HomeMy WebLinkAboutR7- Economic Development ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
REQUEST FOR COMMISSION/COUNCIL ACTION
FROM: RONALD E.WINKLER SUBJECT: COSTCO OWNER
Development Director PARTICIPATION
AGREEMENT
DATE: May 28, 1998 , Li=J`
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Synopsis of Previous Commission/Councit/Committee Action(s):
On May 26, 1998,the Redevelopment Committee recommended that this item be forwarded to the Community
Development Commission for approval.
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Recommended Motion(s):
(Community Development Commission)
MOTION A: That the Community Development Commission approve an Owner Participation Agreement with
Costco Wholesale Corporation.
(Mayor and Common Council)
MOTION B: That the Mayor and Common Council authorize the Agency to incur indebtedness in an amount not to
exceed$495,040 for necessary offsite improvements.
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Contact Person(s): Ronald E.Winkler/John Hoeger Phone: 5081
Project Area(s): Tri-City Ward(s): Three(3)
Supporting Data Attached:0 Staff Report❑ Resolution(s) 0 Agreement(s)/Contract(s) ❑ Map(s) ❑Ltr/Memo
FUNDING REQUIREMENTS: Amount: $ N/A Source: N/A
Budget Authority: N/A
SIGNATURE: T-x' `.
I-If/11t�
Ronald E.W nkler,Director
Developm
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Commission/Council Notes:
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REW:Iag:06-01-02.cdc COMMISSION MEETING AGENDA
MEETING DATE:06/01/1998
Agenda Item Number:
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
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Costco Owner Participation Agreement
This report summarizes the subject project and action taken by the Redevelopment Committee on
May 26, 1998 to recommend approval of an Owner Participation Agreement with Costco
Wholesale Corporation.
THE PROJECT
The proposed agreement will facilitate construction of a new Costco Superstore to be located at
the southwest corner of the intersection of Tippecanoe Avenue and Hospitality Lane, within the
Tri-City Redevelopment Project area.
The project includes construction of a 137,640 square foot Costco Superstore which includes a
5,200 square foot tire center, and a 1,075 square foot food service area; with the remaining
131,365 square feet to be used for general retailing and storage. In addition the project includes a
three island, six pump fuel filling station which will be operated under the name of Costco
Gasoline. The gas station will be a self service, card operated facility. The total site is comprised
of 14.21 acres and will include approximately 818 parking spaces.
Offsite public improvements required to be completed and dedicated for acceptance by the City as
part of the overall improvement of the project generally include:
• Traffic signal modifications at Tippecanoe/Hospitality
• Construction of a dual left turn lane on Tippecanoe to Hospitality
• Construction of an extension of the left turn lane from Hospitality to Tippecanoe
• Installation of traffic signals at the westerly entrance to the project
• Modification of the median on Hospitality Lane.
• Modification of traffic signal at Waterman/Hospitality. (Qualifies for Traffic Systems Fee
Credit)
• Widening of Tippecanoe to accomadate right turn in/right out access from southbound
Tippecanoe.
• Street Lights, curbs, gutters, etc.
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REW:lag:06-01-02.cdc COMMISSION MEETING AGENDA
MEETING DATE:06/01/19998]
Agenda Item Number:
Economic Development Agency Staff Report
Costco Owner Participation Agreement
May 27, 1998
Page Number-2-
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ANALYSIS
Costco currently generates approximately$350,000 in annual sales tax revenues payable to the
City of San Bernardino from taxable retail sales at their current location. Costco estimates that the
annual sales tax revenues at the new and expanded facility after completion will increase to
$650,000 per year during the first full year of operation at their proposed location. They estimate
that upon completion, the valuation of the project for property tax assessment purposes will be
$1 OM, including land and building assessments, which will result in gross tax increment revenues
to the Agency of approximately$100,000 annually. Net tax increment available associated with
the completion of the project will be approximately $78,000 after deductions for housing set aside
funds and pass through agreements.
Offsite public improvements as outlined above are presently estimated to cost $495,040. An
additional burden on the project is the assessment created by City of San Bernardino Assessment
District 961. Costs associated with Assessment District 961 are estimated to be approximately
$80,936 annually through the year 2006. This District provided for the construction of various
improvements including streets, sewers, fencing, water mains, curbs, gutters, sidewalks,
streetlights, traffic signals, and other improvements in the Hospitality Lane area generally between
Waterman and Tippecanoe.
The Agency has been asked to provide public assistance to offset the costs associated with
installation of various public improvements for the project and the assumption by the Agency to
pay certain assessment district 961 assessments on the project. Staff recommends that no Agency
funds other than those directly generated by the "Net Tax Increment" amounts upon completion
of the project be pledged as part of any assistance package.
As structured Net Tax Increment payments derived from development of the site would be
applied as follows:
1. Reimbursement of Assessment District 961 payments made by developer in an amount
estimated to be $80,936 annually commencing with tax year 1998-99 through the year 2006.
2. Reimbursement of public offsite improvement costs in an amount not to exceed $495,040,
plus interest at 6%. (Note: Costco shall commit to pay all construction labor personnel who
are employed on the offsite public improvements to be paid the applicable amounts of
prevailing wages).
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REW:lag:06-01-02.cdc COMMISSION MEETING AGENDA
MEETING DATE:06/01/1998
Agenda Item Number:
Economic Development Agency Staff Report
Costco Owner Participation Agreement
May 27, 1998
Page Number-3-
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Net Tax Increment payments would continue for a period of fifteen(15)years or until all
reimbursements are paid whichever is sooner. Any assistance shall be conditioned upon Costco's
compliance with various performance measures and operating covenants including, completing
project per Scope of Development, obtaining certificate of completion, making timely payments to
County Treasurer-Tax Collector of taxes and Special Assessments, operating retail operation
under the name of Costco, generating sales tax revenues of at least $400,000 per year.
Based upon the above, the Redevelopment Committee recommends approval of the form
motions.
ul
RONALD A. WINKLER, Director
Development Department
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REW:1ag:06-01-02.cdc COMMISSION MEETING AGENDA
MEETING DATE:06/01/1998
Agenda Item Number: 7
d
WHEN RECORDED MAIL TO:
REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
201 North "E" Street
Third Floor
San Bernardino, CA 92401
(Space above for Recorder ' s Use)
OWNER PARTICIPATION AGREEMENT
BY AND BETWEEN
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
and
COSTCO WHOLESALE CORPORATION,
a Washington corporation
TABLE OF CONTENTS
ARTICLE I SUBJECT OF AGREEMENT . . . . . . . . . . 1
Section 1 . 1 Purposes of Agreement . . . . . . . . 1
Section 1 . 2 The Project Area . . . . . . . . . . 1
Section 1 . 3 Parties to the Agreement . . . . . . 1
Section 1 . 4 Prohibition Against Change in
Ownership, Management and Control of
Developer for Assignment of Agreement . 2
ARTICLE II DISPOSITION OF PROPERTY . . . . . . . . . 3
Section 2 . 1 Developer ' s Private Purchase of
Property. . . . . . . . . . . . . . 3
Section 2 . 2 Proposed Project . . . . . . . . . . 3
Section 2 . 3 Agency Assistance . . . . . . . . . . 4
Section 2 . 4 Developer ' s Conditions . . . . . . . 7
Section 2 . 5 Property Use Approvals . . . . . . . 8
Section 2 . 6 Evidence of Financing Commitments . 8
Section 2 . 7 Representations And Warranties of the
Agency. . . . . . . . . . . . . . . 8
Section 2 . 8 Representations and Warranties of the
Developer. . . . . . . . . . . . . . 10
ARTICLE III DEVELOPMENT OF THE PROPERTY . . . . . . . 11
Section 3 . 1 Lot Line Adjustment . . . . . . . . . 11
Section 3 . 2 City Land Use Approvals . . . . . . . 11
Section 3 . 3 Scope of Development . . . . . . . . 12
Section 3 . 4 Conditions of Approval . . . . . . . 12
Section 3 . 5 Agency Review of Plans . . . . . . . 12
Section 3 . 6 City Plan Review . . . . . . . . . . 13
Section 3 . 7 Changes in Plans . . . . . . . . . . 14
Section 3 . 8 Developer' s Costs; Developer' s Permits 15
Section 3 . 9 Progress Reports . . . . . . . . . . 15
Section 3 . 10 Developer' s Insurance . . . . . . . 15
Section 3 . 11 Non-Discrimination . . . . . . . . . 16
Section 3 . 12 Agency Access . . . . . . . . . . . 16
Section 3 . 13 Certain Responsibilities of the
Agency. . . . . . . . . . . . . . . 17
Section 3 . 14 Taxes Assessments, Encumbrances and
Liens . . . . . . . . . . . . . . . . 17
Section 3 . 15 Certain Prohibitions Against
Transfers . . . . . . . . . . . . . . 18
Section 3 . 16 Intentionally omitted. . . . . . . . 18
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TABLE OF CONTENTS
(continued)
Page(s)
Section 3 . 17 Right of the Agency to Satisfy Other
Liens on the Property after Conveyance
of Title. . . . . . . . . . . . . . 19
Section 3 . 18 Certificate of Completion. . . . . . 19
ARTICLE IV USE OF THE PROPERTY . . . . . . . . . . . 20
Section 4 . 1 Opening Conditions . . . . . . . . . 20
Section 4 . 2 Operating Covenant . . . . . . . . 21
Section 4 . 3 Governmental Acts . . . . . . . . . 22
Section 4 . 4 LIQUIDATED DAMAGES . . . . . . . . . 22
Section 4 . 5 Subsidy Recoupment Amount . . . . . 23
Section 4 . 6 Obligation to Refrain from
Discrimination. . . . . . . . . . . 23
Section 4 . 7 Form of Nondiscrimination and
Nonsegregation Clauses . . . . . . . 23
Section 4 . 8 Effect and Duration of Covenants . 24
Section 4 . 9 Restrictive Covenant . . . . . . . . 25
ARTICLE V DEFAULTS AND REMEDIES . . . . . . . . . . 25
Section 5 . 1 Defaults - General . . . . . . . . . 25
Section 5 . 2 Legal Actions . . . . . . . . . . . 26
Section 5 . 3 Rights and Remedies are Cumulative . 26
Section 5 . 4 Damages . . . . . . . . . . . . . . . 26
Section 5 . 5 Specific Performance . . . . . . . . 27
ARTICLE VI GENERAL PROVISIONS . . . . . . . . . . . 27
Section 6. 1 Notices Demands and Communications
Between the Parties . . . . . . . . . 27
Section 6 . 2 Conflict of Interest . . . . . . . . 28
Section 6 . 3 Warranty Against Payment of
Consideration for Agreement . 28
Section 6 . 4 Nonliability of Agency Officials and
Employees . . . . . . . . . . . . . . 28
Section 6 . 5 Enforced Delay: Extension of Time of
Performance. . . . . . . . . . . . . 29
Section 6 . 6 Approvals . . . . . . . . . . . . . . 29
Section 6 . 7 Real Estate Commissions . . . . . . . 29
Section 6. 8 Indemnification. . . . . . . . . . . 30
Section 6 . 9 Release of Developer from Liability. 30
Section 6 . 10 Attorneys ' Fees . . . . . . . . . . . 30
Section 6 . 11 Dispute Resolution. . . . . . . . . 30
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d
TABLE OF CONTENTS
(continued)
Page (s)
Section 6 . 12 Effect . . . . . . . . . . . . . . . 31
ARTICLE VII ENTIRE AGREEMENT WAIVERS AND AMENDMENT 31
Section 7 . 1 Entire Agreement . . . . . . . . . . 31
ARTICLE VIII TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY
AND RECORDATION . . . . . . . . . . . . . 32
Section 8 . 1 Execution and Recordation. . . . . . 32
Page (s)
EXHIBITS
Exhibit "A" Site Plan
Exhibit "B" Scope of Development
Exhibit "C" Schedule of Performance
Exhibit "D" Certificate of Completion
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OWNER PARTICIPATION AGREEMENT
THIS OWNER PARTICIPATION AGREEMENT is entered into by and
between the Redevelopment Agency of the City of San Bernardino (the
"Agency") , and Costco Wholesale Corporation, a Washington
corporation (the "Developer") . The Agency and the Developer agree
as follows :
ARTICLE I
SUBJECT OF AGREEMENT
Section 1 . 1 Purposes of Agreement .
The purpose of this Owner Participation Agreement (the
"Agreement") is to effectuate redevelopment within the boundaries
of the City of San Bernardino (the "City") by providing for the
redevelopment by the Developer of certain real property located
within a duly established Redevelopment Project Area of the City
(the "Project Area") , which property is shown in the Site Plan
attached hereto as Exhibit "A" and incorporated herein by reference
(the "Property") . The Property was previously developed for urban
uses prior to the effective date of the State Legislation which
enacted Health and Safety Code Section 33326 . 5 . The redevelopment
of the Property by the Developer pursuant to this Agreement, and
the fulfillment generally of the Agreement, are in the vital and
best interests of the City, the Agency, and the health, safety,
morals, and welfare of the City' s residents, and are in accord with
the public purposes and provisions of applicable federal, state and
local laws and requirements .
Section 1 . 2 The Project Area .
The Project Area was approved and adopted by the City Council
of the City of San Bernardino by duly adopted ordinance in
accordance with the provisions of the Community Redevelopment Law
of the State of California (the "Community Redevelopment Law") .
This Agreement shall be subject to the provisions of the Community
Redevelopment Law.
Section 1 . 3 Parties to the Agreement .
a. The Agency is a public body, corporate and politic,
exercising governmental functions and powers, and organized and
existing under Chapter 2 of the Community Redevelopment Law, Health
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and Safety Code Section 33000, et sec . The principal office of the
Agency is located at 201 N. "E" Street, San Bernardino, California
92401-1507 . As used in this Agreement, the term "Agency" shall be
deemed to include the Agency and any assignee and/or successor to
the Agency or to its rights, powers and responsibilities under this
Agreement.
b. The Developer is Costco Wholesale Corporation, a
Washington corporation. The principal office of the Developer for
purposes of this Agreement is located at 999 Lake Drive, Issaquah,
Washington 98027 (Telephone Number: (425) 313-8100) , and for
purposes of Section 6 . 1 hereof, any and all notices, demands or
communications shall be sent to the Developer addressed to the
attention of Richard Olin. The Developer has heretofore provided
to the Agency satisfactory evidence of the legal formation and
existence of the Developer and the good standing of the Developer
with the State of California (the "State") to transact business
within the State, to hold title to the Property and to develop the
Project, as hereinafter defined.
Section 1 . 4 Prohibition Against Chancre in Ownership,
Manaaement and Control of Developer for
Assignment of Agreement .
a. The qualifications and identity of the Developer are
of particular concern to the Agency. It is because of these
qualifications and the identity of the Developer that the Agency
has entered into this Agreement with the Developer. Prior to the
issuance of a Certificate of Completion, no voluntary or
involuntary successor in interest of the Developer shall acquire
any rights or powers under this Agreement, except as expressly set
forth herein.
b. Except as otherwise provided in this Agreement, the
Developer shall not assign all or any part of this Agreement prior
to the issuance of a Certificate of Completion without the prior
written approval of the Agency, which approval shall not be
unreasonably withheld.
C. Nothing contained in this Agreement shall limit or
impair the Developer ' s rights or powers to assign all or any part
of this Agreement or to make any total or partial sale, transfer,
conveyance, assignment, subdivision, refinancing or lease of the
whole or any part of the Property or Improvements which occurs on
or after the date that a Certificate of Completion has been issued
for the Property.
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b
d. Notwithstanding any other provision of this
Agreement to the contrary, Agency approval of an assignment of this
Agreement or conveyance of the Property or Improvements, or any
part thereof, shall not be required in connection with any of the
following which occurs prior to the date that a Certificate of
Completion has been issued for the Property:
(i) Any transfers to an entity or entities
controlled by or under common control with
Developer, Costco Companies, Inc. , The Price
Company; and/or an entity or entities formed
by the merger, consolidation or corporate
reorganization of any of the foregoing
companies .
(ii) The conveyance or dedication of any portion of
the Property, or any of the Area Off-Sites
described below, to the City or other
appropriate governmental agency, or the
granting of easements or permits to facilitate
construction of the Project (as defined
herein) .
(iii) Any assignment for financing purposes,
including the grant of a deed of trust to
secure the funds necessary for land
acquisition, construction and permanent
financing of the Project .
(iv) Any lease of a portion of the Property which
is not inconsistent with the use of the main
building as a warehouse club.
ARTICLE II
DISPOSITION OF PROPERTY
Section 2 . 1 Developer' s Private Purchase of Property.
The Property which is the subject of this Agreement is
currently owned by Aaron Mendelsohn ("Current Owner") . Current
Owner and Developer have entered into a purchase and sale agreement
("Land Contract") pursuant to which Developer has agreed to
purchase the Property upon the terms and provisions, and subject to
the conditions, set forth therein. Developer ' s and Agency' s
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obligations under this Agreement are subject to the occurrence of
the acquisition by Developer of the Property from the Current
Owner. Developer shall not be obligated to acquire the Property
from the Current Owner unless Developer has determined in its sole
and absolute discretion that all conditions to Developer' s
obligations to purchase the Property from Current Owner under the
Land Contract have first been satisfied.
Section 2 . 2 Proposed Project .
The development proposed by Developer on the Property
comprises a warehouse club store and related common area
improvements (the "Project") as generally depicted on the Site
Plan. As used herein, the term "Scope of Development" means, as to
the Developer' s responsibilities, the design, construction and
financing of a building comprising not less than 125, 000 square
feet suitable for wholesale and retail sales on the Property,
together with the related internal parking, roadway and landscaped
areas necessary to service the same in a manner generally
consistent with the Site Plan, together with the design,
construction and installation of the Area Off-Sites referenced in
Section 2 . 3, below.
Section 2 . 3 Agency Assistance .
Upon completion of the transfer to the Developer of the
Property pursuant to the Land Contract, the Agency shall incur
certain indebtedness to the Developer with respect to the
redevelopment of the Property and completion of the Project, and
repay the Developer such indebtedness in the amounts, and on the
conditions and at the times from the special source of funds of the
Agency all as set forth in this Section 2 . 3 :
a. Special Assessments . As of the date of recordation
of the Certificate of Completion as set forth in Section 3 . 18,
below, the Agency hereby agrees to assume (subject to the terms and
conditions and payable solely from the special source of funds of
the Agency pledged thereto under this Section) , the obligation to
reimburse the Developer an amount equal to, each installment of the
special assessments or special taxes imposed on the Property
pursuant to Assessment District No. 961, Reassessment District No.
961-R or any modifications or refundings thereof, which may be
levied and come due in any tax year beginning on or after July 1,
1998 (the "Infrastructure Assessments") . The obligation of the
Agency to make such reimbursement amounts available to the
Developer of the Infrastructure Assessments shall be payable solely
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from the available funds of the Agency under the pledge of the "Net
Tax Increment" for the "Term" set forth below in this Section 2 . 3 .
b. Repayment of Developer Loan; Reimbursement to
Developer. In addition to the obligation of the Agency as assumed
under Section 2 . 3 .a, the Agency has agreed to bear the cost of the
design, construction and installation of certain off-site public
improvements associated with the redevelopment of the Property and
the Project by the Developer, but the Agency does not currently
have sufficient funds to finance the cost of such public
improvements, and accordingly, the Agency and Developer have agreed
upon the mechanism described below to accomplish such result .
Developer agrees to design, construct, install and offer for
dedication to the City upon completion, those off-site public
improvement work elements ("Area Off-Sites") which are identified
in the Scope of Development under the heading labeled "Off-Site
Improvements (Area Off-Sites) , " and the Agency agrees to reimburse
Developer an amount not to exceed four hundred and ninety-five
thousand and forty dollars ($495, 040) in respect to the costs
incurred by the Developer in connection with the design,
construction and installation of the Area Off-Sites ( "Area Off-
Sites Amount") , plus interest thereon at the rate of six percent
(60) per annum from the date of the advance of said funds for the
account of the Agency to pay for the Area Off-Sites, until the
earlier date when said amount has been paid in full or the end of
the Term set forth below.
C. Pledge by the Agency of the Net Tax Increment .
Agency hereby pledges to the Developer to pay the Agency' s
obligations under Sections 2 . 3 .a and 2 . 3 .b for the "Term" as set
forth below, all of the "Net Tax Increment" allowable and paid to
the Agency which is attributable as certain tax increment revenues
of the Agency generated by the Property and any improvements and
personal property therein as described below. The words "Net Tax
Increment" and "Term" and other related phrases, are defined in the
following subsections of this Section 2 . 3 .
d. Net Tax Increment . As used herein, the term "Net
Tax Increment" means that portion of the taxes levied upon the
Property by or for the benefit of the applicable taxing agencies on
or after July 1, 1998, which taxes are allocated and paid to the
Agency pursuant to California Health and Safety Code Section 33670
or any successor provisions of law or substitutions therefor (i)
net of the required 20% deposit to the Agency' s Low and Modlerate-
Income Housing Fund, and (ii) net of existing taxing entities pass-
through agreements by and between the Agency and the San Bernardino
City Unified School District which do not exceed 20 of Net Tax
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Increment; provided, however, that Net Tax Increment shall not
include such taxes allocated to the Agency by reason of any
increase in the assessed value of the Property which may have
occurred after the Base Year for the Project Area and the day
preceding acquisition of the Property by the Developer pursuant to
the Land Contract (the "Property Base Year Assessed Value") . Said
taxes levied upon the taxable personal property on the Property, if
any, shall be included in Net Tax Increment whether the assessment
for such taxable personal property is included on the secured or
the unsecured property tax assessment rolls . The parties estimate
the Property Base Year Assessed Value of the Property prior to sale
to the Developer pursuant to the Land Contract is approximately
$9. 61 per square foot of land area, based on the assessments
against the existing assessor ' s parcels out of which the Property
is being created. The assessed value of the Property (real and
personal property) upon completion of the redevelopment of the
Project, as adjusted from time to time, is sometimes hereinafter
referred to as the "Completed Property Assessed Value" . Upon the
request of either party, both of the parties shall jointly execute
a memorandum which confirms the amount of the Property Base Year
Assessed Value based on the actual acreage being purchased by
Developer under the Land Contract .
e. Limitations and Pledge . The pledge of the Net Tax
Increment under Section 2 . 3 .c shall be at all times subordinate to
(i) any and all previously created or hereafter created security
interests, liens or pledges of the taxes allocated to the Agency
pursuant to California Health and Safety Code Section 33670, or any
successor provisions of law or substitutions therefor (including
Net Tax Increment) as previously pledged by the Agency or otherwise
required to be available under such security interest, lien or
pledge for the payment of principal, interest, redemption premiums
and related administrative expenses for any issuance of tax
allocation bonds, notes or other obligations of the Agency that are
sold through traditional public underwriting processes to investors
whether in the form of a direct pledge to bondholders under a trust
indenture or through a pledge to a bond trustee pursuant to an
Agency loan agreement or other similar financing document providing
the security and repayment source of any bonds, certificate of
participation, lease-purchase obligation issued by the Agency
directly or through any conduit issuer is or shall be from such
taxes allocated to the Agency; provided, however, that the Agency
covenants not to cause the Net Tax Increments to be so encumbered
as to make the Agency unable to pay its obligations to the
Developer under this Section 2 . 3 .
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f. Semi-Annual Payments . With respect to the period
from the date of the Project ' s opening for business in accordance
with Section 4 . 1 below, until the expiration of the Term pursuant
to Section 2 . 3 (g) below, Agency shall pay all available Net Tax
Increment allocated and paid to the Agency with respect to the
Property to the Developer. All payments due Developer hereunder
shall be payable in arrears two (2) months after the conclusion of
the second and fourth quarters of each state fiscal year (i .e . , on
March 1 and August 1) based on each preceding two fiscal year
quarters and shall be determined by reference to the amount of the
Net Tax Increment with respect to the Property (if any) as
allocated and paid to the Agency during the most recently concluded
period. All payments by the Agency to the Developer under this
Section shall be applied first to the reimbursement of the
installments of Infrastructure Assessments, second to the payment
of accrued interest on the Area Off-Sites Amount and third to the
repayment of the Area Off-Sites Amount . In no event shall the
payments of Net Tax Increment due under Section 2 . 3 (a) and Section
2 . 3 (b) during the Term exceed in the aggregate a sum which is
sufficient to satisfy the Infrastructure Assessments plus the Area
Off-Sites Amount and any applicable interest thereon.
g. Term; Minimum Sales . The "Term" of the pledge of
the Net Tax Increment under Section 2 . 3 .c shall be the period of
time commencing on the "Opening Date" (as defined in Section 4 . 1
below) and ending on that date which is the last day of the
fifteenth (15th) full fiscal year after the expiration of the
partial fiscal year in which the Opening Date occurred. Agency
shall not be required to make any payment of Net Tax Increment to
the Developer under this Section 2 . 3 with respect to Net Tax
Increment which is allocated and paid to the Agency for any state
fiscal year which begins after the Term. In addition, the Agency
shall not be required to make any payment of Net Tax Increment to
the Developer under this Section 2 . 3 with respect to any state
fiscal year in which after the Opening Date has occurred, the
Project shall generate less than Forty Million Dollars
($40, 000, 000) of retail sales subject to retail sales taxes;
provided further, that said $40, 000, 000 shall be prorated for the
portion of the fiscal year in which the Opening Date occurs and
prorated in any year thereafter in which the Project is not open
for business due to casualty, based on the number of days during
such fiscal year in which the Project is open for business .
h. Limitation of Amount; Late Receipt by Agency.
Agency' s obligation to remit Net Tax Increment amounts to the
Developer to pay the sums due under Section 2 . 3 .a and Section 2 . 3 .b
with respect to any state fiscal year shall not exceed the
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aggregate amount of available Net Tax Increment from the Property
as allocated and paid to the Agency for such fiscal year. Further,
if during the Term the Agency has not received the Net Tax
Increment corresponding with any preceding fiscal year or portion
thereof from the County Auditor-Controller prior to the date a
payment to Developer is due under Section 2 . 3 . f above, the Agency
may defer the payment of Net Tax Increment to Developer until that
date which is thirty (30) days after the Agency' s receipt of such
Net Tax Increment from the County Auditor-Controller. For example,
and without limitation upon the foregoing, if a supplemental
assessment with respect to the Property for the 1999/2000 fiscal
year is not billed by the Tax Assessor or Tax Collector or if the
applicable supplemental assessment if billed is not collected by
the Tax Collector and remitted to the Agency by the County Auditor-
Controller until May 31, 2001, then that portion of the Net Tax
Increment for the 1999/2000 fiscal year included in such
supplemental assessment shall be payable to Developer on or before
July 30, 2001 . If the Agency believes any payment of Net Tax
Increment to the Developer may be subject to a deferral in payment
under Section 2 . 3 .h, the Agency shall provide written notice to the
Developer of such deferral on the date (s) payments would otherwise
have become due .
i . Late Payments of Property Taxes By Developer and
Late Receipt of Net Tax Increment by Agency. If Developer is
properly billed for any real or personal property taxes or
assessments relating to the Property with respect to a particular
state fiscal year, and Developer fails to pay the taxes for such
year within six (6) months after the date that the second
installment of taxes for such fiscal year becomes delinquent (the
"Delinquency Roll Date") , then any such delinquent taxes for such
fiscal year when paid by the Developer for the Property after the
Delinquency Roll Date ("Delinquent Taxes") regardless of when such
Delinquent Taxes may later be paid by the Developer, shall be
excluded from the amount of Net Tax Increment available to the
Agency from such fiscal year to make the next payment (s) to the
Developer when due. Nothing contained in the foregoing shall limit
or impair Developer' s right to challenge or appeal any tax or
assessment on the Property in accordance with applicable law, and
no such tax or assessment amount paid under protest by the
Developer, shall be deemed to be Delinquent Taxes .
j . The Obligation of the Agency Under Section 2 . 3 .a and
Section 2 . 3 .b Is a Special and Limited Fund Obligation of the
Agency Payable Solely From Net Tax Increment . The obligation of
the Agency to pay any sum to the Developer under Section 2 . 3 . a and
Section 2 . 3 .b is expressly acknowledged by the Developer to be a
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special and limited fund obligation of the Agency, payable solely
from the available Net Tax Increment collected and paid to the
Agency each year during the Term, and neither the full faith or
credit or taxing power of the Agency or any other local entity is
pledged to the Developer hereunder.
k. Discharge of the Remainina Balance of the
Indebtedness of the Aaencv to the Developer at the End of the Term.
[INSERT TEXT]
1 . Agency Promissory Note Evidencing Indebtedness of
the Agency to the Developer.
Within thirty (30) days following the Opening Date (as
defined in Section 4 . 1, below, the Agency shall deliver to the
Developer a promissory note of the Agency evidencing the obligation
of the Agency to pay to the Developer the sums required for the
Infrastructure Assessments and the Area Off-Sites Amount when due
during the Term from Net Tax Increment .
Section 2 . 4 Developer ' s Conditions .
The Developer' s obligation to acquire the Property and to
build the Project shall be expressly conditioned upon the
satisfaction or waiver by Developer of each of the following:
a . The Current Owner shall be able to convey good,
marketable and insurable title to the Property, subject only to
those exceptions as approved by Developer.
b. The City shall be prepared to issue any necessary
building permits for the Project including the building permit for
the warehouse club store.
C. The Developer shall have received final approval of
any changes in zoning, variances, special use permits, site plan
approvals, environmental approvals or other approvals under
applicable law as are required for the Intended Use, including,
without limitation, any necessary actions pursuant to CEQA. For
the purposes of this Agreement, "final approval" shall mean
approval by the applicable governmental agency authorized to grant
such approval including, without limitation, the expiration of the
applicable statute of limitations for any challenges to any
determination under CEQA and expiration of any and all appeal or
challenge periods with respect to any such approval without any
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appeal being taken or judicial challenge to such approval being
filed.
d. Developer shall have approved in its sole, absolute
and unrestricted discretion any fees, exactions or requirements
established as a condition to (or otherwise imposed in connection
with) the subdivision, development, use or occupancy of the
Property or the Project including, without limitation, any
mitigation measures imposed in connection with any action under
CEQA.
e. Developer shall have approved that the results of
any inspections, hazardous materials tests, soil tests, drainage
tests, surveys, topographical analysis, engineering and/or
architectural drawings (all to be performed at Developer' s expense)
do not disclose that the Property is unsuitable for the Project or
will require extraordinary construction techniques or variations
from Tenant ' s prototypical new facilities .
f. The representations and warranties of the Agency
shall be true and correct at the time of close of escrow.
g. The Current Owner shall be prepared to proceed to
closing under the Land Contract and all conditions to Developer' s
obligations thereunder shall have been satisfied.
Section 2 . 5 Property Use Approvals .
The Developer will submit such land use approval applications
as are required in connection with the contemplated development,
construction and operation of the Property as contemplated by this
Agreement, including, without limitation, all necessary conditional
use permits required pursuant to the zoning ordinance, and
variances necessary for automotive uses, gasoline sales, liquor
sales, on premises signage and any and all other matters . Agency
shall use its best efforts to assist Developer in identifying any
necessary land use approvals and to assist Developer in processing
the same with the City and any other applicable government agencies
but nothing contained herein shall bind the City to issue any such
land use approvals to the Developer for the Project .
Section 2 . 6 Evidence of Financing Commitments .
Developer presently intends to finance the development of the
Project with its internal corporate funds, and Developer ' s and
Agency' s obligations hereunder are not conditioned upon Developer' s
obtaining construction or permanent financing for the Project .
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Prior to the date hereof, Developer has made available to Agency
various items of financial information concerning Developer which
Developer and its affiliates have compiled in connection with their
routine compliance with the applicable Federal securities laws, and
Agency is satisfied that the Developer has sufficient resources to
undertake the Project .
Section 2 . 7 Representations And Warranties of the AaencX.
The Agency hereby represents and warrants the following to the
Developer for the purpose of inducing the Developer to enter into
this Agreement and to consummate the transactions contemplated
hereby, all of which shall be true as of the date hereof and as of
the date of close of escrow for the Developer' s acquisition of the
Property under the Land Contract and shall survive the Developer ' s
acquisition of title to the Property:
a . The Agency is a duly organized and validly existing
Redevelopment Agency created under the laws of the State of
California. The Agency has the legal power, right and authority to
enter into this Agreement and the instruments and documents
referenced herein, and to consummate the transactions contemplated
hereby. The Director of the Agency executing this Agreement and
the instruments referenced herein on behalf of the Agency hereby
represents and warrants that he has the power, right and authority
to bind the Agency.
b. The Agency and City have taken all requisite action
and obtained all requisite consents in connection with entering
into this Agreement and the instruments and documents referenced
herein and the consummation of the transactions contemplated
hereby, and no consent of any other person or entity to the
approval of this Agreement by the Agency is required.
C. This Agreement and all related instruments and
documents to be executed by the Agency pursuant to this Agreement,
shall be duly executed by and are or shall be valid and legally
binding upon the Agency, and enforceable by the Developer against
the Agency in accordance with their respective terms .
d. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby shall result
in a breach of or constitute a default under any agreement,
document, instrument or other obligation to which the Agency or
City is a party, or by which the Agency or City may be bound, or
under law, statute, ordinance, rule, governmental regulation or any
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writ, injunction, order or decree of any court or governmental body
applicable to the Agency or to the Property.
e . There is no claim, action, litigation, arbitration
or other proceeding pending or to the best of the Agency' s
knowledge, threatened against the Agency or City which relates to
the Property or the transactions contemplated. If the Agency
receives notice of any claim, litigation or proceeding prior to
close of escrow, the Agency shall promptly notify the Developer of
the same in writing.
f. The uses and improvements to be constructed on the
Property in accordance with the Scope of Development comply with
the California Community Redevelopment Law and the use of funds is
consistent with the provisions of the California Community
Redevelopment Law, the California Constitution, City Charter and
other applicable laws and is not violative thereof.
g. To the knowledge of the Agency, the Property is not
in violation of, and the Agency has not received any notice of any
violation of any law, ordinance, regulation order or requirement
applicable to the Property including, without limitation,
requirements imposed under any recorded covenants, conditions,
restrictions, easements or other rights affecting the Property.
The Agency has not received any notice from any governmental
authority or any private person that the Agency or the Property or
any portion thereof is in violation of any governmental or legal
requirements . If the Agency receives such a notice prior to the
close of escrow on either parcel, the Agency shall immediately
notify the Developer in writing.
The representations and warranties contained in this
Section 2 . 7 are true and correct on the date hereof and no
representation or warranty made by the Agency or in any statement
or exhibit required to be furnished hereunder misstates, omits or
shall misstate or omit a fact necessary to make the statement
therein not misleading. The Agency shall promptly notify the
Developer upon the Agency' s discovery of any fact which would
render any representation or warranty in this Agreement untrue,
incorrect or misleading in any respect. The knowledge of the
"Agency" shall be the actual knowledge of the following officials
of the Agency: Ronald Winkler, or his successor in function.
Section 2 . 8 Representations and Warranties of the
Developer.
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The Developer hereby represents and warrants the following to
the Agency for the purpose of inducing the Agency to enter into
this Agreement and to consummate the transactions contemplated
hereby, all of which shall be true as of the date hereof and as of
the date of close of escrow as to either parcel and shall survive
the close of escrow and the conveyance of title hereunder.
a . The Developer is a duly organized and validly
existing corporation created under the laws of the state of
Washington and has qualified to do business in the State of
California. The Developer has the legal right, power and authority
to enter into this Agreement and the instruments and documents
referenced herein and to consummate the transactions contemplated
hereby. The persons executing this Agreement and the instruments
referenced herein on behalf of the Developer hereby represent and
warrant that such persons have the power, right and authority to
bind the Developer.
b. The Developer has taken all requisite action and
obtained all requisite consents in connection with entering into
this Agreement and the instruments and documents referenced herein
and the consummation of the transactions contemplated hereby, and
no consent of any other party is required.
C. This Agreement is, and all agreements, instruments
and documents to be executed by the Developer pursuant to this
Agreement shall be duly executed by and are or shall be valid and
legally binding upon the Developer and enforceable in accordance
with their respective terms .
d. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby shall result
in a breach of or constitute a default under any agreement,
document, instrument or other obligation to which the Developer is
a party or by which the Developer may be bound, or under any law,
statute, ordinance, rule, governmental regulation or any writ,
injunction, order or decree of any court or governmental body
applicable to the Developer or to the Property.
The representations and warranties contained in this
Section 2 . 8 are true and correct on the date hereof, and no
representation or warranty made by the Developer or in any
statements or exhibit required to be furnished hereunder misstates,
omits or shall misstate or omit a fact necessary to make the
statement therein not misleading. The Developer shall promptly
notify the Agency upon the Developer' s discovery of any fact which
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would render any representation or warranty in this Agreement
untrue, incorrect or misleading in any respect .
ARTICLE III
DEVELOPMENT OF THE PROPERTY
Section 3 . 1 Lot Line Adjustment . If the Property does not
already comprise a one or more separate legal parcels, the
Developer shall prepare and submit for approval to the City a
parcel map or lot line adjustment with respect to the Property,
creating one or more separate legal parcels .
Section 3 . 2 City Land Use Approvals . The City' s zoning
ordinance including, but not limited to, parking and height
requirements, and the City' s building requirements are applicable
to the use and development of the Property pursuant to this
Agreement. The Developer acknowledges that any change in the plans
for development or the use of the Property as set forth in the
Scope of Development shall be subject to the City' s zoning
ordinance and building requirements . No action by the Agency or
the City with reference to this Agreement or related documents
shall be deemed to constitute a waiver of any City parking, height
or other requirements which are applicable to the Property or to
the . Developer, any successor in interest or tenant of the Developer
or any tenant or successor in interest pertaining to the Property,
except by modification or variance approved by the City consistent
with this Agreement . The Agency shall cooperate with and shall
assist the Developer in efforts to obtain all land use approvals
necessary for the development and use contemplated hereby including
modifications or variances from City zoning regulations necessary
to develop the Project consistent with this Agreement and, in
particular, with the Scope of Development, within forty-five (45)
calendar days following written application therefor by the
Developer. Any failure by the City either to approve or disapprove
any of such land use approvals or modifications or variances within
said forty-five (45) calendar day period shall constitute an
enforced delay hereunder, and the Schedule of Performance, as
defined hereinafter, shall be extended by that period of time
beyond said forty-five (45) calendar day period in which the City
approves or disapproves such modifications or variances .
Section 3 . 3 Scope of Development .
a. The Scope of Development set forth in Exhibit "B" is
hereby approved by the Agency upon its execution of this Agreement.
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The Project shall be developed and completed in conformance with
the approved Scope of Development and any and all other plans,
specifications and similar development documents required by this
Agreement, except for such changes as may be mutually agreed upon
in writing by and between the Developer and the Agency. The Agency
agrees to approve preliminary and final construction plans and
preliminary and final landscaping plans, if reasonably consistent
with the approved Scope of Development .
b. The approval of the Scope of Development by the
Agency hereunder shall not be binding upon the City Council or the
Planning Commission of the City with respect to any approvals of
the Project required by such other bodies . If any revisions of the
Scope of Development are required by another government official,
agency, department or bureau having jurisdiction over the
development of the Property after the date of this Agreement, the
Developer and the Agency shall cooperate on a best efforts basis to
obtain waivers of such revisions, or to obtain approvals of any
such revisions which have been made by the Developer and have
thereafter been approved by the Agency. The Agency shall not
unreasonably withhold approval of such revisions .
Section 3 . 4 Conditions of Approval . Subject to the
conditions to Developer ' s obligations under Section 2 . 4 above and
the Agency' s obligations under Section 2 . 3 above, the Developer
agrees to comply fully with any and all reasonable conditions of
approval applicable to all permits and other governmental actions
affecting the Project which are consistent with this Agreement and
the Scope of Development .
Section 3 . 5 Agency Review of Plans .
a. By its execution of this Agreement, the Agency shall
be deemed to have authorized the Developer to proceed with the
final submission of drawings (i .e. , working drawings) , plans and
specifications to the City in connection with Developer ' s
application for a building permit for the improvement of Project,
including the installation of the Area Off-Sites (the "Existing
Plans") .
b. Any changes to the Existing Plans shall be subject
to review by the Agency pursuant to Section 3 . 7 below under the
standards set forth in this Section 3 . 5 and under Section 3 . 7
below.
C. The Agency shall not have the right or
responsibility to approve development plans, construction drawings
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or related documents for purposes of the issuance of a building
permit or otherwise on behalf of the City, but shall only have the
right of reasonable review and approval of such plans, drawings and
documents for purposes of conformity of such plans, drawings and
documents with the terms and conditions of this Agreement . Any
design elements previously submitted to and approved in writing by
the Agency shall not be subject to subsequent disapproval by the
Agency, and any Agency approvals hereunder shall not be
unreasonably withheld.
d. During the preparation of all drawings and plans for
the Project, the Agency Staff and the Developer shall hold regular
progress meetings to coordinate the preparation by the Developer,
and the submission to and review by the City and the Agency of
construction plans and related documents . The Agency Staff and the
Developer shall communicate and consult informally as frequently as
is necessary to ensure that any such plans and related documents
submitted by the Developer to the City and the Agency can receive
prompt and speedy consideration.
e . The Agency' s right of architectural review and
approval of building exteriors and design of the Project shall be
reasonably exercised. The Agency shall also have the right to
review all plans, drawings and related documents pertinent to the
development of the Project in order to ensure that they are
consistent with this Agreement and with the Scope of Development.
The Agency shall not disapprove any aspects or elements of the
Project which are typical of Developer' s prototypical new
facilities in similar locations .
Section 3 . 6 City Plan Review.
a . The Developer shall timely submit to the City for
its review and approval any and all plans, drawings and related
documents pertinent to the development of the Project, as required
by the City. The Agency shall cooperate with and shall assist the
Developer in an effort to obtain the approval of any and all
development plans, construction drawings and related documents
submitted by the Developer to the City consistent with this
Agreement within thirty (30) calendar days following the City' s
receipt of said plans . Any failure by the City to approve any of
such plans or to issue necessary permits for the development of the
Project, as applicable, within said thirty (30) calendar day period
shall constitute an enforced delay hereunder, and the Schedule of
Performance shall be extended by that period of time beyond said
thirty (30) calendar day period in which the City approves said
plans; provided, however, that in the event that the City
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disapproves of any of such plans, the Developer shall within thirty
(30) calendar days after receipt of such disapproval revise and
resubmit such plans in accordance with the City' s requirements and
in such form and substance so as to obtain the City' s approval
thereof.
b. The Agency shall in good faith use its best efforts
to cause the City to approve in a timely fashion any and all plans,
drawings and documents submitted by the Developer hereunder and to
cause the City not to impose new conditions inconsistent with: (i)
prior plans, drawings and documents approved by the City; or (ii)
the Scope of Development .
Section 3 . 7 Changes in Plans .
a . If the Developer desires to make any change in the
final construction drawings, plans and specifications and related
documents after their approval by the Agency and/or the City, the
Developer shall submit the proposed change in writing to the Agency
and/or the City for approval . The Agency shall notify the
Developer of approval or disapproval thereof in writing within
fifteen (15) calendar days after submission to the Agency. This
fifteen (15) calendar day period may be extended by mutual consent
of the Developer and the Agency. Any such change shall, in any
event, be deemed to be approved by the Agency unless rejected, in
whole or in part, by written notice thereof submitted by the Agency
to the Developer, setting forth the reasons therefor, and such
rejection shall be made within said fifteen (15) calendar day
period unless extended as permitted herein. The Agency shall use
its best efforts to cause the City to review and approve or
disapprove any such change in accordance with the powers and
responsibilities reserved to the sole and separate discretion of
the City, as applicable.
b. The Developer, upon receipt of a notice of
disapproval by the Agency and/or the City, may revise such portions
of the proposed change in construction drawings, plans and
specifications and related documents as are rejected and shall
thereafter resubmit such revisions to the Agency for approval in
the manner provided in Sections 3 . 5 and 3 . 6 hereof and to the City
in accordance with the powers and responsibilities reserved to the
sole and separate discretion of the City, as applicable .
C. The Developer shall have the right during the course
of construction to make changes in construction concerning the
interior of structures and "minor field changes" without seeking
the approval of the Agency; provided, however, that such changes do
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not affect the type of use to be conducted within all or any
portion of a structure . Said "minor field changes" shall be
defined as those changes from the approved final construction
drawings, plans and specifications which have no substantial effect
on the improvements and are made in order to expedite the work of
construction in response to field conditions . Nothing contained in
this Section shall be deemed to constitute a waiver of or change in
the City' s Building Code requirements governing such "minor field
changes" or in any and all approvals by the City otherwise required
for such "minor field changes . "
Section 3 . 8 Developer ' s Costs; Developer' s Permits .
a . The costs of developing the Property and of
constructing all improvements thereon for the Project (including
without limitation, the Area Off-Site as set forth in the Scope of
Development) shall be borne by the Developer. To the extent that
the actual costs incurred by the Developer in connection with the
design, construction and installation of the Area Off-Site exceeds
the sum of $495, 040 . 00, the Developer shall be solely responsible
for paying all amounts in excess of $495, 400 . 0, as required to
complete the construction and installation of the Area Off-Sites
and the acceptance of the dedication therefrom by the City upon
completion.
b. The Developer shall at its expense cause to be
prepared, and shall pay any and all fees pertaining to the review
and approval by the City of, all required construction, planning
and other documents reasonably required by governmental bodies
pertinent to the development of the Property hereunder including,
but not limited to, specifications, drawings, plans, maps, permit
applications, land use applications, zoning applications and design
review documents .
C. The Developer shall pay for any and all costs for
the improvement of the Property and the Project . The Developer
shall obtain any and all necessary approvals prior to the
commencement of applicable portions of said construction, and the
Developer shall take reasonable precautions to ensure the safety
and stability of surrounding properties during said construction.
d. The Developer shall be solely responsible for
ensuring that pursuant to Labor Code Sections 1770 to 1777,
prevailing wages shall be paid during the course of construction
and installation of the Area Off-Sites to each craft or type of
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worker engaged by the Developer or its contractors or
subcontractors to contract or install the Area Off-Sites .
Section 3 . 9 Progress Reports .
a . Before commencement of construction and development
of any buildings, structures or other work or improvements upon the
Property, the Developer shall, at its own expense, secure or shall
cause to be secured, any and all permits which may be required for
such construction, development or work by the City or any other
governmental agency having jurisdiction thereof. The Agency shall
cooperate in good faith with the Developer in the Developer ' s
efforts to obtain from the City or any other appropriate
governmental agency any and all such permits and, upon completion
of applicable portions of the Project, certificates of occupancy.
b. Prior to and during the period of construction of
the Project, the Developer shall submit to the Agency written
progress reports when and as reasonably requested by the Agency but
in no event more frequently than every two (2) weeks . The reports
shall be in such form and detail as may reasonably be required by
the Agency, and shall upon request include a reasonable number of
construction photographs taken since the last such report submitted
by the Developer.
Section 3 . 10 Developer' s Insurance . Prior to the
commencement of construction on the Property, the Developer shall
furnish, or shall cause to be furnished, to the Agency duplicate
originals or appropriate certificates of public indemnity and
liability insurance in the amount of One Million Dollars
($1, 000, 000 . 00) combined single limit, naming the Agency and the
City as additional insureds . Said insurance shall cover
comprehensive general liability including, but not limited to:
contractual liability; acts of subcontractors; premises-operations;
explosion, collapse and underground hazards, if applicable; broad
form property damage; and personal injury including libel, slander
and false arrest . In addition, the Developer shall provide to the
Agency adequate proof of comprehensive automobile liability
insurance covering owned, non-owned and hired vehicles, combined
single limit in the amount of One Million Dollars ($1, 000, 000 . 00)
each occurrence; and proof of workers ' compensation insurance. Any
and all insurance policies required hereunder shall be obtained
from insurance companies admitted in the State of California and
rated at least B+ XII in Best ' s Insurance Guide. All said
insurance policies shall provide that they may not be canceled
unless the Agency and the City receive written notice of
cancellation at least thirty (30) calendar days prior to the
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effective date of cancellation. Any and all insurance obtained by
the Developer hereunder shall be primary to any and all insurance
which the Agency and/or City may otherwise carry, including self
insurance, which for all purposes of this Agreement shall be
separate and apart from the requirements of this Agreement . Any
insurance policies governing the Property as obtained by the Agency
shall not be transferred from the Agency to the Developer.
Appropriate insurance means those insurance policies approved by
the Agency Counsel consistent with the foregoing. Any and all
insurance required hereunder shall be maintained and kept in force
until the Agency has issued the Certificate of Completion for the
Property.
Section 3 . 11 Non-Discrimination. The Developer for itself
and its successors and assigns agrees that during the course of the
construction of the improvements on the Property, the Developer
will not discriminate against any employee or applicant for
employment because of sex, marital status, race, color, religion,
creed, national origin, or ancestry.
Section 3 . 12 Aaency Access .
Officers, employees, agents or representatives of the
Agency and the City shall have the right of reasonable access to
the Property, without the payment of charges or fees, during normal
construction hours during the period of construction of the Project
for the purpose of inspecting work being performed in constructing
the Project. Such access and inspection will be undertaken in such
a way as not to unreasonably interfere with construction and
development activities . Such officers, employees, agents or
representatives of the Agency and/or the City shall be those
persons who are so identified by the Director. Any and all
officers, employees, agents or representatives of the Agency and
the City who enter the Property pursuant hereto shall identify
themselves at the job site office upon their entrance thereon and
shall at all times be accompanied by a representative of the
Developer; provided, however, that the Developer shall make a
representative of the Developer available for this purpose at all
times during normal construction hours upon reasonable notice from
the Agency. The Agency shall indemnify and hold the Developer
harmless from injury, property damage or liability arising out of
the exercise by the Agency and/or the City of any right of access
to the Property under this Agreement, other than injury, property
damage or liability relating to the negligence of the Developer or
its officers, agents or employees .
Section 3 . 13 [Intentionally Omitted]
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d —
Section 3 . 14 Taxes Assessments, Encumbrances and Liens .
The Developer shall pay prior to delinquency all real property
taxes and assessments assessed and levied on or against the
Property subsequent to the close of the escrow under the Land
Contract and the conveyance to the Developer of title to the
Property. Nothing herein contained shall be deemed to prohibit the
Developer from contesting the validity or amounts of any tax
assessment, encumbrance or lien under applicable law, nor to limit
the remedies available to the Developer in respect thereto;
provided however, that to the extent any such real property taxes
and assessments may not be paid prior to the Delinquency Roll Date,
then the provisions of Section 2 . 3 . i, shall apply to Delinquent
Taxes, if any.
Section 3 . 15 Certain Prohibitions Against Transfers .
a. Prior to the recordation of a Certificate of
Completion with respect to the Property, as set forth in Section
3 .18 of this Agreement, the Developer shall not, without prior
written approval of the Agency, or except as permitted by this
Agreement, (i) assign or attempt to assign this Agreement or any
right herein or (ii) make any total or partial sale, transfer,
conveyance, lease, leaseback, or assignment of the whole or any
part of the Property or the improvements thereon except to a
"Costco Affiliate" . The term "Costco Affiliate" means Costco
Companies, Inc. , Costco Wholesale Corporation, The Price Company,
any entity controlled by or under common control within any of the
foregoing, any successor by merger, acquisition or corporate
reorganization to any of the foregoing or any other entity which
may acquire not less than ten (10) stores in California presently
operated under the trade names "Costco" or "Price Club" . This
prohibition shall not apply to any of the following: (i) the
reasonable grant of limited easements or permits to facilitate the
development of the Property; or (ii) leases, other than ground
leases, to prospective tenants whose use of the Property, as
applicable, is in conformity with the Community Redevelopment Law
and all applicable zoning laws or ordinances .
b. It is understood and agreed by the Developer that
during the Term of the pledge of the Net Tax Increment to pay the
obligation of the Agency under Section 2 . 3, neither the Developer,
nor its assigns or successors in interest to the Property or this
Agreement, shall use or otherwise sell, transfer, convey, assign,
lease, leaseback or hypothecate the Property or any portion of
either to any entity or party, for any use of the Property that is
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partially or wholly exempt from the payment of real property taxes
pertinent to the Property or any portion thereof, or which would
cause the exemption of the payment of all or any portion of such
real property taxes .
C. In the absence of specific written agreement or
approval by the Agency, no unauthorized sale, transfer, conveyance,
lease, leaseback or assignment of the Property shall be deemed to
relieve the Developer from any of its obligations to the Agency
under this Agreement .
Section 3 . 16 [Intentionally Omitted]
Section 3 . 17 . As promptly as feasible following the
completion of the installation of the Area Off-Sites by the
Developer and the acceptance thereof by the City, or concurrently
upon the submission of a written request for the issuance of a
Certificate of Completion for the Project under Section 3 . 18, the
Developer shall submit an appropriately itemized and detailed
written accounting of the costs actually incurred by the Developer
in connection with the design, construction and installation of the
Area Off-Sites . Such accounting shall be accompanied by final
certification of the payroll records of all contractors and
subcontractors of the Developer who provided construction related
labor service in connection with the construction and installation
of the Area Off-Sites that the applicable amounts of prevailing
wages have been paid pursuant to Labor Code Sections 1770-1777,
inclusive, for each craft or type of worker engaged in the work of
installation of the Area Off-Sites . To the extent such costs
actively incurred are less the maximum amount of the Agency
indebtedness authorized for such purpose under Section 2 . 3 .b,
above, then the obligation of the Agency to repay such amount, plus
interest, shall be reduced accordingly. The Developer shall
include in such accounting a written certification of an authorized
officer of the Developer signed under penalty of perjury, that the
information and cost accounting included therein is true and
correct to the best knowledge of such officer based upon due and
diligent inquiry.
Section 3 . 18 Certificate of Completion.
a. Following the written request therefor by the
Developer and the completion of construction and development of the
improvements, excluding any normal and customary tenant
improvements and reasonable building "punch-list" items to be
completed by the Developer for the Project, the Agency shall
furnish the Developer with a Certificate of Completion for the
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a —
Project as is applicable, substantially in the form in Exhibit "D"
attached hereto. The completion of construction and development of
improvements for the Project shall be deemed to include the
completion of construction and development of any and all buildings
and any and all parking, landscaping and related improvements
necessary to support or which meet the requirements applicable to
the building and its use and occupancy for the Project and the
acceptance by the City of the dedication of the Area Off-Sites as
complete.
b. The Agency shall not unreasonably withhold the
issuance of such Certificate of Completion. The Certificate of
Completion shall be, and shall state that it is, a conclusive
determination of satisfactory completion of all of the obligations
of this Agreement with respect to the development of the Project
including, without limitation, under the Scope of Development .
After the recordation of the Certificate of Completion, any party
then owning or thereafter purchasing, leasing or otherwise
acquiring any interest in the Project, as applicable, shall not
(because of such ownership, purchase, lease or acquisition) incur
any obligation or liability with respect to the development of the
Project.
C. The Certificates of Completion shall be in such form
as to permit them to be recorded in the Recorder' s Office of the
County where the Property is located.
d. If the Agency refuses or fails to furnish a
Certificate of Completion for the Project after written request
from the Developer, the Agency shall, within fifteen (15) business
days of its receipt of such written request or within ten (10)
calendar days after the next regular meeting date of the Agency
following the date of its receipt of such request, whichever date
occurs later, provide to the Developer a written statement setting
forth the reasons with respect to the Agency' s refusal or failure
to furnish a Certificate of Completion. The statement shall also
contain the Agency' s opinion of the action the Developer must take
to obtain a Certificate of Completion. If the reason for such
refusal is confined to the immediate unavailability of specific
items or materials for construction or landscaping at a price
reasonably acceptable to the Developer or other reasonable building
"punch-list" items, the Agency will issue its Certificate of
Completion upon the posting of a bond or irrevocable letter of
credit, reasonably approved as to form and substance by the Agency
Counsel and obtained by the Developer in an amount representing a
fair value of the work not yet completed as reasonably determined
by the Agency. If the Agency shall have failed to provide such
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written statement within the foregoing period, the Developer shall
be deemed conclusively and without further action of the Agency to
have satisfied the requirements of this Agreement with respect to
the applicable portion of the Property as if a Certificate of
Completion had been issued therefor. Notwithstanding any language
in this Agreement or in a Certificate of Completion to the
contrary, the issuance of a Certificate of Completion does not
relieve the Developer from the obligation to complete, free of
liens against the Property as applicable, any such remaining works
of improvement .
e. Such Certificate of Completion shall not constitute
evidence of compliance with or satisfaction of any obligation of
the Developer to any holder of a mortgage, or any insurer of a
mortgage securing money loaned to finance the improvements
described herein, or any part thereof. Such Certificate of
Completion shall not be deemed to constitute a notice of completion
as referred to in Section 3093 of the California Civil Code, nor
shall it act to terminate the continuing covenants or conditions
subsequent contained in Sections 2 . 3, and 4 . 2 through 4 . 9 hereof.
ARTICLE IV
USE OF THE PROPERTY
Section 4 . 1 Opening Conditions .
If the Developer has not completed the Project within 24
months after the close of escrow to purchase the Property from the
Current Owner under the term of the Land Contract and thereafter
applied to the Agency for the issuance of a Certificate of
Completion under Section 3 . 18 and thereafter opened the Project for
business to the general public (the "Opening Date") for a period of
one (1) day as a retail and/or wholesale store under the trade name
Costco, Price Club or such other trade name as Developer or a
Costco Affiliate may utilize in not less than ten (10) of their
similar facilities in Southern California (a "Costco Trade Name") ,
this Agreement shall have no further force or effect, and the
parties shall each execute an appropriate form of written
acknowledgment of such expiration of the Agreement and the
discharge and release of the pledge of the Net Tax Increment and
the discharge, release, waiver and the forgiveness of the
indebtedness and obligation of the Agency to pay any sum to the
Developer under Section 2 . 3 .a or Section 2 . 3 .b.
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Section 4 . 2 Operating Covenant .
a. Covenant . Developer covenants and agrees, subject
to the provisions and limitations of remedies under Sections 4 .2
through 4 . 6 hereof and except during any periods of Temporary
Closure (as defined below) , that from and after the Opening Date,
it will operate or cause to be operated a retail and/or wholesale
store in the Project under a Costco Trade Name or an "Acceptable
Substitute (s) " in not less than an aggregate of One Hundred
Thousand (100, 000) square feet of floor area during that period
commencing on the Opening Date and ending fifteen (15) years
thereafter. The words "Temporary Closure" means any cessation of
business operations open to the public in the 100, 000 square foot
of floor area store in the Project after the Opening Date for a
period for (i) no more than ninety (90) days, plus (ii) a period
equal to any period ("Excused Closure") of the cessation of such
business operations due to events of repair, restoration,
alteration, construction, remodeling or due to events of force
majeure as set out in Section 6 . 5 hereof. The sole and exclusive
remedy of the Agency for a breach or default under the covenant and
agreement of the Developer in this Section 4 . 2 is the liquidated
damages provided for below in Section 4 . 4 below. A "Permanent
Closure" of the Project shall be deemed to have occurred on the
date of the expiration of any applicable period of "Temporary
Closure" .
b. Excused Closure. Any Excused Closure must be due to
events which are, in the reasonable business judgment of the
Developer, sufficient to justify the temporary cessation of
business operations . If after the Opening Date there is a closure
of more than ninety (90) days and the Agency and Developer disagree
as to whether an Excused Closure has occurred, then either the
Developer or the Agency may petition the American Arbitration
Association for final and binding arbitration in accordance with
Title 9, Chapter 3 of the California Code of Civil Procedure. All
of the provisions of Section 1283 . 05 of the California Code of
Civil Procedure are hereby incorporated into this Agreement . In
the event that a determination is made that such closure was not an
Excused Closure then the Developer may cure such closure by opening
for business within ninety (90) days after such determination
becomes final, in which case such closure shall be deemed to have
been a Temporary Closure .
NOTICE: BY INITIALING IN THE SPACE BELOW, YOU ARE AGREEING
TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE
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"ARBITRATION OF DISPUTES" PROVISION CONTAINED IN SECTION 4 . 2
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND
YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE
LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE
BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND
APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE
"ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO
ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED
TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS
VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO
SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE
"ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION.
Agency: Developer:
C. Acceptable Substitute (s) . As used herein, the term
"Acceptable Substitute (s) " means retail or warehouse retail
business operation (s) which (i) generate annual retail sales which
are subject to sales taxes of not less than four hundred million
dollars ($400, 000, 000) per annum or (ii) are approved by Agency in
its sole and absolute discretion.
Section 4 . 3 Governmental Acts . If the Developer is
prevented from operating as provided above by a judgment or
delivery of possession of the Property to a governmental entity
under power of eminent domain or other governmental action, the
operating covenants set forth in Section 4 .2 shall terminate on the
date on which a governmental entity takes possession of the
Property. Accordingly, in such event, the Developer shall have no
further obligation to pay liquidated damages pursuant to Section
4 . 4 below and the obligation of the Agency to make any further
payments to the Developer under Section 2 . 3 . a or Section 2 . 3 .b
shall cease and the remaining balance thereof and the pledge of the
Net Tax Increment shall be deemed waived, discharged and forgiven.
Section 4 . 4 LIQUIDATED DAMAGES. IN THE EVENT OF A BREACH
OR DEFAULT BY DEVELOPER UNDER THE OPERATING COVENANT UNDER SECTION
4 .2 ABOVE, THE DEVELOPER SHALL PAY TO THE AGENCY AN AMOUNT EQUAL TO
THE "SUBSIDY RECOUPMENT AMOUNT" AS OF THE DATE OF PERMANENT CLOSURE
AS LIQUIDATED DAMAGES AS THE SOLE AND EXCLUSIVE REMEDY OF THE
AGENCY HEREUNDER. IN THE EVENT OF SUCH BREACH OR DEFAULT, THE
AGENCY WOULD SUSTAIN DAMAGES BY REASON THEREOF WHICH WOULD BE
UNCERTAIN. SUCH DAMAGES WOULD INVOLVE SUCH VARIABLE FACTORS AS THE
DELAY OR FRUSTRATION OF TAX REVENUES THEREFROM TO THE CITY AND THE
AGENCY, THE DELAY OR FAILURE OF THE AGENCY TO FURTHER THE
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IMPLEMENTATION OF THE REDEVELOPMENT PLAN, AND A LOSS OF OPPORTUNITY
TO ENGAGE IN OTHER POTENTIAL TRANSACTIONS, RESULTING IN DAMAGE AND
LOSS TO THE AGENCY. IT IS IMPRACTICABLE AND EXTREMELY DIFFICULT TO
FIX THE AMOUNT OF SUCH DAMAGES TO THE AGENCY, BUT THE PARTIES ARE
OF THE OPINION, UPON THE BASIS OF ALL INFORMATION AVAILABLE TO
THEM, THAT SUCH DAMAGES WOULD APPROXIMATELY EQUAL THE AMOUNT OF THE
SUBSIDY RECOUPMENT AMOUNT, AND SUCH AMOUNT SHALL BE RETAINED BY THE
AGENCY AS THE TOTAL OF ALL LIQUIDATED DAMAGES FOR ANY AND ALL SUCH
DEFAULTS AND NOT AS A PENALTY.
THIS LIQUIDATED DAMAGE PROVISION SHALL BE APPLICABLE ONLY IN THE
EVENT OF A BREACH OR DEFAULT BY THE DEVELOPER UNDER THE OPERATING
COVENANT CONTAINED IN SECTION 4 . 2 AND NOT IN THE EVENT OF ANY OTHER
BREACH OR DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT.
THE DEVELOPER AND THE AGENCY SPECIFICALLY ACKNOWLEDGE THIS
LIQUIDATED DAMAGES PROVISION BY THE SIGNATURES OF THEIR
REPRESENTATIVES BELOW:
Developer Agency
Section 4 . 5 Subsidy Recoupment Amount . The term "Subsidy
Recoupment Amount" means the product of (i) all sums paid to
Developer by the Agency pursuant to Section 2 . 3 .a and Section
2 . 3.b, above, multiplied by (ii) the "Applicable Percentage" with
respect to the date upon which the Permanent Closure of the Project
occurs . The term Applicable Percentage means : 100%, minus that
percentage of fifteen (15) years which has elapsed from the Opening
Date to the date of a Permanent Closure. For example, if the
Developer has operated as provided under Section 4 . 2 for five (5)
years (e.g. 33 . 33% of the duration of its operating covenant) , then
the Applicable Percentage in such an instance would be 33 . 33% .
Section 4 . 6 Obligation to Refrain from Discrimination.
The Developer covenants and agrees for itself, its successors,
its assigns and every successor in interest to the Property or any
part thereof, that there shall be no discrimination against or
segregation of any person, or group of persons, on account of sex,
marital status, race, color, religion, creed, national origin or
ancestry in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the Property nor shall the Developer, itself
or any person claiming under or through it, establish or permit any
such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of
tenants, lessees, subtenants, sublessee or vendees of the Property.
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Section 4 . 7 Form of Nondiscrimination and Nonse_regation
Clauses .
The Developer covenants and agrees for itself, its successors,
its assigns, and every successor in interest to the Property or any
part thereof, that the Developer, such successors and such assigns
shall refrain from restricting the sale, lease, sublease, rental,
transfer, use, occupancy, tenure or enjoyment of the Property (or
any part thereof) on the basis of sex, marital status, race, color,
religion, creed, ancestry or national origin of any person. All
deeds, leases or contracts pertaining thereto shall contain or be
subject to substantially the following nondiscrimination or
nonsegregation clauses :
a . In deeds : "The grantee herein covenants by and for
itself, its successors and assigns, and all persons claiming under
or through them, that there shall be no discrimination against or
segregation of, any person or group of persons on account of race,
color, creed, religion, sex, marital status, national origin, or
ancestry in the sale, lease, sublease, transfer, use, occupancy,
tenure, or enjoyment of the premises herein conveyed, nor shall the
grantee or any person claiming under or through it, establish or
permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use
or occupancy of tenants, lessees, subtenants, sublessee, or vendees
in the premises herein conveyed. The foregoing covenants shall run
with the land. "
b. In leases : "The Lessee herein covenants by and for
itself, its successors and assigns, and all persons claiming under
or through them, and this lease is made and accepted upon and
subject to the following conditions : That there shall be no
discrimination against or segregation of any person or group of
persons, on account of race, color, creed, religion, sex, marital
status, national origin, or ancestry, in the leasing, subleasing,
transferring, use, occupancy, tenure, or enjoyment of the premises
herein leased nor shall the lessee itself, or any person claiming
under or through it, establish or permit any such practice or
practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy, of tenants lessees,
sublessee, subtenants, or vendees in the premises herein leased. "
C. In contracts : "There shall be no discrimination
against or segregation of any person or group of persons on account
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of race, color, creed, religion, sex, marital status, national
origin, or ancestry, in the sale, lease, sublease, transfer, use,
occupancy, tenure, or enjoyment of the premises herein conveyed or
leased, nor shall the transferee or any person claiming under or
through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection,
location, number, use, or occupancy, of tenants, lessees,
sublessees, subtenants, or vendees of the premises herein
transferred. " The foregoing provision shall be binding upon and
shall obligate the contracting party or parties and any
subcontracting party or parties, or other transferees under the
instrument.
Section 4 . 8 Effect and Duration of Covenants .
The covenants established against discrimination shall remain
in effect in perpetuity. The covenants respecting uses of the
Property shall remain in effect for a period of fifteen (15) years
from the Opening Date, shall run with the land and shall constitute
equitable servitudes thereon, and shall, without regard to
technical classification and designation, be binding for the
benefit and in favor of the Agency, its successors and assigns .
The Agency is deemed the beneficiary of the terms and
provisions of this Agreement and of the covenants running with the
land for and in its own rights and for the purposes of protecting
the interests of the community. The Agency shall have the right,
if such covenants are breached, to exercise all rights and remedies
and to maintain any actions or suits at law or in equity or such
other proper proceedings to enforce the curing of such breaches to
which it or any other beneficiary of such covenants may be
entitled, including, without limitation, to specific performance,
damages and injunctive relief. The Agency shall have the right to
assign all of its rights and benefits hereunder to the City.
Section 4 . 9 Restrictive Covenant .
Upon Agency' s request, Developer shall cause to be recorded
against the title to the Property a Community Redevelopment
Covenant memorializing the terms of Sections 4 .2 through 4 . 8,
inclusive, including, without limitation, the obligation of the
Developer, and its successors in interest in the Property to pay
the Subsidy Recoupment Amount to the Agency when due as liquidated
damages under Section 4 . 4 .
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ARTICLE V
DEFAULTS AND REMEDIES
Section 5 . 1 Defaults - General .
a. Subject to the extensions of time set forth in
Section 6. 5 hereof, failure or unexcused delay by either party to
perform any term or provision of this Agreement shall constitute a
default under this Agreement; provided, however, that if a party
otherwise in default commences to cure, correct or remedy such
default within thirty (30) calendar days after receipt of written
notice specifying such default and shall diligently and
continuously prosecute such cure, correction or remedy to
completion (and where any time limits for the completion of such
cure, correction or remedy are specifically set forth in this
Agreement, then within said time limits) , such party shall not be
deemed to be in default hereunder.
b. The injured party shall give written notice of
default to the party in default, specifying the default complained
of by the nondefaulting party. Delay in giving such notice shall
not constitute a waiver of any default nor shall it change the time
of default.
C. Any failure or delays by either party in asserting
any of its rights and remedies as to any default shall not operate
as a waiver of any default or of any such rights or remedies .
Delays by either party in asserting any of its rights and remedies
shall not deprive either party of its right to institute and
maintain any actions or proceedings which it may deem necessary to
protect, assert or enforce any such rights or remedies .
Section 5 . 2 Leaal Actions .
a. In addition to any other rights or remedies, either
party may institute legal action to cure, correct or remedy any
default, to recover damages for any default, or to obtain any other
remedy consistent with the purposes of this Agreement . Such legal
actions must be instituted in the Superior Court of the County of
San Bernardino, State of California, in any other appropriate court
in that County, or in the Federal District Court in the Eastern
District of California.
b. The laws of the State of California shall govern the
interpretation and enforcement of this Agreement.
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C. In the event that any legal action is commenced by
the Developer against the Agency, service of process on the Agency
shall be made by personal service upon the Secretary of the Agency,
or in such other manner as may be provided by law.
d. In the event that any legal action is commenced by
the Agency against the Developer, service of process shall be by
personal service on the registered agent for service of process in
California for the Developer (or such other agent for service of
process and at such address as may be specified in written notice
to the Agency) , or in such other manner as may be provided by law,
and shall be valid whether made within or without the State of
California.
Section 5 . 3 Rights and Remedies are Cumulative .
Except with respect to any rights and remedies expressly
declared to be exclusive in this Agreement, the rights and remedies
of the parties are cumulative and the exercise by either party of
one or more of such rights or remedies shall not preclude the
exercise by it, at the same or different times, of any other rights
or remedies for the same default or any other default by the other
party.
Section 5 . 4 Damages .
If either party defaults with regard to any provision of this
Agreement other than Section 4 . 2, the nondefaulting party shall
serve written notice of such default upon the defaulting party. If
the defaulting party does not diligently commence to cure such
default within thirty (30) calendar days after service of the
notice of default and promptly complete the cure of such default
within a reasonable time, not to exceed ninety (90) calendar days
(or such shorter period as may otherwise be specified in this
Agreement for any specific default) , after the service of written
notice of such default, the defaulting party shall be liable to the
other party for damages caused by such default.
Section 5 . 5 Specific Performance.
If either party defaults under any of the provisions of this
Agreement other than Section 4 . 2, the nondefaulting party shall
serve written notice of such default upon such defaulting party.
If the defaulting party does not commence to cure the default and
diligently and continuously proceed with such cure within thirty
(30) calendar days after service of the notice of default, and such
default is not cured within a reasonable time thereafter (and where
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any time limits for the completion of such cure, correction or
remedy are specifically set forth in this Agreement, then within
said time limits) , the nondefaulting party, at its option, may
institute an action for specific performance of the terms of this
Agreement, except as otherwise provided in Section 6 . 9 hereof.
ARTICLE VI
GENERAL PROVISIONS
Section 6 . 1 Notices Demands and Communications Between the
Parties .
a. Any and all notices, demands or communications
submitted by any party to another party pursuant to or as required
by this Agreement shall be proper if in writing and dispatched by
messenger for immediate personal delivery, or by registered or
certified United States mail, postage prepaid, return receipt
requested, to the principal office of the Agency or the Developer,
as applicable, as designated in Section 1 . 3 . a and Section 1 . 3 .b
hereof. Such written notices, demands and communications may be
sent in the same manner to such other addresses as either party may
from time to time designate as provided in this Section. Any such
notice, demand or communication shall be deemed to be received by
the addressee, regardless of whether or when any return receipt is
received by the sender or the date set forth on such return
receipt, on the day that it is dispatched by messenger for
immediate personal delivery, or two (2) calendar days after it is
placed in the United States mail as heretofore provided.
b. In addition to the submission of notices, demands or
communications to the parties as set forth above, copies of all
notices to any party shall also be sent to:
(If to Developer) Costco Wholesale Corporation,
a Washington corporation
999 Lake Drive
Issaquah, WA 98027
(With copy to) Greenberg, Glusker, Fields,
Claman & Machtinger LLP
1900 Avenue of the Stars
Suite 2100
Los Angeles, CA 90067
Attn: Henry D. Finkelstein, Esq.
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(If to Agency) Redevelopment Agency of the City of San
Bernardino
201 N. "E" Street, 3rd Floor
San Bernardino, CA 92401-1507
Attn: Development Director
(With copy to) Sabo & Green, A Professional Corporation
23801 Calabasas Road, Suite 1015
Calabasas, CA 91302
Attn: Timothy Sabo, Esq.
Section 6 . 2 Conflict of Interest .
No member, official or employee of the Agency having any
conflict of interest, direct or indirect, related to this Agreement
and the development of the Property shall participate in any
decision relating to the Agreement . The parties represent and
warrant that they do not have knowledge of any such conflict of
interest.
Section 6 . 3 Warranty Aaainst Payment of Consideration for
Aareement .
The Developer warrants that it has not paid or given, and will
not pay or give, any third party any money or other consideration
for obtaining this Agreement . Third parties, for the purposes of
this Section, shall not include persons to whom fees are paid for
professional services if rendered by attorneys, financial
consultants, accountants, engineers, architects and the like when
such fees are considered necessary by the Developer.
Section 6 . 4 Nonliability of Agency Officials and
Employees .
No member, official or employee of the Agency shall be
personally liable to the Developer, or any successor in interest,
in the event of any default or breach by the Agency or for any
amount which may become due to the Developer or to its successor,
or on any obligations under the terms of this Agreement, except for
gross negligence or willful acts of such member, officer or
employee.
Section 6 . 5 Enforced Delay: Extension of Time of
Performance.
In addition to specific provisions of this Agreement,
performance by either party hereunder shall not be deemed to be in
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default where delays or defaults are due to war; insurrection;
strikes; lockouts; riots; floods; earthquakes; fires; casualties;
acts of God; acts of public enemy; epidemics; quarantine
restrictions; freight embargoes or lack of transportation; weather-
caused delays; inability to secure necessary labor, materials or
tools; delays of any contractor, subcontractor or supplier; acts of
the other party other than as permitted or required by the terms of
this Agreement; acts or failure to act of any public or
governmental agency or entity other than as permitted or required
by the terms of this Agreement (except that action or failure to
act by the City or the Agency shall not extend the time for the
Agency to act unless such extension is otherwise expressly
authorized herewith unless such action or failure to act is the
result of a lawsuit or injunction including by way of illustration,
but not limited to, lawsuits pertaining to the adoption of the
Agreement, other-Project related approvals of the City, and the
like) or any other causes beyond the control or without the fault
of the party claiming an extension of time to perform. The
foregoing are sometimes referred to herein as "force majeure" . Any
extension of time for any such cause hereunder shall be for the
period of the enforced delay and shall commence to run from the
time of the commencement of the cause, if notice by the party
claiming such extension is sent to the other party within thirty
(30) calendar days of the commencement of the cause . Times of
performance under this Agreement may also be extended by mutual
agreement in writing by and between the Agency and the Developer.
Section 6 . 6 Approvals .
a. Approvals required of the Agency or the Developer,
or any officers, agents or employees of either the Agency or the
Developer, shall not be unreasonably withheld and approval or
disapproval shall be given within the time set forth in the
Schedule of Performance or, if no time is given, within a
reasonable time .
b. The Director of the Agency is authorized to sign on
his own authority amendments to this Agreement which are of routine
or technical nature, including minor adjustments to the Schedule of
Performance.
Section 6 . 7 Real Estate Commissions .,
The Agency shall not be liable for any real estate
commissions, brokerage fees or finder fees which may arise from or
in relation to this Agreement .
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The Agency represents to Developer that it has not retained or
entered into any Agreement with any broker in connection with the
sale of the Property or negotiation of this Agreement.
Section 6 . 8 Indemnification.
The Developer agrees to indemnify and hold the City and the
Agency, and their officers, employees and agents, harmless from and
against all damages, judgments, costs, expenses and fees arising
from or related to any act or omission of the Developer in
performing its obligations hereunder. The Agency agrees to
indemnify and hold the Developer and its officers, employees and
agents, harmless from and against all damages, judgments, costs,
expenses and fees arising from or related to any act or omission of
the Agency in performing its obligations hereunder.
Section 6 . 9 Release of Developer from Liability.
Notwithstanding any provision herein to the contrary, the
Developer shall be relieved of any and all liability for the
obligations of the Developer hereunder with regard to the Property
when a Certificate of Completion has been issued by the Agency
hereunder with respect to said parcel, other than any covenants and
obligations provided by the grant deeds by which the Property is
conveyed to the Developer hereunder.
Section 6 . 10 Attorneys ' Fees .
If either party hereto files any action or brings any action
or proceeding against the other arising out of this Agreement,
seeks the resolution of disputes pursuant to Section 6 . 11 hereof,
or is made a party to any action or proceeding brought by the
Escrow Agent, then as between the Developer and the Agency, the
prevailing party shall be entitled to recover as an element of its
costs of suit or resolution of disputes pursuant to Section 6 . 11
hereof, and not as damages, its reasonable attorneys ' fees as fixed
by the Court or other forum for resolution of disputes as set forth
in Section 6 . 11 hereof, in such action or proceeding or in a
separate action or proceeding brought to recover such attorneys '
fees .
Section 6. 11 Dispute Resolution.
Any controversy or dispute arising from or relating to this
Agreement shall be heard by a reference pursuant to California Code
of Civil Procedure Sections 638 (1) , 640 and 641 through 645 . 1,
inclusive, by the Court in an action or proceeding to be commenced
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only in San Bernardino County, California. Upon commencement of
any such action or proceeding, the parties hereto shall endeavor to
agree upon and have appointed by the Court a retired Superior Court
Judge or Court of Appeal Justice from the then current list of
retired judges and justices available to serve as referees in San
Bernardino County. If the parties are unable to agree upon the
referee within five (5) business days after service of the
complaint, or the referee selected by the parties is unable or
unwilling to serve and the parties cannot agree on an alternate
within five (5) business days of notice thereof, then either party
may make application to the Court in which the action or proceeding
is pending for the appointment of a judge or justice from said list
to serve as the referee. In connection therewith, the parties each
shall be entitled to submit the names of three names from said
list, each party shall be entitled to strike one name proposed by
the other party, and the appointment shall be made from the
remaining four names, unless each of them are unwilling or unable
to serve, in which case the Court shall exercise its powers under
California Code of Civil Procedure Section 640 . The referee shall
try any or all of the issues in the action or proceeding, whether
of fact or of law, and shall report a statement of decision
thereon. The parties shall advance, in equal shares, the fees and
expenses of the referee selected pursuant to this Section 6. 11 .
However, the referee ' s statement of decision shall award the party
that, in light of the issues litigated and the referee ' s decision
on those issues, was the more successful in the reference, all of
its actual attorneys ' fees reasonably incurred in good faith, all
of its fees and expenses associated with the reference, including,
without limitation, any administrative fees, room charges, and
referee fees, and those costs allowable in an action at law.
Notwithstanding anything contained herein to the contrary, the
parties hereto expressly preserve all rights and remedies they may
have at law or in equity unless and until a referee is appointed
pursuant to this Section 6 . 11, including, without limitation, the
right to seek provisional remedies or injunctive relief.
Section 6 . 12 Effect .
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns .
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ARTICLE VII
ENTIRE AGREEMENT WAIVERS AND AMENDMENT
Section 7 . 1 Entire Agreement .
a. This Agreement shall be executed in four (4)
duplicate originals each of which is deemed to be an original .
This Agreement, and the attachments hereto, constitute the entire
understanding and Agreement of the parties .
b. This Agreement integrates all of the terms and
conditions mentioned herein or incidental hereto, and supersedes
all negotiations or previous agreements between the parties with
respect to all or any part of the Property and the development
thereof.
C. None of the terms, covenants, agreements or
conditions set forth in this Agreement shall be deemed to be merged
with the grant deed conveying title to the Property and this
Agreement shall continue in full force and effect as to the
Property before and after such conveyance until issuance of the
Certificate of Completion for the Property.
d. All waivers of the provisions of this Agreement and
all amendments hereto must be in writing and signed by the
appropriate authorities of the Agency and the Developer.
ARTICLE VIII
TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY AND RECORDATION
Section 8 . 1 Execution and Recordation.
a . Following its execution by the Developer and prompt
delivery thereafter to the Agency, this Agreement must be approved
by the governing board of the Agency and thereafter, executed on
behalf of the Agency by its officers and delivered to the Developer
within thirty (30) calendar days after the date of signature by the
Developer. In the event that the Agency has not approved, executed
and delivered the Agreement to the Developer within the foregoing
period, then this Agreement shall be deemed to be of no further
force or effect unless the time for such approval, execution and
delivery is extended by written notice from the Developer to the
Agency. The date of this Agreement shall be the date when the
Agreement shall have been approved by the Agency.
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b. The Developer and the Agency agree to permit
recordation of this Agreement or any portion thereof against the
Property in the Office of the County Recorder for the County where
the Property is located.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the dates set forth below.
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
Date of Agency Governing
Board Approval of
this Agreement : 1998 By:
Chair
By:
Agency Secretary
APPROVED AS TO FORM:
Agency Counsel
Dated:
COSTCO WHOLESALE CORPORATION,
a Washington corporation
Dated: By:
Its :
APPROVED AS TO FORM:
GREENBERG GLUSKER FIELDS
CLAMAN & MACHTINGER, LLP
Counsel for the Developer
Dated:
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39
EXHIBIT "B"
SCOPE OF DEVELOPMENT
I On-Site Improvements
The Developer shall construct at its sole cost an
approximately 135, 000 square foot building suitable for
warehouse club use together with related parking, internal
driveways, lighting and landscaping on the Property in
accordance with City of San Bernardino Design Approval Case
No. DPII 98-03, dated April _, 1998, and the Existing Plans,
all as generally depicted on the Site Plan
II Off-Site Improvements (Area Off-Sites - See: OPA Section 2 . 3 .b
The Developer shall design, construct and install the
following public improvements, as indicated in City of San
Bernardino Design Approval Case No. DPII 98-03, dated April
1998 :
1 . New traffic signal at Hospitality Lane adjacent to
the (westerly) Shared Driveway accessing the
Property and the balance of Parcel 2 ("Shared
Driveway") .
2 . Median modification, geometric striping changes and
signage changes on Hospitality Lane near Shared
Driveway.
3 . Sidewalk and landscape improvements interior to the
new curb at Tippecanoe Avenue adjacent to the
Property.
4 . Sidewalk and landscape improvements interior to the
existing curb at Hospitality Lane adjacent to the
Property.
5 . New curb to allow for acceleration/deceleration
lane along Tippecanoe Avenue adjacent to the
Property.
6 . Geometric striping and signage changes for
acceleration/deceleration lane along Tippecanoe
Avenue adjacent to the Property within 18 '
dedication.
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7 . If necessary, new conduit and pull boxes
beneath/within new sidewalk along Tippecanoe
Avenue .
8 . Median modification on Hospitality Lane closest to
Tippecanoe Avenue .
9 . New traffic signal at Hospitality Lane and Shared
Driveway.
10 . Two new northbound left turn lanes and geometric
striping changes, signage changes and related
improvements on Tippecanoe Avenue .
11 . Related geometric striping and signage changes on
Hospitality Lane and Coulston Street .
12 . Modifications to traffic signal at Tippecanoe
Avenue and Hospitality Lane, including new conduit
and interconnect .
13 . Additional geometric striping and signage changes
on Hospitality Lane near Shared Driveway.
14 . Modifications to traffic signal at Waterman Avenue
and Hospitality Lane, and related geometric
striping and signage changes for northbound right-
turn-only lane .
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EXHIBIT "C"
SCHEDULE OF PERFORMANCE
2. 1 Costco Work
Costco shall complete the improvements for the Project under
the Scope of Development within one (1) year of the date of the
OPA.
2 .2 Force Maleure
The foregoing dates are subject to Section 6 . 5 of the OPA
captioned "Enforced Delay, Extension of Time for Performance. "
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Recording Requested By:
When Recorded Return to:
Costco Wholesale Corporation
999 Lake Drive
Issaquah, WA 98027
Attn: General Counsel
[Free Recording Requested
Government Code Section 6103]
CERTIFICATE OF COMPLETION
WHEREAS, the Redevelopment Agency of the City of San
Bernardino, a public body, corporate and politic ( "Agency") , and
Costco Wholesale Corporation, a Washington corporation
("Developer) , entered into an Owner Participation Agreement ("OPA")
with respect to that certain real property described in Exhibit "A"
attached hereto and incorporated herein by this reference (the
"Property") ;
WHEREAS, as referenced in section 3 . 18 of the OPA, Agency
shall furnish Developer with a Certificate of Completion upon
written request therefor from Developer;
WHEREAS, such Certificate of Completion shall conclusively
establish completion of construction of the improvements required
to be made to the Property pursuant to the OPA (the
"Improvements") ;
WHEREAS, Agency has conclusively determined that construction
of the Improvements has been completed.
NOW THEREFORE :
1. As provided in the OPA, Agency does hereby certify that
construction of the Improvements has been completed.
2 . This Certificate of Completion shall not constitute
evidence of compliance with or satisfaction of any obligation of
Developer to any holder of a mortgage or any insurer of a mortgage,
securing money loaned to finance the Improvements or any part
thereof.
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EXHIBIT "D"
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44
3 . Nothing contained in this instrument shall modify in
any way other provisions of the OPA.
4 . This Certificate of Completion is not a Notice of
Completion as referred to in California Civil Code Section 3093 .
IN WITNESS WHEREOF, Agency has caused this Certificate of
Completion to be executed this day of 199 by
its duly authorized representative .
REDEVELOPMENT AGENCY OF THE CITY OF
SAN BERNARDINO, corporate and
politic
By:
Its :
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EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
EXHIBIT "A"
TO EXHIBIT "D"
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CITY OF SAN BERNARDINO
INTEROFFICE MEMORNMOnto Record at
r,o1je1ci11Cmy0evCms Mtg:
X14
TO: James F. Penman rp A4 l' 7
City Attorney
FROM: Huston T. Carlyle, Jr.
Sr. Assistant City Atto e. City ClerkiCOC Secy
City of Sar) Bernardino
DATE: June 1, 1998
RE: Owner Participation Agreement Between The Redevelopment Agency of the
City of San Bernardino("Agency")and Costco Wholesale Corporation(Costco)
I have reviewed the forty-six(46)page Owner Participation Agreement(OPA) between the
Agency and Costco. I have five areas of observation/concern which should be addressed:
1. First, and this is technical and merely an observation, the pagination in the table of
contents is not accurate. Apparently there was more than one draft of the document, but the table
of contents was not updated to accurately reflect which sections appear on which pages; this would
need to be corrected.
2. Second, Section 2.')k. will need to be known as to its language. Currently, it merely
says "Insert Text."
3. Third, Section 4.2 contains at the bottom of page 25 and the top of page 26 a place
for both parties to initial if they agree to have disputed matters included in the "Arbitration of
Disputes" provision decided by neutral arbitration. The "Arbitration of Disputes" provision in
the OPA refers to the language referenced in Section 4.2b. Section 4.2b. in its entirety should
be deleted and 4.2c. relettered to 42b.
4. Fourth. Section 6.10 on page 35. entitled "Attorneys' Fees" should contain one
additional sentence at the end of said section: "The costs. salary and expenses of the City Attorney
and members of his office in enforcing this Agreement on behalf of the Agency shall be considered
as 'attorneys' fees' for the purposes of this paragraph."
5. Fifth, Section 6.11 on pages 35 and 36 of the OPA should be deleted in its entirety.
Again, this Section would obligate the Agencv to use a fact finder in the form of a referee (usually
67 /�
a retired judge or justice) should any controversy or dispute arise from this OPA. While this may
be better than binding arbitration, it is still not the forum which the Agency would want, which is
the full panoply of the judicial system.