be attained.
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Lessor and Lessee acknowledge that Sales Taxes are being used solely as
the measure of Lessee's Rent obligations and that all Rent and other Lessee obligations
constitute an obligation payable from any source of funds legally available to Lessee for the
purpose, provided, however, that Lessee shall at no time be required to pay rent unless it has
actually received the Sales Taxes (or replacement source of revenue) upon which said rent
payment is calculated.
Within thirty (30) days following written request from Lessor, Lessee
shall issue a report of the status of Lessee's obligation to pay Rent pursuant to this Lease;
provided, however, that Lessee shall not be obligated to issue such reports more frequently than
twice per Lease Year.
(d) Abatement of Rent. Except for Leased Spaces with respect to which
Lessor is performing routine maintenance and subject to Lessor's right to relocate Leased Spaces
as provided in this Lease, during any period that any Leased Spaces are not available for use for
the purpose in Paragraph 5 below, the Rent which accrues and is payable pursuant to this Lease
shall be adjusted so that Lessee shall be required to pay during that period only a fraction of the
Rent which is payable at the beginning of that period, the numerator of which is the number of
Leased Spaces which are available for use for the purpose in Paragraph 5 below during that
period, and the denominator of which is the number of Leased Spaces which were available for
use for the purpose in Paragraph 5 below as of the beginning of that period. However, the Rent
will not be adjusted if, within thirty(30) days after the Leased Spaces first become not available,
Lessor substitutes an equal number of parking spaces at another location of Lessor's
determination within the Retail Center.
5. Purpose. The Leased Spaces shall be used by Lessee solely for the purpose of
providing parking on a first-come, first-served, non-exclusive basis for the vehicles of members
of the general public who are visiting or shopping at the Retail Center and who may also
patronize other retailers in the immediate vicinity of the Retail Center and for no other use or
purpose. Lessee may not charge a fee for use of the Leased Spaces. Without limiting the
generality of the foregoing, Lessor and Lessee agree that the Leased Spaces may not be used by
any person for any purpose related to any special event or other activity, including any event or
other activity occurring at the National Orange Show Events Center ("NOSEC") (or any
successor to or substitute for the NOSEC).
6. Restrictions and Easements. Without any further specific subordination
agreement being required, this Lease shall be and is hereby made subject and subordinate to all
existing ground leases, licenses, and all covenants, conditions, restrictions and easements
governing the Retail Center (as the same may hereafter be amended from time to time), any
existing or future parking rights of the Anchor Tenants, any current or future mortgage or debt
facility placed against the Retail Center, and any and all other matters of record against the Retail
Center(all of the foregoing, collectively, "Superior Rights"). Lessee has independently obtained
and reviewed each and every document evidencing the current Superior Rights. Without limiting
the generality of the foregoing, Lessor reserves the right to impose reasonable rules and
regulations governing the Retail Center in order to maintain consistency and compatibility of
existing and future uses of Inland Center.
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7. Indemnification. Lessor shall defend, protect, indemnify and hold harmless
Lessee and its elected officials, officers and employees from and against any and all claims,
causes of action, damages or liability arising out of or in connection with any acts or omissions
of Lessor or its agents in connection with any activities which are performed as provided in this
Lease or in connection with any contamination of the Parking Facility by hazardous materials,
toxic waste or any other environmentally sensitive material which was caused by Lessor.
Lessor's indemnity and duty to defend shall extend, but not be limited to, claims, causes of
action, damages and liability arising from injuries or damages to persons or property, including
wrongful death and worker's compensation claims and awards of attorneys' fees. Lessor's
indemnity and duty to defend shall further extend to, but shall not be limited to, claims, causes of
action, damages and liability arising from challenges to the validity or legality of this Lease or of
any acts required or authorized under it or in the performance of it, including awards of
attorneys' fees. Lessor's indemnity shall not apply to any claims, causes of action, damages or
liability arising from injuries to persons or property which arise out of or in connection with the
negligent or willful acts or omissions of Lessee or its elected officials, officers, employees or
agents. Without limiting Lessor's indemnity and subject to Lessor's right to self-insure as
provided in the next sentence, Lessor shall take out and continuously maintain public liability
insurance (or comparable coverage pursuant to an umbrella policy or self-insurance program)
covering risks which are normally insured in connection with the operation of a commercial
shopping center, with limits of liability of at least One Million Dollars ($1,000,000), naming
Lessee as an additional insured, and shall cause the carrier of that insurance to deliver to Lessee a
certificate evidencing that insurance and evidencing that the carrier has agreed to give Lessee at
least thirty (30) days advance written notice of any cancellation of that insurance.
Notwithstanding the foregoing, Lessor may retain the financial risk of liability pursuant to
Lessor's indemnity which would otherwise be covered by insurance. If Lessor elects to self-
insure, then it shall deliver a letter or other evidence of insurance as may be reasonably requested
by Lessee, indicating the same to Lessee.
8. Subordination to Financing.
(a) As provided by Paragraph 6, Lessor shall have the right to encumber the
Parking Facility and Leased Spaces in connection with any financing that Lessor obtains and,
without any further specific subordination agreement being required, this Lease shall be subject
and subordinate to any security interest which is created in connection with any such financing.
As used in this Paragraph 8, "financing" shall include, without limitation, a"sale and lease back"
transaction. Notwithstanding the foregoing, and without affecting the self-executing nature of
Lessee's subordination, if any lender or other party requires a specific subordination agreement
to implement the aforementioned subordination, then Lessee shall, at Lessor's request, execute,
acknowledge and deliver or cause to be executed, acknowledged or delivered, any subordination,
non-disturbance and attornment agreement which Lessor may request and which is not
inconsistent with Lessee's rights as provided in this Lease.
(b) In addition, Lessee shall, at Lessor's request, execute and deliver or cause
to be executed and delivered any estoppel certificate which Lessor may request.
9. Alterations by Lessee; Maintenance of Leased Spaces; Landscape Improvements.
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(a) Lessee shall not have the right to make any alterations, modifications, or
repairs to the Parking Facility, including, without implied limitation, the right to place any
signage in or about the Parking Facility; provided, however that Lessee shall have the right (but
not the obligation) to effect the closure of any portion of the Parking Facility that presents
conditions that pose an immediate threat to public health and safety ("Dangerous Conditions"),
subject to satisfaction of the following conditions precedent:
(i) Lessee provides a first written notice to Lessor describing the
Dangerous Conditions; and
(ii) within seven (7) business days following receipt of Lessee's first
written notice, Lessor fails to either commence the repairs
necessary to abate the Dangerous Conditions or to effect closure of
those portions of the Parking Facility that present the Dangerous
Conditions; and
(iii) if Lessor fails to undertake either of the actions described in (ii)
above, Lessee provides a second written notice describing the
Dangerous Conditions and informing Lessor that Lessee intends to
exercise its rights under this Paragraph 9; and
(iv) within seven (7) business days following receipt of Lessee's
second written notice, Lessor fails to either commence the repairs
necessary to abate the Dangerous Conditions or to effect closure of
those portions of the Parking Facility that present the Dangerous
Conditions.
If Lessor fails to effect necessary repairs or closure following satisfaction
of the foregoing conditions, then Lessee may enter the Parking Facility and effect closure of
those portions of the Parking Facility that present the Dangerous Conditions. Lessor shall
reimburse Lessee within thirty (30) days after demand for any reasonable, out-of-pocket costs
Lessee incurs to close any portion of the Parking Facility.
(b) Lessor shall maintain the Leased Spaces and the Parking Facility, or shall
cause the Leased Spaces and the Parking Facility to be maintained, in accordance with
commercially reasonable standards for first-class regional shopping centers.
(c) As an element of its maintenance of the Parking Facility, Lessor shall at its
cost install, or shall cause the installation of,the following improvements, in and about the Retail
Center, of a nature and type determined by Lessor in its sole discretion and within the times
noted: (i) landscape improvements with a value of no less than One Hundred Fifty Thousand
Dollars ($150,000) within eighteen (18) months from the Lease Start Date; (ii) additional
landscape improvements with a value of no less than One Hundred Thousand Dollars ($100,000)
no later than one hundred twenty(120) months from the Lease Start Date.
10. Entry Lessor. Lessor and its agents shall have the right to enter the Parking
Facility at all times and for any purpose whatsoever.
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11. Assignment or Subletting.
(a) If Lessee forms a parking authority or similar public entity which is
charged with the administration of Lessee's parking facilities on a city-wide basis, then with
Lessor's prior consent, which shall not be unreasonably withheld, Lessee shall have the right to
assign this Lease or to sublet the Leased Spaces to the parking authority or similar public entity;
provided, however that any such assignment or sublease shall be subject to all of the provisions
of this Lease and provided further that no such assignment or sublease shall relieve Lessee of its
obligations or liabilities pursuant to this Lease. Otherwise, Lessee shall not have the right to
assign this Lease, sublet all or any part of the Leased Spaces, or grant licenses or other rights
therein to any person or entity at any time.
(b) Lessor shall have the right to assign its interest in this Lease and Lessor
may sell, assign or transfer its interest in the real property underlying this Lease or any right or
interest therein, to any person or entity whatsoever. In addition, Lessor shall have the right to
separately assign any of its rights pursuant to this Lease, including, without limitation, its right to
receive Rent payments, to any person or entity whatsoever, irrespective of whether the
assignment is absolute or for security purposes.
12. Surrender. At the expiration or earlier termination of this Lease, Lessee shall
surrender possession of the Leased Spaces to Lessor, in good condition and repair except for
reasonable wear and tear.
13. Remedies of Lessor on Default. In the event of any breach of this Lease by
Lessee including, without limitation, Lessee's failure to pay Rent pursuant to this Lease, Lessor,
in addition to any other rights or remedies which it may have at law or in equity, shall have the
rights and remedies in California Civil Code section 1951.2, as that section may be amended or
superseded from time to time.
14. Attorneys' Fees. If any legal action is commenced to enforce or interpret any
provision in this Lease, then the prevailing party shall, in addition to any costs and other relief,
be entitled to recover its reasonable attorneys' fees, including litigation costs, expert witness
costs, and fees and costs incurred on appeal.
15. Notices. All notices or other communications which are required or permitted to
be given to the parties shall be in writing and shall be given either by way of personal service, by
way of a recognized overnight mail delivery service that offers proof of delivery, or by mailing
the same by certified mail, postage prepaid, return receipt requested, in a depository maintained
by the U.S. Postal Service, addressed as follows:
LESSEE
City of San Bernardino
300 North"D" Street
San Bernardino, California 92418
Attn: City Manager
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LESSOR
WM Inland Investors IV LP
WM Inland (May) IV, L.L.C.
c/o The Macerich Company
401 Wilshire Boulevard, Suite 700
Santa Monica, California 90401
Attn: Senior Vice President, Asset Management
With a Copy to:
Inland Center Mall Offices
500 Inland Center Drive
San Bernardino, California 92408
Attn: Center Manager
Also with a Copy to:
Macerich Company
401 Wilshire Boulevard, Suite 700
Santa Monica, California 90401
Attn: Chief Legal Officer
Any such notice or other communication shall be deemed given (a) as of the date
of receipt, if personally served, (b) as of the date of delivery, if mailed by way of a recognized
overnight delivery service or (c) four (4) business days after posting, if mailed by way of the
U.S. Postal Service. Lessor and Lessee may change their respective addresses to which notices
or other communications may be delivered from time to time by notice given pursuant to this
Paragraph 15. Either party may add additional persons who shall receive copies of any notice or
other communication sent pursuant to this Lease by notice to the other given pursuant to this
Paragraph 15.
16. Further Acts. Whenever and as often as it is requested to do so by the other party,
each party shall execute, acknowledge and deliver or cause to be executed, acknowledged or
delivered, any and all such further documents as may be necessary, expedient or proper in order
to achieve the intent of this Lease. In furtherance of the foregoing, upon Lessee's written
request, Lessor will provide the non-privileged, non-confidential information described in
Government Code section 53083(a) and (d) so long as Lessee makes its request within five (5)
years from the Lease Start Date. Lessor and Lessee acknowledge that the foregoing provision is
a protective measure only and that neither Lessor nor Lessee maintain or assert that this Lease
constitutes an"economic development subsidy" within the meaning of Government Code section
53083.
17. Applicable Law. This Lease shall be construed and enforced pursuant to the
procedural and substantive laws of the State of California, without regard to its conflicts of laws
principles.
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18. Venue. Any legal action with regard to this Lease shall be brought, at Lessor's
election, in either San Bernardino County Superior Court or in the United States District Court
for the Central District of California.
19. Paragraph Headings. The paragraph headings in this Lease are for convenience
only and are not a part of, and are not intended to govern, limit or aid in the interpretation of, any
provision in this Lease.
20. Construction. In all cases, the language in this Lease shall be construed simply,
according to its fair meaning and not strictly for or against either party, it being agreed that both
parties or their agents have participated in the preparation of this Lease.
21. Survival. Each and every covenant in this Lease shall survive the execution and
delivery of this Lease for the benefit of the parties. Without limiting the effect of the foregoing,
should this Lease be terminated at a time when rent has accrued but has not yet become payable
because Lessee has not yet received from the State of California the sales tax revenue on which
said rent is to be computed, Lessee's obligation to pay said rent for the period up to the date of
termination shall survive the termination and said rent shall become payable when said sales tax
revenue is received by Lessee.
22. Severability. Every provision in this Lease is and shall be construed to be a
separate and independent covenant. If any provision in this Lease or the application of the same
is, to any extent, held to be invalid or unenforceable, then the remainder of this Lease or the
application of that provision to circumstances other than those to which it is held invalid or
unenforceable, shall not be affected by the same and each provision in this Lease shall be valid
and shall be enforced to the extent permitted by law. In that event, Lessor and Lessee shall
cooperate with one another in negotiating such amendments to this Lease as may be necessary to
give effect to this Lease, notwithstanding the severance of the invalid or unenforceable
provision.
23. Covenant of Good Faith. In exercising their rights and in performing their
obligations pursuant to this Lease,the parties shall cooperate with one another in good faith.
24. Incorporation of Recitals. The "Recitals" in this Lease are material and are
incorporated by reference as though fully set forth herein.
25. Waiver. The waiver by Lessor of any breach of any term, covenant or condition
in this Lease shall not be deemed to be a waiver of that term, covenant, or condition or any
subsequent breach of the same or any other term, covenant, or condition in this Lease. The
acceptance of Rent by Lessor shall not be deemed to be a waiver of any breach by Lessee of any
term, covenant or condition in this Lease, including the failure of Lessee to pay the full amount
of the particular Rent so accepted, regardless of Lessor's knowledge of the breach at the time of
its acceptance of the Rent.
26. Binding on Successors. The covenants and conditions in this Lease shall, subject
to the provisions of Paragraph 11 of this Lease, inure to the benefit of and bind the successors
and assigns of the parties.
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27. Time. Time is of the essence of this Lease.
28. Condemnation or Destruction. This Lease shall not terminate as a result of the
total or partial condemnation or destruction of the Leased Spaces, unless Lessor elects to
terminate this Lease in accord with Paragraph 3 and, in the event of total or partial condemnation
or destruction where Lessor does not elect to terminate this Lease, Lessor, at its cost, shall either
(i) relocate the Leased Spaces or the affected portion of the Parking Facility to an unaffected
portion of the Retail Center, or (ii) restore the Leased Spaces to substantially the same condition
as before the condemnation or destruction, with reasonable diligence. If Lessor does not elect to
terminate this Lease or relocate the Leased Spaces or affected portion thereof to an unaffected
portion of the Retail Center, then the future Rent which accrues and is payable pursuant to this
Lease shall be adjusted so that Lessee shall be required to pay only a fraction of the Rent which
is payable as of the date of condemnation or destruction, the numerator of which is the number of
parking spaces which remain after the date of condemnation or destruction and the denominator
of which is the number of parking spaces which existed as of the day preceding the date of
condemnation or destruction. If all or part of the Parking Facility or Leased Spaces are
condemned or destroyed, then Lessee shall not be obligated to pay Rent until use of a portion of
the Leased Spaces restored (through repair or relocation) and, in that event, Rent shall be
prorated as set forth in this Paragraph 28 and the Term of this Lease will be extended for a period
equal to the number of whole months between the date of condemnation or destruction and the
date of restoration or relocation. If all or part of the Parking Facility or Leased Spaces are
condemned or destroyed, then all compensation which is payable as a result, whether from
insurance policies, just compensation or otherwise, shall be paid solely to Lessor, and Lessee
shall have no claim to the same. Lessee hereby irrevocably assigns and transfers to Lessor any
right to compensation or damages to which Lessee may become entitled during the Term of this
Lease by reason of the destruction or condemnation of all or part of the Parking Facility or
Leased Spaces.
Lessee fully waives any and all statutory or other legal rights that it may have to
terminate this Lease on account of the total or partial condemnation or destruction of the Parking
Facility or Leased Spaces. Upon that event, Lessee's sole right and remedy will be to an
adjustment of future Rent payments as described in this Paragraph 28.
29. Effect on Lessee. This Lease shall not be binding on or enforceable against
Lessee until such time as it has been approved by official action of Lessee's City Council.
30. Negation of Aizency, Joint Venture and Partnership. The parties acknowledge
that, in entering into this Lease, they are acting as independent entities and not as agents of the
other in any respect. The parties hereby renounce the existence of any form of joint venture or
partnership between them and agree that nothing in this Lease shall be construed as making them
joint venturers or partners.
31. Memorandum of Lease. At Lessor's request, Lessee shall execute a
memorandum of this Lease in a form which describes the Parking Facility and which is
recordable in the Official Records of San Bernardino County. Lessor shall pay all costs that are
incurred in preparing and recording any memorandum of this Lease.
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[Signature Follow on Next Page]
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SIGNATURE PAGE TO
INLAND CENTER PARKING LEASE AGREEMENT
LESSOR:
WM INLAND INVESTORS IV LP,
a Delaware partnership
By:
Name:
Its:
WM INLAND (MAY) IV, L.L.C.,
a Delaware limited liability company
By:
Name:
Its:
LESSEE:
CITY OF SAN BERNARDINO
By:
Name: n11Pn .r- Parker
City Manager
ATTEST:
By:
City Clerk
APPROVED AS TO FORM:
By:
City Attorney
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EXHIBIT A
LEGAL DESCRIPTION OF LESSOR PARCELS
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LEGAL DESCRIPTION OF LESSOR PARCELS
A fee or leasehold in the following land located in the City of San Bernardino, County of San
Bernardino, State of California:
Parcel 1
That portion of Blocks 29 and 54, of the Rancho San Bernardino, in the City of San Bernardino
Meridian, County of San Bernardino, State of California, as shown by Map on file in Book 7,
Page 2, of Maps, Records of San Bernardino County, California, described as follows:
Commencing at the intersection of the Southeast line of Colton Avenue with the West line of"E"
Street as it now exists, said point being monumented with a 6 inch x 6 inch concrete monument;
Thence South 39°16'43" West along said Southeast line, 1046.85 feet;
Thence South 39°22'40" East, 100.00 feet;
Thence South 30°45'02" East, 73.17 feet, to the beginning of a tangent curve, concave to the
West and having a radius of 2305.05 feet;
Thence Southerly along said curve through a central angle of 22'18'52", 897.73 feet to the True
Point of Beginning;
Thence South 89°27'35" West, 461.03 feet;
Thence South 39°15'55" West, 190.65 feet;
Thence South 50°44'05" East, 165.10 feet;
Thence South 0°32'25" East, 735.91 feet;
Thence North 89°27'35" East, 378.31 feet;
Thence North 15°43'54" East, 26.61 feet, to a tangent curve, concave to the West and having a
radius of 2305.05 feet;
Thence Northerly along said curve through an angle of 24'10'04", 972.28 feet to the True Point
of Beginning.
Parcel 2
That portion of Lots 35, 36, 37 and 38 in Block 54 together with that portion of Lots 5 and 6 in
Block 29 of Rancho San Bernardino, in the City of San Bernardino, County of San Bernardino,
State of California, as shown on a Map recorded in Book 7, Page 2 of Maps, in the Office of the
County Recorder of said County, described as follows:
Beginning at the intersection of the centerlines of"E" Street, Inland Center Drive and Mill Street
as shown on a Map filed in Book 39, Pages 29 to 32 inclusive of Record of Surveys, Records of
said County;
Thence along said centerline of Inland Center Drive, South 50 043'28" East 50.00 feet to a point
in the Southeast line of Inland Center Drive, as shown on a Map filed in Book 21, Page 45 of
Record of Surveys, Records of said County, said point being the Northwesterly terminus of that
certain course described as having a bearing and length of North 39 022'40" West 100.00 feet in
the Deed to San Bernardino County Flood Control District recorded September 13, 1965 in Book
6471, Page 333, of Official Records, Records of said County, said point also being the
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Southwesterly terminus of that certain course described as having a bearing and length of"South
39°16'43" West 1046.85 feet" in those Deeds all recorded August 23, 1966 in Book 6685, Page
491 of Official Records, in Book 6685, Page 493 of Official Records, and in Book 6685, Page
495 of Official Records, Records of said County;
Thence along said first mentioned certain course, South 39°22'40" East 100.00 feet;
Thence South 30°45'02" East 73.17 feet to the beginning of a tangent curve concave Westerly
and having a radius of 2305.05 feet;
Thence Southerly along said curve through a central angle of 46°28'56" an arc distance of
1870.01 feet;
Thence South 15°43'54" West 26.61 feet;
Thence South 89°27'35" West 378.31 feet;
Thence North 00°32'25" West 735.91 feet;
Thence North 50°44'05" West 165.10 feet;
Thence South 39'15'55" West 459.70 feet to the True Point of Beginning;
Thence North 39°15'55" East 459.70 feet;
Thence South 50°44'05" East 165.10 feet;
Thence South 00°3225" East 735.91 feet;
Thence North 89°27'35" East 378.31 feet;
Thence South 15°43'54" West 210.92 feet to the beginning of a tangent curve to the
Northwesterly and having a radius of 13 11.10 feet;
Thence Southwesterly along said curve through a central angle of 19°52'49", an arc distance of
454.92 feet to a point, a radial line of said curve to said point bears South 54°23'17" East;
Thence North 40°20'45" West 413.82 feet;
Thence North 49°39'15" East 11.50 feet;
Thence North 40°20'45" West 295.00 feet;
Thence South 49°39'15" West 155.87 feet to a point, said point being the Southeasterly terminus
of that certain course described as having a bearing and length of North 40°20'45" West 537.36
feet in a Grant Deed recorded June 22, 1983 as Instrument No. 83-137885, of Official Records,
Records of said County;
Thence along said certain course North 40°20'45" West 385.68 feet;
Thence North 89°28'07" East 185.23 feet to the beginning of a tangent curve concave
Southwesterly and having a radius of 100.50 feet;
Thence Southeasterly along said curve through a central angle of 58°00'00" an arc distance of
101.74 feet;
Thence tangent to said curve South 32°31'53" East 8.66 feet to the beginning of a tangent curve
concave Northerly and having a radius of 6.50 feet;
Thence Easterly along said curve through a central angle of 90°00'00" an arc distance of 10.21
feet;
Thence tangent to said curve North 57°28'07" East 41.06 feet;
Thence North 32°31'53" West 66.89 feet;
Thence North 00°31'53" West 315.17 feet;
Thence South 89°28'07" West 323.65 feet to the beginning of a tangent curve concave to the
Southeast and having a radius of 24.50 feet;
Thence Westerly and Southerly along said curve through a central angle of 114°03'25" an arc
distance of 48.77 feet to the beginning of a reverse curve, concave to the Westerly and having a
radius of 315.54 feet, a radial line to said reverse curve bears South 65°24'42" West;
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Thence Southerly along said reverse curve through a central angle of 44110'22" an arc distance
of 243.27 feet to a point, said point being on the Northwesterly prolongation of that hereinbefore
mentioned course having a bearing and distance of North 40°20'45" West 385.68 feet, a radial
line to said point bears South 70°27'31" East;
Thence North 40°20'45" West 66.58 feet to the Easterly line of the land described in the Deed to
the State of California recorded March 5, 1956 in Book 3875, Page 50 of Official Records,
Records of said County;
Thence along said Easterly line to and along the Easterly line of the land described in the Deed to
the State of California recorded November 27, 1956 in Book 4095, Page 197 of Official Records,
Records of said County as follows:
Northerly along a curve concave Westerly and having a radius of 350.00 feet from which a
tangent line bears North 13°03'36" East, through a central angle of 21°11'45" an arc distance of
129.48 feet to a point, a radial line of said curve to said point bears North 81°51'51" East; North
34°23' West 178.22 feet to the beginning of a tangent curve concave Southwesterly and having a
radius of 350.00 feet;Northwesterly along said curve through a central angle of 15°51'04" an arc
distance of 96.83 feet to the beginning of a reverse curve concave Easterly and having a radius of
75.00 feet; Northerly along said curve through a central angle of 829 1'12" an arc distance of
107.58 feet; and North 31°45'45" East 185.95 feet to the Original Southeast line of said Inland
Center Drive;
Thence along said Inland Center Drive North 39'16'16" East 113.08 feet and North 39'16'32"
East 1336.43 feet to the Northwesterly terminus of said certain course hereinbefore described as
having a bearing and length of"North 39°22'40" West 100.00 feet";
Thence along said certain course South 39°22'40" East 15.30 feet to the Southeast line of Inland
Center Drive as described in the grant of easement to the County of San Bernardino, State of
California recorded April 1, 1966 in Book 6600, Page 620 of Official Records, Records of said
County;
Thence along said Inland Center Drive South 39°16'32" West 1333.42 feet and South 39°16'16"
West 115.09 feet to a line which bears South 50°44'05" East and which passes through the True
Point of Beginning;
Thence South 50 144'05" East 561.39 feet to the True Point of Beginning.
Parcel 3
That portion of Blocks 29 and 54 of the Rancho San Bernardino, in the City of San Bernardino,
County of San Bernardino, State of California, as per plat recorded in Book 7, Page 2 of Maps,
Records of said County, described as follows:
Commencing at the intersection of the Southeast line of Colton Avenue with the West line of"E"
street as it now exists, said point being monumented with a 6 inch x 6 inch concrete monument;
Thence South 39°16'43" West, along said Southeast line, 1046.85 feet;
Thence South 39°22'40" East, 100.00 feet;
Thence South 30°45'02" East, 73.17 feet to the beginning of a tangent curve, concave to the
West and having a radius of 2305.05 feet;
Thence Southerly along said curve, from a tangent bearing South 30°45'02" East, through a
central angle of 46°28'56", a distance of 1870.01 feet;
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Thence South 15°43'54" West 237.53 feet to the beginning of a tangent curve, concave to the
Northwest and having a radius of 1311.10 feet;
Thence Southwesterly along said curve, from a tangent bearing South 15°43'54" West, through a
central angle of 19°52'49", a distance of 454.92 feet to a point on said curve, said point being the
True Point of Beginning;
Thence North 40°20'45" West 413.82 feet;
Thence North 49°39'15" East 11.50 feet;
Thence North 40°20'45" West, 295.00 feet;
Thence South 49°39'15" West, 155.87 feet;
Thence North 40°20'45" West 537.03 feet to a point on a curve concave to the West, having a
radius of 350.00 feet, said point having a radial bearing of North 76°47'58" West;
Thence Southwesterly along said curve through a central angle of 14°32'08", a distance of 88.79
feet;
Thence South 27°44'10" West 154.05 feet to the beginning of a tangent curve concave to the
East,having a radius of 180.00 feet;
Thence Southerly along said curve through a central angle of 50°52'52", a distance of 159.85
feet;
Thence South 23°08'42" East 251.62 feet;
Thence South 29°08'47" East 770.00 feet;
Thence North 60°55'21" East 60.00 feet;
Thence South 61°56'03" East 30.23 feet;
Thence North 60°55'21" East 50.00 feet to the beginning of a tangent curve, concave to the
Northwest and having a radius of 1311.10 feet;
Thence Northeasterly along said curve, from a tangent bearing North 60°55'21" East, through a
central angle of 25'18'38", a distance of 579.18 feet to the Point of Beginning.
Except that portion of said land granted to San Bernardino County Flood Control District by
deed recorded July 17, 1972, in Book 7978, Page 105, Official Records, described as follows:
Beginning at a 6 inch X 6 inch concrete monument marking the most Northerly point of that
certain course described as South 28°35'05" East, 156.31 feet, in document to the State of
California recorded in Book 3855, Page 385, Official Records of said county;
Thence along the Northeasterly line of said State of California parcel of land, North 39°55'34"
West(recorded North 39°55'34" West)42.01 feet;
Thence North 60°50'25" East, 74.70 feet;
Thence at right angles, South 29°09'35" East, 100.00 feet;
Thence South 60°50'25" West, 67.45 feet to the Northeasterly line of said State of California
parcel of land;
Thence along said Northeasterly line, North 28°35'05" West, 58.73 feet to the Point of
Beginning.
Excepting therefrom Parcel 18963-1 as condemned by the State of California, as set forth and
described in that certain document recorded January 3, 2011 as Instrument No. 2011-0001333 of
Official Records.
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EXHIBIT B
DEPICTION OF PARKING FACILITY
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Exhibit B
DEPICTION OF PARKING FACILITY
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EXHIBIT C
EXAMPLE OF RENT CALCULATION
Following is an example of a Rent calculation for illustration purposes only.
If the Non-JCP Generated Sales Taxes for a Lease Year were equal to $1,400,000, then such
amount would be allocated as follows:
Portion of Sales Taxes Lessee's Share Lessor's Share
First$800,000 100%_ $800,000 0%_$0
$800,001 - $900,000 50%_ $50,000 50%_$50,000
$900,001 - $1,000,000 45%_ $45,000 55%_ $55,000
$1,000,001 - $1,100,000 40%=$40,000 60%= $60,000
$1,100,001 - $1,200,000 35%= $35,000 65%=$65,000
$1,200,001 - $1,400,000 30%_ $60,000 70%_$140,000
TOTAL $1,030,000 $370,000
Accordingly, Lessor's Share of the Non-JCP Sales Tax Increment would be $370,000.
If the JCP-Generated Sales Taxes for the same Lease Year were equal to $200,000, then such
amount would be allocated as follows:
Portion of Sales Taxes Lessee's Share Lessor's Share
First$185,000 0% 100%= $185,000
$185,001 - $200,000 10%= $1,500 90%= $13,500
TOTAL $1,500 $198,500
Accordingly, Lessor's Share of the JCP Sales Tax Increment would be $198,500.
The Rent due for this Lease Year therefore would be $370,000 plus $198,500, or$568,500.
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LEASE AGREEMENT
This Lease Agreement ("Lease") is entered into effective October 5 , 2015,
between WM INLAND INVESTORS IV LP, a Delaware limited partnership, and WM INLAND
(MAY) IV, L.L.C., a Delaware limited liability company (collectively, "Lessor"), and the CITY
OF SAN BERNARDINO, a municipal corporation("Lessee").
RECITALS
A. Lessor is the owner or lessee of certain real property located within the City of
San Bernardino, which consists of portions of the shopping center commonly known as "Inland
Center", and which is more particularly described in Exhibit A attached hereto. Inland Center is
improved with an approximately 989,000 square foot retail center (sometimes referred to as the
"Retail Center"), which Lessor intends to remodel. The Retail Center includes (i) an
approximately 240,000 square foot building, currently occupied by Sears, Roebuck and Co.
("Sears"), (ii)an approximately 165,000 square foot building,currently occupied by Macy's,Inc.
("Macy's"), (iii) an approximately 94,000 square foot building, currently leased to Forever 21,
Inc. ("Forever 21"), and (iv) an approximately 204,000 square foot vacant building ("Vacant
Anchor Building"), currently intended to be partially leased by Lessor to J.C. Penney
Corporation, Inc. ("JCP,"which term includes J.C. Penney Corporation, Inc. and any alternative,
replacement or successor retailer to whom Lessor or JC Penney Corporation, Inc., acting in their
sole and absolute discretion, leases or conveys all or a portion of the Vacant Anchor Building)
(Sears,Macy's, Forever 21 and JCP are sometimes collectively referred to herein as the"Anchor
Tenants"). Lessor and Lessee acknowledge that Lessor may modify and/or expand the Retail
Center from time to time during the term of this Lease and, in that event, such expanded or
modified portion, whether owned or ground leased by Lessor or its affiliates(s), shall be deemed
part of the"Retail Center" for purposes of this Lease.
B. Lessor constructed and owns an approximately 1,011-space, 4-level structured
parking facility ("Parking Facility") located on the Retail Center property. The location of the
Parking Facility is depicted on Exhibit B attached hereto.
C. Because increased business activity within and in the vicinity of the Retail Center
will create the need for public parking, Lessee has asked Lessor to make parking available to the
general public who may be patronizing other retailers in the immediate vicinity of the Retail
Center and visiting or shopping at the Retail Center, by leasing one thousand eleven (1,011)
parking spaces("Leased Spaces")within the Parking Facility to Lessee.
D. Because Lessor's planned business activities will generate increased sales tax
revenues, thereby providing revenues to Lessee in the long term that may be used to satisfy its
public service needs, and because providing additional public parking to support the increased
business activity within and in the vicinity of the Retail Center provides a public benefit, Lessee
agrees to lease the Leased Spaces from Lessor on the terms and conditions in this Lease.
E. Lessee has determined that the activities authorized by this Lease are within the
scope of environmental documents previously approved in connection with the Retail Center.
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NOW THEREFORE,the parties agree as follows:
OPERATIVE PROVISIONS
1. Demise. Lessor hereby leases the Leased Spaces to Lessee and Lessee hereby
leases the Leased Spaces from Lessor, on the terms and conditions in this Lease. Subject to
Lessor's rights as described in this Lease to relocate, replace or substitute the original Leased
Spaces anywhere within the Retail Center, the Leased Spaces include and are limited to one
thousand eleven (1,011) parking spaces within the Parking Facility. Lessee shall also have the
appurtenant, non-exclusive right for the term of this Lease to use the parking lot traffic lanes of
the Retail Center as the same exist from time to time as are necessary for ingress and egress
between the Parking Facility and the public rights of way adjacent to the Retail Center, on the
terms and conditions provided herein. The Leased Spaces will be available on a first-come, first-
served, non-exclusive basis to all members of the general public while those members are
visiting or shopping at the Retail Center or are patronizing other retailers in the immediate
vicinity of the Retail Center.
Notwithstanding the foregoing, Lessor reserves the right in its sole and absolute
discretion to relocate any of the Leased Spaces anywhere within the Retail Center and to modify
the size and configuration of some or all of the Leased Spaces or the Parking Facility itself, from
time to time during the Term of this Lease, and Lessee acknowledges that the benefit to Lessee
shall remain as identified herein, so long as the total number of Leased Spaces shall never be less
than one thousand eleven (1,011) parking spaces. Notwithstanding the foregoing, Lessor's right
to modify the size and configuration of some or all of the Leased Spaces is subject to Lessor's
compliance with applicable City parking codes. Lessor's election to modify the location, size
and configuration of some or all of the Leased Spaces or the Parking Facility itself may be
exercised upon thirty (30) days prior written notice by Lessor to Lessee of such election, which
written notice shall be accompanied by a new Exhibit B to be attached to this Lease,to depict the
location of the Leased Spaces as modified. If any portion of the Parking Facility is relocated to
property that is deemed by Lessor to be part of the Retail Center and that is owned by an affiliate
of Lessor, then Lessor shall cause its affiliate to also undertake the rights and obligations of the
Lessor under to this Lease. All references in this Lease to "Leased Spaces" shall refer to those
parking spaces within the Parking Facility, as they or it may be modified from time to time
during the Term of this Lease.
2. Possession. Possession of the Leased Spaces shall be delivered to Lessee on or
before the Lease Start Date (as defined in Paragraph 3 below).
3. Term.
(a) As used in this Lease,the following terms have the following meanings:
(i) "Lease Start Date" means the date that JCP opens for business to
the general public in the Vacant Anchor Building.
(ii) "Term" means, collectively, the twenty-five (25) years
immediately following first day of the first full quarter following
the Lease Start Date.
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(iii) "Lease Year" means 12 months from the first day of the first full
quarter following the Lease Start Date, and each 12 months
thereafter for the Term of this Lease.
(b) Unless terminated sooner as allowed by any provision of this Lease, this
Lease will be in effect for the Term. Rent will be payable for each Lease Year, as well as for the
period from the Lease Start Date until the first day of the first full quarter following the Lease
Start Date, and will be calculated as provided in Paragraph 4.
(c) Notwithstanding anything in this Lease to the contrary, Lessor (but not
Lessee) shall have the right to terminate this Lease at any time and for any reason (including
Lessor's convenience) during the Term upon ninety (90) days' advance written notice to Lessee.
If Lessee exercises its right to terminate this Lease, then this Lease shall terminate as of the date
set forth in Lessor's termination notice. In the event of any early termination of this Lease, all
Rent (as hereinafter defined) accruing prior to such termination date shall be fully due and
payable, on a prorated basis with respect to any partial Lease Year, and on the terms and
conditions set forth in this Lease.
(d) It is acknowledged that the City is entering into this Lease in anticipation
of increased business activity within and in the immediate vicinity of the Retail Center, in part
driven by occupancy of the Vacant Anchor Building by JCP as an active retail store. To that
end, should JCP cease to occupy the Vacant Anchor Building as an active retail store before the
expiration of ten (10) years following the Lease Start Date, Lessee may elect to terminate this
Lease and in that event, from and after the date of termination, Lessee's obligations under this
Lease shall terminate. In the event of termination, Lessee shall have no right to recover rent or
other charges paid prior to the date of termination. Notwithstanding the foregoing, in the event
that the Vacant Anchor Building is closed during said ten (10) year period for repair, remodel,
structural upgrading or as a result of any event of force majeure, such shall not constitute JCP
ceasing to occupy the Vacant Anchor Building.
4. Rent.
(a) Definitions. As used in this Lease, the following terms have the following
meanings:
(i) "Excluded Retailers"means Sears and Macy's.
(ii) "JCP Base Sales Taxes" means the sum of zero dollars. The JCP
Base Sales Taxes are not subject to modification.
(iii) "JCP-Generated Sales Taxes" means the Sales Taxes generated by
retail sales and use transactions occurring at the JCP store.
(iv) "JCP Sales Tax Increment" means, as to each Lease Year, the
amount by which the JCP-Generated Sales Taxes exceed the JCP
Base Sales Taxes.
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(v) "Lessor's Share of the JCP Sales Tax Increment"means, as to each
Lease Year, an amount equal to a percentage of the JCP Sales Tax
Increment determined by reference to the following Table 1:
JCP Sales Tax Increment for Lease Year Lessor's Share
First$185,000 10001"0
$185,001 and above 90%
(vi) "Lessor's Share of the Non-JCP Sales Tax Increment"means, as to
each Lease Year, an amount equal to a percentage of the Non-JCP
Sales Tax Increment determined by reference to the following
Table 2:
Non-JCP Sales Tax Increment for Lease Year Lessor's Share
First$100,000 50%
$100,001 - $200,000 55%
$200,001 - $300,000 60%
$300,001 - $400,000 65%
$400,001 and above 70%
(vii) "Maximum Rent" means the sum of Twenty Million Dollars
($20,000,000), or such lesser amount as Lessor spends in making,
or paying JCP for, tenant improvements made to the Vacant
Anchor Building prior to JCP's occupancy thereof. It is
acknowledged that said tenant improvements are a material
inducement for Lessee to enter into this Lease. Within one
hundred eighty (180) days after the completion of said tenant
improvements, Lessor shall provide Lessee with vendor invoices
for work done by or at the request of Lessor and proof of payment
to JCP for work performed by or at the request of JCP. However,
Lessor's failure to deliver proof of payment due to JCP's failure to
timely request payment from Lessor or due to delay in receipt of
confirmation of any payment made to JCP, shall not constitute a
default by Lessor. In that event, Lessor shall make diligent, good
faith efforts to obtain JCP's request for payment, to make payment
to JCP and to provide proof of payment to Lessee and Lessee shall
have the right to delay payment of Rent pursuant to Section 4(c),
until proof of payment is delivered. The total amount paid for said
tenant improvements shall constitute "Maximum Rent" in the
event said amount is less than $20,000,000.
(viii) "Non-JCP Base Sales Taxes" means the sum of Eight Hundred
Thousand Dollars ($800,000). The Non-JCP Base Sales Taxes are
not subject to modification.
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(ix) "Non-JCP Generated Sales Taxes" means the Sales Taxes
generated by retail sales and use transactions occurring at the
Retail Center, excluding JCP and the Excluded Retailers.
(x) "Non-JCP Sales Tax Increment" means, as to each Lease Year,the
amount in each Lease Year by which the Non-JCP Generated Sales
Taxes exceed the Non-JCP Base Sales Taxes.
(xi) "Rent" means, for each Lease Year, the sum of. (i) Lessor's Share
of the Non-JCP Sales Tax Increment for that Lease Year, plus
(ii) Lessor's Share of the JCP Sales Tax Increment for that Lease
Year. The term"Rent" also means the Rent as prorated or adjusted
in accord with a specific provision of this Lease. An example
illustrating how Rent is calculated pursuant to the terms hereof is
attached as Exhibit C. Lessee's obligation for payment of Rent
under this Lease will not exceed the Maximum Rent.
(xii) "Sales Taxes" means, with respect to a Lease Year, the sales and
use taxes accrued on account of retail sales and use transactions
made from the Retail Center during such Lease Year and that
would be payable to Lessee from the California State Board of
Equalization ("SBOE," which term includes any successor
agency); provided that such sales or use taxes are or will be legally
available for use by Lessee's General Fund and are not otherwise
restricted by the state or federal government or by the Bradley-
Burns Uniform Local Sales and use Tax Law (commencing with
Section 7200 of the California Revenue and Taxation Code, as
amended) ("Sales and Use Tax Law"). As used in this definition,
the phrase "on account of sales and use transactions made from the
Retail Center" means all sales and use taxes that are derived from,
accrue, arise in connection with or are on account of any and all
transactions conducted from the Retail Center or with the Retail
Center as the point of sale, including, without limitation, the sales
of goods and services at or from the Retail Center, determined in
accordance with existing law or any subsequent changes to the
applicable provisions of the Sales and Use Tax Law. For purposes
of clarity, the term "Sales Taxes" is intended to mean only the
portion of sales and use tax receipts disbursed from the SBOE to
Lessee and is not intended to mean all sales tax amounts required
to be collected by retailers for taxable sales and use transactions.
(b) Proration of Rent. Lessee shall be obligated to pay Rent for its use of the
Leased Spaces. Lessor and Lessee represent to one another that, in their good faith opinion, the
Rent payments which Lessee is required to make pursuant to this Lease correspond to the benefit
which Lessee shall derive by having the legal right to use the Leased Spaces for the purpose
described in Paragraph 5 below and from the other rights available to Lessee under this Lease.
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If the application of any provision of this Lease results in a proration of
the Rent payable for any period (for example, in accordance with Paragraph 28), then the Non-
JCP Base Sales Taxes will be, for the period of Rent proration, prorated equally. Rent will not
be prorated if Lessor exercises its right to relocate, replace or substitute the Leased Spaces as
permitted by this Lease.
(c) Payment of Rent. Rent shall commence to accrue as of the Lease Start
Date, and shall be due and payable annually during the Term, in arrears and without offset or
demand, no later than thirty (30) days ("Due Date") after the date that Lessee receives from the
SBOE a report (or a series of reports) that permits the determination of the Sales Taxes
attributable to the Lease Year immediately preceding the Due Date (collectively, "SBOE
Report"). Subject to any limitations in Revenue and Taxation Code Section 7056 and its
implementing regulations and executive orders, Lessee shall deliver to Lessor a copy of each
SBOE Report, along with a statement showing Lessee's calculation of the Rent due for such
Lease Year, with each annual payment of Rent due hereunder. Subject to any limitations in
Revenue and Taxation Code Section 7056 and its implementing regulations and executive
orders, Lessor shall have the right to conduct an audit of the data and methodology used by
Lessee to calculate the Rent payments due hereunder, including without limitation, the right to
audit the Sales Taxes paid or payable by the SBOE to Lessee with respect to any Lease Year.
Lessee shall pay Lessor any amounts of underpayment by Lessee revealed by any such audit. In
addition, if any such audit reveals that Lessee is entitled to receive additional Sales Taxes from
SBOE, Lessee shall use its best efforts to collect all of the Sales Taxes that the audit indicates
Lessee should have received.
The calculation of Rent (and the related financial performance measures
applicable to that calculation, including, without implied limitation, the Non-JCP Base Sales
Taxes) for the less than full calendar year period described in Section 3(b) above will be
fractionally prorated, with the numerator of such fraction equal to the number of calendar days in
the less than full calendar year period referred to in Section 3(b) and a denominator of 365.
If the Sales and Use Tax Law is repealed or modified after the date of this
Lease and if Lessee's portion of the Sales Taxes which is based on sales and use transactions
occurring at or from the Retail Center is totally or partially replaced with another source of
revenue, then Lessee's obligation to pay Rent shall continue to accrue and the limitations in this
Lease on Lessee's obligation to pay Rent shall be deemed modified and shall thereafter be based
on any form of tax or other revenue which Lessee receives with regard to the applicable Lease
Year in total or partial replacement of Sales Taxes. If the replacement source produces less Rent
than the Rent provided in this Paragraph 4, then the number of Leased Spaces will be
immediately reduced by multiplying the original number of parking spaces by a fraction, the
numerator of which is the total annual Rent produced by the replacement source and the
denominator of which is the total amount of Rent payable pursuant to this Lease immediately
preceding substitution of the replacement source. In addition, in the event of any such change,
Lessor and Lessee shall fully cooperate with one another in amending this Lease as is necessary
or appropriate to implement any reduction of Leased Spaces and otherwise facilitate the timely
and full payment of Rent pursuant to this Lease so that the intent of this Lease can be attained.
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Lessor and Lessee acknowledge that Sales Taxes are being used solely as
the measure of Lessee's Rent obligations and that all Rent and other Lessee obligations
constitute an obligation payable from any source of funds legally available to Lessee for the
purpose, provided, however, that Lessee shall at no time be required to pay rent unless it has
actually received the Sales Taxes (or replacement source of revenue) upon which said rent
payment is calculated.
Within thirty (30) days following written request from Lessor, Lessee
shall issue a report of the status of Lessee's obligation to pay Rent pursuant to this Lease;
provided, however, that Lessee shall not be obligated to issue such reports more frequently than
twice per Lease Year.
(d) Abatement of Rent. Except for Leased Spaces with respect to which
Lessor is performing routine maintenance and subject to Lessor's right to relocate Leased Spaces
as provided in this Lease, during any period that any Leased Spaces are not available for use for
the purpose in Paragraph 5 below, the Rent which accrues and is payable pursuant to this Lease
shall be adjusted so that Lessee shall be required to pay during that period only a fraction of the
Rent which is payable at the beginning of that period, the numerator of which is the number of
Leased Spaces which are available for use for the purpose in Paragraph 5 below during that
period, and the denominator of which is the number of Leased Spaces which were available for
use for the purpose in Paragraph 5 below as of the beginning of that period. However, the Rent
will not be adjusted if,within thirty (30) days after the Leased Spaces first become not available,
Lessor substitutes an equal number of parking spaces at another location of Lessor's
determination within the Retail Center.
5. Purpose. The Leased Spaces shall be used by Lessee solely for the purpose of
providing parking on a first-come, first-served, non-exclusive basis for the vehicles of members
of the general public who are visiting or shopping at the Retail Center and who may also
patronize other retailers in the immediate vicinity of the Retail Center and for no other use or
purpose. Lessee may not charge a fee for use of the Leased Spaces. Without limiting the
generality of the foregoing, Lessor and Lessee agree that the Leased Spaces may not be used by
any person for any purpose related to any special event or other activity, including any event or
other activity occurring at the National Orange Show Events Center ("NOSEC") (or any
successor to or substitute for the NOSEC).
6. Restrictions and Easements. Without any further specific subordination
agreement being required, this Lease shall be and is hereby made subject and subordinate to all
existing ground leases, licenses, and all covenants, conditions, restrictions and easements
governing the Retail Center (as the same may hereafter be amended from time to time), any
existing or future parking rights of the Anchor Tenants, any current or future mortgage or debt
facility placed against the Retail Center, and any and all other matters of record against the Retail
Center(all of the foregoing, collectively, "Superior Rights"). Lessee has independently obtained
and reviewed each and every document evidencing the current Superior Rights. Without limiting
the generality of the foregoing, Lessor reserves the right to impose reasonable rules and
regulations governing the Retail Center in order to maintain consistency and compatibility of
existing and future uses of Inland Center.
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7. Indemnification. Lessor shall defend, protect, indemnify and hold harmless
Lessee and its elected officials, officers and employees from and against any and all claims,
causes of action, damages or liability arising out of or in connection with any acts or omissions
of Lessor or its agents in connection with any activities which are performed as provided in this
Lease or in connection with any contamination of the Parking Facility by hazardous materials,
toxic waste or any other environmentally sensitive material which was caused by Lessor.
Lessor's indemnity and duty to defend shall extend, but not be limited to, claims, causes of
action, damages and liability arising from injuries or damages to persons or property, including
wrongful death and worker's compensation claims and awards of attorneys' fees. Lessor's
indemnity and duty to defend shall further extend to,but shall not be limited to, claims, causes of
action, damages and liability arising from challenges to the validity or legality of this Lease or of
any acts required or authorized under it or in the performance of it, including awards of
attorneys' fees. Lessor's indemnity shall not apply to any claims, causes of action, damages or
liability arising from injuries to persons or property which arise out of or in connection with the
negligent or willful acts or omissions of Lessee or its elected officials, officers, employees or
agents. Without limiting Lessor's indemnity and subject to Lessor's right to self-insure as
provided in the next sentence, Lessor shall take out and continuously maintain public liability
insurance (or comparable coverage pursuant to an umbrella policy or self-insurance program)
covering risks which are normally insured in connection with the operation of a commercial
shopping center, with limits of liability of at least One Million Dollars ($1,000,000), naming
Lessee as an additional insured, and shall cause the carrier of that insurance to deliver to Lessee a
certificate evidencing that insurance and evidencing that the carrier has agreed to give Lessee at
least thirty (30) days advance written notice of any cancellation of that insurance.
Notwithstanding the foregoing, Lessor may retain the financial risk of liability pursuant to
Lessor's indemnity which would otherwise be covered by insurance. If Lessor elects to self-
insure,then it shall deliver a letter or other evidence of insurance as may be reasonably requested
by Lessee, indicating the same to Lessee.
8. Subordination to Financing.
(a) As provided by Paragraph 6, Lessor shall have the right to encumber the
Parking Facility and Leased Spaces in connection with any financing that Lessor obtains and,
without any further specific subordination agreement being required, this Lease shall be subject
and subordinate to any security interest which is created in connection with any such financing.
As used in this Paragraph 8, "financing" shall include,without limitation, a"sale and lease back"
transaction. Notwithstanding the foregoing, and without affecting the self-executing nature of
Lessee's subordination, if any lender or other party requires a specific subordination agreement
to implement the aforementioned subordination, then Lessee shall, at Lessor's request, execute,
acknowledge and deliver or cause to be executed, acknowledged or delivered, any subordination,
non-disturbance and attornment agreement which Lessor may request and which is not
inconsistent with Lessee's rights as provided in this Lease.
(b) In addition, Lessee shall, at Lessor's request, execute and deliver or cause
to be executed and delivered any estoppel certificate which Lessor may request.
9. Alterations by Lessee; Maintenance of Leased Spaces, Improvements.
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(a) Lessee shall not have the right to make any alterations, modifications, or
repairs to the Parking Facility, including, without implied limitation, the right to place any
signage in or about the Parking Facility; provided, however that Lessee shall have the right (but
not the obligation) to effect the closure of any portion of the Parking Facility that presents
conditions that pose an immediate threat to public health and safety ("Dangerous Conditions"),
subject to satisfaction of the following conditions precedent:
(i) Lessee provides a first written notice to Lessor describing the
Dangerous Conditions; and
(ii) within seven (7) business days following receipt of Lessee's first
written notice, Lessor fails to either commence the repairs
necessary to abate the Dangerous Conditions or to effect closure of
those portions of the Parking Facility that present the Dangerous
Conditions; and
(iii) if Lessor fails to undertake either of the actions described in (ii)
above, Lessee provides a second written notice describing the
Dangerous Conditions and informing Lessor that Lessee intends to
exercise its rights under this Paragraph 9; and
(iv) within seven (7) business days following receipt of Lessee's
second written notice, Lessor fails to either commence the repairs
necessary to abate the Dangerous Conditions or to effect closure of
those portions of the Parking Facility that present the Dangerous
Conditions.
If Lessor fails to effect necessary repairs or closure following satisfaction
of the foregoing conditions, then Lessee may enter the Parking Facility and effect closure of
those portions of the Parking Facility that present the Dangerous Conditions. Lessor shall
reimburse Lessee within thirty (30) days after demand for any reasonable, out-of-pocket costs
Lessee incurs to close any portion of the Parking Facility.
(b) Lessor shall maintain the Leased Spaces and the Parking Facility, or shall
cause the Leased Spaces and the Parking Facility to be maintained, in accordance with
commercially reasonable standards for first-class regional shopping centers.
(c) As an element of its maintenance of the Parking Facility,Lessor shall at its
cost install, or shall cause the installation of,the following improvements, in and about the Retail
Center, of a nature and type determined by Lessor in its sole discretion and within the times
noted: (i)landscape improvements with a value of no less than One Hundred Fifty Thousand
Dollars ($150,000) within eighteen (18) months from the Lease Start Date; (ii)additional
landscape improvements with a value of no less than One Hundred Thousand Dollars ($100,000)
no later than one hundred twenty(120)months from the Lease Start Date.
10. Entry by Lessor. Lessor and its agents shall have the right to enter the Parking
Facility at all times and for any purpose whatsoever.
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11. Assignment or Subletting.
(a) If Lessee forms a parking authority or similar public entity which is
charged with the administration of Lessee's parking facilities on a city-wide basis, then with
Lessor's prior consent, which shall not be unreasonably withheld, Lessee shall have the right to
assign this Lease or to sublet the Leased Spaces to the parking authority or similar public entity;
provided, however that any such assignment or sublease shall be subject to all of the provisions
of this Lease and provided further that no such assignment or sublease shall relieve Lessee of its
obligations or liabilities pursuant to this Lease. Otherwise, Lessee shall not have the right to
assign this Lease, sublet all or any part of the Leased Spaces, or grant licenses or other rights
therein to any person or entity at any time.
(b) Lessor shall have the right to assign its interest in this Lease and Lessor
may sell, assign or transfer its interest in the real property underlying this Lease or any right or
interest therein, to any person or entity whatsoever. In addition, Lessor shall have the right to
separately assign any of its rights pursuant to this Lease, including,without limitation, its right to
receive Rent payments, to any person or entity whatsoever, irrespective of whether the
assignment is absolute or for security purposes.
12. Surrender. At the expiration or earlier termination of this Lease, Lessee shall
surrender possession of the Leased Spaces to Lessor, in good condition and repair except for
reasonable wear and tear.
13. Remedies of Lessor on Default. In the event of any breach of this Lease by
Lessee including, without limitation, Lessee's failure to pay Rent pursuant to this Lease, Lessor,
in addition to any other rights or remedies which it may have at law or in equity, shall have the
rights and remedies in California Civil Code section 1951.2, as that section may be amended or
superseded from time to time.
14. Attorneys' Fees. If any legal action is commenced to enforce or interpret any
provision in this Lease, then the prevailing party shall, in addition to any costs and other relief,
be entitled to recover its reasonable attorneys' fees, including litigation costs, expert witness
costs, and fees and costs incurred on appeal.
15. Notices. All notices or other communications which are required or permitted to
be given to the parties shall be in writing and shall be given either by way of personal service,by
way of a recognized overnight mail delivery service that offers proof of delivery, or by mailing
the same by certified mail, postage prepaid, return receipt requested, in a depository maintained
by the U.S. Postal Service, addressed as follows:
LESSEE
City of San Bernardino
300 North"D" Street
San Bernardino, California 92418
Attn: City Manager
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LESSOR
WM Inland Investors IV LP
WM Inland (May) IV, L.L.C.
c/o The Macerich Company
401 Wilshire Boulevard, Suite 700
Santa Monica, California 90401
Attn: Senior Vice President,Asset Management
With a Copy to:
Inland Center Mall Offices
500 Inland Center Drive
San Bernardino, California 92408
Attn: Center Manager
Also with a Copy to:
Macerich Company
401 Wilshire Boulevard, Suite 700
Santa Monica, California 90401
Attn: Chief Legal Officer
Any such notice or other communication shall be deemed given (a) as of the date
of receipt, if personally served, (b) as of the date of delivery, if mailed by way of a recognized
overnight delivery service or (c) four (4) business days after posting, if mailed by way of the
U.S. Postal Service. Lessor and Lessee may change their respective addresses to which notices
or other communications may be delivered from time to time by notice given pursuant to this
Paragraph 15. Either party may add additional persons who shall receive copies of any notice or
other communication sent pursuant to this Lease by notice to the other given pursuant to this
Paragraph 15.
16. Further Acts. Whenever and as often as it is requested to do so by the other party,
each party shall execute, acknowledge and deliver or cause to be executed, acknowledged or
delivered, any and all such further documents as may be necessary, expedient or proper in order
to achieve the intent of this Lease. In furtherance of the foregoing, upon Lessee's written
request, Lessor will provide the non-privileged, non-confidential information described in
Government Code section 53083(a) and (d) so long as Lessee makes its request within five (5)
years from the Lease Start Date. Lessor and Lessee acknowledge that the foregoing provision is
a protective measure only and that neither Lessor nor Lessee maintain or assert that this Lease
constitutes an"economic development subsidy" within the meaning of Government Code section
53083.
17. Applicable Law. This Lease shall be construed and enforced pursuant to the
procedural and substantive laws of the State of California, without regard to its conflicts of laws
principles.
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18. Venue. Any legal action with regard to this Lease shall be brought, at Lessor's
election, in either San Bernardino County Superior Court or in the United States District Court
for the Central District of California.
19. Paragraph Headings. The paragraph headings in this Lease are for convenience
only and are not a part of, and are not intended to govern, limit or aid in the interpretation of, any
provision in this Lease.
20. Construction. In all cases, the language in this Lease shall be construed simply,
according to its fair meaning and not strictly for or against either party, it being agreed that both
parties or their agents have participated in the preparation of this Lease.
21. Survival. Each and every covenant in this Lease shall survive the execution and
delivery of this Lease for the benefit of the parties. Without limiting the effect of the foregoing,
should this Lease be terminated at a time when rent has accrued but has not yet become payable
because Lessee has not yet received from the State of California the sales tax revenue on which
said rent is to be computed, Lessee's obligation to pay said rent for the period up to the date of
termination shall survive the termination and said rent shall become payable when said sales tax
revenue is received by Lessee.
22. Severability. Every provision in this Lease is and shall be construed to be a
separate and independent covenant. If any provision in this Lease or the application of the same
is, to any extent, held to be invalid or unenforceable, then the remainder of this Lease or the
application of that provision to circumstances other than those to which it is held invalid or
unenforceable, shall not be affected by the same and each provision in this Lease shall be valid
and shall be enforced to the extent permitted by law. In that event, Lessor and Lessee shall
cooperate with one another in negotiating such amendments to this Lease as may be necessary to
give effect to this Lease, notwithstanding the severance of the invalid or unenforceable
provision.
23. Covenant of Good Faith. In exercising their rights and in performing their
obligations pursuant to this Lease, the parties shall cooperate with one another in good faith.
24. Incorporation of Recitals. The "Recitals" in this Lease are material and are
incorporated by reference as though fully set forth herein.
25. Waiver. The waiver by Lessor of any breach of any term, covenant or condition
in this Lease shall not be deemed to be a waiver of that term, covenant, or condition or any
subsequent breach of the same or any other term, covenant, or condition in this Lease. The
acceptance of Rent by Lessor shall not be deemed to be a waiver of any breach by Lessee of any
term, covenant or condition in this Lease, including the failure of Lessee to pay the full amount
of the particular Rent so accepted, regardless of Lessor's knowledge of the breach at the time of
its acceptance of the Rent.
26. Binding on Successors. The covenants and conditions in this Lease shall, subject
to the provisions of Paragraph 11 of this Lease, inure to the benefit of and bind the successors
and assigns of the parties.
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27. Time. Time is of the essence of this Lease.
28. Condemnation or Destruction. This Lease shall not terminate as a result of the
total or partial condemnation or destruction of the Leased Spaces, unless Lessor elects to
terminate this Lease in accord with Paragraph 3 and, in the event of total or partial condemnation
or destruction where Lessor does not elect to terminate this Lease, Lessor, at its cost, shall either
(i)relocate the Leased Spaces or the affected portion of the Parking Facility to an unaffected
portion of the Retail Center, or (ii)restore the Leased Spaces to substantially the same condition
as before the condemnation or destruction, with reasonable diligence. If Lessor does not elect to
terminate this Lease or relocate the Leased Spaces or affected portion thereof to an unaffected
portion of the Retail Center, then the future Rent which accrues and is payable pursuant to this
Lease shall be adjusted so that Lessee shall be required to pay only a fraction of the Rent which
is payable as of the date of condemnation or destruction,the numerator of which is the number of
parking spaces which remain after the date of condemnation or destruction and the denominator
of which is the number of parking spaces which existed as of the day preceding the date of
condemnation or destruction. If all or part of the Parking Facility or Leased Spaces are
condemned or destroyed, then Lessee shall not be obligated to pay Rent until use of a portion of
the Leased Spaces restored (through repair or relocation) and, in that event, Rent shall be
prorated as set forth in this Paragraph 28 and the Term of this Lease will be extended for a period
equal to the number of whole months between the date of condemnation or destruction and the
date of restoration or relocation. If all or part of the Parking Facility or Leased Spaces are
condemned or destroyed, then all compensation which is payable as a result, whether from
insurance policies, just compensation or otherwise, shall be paid solely to Lessor, and Lessee
shall have no claim to the same. Lessee hereby irrevocably assigns and transfers to Lessor any
right to compensation or damages to which Lessee may become entitled during the Term of this
Lease by reason of the destruction or condemnation of all or part of the Parking Facility or
Leased Spaces.
Lessee fully waives any and all statutory or other legal rights that it may have to
terminate this Lease on account of the total or partial condemnation or destruction of the Parking
Facility or Leased Spaces. Upon that event, Lessee's sole right and remedy will be to an
adjustment of future Rent payments as described in this Paragraph 28.
29. Effect on Lessee. This Lease shall not be binding on or enforceable against
Lessee until such time as it has been approved by official action of Lessee's City Council.
30. Negation of Agency, Joint Venture and Partnership. The parties acknowledge
that, in entering into this Lease, they are acting as independent entities and not as agents of the
other in any respect. The parties hereby renounce the existence of any form of joint venture or
partnership between them and agree that nothing in this Lease shall be construed as making them
joint venturers or partners.
31. Memorandum of Lease. At Lessor's request, Lessee shall execute a
memorandum of this Lease in a form which describes the Parking Facility and which is
recordable in the Official Records of San Bernardino County. Lessor shall pay all costs that are
incurred in preparing and recording any memorandum of this Lease.
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[Signature Follow on Next Page]
14 W990-001•-1801082.1
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SIGNATURE PAGE TO
INLAND CENTER PARKING LEASE AGREEMENT
LESSOR:
WM INLAND INVESTORS IV LP,
a Delaware partnership
By:
Name: I
Its: Sen CC yi_c�a ihNiir�tn .mineral C' 13
WM INLAND(MAY) IV,L.L.C.,
a Delaware limited liability mpany
By:
Name: er� :ctor
Its: �C:2iL`i Vi+°'�9r. •,t C`.rn?,ral c-n 3cl
LESSEE:
CITY OF SAN BERNARDINO
By:
Name:
City Manager
ATTEST:
B ': �t2
City Clerk
APPROVED AS TO FORM:
By: Mtt Ci !3 .� ( n
15
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EXHIBIT A
LEGAL DESCRIPTION OF LESSOR PARCELS
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LEGAL DESCRIPTION OF LESSOR PARCELS
A fee or leasehold in the following land located in the City of San Bernardino, County of San
Bernardino, State of California:
Parcel 1
That portion of Blocks 29 and 54, of the Rancho San Bernardino, in the City of San Bernardino
Meridian, County of San Bernardino, State of California, as shown by Map on file in Book 7,
Page 2, of Maps,Records of San Bernardino County, California, described as follows:
Commencing at the intersection of the Southeast line of Colton Avenue with the West line of"E"
Street as it now exists, said point being moriumented with a 6 inch x 6 inch concrete monument;
Thence South 39'16'43" West along said Southeast line, 1046.85 feet;
Thence South 39°22'40" East, 100.00 feet;
Thence South 30°45'02" East, 73.17 feet, to the beginning of a tangent curve, concave to the
West and having a radius of 2305.05 feet;
Thence Southerly along said curve through a central angle of 22'18'52", 897.73 feet to the True
Point of Beginning;
Thence South 89°27'35" West,461.03 feet;
Thence South 39°15'55" West, 190.65 feet;
Thence South 50 044'05" East, 165.10 feet;
Thence South 0°32'25" East, 735.91 feet;
Thence North 89°27'35" East, 378.31 feet;
Thence North 15°43'54" East, 26.61 feet, to a tangent curve, concave to the West and having a
radius of 2305.05 feet;
Thence Northerly along said curve through an angle of 24'10'04", 972.28 feet to the True Point
of Beginning.
Parcel 2
That portion of Lots 35, 36, 37 and 38 in Block 54 together with that portion of Lots 5 and 6 in
Block 29 of Rancho San Bernardino, in the City of San Bernardino, County of San Bernardino,
State of California, as shown on a Map recorded in Book 7,Page 2 of Maps, in the Office of the
County Recorder of said County, described as follows:
Beginning at the intersection of the centerlines of"E" Street, Inland Center Drive and Mill Street
as shown on a Map filed in Book 39, Pages 29 to 32 inclusive of Record of Surveys, Records of
said County;
Thence along said centerline of Inland Center Drive, South 50°43'28" East 50.00 feet to a point
in the Southeast line of Inland Center Drive, as shown on a Map filed in Book 21, Page 45 of
Record of Surveys, Records of said County, said point being the Northwesterly terminus of that
certain course described as having a bearing and length of North 39°22'40" West 100.00 feet in
the Deed to San Bernardino County Flood Control District recorded September 13, 1965 in Book
6471, Page 333, of Official Records, Records of said County, said point also being the
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Southwesterly terminus of that certain course described as having a bearing and length of"South
39016'43" West 1046.85 feet in those Deeds all recorded August 23, 1966 in Book 6685, Page
491 of Official Records, in Book 6685, Page 493 of Official Records, and in Book 6685, Page
495 of Official Records,Records of said County;
Thence along said first mentioned certain course, South 39 022'40"East 100.00 feet;
Thence South 30°45'02" East 73.17 feet to the beginning of a tangent curve concave Westerly
and having a radius of 2305.05 feet;
Thence Southerly along said curve through a central angle of 46°28'56" an arc distance of
1870.01 feet;
Thence South 15 143'54" West 26.61 feet;
Thence South 89 127'35" West 378.31 feet;
Thence North 00 032'25" West 735.91 feet;
Thence North 50 044'05" West 165.10 feet;
Thence South 39015'55" West 459.70 feet to the True Point of Beginning;
Thence North 39°1555" East 459.70 feet;
Thence South 50°44'05" East 165.10 feet;
Thence South 00 032'25" East 735.91 feet;
Thence North 89 027'35" East 378.31 feet;
Thence South 15°43'54" West 210.92 feet to the beginning of a tangent curve to the
Northwesterly and having a radius of 13 11.10 feet;
Thence Southwesterly along said curve through a central angle of 19 052'4911, an arc distance of
454.92 feet to a point, a radial line of said curve to said point bears South 54'23'17" East;
Thence North 40°20'45" West 413.82 feet;
Thence North 49°39'15" East 11.50 feet;
Thence North 40°20'45" West 295.00 feet;
Thence South 49°39'15" West 155.87 feet to a point, said point being the Southeasterly terminus
of that certain course described ashaving 2 983 asrinsgtrument No. 83113788 s°of 1Offi al Records
feet in a Grant Deed recorded Jun ,
Records of said County;
Thence along said certain course North 40°20'45" West 385.68 feet;
Thence North 89 128'07" East 185.23 feet to the beginning of a tangent curve concave
Southwesterly and having a radius of 100.50 feet;
Thence Southeasterly along said curve through a central angle of 58°00100" an arc distance of
101.74 feet;
Thence tangent to said curve South 32 131'53" East 8.66 feet to the beginning of a tangent curve
concave Northerly and having a radius of 6.50 feet;
Thence Easterly along said curve through a central angle of 90 100'00" an arc distance of 10.21
feet;
Thence tangent to said curve North 57°28'07"East 41.06 feet;
Thence North 32°31'53" West 66.89 feet;
Thence North 00°31'53" West 315.17 feet;
Thence South 89°28'07" West 323.65 feet to the beginning of a tangent curve concave to the
Southeast and having a radius of 24.50 feet;
Thence Westerly and Southerly along said curve through a central angle of 114°03'25" an arc
distance of 48.77 feet to the beginning of a reverse curve, concave to the Westerly and having a
radius of 315.54 feet, a radial line to said reverse curve bears South 65°24'42" West;
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Thence Southerly along said reverse curve through a central angle of 44"10'22" an arc distance
of 243.27 feet to a point, said point being on the Northwesterly prolongation of that hereinbefore
mentioned course having a bearing and distance of North 40°20'45" West 385.68 feet, a radial
line to said point bears South 70°27'31" East;
Thence North 40°20'45" West 66.58 feet to the Easterly line of the land described in the Deed to
the State of California recorded March 5, 1956 in Book 3875, Page 50 of Official Records,
Records of said County;
Thence along said Easterly line to and along the Easterly line of the land described in the Deed to
the State of California recorded November 27, 1956 in Book 4095,Page 197 of Official Records,
Records of said County as follows:
Northerly along a curve concave Westerly and having a radius of 350.00 feet from which a
tangent line bears North 13°03'36" East, through a central angle of 21°11'45" an arc distance of
129.48 feet to a point, a radial line of said curve to said point bears North 81°51'51" East; North
34°23' West 178.22 feet to the beginning of a tangent curve concave Southwesterly and having a
radius of 350.00 feet;Northwesterly along said curve through a central angle of 15°51'04" an arc
distance of 96.83 feet to the beginning of a reverse curve concave Easterly and having a radius of
75.00 feet; Northerly along said curve through a central angle of 82°11'12" an arc distance of
107.58 feet; and North 31°45'45" East 185.95 feet to the Original Southeast line of said Inland
Center Drive;
Thence along said Inland Center Drive North 39'16'16" East 113.08 feet and North 39'16'32"
East 1336.43 feet to the Northwesterly terminus of said certain course hereinbefore described as
having a bearing and length of"North 39 122'40" West 100.00 feet";
Thence along said certain course South 39°22'40" East 15.30 feet to the Southeast line of Inland
Center Drive as described in the grant of easement to the County of San Bernardino, State of
California recorded April 1, 1966 in Book 6600, Page 620 of Official Records, Records of said
County;
Thence along said Inland Center Drive South 39°16'32" West 1333.42 feet and South 39 9616"
West 115.09 feet to a line which bears South 50°44'05" East and which passes through the True
Point of Beginning;
Thence South 50°44'05" East 561.39 feet to the True Point of Beginning.
Parcel 3
That portion of Blocks 29 and 54 of the Rancho San Bernardino, in the City of San Bernardino,
County of San Bernardino, State of California, as per plat recorded in Book 7, Page 2 of Maps,
Records of said County, described as follows:
Commencing at the intersection of the Southeast line of Colton Avenue with the West line of"E"
street as it now exists, said point being monumented with a 6 inch x 6 inch concrete monument;
Thence South 39 116'43" West, along said Southeast line, 1046.85 feet;
Thence South 39°22'40" East, 100.00 feet;
Thence South 30°45'02" East, 73.17 feet to the beginning of a tangent curve, concave to the
West and having a radius of 2305.05 feet;
Thence Southerly along said curve, from a tangent bearing South 30°45'02" East, through a
central angle of 46°28'56", a distance of 1870.01 feet;
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Thence South 15°43'54" West 237.53 feet to the beginning of a tangent curve, concave to the
Northwest and having a radius of 13 11.10 feet;
Thence Southwesterly along said curve, from a tangent bearing South 15°43'54" West, through a
central angle of 19°52'49", a distance of 454.92 feet to a point on said curve, said point being the
True Point of Beginning;
Thence North 40°20'45" West 413.82 feet;
Thence North 49°39'15" East 11.50 feet;
Thence North 40°20'45" West,295.00 feet;
Thence South 49°39'15" West, 155.87 feet;
Thence North 40°20'45" West 537.03 feet to a point on a curve concave to the West, having a
radius of 350.00 feet, said point having a radial bearing of North 76°47'58" West;
Thence Southwesterly along said curve through a central angle of 14 132'08", a distance of 88.79
feet;
Thence South 27°44'10" West 154.05 feet to the beginning of a tangent curve concave to the
East,having a radius of 180.00 feet;
Thence Southerly along said curve through a central angle of 50 152'52", a distance of 159.85
feet;
Thence South 23°08'42" East 251.62 feet;
Thence South 29°08'47" East 770.00 feet;
Thence North 60°55'21" East 60.00 feet;
Thence South 61°56'03" East 30.23 feet;
Thence North 60°55'21" East 50.00 feet to the beginning of a tangent curve, concave to the
Northwest and having a radius of 1311.10 feet;
Thence Northeasterly along said curve, from a tangent bearing North 60°55'21" East, through a
central angle of 25 018'38", a distance of 579.18 feet to the Point of Beginning.
Except that portion of said land granted to San Bernardino County Flood Control District by
deed recorded July 17, 1972, in Book 7978,Page 105, Official Records, described as follows:
Beginning at a 6 inch X 6 inch concrete monument marking the most Northerly point of that
certain course described as South 28°35'05" East, 156.31 feet, in document to the State of
California recorded in Book 3855,Page 385, Official Records of said county;
Thence along the Northeasterly line of said State of California parcel of land, North 39°55'34"
West(recorded North 39°5534" West) 42.01 feet;
Thence North 60°50'25" East, 74.70 feet;
Thence at right angles, South 29°09'35" East, 100.00 feet;
Thence South 60°50'25" West, 67.45 feet to the Northeasterly line of said State of California
parcel of land;
Thence along said Northeasterly line, North 28°35'05" West, 58.73 feet to the Point of
Beginning.
Excepting therefrom Parcel 18963-1 as condemned by the State of California, as set forth and
described in that certain document recorded January 3, 2011 as Instrument No. 2011-0001333 of
Official Records.
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EXH
DEPICTION OF PARKING FACILITY
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Exhibit B
DEPIMON OF PARKING FACILITY,
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W990-001-1801092.1
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EXH
EXAMPLE OF RENT CALCULATION
Following is an example of a Rent calculation for illustration purposes only.
If the Non-JCP Generated Sales Taxes for a Lease Year were equal to $1,400,000, then such
amount would be allocated as follows:
Portion of Sales Taxes Lessee's Share Lessor's Share
First$800,000 100%_$800,000 0%_ $0
$800,001 - $900,000 50%_$50,000 50%_$50,000
$900,001 - $1,000,000 45%_$45,000 55%_ $55,000
$1,000,001 -$1,100,000 40%_$40,000 60%_$60,000
$1,100,001 - $1,200,000 35%=$35,000 65%= $65,000
$1,200,001 - $1,400,000 30%_$60,000 70%_$140,000
TOTAL $1,030,000 $370,000
Accordingly, Lessor's Share of the Non-JCP Sales Tax Increment would be $370,000.
If the JCP-Generated Sales Taxes for the same Lease Year were equal to $200,000, then such
amount would be allocated as follows:
Portion of Sales Taxes Lessee's Share Lessor's Share
First$185,000 0% 100%_$185,000
$185,001 - $200,000 10%= $1,500 90%_$13,500
TOTAL $1,500 $198,500
Accordingly, Lessor's Share of the JCP Sales Tax Increment would be $198,500.
The Rent due for this Lease Year therefore would be $370,000 plus $198,500, or $568,500.
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