HomeMy WebLinkAboutR34-Economic Development AgencyECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
FROM: John Hoeger SUBJECT: TIPPECANOE RETAIL
Project Manager ~ t ,~ , ~ , , DEVELOPMENT
City /Agency Cooperation and Financing
DATE: January 14, 2002 ~ I f, + l.. ~ t ~ - ~ ~ Agreement; and
CIEDB Lease/Leaseback Agreements
~nonsis of Previous Commission/CounciUCommittee Action(s):
On July 12, 1999, the Community Development Commission approved a Cooperation Agreement. with the Inland Valley
Development Agency.
On May 21, 2001, the Community Development Commission and/or Common Council certified an Environment Impact
Repor[ 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.
_SContinued on Page 2~__________-_-___-
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Recommended Motion(s):
(Community Development 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
(Mayor and Common Council)
MOTION B: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO APPROVING THAT CERTAIN REDEVELOPMENT COOPERATION .1ND
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)
Contact Person(s): Gary Van OsdeUJohn Hoeger Phone: 663-1044
Project Area(s)
Supporting Data Attached:
IVDA
Ward(s): Third
^O Staff Report ^O Resolution(s) x^ Agreement(s)/Contract(s) ^ Map(s) ^O Letter/Memo
FUNDING REQUIREMENTS Am unt:
SIGNATURE:
Osdel, Executive
Development Ag
,500,000 Source: See Text
~dget Authority: Requested
~/ -'
rector Jo ger, Project Man ger
ncy Economic Development Agency
Commission/Council Notes:
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P:\Clerical Services DeptVStephanieV~genda\CDC 20022-0-02 TIPP Financing Agreementdoc
COMMI
Aget
~3`~
~~I~~De'
REQUEST FOR COMMISSION/COUNCIL ACTION
Tippecanoe Financing Agreement
January 15, 2002
Paee 2
Synopsis of Previous Commission/CouncillCommittee Actions: (Continued)
On June 18, 2001, the Community Development Commission adopted a Relocation Plan for Phase I of the HUB
Project.
On September 4, 2001 the Community Development Commission made accepted appraisals for real property in
Phase I of the HUB project.
On November 5, 2001, 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 11 property owners to the Inland Valley
Development Agency for acquisition.
Recommended Motion(s) Continued:
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: $2.OM HARRIMAN PLACE STREET
EXTENSION PROJECT)
P:\Clerical Services Dept\StephanieWgenda\CDC 2002\2-4-02 TIPP Financing Agreementdoc
COMMISSION MEETING AGENDA
Meeting Date: 02/04/2002
Agenda Item Number: ~_
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
TIPPECANOE RETAIL DEVELOPMENT
City /Agency Cooperation and Financing Agreement; and
CIEDB Lease/Leaseback Agreements
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
Demo by HUB
(4,715,520) less Developer funds
(900,000) less CIEDB R/W funding
$2,948,499 Net Agency Cost (Phase I)
7,141,145 663,300 1,129,794
(370,220)
(4,715,520) 0 0
(900,000) 0 0
$1,525,625 $293,080 $1,129,794
P:\Clerical Smices Dept\StephanieWgenda\CDC 2002\2-0-02 TIPP Financing A~eement.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 lazge 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 yeaz, 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
of 20 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 of the
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 DepAStephanieWgende\CDC 2002\2-0-02 TTPP Financing AgreemenLdoc
14MISSION MEETING AGENDA
Meeting Date: 02p/04/2002
Agenda Item Number: ~~3
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 alease/leaseback arrangement for the Rudy C. Hernandez Community
Center and Plunge in Meadowbrook Park. The City leases the Center to the State for $1 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 of the Harriman
Place realignment improvements. Construction of these improvements provides a regional
benefit to the Tri City Corporate Centre area and to traffic on Tippecanoe Avenue that comes
from the San Bernardino International Airport and from Loma Linda.
FISCAL IMPACT
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 of 30 years and the $5,500,000 over a period of 20 years from
increased sales tax proceeds that result from the retail development.
RECOMMENDATION
That the Community Development Commission and the Mayor and Common Council adopt the
attached Resolutions.
Gary
Director
P:\Clerical Services DeptVSkphanie\Agenda\CDC 2002\2-4A2 TIPP Financing Agreement.doc
COMMISSION MEETING AGENDA
Meeting Date: 02/04/2002
Agenda Item Number: ~3~
K E Y S E R M A R S T O N ASSOCIATES I N C.
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MEMORANDUM
To: Mr. Gary Van Osdel, Director
San Bernardino Redevelopment Agency
From: Keyser Marston Associates, Inc.
cc: Mr. John Hoeger
Date: March 27. 2001
Subject: Projection of Public Revenues -
Tippecanoe Power Center
ADVLSOHS IN:
REAL ESTATE
REDEVELOPMENT
AFFORDABLE HOUSING
ECONOMIC DEVELOPAIENT
FISCAL IMPACT
INFRASTRUCTURE FINANCE
VALUATION AND
LITIGATION SUPPORT
l,or Angeles
Calvin E. Hollis, II
Kathleen H. Head
James A. Rabe
Paul C. Anderson
Gregory D. Soo-Hoo
San Diego
Gerald M. Trimble
Robert 1. Wetmore
Paul C. Marra
SAN PRANCLSCO
A. Jerry Keyser
Timothy C. Kelly
Kate Earle Funk
Debbie M. Kern
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.
0103034.SB:JAR:gbd
19020.001.007
To: Mr. Gary Van Osdel, March 27, 2001
San Bernardino Redevelopment Agency Page 2
Subject: Projection of Public Revenues -Tippecanoe Power Center
Tenant Square Footage
Sam's Club 130,421
Soft Goods 20,000
Electronics 8,400
Soft Goods 10,000
General Retail 6,600
Retail "C" -Retail Shops 10,000
In-N-Out Burger 3,500
TOTAL 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.
Sales per
Tenant Square Foot
Sam's Club $575
Soft Goods $275
Electronics $500
Soft Goods $275
General Retail $250
Retail "C" -Retail Shops $250
Pad "B" -Retail Shops $250
In-N-Out Burger $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:gbC
19020.001.007
To: Mr. Gary Van Osdel, March 27, 2001
San Bernardino Redevelopment Agency Page 3
Subject: Projection of Public Revenues -Tippecanoe Power Center
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 101h 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 atwenty-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-leasing 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
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TABLE 2
ESTIMATED PUBLIC REVENUES
TIPPECANOE POWER CENTER- KMA VERSION
SAN BERNARDINO, CALIFORNIA
City Taxable Sales Total Available
Year Property Value Property Tax Share ~ 8.97449{ 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 20,279,000 202,600 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
2017 21,521,000 215,200 19,300 51,428,844 514,300 533,600
2018 21,951,000 219,500 19,700 52,713,865 527,100 546,800
2019 22,390,000 223,900 20,100 54,033,162 540,300 560,400
2020 22,638,000 228,400 20,500 55,383,191 553,800 574,300
2021 23,295,000 233,000 20,900 56,766,396 567,700 588,600
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
prepared By. Keyser Marston Assodates, Inc.
Filename: Tippacance Poaar Center Pro Fartr~ Revised 4-12.~ds; PubRer, 327101; ICE
CITY OF SAN BERNARDINO
AND
REDEVELOPMENT AGENCY OF THE CITY OF SAN
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 -
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 Project, as analyzed in the FEIR
includes the following key elements:
(i) the realignment and construction of a new public
street improvement project referred to in the FEIR as
the Harriman Place Improvement Project;
SB2001:17459 .2
(ii) the assembly and acquisition of public street
right-of-way for the Harriman Place Improvement
Project;
(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
WHEREAS, the implementation of the HUB Project 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
with 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
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
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:
Section 1. The City hereby authorizes the
Agency to incur an indebtedness with respect to the HUB
Project ("HUB Project 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 Project
Indebtedness" mean and include any obligation which the
Agency may undertake to pay or 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;
(vi) one or more loan agreements by and between the
San Bernardino Public Financing Authority and the
Agency relating to the HUB Project.
sszooi:i~asa.z 3
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.
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
subject 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.
(a) 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
sszooi:i~nsa.z q
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:
A1/ - B?/ - $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
(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
1/
"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 aet forth in Section 4(b) is made. This calculation shall
be made annually during the term of this Agreement.
z/
"B" = the amount of scheduled asset transfer lease payments (principal
and interest), if any, payable by the City under the term of the $2.OM
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.
SB2001:17454.2 5
the sum of up to $300,000 to be transferred to the Special
Fund (subject to the confirmation as of each July I 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.
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 Project
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 I, 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 (iii) the HUB Project
Indebtedness is repaid in full by the Agency.
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
sezooi:i~asa.2 6
action of the governing bodies thereof and shall be
effective for the period of time provided in Section 7.
SB2001:17954.2
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
APPROVED AS TO FORM:
~~--
C' Attorney
AGENCY
Redevelopment Agency of the
City of San Bernardino
By:
Chairperson of the
Community Development
Commission, its
governing board
ATTEST:
Agency Secretary
sszooi:i~asa.z g
DRAFT
Recording Requested By and Return To:
CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK
c/o California Technology, Trade and Commerce Agency
801 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
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 of the 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 1 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") (herein called the "CIEDB");
WITNESSETH:
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
"Facilit}~'); 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 1. Site.
The 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
Bemardino 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 of the date of recordation of
this lease in the office of the County Recorder of San Bemardino County, State of California, or
August 28, 2001, 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,
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 CIEDB, whichever is earlier.
SECTION 3. Rental.
The CIEDB shall pay to the Site Lessor as and for rental hereunder the sum of
One Dollar ($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 CIEDB 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. Purpose.
The CIEDB shall use the Site solely for the purpose of leasing the Facility to the
Site Lessor pursuant to the Facility Lease and for such purposes as maybe incidental thereto;
rovided, that in the event of default by the Site Lessor under the Facility Lease the CIEDB may
exercise the remedies provided in the Facility Lease.
SECTION 5. Assignment by the CIEDB.
The Site Lessor acknowledges that the CIEDB has authority to issue tax-exempt
bonds, that the Facility maybe used to secure such bonds and that certain of the rights of the
CIEDB hereunder will be assigned to a trustee under an indenture. The Site Lessor agrees to
execute all documents which maybe reasonably requested by the CIEDB 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 CIEDB 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 weaz 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. Default.
In the event the CIEDB 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 CIEDB, the Site Lessor may exercise
2
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; rop vided, 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 rop vided further, 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 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 of the rights and privileges granted under any such assignment or sublease;
rop vided 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. Quiet Enjoyment.
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 of the 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 govemment 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 of the 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,
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 of the 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
terns thereof.
SECTION 13. License to Access Site Utilities and Parkine.
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 sublessees, 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 any one 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 "E" 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
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 Headines.
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 CIEDB and the Site Lessor, provided however that no such amendment shall
materially adversely affect the owners of the Bonds.
SECTION 18. Execution.
This lease maybe 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 of this lease may separately be executed by the CIEDB and the
Site Lessor, all with the same force and effect as though the same counterpart had been executed
by both the CIEDB and the Site Lessor.
[The balance of this page is intentionally ]eft blank.]
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 yeaz
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
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]
DRAFT
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 his/her authorized
capacity, and that byhis/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]
DRAFT
EXHIBIT A
Property Description
222 North Lugo Avenue, San Bernardino, California
APN: 0135-231-01
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-Ol-015
Dated as of August 28, 2001
DRAFT
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS .................................................................................... ............. 2
SECTION 1.01 Defmitions ............................................................................. ............. 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 of the Project ...... ........... 10
SECTION 2.08 Project Account ..................................................................... ........... 10
SECTION 2.09 Disbursement of Funds .......................................................... ........... I 1
SECTION 2.10 Withholding of Project Amount ............................................ ........... 12
ARTICLE III TERM OF THE FACILITY LEASE ............................................................. 12
SECTION 3.01 Commencement and Termination of the Facility Lease;
Vesting of Title ................................................................................. 12
ARTICLE N 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 ............................................................................... 15
SECTION 5.02 Annual Budgets; Reporting Requirements ....................................... 15
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 of the Facility by the Lessee .................................. ...... 18
SECTION 6.02 Taxes, Other Governmental Chazges and Utility Charges ......... ...... 18
SECTION 6.03 Insurance ..................................................................................... ...... 18
SECTION 6.04 Advances .................................................................................... ...... 21
SECTION 6.05 Title Insurance ............................................................................ ...... 22
i
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 D~ ASSIG NMENT 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 10.01 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 AFFIR MATIVE COVENANTS OF THE LESSEE .......................... ............ 30
SECTION 12.01 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
SECTION 12.14 Compliance with State Contract Requirements ................................ 33
ARTICLE XIII NEGATIVE COVENANTS OF THE LESSEE ............................................ 33
SECTION 13.01 Nondiscrimination
ARTICLE XIV MISCELLANEOUS ................................................................... ................... 34
SECTION 14.01 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
EXHIBTI' A -Description of the Project .................................................................. .................A-1
EXHIBIT B -Description of the Site ....................................................................... .................B-1
EXHIBIT C - Fonn of Resolution of Lessee ............................................................ .................C-1
EXHIBIT D -Budget of Project ............................................................................... .................D-1
EXHIBIT E -Conditions Precedent to Disbursement .............................................. ................. E-1
EXHIBIT F -Base Rental Payments ........................................................................ ................. F-1
EXHIBIT G -State Contract Requirements ............................................................. .................G-1
EXHIBIT H -Tax Certificate ............................................................... .............H-1
EXHIBIT I -Form of Certificate of Chief Financial Officer of * 1 * (the "Lessee") .................. I-1
EXHIBIT J -Certificate of the Lessee Regarding: Fair Market Rental ............... .............J-1
iii
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 1 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 Bernazdino, a charter city and
municipal corporation duly organized and existing under the laws of the State of California (the
"Lessee");
WITNESSETH:
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 Bernazdino, 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 "Facilit}~');
WHEREAS, the Lessee has leased the Facility to the Lessor pursuant to the Site
Lease, dated as of August 28, 2001, 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
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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 regulaz
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 tenns
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 singulaz
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 of the particular Account.
Act
"Act" means the Bergeson-Peace Infrastructure and Economic Development Bank
Act, constituting Division 1 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.
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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 Da}~' 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 of the 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 regazd
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.
Exuirv Date
"Expiry Date" means August 27, 2031, except as extended or sooner terminated
pursuant to Section 3.01 hereof.
Facili
"Facilit}~' 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).
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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 1 in one
calendaz yeaz to June 30 of the succeeding calendaz 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.
Indenendent 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:
(1) 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 regulazly 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.
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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.
Operating Budget
"Operating Budget" means the annual approved budget of the Lessee which
includes Base Rental Payments and Additional Rental Payments due during the year.
Oninion 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 bylaw;
(4) easements, rights of way, mineral rights, drilling rights and other rights,
reservations, covenants, conditions or restrictions, all of anon-monetary nature, which exist of
record as of the Effective Date and are acceptable to the Lessor; and
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(5) easements, rights of way, mineral rights, drilling rights and other rights,
reservations, covenants, conditions or restrictions, all of anon-monetary nature, established
following the date of recordation of this Facility Lease and to which the Lessor and the Lessee
consent in writing.
Project
"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.
Project Account
"Project Account" means the Account by that name established by the Lessor
pursuant to Section 2.08.
Project 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).
Project 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.
Report
"Report" means a document in writing signed by an lndependent Consultant or an
lndependent Accountant, and including:
(1) 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.
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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.
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ARTICLE II
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. Quiet Enjoyment. 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 Entry and Inspection. 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, provided 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,
transferor 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 pay or cause to be paid when due all sums of
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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 if so 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 maybe 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 Facility.
(a) The Lessee and the Lessor may amend this Facility Lease to either
substitute additional real property and/or improvements (the "Substituted Propert}~') 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:
(1) 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;
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(4) Tn the event of a Substitution, a policy of title insurance covering
the Substituted Property in an amount at ]east 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 (1) 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 (1) 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 Project. 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 Project 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
similaz 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
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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; provided, 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 Project 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
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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 al]
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 bylaw.
SECTION 2.10 Withholdin og f Project Amount. (a) The Lessor may withhold
all or any portion of the Project Amount prior to the Bond Date in the event that:
(1) The Lessee has substantially violated any of the teens, 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 Facilitv Lease: Vesting
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 al] Bonds have been fully paid, whichever is
earlier, and this Facility Lease shall thereupon terminate.
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(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 Project 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 atax-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 famish
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 l Ob-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 Payments. 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.
(1) 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
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have an interest only component through January 31, 2003. The Lessee shall deposit with the
Lessor not later than each February 1 and August 1, commencing February 1, 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 azbitrage) 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 Payments. 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:
(1) a payment of an annual fee due with the principal payment each yeaz
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 ordinazy and customary expenses incurred as part of the annual fee pursuant to
Section 5.01(b)(1). 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 (1) above with
the Lessor not later than August 1 of each yeaz; 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
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directly attributable to any facilities other than the Facility shall not be included in the
administrafive 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 aze 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 aze expenses of operation of the Facility.
(c) Consideration. Such payments of Base Rental Payments and Additional Rental
Payments for each Lease Yeaz 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; Reporting 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
yeaz 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,
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the Lessee covenants to take such action as maybe 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. Annlication of Rental Payments. 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 of rental 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. Prepayment of Base Rental Payments.
(a) Optional Prepayment. 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
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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 anon-prepayment period
and/or a prepayment premium.
(b) Notice of Prepayment. 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; Prepayment 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 Project 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 2.08(d), such amounts shall be deducted from the Project Amount, and shall no longer be
available to the Lessee; rop vided, 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 Prepayment. 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 Payments. 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.
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THE OBLIGATION OF THE LESSEE TO MAKE BASE RENTAL
PAYMENTS AND ADDITIONAL RENTAL PAYMENTS DOES NOT CONSTITUTE AN
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 AND OTHER CHARGES
SECTION 6.01. Maintenance of the Facilit~by 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 of these matters or for
the making of additions or improvements to the Facility.
SECTION 6.02. Taxes. Other Governmental Chazges 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 govemmental 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 chazges incurred in the operation, maintenance, use, occupancy and upkeep of
the Facility; rop vided, 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 aze 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:
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(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; ron vided 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 standazds which maybe 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 (1) 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 pazagraph (2) below,
except that such insurance may be subject to deductible clauses of not to exceed the fast one
hundred thousand dollazs ($100,000) subject to Lessor's approval of the amount of any one loss (or
ten percent (10%) of the amount insured, in the case of earthquake). Insurance described in this
pazagraph (1) and in paragraph (2) below may be in the form of a policy which covers the Facility
and one or more additional pazcels of real property insured by the Lessee; rop vided 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 Propert}~') for which bonds, certificates of participation or other
obligations shall have been issued ("Obligations") plus the amount of use and occupancy coverage
required by pazagraph (2) below; in the event the Lessee elects to obtain insurance for the Facility
and one or more additional pazcels 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 (1) hereof, in an amount sufficient to pay the Base Rental Payments attributable to the
Facility for atwenty-four (24) month period; provided, that the amount of such insurance need not
exceed the total remaining Base Rental Payments attributable to the Facility; ron vided further, that
such insurance may be part of a policy pemutted under paragraph (1) above, which policy may
provide that insurance proceeds paid for coverages contemplated by paragraph (1) 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 pazagraph (2) and any
agreements relating to Financed Property in respect of which Obligations aze 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 similaz employees doing similar work; and the Lessee shall
A-19
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 aself-insurance orself-funding
method or plan permitted by this Section.
(4) A standazd, commercial genera] 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 dollazs ($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 Tmstee, 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 (1) and (2) above, may compromise
any and all claims thereunder and, subject to the provisions of Section 7.01 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 Tmstee
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 aself-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 (1), (3) or (4) of Section
6.03(x). Any such self-insurance or self-funding maintained by the Lessee pursuant to the
foregoing Sections shall comply with the following terms:
(1) 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 pazagraphs (1), (3) and (4) of Section 6.03(a) shall be paid; prior
to the end of the first Lease Yeaz, 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 Yeaz, at least
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annually and not later than July 1 of each year that is a Lease Yeaz, 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 (1) 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 aze 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.
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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
SECTION 7.01. Damage, Destruction, Title Defect and Condemnation; Use of
Net Proceeds.
(a) If prior to the termination of the term 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)(1)
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:
(1) 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 refen•ed 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 maybe 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.
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(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
awazd received by the Lessor in respect of the 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 Prepay All Unpaid Base Rental Pavments.
If the Lessee does not exercise the election to reconstruct pursuant to Section 7.01(a)(2) and Net
Proceeds aze 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 awazd 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 Pre~ay All Unpaid Base Rental
Payments. If the Lessee does not exercise the election to reconstruct pursuant to Section 7.01(a)(2)
and Net Proceeds aze 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 pazt thereof
becomes Damaged Improvements, 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.
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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 Facilitv. 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 pennits 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; ron vided, 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. Assignment by 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.
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SECTION 9.02. Assignment by 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 injury 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) any claim based upon environmental law or regulation relating to the
Facility or the Project;
(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 hazazdous
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 obligations 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 learning thereof by such party.
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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, any one or more of the following events:
(1) 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, ron vided, 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; ron vided,
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 tenninate 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
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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 manner
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 manner 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-let 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 irespective 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
manner 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 maybe
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
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for damages to or loss of any property belonging to the Lessee, or any other person, that maybe
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) of the 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 dischazged 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 hereofj; 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 by 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 maybe limited by bankruptcy, insolvency, reorganization, moratorium or similaz
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 Facility 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 maybe affected.
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SECTION 11.04. No Liti ag lion. 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 of the 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. Annroval or Permission Necessary. 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. Information 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 Operation 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. Project Comnletion.
(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
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a "public development facilit}~' 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 facilit}~' 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 Payment. 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 al] 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 (180) 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) Certificafion 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
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(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 Yeaz, the Lessee
will adopt and deliver to the Lessor, a budget approved by the governing boazd 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 Fiscal Yeaz 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 12.04. Protection of Securit~ghts. 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 12.07. 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 12.08. Project 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 "public development facilit}~' 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.
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(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 Responsibility. 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 yeazs 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 prepazed by an Independent
Accountant.
SECTION 12.11. Facility and Project Access. The Lessee shall assure that the
Lessor or its designee will have suitable access to the Facility and the Project at all reasonable
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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%) of the estimated cost of the 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. Compliance with State Contract Requirements. The Lessee
shall comply with all provisions contained in Exhibit G throughout the term of this Facility
Lease.
ARTICLE XIII
NEGATNE 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,
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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, Califomia 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:
If to 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 maybe designated in writing by the Lessor.
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If to the Lessee:
City of San Bernazdino
201 North "E" Street, Ste. 301
San Bemazdino, CA 92401-15087
Attention: John Hoeger, Project Manager
Or to such other address as maybe 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 Tmstee 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 Party 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 maybe
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.
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(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 any one or
more of the following purposes:
(1) 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 teens 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) to effect a Substitution or Removal in accordance with
Section 2.06 hereof; or
(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; provided, 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 Invalidity. If any one or more of the agreements,
conditions, covenants or teens 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
terms hereof shall be affected thereby, and each provision of this Facility Lease shall be valid and
enforceable to the fullest extent permitted bylaw.
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 HeadinQS. 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 of this page is intentionally left blank.]
A-37
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:
A-38
STATE OF CALIFORNIA )
ss
COUNTY OF 1
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]
A39
STATE OF CALIFORNIA )
ss
COUNTY OF 1
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 byhis/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]
A-40
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 of 24.5 acres of blighted
residential area and unimproved lots.
A-1
EXHIBIT B
DESCRIPTION OF THE SITE
222 North Lugo Avenue, San Bernardino, CA
APN: 0135-231-01.
[Legal;dese~ipticsn tv b~'pra~idert~,
s-t
EXHIBIT C
FORM OF RESOLUTION OF LESSEE
RESOLUTION NO.
A RESOLUTION OF THE GOVERNING 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 TT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SAN
BERNARDINO (THE "LESSEE"), AS FOLLOWS
Section 3. This resolution shall take effect from and after its passage, approval and adoption
PASSED, APPROVED and ADOPTED this day of , _.
Ayes:
Noes:
Absent:
Abstain:
C-1
CERTIFICATION OF RESOLUTION
The undersigned hereby states and certifies:
(1) 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 of the governing
body of the Lessee authorizing the execution and delivery of the 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
C-2
EXHIBIT D
PROJECT COSTS
Project Costs:
Project Sources and Uses
CIEDB AGENCY CIEDB
PROJECT
TOTALS PROJECT
PHASEI
TOTALS
TAX
INCREMENT CDBG HOME LO/MOD
Land
Ac uisition $900,000 $154,000 $0 $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
Ci Street $541,335 $0 $0 $0 $0 $541,335 $541,335
Drainage and
Flood Control $50,000 $0 $0 $0 $0 $50,000 $50,000
Water $107,100 $0 $0 $0 $0 $107,100 $107,100
Sewer $55,350 $0 $0 $0 $0 $55,350 $55,350
Electricity and
Communications $80,000 $0 $0 $0 $0 $80,000 $80,000
Engineering,
Desi nand Permits $161,111 $0 $0 $0 $0 $161,111 $161,111
Construction
Contin enc $88,104 $365,000 $0 $0 $0 $453,104 $453,104
CIEDB Origination
Fee $17,000 $0 $0 $0 $0 $17,000 $17,000
Totals $2,000,000 $519,000 $415,000 $178,000 $178,000 $3,290,000 $9,111,035
Any line item maybe 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
Land acquisition; engineering, design and permits
D-2
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:
(1) 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 aze legal, binding and
enforceable agreements of Lessee;
(2) Resolution adopted by Lessee in a form substantially similaz to Exhibit C;
(3) Certificate of the Lessee's chief financial officer in a form substantially similar to
Exhibit I;
(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 similaz 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 aze 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 aze required for construction and operation of the Project;
E-1
(2) Certificate of the Lessee that all required permits have been obtained for the
construction of the Project;
(3) Performance 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 awazded pursuant to competitive
bidding and Lessee procedures normally required for similaz 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 performance 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 aze 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 1
(commencing with Section 1720) of Part 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 of the following, and provided a copy of the specified document or certificate to the
Lessor:
(1) Recorded Project notice of completion or other evidence of completion
satisfactoryto the Lessor;
(2) Lien waivers for the Project, or passage of the applicable statutory time periods
for filing mechanics and other similaz liens;
E-2
(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
defmition 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
EXHIBIT F
' NOTE: The Base Rental Payments shall conform to the following guidelines:
This schedule is based on a term of thirty (30) yeazs 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 yeaz
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 chazged 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 lazger 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 sepazately as the cost is intoned.
F-1
RENTAL PAYMENTSl
F-2
EXHIBIT G
STATE CONTRACT REOUIltEMENTS
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) yeazs 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 minimum 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")
regazding 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 Compliance 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, hazass 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 aze 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 bazgaining or other Facility Lease.
(b) The Lessee shall include the nondiscrimination and compliance provisions
as detailed in clause (a) of this section, in all contracts to perform work under this Facility Lease.
G-1
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 Boazd.
SECTION 5. Certification of Dru¢ 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:
(1) 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
(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:
(1) has made a false certification; or,
(2) violates the certification by failing to carry out the requirements as
noted above.
SECTION 6. Certification of Recycled Content. The Lessee shall certify in
writing, under penalty of perjury, 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 of the Welfare
and Institutions Code.
(b) Nothing in this provision shall be construed to:
(1) interfere with or create a violation of the terms of valid collective
bargaining agreements;
(2) require the Lessee to hire an unqualified recipient of aid;
G-3
(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 aze planned.
G-4
EXHIBIT H
LESSEE TAX CERTIFICATE
This tax certificate is executed and delivered by the City of San Bernazdino (the
"Lessee") in connection with the facility lease between the Lessee and the Califomia
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. 1N 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-1
"Preliminary Expenditures" means azchitectural, 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 X1II 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 LINIITATIONS
2.1 Expenditure of Proceeds. Proceeds of the Obligation shall be used
exclusively for the following purposes: (i) architectural, engineering, surveying, soil testing, and
similaz 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 yeaz 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 of the 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 (e.g_, 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
x-z
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 aze 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 yeaz. To the extent of
Current Revenues, such account in the aggregate will be depleted at least once a yeaz 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 yeaz after the date of
accumulation thereof in any such fund. Current Revenues in such account shall be invested
without regazd 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 aze 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.
2.10 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
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; provided, 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 501(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 nongovemmental 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 yeaz 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 boazd; 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 yeazs;
and (iv) in the case of certain contracts with a term not longer than two (2) years, the compensation
is based on a percentage of fees chazged and the contract is cancelable after one yeaz.
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
lrnowledge and belief of the undersigned, there aze no other facts, estimates or circumstances that
would materially change the expectations as set forth herein, and said expectations are
reasonable.
x-a
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 al] requirements contained in this Tax
Certificate shall survive defeasance or prepayment of the Obligation.
Dated:
CTI'Y OF SAN BERNARDINO
By
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EXHIBIT I
FORM OF CERTIFICATE OF
CHIEF FINANCIAL OFFICER of the CITY OF SAN BERNARDINO (the "Lessee")
The undersigned hereby states and certifies:
(1) 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 information 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 cun•ent fiscal year are
included in the adopted budget of the 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 terms not otherwise defined herein shall have the meanings ascribed
thereto in the Facility Lease.
Dated: ,
CITY OF SAN BERNARDINO
By
H-1
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 maybe
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 fair rental value of the 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: ,
B "~ ~,.. .
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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 Bemazdino, 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
Bernazdino, 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
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WHEREAS, the implementation of the HUB Project will confer substantial benefits on the
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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 lands 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 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
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
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WHEREAS, the City has certified a Final Environmental Impact Report as of May 21, 2001
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 Proj ect) 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
II 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
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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
Agreement.
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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
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 Bernazdino at a meeting thereof, held
on the day of , 2002, by the following vote, to wit:
Commission AYES NAYS
ESTRADA
LIEN
MCGINNIS
SCHNETZ
SUAREZ
ANDERSON
McCAMMACK
ABSTAIN ABSENT
Secretary
The foregoing Resolution is hereby approved this day of , 2002.
Judith Valles, Chairperson
Community Development Commission
of the City of San Bemazdino
Ap
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By
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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 Bernazdino, California, a municipal corporation (the "City"), the
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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 Bemazdino, 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
ofMay 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
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 of lands adversely affected by the closure of the
former Norton Air Force Base; and
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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 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
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 21, 2001 for
the HUB Project, in accordance with CEQA; and
WHEREAS, there has been presented to the Mayor and Common Council a proposed
Redevelopment Cooperation and Financing Agreement (HUB Proj ect) by and between the Agency and
the City (the "Agreement")pursuant to which the City will lend redevelopment financing assistance to
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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 Mayor and Common Council to take action with respect to
the Agreement, as set forth in this Resolution.
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY THE
MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS FOLLOWS:
Section 1. The recitals set forth above aze true and correct.
Section 2. The Mayor and Common Council hereby approve the Agreement as on file with
the City Clerk.
Section 3. The Mayor is hereby authorized and directed to execute the Agreement on behalf
of the City together with such technical and conforming changes as may be approved by the Mayor and
City Attorney. The Mayor, the City Administrator or such other designated representative of the City
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 Agreement.
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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
Section 4. This Resolution shall take effect upon the date of its adoption.
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
Common Council of the City of San Bernardino at a meeting thereof, held on the
day of , 2002, by the following vote, to wit:
Council: AYES NAYS ABSTAIN ABSENT
ESTRADA
LIEN _
MCGINNIS _
SCHNETZ _
SUAREZ _
ANDERSON _
McCAMMACK
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:
By: ..,. -
City Attorney
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C~OG°~~
RESOLUTION NO.
A RESOLUTION OF THE MAYOR AND COAIAION
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.OM 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 comer 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, 2001, 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
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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 beriveen
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
Infrastmcture 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 of this 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-
OI-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.
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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 occtirred 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 maybe 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:
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(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 Ciry
substantially in the form attached as Exhibit "P' 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 of the City substantially in the form attached as Exhibit "J" 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 CIEDB 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 of the 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
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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.
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A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SA\
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.OM HARRIMAN PLACE STREET EXTENSION PROJECT)
Section 2. This Resolution shall take effect upon the date of its adoption.
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
Common Council of the City of San Bernardino at a meeting thereof, held
on the day of
Council: AYES
ESTRADA
LIEN
MCGINNIS
SCHNETZ
SUAREZ
ANDERSON
McCAMMACK
2002, by the following vote, to wit:
NAYS ABSTAIN ABSENT
City Clerk
The foregoing resolution is hereby approved this day of , 2002.
Judith Valles, Mayor
City of San Bernardino
Approv as to form and legal content:
By: M
ity Attorney
I sazooz:zis.i
Resolution - 6