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HomeMy WebLinkAboutR33-Economic Development Agency ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO FROM: John Hoeger Project Manager SUBJECT: TIPPECANOE RETAIL DEVELOPMENT City / Agency Cooperation and Financing Agreement; and CIEDB LeaselLeaseback Agreements DATE: January 14,2002 Svnoosis of'Previous Commission/Council/Committee Aclion(s): '. ------------------- --------------------------------------------------------------- On July 12, 1999, the Community Development Commission approved a Cooperation Agreement with the Inland Valley Development Agency, On May 21, 200 I, the Community Development Commission andlor Common Council certified an Environment Impact Report for the HUB Project; approved a Disposition and Development Agreement with SBT Partners; and approved a Harriman Place Improvement Agreement between the City and the Agency. _~'!"-!i.!1.!!~ o~!age_~____________________ Recommended Molion(s): _______-*___d_____________ (Commuoitv Develoomenl Commission) MOTION A: RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO, AS THE GOVERNING BODY OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, APPROVING THAT CERTAIN REDEVELOPMENT COOPERATION AND FINANCING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND THE CITY OF SAN BERNARDINO, CALIFORNIA (Mavor and Common Council) MOTION B: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING THAT CERTAIN REDEVELOPMENT COOPERATION AND FINANCING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND THE CITY OF SAN BERNARDINO, CALIFORNIA (Continued on Page 2) ____________________________________________________________________________________________________________n______ Contact Person(s): Gary Van Osdel/John Hoeger Phone: 663-1044 Third (3) Project Area(s) IVDA Ward(s): Supporting Data Attached: !ill Staff Report !ill Resolution(s) !ill Agreement(s)/Contracl(s) 0 Map(s) !ill LellerlMemo ---- , Commission/Council Noles: Source: See Text ",",,<NG "",UmE"? Requested SIGNATURE: ~~:/t-~ - Jo~er, Project Man~ger Economic Development Agency ./ --------------------------------------- ..___e..______________________________________________--------------------------.--.----.---------.-...------------.--.---------..-----.- P:\Clerical Services Dept\Stephanie\Agenda\CDC 2002\2-4-02 TIPP Financing Agreement.doc COMMISSION MEETING AGENDA Meeting Date: 02/04/2002 Agenda Item Number: R33 REQUEST FOR COMMISSION/COUNCIL ACTION Tippecanoe Financing Agreement January 15,2002 Page 2 Svnoosis of Previous Commission/Council/Committee Actions: (Continued) On June 18,2001, the Community Development Commission adopted a Relocation Plan for Phase I of the HUB Project. On September 4, 200 I the Community Development Commission made accepted appraisals for real property in Phase I of the HUB project. On November 5, 200 I, the Community Development Commission authorized execution of a Redevelopment Condemnation Memorandum with Inland Valley Development Agency. On December 17,2001, the Community Development Commission referred II property owners to the Inland Valley Development Agency for acquisition. Recommended Motion!s) Cootinued: MOTION c: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA AUTHORIZING THE EXECUTION AND DELIVERY OF A SITE LEASE AND A FACILITY LEASE AND APPROVING CERTAIN OTHER MATTERS IN CONNECTION THEREWITH (CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK: S2.0M HARRIMAN PLACE STREET EXTENSION PROJECT) ----~.._----------------------------------------------------------------------------------------------------------------------------. P:\Clerical Services Dept\Stephanie\Agenda\CDC 2002\24-02 TlPP Financing Agreementdoc COMMISSION MEETING AGENDA Meeting Date: 02/04/2002 Agenda Item Number: R33 ECONOMIC DEVELOPMENT AGENCY STAFF REPORT --------------------------------------------------------------------------------------------------------------------- TIPPECANOE RETAIL DEVELOPMENT City / Agency Cooperation and Financing Agreement; and CIEDB LeaselLeaseback A2reements BACKGROUND Financing for the Tippecanoe Retail Development (the "HUB") comes from several sources. Most of the street improvement costs, including most of the right of way acquisition costs, will be financed with a low interest loan from the State of California's Infrastructure and Economic Development Bank (CIEDB). This loan will be collateralized under lease/lease back agreements for the Rudy Hernandez Community Center in Meadowbrook Park. The debt service on the loan will be paid by the City in the form of lease payments for the Center. Demolition and relocation activities will qualify for use of CDBG and HOME funds. The development's land write-down, however, will be financed from the financial assets of individual redevelopment project areas--primarily land sale proceeds. These assets will be used to finance the largest portion of the Agency's assistance to the development. HUB Retail (Phase I) Cost Breakdowns Purchase Demolition Relocation 1,120,020 OPA costs (INO) 841 ,450 164,000 114,570 112,002 10% Contingency 84,145 16,400 11,457 1,232,022 OPA Budget 925,595 180,400 126,027 7,002,016 DDA costs (HUB) 5,650,500 439,000 912,516 700,202 10% Contingency 565,050 43,900 91 ,252 7,702,217 DDA Budget 6,215,550 482,900 1,003,767 8,934,239 Gross Acquisition Phase I 7,141,145 663,300 1,129,794 Demo by HUB (370,220) (4,715,520) less Developer funds (4,715,520) 0 0 (900,000) less CIEDB R/W funding (900,000) 0 0 $2,948,499 Net Agency Cost (Phase I) $1,525,625 $293,080 $1,129,794 -------------------------------------------------------------------..----------------------------------------------------------------- P:\Clerical Services Dcpt\Stephanie\Agenda\CDC 2002\2-4-02 TIfP Financing Agreement.doc COMMISSION MEETING AGENDA Meeting Date: 02/04/2002 Agenda Item Number: ~ Economic Development Agency Staff Report Tippecanoe Financing Agreement January 15, 2002 Page 2 Phase I of this development requires almost $3 million of Agency assistance (note that although these estimates include contingency provisions there is no provision to cover extraordinary costs resulting from eminent domain actions or large increases in property values during acquisition). Without the City's willingness to enter into an agreement to share the sales tax benefits of the development, the Agency will not be able to replace the project area assets used to provide this assistance. The financial benefits of this development flow primarily to the City in the form of sales tax increases. The attached analysis of pubic revenues by Keyser Marston Associates indicates that Phase I will produce a net increase of $350,000 in sales tax in the first year, growing to $450,000 in year ten. (That assumes that the existing Sam's Club stays vacant. Releasing its existing building would result in increases of$550,000 to $650,000 per year respectively.) Adopting the attached resolutions will accomplish two things. The first two resolutions authorize the execution of a Redevelopment Cooperation And Financing Agreement between the City and Agency to allow the Agency to restore a portion of individual redevelopment project area assets used to assist this development. This Cooperation Agreement also sets up the role of the Joint Powers Financing Authority that is used to receive and disburse these funds. The third resolution authorizes execution of CIEDB lease/leaseback agreements between the City and the State to finance $2,000,000 for the realignment of Harriman Place. Pursuant to the terms of the previously approved Harriman Place Improvement Agreement between the City and the Agency, proceeds of this loan will be used $900,000 by the Agency for acquisition of right of way and $1,100,000 by the City for construction of improvements. CURRENT ISSUE Redevelopment Cooperation And Financing Agreement. This Agreement sets up a financial sharing arrangement between the City and the Agency. It also provides for the San Bernardino Public Financing Authority to serve as an intermediary between the City, the Agency and the Agency's individual redevelopment project areas. The Agreement provides that the City will keep the first $300,000 in sales taxes each year from the development. In addition, the City will also keep the additional amount necessary to debt service the CIEDB loan (approximately $110,000 per year). Any surplus over these two amounts (but not to exceed another $300,000) will go to the Agency to replace assets used to assist the development. The Agreement has a term of20 years but will end sooner if the Agency is repaid earlier than that. The $5.5 million assistance amount in the Agreement is intended to cover both Phase I and Phase II ofthe development. CIEDB Site Lease and Facility Lease. These documents provide for a low cost loan from the State of California's Infrastructure and Economic Development Bank in the amount of ------------------------------------------------------------------------------------------------------------------------------------ P:\Clerical Services Dept\Stephanie\Agenda\CDC 2002\2-4-02 TIPP Financing Agreement.doc COMMISSION MEETING AGENDA Meeting Date: 02/04/2002 Agenda Item Number: Je33 Economic Development Agency Staff Report Tippecanoe Financing Agreement January 15,2002 Page 3 $2,000,000. The interest rate is 2.81 % per annum. The term is 30 years. And the annual payments of principal and interest varies slightly from year to year but is approximately $110,000 per year initially decreasing to $100,000 per year at the end. The loan is secured by a lease/leaseback arrangement for the Rudy C. Hernandez Community Center and Plunge in Meadowbrook Park. The City leases the Center to the State for $ i per year in the Site Lease. The State leases the Center back to the City for the payments on the loan in the Facility Lease. The Facility Lease is equivalent to the loan document for this transaction. These leases end 10 days after the discharge of the City's loan obligations. These funds will be used for acquisition of right of way and for construction ofthe Harriman Place realignment improvements. Construction of these improvements provides a regional benefit to the Tri City Corporate Centre area and to traffic on Tippecanoe A venue that comes from the San Bernardino International Airport and from Lorna Linda. FISCAL IMP ACT These actions authorize the Agency to incur and indebtedness of $5,500,000 for assistance to the HUB Retail Development. They also authorize the City to borrow $2,000,000 from the State of California to be used for the realignment of Harriman Place. The City would repay the $2,000,000 loan over a period of30 years and the $5,500,000 over a period of20 years from increased sales tax proceeds that result from the retail development. RECOMMENDA nON That the Community Development Commission and the Mayor and Common Council adopt the attached Resolutions. d Gary Vay( OsdeI, ExecutiVe Director ...-----------------------------------------------------------..-------------------------------------------------------------------- P:\Clerical Services Dept\Stephanie\Agenda\CDC 2002\2-4-02 TIPP Financing Agreement.doc COMMISSION MEETING AGENDA Meeting Date: 02/04/2002 Agenda Item Number: R 31 e e e KEYSER MARSTON ASSOCIATES INC. i'.~.:C IV to II '-('r 500 soli{i'~~'~~r\~""" ~:'~E),480 Los A~GELES. CAllFORr>.1A"'90071' . PHO" '"6".809; fILE COP F"{'Jr'/1AR429 Pil 2 ,,1 Y A/lll\UH\ I' REAl [q"n RED! \F!\)P\IE'T ....HOR:l,un I !1(1, ~"q ECO"i.1\l:,' :)1\ :.il"'\:: \ FI~( ...L hi P ACl hFR...nRlCTlRl Fl\\\l \....Ll...TIO' A'D LITlG.4.TIO'SlPPOR, r,''''/ SAI; '[1'/' A 1':"- J \"..l.I,flU LO!i Alli!t!I!!.\' Calvin E. Hollis, II Kathleen H. Head JamesA. Rabe Paul C. Anderson Gregory D. Soa-Hoo MEMORANDUM To: San Diego Gerald M Trimble Roben J Wetmore Paul C. Marra Mr. Gary Van Osdel, Director San Bernardino Redevelopment Agency From: S.~S FRASC/S('(J A. Jerry Keyser Timothy C. Kelly' Kate Earle Funk Debbie M. Kern Keyser Marston Associates, Inc. cc: Mr. John Hoeger Date: March 27, 2001 Subject: Projection of Public Revenues - Tippecanoe Power Center Pursuant to your request, Keyser Marston Associates, Inc. (KMA) has prepared this projection of public revenues that could be created through the development of a Sam's Club anchored power center at Tippecanoe Avenue and Interstate 10. This project and its second phase would complete the retail development of this area. This memorandum presents a projection of the net property tax increment and the net sales tax revenues that the City of San Bernardino (City) might receive. PROJECT DESCRIPTION The first phase of the project will entail the assembly of an approximately 17.13 acre parcel and the development of an approximately 199,000 square foot power center. The project entails the relocation of the existing Sam's Club and In-N-Out Burger. The In-N-Out Burger is . currently located on the site. The Sam's Club is located on an adjacent parcel. This analysis , does not take into account a replacement tenant for the existing Sam's Club space. Other than the Sam's Club and In-N-Out Burger, specific tenants have not been identified, although expected tenant types have been identified. Tenants and their space requirements are identified below. \Z- "'.3 !I)t.i)()~ 0103034.SB;JARgbd 19020.001,007 e e e To: Mr. Gary Van Osdel, San Bernardino Redevelopment Agency Projection of Public Revenues - Tippecanoe Power Center March 27,2001 Page 2 Subject: Tenant Sam's Club Soft Goods Electronics Soft Goods General Retail Retail "CO - Retail Shops In-N-Out Burger TOTAL Sauare Footaae 130,421 20,000 8,400 10,000 6,600 10,000 3.500 198,921 SALES TAX REVENUES Sales at the center will not all be new sales in the City. Clearly, sales at the Sam's Club and In-N-Out Burger are new sales only to the extent that sales increase over the existing store. In addition, there will be a "transfer" of sales from other stores in the City to this location. This latter effect is somewhat minimized due to the location of the site at the boundary of the City. Estimated sales levels for the various tenants are provided below. Tenant Sam's Club Soft Goods Electronics Soft Goods General Retail Retail "CO - Retail Shops Pad "B" - Retail Shops In-N-Out Burger Sales per Sauare Foot $575 $275 $500 $275 $250 $250 $250 $800 The amounts listed above represent typical sales for the specific stores or store types without taking into account existing sales or transfers from other stores. Also there is a large range in sales between individual stores and among tenants. For example, electronics store sales may range from a low of $350 per square foot to a high of $1,000 per square foot. It should be noted that the current Sam's Club site is under parked and it is an older store. The sales performance of this store appears to be significantly below typical Sam's Club performance. As shown in Table 1, total sales are projected to be nearly $97 million and taxable sales approximately $70.6 million in the first year. 0103034.SB:JAR:gbd 19020.001.007 e e e To: Mr. Gary Van asdel, San Bernardino Redevelopment Agency Projection of Public Revenues - Tippecanoe Power Center March 27,2001 Page 3 Subject: Based on data provided by the City, it appears that the existing Sam's Club, Costco and In-N- Out Burger generate approximately $95.1 million of taxable sales (data is aggregated to avoid disclosure of confidential data). It is KMA's estimate that the existing taxable sales and the transfer of sales between Costco and Sam's Club will amount to approximately $31.3 million (data aggregated to avoid disclosure). In addition, a portion of the sales at the other stores will be transferred from other stores in the City. Given the location of the power center at the edge of the City, and without knowing specific tenants, KMA estimates that approximately 20% of other store sales or approximately $3.8 million will be transferred sales. Total existing and transferred sales amount to $35.1 million in the first year. Net taxable sales in the first year are estimated to be $35.5 million, approximately 50% of the gross taxable sales. Sales tax revenues are shown in Table 2. Sales tax revenues start at approximately $355,000 in the first year growing to approximately $443,000 by the 10th year. Over 25 years, the project is projected to generate approximately $12.1 million of new sales tax revenues. PROPERTY TAX INCREMENT The project is located within the Inland Valley Development Agency project area. Within the joint powers redevelopment agency, the City receives 8.9744% of tax increment revenues. It is projected that assessed value of the first phase project will be approximately $15.9 million. As shown in Table 2, this value is expected to generate $159,900 of tax increment revenues of which the City will receive $14,400. This analysis assumes that the existing assessed value for this site is effectively zero. CONCLUSIONS As shown in Table 2,the total incremental revenues available to the City start at approximately $369,500 increasing to $460,700 by Year 10. Over a twenty-five year period, total City revenues are projected to be approximately $12.6 million. This is a conservative estimate, as it does not take into account the ultimate re-Ieasing of the existing Sam's Club site. KMA has estimated the public revenues assuming significant transfer of sales and revenues within the City. It the project does not go forward at this location, there is a reasonable probability that Sam's Club and other tenants may relocate elsewhere in the region and the sale will be lost from the City, and the City will experience a net loss of revenues. 0103034.SB:JAR:gbd 19020.001.007 o~~~~~~~~ ~ - 0> ~~~~~~~~ ~ - $ ;: '" ;: '" '" :;tii~8~~gf N ri a:i :e~~:liS~~:lf ri ri ai e 8. .... '" '" .... ;S; : ~ ~~ "It. . ""':. ""':. ""'. '" - co Nv ........... '" '" >~(OIt)(")N(,,)(,,,)(,,) ~ ri ,..: gc6llfMNMriri :8 ri ;- ... .... ... ... !;!.!;!.~~.~~~.~ ~. 0 lil ~~~~~~~~ ~ 0 ~ 10 .... 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Ii filii ~~~~JJI! ;lj Ul i~~jj!~!~ 011 I I 011 I - !C;1111 i i ~ I i i Ij~~ I ll.1i: ID ~~z 1!~w'2IJ~_ ~ ! ~ :!' cn!:c ~w'2 a:~s ~ WOo'" Ul Ul e TABLE 2 ESTIMATED PUBLIC REVENUES TIPPECANOE POWER CENTER- KMA VERSION SAN BERNARDINO, CALIFORNIA City Taxable Sales Total Available Year Property Value' Property Tax Share @l8.9744'A Sales Tax Revenues 2002 $15,990,500 $159,900 $14,400 $35,513,000 $355.100 $369,500 2003 16.310.000 163.100 14.600 36.401.000 364,000 378,600 2004 16.636.000 166,400 14.900 37,312.000 373,100 388,000 2005 16.969,000 169.700 15.200 38.243,625 382,400 397,600 2006 17,308,000 173,100 15,500 39,197.491 392.000 407,500 2007 17,654,000 176,500 15,800 40,177,203 401.800 417.600 2008 18,007,000 180,100 16,200 41,183.358 411,800 428,000 2009 18.367.000 183.700 16.500 42.212,542 422,100 438.600 2010 18,734.000 187.300 16,800 43.267,330 432,700 449.500 2011 19.109,000 191,100 17,200 44,349.289 443.500 460,700 2012 19.491.000 194.900 17.500 45.456,971 454.600 472.100 2013 19,881,000 198,800 17.800 46,593,920 465,900 483,700 2014 20,279,000 202.800 18.200 47,759,668 477,600 495.800 2015 20,685,000 206,900 18,600 48,952,735 489.500 508,100 2016 21,099,000 211,000 18,900 50.176,628 501,800 520,700 e 2017 21,521,000 215,200 19,300 51.428.844 514.300 533.600 2018 21.951.000 219.500 19,700 52.713,865 527,100 548.800 2019 22,390.000 223.900 20.100 54.033,162 540,300 560.400 2020 22.838,000 228,400 20,500 55,383,191 553.800 574,300 2021 23,295,000 233.000 20,900 56.766,396 567,700 568.600 2022 23,761,000 237,600 21,300 58.186,205 581,900 603.200 2023 24,236.000 242.400 21,800 59,641,036 596.400 618,200 2024 24.721,000 247,200 22.200 61.133,286 611,300 633,500 2025 25,215,000 252,200 22,600 62,661.344 626,600 649,200 2026 25,719,000 $257,200 $23.100 $64.226,577 $642,300 $665.400 Total $5,121,900 $459,600 $12,129.600 $12.589,200 NPV' $2.027,000 $182,000 $4,708,700 $4,890.700 e Prepared By. Keyser Marston Associales, Inc. FiIen8ne: TIpp8Clm8_Center ProFClITI1&- Revised 4-12.x1s; PlbRev, 3/27101; KEE e CITY OF SAN BERNARDINO AND REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REDEVELOPMENT COOPERATION AND FINANCING AGREEMENT (HUB Project) THIS REDEVELOPMENT COOPERATION AND FINANCING AGREEMENT (the "Agreement") is dated as of January _, 2002, by and between the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency") and the City of San Bernardino, California, a municipal corporation (the "City"), and is entered into in light of the facts set forth in the following Recital paragraphs: - RECITALS - e WHEREAS, the Inland Valley Development Agency (the "IVDA"), the City and the Agency have previously entered into an agreement entitled "1999 Redevelopment Cooperation Agreement", dated as of July 12, 1999, pursuant to which the IVDA, the City and the Agency have initiated the redevelopment of a potion of the Inland Valley Redevelopment Project Area referred to in the 1999 Redevelopment Cooperation Agreement as the "Agency Implementation Area" and which area has since been referred to by the Agency as the "HUB Project"; and WHEREAS, the IVDA has previously designated the City to serve as the "lead agency" as this term is defined in the California Environmental Quality Act of 1970, as amended, ("CEQA") for the purpose of conducting an environmental review of the HUB Project; and WHEREAS, the City has certified a Final Environmental Impact Report as of May 21, 2001 (the "FEIR") for the HUB Project, in accordance with CEQA; and WHEREAS, the HUB proj ect, as analyzed in the FEIR includes the following key elements: e (i) the realignment and construction of a new public street improvement project referred to in the FEIR as the Harriman Place Improvement Project; SB2001:17454.2 1 e (ii) the assembly right-of-way for Project; and the acquisition Harriman of public street Place Improvement (iii) the assembly of land for the redevelopment of a new commercial retail shopping center to be undertaken by the Developer and In-N-Out; (iv) the assembly and exchange of lands for the redevelopment of a restaurant by In-N-Out as an owner participant in the HUB Project; and WHEREAS, the Agency has entered into a Disposition and Development Agency, dated as of May 21, 2001, with SBT Partners, LLC, a California limited liability company (the "Developer") and the Agency has also entered into an Owner Participation Agreement, dated as 'of September 17, 2001, with In-N-Out Burgers, Inc., a California corporation ("In- N-Out") for the implementation of the commercial shopping center portion of the HUB Project; and e WHEREAS, the implementation of the HUB proj ect shall confer substantial benefits on the City and the IVDA in terms of eliminating conditions of blight which affect the site of the HUB Project and nearby lands and in terms of providing for necessary public street and public street traffic circulation improvements which will foster the redevelopment of the lands adversely affected by the closure of the former Norton Air Force Base; and WHEREAS, the HUB Project shall also provide the City wi th a substantial source of new tax revenues when the prime tenant of the HUB Project (Sam's Club) relocates and expands its facility (the "New Store") from the current address on Hospitality Lane in the Tri City Redevelopment Project of the Agency, to the HUB Project Site; and e WHEREAS, the Agency shall incur certain costs, described below as the "HUB Project Indebtedness", in connection with the acquisition of lands necessary for the new public street right-of-way improvements associated with the HUB Project as well as the costs of planning and assembly of lands and the relocation of businesses and households from the HUB Project site for reuse and redevelopment by the Developer and In-N-Out as part of the HUB Project; and SB2001:17454.2 2 e WHEREAS, the Agency does not presently have a source of tax increment revenues from the HUB Project or from other funds to repay HUB Project Indebtedness and it is necessary for the City and the Agency to enter into this Agreement in order for the Agency to repay the HUB Project Indebtedness as may hereafter be incurred by the Agency in connection with the HUB Project. NOW, THEREFORE, THE CITY AND THE AGENCY HEREBY AGREE AS FOLLOWS: e Section 1. The City hereby authorizes the Agency to incur an indebtedness with respect to the HUB proj ect ("HUB proj ect Indebtedness") which is payable by the Agency in whole or in part from the proceeds of the assistance to be provided to the Agency as set forth in Section 2 in an amount not to exceed the sum of Five Million Five Hundred Thousand Dollars ($5,500,000). The Agency may incur indebtedness with respect to the HUB Project in excess of the sum of $5,500,000 but such additional Agency indebtedness for the HUB Project shall not be payable from any City Assistance provided hereunder. For the purposes of this Agreement, the words "HUB proj ect Indebtedness" mean and include any obligation which the Agency may undertake to payor discharge under each of the following agreements relating to the HUB Project: (i) the Harriman Place Improvement Agreement by and between the City and the Agency; (ii) the Disposition and Development Agreement by and between the Developer and the Agency; (iii) the Owner Participation Agreement by and between In-N-Out and the Agency; (iv) the 1999 Redevelopment Cooperation Agreement by and between the City, the IVDA and the Agency; (v) the. Condemnation Memorandum by and between the IVDA and the Agency; e (vi) one or more loan agreements by and between the San Bernardino public Financing Authority and the Agency relating to the HUB Project. 5B2001:17454.2 3 e Section 2. Subject to the terms and conditions of this Agreement, the City agrees to provide redevelopment financing assistance to the Agency (the "City Assistance") each year for the term hereof in the total amount not to exceed Five Million Five Hundred Dollars ($5, 500, 000) . The sole source of funds of the City to provide the Agency with the proceeds of the City Assistance each year is described in Section 4. The City shall disburse the proceeds of the City Assistance in annual installments (each a "City Assistance Advance"), from the source of the available funds of the City described in Section 4, in an amount not to exceed Three Hundred Thousand Dollars ($300,000.00) for each year during the term of this Agreement. The Agency shall use and apply each City Assistance Advance to repay HUB Project Indebtedness. e Section 3. The City and the Agency each acknowledge, understand and intend that the obligation of the City to pay each City Assistance Advance to the Agency each year during term of this Agreement shall constitute a current expense of the City to support the HUB Project. The obligation of the City to provide City Assistance Advances to the Agency each fiscal year during the term of this Agreement is expressly acknowledged by the Agency to be a special and limited obligation of the City payable solely from the funds described in Section 4, in each fiscal year subj ect to annual appropriation by the City. Furthermore, the obligation of the City to the Agency as arises under this Agreement during each fiscal year shall not in any way be construed to be a debt of the City in contravention of any applicable constitutional restriction of the State concerning the creation of indebtedness by the City, nor shall anything contained in this Agreement be deemed to constitute a pledge of the general tax revenues, funds or monies of the City. Section 4. e (al The City hereby creates a special fund entitled: "HUB Project Indebtedness City Assistance Advance Fund" (the "Special Fund"). Each year the City Assistance Advance shall be paid by the City to the Agency from the funds transferred by the City to the Special Fund. The initial transfer of available funds of the City to the Special Fund shall occur on the July 1 next following the date on which the New Store is open for business to the SB2001:17454.2 4 e general public the amount determined in accordance with Section 4(b). On each July 1, after such initial transfer of available funds during the remainder of the term of this Agreement, the City shall transfer into the Special Fund the amount determined in accordance with the formula set forth in Section 4(b). (b) The sum to be transferred by the City to the Special Fund from its available funds as a City Advance on each July 1 following the date on which the New Store is open for business to the general public for the remainder of the term of this Agreement shall be determined in accordance with the following formula: AY - B..1 - $300,000 = Amount Transferred Each Fiscal Year to the Special Fund; provided however that the amount so transferred each year shall not exceed the sum of $300,000 e (c) Provided the New Store opens for business to the general public, the City reasonably believes that funds shall be available each year for transfer to the Special Fund for the payment of each City Assistance Advance. The City hereby covenants that it shall do all things lawfully within its power to obtain funds from which transfers to the Special Fund in the amount indicated by the formula set forth in Section 4 (b) can be made each year to pay City Assistance Advances to the Agency. The City further covenants and agrees to include provisions in its budget for each fiscal year during the term of this Agreement for Y "A" = the aggregate amount of retail sales and use taxes paid to the City, if any, pursuant to Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code from businesses situated in the Agency Implementation Area during the four (4) calendar year quarters ending on the March 30 preceding the July 1 date on which the calculation set forth in Section 4(b) is made. This calculation shall be made annually during the term of this Agreement. e ..I "B" = the amount of scheduled asset transfer lease payments (principal and interest), if any, payable by the City under the term of the $2.0M loan agreement, approved by the State of California in September 2001, subject to final execution, by and between the City and the State of California Infrastructure and Economic Development Bank, during the four (4) calendar year quarters ending on the March 30 preceding the July 1 date on which the calculation set forth in Section 4(b) is made. This calculation shall be made annually during the term of this Agreement. 882001:17454.2 5 e the sum of up to $300,000 to be transferred to the Special Fund (subject to the confirmation as of each July 1 of the calculation set forth in Section 4(b)), and the City shall exercise best efforts to approve such portion of the budget, subject to the funds then being available therefor. In any year in which the application of the formula set forth in Section 4 (b) produces a figure of $-0- or less, no amount shall be transferred by the City to the Special Fund Section 5. The Agency shall use and apply each City Assistance Advance payment to pay indebtedness of the Agency as incurred in connection with the HUB Project. The Agency and the City hereby agree that the Agency shall have no obligation to repay City Assistance Advances to the City. e Section 6. The City shall pay to the Agency the sums transferred to the Special Fund each year as a City Assistance Advance upon receipt of a written invoice from the Agency which states that the Agency shall use and apply the City Assistance Advance to repay HUB Project Indebtedness. Each such written invoice of the Agency shall set forth the current balance of the HUB proj ect Indebtedness and the Agency shall provide the City with a written accounting of the HUB Project Indebtedness each year during the term of this Agreement. Upon request by the Agency, the City shall provide the Agency with a suitably detailed accounting of the application of the formula set forth in Section 4(b) to the amount transferred by the City to the Special Fund each year during the term of this Agreement. Section 7. This Agreement shall terminate on the earlier to occur of: (i) July 1, 2022 and the payment of the City Assistance Advance amount, if any, due as of July 1, 2022; (ii) the receipt by the Agency of an aggregate amount of Five Million Five Hundred Thousand Dollars ($5,500,000) in City Assistance Advances made by the City to the Agency hereunder; or (i i i) the HUB proj ect Indebtedness is repaid in full by the Agency. e Section 8. This Agreement shall take effect from and after the date of adoption and approval by the Common Council and the Community Development Commission as the governing board of the Agency pursuant to official 882001:17454.2 6 e action of the governing bodies thereof and shall be effective for the period of time provided in Section 7. e e 5B2001:17454.2 7 e IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written. CITY City of San Bernardino By: Judith Valles, Mayor of the City of San Bernardino ATTEST: City Clerk e APPROVED AS TO FORM: ~ " '-'fV'.--.- j . J~ ~y Attorney V AGENCY Redevelopment Agency of the City of San Bernardino By: Chairperson of the Community Development Commission, its governing board ATTEST: Agency Secretary e 582001:17454.2 8 e e e DRAFT Recording Requested By and Return To: CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK c/o California Technology, Trade and Commerce Agency 80 I K Street, Suite 1700 Sacramento, California 95814 This document is recorded for the benefit of the CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK and the recording is fee-exempt under Section 6103 of the California Government Code. SITE LEASE Dated as of August 28, 2001 by and between CITY OF SAN BERNARDINO, as lessor and CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK, as lessee e e e SITE LEASE THIS SITE LEASE, dated as of August 28, 2001, by and between the City of San Bernardino, a chartered municipal corporation duly organized and validly existing under and by virtue of the laws ofthe State of California (herein called the "Site Lessor") and the CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK, duly organized and existing pursuant to the Bergeson-Peace Infrastructure and Economic Development Bank Act, constituting Division I of Title 6.7 ofthe California Government Code (commencing at Section 63000 thereof) as now in effect and as it may from time to time hereafter be amended (the "Act") (herein called the "CIEDB"); W IINgS.S.gIH: WHEREAS, the CIEDB intends to assist the Site Lessor pursuant to the Act by financing the construction, plus certain related costs, of the Harriman Place Street Extension Project, Phase 1 (herein called the "Project"); . WHEREAS, the Site Lessor owns the property situated at the 222 North Lugo Avenue, San Bernardino, California, California on which property is located the Rudy C. Hernandez Community Center, (the land and improvements are together herein called the "Facility"); and WHEREAS, the CIEDB intends to lease the Facility to the Site Lessor by a facility lease (herein called the "Facility Lease") and the Site Lessor intends to enter into such a lease with the CIEDB as a material consideration for the CIEDB's agreement to finance the construction of the Project for and on behalf of the Site Lessor; NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED as follows: SECTION I. Site. Tbe Site Lessor hereby leases to the CIEDB and the CIEDB hereby hires from the Site Lessor, on the terms and conditions hereinafter set forth, the real property situated in San Bernardino County, State of California, and described in Exhibit A attached hereto and made a part hereof and all improvements thereon (herein called the "Site"). SECTION 2. Term. The term of this lease shall commence on the earlier ofthe date of recordation of this lease in the office of the County Recorder of San Bernardino County, State of California, or August 28, 200 I, and shall end on August 27, 2031, unless such term is extended or sooner terminated as hereinafter provided. If on such date, the bonds or other indebtedness of or advance for construction costs of the Project and related costs provided by the CIEDB (the "Bonds") shall not be fully paid and retired or the indenture authorizing such Bonds shall not be discharged by its terms, or if the rental payable under the Facility Lease shall have been abated at any time and for any reason, then the term of this lease shall be extended until ten (10) days after all Bonds shall be fully paid and retired and any such indenture shall be discharged by its terms, r-------- e e e DRAFT except that the term of this lease shall in no event be extended beyond August 27, 2036. If prior to August 27, 2036, all Bonds and any such indenture shall be discharged by its terms, the term of this lease shall end ten (10) days thereafter or ten (10) days after written notice by the Site Lessor to the CIEOB, whichever is earlier. SECTION 3. Rental. The CIEOB shall pay to the Site Lessor as and for rental hereunder the sum of One Oollar ($1), all of which rental shall be payable in full within ten (10) days of the recordation hereof. In addition to the foregoing rental payment, the CIEOB may pay to the Site Lessor as and for rental hereunder such surplus moneys, if any, as shall be paid over to the Site Lessor pursuant to the Facility Lease. SECTION 4. Puroose. The CIEOB shall use the Site solely for the purpose ofleasing the Facility to the Site Lessor pursuant to the Facility Lease and for such purposes as may be incidental thereto; provided, that in the event of default by the Site Lessor under the Facility Lease the CIEOB may exercise the remedies provided in the Facility Lease. SECTION 5. Assil!l1ment bv the CIEOB. The Site Lessor acknowledges that the CIEOB has authority to issue tax-exempt bonds, that the Facility may be used to secure such bonds and that certain of the rights of the CIEOB hereunder will be assigned to a trustee under an indenture. The Site Lessor agrees to execute all documents which may be reasonably requested by the CIEOB or the trustee to protect their interests in the Facility during the term hereof. SECTION 6. Right of Entrv. The Site Lessor reserves the right for any of its duly authorized representatives to enter upon the Site at any reasonable time to inspect the same or to make any repairs, improvements or changes necessary for the preservation thereof. SECTION 7. Termination. The CIEOB agrees, upon the termination or expiration of this lease, to quit and surrender the Site in the same good order and condition as the same was in at the time of commencement of the term hereunder, except for acts of God and reasonable wear and tear and any actions taken by the Site Lessor that may affect the condition of the Site, and agrees that any permanent improvements and structures existing upon the Site at the time of such termination or expiration of this lease shall remain thereon and title thereto shall vest in the Site Lessor. SECTION 8. Oefault. In the event the CIEOB shall be in default in the performance of any obligation on its part to be performed under the terms of this lease, which default continues for sixty (60) days following notice and demand for correction thereof to the CIEOB, the Site Lessor may exercise 2 e e e DRAFT any and all remedies granted by law, except that no merger of this lease and of the Facility Lease shall be deemed to occur as a result thereof; provided, however, that the Site Lessor shall have no power to terminate this lease by reason of any default on the part of the CIEDB if such termination would affect or impair any assignment or sublease of all or any part of the Site then in effect between the CIEDB and any assignee or subtenant of the CIEDB (other than the Site Lessor under the Facility Lease); and provided further, that so long as any Bonds or other indebtedness or advance ofthe CIEDB is outstanding and unpaid in accordance with the terms of any indenture authorizing such bonds or the terms of such other indebtedness or advance, the rentals or any part thereof payable to the CIEDB or its assignees shall continue to be paid to the CIEDB or its assignees. So long as any assignee or subtenant of the CIEDB shall duly perform the terms and conditions of this lease and of its then existing sublease (if any), such assignee or subtenant shall be deemed to be and shall become the tenant of the Site Lessor hereunder and shall be entitled to all ofthe rights and privileges granted under any such assignment or sublease; provided further, however, that so long as any Bonds or other indebtedness or advance of the CIEDB is outstanding and unpaid in accordance with the terms of any indenture authorizing such bonds or the terms of such other indebtedness or advance, the rentals or any part thereof payable to the CIEDB or its assignees (by the terms of such assignment or sublease) shall continue to be paid to the CIEDB or its assignees. SECTION 9. Ouiet Enioyment. The CIEDB at all times during the term of this lease, subject to the provisions of Section 8 hereof, shall peaceably and quietly have, hold and enjoy all of the Site. SECTION 10. Waiver of Personal Liabilitv. All liabilities under this lease on the part of the CIEDB are solely liabilities of the CIEDB as an entity of state government, and the Site Lessor hereby releases each and every member, officer, agent and employee ofthe CIEDB of and from any personal or individual liability for negligence under this lease. All liabilities under this lease on the part of the Site Lessor are solely liabilities of the Site Lessor as a local government entity under the laws of the State of California, and the CIEDB hereby releases each and every member, officer, agent and employee of the Site Lessor of and from any personal or individual liability for negligence under this lease. SECTION 11. Taxes. The Site Lessor covenants and agrees to pay any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Site (including both land and improvements); provided, however, that the Site Lessor shall not pay any possessory interest taxes levied as a result of any assignment or sublease of all or any part of the Site then in effect between the CIEDB and any assignee or subtenant ofthe CIEDB (other than the Site Lessor under the Facility Lease). SECTION 12. Eminent Domain. In the event the whole or any part of the Site or the improvements thereon (including the Facility) is taken permanently or temporarily under the power of eminent domain, 3 e e e DRAFT the interest of the CIEDB shall be recognized and is hereby determined to be the amount of the then unpaid indebtedness incurred or advanced by the CIEDB to finance or refinance the construction of the Project, including the unpaid principal of and interest on any then outstanding Bonds or other indebtedness or advance ofthe CIEDB, and shall be paid as required by any indenture authorizing such bonds or the terms of such other indebtedness or advance and applied in accordance therewith. The term "unpaid indebtedness," as used in the preceding sentence, includes the face amount of the indebtedness evidenced by any outstanding loans, bonds, notes or advances for construction or acquisition of the Project by the CIEDB, together with the interest thereon and all other payments required to be made pursuant to the indenture authorizing the issuance of said bonds or notes or the terms of such indebtedness or advance, until such indebtedness, together with the interest thereon, has been paid in full in accordance with the terms thereof. SECTION 13. License to Access Site Utilities and Parking. The Site Lessor hereby irrevocably grants to the CIEDB and the CIEDB hereby accepts from the Site Lessor, during the term of this lease, a license for ingress and egress to the Facility. The Site Lessor agrees to provide or cause to be provided to the CIEDB, at reasonable rates and charges payable by the CIEDB, its assigns or sub lessees, adequate parking spaces and such utility services, including electricity, gas, water, sewer, garbage disposal, heating, air conditioning and telephone, as the Site Lessor provides or causes to be provided to structures similar to the Project. SECTION 14. Partial Invalidity. If anyone or more of the terms, provisions, covenants or conditions of this lease shall to any extent be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this lease shall be affected thereby, and each provision of this lease shall be valid and enforceable to the fullest extent permitted by law. SECTION 15. Notices. All notices, statements, demands, consents, approvals, authorizations, offers, designations, requests, agreements or promises or other communications hereunder by either party to the other shall be in writing and shall be sufficiently given and served upon the other party if delivered personally or if mailed by United States certified or registered mail, return receipt requested, postage prepaid, and, if to the Site Lessor, addressed to the City of San Bernardino, 201 North "En Street, Ste. 301, San Bernardino, CA 92401-15087, Attention: John Hoeger, Project Manager, or, if to the CIEDB, addressed to the CIEDB at California Infrastructure and Economic Development Bank, California Technology, Trade and Commerce Agency, 801 K Street, Suite 1700, Sacramento, California, 95814, Attention: Credit Support Manager, with a copy to the trustee for the Bonds, if any, at such address as may be provided by 4 e e e DRAFT such trustee for such purpose, or to such other addresses as the respective parties may from time to time designate by notice in writing. SECTION 16. Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this lease. SECTION 17. Amendment. This lease may only be amended by a written instrument duly authorized and executed by the CIEOB and the Site Lessor, provided however that no such amendment shall materially adversely affect the owners of the Bonds. SECTION 18. Execution. This lease may be executed in any number.of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same lease. It is also agreed that separate counterparts ofthis lease may separately be executed by the CIEOB and the Site Lessor, all with the same force and effect as though the same counterpart had been executed by both the CmOB and the Site Lessor. [The balance of this page is intentionally left blank.] 5 e e e DRAFT IN WITNESS WHEREOF, the Site Lessor and the CIEDB have caused this lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. City of San Bernardino, as Site Lessor By ~ CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK, as lessee By Stanton C. Hazelroth Executive Director 6 e e e DRAFT STATE OF CALIFORNIA ) ) ss ) COUNTY OF On ,2001, before me, a Notary Public in and for the State of California, personally appeared STANTON C. HAZELROTH, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person or the entity on behalf of which the person acted, executed the instrument. Witness my hand and official seal [SEAL] 7 e e e DRAFT ST ATE OF CALIFORNIA ) ) ss ) COUNTY OF On .2001, before me, a Notary Public in and for the State of California, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person or the entity on behalf of which the person acted, executed the instrument. Witness my hand and official seal [SEAL] 8 e e e DRAFT EXHIBIT A Property Description 222 North Lugo Avenue, San Bernardino, California APN: 0135-231-01 [Legal description to be provided.] e e e DRAFT Recording Requested By ) And When Recorded Mail To: ) ) ) California Infrastructure and Economic ) Development Bank ) California Technology, Trade and Commerce ) Agency ) 801 K Street, Suite 1700 ) Sacramento, California 95814 ) (Space above for Recorder' s use) This document is recorded for the benefit of the CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK and the recording is fee-exempt under Section 6103 of the California Government Code. FACILITY LEASE by and between the California Infrastructure and Economic Development Bank and the City of San Bernardino relating to $2,000,000 Agreement # CIEDB-OI-015 Dated as of August 28, 2001 DRAFT e e e TABLE OF CONTENTS Page ARTICLE I DEFINITIONS .......... ... ... .......... ... ... ............ ... ........... ..... ........ ... ........ ....... ........ 2 SECTION 1.01 Definitions ..........................................................................................2 SECTION 1.02 Rules of Construction............................................................. ............7 ARTICLE II THE FACILITy................................................................................................ 8 SECTION 2.01 Lease of the Facility............................................................................ 8 SECTION 2.02 Quiet Enjoyment................................................................................. 8 SECTION 2.03 Right of Entry and Inspection............................................................. 8 SECTION 2.04 Prohibition Against Encumbrance or Sale.......................................... 8 SECTION 2.05 Liens ...................................................................................................8 SECTION 2.06 Substitution or Removal of Facility.................................................... 9 SECTION 2.07 Construction, Acquisition and Installation ofthe Project................. 10 SECTION 2.08 Project Account ................................................................................10 SECTION 2.09 Disbursement ofFunds..................................................................... II SECTION 2.10 Withholding of Project Amount....................................................... 12 ARTICLE ill TERM OF THE FACILITY LEASE ............................................................. 12 SECTION 3.01 Commencement and Termination of the Facility Lease; Vesting of Title ..... ....... ............ ............ ........ .......... ......... ..... ............. 12 ARTICLE IV USE OF PROCEEDS; TAX COVENANTS; CONTINUING DISCLOSURE ............................................................................................... 13 SECTION 4.01 Use of Project Amount .....................................................................13 SECTION 4.02 Tax Covenants.................................................................................. 13 SECTION 4.03 Continuing Disclosure ...................................................................... 13 ARTICLE V RENTAL PAYMENTS .................................................................................13 SECTION 5.01 Rental Payments ............................................................................... IS SECTION 5.02 Annual Budgets; Reporting Requirements ....................................... IS SECTION 5.03 Application of Rental Payments ....................................................... 16 SECTION 5.04 Rental Abatement ............................................................................. 16 SECTION 5.05 Prepayment of Base Rental Payments .............................................. 16 SECTION 5.06 Obligation to Make Rental Payments............................................... 17 ARTICLE VI MAINTENANCE; TAXES; INSURANCE AND OTHER CHARGES....... 18 SECTION 6.01 Maintenance ofthe Facility by the Lessee........................................ 18 SECTION 6.02 Taxes, Other Governmental Charges and Utility Charges ............... 18 SECTION 6.03 Insurance...................................................... ..................................... 18 SECTION 6.04 Advances .......................................................................................... 21 SECTION 6.05 Title Insurance .................................................................................. 22 e e e ARTICLE VII DAMAGE, DESTRUCTION, TITLE DEFECT AND CONDEMNATION ....................................................................................... 22 SECTION 7.01 Damage, Destruction, Title Defect and Condemnation; Use of Net Proceeds ............. ................ ...... ................ ... ........ ........ ............... 22 ARTICLE VIII DISCLAIMER OF WARRANTIES; VENDOR'S WARRANTIES; USE OF THE FACILITY .............................................................................. 24 SECTION 8.01 Disclaimer of Warranties.................................................................. 24 SECTION 8.02 Use of the Facility............................................................................. 24 ARTICLE IX ASSIGNMENT AND INDEMNIFICATION................................................ 24 SECTION 9.01 Assignment by Lessor....................................................................... 24 SECTION 9.02 Assignment by Lessee ...................................................................... 25 SECTION 9.03 Indemnification... ........ ......... ... ... .............. ... ........ ........ ... ...... ............. 25 ARTICLE X DEFAULT .....................................................................................................26 SECTION 10.0 I Default ..............................................................................................26 ARTICLE XI REPRESENTATIONS AND WARRANTIES OF THE LESSEE................ 28 SECTION 11.01 Organization; Authority; Application Correct.................................. 28 SECTION 11.02 Agreement Valid and Binding; Approval by Lessee ........................ 28 SECTION 11.03 No Conflict in Execution of Facility Lease ...................................... 28 SECTION 11.04 No Litigation.....................................................................................29 SECTION 11.05 No Breach or Default........................................................................ 29 SECTION 11.06 No Consent, Approval or Permission Necessary.............................. 29 SECTION 11.07 Information Submitted to the Lessor ................................................ 29 SECTION 11.08 Financial Statements of the Lessee................................................... 29 SECTION 11.09 Licenses, Permits and Approvals for Operation of Facility.............. 29 SECTION 11.10 Project Completion...........................................................................29 ARTICLE XII AFFIRMATIVE COVENANTS OF THE LESSEE...................................... 30 SECTION 12.0 I Punctual Payment ............................................................................. 30 SECTION 12.02 Books and Accounts; Financial Statements...................................... 30 SECTION 12.03 Notification to the Lessor ................................................................. 31 SECTION 12.04 Protection of Security and Rights..................................................... 31 SECTION 12.05 Management of Properties.............................................................. .. 31 SECTION 12.06 Payment from Tax-Exempt Debt...................................................... 31 SECTION 12.07 Further Assurances ........................................................................... 31 SECTION 12.08 Project Documentation ..................................................................... 31 SECTION 12.09 Lessee's General Responsibility....................................................... 32 SECTION 12.10 Lessee's Assurances and Commitments........................................... 32 SECTION 12.11 Facility and Project Access............................................................... 32 SECTION 12.12 Performance and Payment Bonds .....................................................33 SECTION 12.13 Notice of Default and Event of Default............................................ 33 ii e e e SECTION 12.14 Compliance with State Contract Requirements................................ 33 ARTICLE xm NEGATNE COVENANTS OF THE LESSEE ............................................ 33 SECTION 13.01 Nondiscrimination ARTICLE XIV MISCELLANEOUS ...................................................................................... 34 SECTION 14.0 I Notices .................................... ...................... .......... .......................... 34 SECTION 14.02 Binding Effect................................................................................... 35 SECTION 14.03 Third Party Beneficiaries.................................................................. 35 SECTION 14.04 Net Lease ..........................................................................................35 SECTION 14.05 Amendments to Facility Lease ......................................................... 35 SECTION 14.06 Discharge of Lessee.......................................................................... 36 SECTION 14.07 Partial Invalidity ...............................................................................36 SECTION 14.08 California Law; Venue ..................................................................... 37 SECTION 14.09 Section Headings..................;........................................................... 37 SECTION 14.10 Execution.......................................................................................... 37 EXHffirr A - Description of the Project...................................................................................A-I EXHffirr B - Description of the Site ........................................................................................B-I EXHffirr C - Form of Resolution ofLessee.............................................................................C-1 EXHffiIT D - Budget ofProject................................................................................................D-I EXHffilT E - Conditions Precedent to Disbursement............................................................... E-I EXHffirr F - Base Rental Payments......................................................................................... F-I EXHffiIT G - State Contract Requirements ..............................................................................G-I EXHffiIT H - Tax Certificate..... ................................................ .......................H-I EXHffilT I - Form of Certificate of Chief Financial Officer of * I * (the "Lessee") .................. I-I EXHffirr J - Certificate of the Lessee Regarding: Fair Market RentaI............................J-I iii e e e FACILITY LEASE This Facility Lease (the "Facility Lease"), executed and entered into as of August 28, 2001, by and between the California Infrastructure and Economic Development Bank (the "Lessor"), duly organized and existing pursuant to the Bergeson-Peace Infrastructure and Economic Development Bank Act, constituting Division I of Title 6.7 of the California Government Code (commencing at Section 63000 thereof) as now in effect and as it may from time to time hereafter be amended (the "Act") and the City of San Bernardino, a charter city and municipal corporation duly organized and existing under the laws of the State of California (the "Lessee"); WIT N E SSE T H: WHEREAS, the Lessee and the Lessor desire to finance the construction, acquisition and installation of Harriman Place Street Extension Project - Phase I, as described in Exhibit A attached hereto (the "Project"), which Project will be located on real property owned by the City of San Bernardino; WHEREAS, the Lessee owns the real property situated at 222 North Lugo Avenue, San Bernardino, California on which property is located the Rudy C. Hernandez Community Center, also known as the Meadowbrook Park, described in Exhibit B attached thereto ( the "Facility"); WHEREAS, the Lessee has leased the Facility to the Lessor pursuant to the Site Lease, dated as of August 28, 200 I, between the Lessee, as lessor and the Lessor, as lessee; WHEREAS, the Lessee has determined that it is in the public interest, convenience and welfare and for the common benefit of the inhabitants of the Lessee that the Lessee finance the Project through the delivery of this Facility Lease (as defined in Section 1.01) and the issuance and delivery of Bonds of the Lessor secured by Base Rental Payments under this Facility Lease; WHEREAS, the Lessee is authorized by law to lease the Facility and the Facility is necessary and proper for public purposes; WHEREAS, the Lessor has authority under the Act to issue tax-exempt Bonds and to pledge its rights under this Facility Lease to secure such Bonds, and Lessee acknowledges that the issuance of such Bonds impacts its rights and obligations as described herein, and Lessee hereby agrees to adhere to the requirements contained in this Facility Lease and the Indenture necessary in order to maintain the tax-exempt status of the Bonds; and A-I e e e WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Facility Lease to exist, have happened and have been performed in a regular and due time, form and manner as required by law, the parties hereto are now duly authorized to execute and enter into this Facility Lease. NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS: ARTICLE I DEFINITIONS SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein. Account "Account" means a line item, sub-account or allocated amount segregated for the purpose and function ofthe particular Account. Act "Act" means the Bergeson-Peace Infrastructure and Economic Development Bank Act, constituting Division I of Title 6.7 of the California Government Code (commencing at Section 63000 thereof) as now in effect and as it may from time to time hereafter be amended. Additional Rental Payments "Additional Rental Payments" means all amounts payable by the Lessee pursuant to Section 5.01(b) hereof. Base Rental Payments "Base Rental Payments" means all amounts payable by the Lessee as Base Rental pursuant to Section 5.01(a) hereof. Bond Date "Bond Date" means the date when the Facility Lease and the Base Rental Payments are pledged as security for Bonds under an Indenture. A-2 e e e Bonds "Bonds" means any bonds and additional financing issued by the Lessor, the repayment of which is secured, in whole or in part, by this Facility Lease. Business Dav "Business Day" means any day, Monday through Friday, which is not a legal holiday of the State or the Trustee. Certificate of the Lessee "Certificate of the Lessee" means a request or certificate, in writing, signed by a duly authorized representative ofthe Lessee. Code "Code" means the Internal Revenue Code of 1986, as amended, and the regulations of the United States Department of the Treasury issued thereunder, and in this regard reference to any particular section of the Code shall include reference to all successors to such section of the Code. Effective Date "Effective Date" means August 28, 2001, the date on which this Facility Lease becomes effective and binding upon the Lessee and the Lessor. Event of Default "Event of Default" means any of the events described in Section 10.01. Exoiry Date "Expiry Date" means August 27,2031, except as extended or sooner terminated pursuant to Section 3.01 hereof. Facilitv "Facility" means the Site and any and all improvements thereon, as described in Exhibit B hereto (as the same may be changed from time to time by Removal or Substitution as provided in Section 2.06). A-3 e e e Facility Lease "Facility Lease" means this facility lease, dated as of August 28, 2001, by and between the Lessor and the Lessee, as originally executed and as it may from time to time be amended or supplemented in accordance with the terms hereof. Fiscal Year "Fiscal Year" means any twelve (12) month period extending from July I in one calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any other 12 month period selected and designated by the Lessee as its official fiscal year period. Indenture "Indenture" means any indenture providing for the issuance of Bonds, as originally executed and as it may from time to time be amended or supplemented in accordance with the terms thereof. Independent Accountant "Independent Accountant" means any certified public accountant or firm of certified public accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State, appointed by the Lessee, and who, or each of whom: (I) is in fact independent and not under the control of the Lessee or the Lessor; (2) does not have any substantial interest, direct or indirect, in the Lessee or the Lessor; and (3) is not connected with the Lessee or the Lessor as an officer or employee of the Lessee or the Lessor, but who may be regularly retained to make reports to the Lessee or the Lessor. Insurance Consultant "Insurance Consultant" means an individual or firm either retained by the Lessee as an independent insurance consultant or an employee of the Lessee, experienced in the field of risk management. Lease Year The term "Lease Year" means the period from each July 1 to and including the following June 30, during the term hereof; except that the initial Lease Year means the period from August 28, 2001 to and including June 30, 2002. A-4 e e e Lessee "Lessee" means the City of San Bernardino, a charter city and municipal corporation duly organized and existing under the laws of the State. Lessor "Lessor" means the California Infrastructure and Economic Development Bank, and its successors and assignees. Net Proceeds "Net Proceeds" means, collectively, the net proceeds of any insurance or condemnation award resulting from any damage or destruction of any portion of the Facility payable in accordance with Section 7.01. Ooerating Budget "Operating Budget" means the annual approved budget of the Lessee which includes Base Rental Payments and Additional Rental Payments due during the year. Ooinion of Counsel "Opinion of Counsel" means a written opinion of counsel of recognized national standing in the field of law relating to municipal bonds, appointed by the Lessee or the Lessor and in all cases paid for by the Lessee and acceptable to the Lessor. Owner "Owner" means the registered owner of any outstanding Bond. Permitted Encumbrances "Permitted Encumbrances" means, as of any particular time: (1) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the Lessee may, pursuant to Section 6.02, permit to remain unpaid; (2) this Facility Lease, as it may be amended from time to time; (3) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (4) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions, all of a non-monetary nature, which exist of record as of the Effective Date and are acceptable to the Lessor; and A-5 e e e (5) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions, all of a non-monetary nature, established following the date of recordation of this Facility Lease and to which the Lessor and the Lessee consent in writing. Proi ect "Project" means the public development facility to be constructed by the Lessor to the Lessee pursuant to this Facility Lease, authorized by Government Code section 63010(q) and the Act and described in Exhibit A. Proiect Account "Project Account" means the Account by that name established by the Lessor pursuant to Section 2.08. Proiect Amount "Project Amount" means the total cumulative amount authorized by the Lessor, pursuant to resolution and as specified in Section 2.08(b), not to exceed two million dollars, ($2,000,000). Proiect Costs "Project Costs" means the costs of construction, acquisition and installation of the Project, as approved by the Lessor and set forth in Exhibit D. Removal "Removal" means the release of all or a portion of the Facility from the leasehold hereof as provided in Section 2.06. Reoort "Report" means a document in writing signed by an Independent Consultant or an Independent Accountant, and including: (I) a statement that the person or firm making or giving such Report has read the pertinent provisions of this Facility Lease to which such Report relates; (2) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and (3) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the Report. A-6 e e e Site "Site" means the real property described in Exhibit B attached hereto. Site Lease "Site Lease" means the site lease, dated as of August 28, 2001, by and between the Lessee, as lessor and the Lessor, as lessee, of the Site as originally executed and as it may from time to time be amended or supplemented. State "State" means the State of California. Substitution "Substitution" means the removal, and the lease of substituted real property and improvements hereunder as provided in Section 2.06. Tax Certificate "Tax Certificate" means the tax certificate as set forth in Exhibit H executed and delivered by the Lessee as of August 28, 2001 setting forth certain conditions, covenants, expectations and elections of the Lessee with respect to the Facility Lease in accordance with the Code. Trustee "Trustee" means the trustee acting in its capacity as such under the Indenture, or any successor or assignee as therein provided, including the Lessor. SECTION 1.02 Rules of Construction. The singular form of any word used herein, including the terms defined in this Section 1.01, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. All references herein to "Sections" and other subdivisions hereof are to the corresponding Sections or subdivisions of this Facility Lease as originally executed; and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Facility Lease as a whole and not to any particular Section or subdivision hereof. A-7 e e e ARTICLE 1I THE FACILITY SECTION 2.01. Lease of the Facility. The Lessor hereby leases to the Lessee, and the Lessee hereby rents and hires from the Lessor, the Facility on the conditions and terms hereinafter set forth. The Lessee hereby agrees and covenants that during the term hereof, except as hereinafter provided, it will use the Facility for public purposes so as to afford the public the benefits contemplated hereby and so as to permit the Lessor to carry out its agreements and covenants contained herein and in the Indenture, and the Lessee hereby further agrees and covenants that during the term hereof that it will not abandon or vacate the Facility. SECTION 2.02. Ouiet Eniovment. The parties hereto mutually covenant that the Lessee, so long as it observes and performs the agreements, conditions, covenants and terms required to be observed or performed by it contained herein and is not in default hereunder, shall at all times during the term hereof peaceably and quietly have, hold and enjoy the Facility without suit, trouble or hindrance from the Lessor. SECTION 2.03. Right of Entrv and Insoection. The Lessor shall have the right to enter the Facility and the Project and inspect the Facility and the Project during reasonable business hours (and in emergencies at all times) for any purpose connected with the Lessor's rights or obligations hereunder and for all other lawful purposes. SECTION 2.04. Prohibition Against Encumbrance or Sale. The Lessee and the Lessor will not create or suffer to be created any mortgage, pledge, lien, charge or encumbrance upon the Facility except Permitted Encumbrances. -The Lessee and the Lessor will not sell or otherwise dispose of the Facility or any property essential to the proper operation of the Facility except as otherwise provided herein. Notwithstanding anything to the contrary herein contained, the Lessee may assign, transfer or sublease any and all of the Facility or its other rights hereunder, orovided that (a) the rights of any assignee, transferee or sublessee shall be subordinate to all rights of the Lessor hereunder, (b) no such assignment, transfer or sublease shall relieve the Lessee of any of its obligations hereunder, (c) the assignment, transfer or sublease shall not result in a breach of any covenant of the Lessee contained in any other Section hereof, or in the Tax Certificate, (d) any such assignment, transfer or sublease shall by its terms expressly provide that the fair rental value of the Facility for all purposes shall be first allocated to this Facility Lease, as the same may be amended from time to time before or after any such assignment, transfer or sublease and (e) no such assignment, transfer or sublease shall confer upon the parties thereto any remedy which allows reentry upon the Facility unless concurrently with granting such remedy the same shall be also granted hereunder by an amendment to this Facility Lease which shall in all instances be prior to and superior to any such assignment, transfer or sublease. SECTION 2.05 Liens. In the event the Lessee shall at any time during the term hereof cause any improvements to the Facility to be constructed or materials to be supplied in or upon or attached to the Facility, the Lessee shall payor cause to be paid when due all sums of A-8 e e e money that may become due or purporting to be due for any labor, services, materials, supplies or equipment furnished or alleged to have been furnished to or for the Lessee in, upon, about or relating to the Facility and shall keep the Facility free of any and all liens against the Facility or the Lessor's interest therein. In the event any such lien attaches to or is filed against the Facility or the Lessor's interest therein, and the enforcement thereof is not stayed or ifso stayed such stay thereafter expires, the Lessee shall cause each such lien to be fully discharged and released at the time the performance of any obligation secured by any such lien matures or becomes due. If any such lien shall be reduced to final judgment and such judgment or any process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and such stay thereafter expires, the Lessee shall forthwith pay and discharge or cause to be paid and discharged such judgment. SECTION 2.06 Substitution or Removal of Facilitv. (a) The Lessee and the Lessor may amend this Facility Lease to either substitute additional real property and/or improvements (the "Substituted Property") from the existing Facility and/or to remove real property (including undivided interests therein) or improvements from the definition of Facility ("Removal"), in each case upon compliance with all of the conditions set forth in subsection (b). After a Substitution or Removal, the part of the Facility for which the Substitution or Removal has been effected shall be released from the leasehold hereunder. (b) No Substitution or Removal shall take place hereunder until the Lessee delivers to the Lessor and the Trustee the following: (I) A Certificate of the Lessee containing a description of all or part of the Facility to be released and, in the event of a Substitution, a description of the Substituted Property constituting the Substitution; (2) A Certificate of the Lessee stating that the annual fair rental value of the Facility after a Substitution or Removal, in each year during the remaining term of this Facility Lease, is at least equal to the maximum annual Base Rental Payments and Additional Rental Payments attributable to the Facility during the remaining term of this Facility Lease. Annual fair rental value shall be determined by the Lessee on the basis of an appraisal of the Facility after said Substitution or Removal conducted by a member of the American Institute of Real Estate Appraisers or the American Society of Appraisers designated by the Lessee (or on such other basis and with such other evidence of annual fair rental value as may be approved by the Lessor in its discretion); (3) An Opinion of Counsel to the effect that the Facility Lease and Site Lease amendment containing the Substitution or Removal have been duly authorized, executed and delivered by the Lessee and constitute the valid and binding obligations of the Lessee enforceable in accordance with their terms; A-9 e e e (4) In the event of a Substitution, a policy of title insurance covering the Substituted Property in an amount at least equal to the proportionate share of the Base Rental Payments represented by the Substitution, insuring the Lessor's interest in the Substituted Property (except any portion thereof which is not real property) subject to Permitted Encumbrances; (5) In the event of a Substitution, an opinion of the attorney of the Lessee or endorsement by a title company acceptable to the Lessor to the effect that the exceptions, if any, contained in the title insurance policy referred to in (4) above do not interfere with the beneficial use and occupancy of the Substituted Property described in such policy by the Lessee for the purposes of leasing or using the Substituted Property; (6) An Opinion of Counsel nationally recognized as having expertise in the exemption of interest from gross income under the Code that the Substitution or Removal does not cause the interest with respect to the Bonds and any Additional Bonds to be includable in gross income of the Owners thereof for federal income tax purposes; (7) A Certificate of the Lessee stating that the Lessee has complied with the covenants contained in subsections (I) and (2) of Section 6.03(a) hereof with respect to the Substituted Property; (8) Evidence that the Lessee has delivered to the Lessor copies of the certificates and appraisal described in subsections (I) and (2) above; and (9) Lessor has not received notice from any of the rating agencies then rating the Bonds that such Substitution or Removal will result in a down-grade of the rating on the Bonds. SECTION 2.07 Construction, Acquisition and Installation of the Proiect. The Lessee hereby agrees to cause the Project to be constructed, acquired and installed as agent of the Lessor. The Lessee shall enter into contracts and provide for, as agent of the Lessor, the complete construction, acquisition and installation of the Project. The Lessee hereby agrees that it will cause the construction, acquisition and installation of the Project to be diligently performed in accordance with the terms and conditions of this Facility Lease. SECTION 2.08 Proiect Account. (a) The Lessor hereby agrees to establish a Project Account for the benefit of the Lessee, and the Lessee, pursuant to resolution previously adopted in form substantially similar to Exhibit C, hereby agrees to utilize the Project Account, as the agent of the Lessor, to construct, acquire and install the Project, subject to the covenants, agreements, provisions and conditions herein. (b) Moneys in the Project Account shall be disbursed solely upon receipt by the Lessor of invoices documenting, to the satisfaction of the Lessor, that the Lessee, acting as A-tO e e e agent for the Lessor, has incurred costs that constitute both reasonable and necessary components of the Project and which are consistent with the cost categories, amounts and requirements described in Exhibit D hereto; orovided, however, that no disbursements shall be approved until and unless the Lessee has complied with the conditions precedent to disbursement set forth in Exhibit E hereto, and, except for the purchase of land or preliminary costs specified in exhibit D, no invoice shall be dated prior to August 28, 2001. "Preliminary costs," as used in this paragraph, means architectural, engineering, surveying, soil testing, and similar costs paid with respect to the Project in an aggregate amount not exceeding twenty percent (20%) of the Project Amount. (c) The total cumulative amount of Project Account disbursements shall not exceed the Project Amount. The Lessor shall encumber an amount equal to the Project Amount and make such amounts available to the Lessee as provided herein. Funds in the Project Account paid to Lessee ("Disbursed Funds") plus funds not yet paid to Lessee ("Undisbursed Funds") shall together equal the Project Amount. (d) Lessee must both: (i) begin Project construction no later than eighteen (18) months after August 28, 2001, and (ii) submit invoices to the Lessor for the entire Project Amount no later that thirty-five (35) months after August 28, 2001. If the Lessee fails to meet either of these conditions, the Lessor may unencumber any and all undisbursed funds in the Project Account and such unencumbered amounts shall henceforth not be available to the Lessee. If the Lessee fails to meet the 35 month requirement, the Lessor shall, if required by federal law, hold any or all undisbursed funds and apply such funds to the optional redemption of Bonds in accordance with the Indenture (in which event the moneys on deposit in the Project Account shall be reduced by the principal amount of Bonds so redeemed). (e) Notwithstanding any contrary provisions of this Facility Lease or any other documents, under no circumstances will the Lessor be obligated to make disbursements in excess of the lesser of (i) the actual Project Costs incurred in connection with the completion of the Project or (ii) $2,000,000. (f) The Lessee agrees to pay any and all costs connected with the Project, including, without limitation, any and all Project Costs exceeding the Project Amount, and if the Lessor reduces the Project Amount pursuant to any provision hereunder, it shall also be the responsibility of the Lessee to pay any additional costs of the Project. SECTION 2.09 Disbursement of Proiect Amount. Upon receipt of a written request for disbursement, the Lessor will disburse moneys in the Project Account, no more than once a month, to the Lessee after specific compliance with all Exhibit E conditions precedent, and after the Lessee presents evidence that a Project Cost has been incurred. All requests for payment shall be accompanied by information and documentation as may be required by the "Lessor to determine the amount of Project funds to be disbursed. In addition, all requests for payment shall be accompanied by a certification by the Lessee that the Project funds so requested are for eligible Project Costs as defined in the Act and this Facility Lease; are incurred in the amounts and for the purposes represented and that the work or materials for which payment has A-ll e e e been requested are satisfactory. The Lessor will provide the Lessee with a description of the documentation required for payment. Further, not more than ninety percent (90%) of each invoice payable from the Project Amount designated for construction shall be disbursed until the Lessor receives a recorded notice of completion for the Project; and the Lessee has met all conditions precedent to final disbursement set out in Exhibit D; provided however, if the Lessee is obliged by law to make payments to certain construction contractors of 100% of invoiced amounts or to establish a retention fund for final payment to certain contractors, the Lessor shall disburse Project funds in the amount required by law. SECTION 2.10 Withholding of Proiect Amount. (a) The Lessor may withhold all or any portion of the Project Amount prior to the Bond Date in the event that: (I) The Lessee has substantially violated any of the terms, provisions, conditions or commitments of this Facility Lease, or if an Event of Default has occurred; or (2) The Lessee is unable to demonstrate, to the satisfaction of the Lessor the ability to complete the Project or to maintain adequate and timely progress toward completion thereof. (b) In the event that any portion of the Project Amount is withheld from the Lessee, the Lessor shall notify the Lessee of the reasons and advise the Lessee that the Lessee has thirty (30) days in which to remedy the failure or violation. (c) If any portion of the Project Amount is withheld pursuant to this section, the Lessee hereby acknowledges and agrees that the Lessor shall have the right to disencumber undisbursed funds under this Facility Lease. ARTICLE III TERM OF THE FACILITY LEASE SECTION 3.01. Commencement and Termination of the Facility Lease: Vestim! of Title. (a) The term of this Facility Lease shall commence on the Effective Date, and shall end on the Expiry Date, unless the Expiry Date is extended or is sooner terminated as hereinafter provided. If on the Expiry Date the rental payable hereunder shall not be fully paid and all Bonds and Additional Bonds shall not be fully paid and defeased, or if the rental payable hereunder shall have been abated at any time and for any reason, then the term of this Facility Lease shall be extended until ten (10) days after the rental payable hereunder shall be fully paid and all Bonds shall be fully paid and defeased, except that the term of this Facility Lease shall in no event be extended beyond August 27, 2036, the maximum expiry date. If prior to the Expiry Date, the rental payable hereunder shall be fully paid and all Bonds shall have been fully paid or defeased in accordance with the terms of the Indenture, the term of this Facility Lease shall end ten (10) days thereafter or ten (10) days after written notice by the Lessor to the Lessee to the effect that the rental payable hereunder has been fully paid and all Bonds have been fully paid, whichever is earlier, and this Facility Lease shall thereupon terminate. A-12 e e e (b) Upon the termination or expiration of this Facility Lease (other than as provided in Article X), full and complete title to the Facility shall vest in the Lessee, free of any leasehold or other encumbrance established hereunder. Upon such termination or expiration, the Lessor shall execute such conveyances, deeds and other documents as may be necessary or appropriate to evidence such jurisdiction and vesting of record. ARTICLE IV USE OF PROCEEDS; TAX COVENANTS; CONTINUING DISCLOSURE SECTION 4.01. Use of Proiect Amount. The parties hereto agree that the Lessor shall apply funds from the Project Amount to the Project Account in the amount of $2,000,000. SECTION 4.02 Tax Covenants. The Lessee recognizes that the Project Amount consists of proceeds of a tax-exempt financing program. In order to maintain the tax- exempt status of the financing, the Lessee will not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, and the Lessee specifically agrees to comply with all terms and conditions contained in the Tax Certificate. SECTION 4.03 Continuing Disclosure. The Lessee covenants to furnish certain financial and operating data pertaining to the Lessee that may be required to either: (i) enable the Lessor to secure an Indenture by this Facility Lease and issue any Bonds; or (ii) enable any underwriter of the Bonds to comply with Rule 15c2-12(b)(5) of the Securities and Exchange Commission. The Lessee covenants to provide the Lessor with copies of all continuing disclosure reports concerning the Lessee required by the terms of any financing other than this Facility Lease, including reports required to be filed in order to comply with Rule IOb-5, and to send such reports to the Lessor at the same time such reports are sent to any dissemination agent, trustee, nationally recognized municipal securities information repository or other person. ARTICLE V RENTAL PAYMENTS SECTION 5.01. Rental Pavrnents. The Lessee agrees to pay to the Lessor, its successors or assignees, without deduction or offset of any kind, as rental for the use and occupancy of the Facility, the following amounts at the following times: (a) Base Rental. The Lessee shall pay to the Lessor rental hereunder as Base Rental Payments with respect to the Facility at the times and in the amounts set forth in the Base . Rental Payment Schedule attached hereto as Exhibit F and made a part hereof. (I) The obligation of the Lessee to pay Base Rental Payments (and Additional Rental) shall commence on the Effective Date except that Base Rental Payments shall A-13 e e e have an interest only component through January 31,2003. The Lessee shall deposit with the Lessor not later than each February 1 and August I, commencing February I, 2002, the Base Rental Payments due in the then current fiscal year (as set forth in Exhibit F) and the same shall be held by the Lessor as security for the Base Rental Payments due on such dates. (2) Prior to the Bond Date, Lessee Base Rental Payments shall consist of an interest component calculated on the disbursed portion of the loan and a principal component based upon a fully disbursed loan. Commencing on the Bond Date, Base Rental Payments shall consist of both an interest component and a principal component based upon a fully disbursed loan, but Lessee shall receive a credit against any Base Rental Payment due and payable hereunder for the actual interest earned by the Lessor (net of rebatable arbitrage) on the undisbursed funds in the Project Account. Prior to the Bond Date, the Lessee shall receive no such credit. The Lessee may choose to prepay the Base Rental Payments pursuant to Section 5.05(a). (b) Additional Rental Pavrnents. The Lessee shall pay as Additional Rental Payments as rental hereunder in addition to the Base Rental Payments, to the Lessor or the Trustee, as hereinafter provided: (I) a payment of an annual fee due with the principal payment each year during the term of this Facility Lease in an amount equal to .3% (30 basis points) of the outstanding principal component of the remaining Base Rental Payments as of the first day of the month prior to the month in which the principal payment is due as set forth in Exhibit F; and (2) amounts in each year as shall be required by the Lessor or the Trustee for the payment of extraordinary expenses of the Lessor in connection with this Facility Lease, including all expenses, fees of accountants, trustees, attorneys, litigation costs, insurance premiums, taxes, assessments (if any), and all other extraordinary costs of the Lessor or the Trustee. Extraordinary expenses and extraordinary costs are those expenses and costs related to this Facility Lease in excess of ordinary and customary expenses incurred as part of the annual fee pursuant to Section 5.0l(b)(I). Such additional payments shall be billed by the Lessor or the Trustee from time to time, together with a statement certifying that the amount so billed has been paid by, or will be paid by, the Lessor or the Trustee for one or more of the items above described, or that such amount is then payable by the Lessor or the Trustee for such items. (3) Lessee shall deposit the amount required pursuant to (I) above with the Lessor not later than August 1 of each year; if billed pursuant to (2) above, Lessee shall deposit that amount within thirty (30) days after receipt of the bill by the Lessee. Any amount billed and not deposited within thirty (30) days of billing or due date shall accrue interest at the lesser of 12% per annum or the maximum rate permitted by law. (4) The Lessor may issue bonds and may enter into leases to finance facilities other than the Project. Any taxes levied against the Lessor with respect to real property other than the Facility, the fees of any trustee or paying agent under any resolution securing bonds of the Lessor or any trust agreement or indenture other than the Indenture, and any other expenses A-14 e e e directly attributable to any facilities other than the Facility shall not be included in the administrative costs of the Facility and shall not be paid from the Additional Rental Payments payable hereunder. The Trustee may conclusively rely upon a written certificate of the Lessor in making any determination that costs are payable as Additional Rental Payments hereunder, and shall not be required to make any investigation as to whether or not the items so requested to be paid are expenses of operation of the Facility. (c) Consideration. Such payments of Base Rental Payments and Additional Rental Payments for each Lease Year or portion thereof during the term of this Facility Lease shall constitute the total rental for such Lease Year or portion thereof and shall be paid or payable by the Lessee for and in consideration for the right of the use and possession of, and the continued quiet use and enjoyment of, the Facility. Upon the execution of this Facility Lease, the Lessee shall deliver to the Lessor a Certificate of the Lessee, in substantially the form set forth as Exhibit J hereto, which shall set forth the annual fair rental value of the Facility. The parties hereto have agreed and determined that the annual fair rental value of the Facility is not less than the maximum Base Rental Payments and Additional Rental Payments payable hereunder in any year. (d) PaYment; Credit. Each installment of Base Rental Payments and Additional Rental Payment payable hereunder shall be paid in lawful money of the United States of America to or upon the order of the Lessor at such place as the Lessor shall designate. Any such installment of rental accruing hereunder which shall not be paid when due shall remain due and payable until received by the Lessor or the Trustee, except as provided in Section 5.04 hereof, and to the extent permitted by law shall bear simple interest at the rate of the lesser of (i) twelve percent (12%) per annum or (ii) the maximum rate authorized by law from the date when the same is due hereunder until the same shall be paid. Notwithstanding any dispute between the Lessee and the Lessor, the Lessee shall make all rental payments when due, without deduction or offset of any kind, and shall not withhold any rental payments pending the final resolution of any such dispute. In the event of a determination that the Lessee was not liable for said rental payments or any portion thereof, said payments or excess of payments, as the case may be, shall, at the option of the Lessee, be credited against subsequent rental payments due hereunder or be refunded at the time of such determination. (e) A one-time Facility Lease origination fee in the amount of $17,000 shall be due and payable by the Lessee upon initial disbursement of the Project Account. (f) All payments hereunder shall be payable by the Lessee in immediately available funds which constitute lawful money of the United States of America. Such payments shall be unsecured, and amounts for the payment thereof shall be paid to, or upon the order of, the Lessor as set forth in this Article. SECTION 5.02. Annual Budgets: Reoorting Requirements. The Lessee covenants to take such action as may be necessary to include all Base Rental Payments and Additional Rental Payments due under this Facility Lease in its Operating Budget for each fiscal year commencing after August 28, 2001 and to make all necessary appropriations for such Base Rental Payments and Additional Rental Payments. In addition, to the extent permitted by law, A-IS e e e the Lessee covenants to take such action as may be necessary to amend or supplement the budget appropriations for payments under this Facility Lease at any time and from time to time during any Fiscal Year in the event that the actual Base Rental Payments and Additional Rental Payments paid in any fiscal year exceeds the pro rata portion of the appropriations then contained in the Lessee's Operating Budget. SECTION 5.03. Application of Rental Pavrnents. All Base Rental Payments received shall be applied first to the interest component of Base Rental Payments, then to the principal component of Base Rental Payments due hereunder (including any prepayment premium components) and thereafter to all Additional Rental Payments due hereunder, but no such application of any payments which are less than the total rental due and owing shall be deemed a waiver of any default hereunder. SECTION 5.04. Rental Abatement. Except to the extent of, (i) amounts received in respect of use and occupancy insurance, and (ii) amounts, if any, otherwise legally available to the Trustee for payments in respect of the Bonds, during any period in which, by reason of material damage, destruction, title defect or condemnation there is substantial interference with the use and possession by the Lessee of any portion of the Facility, rental payments due hereunder with respect to the Facility shall be abated to the extent that the annual fair rental value of the portion of the Facility in respect of which there is no substantial interference is less than the annual Base Rental Payments and Additional Rental Payments, in which case rental payments shall be abated only by an amount equal to the difference. In the event the Lessee shall assign, transfer or sublease any or all of the Facility or other rights hereunder, as permitted by Section 2.04 hereof, for purposes of determining the annual fair rental value available to pay Base Rental Payments and Additional Rental Payments, annual fair rental value of the Facility shall first be allocated to this Facility Lease as provided in subsection (d) of Section 2.04. Any abatement ofrental payments pursuant to this Section shall not be considered an Event of Default. The Lessee waives the benefits of Civil Code Sections 1932(2) and 1933(4) and any and all other rights to terminate this Facility Lease by virtue of any such interference and this Facility Lease shall continue in full force and effect. Such abatement shall continue for the period commencing with the date of such damage, destruction, title defect or condemnation and ending with the substantial completion of the work of repair or replacement of the portions of the Facility so damaged, destroyed, defective or condemned. In the event that rental is abated, in whole or in part, pursuant to this Section 5.04 due to damage, destruction, title defect or condemnation of any part of the Facility and the Lessee is unable to repair, replace or rebuild the Facility from the Net Proceeds, if any, the Lessee agrees to promptly apply for and to use its best efforts to obtain any appropriate State and/or federal disaster relief in order to obtain funds to repair, replace or rebuild the Facility. SECTION 5.05. Prepavrnent of Base Rental Pavrnents. (a) Optional Prepavrnent. Prior to the Bond Date, the principal components of the Base Rental Payments shall be subject to optional prepayment at any time in whole or in part, without premium, together with accrued interest thereon and any Additional Rental Payments A.16 e e e owed to the Lessor. On or after the Bond Date, optional repayment of the principal of the Base Rental Payments shall be as set forth in the Indenture and may include a non-prepayment period and/or a prepayment premium. (b) Notice of Preoavrnent. Prior to the Bond Date, the Lessee shall be required to give the Lessor written notice of its intention to prepay principal components of Base Rental Payments at least forty-five (45) days prior to the date of the requested prepayment, and shall transfer to the Lessor all amounts required for such prepayment no later than the date fixed for such prepayment, which in no case shall be after the Bond Date. On or following the Bond Date, notice and transfer of optional prepayments shall be as set forth in the Indenture, and may include prepayment premiums and time periods during which a prepayment is prohibited. (c) Notice of Bond Date: Prepavrnent after Notice of Bond Date. At least ninety (90) days prior to the expected Bond Date, the Lessor shall send notice to the Lessee providing the Lessee with the option of prepaying or reducing the Project Amount or converting to a new Base Rental Payment Schedule as of the Bond Date or prepaying the Base Rental Payments pursuant to Section 5.05(a). The Lessee shall notify the Lessor no less than forty-five (45) days prior to the expected Bond Date if it intends to prepay Base Rental Payments or reduce the amount of the Base Rental Payments through the unencumbrance of any portion of the Project Amount as described in Section 5.05(c). (d) Reduction in Proiect Amount. If (i) prior to the Bond Date, the Lessee requests a reduction in the Project Amount, or (ii) the Lessor unencumbers funds as provided in Section 2.0S(d), such amounts shall be deducted from the Project Amount, and shall no longer be available to the Lessee; orovided, that no such request pursuant to subsection (i) shall be approved unless the costs of completing the Project have been adequately provided for in the sole discretion of the Lessor. Any reduction in the Project Amount shall not effect the obligation of the Lessee to complete the Project. Following any reduction in the Project Amount, the Lessor shall provide the Lessee with an updated Base Rental Payment Schedule using the new Project Amount and an amended termination date. (e) Extraordinary Preoavrnent. Subject to the provisions of Section 7.01, the Lessee may prepay, from Net Proceeds, all or any portion of the components of Base Rental Payments relating to any portion of the Facility then unpaid on any date, in whole or in part, so that the aggregate annual amounts of principal components of Base Rental Payments which shall be payable after such prepayment date shall each be as nearly proportional as practicable to the aggregate annual amounts of principal components of Base Rental Payments with respect to the portion of the Facility so prepaid. SECTION 5.06. Obligation to Make Rental Pavrnents. The agreements and covenants on the part of the Lessee contained herein shall be deemed to be and shall be construed . to be duties imposed by law and it shall be the duty of each and every public official of the Lessee to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the Lessee to carry out and perform the agreements and covenants contained herein agreed to be carried out and performed by the Lessee. A-17 e e e THE OBLIGATION OF THE LESSEE TO MAKE BASE RENTAL PAYMENTS AND ADDITIONAL RENTAL PAYMENTS DOES NOT CONSTITUTE Al\' OBLIGATION OF THE LESSEE FOR WHICH THE LESSEE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE LESSEE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. NEITHER THE BONDS NOR THE OBLIGATION TO MAKE BASE RENTAL PAYMENTS AND ADDITIONAL RENTAL PAYMENTS CONSTITUTES AN INDEBTEDNESS OF THE LESSEE, THE COUNTY OF SAN BERNARDINO, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. ARTICLE VI MAINTENANCE; TAXES; INSURANCE M'D OTHER CHARGES SECTION 6.01. Maintenance of the Facility bv the Lessee. The Lessee agrees that, at all times during the term hereof, it will, at its own cost and expense, maintain, preserve and keep the Facility and every portion thereof in good repair, working order and condition and that it will from time to time make or cause to be made all necessary and proper repairs, replacements and renewals. The Lessor shall have no responsibility in any ofthese matters or for the making of additions or improvements to the Facility. SECTION 6.02. Taxes. Other Governmental Charges and Utility Charges. The parties hereto contemplate that the Facility will be used for public purposes by the Lessee and, therefore, that the Facility will be exempt from all taxes presently assessed and levied with respect to real and personal property, respectively. In the event that the use, possession or acquisition by the Lessee or the Lessor of the Facility is found to be subject to taxation in any form, the Lessee will pay during the term hereof, as the same respectively become due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Facility and any other property acquired by the Lessee in substitution for, as a renewal or replacement of, or a modification, improvement or addition to, the Facility, as well as all gas, water, steam, electricity, heat, power, air conditioning, telephone, utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Facility; orovided, that with respect to any governmental charges or taxes that may lawfully be paid in installments over a period of years, the Lessee shall be obligated to pay only such installments as are accrued during such time as this Facility Lease is in effect. SECTION 6.03. Insurance. (a) The Lessee shall procure or cause to be procured and maintain or cause to be maintained throughout the term hereof insurance against the following risks in the following respective amounts: A-tS e e e (1) Insurance against loss or damage to the Facility caused by fire, lightning or earthquake, with an extended coverage endorsement covering the risk of vandalism and malicious mischief, sprinkler system leakage and boiler loss; provided that earthquake coverage shall be required only if: (i) available from reputable insurers at commercially reasonable rates; and (ii) the Facility cannot satisfy any earthquake standards which may be imposed by any rating agency then rating the Bonds. In the event the Lessee is unable to obtain earthquake coverage on any Facility which it previously has maintained, it will promptly so notify all rating agencies then rating the Bonds. The insurance described in this paragraph (I) shall be in an amount equal to the lesser of (i) replacement cost (without deduction for depreciation) of improvements located or to be located on the Facility or (ii) the remaining unpaid principal amount owed under this Facility Lease outstanding plus the amount of use and occupancy coverage described in paragraph (2) below, except that such insurance may be subject to deductible clauses of not to exceed the first one hundred thousand dollars ($100,000) subject to Lessor's approval of the amount of anyone loss (or ten percent (10%) of the amount insured, in the case of earthquake). Insurance described in this paragraph (1) and in paragraph (2) below may be in the fonn of a policy which covers the Facility and one or more additional parcels of real property insured by the Lessee; provided that the amount of coverage available thereunder shall be at least equal to the cumulative replacement values of the Facility and any other such property which is the subject of a lease, installment purchase or other financing arrangement ("Financed Property") for which bonds, certificates of participation or other obligations shall have been issued ("Obligations") plus the amount of use and occupancy coverage required by paragraph (2) below; in the event the Lessee elects to obtain insurance for the Facility and one or more additional parcels of real property and the amount of the insurance proceeds available to pay all claims thereunder is not sufficient to cover the replacement values of all such properties, then any such proceeds shall be used first to rebuild or repair the Facility and all Financed Properties or to repay all Obligations and the Bonds. The Lessor, and after the Bond Date, the Trustee, shall be named as loss payee. (2) Use and occupancy insurance against loss, total or partial, of the use and occupancy of the Facility as a result of any of the hazards covered by the insurance required by paragraph (I) hereof, in an amount sufficient to pay the Base Rental Payments attributable to the Facility for a twenty-four (24) month period; provided, that the amount of such insurance need not exceed the total remaining Base Rental Payments attributable to the Facility; provided further, that such insurance may be part of a policy pennitted under paragraph (I) above, which policy may provide that insurance proceeds paid for coverages contemplated by paragraph (I) above may reduce amounts payable under coverage required by this paragraph (2), and vice-versa; the Lessee may obtain use and occupancy insurance covering the Facility as well as other parcels of property owned by the Lessee, provided that the cumulative amount thereof is at least equal to the cumulative amount of use and occupancy insurance required by this paragraph (2) and any agreements relating to Financed Property in respect of which Obligations are outstanding. The Lessor, and after the Bond Date, the Trustee, shall be named as an additional insured. (3) Workers' compensation insurance covering all employees working in or on the Facility and the Project, in the same amount and type as other workers' compensation insurance maintained by the Lessee for similar employees doing similar work; and the Lessee shall A-19 e e e also require any other person or entity working in or on the Facility and the Project to carry the foregoing amount of workers' compensation insurance; any such policy maintained by the Lessee may provide for a deductible so long as the deductible is covered by a self-insurance or self-funding method or plan permitted by this Section. (4) A standard, commercial general liability insurance policy or policies in protection of the Lessor, the Lessee and their directors, officers and employees and the Trustee, indemnifYing and defending such parties against direct or contingent loss or liability for damages for personal injury, death or property damage related to the possession, operation or use of the Facility and the Project, with a minimum combined single limit of one million dollars ($1,000,000) for personal injury or death of one or more persons, and for property damage, in each accident or event (subject to a deductible clause of not to exceed one hundred thousand dollars ($100,000) or such greater amount as may be covered by any self-insurance or self-funding method or plan permitted by this Section). The Lessor, and after the Bond Date, the Trustee, shall be named as an additional insured. The Lessee shall collect, adjust and receive all moneys which may become due and payable under any policies contemplated by paragraphs (I) and (2) above, may compromise any and all claims thereunder and, subject to the provisions of Section 7.0 I hereof, shall transfer such Net Proceeds: (i) prior to the Bond Date, to the Lessor, and (ii) after the Bond Date, to the Trustee for application as provided herein or in the Indenture. Neither the Lessor nor the Trustee shall be responsible for the sufficiency of any insurance herein required. The Lessor and the Trustee shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Lessee. (b) Notwithstanding the provisions of Section 6.03(a), as an alternative to providing the insurance required by paragraphs (1), (3) and (4) of Section 6.03(a), the Lessee may provide a self-insurance or self-funding method or plan of protection for any part or all of the requirements for such insurance and, through such a plan or method, provide for deductible or retention amounts greater than those contemplated by paragraphs (I), (3) or (4) of Section 6.03(a). Any such self-insurance or self-funding maintained by the Lessee pursuant to the foregoing Sections shall comply with the following terms: (I) The self-insurance or self-funding program shall be approved by an Insurance Consultant; (2) The self-insurance or self-funding program shall include a reasonable claims reserve fund out of which each self-insured or self-funded claim and any deductible amount authorized by paragraphs (1), (3) and (4) of Section 6.03(a) shall be paid; prior to the end of the first Lease Year, the adequacy of each such fund shall be evaluated by an Insurance Consultant who shall also evaluate the appropriateness of the reserving and funding methods and practices employed in establishing and maintaining each such fund; any deficiencies in any claims reserve fund shall be remedied in accordance with the recommendation of the Insurance Consultant and any recommended changes in the reserving or funding methods or practices shall be adopted in accordance with the recommendation of the Insurance Consultant; after the first Lease Year, at least A-20 e e e annually and not later than July I of each year that is a Lease Year, the Lessee shall provide to the Lessor, a report by either the independent accountants which provide the audit report on the Lessee's annual audited financial statements or by an Insurance Consultant, as selected by the Lessee, as to the appropriateness of the reserving and funding methods and practices employed by the Lessee in funding the claims funds, and any changes recommended by the report shall promptly be implemented by the Lessee; (3) The claims reserve fund shall be held in a separate fund by the Lessee or by the self-insurance program; and (4) In the event the self-insurance or self-funding program shall be discontinued, the soundness of its claim and deductible or retention reserve fund, as determined by the Insurance Consultant, shall be maintained. (c) Any insurance policy issued pursuant to paragraph (I) of Section 6.03(a) shall be so written or endorsed as to make losses, if any, payable to the Lessee, the Lessor and the Trustee as their respective interests may appear and the Net Proceeds of the insurance required by that paragraph shall be applied as provided in Section 7.01 hereof. The net proceeds, if any, of the insurance policy described in that paragraph shall, to the extent that such proceeds are paid on account of loss or damage to the Facility, be payable and applied as described in Section 7.01. The net proceeds, if any, of the insurance policy described in paragraph (2) of Section 6.03(a) shall, to the extent that such proceeds relate to the use and occupancy of the Facility, be payable to the Lessor, and after the Bond Date shall be deposited in accordance with the Indenture. Each insurance policy provided for in the Facility Lease shall contain a provision to the effect that the insurance company shall not cancel the policy or modify it materially and adversely to the interests of the Lessor and the Trustee without first giving written notice thereof to the Lessor and the Trustee at least sixty (60) days in advance of such intended cancellation or modification. (d) The Lessee shall provide copies of policy endorsement, or in the case of self-insurance, provide the insurance report described in section 6.03 (b) (2) and file a Certificate of the Lessee with the Lessor, and after the Bond Date the Trustee and the Lessor, not later than July 1 of each year commencing July 1, 2002, certifying that the insurance required by this Section is in full force and effect and that the Trustee and the Lessor are named as loss payees and/or additional insured on each insurance policy which this Facility Lease requires to be so endorsed. SECTION 6.04. Advances. In the event the Lessee shall fail to maintain the full insurance coverage required by Section 6.03 hereof or shall fail to keep the Facility in good repair and operating condition, the Lessor may (but shall be under no obligation to) purchase the required policies of insurance and pay the premiums on the same or may make such repairs or replacements as are necessary and provide for payment thereof; and all amounts so advanced therefor by the Lessor shall become Additional Rental Payments, which amounts the Lessee agrees to pay within thirty (30) days of a written request therefor, together with interest thereon at the lesser of (i) twelve percent (12%) per annum; or (ii) the maximum rate allowed by law. A-21 e e e SECTION 6.05. Title Insurance. The Lessee covenants and agrees to deliver or cause to be delivered to the Lessor upon recordation of this Facility Lease and the Site Lease, an ALTA policy or policies with appropriate endorsements with respect to the Facility with liability in the aggregate amount equal to the Project Amount. Such policy or policies shall name the Lessor as the insured and shall insure the Lessor's interests in the Facility subject only to such exceptions as do not materially affect the Lessee's right to the use and occupancy of the Facility. ARTICLE VII DAMAGE, DESTRUCTION, TITLE DEFECT AND CONDEMNATION Net Proceeds. SECTION 7.01. Damage. Destruction. Title Defect and Condemnation: Use of (a) If prior to the termination of the t~rm hereof (i) the Facility or any other improvements in or on the Facility are damaged (each of which is hereinafter called "Damaged Improvements") by a peril covered by a policy of insurance described in Section 6.03(a)(I) hereof (an "Insured Peril"); or (ii) title to, or the temporary use of, the Facility or any portion thereof or the estate of the Lessee or the Lessor in the Facility or any portion thereof is defective or shall be taken under the exercise of the power of eminent domain by any governmental body or by any person or firm or corporation acting under governmental authority, then the Lessee and the Lessor will cause the Net Proceeds of any insurance claim (other than rental interruption insurance pursuant to Section 6.03(a)(2) hereof which shall be directly transferred to the Lessor and after the Bond Date to the Trustee with notice to the Lessor for deposit pursuant to Section 6.03 hereof) or condemnation award to be transferred to the Lessor, or after the Bond Date to the Trustee for deposit pursuant to the Indenture, and applied as follows: (I) Net Proceeds Exceeding Costs. Within 120 days of the date of said Insured Peril, the Lessee shall obtain written estimate(s) of the (i) cost of the repair, replacement and reconstruction of the Damaged Improvements (collectively referred to herein as the "Reconstruction"), and (ii) Net Proceeds available to pay such costs. Copies of such estimate(s) shall be provided to the Lessor and after the Bond Date to the Trustee. If the 120 day period is insufficient to obtain said estimates, the period may be reasonably extended by the Lessee upon the approval of the Lessor. If the Net Proceeds (not including proceeds of any policy of title insurance or condemnation award received by the Lessor in respect of the Facility) exceed the estimated costs of Reconstruction, the Damaged Improvements shall be repaired, replaced and reconstructed to the same or better quality as existed before the damage occurred. The Lessee shall commence and manage the Reconstruction and shall complete the Reconstruction as soon as reasonably possible after the occurrence of such damage. Any balance of Net Proceeds remaining after the Reconstruction has been completed shall be transferred to the Lessor (or, after the Bond Date, to the Trustee) for the payment of unpaid Base Rental Payments and Additional Rental Payments. Net Proceeds remaining after payment of the amounts specified in the previous sentence shall be(transferred to Lessee. A-22 e e e (2) Costs Exceeding Proceeds. If the estimated costs of Reconstruction exceed the Net Proceeds (not including proceeds of any policy of title insurance or condemnation award received by the Lessor in respect ofthe Facility), the Lessee, in its sole discretion, may elect to budget and appropriate to the Reconstruction the amount of such excess, and to manage the Reconstruction as set forth in Section 7.01(a)(5). The Lessee shall exercise this election by written notice thereof delivered to Lessor, or after the Bond Date, to the Trustee within thirty (30) days after the Lessee obtains the written estimate(s). (3) Net Proceeds Sufficient to Prepav All Unpaid Base Rental Pavrnents. If the Lessee does not exercise the election to reconstruct pursuant to Section 7.01(a)(2) and Net Proceeds are at least sufficient to prepay all unpaid Base Rental Payments, such Net Proceeds shall be transferred to the Lessor or, after the Bond Date, to the Trustee, to prepay such Base Rental Payments. If the Net Proceeds (not including proceeds of any policy of title insurance or condemnation award received by the Lessor in respect of the Facility) exceed the amount necessary to prepay the unpaid Base Rental Payments and any due and owing Additional Rental Payments, the Lessee shall be entitled to the amount of proceeds remaining after such prepayment. (4) Net Proceeds Insufficient to Prepav All Unpaid Base Rental Pavrnents. If the Lessee does not exercise the election to reconstruct pursuant to Section 7.01(a)(2) and Net Proceeds are insufficient to prepay the unpaid Base Rental Payments hereunder, the Lessee, in its sole discretion, may elect to budget and appropriate funds to cause the prepayment of the Base Rental Payments and due and owing Additional Rental Payments and the Net Proceeds, together with such funds, shall be transferred to the Lessor, or after the Bond Date, to the Trustee with directions to apply the proceeds to the prepayment of the Base Rental Payments and due and owing Additional Rental Payments; provided, that if the Lessee elects not to appropriate funds for such prepayment, the Lessee shall apply Net Proceeds (not including proceeds of any policy of title insurance or condemnation award received by the Lessor in respect of the Facility) to the Reconstruction. If the Lessee, in its sole discretion, elects to budget or appropriate funds for the prepayment of the unpaid Base Rental Payments and due and owing Additional Rental Payments, the Lessee shall transfer such funds to the Lessor, or after the Bond Date, to the Trustee for the prepayment of Base Rental Payments and due and owing Additional Rental Payments. (5) Management of Reconstruction. If the Facility or any part thereof becomes Damaged hnprovements, the Lessee shall promptly cause, manage and supervise the Reconstruction. (b) The proceeds of any policy of title insurance or condemnation award received by the Lessor (or, after the Bond Date, by the Trustee) in respect of the Facility shall be applied to prepay Base Rental Payments. A-23 e e e ARTICLE VIII DISCLAIMER OF WARRANTIES; VENDOR'S WARRANTIES; USE OF THE FACILITY SECTION 8.01. Disclaimer of Warranties. THE LESSOR MAKES NO AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE OR FITNESS FOR USE OF THE FACILITY, OR WARRANTY WITH RESPECT THERETO. THE LESSEE ACKNOWLEDGES THAT THE LESSOR IS NOT A MANUFACTURER OF ANY PORTION OF THE FACILITY OR A DEALER THEREIN, THAT THE LESSEE LEASES THE FACILITY AS-IS, IT BEING AGREED THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE LESSEE. In no event shall the Lessor or its assignees be liable for any incidental, indirect, special or consequential damage in connection with or arising out of this Facility Lease or the existence, furnishing, functioning or the Lessee's use of the Facility as provided hereby. SECTION 8.02. Use of the Facility. The Lessee will not use, operate or maintain the Facility improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated hereby. The Lessee shall provide all permits and licenses, if any, necessary for the use of the Facility. In addition, the Lessee agrees to comply in all respects (including, without limitation, with respect to the use, maintenance and operation of each portion of the Facility) with all laws of the jurisdictions in which its operations involving any portion of the Facility may extend and any legislative, executive, administrative or judicial body exercising any power or jurisdiction over the Facility; provided, that the Lessee may contest in good faith the validity or application of any such law or rule in any reasonable manner which does not, in the opinion of the Lessee adversely affect the estate of the Lessor in and to the Facility or its interest or rights hereunder. ARTICLE IX ASSIGNMENT AND INDEMNIFICATION SECTION 9.01. Assil!Ilment bv Lessor. The parties understand that certain of the rights of the Lessor hereunder may, at the Lessor's discretion after the Bond Date, be assigned to the Trustee under the Indenture. Accordingly, the Lessee agrees to make all payments due hereunder to the Trustee, notwithstanding any claim, defense, setoff or counterclaim whatsoever (whether arising from a breach hereof or otherwise) that the Lessee may from time to time have against the Lessor. The Lessee agrees to execute all documents, including notices of assignment and chattel mortgages or financing statements, which may be reasonably requested by the Lessor or the Trustee to protect their interests in the Facility during the term hereof. A-24 e e e SECTION 9.02. Assignment bv Lessee. This Facility Lease and the interest of the Lessee in the Facility may not be assigned or encumbered by the Lessee except as permitted by Section 2.04 hereof. SECTION 9.03. Indemnification. The Lessee shall, to the full extent permitted by law, indemnify, protect, hold harmless, save and keep harmless the Lessor and its members, directors, officers, employees and agents, and the Trustee and any underwriter for the Bonds and its respective directors, officers and employees from and against any and all liability, obligations, losses, claims and damages whatsoever, regardless of the cause thereof, and expenses in connection therewith, including, without limitation, counsel fees and expenses as incurred, penalties and interest (collectively, a "Claim"), arising out of or as the result of entering into the Facility Lease, and the acquisition, construction, operation, use, condition, or possession of the Facility or the Project and any portion thereof, including: (1) any accident in connection with the operation, use, condition or possession of the Facility or the Project resulting in damage to property or injuty to or death to any person including, without limitation, any claim alleging latent and other defects, whether or not discoverable by the Lessee or the Lessor; (2) patent, trademark or copyright infringement as a consequence of the operation of the Facility or the Project; (3) strict liability in tort as a consequence of the operation of the Facility or the Project; (4) Facility or the Project; any claim based upon environmental law or regulation relating to the (5) any claim of any nature directly arising from or related to the Facility or the Project, which claim is based upon the operation of the Facility or the Project from and after the Effective Date; (6) the existence, placement, delivery, storage or release of hazardous materials on the Facility or the Project or contamination of property, arising therefrom; and (7) the Trustee's acceptance or administration of the trusts imposed by the Indenture, including performance of the Trustee's duties, to the extent provided herein. The indemnification arising under this Section 9.03 shall continue in full force and effect notwithstanding the full payment of all ohligations hereunder or the termination hereof for any reason or the resignation or removal of the Trustee. Any party seeking indemnity hereunder shall promptly give notice to the Lessee of any claim or liability hereby indemnified against following the leaming thereof by such party. A-25 e e e ARTICLE X DEFAULT SECTION 10.01. Events of Default. (a) The following events shall be Events of Default under this Facility Lease and the terms Event of Default and "default" shall mean, whenever they are used in this Facility Lease, anyone or more of the following events: (I) The Lessee shall fail to deposit with the Lessor or its assignee any Base Rental Payment or Additional Rental Payment required to be so deposited by the close of business on the day such deposit is required pursuant to Section 5.01(a) hereof, orovided, that the failure to deposit any Base Rental Payment abated pursuant to Section 5.04 hereof shall not constitute an Event of Default; or (2) The Lessee shall breach any other terms, covenants or conditions contained herein, and shall fail to remedy any such breach with all reasonable dispatch within a period of thirty (30) days after written notice thereof from the Lessor to the Lessee; orovided, however, that if the failure stated in the notice cannot be corrected within such period, then the Lessor shall not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the Lessee within such period and is diligently pursued until the default is corrected. Upon the happening of any of the events specified in subsection (a) or (c) of this Section (in either case an "Event of Default"), it shall be lawful for the Lessor or its assignee, subject to the terms of this Facility Lease, to exercise any and all remedies available or granted to it pursuant to law or hereunder. (b) The Lessor or its assignee, in addition to all other rights and remedies it may have at law, shall have the option to do any of the following: (1) To terminate this Facility Lease in the manner hereinafter provided on account of default by the Lessee, notwithstanding any retaking of possession or re-letting of the Facility as hereinafter provided for in subparagraph (2) hereof, and to retake possession of the Facility. In the event of such termination, the Lessee agrees to surrender immediately possession of the Facility, without let or hindrance, and to pay the Lessor or its assignee all damages recoverable at law that the Lessor or its assignee may incur by reason of default by the Lessee, including, without limitation, any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such retaking possession of the Facility. Neither notice to pay rent nor to deliver up possession of the Facility given pursuant to law nor any proceeding in unlawful detainer, or otherwise, brought by the Lessor or its assignee for the purpose of obtaining possession of the Facility nor the appointment of a receiver upon initiative of the Lessor or its assignee to protect the Lessor's or its assignee's interest under this Facility Lease shall of itself operate to terminate this Facility Lease, and no termination of this Facility Lease on account of default by the Lessee shall be or become effective by operation of law or acts of the parties hereto, unless and until the Lessor or A-26 e e e its assignee shall have given written notice to the Lessee of the election on the part of the Lessor or its assignee to terminate this Facility Lease. (2) Without terminating this Facility Lease, (i) to collect each installment of rent as it becomes due and enforce any other term or provision hereof to be kept or performed by the Lessee and/or (ii) to exercise any and all rights to retake possession of the Facility. In the event the Lessor or its assignee does not elect to terminate this Facility Lease in the marmer provided for in subparagraph (1) hereof, the Lessee shall remain liable and agrees to keep or perform all covenants and conditions herein contained to be kept or performed by the Lessee and, to pay the rent to the end of the term of this Facility Lease or, in the event that the Facility is re-let, to pay any deficiency in rent that results therefrom; and further agrees to pay said rent and/or rent deficiency punctually at the same time and in the same marmer as hereinabove provided for the payment of rent hereunder (without acceleration), notwithstanding the fact that the Lessor or its assignee may have received in previous years or may receive thereafter in subsequent years rental in excess of the rental herein specified and notwithstanding any retaking of possession of the Facility by the Lessor or its assignee or suit in unlawful detainer, or otherwise, brought by the Lessor or its assignee for the purpose of obtaining possession of the Facility. Should the Lessor or its assignee elect to retake possession of the Facility as herein provided, the Lessee hereby irrevocably appoints the Lessor or its assignee as the agent and attorney-in-fact of the Lessee to re-Iet the Facility, or any items thereof, from time to time, either in the Lessor's or its assignee's name or otherwise, upon such terms and conditions and for such use and period as the Lessor or its assignee may deem advisable and the Lessee hereby indemnifies and agrees to hold harmless the Lessor or its assignee from any costs, loss or damage whatsoever arising out of, in connection with, or incident to any retaking of possession of and re-letting of the Facility by the Lessor or its assignee or its duly authorized agents in accordance with the provisions herein contained. The Lessee agrees that the terms of this Facility Lease constitute full and sufficient notice of the right of the Lessor or its assignee to re-let the Facility in the event of such reentry without effecting a surrender of this Facility Lease, and further agrees that no acts of the Lessor or its assignee in effecting such re-letting shall constitute a surrender or termination of this Facility Lease irrespective of the use or the term for which such re-letting is made or the terms and conditions of such re-letting, or otherwise, but that on the contrary, in the event of such default by the Lessee the right to terminate this Facility Lease shall vest in the Lessor or its assignee to be effected in the sole and exclusive marmer provided for in subparagraph (1) hereof. The Lessee further waives the right to rental obtained by the Lessor or its assignee in excess of the rental herein specified and hereby conveys and releases such excess to the Lessor or its assignee as compensation to the Lessor or its assignee for its services in re-letting the Facility or any items thereof. The Lessee further agrees to pay the Lessor or its assignee the cost of any alterations or repairs to the Facility or any items thereof necessary to place the Facility or any items thereof in condition for re-letting immediately upon notice to the Lessee of the completion and installation of such alterations or repairs. The Lessee hereby waives any and all claims for damages caused or which may be caused by the Lessor or its assignee in taking possession of the Facility as herein provided and all claims for damages that may result from the destruction of or injury to the Facility and all claims A-27 e e e for damages to or loss of any property belonging to the Lessee, or any other person, that may be on or about the Facility. The Lessor expressly waives the right to receive any amount from the Lessee pursuant to Section 1951.2(a)(3) ofthe California Civil Code. (c) In addition to any default resulting from breach by the Lessee of any agreement, condition, covenant or term hereof, if (i) the Lessee's interest herein or any part thereof be assigned, sublet or transferred without the written consent of the Lessor (except as otherwise permitted by Section 2.04 hereof), either voluntarily or by operation of law; or (ii) the Lessee or any assignee shall file any petition or institute any proceedings under any act or acts, State or federal, dealing with or relating to the subject of bankruptcy or insolvency or under any amendment of such act or acts, either as a bankrupt or as an insolvent or as a debtor or in any similar capacity, wherein or whereby the Lessee asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of its debts or obligations, or offers to its creditors to effect a composition or extension of time to pay its debts, or asks, seeks or prays for a reorganization or to effect a plan of reorganization or for a readjustment of its debts or for any other similar relief, or if the Lessee shall make a general or any assignment for the benefit of its creditors; or (iii) the Lessee shall abandon or vacate the Facility or any portion thereof (except as permitted by Section 2.04 hereof); then in each and every such case the Lessee shall be deemed to be in default hereunder. ARTICLE XI REPRESENTATIONS AND WARRANTIES OF THE LESSEE SECTION 11.01. Organization; Authority; Application Correct. The Lessee is duly organized and existing under the laws of the State and has all necessary power and authority to enter into and perform its duties under this Facility Lease. The application for the financing, including all attachments, amendments and clarifications submitted by the Lessee to the Lessor, were accurate and correct at the time of submission and as of the Effective Date. SECTION 11.02. Agreement Valid and Binding; Approval bv Lessee. This Facility Lease has been duly authorized, executed and delivered by the Lessee and constitutes the legal, valid and binding obligation of the Lessee, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally. The legislative body of the Lessee has authorized the Lessee to enter into this Facility Lease by duly adopting a resolution in substantially the form attached hereto as Exhibit C. SECTION 11.03. No Conflict in Execution of Facilitv Lease. The execution and delivery by the Lessee of this Facility Lease and compliance with the provisions hereof will not conflict with or constitute a breach of or default under any law, administrative regulation, court decree, resolution, charter, by-law or any agreement to which the Lessee is subject or by which it is bound or by which its properties may be affected. A-28 e e e SECTION 11.04. No Litigation. There is no action, suit, proceeding or investigation at law or in equity before or by any court or governmental agency or body pending or threatened against the Lessee to restrain or enjoin the execution or delivery of this Facility Lease, or in any way contesting or affecting the validity of this Facility Lease, or contesting the powers ofthe Lessee to enter into or perform its obligations under this Facility Lease. SECTION 11.05. No Breach or Default. The Lessee is not in breach of or in default under any applicable law or administrative regulation of the State or the United States, the Constitution of the State (including Article XVI, Section 18 thereof), any applicable judgment or decree, any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Lessee is a party or is otherwise subject which would have a material adverse impact on the Lessee's ability to perform its obligations under this Facility Lease and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument. SECTION 11.06. No Consent. Approval or Permission Necessarv. No consent or approval of any trustee or holder of any indebtedness of the Lessee, and no consent, permission, authorization, order or licenses of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of this Facility Lease or the consummation of any transaction contemplated herein, except as have been obtained or made and as are in full force and effect. SECTION 11.07. Infornlation Submitted to the Lessor. The information relating to the Lessee, the Site, the Project and the Facility submitted by the Lessee to the Lessor, including, but not limited to, all information in the financing application, was true at the time submitted to the Lessor and as of the date of this Facility Lease, remains true and correct in all material respects, and such information does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. SECTION 11.08. Financial Statements of the Lessee. The Lessee's financial statements furnished to the Lessor have been prepared in conformity with generally accepted accounting principles and fairly present in all material respects the financial condition of the Lessee as of the date thereof and the results of its operations for the period covered thereby. There has been no material adverse change in the business, condition (financial or otherwise) or operations of the Lessee since the date of such financial statements. SECTION 11.09. Licenses. Permits and Approvals for Ooeration of the Facility. The Lessee has obtained all licenses, permits and approvals from any governmental agency or authority having jurisdiction over the Lessee required for the operation of the Facility. SECTION 11.10. Proiect Completion. (a) The Project is described in Exhibit A and the Lessee shall make no changes thereto or to the operation thereof which would affect the qualification of the Project as A-29 I e e e a "public development facility" within the meaning of the Act or the qualification of the Project for tax exempt financing under the Code. (b) The Lessee intends to utilize the Project or cause the Project to be utilized as a "public development facility" within the meaning of the Act. (c) The Project will be located wholly within the corporate limits of the Lessee. (d) To the best of the Lessee's knowledge, no officer or official of the Lessor has any material interest whatsoever in the Project or in the transactions contemplated by this Facility Lease. (e) All applicable local governmental agency, State and federal government certificates, approvals, permits and authorizations with respect to the construction of the Project have been obtained or will be obtained as soon as practicable. ARTICLE XII AFFIRMATIVE COVENANTS OF THE LESSEE SECTION 12.01. Punctual Pavrnent. The Lessee will punctually pay, or cause to be paid, all payments required hereunder in strict conformity with the terms of this Facility Lease, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Facility Lease. SECTION 12.02. Books and Accounts; Financial Statements. (a) The Lessee will keep proper books of record and accounts in which complete and correct entries shall be made of all transactions relating to the Facility and the Project (which may be consolidated with other activities of the Lessee). Such books of record and accounts shall at all times during business hours be subject to the inspection of the Lessor. (b) The Lessee will prepare and file with the Lessor annually as soon as practicable, but in any event not later than one hundred eighty (I 80) days after the close of each Fiscal Year, so long as this Facility Lease has not been discharged by the Lessor, an audited financial statement of the Lessee for the preceding Fiscal Year, prepared by an Independent Accountant. The Lessee will furnish to the Lessor such reasonable number of copies of such audited financial statements as may be required by the Lessor for distribution (at the expense of the Lessee). (c) Simultaneously with the delivery of the annual audited financial statements, the Lessee will deliver to the Lessor a Certificate of the Lessee stating the following: (I) Certification that no Event of Default has occurred and no event has occurred which, with the passing of time would constitute an Event of Default; and A-30 e e e (2) Notification of any other event or circumstance that would materially affect completion of the Project and/or the payment of the Base Rental Payments. (d) The Lessee shall, upon request, furnish to the Lessor, in a format specified by the Lessor, information concerning employment and other public benefits connected to. the Project. (e) Not later than thirty (30) days after the start of each Fiscal Year, the Lessee will adopt and deliver to the Lessor, a budget approved by the governing board of the Lessee setting forth the estimated revenues, expenses and debt service for the current Fiscal Year; provided, that any such budget may be amended at any time during the Fisca] Year and such amended budget shall be delivered to the Lessor or its designee. SECTION 12.03. Notification to the Lessor. The Lessee agrees to notify the Lessor, immediately, by telephone promptly confirmed in writing, if any representation made in this Facility Lease or in the financing application to the Lessor shall at any time so long as the Facility Lease is outstanding prove untrue or incorrect in any manner. SECTION ]2.04. Protection of Security and Rights. The Lessee shall preserve and protect the security of the Facility Lease and the rights of the Lessor. From and after the date hereof, the Facility Lease shall be incontestable by the Lessee. SECTION 12.05. Management of Properties. The Lessee shall manage and operate the Facility and the Project in a sound and business-like manner and in conformity with all valid requirements of any governmental authority. SECTION 12.06. Payment from Tax-Exempt Debt. The Lessee hereby covenants to notify the Lessor forty-five (45) days before making any repayment or prepayment of this Facility Lease from the proceeds of any tax-exempt debt incurred by the Lessee. SECTION ]2.07. Further Assurances. The Lessee will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably required by the Lessor as necessary or proper to carry out the intention or to facilitate the performance of this Facility Lease and for the better assuring and confirming unto the Lessor of the rights and benefits provided in this Facility Lease. SECTION ]2.08. Proiect Documentation. (a) The Lessee may supplement or amend the Project description with written approval from the Lessor from time to time, provided that no such supplement or amendment shall cause the Project or any portion thereof to fail to constitute a "pub]ic development facility" within the meaning of the Act. (b) At any time, upon request of the Lessor, the Lessee agrees to make available to the Lessor for review and copying all then current plans and specifications for the Project. The Lessee may identify any proprietary information in such plans and specifications and, to the extent legally permissible, the Lessor agrees to keep such information confidential. A-31 e e e (c) As soon as the Project is completed, the Lessee shall evidence such completion by providing a Certificate of the Lessee to the Lessor stating that (i) construction of the Project has been completed substantially in accordance with the final plans and specifications therefor and all labor, services, materials and supplies used in construction have been paid for, and (ii) all other facilities necessary in connection with the Project have been constructed, acquired and installed in accordance with the final plans and specifications therefor and all costs and expenses incurred in connection therewith have been paid. Notwithstanding the foregoing, such certificate may state that it is given without prejudice to any rights of the Lessee against third parties for the payment of any amount not then due and payable which exist at the date of such certificate or which may subsequently exist. SECTION 12.09. Lessee's General Responsibilitv. The Lessee is solely responsible for the design, construction, operation and maintenance of the Project. Any review or approval of plans, specifications, bid documents or other construction documents by the Lessor is solely for the purpose of proper administration of Project funds by the Lessor and shall not be deemed to relieve or restrict the Lessee's responsibility or result in any duty, obligation or responsibility on the part of the Lessor or the officers and agents thereof. SECTION 12.10. Lessee's Assurances and Commitments. (a) Compliance with Laws and Regulations. The Lessee shall at all times comply and require its contractors and subcontractors to comply with all applicable federal and State laws, rules and regulations, and all applicable local ordinances, specifically including, but not limited to, prevailing wage, environmental, procurement and safety laws, rules, regulations, and ordinances. Lessee agrees that its failure to act in accordance with the provisions of this subsection (a) will not result in any duty, obligation or responsibility on the part of the Lessor or the officers and agents thereof. The Lessee will comply with all laws of the State so as not to adversely affect the payment of the Base Rental Payments and Additional Rental Payments. (b) Archeological or Historical Resources. Should a potential archeological or historical resource be discovered during construction, the Lessee agrees that all work in the area of the find will cease until a qualified archeologist has evaluated the situation and the Lessee has determined appropriate actions regarding preservation of the resource. (c) Construction Activities. The Lessee shall assure that adequate supervision and inspection of Project construction activities are maintained. The Lessor or the Lessor's designee reserves the right to conduct an audit of Lessee's construction expenditures during construction and up to three years following receipt by Lessor of notice of completion. The Lessor, at its discretion, may require the Lessee to conduct an interim and/or a final audit at the Lessee's expense, such audit to be conducted by and a report prepared by an Independent Accountant. SECTION 12.11. Facility and Proiect Access. The Lessee shall assure that the Lessor or its designee will have suitable access to the Facility and the Project at all reasonable A-32 e e e times throughout the term of this Facility Lease and shall include provisions assuring such access in all contracts and subcontracts relating to the Facility and the Project. SECTION 12.12. Performance and Payment Bonds. (a) The Lessee shall require its contractor to certify under penalty of perjury, and provide the Lessee with such certified copy, which shall be available for the Lessor's inspection, that a bond or bonds by one or more duly authorized corporation sureties with an A.M. Best rating of at least ''very good" or at least a comparable rating from another rating agency. The Lessee shall require that the Lessee be named as an additional payee and shall provide the Lessor with an insurance certificate to that effect. (b) Said bond shall be in the amounts and for the following purposes: (i) an amount not less than one hundred percent (100%) of the total estimated cost of the Project construction contract amount conditioned upon the faithful performance of the terms of the construction agreement for the Project including the maintenance of the work for a period of one year from the date of final acceptance of work or improvements by the Lessee against any defective work or labor done, or defective materials furnished, and (ii) an additional amount not less than one hundred percent (100%) ofthe estimated cost ofthe Project securing payment to the contractor, his or her subcontractors and to persons renting equipment or furnishing labor or materials to them for the Project. (c) The Lessee shall file a Certificate of the Lessee with the Lessor certifying that the bond required by this Section 12.12 is in full force and effect. SECTION 12.13. Notice of Default and Event of Default. The Lessee covenants that it will deliver to the Lessor, immediately after the Lessee shall have obtained knowledge of the occurrence of an Event of Default or default hereunder, a Certificate of the Lessee setting forth the details of such Event of Default or default and the action which the Lessee proposes to take with respect thereto. SECTION 12.14. Comoliance with State Contract Reauirements. The Lessee shall comply with all provisions contained in Exhibit G throughout the term of this Facility Lease. ARTICLE XIII NEGATIVE COVENANTS OF THE LESSEE SECTION 13.01. Nondiscrimination. (a) During the performance of this Facility Lease, Lessee, any contractor and its subcontractors shall not deny the contracts' benefits to any person on the basis of religion, color, ethnic group identification, sex, age, physical or mental disability, nor shall they discriminate unlawfully against any employee or applicant for employment because of race, A-33 e e e religion, color, national origin, ancestry, physical handicap, mental disability, medical condition, marital status, age or sex. The Lessee, any contractor and its subcontractor shall insure that the evaluation and treatment of employees and applicants for employment are free of such discrimination. (b) The Lessee, any contractor and its subcontractors shall comply with the provisions of the Fair Employment and Housing Act (Government Code Section 12900 et seq.), the regulations promulgated thereunder (Title 2, California Code of Regulations, Section 7285.0 et seq.) the provisions of Article 9.5, Chapter 1, Part 1, Division 3, Title 2 of the Government Code (Sections 11135-11139.5) and any regulations promulgated thereunder. (c) The Lessee, any contractor and its subcontractors shall not knowingly give preferential treatment of any kind whatsoever in connection with any business transaction related to the construction or operation of the Project to any of its affiliates or to any business enterprise in which Lessee has any financial interest, but in such business transactions shall deal at all times with such affiliates and enterprises on the same basis as though Lessee were dealing with any other parties. (d) The Lessee, any contractor and its subcontractors shall give written notice of their obligations under this section to labor organizations with which they have a collective bargaining or other contract. (e) The Lessee, any contractor and its subcontractors shall include the provisions of this section in all subcontracts to perform work with respect to the Facility and the Project. ARTICLE XIV MISCELLANEOUS SECTION 14.01. Notices. All written notices to be given hereunder shall be given by first class mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: 1fto the Lessor: California Infrastructure and Economic Development Bank California Technology, Trade and Commerce Agency 801 K Street, Suite 1700 Sacramento, California 95814 Attention: Credit Support Manager Or to such other address as may be designated in writing by the Lessor. A-34 e e e If to the Lessee: City of San Bernardino 20 I North "E" Street, Ste. 30 I San Bernardino, CA 92401-15087 Attention: John Hoeger, Project Manager Or to such other address as may be designated in writing by the Lessee. After the Bond Date, a copy of any such notice shall be provided to the Trustee at the address provided by the Trustee in the Indenture. SECTION 14.02. Binding Effect. This Facility Lease shall inure to the benefit of and shall be binding upon the Lessor and the Lessee and their respective successors and assignees. SECTION 14.03. Third Partv Beneficiaries. The Trustee is hereby expressly designated as a third party beneficiary hereunder after the Bond Date for the purpose of enforcing any of the rights hereunder assigned to the Trustee and for the purpose of the Trustee enforcing its own rights. SECTION 14.04. Net Lease. It is the purpose and intent of the Lessor and the Lessee that lease payments hereunder shall be absolutely net to the Lessor so that this Facility Lease shall yield to the Lessor the lease payments, free of any charges, assessments or impositions of any kind charged, assessed or imposed on or against the Facility, and without counterclaim, deduction, defense, deferment or set-off by the Lessee except as herein specifically otherwise provided. The Lessor shall not be expected or required to pay any such charge, assessment or imposition, or be under any obligation or liability hereunder except as herein expressly set forth, and all costs, expenses and obligations of any kind relating to the maintenance and operation of the Facility which may arise or become due during the term of this Facility Lease shall be paid by the Lessee. SECTION 14.05. Amendments to Facility Lease. (a) This Facility Lease may be amended in writing as may be mutually agreed by the Lessor and the Lessee, subject after the Bond Date to the written approval of the Trustee; provided, that after the Bond Date no such amendment which materially adversely affects the rights of the Owners shall be effective unless it shall have been consented to by the Owners of more than 50% in value of the Bonds outstanding, and provided further, that after the Bond Date no such amendment shall (i) extend the payment date of any Base Rental Payment, or reduce the interest, principal or prepayment premium component of any Base Rental Payment, without the prior written consent of the Owner . of each Bond so affected, or (ii) reduce the percentage of the value of the Bonds outstanding the consent of the Owners of which is required for the execution of any amendment hereof. A-35 e e e (b) After the Bond Date, this Facility Lease and the rights and obligations of the Lessor and the Lessee hereunder may also be amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding upon execution without the written consents of any Owners, but only to the extent permitted by law and only for anyone or more of the following purposes: (I) to add to the agreements, conditions, covenants and terms required by the Lessor or the Lessee to be observed or performed herein and other agreements, conditions, covenants and terms thereafter to be observed or performed by the Lessor or the Lessee, or to surrender any right or power reserved herein to or conferred herein on the Lessor or the Lessee, and which in either case shall not materially adversely affect the interests of the Owners; (2) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the Lessor or the Lessee may deem desirable or necessary and not inconsistent herewith, and which shall not materially adversely affect the interests of the Owners; (3) Section 2.06 hereof; or to effect a Substitution or Removal m accordance with (4) to make any other addition, amendment or deletion which does not materially adversely affect the interests of the Owners. SECTION 14.06. Discharge of Lessee. (a) After the Bond Date, upon the payment to the Owners of all outstanding Bonds in accordance with the Indenture, all of the obligations of the Lessee hereunder shall thereupon cease, terminate and become void and shall be discharged and satisfied; orovided, however, if any outstanding Bonds shall be deemed to have been paid by virtue of a deposit contemplated by the Indenture, then the obligation of the Lessee hereunder to make Base Rental Payments shall continue in full force and effect until all outstanding Bonds have in fact been paid, but such payments shall be made solely and exclusively from moneys and securities deposited with the Trustee as contemplated by the Indenture, and that shall be the sole source of satisfaction of the Lessee's obligation to make Base Rental Payments. The time period for giving notice by the Lessee to the Lessor and the Trustee specified in Section 5.05(b) shall not apply incident to the payment to the Owners of all outstanding Bonds in accordance with the Indenture. (b) Prior to the Bond Date, upon payment of any outstanding Base Rental Payments, Additional Rental and all other amounts owed to the Lessor, the Facility Lease shall terminate (except for Section 9.03). SECTION 14.07. Partial Invaliditv. If anyone or more of the agreements, conditions, covenants or terms hereof shall to any extent be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes final, none of the remaining agreements, conditions, covenants or A-36 e e e terms hereof shall be affected thereby, and each provision of this Facility Lease shall be valid and enforceable to the fullest extent permitted by law. SECTION 14.08. California Law; Venue. This Facility Lease shall be governed by and construed and interpreted in accordance with the laws of the State. Any proceeding pertaining to this Facility Lease shall be filed in the Superior Court of Sacramento County, unless otherwise expressly agreed to by the Lessor in its discretion. SECTION 14.09. Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision hereof. SECTION 14.10. Execution. This Facility Lease may be executed and entered into in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. [The balance ofthis page is intentionally left blank.] A-37 e e e IN WITNESS WHEREOF, the parties hereto have executed and entered into this Facility Lease by their officers thereunto duly authorized as of the day and year first written above. CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK By: Stanton C. Hazelroth Executive Director CITY OF SAN BERNARDINO By: [Name] A-38 e e e --I STATE OF CALIFORNIA ) ) ss ) COUNTY OF On , 200 I, before me, a Notary Public in and for the State of Cali fomi a, personally appeared STANTON C. HAZELROTH, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person or the entity on behalf of which the person acted, executed the instrument. Witness my hand and official seal [SEAL] A-39 e e e STATE OF CALIFORNIA ) ) ss ) COUNTY OF On ,2001, before me, a Notary Public in and for the State of California, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in hislher authorized capacity, and that by hislher signature on the instrument the person or the entity on behalf of which the person acted, executed the instrument. Witness my hand and official seal [SEAL] A-40 e e e EXHIBIT A DESCRIPTION OF THE PROJECT Project Title: Harriman Place Street Extension Project, Phase I Project Description: To extend the existing eastern end of Harriman Place to align with the present intersection of Laurelwood Drive and Tippecanoe Avenue to facilitate the development of a regional commercial shopping center and the improvement of24.5 acres ofhlighted residential area and unimproved lots. A-I e e e EXHIBIT B DESCRIPTION OF THE SITE 222 North Lugo Avenue, San Bernardino, CA APN: 0135-231-01. [Legal description to be provided] B-1 ,. e e e EXHIBIT C FORM OF RESOLUTION OF LESSEE RESOLUTION NO. A RESOLUTION OF THE GOVERNlNG BODY OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION AND DELIVERY OF A FACILITY LEASE AND A SITE LEASE AND APPROVING CERTAIN OTHER MATTERS IN CONNECTION THEREWITH BE IT RESOLVED BY THE GOVERNlNG BODY OF THE CITY OF SAN BERNARDINO (THE "LESSEE"), AS FOLLOWS: Section 1. is authorized and directed to execute and deliver the Facility Lease, dated as of August 28, 2001 (the "Facility Lease") and the Site Lease dated as of August 28, 200 I (the "Site Lease") proposed to be entered into by the Lessee and the California Infrastructure and Economic Development Bank (the "Lessor"). Section 2. is/are hereby each authorized and directed, in the name and on behalf of the Lessee, to take any and all steps and to execute and deliver any and all certificates, contracts and other documents which they might deem necessary or appropriate in order to consummate the delivery of the Facility Lease and the Site Lease and otherwise to effectuate the purposes of this resolution, including the execution of a tax certificate, and such actions previously taken by the employees of the Lessee are hereby ratified and confirmed. Section 3. This resolution shall take effect from and after its passage, approval and adoption. PASSED, APPROVED and ADOPTED this _ day of '-' [Name and Title] Ayes: Noes: . Absent: Abstain: C-l e e e CERTIFICATION OF RESOLUTION The undersigned hereby states and certifies: (I) I am the duly qualified and acting of the Lessee, and, as such, am familiar with the facts herein certified and am fully authorized to certify the same. (2) Attached hereto is a true, correct and complete copy of the resolution ofthe governing body of the Lessee authorizing the execution and delivery ofthe Facility Lease and the Site Lease, adopted at a meeting thereof duly held on the date set forth in such resolution, of which meeting all of the members of said governing body had due notice and at which a quorum was present and acting throughout. (3) I further certify that I have carefully compared the attached copy of the resolution with the original minutes of said meeting on file and of record in my office; that said copy is a true, correct and complete copy of the original resolution duly adopted by said governing body at said meeting and entered in said minutes; and that said resolution has not been amended, modified or rescinded since its adoption and is in full force and effect as of the date hereof. (4) I further certify that in accordance with Government Code Section 54954.2, the agenda of the meeting contained a brief description of the resolution to be considered at the meeting, and a copy thereof was posted at least seventy-two (72) hours before the meeting in a location freely accessible to members of the public. Dated: '- CITY OF SAN BERNARDINO By rNarne andTitlel C-2 r , e e e EXHIBIT D PROJECT COSTS Project Costs: Proiect Sources and Uses CIEDB AGENCY CIEDB PROJECT PROJECT PHASE 1 TOTALS TOTALS TAX CDBG HOME LO/MOD INCREMENT Land Acouisition S900,000 $154,000 SO $0 $0 $1,054,000 $6,015,950 Demolition $0 $0 $415,000 $0 $0 $415,000 $603,000 Relocation $0 $0 $0 $178,000 $178,000 $356,000 $1,027,085 Citv Street $541,335 $0 $0 SO $0 $541,335 $541,335 Drainage and $50,000 $0 $0 SO $0 $50,000 $50,000 Flood Control Water $107,100 $0 $0 SO $0 $107,100 $107,100 Sewer $55,350 $0 $0 SO $0 $55,350 $55,350 Electricity and S80.000 $0 $0 SO SO $80,000 $80,000 Communications Engineering, $161,111 $0 $0 $0 $0 $161,111 $161,111 Desi!!n and Permits Construction $88,104 S365,000 $0 $0 $0 $453,104 $453,104 Contingencv CIEDB Origination $17,000 $0 $0 $0 $0 $17,000 $17,000 Fee Totals $2,000,000 $519,000 $415,000 $178,000 S 178,000 $3,290,000 $9,111,035 Any line item may be amended up to 20% upon the prior written approval of the Lessor. The Lessor shall not be responsible for the payment of any cost overruns, The Lessee shall submit invoices only for expenses incurred. Expenses contained in the invoices shall be listed according to the categories contained in the above Project Costs. The Lessor shall pay ninety percent (90%) of all approved invoices for construction costs prior to compliance with the conditions precedent to final disbursement. Provided however, that if the Lessee is obliged by law to make payments to certain construction contractors for 100% of invoiced amounts or to establish a retention fund for final payment to certain contractors, the Lessor shall disburse Project funds in the amount required by law. Costs of the Project not covered by this Facility Lease will be paid by the Lessee. Costs of the Project which can be incurred prior to August 28, 2001: D-1 e Land acquisition; engineering, design and permits e e D-2 e e e EXHIBIT E CONDITIONS PRECEDENT TO DISBURSEMENT (a) Initial Disbursement. Disbursements for the Lessor origination fee shall be made concurrent with the initial disbursement. No funds shall be disbursed pursuant to this Facility Lease until and unless Lessee, in the good faith judgment of the Lessor, has specifically complied with the following: (I) An opinion of legal counsel that Lessee has the legal authority to enter into this Facility Lease and Site Lease and that the Facility Lease and Site Lease are legal, binding and enforceable agreements of Lessee; (2) (3) Exhibit I; Resolution adopted by Lessee in a form substantially similar to Exhibit C; Certificate ofthe Lessee's chief financial officer in a form substantially similar to (4) Insurance certificates, as required by Section 6.03; (5) ATLA title policy in an amount not less than the Project Amount meeting the requirements of Section 6.05; (6) Fair market rental certificate executed by Lessee in a form substantially similar to Exhibit J; and (7) Tax Certificate executed by Lessee in a form substantially similar to Exhibit H; and (8) Certification from the Lessee that the HUB project developer is adequately proceeding with the private development. (b) Preliminary Costs. When all the requirements of section (a) herein are met in a manner satisfactory to the Lessor, disbursement shall be allowed for the following costs: preliminary costs as specified in Exhibit D. (c) Construction Costs. For those costs other than the costs described in section (b) herein, no funds shall be disbursed pursuant to this Facility Lease until and unless Lessee has, in the good faith judgment of the Lessor, provided Lessor with all the documents required in section (a) herein and the following documents: (1) Certificate of the Lessee's Public Works Director or legal counsel that Lessee has obtained any and all lands, rights-of-way, easements, lot line adjustments, and orders of possession which are required for construction and operation ofthe Project; E-l e e e (2) Certificate of the Lessee that all required pennits have been obtained for the construction of the Project; (3) Perfonnance and Payment Bonds complying with Section 12.12. (4) Certificate of the Lessee's Public Works Director or legal counsel that: (A) All construction contracts and subcontracts necessary for Project construction have been awarded, and were awarded pursuant to competitive bidding and Lessee procedures nonnally required for similar construction projects; (B) Costs are consistent with the Exhibit D budget; (C) All prime contracts require the contractor to maintain appropriate builder's risk insurance and name Lessor as an additional insured and loss payee, require the contractor to maintain liability insurance and name the Lessor as an additional insured, and include the perfonnance and payment bond provisions set forth in Section 12.12 of this Facility Lease and name the Lessor as an additional payee; and (D) All construction contracts are guaranteed maximum price contracts. (5) Certificate of the Lessee's Public Works Director or legal counsel that all contracts and subcontracts: (A) Require payment of prevailing wage rates and compliance with Chapter I (commencing with Section 1720) ofPart 7 of Division 2 of the California Labor Code; (B) Require payment of workers' compensation insurance by contractors and subcontractors; and (C) Include the nondiscrimination provisions set forth in Section 13.01. (d) Final disbursement: The final disbursement of Project funds shall not be made until and unless Lessee, in the good faith judgment of the Lessor, has specifically complied with each and every one ofthe following, and provided a copy of the specified document or certificate to the Lessor: (I) Recorded Project notice of completion or other evidence of completion satisfactory to the Lessor; (2) Lien waivers for the Project, or passage of the applicable statutory time periods for filing mechanics and other similar liens; E-2 e e e (3) Certification by the Lessee that the Project has been completed according to its approved final plans and specifications, that the completed Project is consistent with the definition of Project in this Facility Lease and is acceptable to the Lessee and that the requirements of Section 12.08(c) have been met; (4) Certification of Recycled Content as set out in Section 6 of Exhibit F; and (5) Project operating permits, if applicable. E-3 e e e EXHIBIT F RENTAL P A YMENTS' Base Rental- Base Rental Additional Rental . Payment Date (Principal (Interest Total Payment Total Payments Component) Component) (.3%) Februarv 1, 2002 $0.00 $23,885.00 $23,885.00 $6,000.00 $29,885.00' Auaust 1, 2002 $28,100.00 $28,100.00 $28,100.00' Februarv 1, 2003 $46,000.00 $28,100.00 $74,100.00 $6,000.00 $80,100.00 Aunust1, 2003 $27,459.97 $27,459.97 $27,459.97 Februarv 1, 2004 $47,000.00 $27,459.97 $74,459.97 $5,863.34 $80,323.31 Aunust1, 2004 $26,801.95 $26,801.95 $26,801.95 Februarv 1, 2005 $48,000.00 $26,801.95 $74,801.95 $5,722.84 $80,524.79 Auaust1, 2005 $26,125.44 $26,125.44 $26,125.44 Februarv 1, 2006 $50,000.00 $26,125.44 $76,125.44 $5,578.39 $81,703.83 Auaust1, 2006 $25,429.92 $25,429.92 $25,429.92 Februarv 1,2007 $51,000.00 $25,429.92 $76,429.92 $5,429.88 $81,859.80 Aunust1, 2007 $24,714.86 $24,714.86 $24,714.86 Februarv 1, 2008 $52,000.00 $24,714.86 $76,714.86 $5,277.19 $81,992.06 Auaust1, 2008 $23,979.71 $23,979.71 $23,979.71 Februarv 1, 2009 $54,000.00 $23,979.71 $77,979.71 $5,120.22 $83,099.93 1 NOTE: The Base Rental Payments shall conform to the following guidelines: This schedule is based on a term of thirty (30) years from the Effective Date at an interest rate of 2.81 % per annum and indicates what the Base Rental Payments will be over the course of the Facility Lease, assuming full disbursement of the Project Amount as of the Effective Date. Base Rental Payments shall have an interest only component until January 31, 2003. The interest component of each Base Rental Payment shall be calculated on the basis of a 360-day year of twelve 30-day months. Any installment of a principal component or an interest component of a Base Rental Payment that is not paid when due shall continue to accrue interest at the lesser of 12% per annum or the maximum rate permitted by law from and including the Base Rental Payment date with respect to which such principal component or interest component is payable to but not including the date of actual payment. Prior to the Bond Date, there will be a .26% reduction in the interest rate, resulting in an initial interest rate of 2.55% per annum calculated on amounts disbursed. If any portion of the principal of the Base Rental Payments is prepaid in part pursuant to Section 5.05 hereof, the principal components of the Base Rental Payments shall be modified to reflect such partial prepayment. In most cases, the above disbursement assumption and actual interest rate charged will not be as reflected in the schedule above. As such, the actual Base Rental Payments will be less before the Bond Date, and correspondingly, the principal component outstanding will be larger than indicated above as of the Bond Date. A replacement payment schedule will be sent to the Lessee upon the Bond Date. Payment billing statements will be mailed to the Lessee reflecting the actual amount owed prior to each Base Rental Payment due date. With the exception of the annual fee, any Additional Rental Payments will also be billed separately as the cost is incurred. F-I e e e Base Rental- Base Rental Additional Rental Payment Date (Principal (Interest Total Payment T alai Payments Component) Component) (.3%) Auaust 1, 2009 $23,223,90 $23,223,90 $23,223,90 February 1, 2010 $55,000,00 $23,223,90 $78,223,90 $4,958.84 $83,182.73 Auaust 1, 2010 $22,446.84 $22,446,84 $22,446.84 February 1, 2011 $57,000,00 $22,446.84 $79,446,84 $4,792,92 $84,239.76 Auoust 1, 2011 $21,647.96 $21,647.96 $21,647,96 February 1,2012 $58,000,00 $21 647,96 $79,64 7 ,96 $4,622,34 $84.270,30 Auaus11,2012 $20,826,62 $20,826,62 $20,826,62 February 1, 2013 $60,000,00 $20,826,62 $80,826,62 $4,446,97 $85,273,59 Auausl1,2013 $19,982.21 $19,982,21 $19,982.21 Februarv 1, 2014 $62,000,00 $19,982.21 $81,982,21 $4,266.66 $86,248.87 Auaust 1, 2014 $19,114,07 $19,114,07 $19,114,07 February 1, 2015 $64,000,00 $19,114,07 $83,114.07 $4,081,30 $87,195.36 Auausl1, 2015 $18,221,53 $18,221.53 $18,221,53 February 1, 2016 $65,000.00 $18,221.53 $83,221,53 $3,890,72 $87,112,25 AUQust 1, 2016 $17,303,91 $17,303,91 $17,303,91 Februarv 1, 2017 $67,000,00 $17,303.91 $84,303,91 $3,694,79 $87,998,70 Auaust 1, 2017 $16,360,51 $16,360,51 $16.360.51 February 1, 2018 $69,000,00 $16,360,51 $85,360,51 $3,493,35 $88,853,86 Auausl1, 2018 $15,390,60 $15,390,60 $15,390,60 Februarv 1, 2019 $71,000,00 $15,390,60 $86,390,60 $3,286,25 $89,676.85 Auausl1, 2019 $14,393.43 $14,393,43 $14,393,43 February 1, 2020 $73,000,00 $14,393.43 $87,393,43 $3,073.33 $90,466,76 AUQusI1, 2020 $13,368.24 $13,368,24 $13,368,24 Februarv 1, 2021 $75,000,00 $13,368.24 $88,368,24 $2,854.43 $91,222,67 Auausl1, 2021 $12,314,25 $12,314,25 $12,314,25 Februarv 1, 2022 $77,000,00 $12,314,25 $89,314,25 $2,629.38 $91,943,62 Auausl 1, 2022 $11,230,64 $11,230,64 $11,230.64 Februarv 1, 2023 $79,000,00 $11,230,64 $90,230,64 $2,398,00 $92,628.64 Auaust 1, 2023 $10,116,57 $10,116,57 $10,116,57 Februarv 1, 2024 $82,000.00 $10,116,57 $92,116,57 $2,160,12 $94,276,70 Auaust 1, 2024 $8,971,21 $8,971,21 $8,971,21 February 1, 2025 $84,000,00 $8,971.21 $92,971,21 $1,915,56 $94,886.77 Auousl1, 2025 $7,793,66 $7,793.66 $7,793.66 Februarv 1, 2026 $86,000.00 $7,793,66 $93,793.66 $1,664.13 $95,457,78 Auausl 1, 2026 $6,583,02 $6,583.02 $6,583.02 February 1, 2027 $89,000,00 $6,583,02 $95,583,02 $1,405,63 $96,988,64 Auaust 1, 2027 $5,338,36 $5,338.36 $5,338,36 February 1, 2028 $91.000.00 $5,338,36 $96.338,36 $1,139,86 $97,478.22 Auaust 1, 2028 $4,058,72 $4,058,72 $4,058.72 February 1, 2029 $94,000.00 $4,058,72 $98,058,72 $866.63 $98,925,35 Auaust 1, 2029 $2,743,13 $2,743,13 $2,743,13 February 1, 2030 $96,000.00 $2,743,13 $98,743,13 $585,72 $99,328,85 Auaust 1, 2030 $1,390,57 $1,390,57 $1,390,57 February 1, 2031 $98,000.00 $1,390,57 $99,390,57 $296.92 $99,687,49 AUQust 1, 2031 $0,00 $0,00 $0,00 Total $2,000,000.00 $974,748.56 $107,515.68 $3,082,264.25 F-2 e e e EXHIBIT G STATE CONTRACT REQUIREMENTS SECTION 1. Record Establishment. Access and Retention. (a) The Lessee agrees that the Lessor shall have the right to review, obtain, and copy all records pertaining to performance of this Facility Lease. The Lessee agrees to provide the Lessor with any relevant information requested and shall permit the access to its premises, upon reasonable notice, during normal business hours for the purpose of interviewing employees and inspecting and copying such books, records, accounts, and other material that may be relevant to a matter under investigation for the purpose of determining compliance with Government Code Section 8546.7. The Lessee further agrees to maintain records concerning costs paid with State funds for three (3) years following the Lessor's receipt of a notice of completion or payment of an invoice, whichever is later. In the event of a Facility Lease performance or payment dispute, the three year miniml!m shall automatically be extended until the dispute is resolved. (b) Upon inspection, the Lessee shall promptly implement any corrective measures recommended by the Lessor, its representatives, or the Bureau of State Audits ("BSA") regarding the requirements of this section. (c) The Lessee shall keep all books, records, accounts and documents pertaining to this Facility Lease separate from other activities unrelated to this Facility Lease. SECTION 2. Nondiscrimination Clause and Comoliance Statement. (a) By signing this Facility Lease, the Lessee and its contractors agree that each shall not, during the performance of this Facility Lease, unlawfully discriminate, harass or allow harassment, against any employee or applicant for employment because of sex, race, color, ancestry, religious creed, national origin, disability (including HIV and AIDS), medical condition (cancer), age, marital status, denial of family and medical care leave or denial of pregnancy disability leave. The Lessee and its contractors shall ensure that the evaluation and treatment of their employees and applicants for employment are free from such discrimination and harassment. The Lessee and its contractors shall comply with the provisions of the Fair Employment and Housing Act (Government Code Section 12900 et seq.), and the applicable regulations promulgated thereunder (Title 2, California Code of Regulations, Section 7285.0 et seq.). The applicable regulations of the Fair Employment and Housing Commission implementing Government Code Section 12990 (a) through (f), set forth in Chapter 5 of Division 4 of Title 2 of the California Code of Regulations are incorporated into this Facility Lease by reference and made a part hereof as if set forth in full. The Lessee and its contractor shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other Facility Lease. (b) The Lessee shall include the nondiscrimination and compliance provisions as detailed in clause (a) ofthis section, in all contracts to perform work under this Facility Lease. G-l e e e SECTION 3. Americans with Disabilities Act Certification. By signing this Facility Lease, the Lessee assures the Lessor that it complies with the Americans with Disabilities Act ("ADA") of 1990 (42 U.S.C. 12101 et seq.), which prohibits discrimination on the basis of disability, as well as all applicable regulations and guidelines issued pursuant to the ADA. SECTION 4. National Labor Relations Board Certification. By signing this Facility Lease, the Lessee does swear under the penalty of perjury that no more than one final unappealable finding of contempt of court by a federal court has been issued against the Lessee within the immediately preceding two year period because of the Lessee's failure to comply with an order of a federal court which orders the Lessee to comply with an order of the National Labor Relations Board. SECTION 5. Certification of Drug Free Workplace. (a) By signing this Facility Lease, the Lessee hereby certifies under penalty of perjury under the laws of the State of California that the Lessee shall comply with the requirements of the Drug Free Workplace Act of 1990 (Government Code Section 8350 et seq.) and shall provide a drug free workplace by: (I) publishing a statement notifying employees that unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited and specifying actions to be taken against employees for violations, as required by Government Code Section 8355(a). (2) establishing a Drug Free Awareness Program as required by Government Code Section 8355(b), to inform employees about: (A) the dangers of drug abuse in the workplace; (B) the person's or organization's policy of maintaining a drug- free workplace; (C) any available counseling, rehabilitation and employee assistance programs; and, (D) penalties that may be imposed upon employees for drug abuse violations; and, (3) providing, as required by Government Code Section 8355(c), that every employee who performs work under this Lessee shall: (A) receive a copy of the Lessee's drug-free policy statement; . and, (B) agree to abide by the terms of the Lessee's statement as a condition of employment under this Facility Lease. G-2 e e e (b) In addition to any other consequences specified in this Facility Lease, failure to comply with these requirements may result in the Lessee being ineligible for award of any future State Contracts if the Lessor determines that the Lessee: (I) has made a false certification; or, (2) violates the certification by failing to carry out the requirements as noted above, SECTION 6. Certification of Recvcled Content. The Lessee shall certify in writing, under penalty of peIjury, the minimum, if not exact, percentage of recycled content of both post-consumer material and secondary material as defined in Public Contract Code Sections 12161 and 12200, in materials, goods or supplies offered, or products used in the performance of this Facility Lease, regardless of whether the product meets the required recycled product percentage as defined in Public Contract Code Sections 12161 and 12200. The Lessee may certify that the product contains zero recycled content. The Recycle Certification shall be delivered to the Lessor not more than thirty days (30) calendar days following the date of the Notice of Completion. SECTION 7. Child Support Compliance Act. (a) The Lessee recognizes the importance of child and family support obligations and shall fully comply with all applicable State and federal laws relating to child and family support enforcement, including, but not limited to, disclosure of information and compliance with earnings assignment orders, as provided in Chapter 8 (commencing with Section 5200) of Part 5 of Division 9 of the Family Code; and (b) The Lessee, to the best of its knowledge, is fully complying with the earnings assignment orders of all employees and is providing the names of all new employees to the New Hire Registry, maintained by the California Employment Development Department. SECTION 8. Welfare Recipients. (a) The Lessee shall give priority consideration in filling vacancies in positions funded by the Lessee to qualified recipients of aid under Chapter 2 (commencing with Section 11200) of Part 3 of Division 9 of the Welfare and Institutions Code in accordance with Article 3.9 (commencing with Section 11349) of Chapter 2 of Part 3 of Division 9 ofthe Welfare and Institutions Code. (b) Nothing in this provision shall be construed to: (1) bargaining agreements; interfere with or create a violation of the terms of valid collective (2) require the Lessee to hire an unqualified recipient of aid; G-3 e e e (3) interfere with or create a violation of any federal affirmative action obligation of the Lessee for hiring disabled veterans or veterans of the Vietnam era; or, (4) interfere with or create a violation of the requirements of Government Code Section 12990. SECTION 9. Prevailing Wages. (a) By signing this Facility Lease, the Lessee agrees to comply with the provisions of Section 1720 et seq. of the California Labor Code in the award of public works contracts and subcontracts involving the expenditure of funds provided in this Facility Lease, and to insure that its contractor and subcontractors meet the requirements of those enactments. (b) The Lessee shall comply with Labor Code provisions that include but are not limited to the following requirements: The Lessee shall obtain, from the Director of the Department of Industrial Relations, the general prevailing rate of per diem wages and the general prevailing rate for holiday and overtime work in the locality in which the public work is to be performed for each craft, classification, or type of worker needed to execute the Facility Lease. The Lessee shall either specify the general prevailing rates in bid and contract documents or include a statement in those documents that such information is available; take cognizance of any violations of prevailing wage law and notify the Department of Industrial Relations of such violations; require that the contractor and subcontractors keep adequate payroll and other records and withhold funds pending investigation of violations. (c) The Lessee shall require its contractor and subcontractors to adhere to prevailing wage requirements, including but not limited to the following requirements: contracts between the contractor and subcontractors must include provisions regarding prevailing wage; the contractor shall monitor subcontractors' payment of prevailing wage by periodically reviewing certified payroll records and diligently taking corrective action if the subcontractors fail to pay prevailing wage; contractor and subcontractors shall maintain certified payroll records and time records. The contractor to whom a contract is awarded, and any subcontractor under him, shall not pay less than the specified prevailing wage; contractor and subcontractors are subject to penalties for violations of prevailing wage provisions. (d) The Lessee acknowledges that it has been informed by the Lessor that the Lessor maywill contract with the Department of Industrial Relations to conduct random audits of some contracts to assure compliance with prevailing wage requirements. The Lessee shall require its contractor and subcontractors to cooperate in an audit if requested to do so by the Lessor and shall inform its contractor and subcontractors that spot audits are planned. G-4 e e e EXHIBIT H LESSEE TAX CERTIFICATE This tax certificate is executed and delivered by the City of San Bernardino (the "Lessee") in connection with the facility lease between the Lessee and the California Infrastructure and Economic Development Bank (the "Lessor"), dated as of August 28, 2001 (the "Obligation") in the amount of $2,000,000. The Lessee certifies, covenants, warrants and represents as follows: ARTICLE I. IN GENERAL 1.1 The Lessee. The Lessee is a charter city and municipal corporation duly organized and existing under the laws of the State of California. 1.2 Purpose of Tax Certificate. In the future, the Lessor intends to issue bonds (the "Bonds") to refinance the Obligation. The Lessee is delivering this Tax Certificate to the Lessor with the understanding that the Lessor will rely in part upon this Tax Certificate in obtaining an opinion from bond counsel that interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Code (as defined below) . 1.3 Purpose of Financing. The Obligation is being issued to finance the Harriman Place Street Extension Project - Phase I on the Lessee's property (the "Project"), as described in more detail in Exhibit D of the Obligation. 1.4 Definitions. Unless the context otherwise reqUires, the following capitalized terms have the following meanings: "Code" means the Internal Revenue Code of 1986 (including amendments thereto) . "Current Revenues" has the meaning given thereto in Section 2.7 hereof. "Governmental Unit" means any state, or political subdivision of a state, but excludes the United States and its agencies or instrumentalities. "Investment Property" means any security or obligation, any annuity contract, or any other investment-type property, but does not include any Tax-Exempt Bond unless such obligation is a "specified private activity bond" within the meaning of Section 57(a)(5)(C) of the Code. "Nongovernmental Person" means any person or entity other than a Governmental Unit. H-l e e e "Preliminary Expenditures" means architectUral, engineering, surveying, soil testing, and similar costs paid with respect to the Project in an aggregate amount not exceeding 20% of the Obligation, However, Preliminary Expenditures do not include land acquisition, site preparation or similar costs incident to the commencement of construction, "Tax-Exempt Bond" means any obligation the interest on which is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Code or Section 103 of the Internal Revenue Code of 1954, as amended, and Title xm of the Tax Reform Act of 1986, as amended, as well as stock in a regulated investment company to the extent at least 95 percent of income to the stockholder is treated as interest that is excludable from gross income under Section 103 of the Code, ARTICLE II. TAX LIMITATIONS 2.1 Expenditure of Proceeds. Proceeds of the Obligation shall be used exclusively for the following purposes: (i) architectural, engineering, surveying, soil testing, and similar costs paid with respect to the Project incurred prior to the commencement of construction and in an aggregate amount not exceeding 20% of the Obligation; (ii) capital expenditures originally paid by the Lessee on or after the date hereof, (iii) interest on the Obligation through the later of three years after the date hereof or one year after the Project is placed in service, and (iv) initial operating expenses directly associated with the Project (in aggregate amount not exceeding 5% of the amount ofthe Obligation). 2.2 Governmental Bond Status. The Lessee will not loan any of the proceeds of the Obligation to one or more Nongovernmental Persons. The Lessee will not allow more than 5% of proceeds of the Obligation or more than 5% of the Project to be used directly or indirectly by any Nongovernmental Person, other than as a member of the general public. In addition, a Nongovernmental Person will be treated as "using" proceeds of the Obligation to the extent the Nonexempt Person:. (i) borrows proceeds of the Obligation, or (ii) uses the Project (~, as owner, lessee, servICe provider, operator or manager). 2.3 Change in Use. The Lessee reasonably expects to use all proceeds of the Obligation and all of the Project as set forth in Section 2.2 for the entire stated term to maturity of the Obligation. Absent written agreement by the Lessor, the Lessee in fact will use all proceeds of the Obligation and all of the Project as set forth in Section 2.2. 2.4 Federal Guarantee. The Lessee will not directly or indirectly use or permit the use of any proceeds of the Obligation or take or omit to take any action that would cause the Bonds to be obligations that are "federally guaranteed" within the meaning of Section 149(b) of the Code. In furtherance of this covenant, the Lessee will not allow the payment of principal or interest with respect to the Obligation to be guaranteed (directly or indirectly) in H-2 e e e whole or in part by the United States or any agency or instrumentality thereof. The Lessee will not use 5% or more of the proceeds of the Obligation to make or finance loans the payment of principal or interest with respect to which is guaranteed in whole or in part by the United States or any agency or instrumentality thereof. 2.5 No Refunding. Proceeds of the Obligation will not be used directly or indirectly to make principal, interest or premium payments with respect to any obligation other than the Obligation. 2.6 No Hedge Bonds. The Lessee reasonably expects that more than 85% of proceeds of the Obligation will be expended for the purposes of the Obligation within three years. 2.7 Rental Payments. Payments of rental payments on the Obligation generally are expected to be derived from Current Revenues of the Lessee in each year, and Current Revenues are expected to equal or exceed debt service on the Obligation during each payment period. Revenues actually used in less than six months from the date first received to pay debt service on Obligation are referred to herein as "Current Revenues." The account, or portion thereof, used by the Lessee to pay debt service on the Obligation will be used primarily to achieve a proper matching of revenues and debt service within each year. To the extent of Current Revenues, such account in the aggregate will be depleted at least once a year except for a carryover amount not to exceed the greater of the earnings on such account for the immediately preceding year or 1/12 of the debt service in respect of the Obligation for the immediately preceding year. Current Revenues contributed to such account will be spent within thirteen months after the date of such contribution, and any amounts received from the investment or reinvestment of monies held in such funds will be expended within one year after the date of accumulation thereof in any such fund. Current Revenues in such account shall be invested without regard to yield. Revenues other than Current Revenues will not be invested in Investment Property with a yield exceeding the yield on the Obligation. 2.8 No Other Replacement Proceeds. The Lessee will not use any proceeds of the Obligation to replace funds of the Lessee which are or will be used to acquire Investment Property reasonably expected to produce a yield that is materially higher than the yield on the Obligation. 2.9 No Expected Sale. It is not expected that the Project or any part thereof will be sold or otherwise disposed of so long as the Obligation is outstanding. 2.1 0 The Lessee will not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code and specifically (i) the Lessee will not directly or indirectly use or make any use of the proceeds of the Bonds or any other funds of the Lessee or take or omit to take any action that would cause the Bonds or to be "arbitrage bonds" subject to federal income taxation by reason of Section 148 of the Code or obligations subject to federal income taxation because they are "federally guaranteed" as provided in H-3 e e e Section 149(b) of the Code, as applicable; and (ii) to that end the Lessee, with respect to the proceeds of the Bonds will comply with all requirements of such sections of the Code to the extent that such requirements are, at the time, applicable and in effect; orovided, that if the Lessee shall obtain an Opinion of Counsel nationally recognized in the area of the Section 103 of the Code to the effect that any action required under this Section is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest evidenced and represented by the Bonds pursuant to Section 103 of the Code, as applicable, the Lessee may rely conclusively on such opinion in complying with the provisions hereof. 2.11 No more than five percent (5%) of the Project (determined both on the basis of space and cost) shall be used for private use. Private use includes use in the trade or business of any nongovernmental persons, but does not include the portion of the proceeds properly allocable to facilities expected to be used by an organization described in Section 50 I (c)(3) of the Code in a manner that does not constitute an unrelated trade or business of such organization, as defined in Section 513(a) of the Code. For purposes of this section, the federal government is considered a nongovernmental person. (a) For purposes of this section, private use shall include any contract for the management or operation of any portion of the Project unless each of the following conditions is met: (i) the term of such contract (including renewal options) does not exceed five (5) years; (ii) the manager or operator under such contract is not compensated on the basis of a share of net profits; (iii) the compensation of the manager or operator is reasonable; (iv) the Lessee must be able to cancel such contract without penalty or cause at the end of the third year of the contract; and (v) neither the Lessee nor the manager or operator may control more than 20% of the voting power of the other's governing board; and (b) The service provider's compensation for management or operation services rendered must be pursuant to one of the following four methods: (i) at least 50 percent of annual compensation is based on a periodic fixed fee; (ii) the compensation is based on a capitation fee or a combination of a capitation fee and a periodic fixed fee; (iii) in the case of certain contracts with a term not longer than three (3) years, the compensation is based on a per-unit fee or a combination of a per-unit fee and periodic fixed fee and the contract is cancelable after two years; and (iv) in the case of certain contracts with a term not longer than two (2) years, the compensation is based on a percentage offees charged and the contract is cancelable after one year. ARTICLE III. OTHER MATTERS 3.1 Expectations. The undersigned is an authorized representative of the Lessee acting for and on behalf of the Lessee in executing this Tax Certificate. To the best of the .knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that would materially change the expectations as set forth herein, and said expectations are reasonable. H-4 e e e 3.2 Amendments. Notwithstanding any other provIsIOn of this Tax Certificate, the Lessee may amend this Tax Certificate and thereby alter any actions allowed or required by this Tax Certificate if such amendment is signed by an authorized officer and is supported by formal written agreement by the CIEDB. 3.3 Survival of Defeasance. Notwithstanding any proVISIOn in this Tax Certificate to the contrary, the obligation to comply with all requirements contained in this Tax Certificate shall survive defeasance or prepayment of the Obligation. Dated: CITY OF SAN BERNARDINO By [Name, Title] H-5 e e e r EXHIBIT I FORM OF CERTIFICATE OF CHIEF FINANCIAL OFFICER of the CITY OF SAN BERNARDINO (the "Lessee") The undersigned hereby states and certifies: (I) I am the duly qualified and acting chief financial officer of the Lessee, and, as such, am familiar with the facts herein certified and am fully authorized to certify the same. (2) The financial data submitted to the California Infrastructure and Economic Development Bank (the "Lessor") by Lessee in the financing application was true at the time submitted to Lessor and as of the date of this certification, remains true and correct in all material respects, and such infonnation did not and does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. (3) The Base Rental Payments and Additional Rental Payments for the current fiscal year are included in the adopted budget ofthe Lessee. (4) The Lessee is not in breach of or in default under any bond indenture, loan agreement, note, lease or other instrument to which it is a party. (5) The representations and warranties made in the facility lease, dated as of August 28, 2001, between the Lessee and the Lessor (the "Facility Lease") are true and correct as if made on the date of this certificate. (6) All capitalized tenns not otherwise defined herein shall have the meanings ascribed thereto in the Facility Lease. Dated: '- CITY OF SAN BERNARDINO By H-l e e e EXHIBIT J CERTIFICATE OF THE LESSEE REGARDING: FAIR MARKET RENTAL The undersigned hereby states and certifies as follows: (1) I am the duly qualified and acting of the City of San Bernardino, (the "Lessee"), and, as such, am familiar with the facts herein certified and am fully authorized to certify the same. (2) All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Facility Lease, dated as of August 28, 2001 between the Lessee and the California Infrastructure and Economic Development Bank. (3) I have reviewed the real estate appraisal dated October 4, 2001, performed byJames Smothers, an expert in the field of valuing real estate such as the Facility, in order to determine the annual fair rental value of the Facility. (4) In making such determination-of annual fair rental value, consideration has been given to a variety of factors including the replacement costs of any existing improvements on the Facility, other obligations of the parties under this Facility Lease, the uses and purposes which may be served by the improvements on the Facility and the benefits therefrom which will accrue to the Lessee and the general public. (5) Based upon the foregoing, the annual fairrental value ofthe Facility is $99,687. (6) Such annual fair rental value is not less than the maximum Base Rental Payments and Additional Rental payments payable under the Facility Lease in any year. Dated: By fName and Titlel H-I ,---- _ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 _15 16 17 18 19 20 21 22 23 24 25 26 _28 RESOLUTION NO. A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO, AS THE GOVERNING BODY OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, APPROVING THAT CERTAIN REDEVELOPMENT COOPERATION AND FINANCING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND THE CITY OF SAN BERNARDINO, CALIFORNIA WHEREAS, the City of San Bernardino, California, a municipal corporation (the "City"), the Inland Valley Development Agency, a joint powers authority organized and existing under the laws of the State of California (the "IVDA") and the Redevelopment Agency of the City of San Bernardino, a public body corporate and politic (the "Agency") have previously entered into an agreement entitled "1999 Redevelopment Cooperation Agreement" dated as of July 12, 1999, pursuant to which the City, the IVDA and the Agency have initiated the redevelopment of a portion of the Inland Valley Redevelopment Project Area referred to in the 1999 Redevelopment Cooperation Agreement as the "Agency Implementation Area" and which area has since been referred to by the Agency as the "HUB Project"; and WHEREAS, the Agency has entered into a Disposition and Development Agreement dated as of May 21, 2001, with SBT Partners, LLC, a California limited liability company (the "Developer") and an Owner Participation Agreement dated as of September 17, 2001 with In-N-Out Burgers, Inc., a California corporation ("In-N-Out") for the implementation of the commercial shopping center portion of the HUB Project; and 27 S82oo2:404.1 1 -~ 3 4 5 6 7 8 9 10 11 12 13 14 _15 16 17 18 19 20 21 22 23 24 25 26 27 e28 WHEREAS, the implementation of the HUB Project will confer substantial benefits on the City and the IVDA in terms of eliminating conditions of blight which affect the site of the HUB Project and nearby lands and in terms of providing for necessary public street and public street traffic circulation improvements which will foster the redevelopment oflands adversely affected by. the closure of the former Norton Air Force Base; and WHEREAS, the HUB Project will also provide the City with a substantial source of new tax revenues when the prime tenant of the HUB Project (Sam's Club) relocates and expands its facility from its existing location on Hospitality Lane in the Tri City Redevelopment Project of the Agency to the HUB Project site; and WHEREAS, the Agency will incur certain costs, described below as the "HUB Project Indebtedness" in connection with the acquisition oflands necessary for the new public street right- of-way improvements associated with the HUB Project as well as the costs of planning and assembly of lands and the relocation of businesses and households from the HUB Project site for reuse and redevelopment by the Developer and In-N-Out as part ofthe HUB Project; and WHEREAS, the Agency does not presently have a source of tax increment revenues from the HUB Project or from other funds to repay the HUB Project Indebtedness; and WHEREAS, the IVDA has previously designated the City to serve as the "lead agency", as that term is defined in the California Environmental Quality Act of 1970, as amended ("CEQA"), for the purpose of conducting an environmental review of the HUB Project; and S82OO2:404. I 2 e I 2 3 4 5 6 7 8 9 10 11 12 13 14 el5 16 17 18 19 20 21 22 23 24 25 26 27 e28 WHEREAS, the City has certified a Final Environmental Impact Report as of May 21. 200 I for the HUB Project, in accordance with CEQA; and WHEREAS, there has been presented to the Commission a proposed Redevelopment Cooperation and Financing Agreement (HUB Project) by and between the Agency and the City (the "Agreement") pursuant to which the City will lend redevelopment financing assistance to the Agency each year for the term of the Agreement in a total amount not to exceed Five Million Five Hundred Dollars ($5,500,000) to assist the Agency in repaying the HUB Project Indebtedness; and WHEREAS, it is appropriate for the Commission to take action with respect to the Agreement, as set forth in this Resolution. NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION, AS THE GOVERNING BODY OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The recitals set forth above are true and correct. Section 2. The Commission hereby approves the Agreement as on file with the Agency , Secretary. Section 3. The Chairperson is hereby authorized and directed to execute the Agreement on behalf of the Agency together with such technical and conforming changes as may be approved S82oo2:404.\ 3 e: 3 4 by the Chairperson and Agency Counsel. The Chairperson, the Executive Director or such other designated representative of the Agency is further authorized to do any and all things and take any and all actions as may be deemed necessary or advisable to effectuate the purposes of the e 1 2 3 4 5 6 7 8 9 10 11 12 13 14 e15 16 17 18 19 20 A RESOLUTION OFTHE COMMUNITY DEVELOPMENT COMMISSION OFTHE CITY OF SAN BERNARDINO, AS THE GOVERNING BODY OF THE REDEVELOPI\IEl'iT AGENCY OF THE CITY OF SAN BERNARDINO, APPROVING THAT CERTAIN REDEVELOPMENT COOPERATION AND FINANCING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND THE CITY OF SAN BERNARDINO, CALIFORNIA Section 4. This Resolution shall become effective immediately upon its adoption. I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community Development Commission of the City of San Bernardino at a meeting thereof, held on the day of , 2002, by the following vote, to wit: Commission ESTRADA LIEN MCGINNIS SCHNETZ SUAREZ ANDERSON McCAMMACK AYES NAYS ABSTAIN ABSENT Secretary The foregoing Resolution is hereby approved this _ day of ,2002. Judith Valles, Chairperson Community Development Commission of the City of San Bernardino 21 Approved 22 and legal c 23 By: 24 25 26 27 e28 5 S82oo2:404.1 e I 2 3 4 5 6 7 8 9 10 11 12 13 e e RESOLUTION NO. A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING THAT CERTAIN REDEVELOPMENT COOPERATION AND FINANCING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND THE CITY OF SAN BERNARDINO, CALIFORNIA WHEREAS, the City of San Bernardino, California, a municipal corporation (the "City"), the Inland Valley Development Agency, a joint powers authority organized and existing under the laws of the State of California (the "IVDA") and the Redevelopment Agency of the City of San Bernardino, a public body corporate and politic (the "Agency") have previously entered into an agreement entitled "1999 Redevelopment Cooperation Agreement" dated as of July 12, 1999, pursuant to which the City, the IVDA and the Agency have initiated the redevelopment of a portion of the Inland Valley Redevelopment Project Area referred to in the 1999 Redevelopment Cooperation Agreement as the "Agency Implementation Area" and which area has since been referred to by the Agency as the "HUB 14 15 16 17 18 19 Project"; and WHEREAS, the Agency has entered into a Disposition and Development Agreement dated as of May 21, 2001, with SBr Partners, LLC, a California limited liability company (the "Developer")and an Owner Participation Agreement dated as of September 17,2001 with In-N-Out Burgers, Inc., a California corporation ("!n-N-Out") for the implementation of the commercial shopping center portion 20 21 22 23 of the HUB Project; and WHEREAS, the implementation of the HUB Project will confer substantial benefits on the City and the IVDA in terms of eliminating conditions of blight which affect the site of the HUB Project and 24 nearby lands and in terms of providing for necessary public street and public street traffic circulation 25 improvements which will foster the redevelopment of lands adversely affected by the closure of the 26 former Norton Air Force Base; and 27 28 SB2002:416.1 1 e 7 8 9 10 11 12 13 e 14 15 16 17 18 19 20 e 1 2 , ! WHEREAS, the HUB Project will also provide the City with a substantial source of new tax 3 revenues when the prime tenant ofthe HUB Project (Sam's Club) relocates and expands its facility from 4 its existing location on Hospitality Lane in the Tri City Redevelopment Project of the Agency to the 5 HUB Project site; and 6 WHEREAS, the Agency will incur certain costs, described below as the "HUB Project Indebtedness" in connection with the acquisition oflands necessary for the new public street right-of- way improvements associated with the HUB Project as well as the costs of planning and assembly of lands and the relocation of businesses and households from the HUB Project site for reuse and redevelopment by the Developer and In-N-Qut as part of the HUB Project; and WHEREAS, the Agency does not presently have a source of tax increment revenues from the HUB Project or from other funds to repay the HUB Project Indebtedness; and WHEREAS, the IVDA has previously designated the City to serve as the "lead agency", as that term is defined in the California Environmental Quality Act of 1970, as amended ("CEQA"), for the purpose of conducting an environmental review of the HUB Project; and WHEREAS, the City has certified a Final Environmental Impact Report as of May 2 I, 2001 for 21 the HUB Project, in accordance with CEQA; and 22 23 WHEREAS, there has been presented to the Mayor and Common Council a proposed 24 Redevelopment Cooperation and Financing Agreement (HUB Project) by and between the Agency and 25 the City (the "Agreement") pursuant to which the City will lend redevelopment financing assistance to 26 27 28 S82oo2:416.1 2 e e 1 the Agency each year for the term of the Agreement in a total amount not to exceed Five Million Five 2 Hundred Dollars ($5,500,000) to assist the Agency in repaying the HUB Project Indebtedness; and 3 4 WHEREAS, it is appropriate for the Mayor and Common Council to take action with respect to 5 the Agreement, as set forth in this Resolution. 6 7 NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY THE 8 MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS FOLLOWS: 9 10 Section I. The recitals set forth above are true and correct. 11 12 Section 2. The Mayor and Common Council hereby approve the Agreement as on file with 13 the City Clerk. 14 15 Section 3. The Mayor is hereby authorized and directed to execute the Agreement on behalf 16 of the City together with such technical and conforming changes as may be approved by the Mayor and 17 City Attorney. The Mayor, the City Administrator or such other designated representative of the City 18 is further authorized to do any and all things and take any and all actions as may be deemed necessary 19 or advisable to effectuate the purposes of the Agreement. 20 1// 21 1// 22 1// 2-~ 1// 24 25 26 e 27 28 S82002:416.1 3 e e e 1 A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SA'\ BERNARDINO APPROVING THAT CERTAIN REDEVELOPMENT COOPERATION A'\D 2 FINANCING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND THE CITY OF SAN BERNARDINO, CALIFOR'\'IA 3 4 Section 4. This Resolution shall take effect upon the date of its adoption. 5 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 6 Common Council of the City of San Bernardino at a meeting thereof, held on the 7 8 day of , 2002, by the following vote, to wit: 9 Council: ESTRADA 10 LIEN MCGINNIS 11 SCHNETZ SUAREZ 12 ANDERSON McCAMMACK AYES NAYS ABSTAIN ABSENT 13 14 15 16 17 18 19 City Clerk The foregoing resolution is hereby approved this _ day of ,2002. Judith Valles, Mayor City of San Bernardino Approved as to form and legal content: 20 By: L? ./th.......... 21 ()City Attorney 22 23 24 25 26 27 28 582002:416.1 4 _ 1 2 3 4 5 6 7 8 9 10 11 12 _ 13 14 15 16 17 18 19 20 21 22 23 24 _25 RESOLUTION NO. A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA AUTHORIZING THE EXECUTION AND DELIVERY OF A SITE LEASE AND A FACILITY LEASE AND APPROVING CERTAIN OTHER MATTERS IN CONNECTION THEREWITH (CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK: $2.0M HARRIMAN PLACE STREET EXTENSION PROJECT) WHEREAS, the City of San Bernardino (the "City") has prepared and submitted an application for financing assistance to the California.Infrastructure and Economic Development Bank as part of a plan to provide for the construction, acquisition and installation of the Harriman Place Street Extension Project concurrently with the redevelopment of the HUB Project near the northwesterly corner of the overcrossing of the Interstate 10 Freeway and Tippecanoe Avenue in the City; and WHEREAS, the potential affect on the environment of the Harriman Place Street Extension Project has been considered by the City and on May 20, 200 I, the City certified a Final Environmental Impact Report for the HUB Project and the Harriman Place Street Extension Project; and WHEREAS, on August 28, 2001, the California Infrastructure and Economic Development Bank approved the terms of conditions on which certain funds of the California Infrastructure and Economic Development Bank in an amount not to exceed Two Million Dollars ($2,000,000) may be provided to the City for use and application in connection with the construction, acquisition and installation of the Harriman Place Street Extension Project; and Resolution - 1 e 2 3 4 5 6 7 8 9 10 11 12 e 13 14 15 16 17 18 19 20 21 22 23 24 e25 WHEREAS, it is appropriate at this time for the Mayor and Common Council to authorize the execution and delivery of an instrument entitled, "Site Lease" by and between the California Infrastructure and Economic Development Bank, as tenant and the City as the lessor of the Rudy C. Hernandez Community Center, and to authorize the execution and delivery of an instrument entitled, "Facility Lease" by and between the California Infrastructure and Economic Development Bank, as lessor under the Site Lease and the City as the lessee of the Rudy C. Hernandez Community Center, and to approve and authorize the other matters set forth below in connection with the Site Lease and the Facility Lease and the financing being provided to the City under the terms of such Site Lease and such Facility Lease by the California Infrastructure and Economic Development Bank for the Harriman Place Street Extension Project. NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO DO HEREBY RESOLVE, ORDER AND APPROVE AS FOLLOWS: Section 1. The recitals ofthis Resolution are true and correct. This Resolution is adopted by the Common Council in order to satisfy certain requirements of California Infrastructure Economic Development Bank ("CIEDB") and CIEDB Agreement No. CIEDB- 01-015, and to authorize the execution and delivery of the Site Lease, dated as of August 28, 2001 (the "Site Lease") by and between the CIEDB and the City and to authorize the execution and delivery of the Facility Lease, dated as of August 28,2001 (the "Facility Lease") by and between the CIEDB and the City. The form of the Site Lease and the form of the Facility Lease, each as presented to the Mayor and Common Council at the meeting at which this Resolution was adopted, is on file with the City Clerk. Resolution - 2 e 2 3 4 5 6 7 8 9 10 11 12 e 13 14 15 16 17 18 19 20 21 22 23 24 e 25 . --1 Section 2. As of May 20, 2001, the City has certified a Final Environmental Impact Report for the HUB Project, including the Harriman Place Street Extension Project and the loan of funds from the CIEDB therefore, and since that date, no new facts, information or changes in the HUB Project or the Harriman Place Street Extension Project have occurred and accordingly, the Common Council hereby finds and determines that no further environmental review of the Site Lease, the Facility, or the Harriman Place Street Extension Project is indicated at this time. Section 3. The Common Council hereby approves the Site Lease and the Facility Lease. Section 4. The Mayor is hereby authorized and directed to execute and deliver to the CIEDB on behalf of the City, the Site Lease and the Facility Lease, together with such technical and conforming changes to the forms of the Site Lease and the Facility Lease as on file with the City Clerk, as may be requested by the CIEDB and approved by the Mayor in consultation with the City Administrator and the City Attorney. Section 5. All actions of the City staff, including without limitation, the staff of the Economic Development Agency of the City, as taken with respect to the Harriman Place Street Extension Project and the Site Lease and the Facility Lease prior to the date of adoption of this Resolution, are hereby ratified and confirmed by the Common Council. Each of the following officers, employees or agents of the City is hereby authorized and directed to provide the CIEDB concurrently with the delivery of the Site Lease and the Facility Lease as executed by the Mayor on behalf of the City, the information, written certifications and other documents set forth below: Resolution - 3 e 2 3 4 5 6 7 8 9 10 11 12 e13 14 15 16 17 18 19 20 21 , 22 23 24 e25 (i) the Mayor and City Administrator shall execute the final form of the "Lessee Tax Certificate" substantially in the form as attached as Exhibit "H" to the Facility Lease; (ii) the Finance Director shall execute the final form of the certificate of the City substantially in the form attached as Exhibit "f' to the Facility Lease; (iii) the Finance Director shall cause to be provided to the CIEDB the evidence of insurance and insurance certificate(s) require by Section 6.03 of the Facility Lease; (iv) the City Administrator shall execute the final form of the "fair market rental value" certificate ofthe City substantially in the form attached as Exhibit "]" to the Facility Lease; (v) the Executive Director of the Economic Development Agency of the City shall provide written certificates to CIEDB that the HUB Project developer is adequately proceeding with the private development component of the HUB Project; (vi) the City Attorney shall provide the CmDS with an opinion that the City has legal authority to enter into the Site Lease and the Facility Lease and that the Site Lease and the Facility Lease are legal, binding, and enforceable agreements ofthe City; and (vii) such other officers or employees or agents of the City as the Mayor may designate shall provide the CIEDB with all other written documents or certifications not enumerated Resolution. 4 _ 2 3 4 5 6 7 8 9 10 11 12 _ 13 14 15 16 17 18 19 20 21 22 23 24 _25 above under (i) through (vi) which are otherwise required or requested by the CIEDB for each disbursement of funds to the City under the Facility Lease. /// //1 1// //1 //1 /1/ 1// 11/ //1 //1 /1/ 11/ /// //1 11/ 11/ 1/1 /// //1 1/1 /// III Resolution - 5 e1 2 el3 14 3 A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SA>'; , BERNARDINO, CALIFORNIA AUTHORIZING THE EXECUTION AND DELIVERY OF Ai SITE LEASE AND A FACILITY LEASE AND APPROVING CERTAIN OTHER MATTERS IN CONNECTION THEREWITH (CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK: $2.0M HARRIMAN PLACE STREET EXTENSION PROJECT) 4 5 Section 2. This Resolution shall take effect upon the date of its adoption. 6 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 7 Common Council of the City of San Bernardino at a meeting thereof, held 8 on the day of , 2002, by the following vote, to wit: 9 ABSTAIN ABSENT NAYS AYES Council: 10 ESTRADA LIEN MCGINNIS SCHNETZ SUAREZ ANDERSON McCAMMACK II 12 City Clerk 15 The foregoing resolution is hereby approved this _ day of ,2002. 16 17 Judith Valles, Mayor City of San Bernardino 18 19 Approv as to form and legal content: 20 By: I 21 22 23 24 e 25 SB2002:213.1 Resolution - 6 ** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT ** RESOLUTION AGENDA ITEM TRACKING FORM Meeting Date (Date Adopted): :J -A -02 Item # \2,T"; G Resolution # Vote: Ayes 1- 3( 5'- '/ Nays -B-- Abstain -0 Change to motion to amend original documents: - ;)C6d -~ 8 Absent ~ NullNoid After: - Reso. # On Attachments: ~ Contract term: - Note on Resolution of Attachment stored separately: ~ Direct City Clerk to (circle I): PUBLISH, POST, RECORD W/COUNTY By: Date Sent to Mayor: J - (p -0 2- Date of Mayor's Signature: j.G. -0') Date of ClerklCDC Signature: :;) -<t -C.?-- Reso. Log Updated: / Seal Impressed: v Date Memo/Letter Sent for Signature: r-O f\ ~eminder Letter Sent on ~y: ') I ;}'1/ (j .)- 90 Day Reminder Letter Sent on 45th day: See Attached: - Date Returned: See Attached: ,/ See Attached: Request for Council Action & Staff Report Attached: Yes / Updated Prior Resolutions (Other Than Below): Yes Updated CITY Personnel Folders (6413, 6429, 6433,10584,10585,12634): Yes Updated CDC Personnel Folders (5557): Yes Updated T;;;Cfic Folders (~85, 8234, 655, 92-389): Yes Copies Distributed to: City Attorney ,/ Parks & Rec. Code Compliance Dev. Services EDA / Police Public Services Water Others: Notes: No By No -L- By No 1 By No ~ By NoL B Finance MIS BEFORE FILING, REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE (Contract Term. etc.) Ready to File: _ Date: Revised 01/12/01