HomeMy WebLinkAboutR32-Economic Development Agency
CITY OF SAN BERNARDINO
ECONOMIC DEVELOPMENT AGENCY
C FROM:
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Emil A. Marzullo
Interim Executi\1e Director
SUBJECT:
Amendment No. 1 to the 2006 Disposition
and Development Agreement by and
between the Agency and Hillwood; and
Water Storage Capacity Payment
Agreement (State College Redevelopment
Project Area)
DATE:
February 11,2008
Svnons;s of Previous Commission/Council/Committee Action(s):
On September] 8, 2006, the Community Development Commission ("Commission") approved a Disposition and Development
Agreement by and between the Redevelopment Agency of the City of San Bernardino ("Agency") and HSB ]-2]5, a Califomia
Limited Partnership and SE 1-215, a California Limited Partnership (collectively referred to as "HiIlwood")
On September 6, 2007, Redevelopment Committee Members Estrada, Johnson and Baxter unanimously voted to recommend
that the Community Development Commission consider this action for approval.
Recommended Molion(s):
(Community Develooment Commission)
Resolution of the Community Development Commission of the City of San Bernardino ("Commission") (I) approving
Amendment No. ] to the 2006 Disposition and Development Agreement by and between the Redeve]opment Agency
of the City of San Bernardino ("Agency") and HSB ]-215, L.P., a California limited partnership and SE 1-2]5, L.P., a
California limited partnership (collective]y, referred to as "Developer"); (2) authorizing the Interim Executive Director
of the Agency to execute said Amendment No. I; (3) approving the Water Storage Capacity Payment Agreement
("Agreement") by and between the Agency and the San Bernardino Municipal Water Department ("SBMWO"); and
(4) authorizing the Chairman of the Commission to execute the Agreement with SBMWO (State College
Redevelopment Project Area)
Contact Person(s):
Mike Trout
State College
Redeve]opment Project Area
Phone:
(909) 663-]044
6
Ward(s):
Project Area(s):
Supporting Data Attached: 0 Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) Q Map(s) 0 Letter(s)
Minimum $1.4 M to
FUNDING REQUIREMENTS: Amount: $ Maximum $4.4 M Source: State College Tax Increment
Budget Authority:
2007-2008 EDA Budget and thereafter
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Signature: :::::::--:.
Emil A. Marzullo, Interim Ex . e Director
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,
Fiscal Review:. ",
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tive Services Director
Commission/Council Notes:
P\A,cndas\Comn Dev CommissionlCDC 2008"02-19-08 HillwoodAmendmem No. I SR,lb;
COMMISSION MEETING AGENDA
Meeting Date: 02/1912008
Agenda Item Number: ~
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
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AMENDMENT NO.1 TO THE 2006 DISPOSITION AND DEVELOPMENT AGREEMENT BY
AND BETWEEN THE AGENCY AND HILLWOOD; AND WATER STORAGE CAPACITY
PAYMENT AGREEMENT
(STATE COLLEGE REDEVELOPMENT PROJECT AREA)
BACKGROUND:
On September 18, 2006, the Community Development Commission of the City of San Bernardino
("Commission") adopted Resolution No. CDC/2006-42 approving a Development and Disposition
Agreement ("DDA") by and between the Redevelopment Agency of the City of San Bernardino
("Agency") and HSB 1-215, L.P., a California limited partnership, and SE 1-215, L. P., a California
limited partnership (collectively, "Developer") and authorized the Executive Director of the
Redevelopment Agency of the City of San Bernardino ("Agency") to execute the DDA.
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After the Developer received all entitlement approvals from the City of San Bernardino ("City") and from
the City's Municipal Water Department ("SBMWD") and paid all required fees to the SBMWD, the
Developer commenced construction of the private improvements upon the property that is subject to the
DDA. Thereafter, the SBMWD received a Water Master Plan report from an independent engineering
firm identifying certain deficiencies in the SBMWD water distribution system and water storage system
and setting forth the potential inability of the SBMWD to serve the fire flow requirements that may be
required by the development to be undertaken pursuant to the DDA. Therefore, the construction of a new
4,000,000 gallon capacity ground level Cajon/Palm Water Reservoir ("Reservoir") is required to meet this
potential demand. The estimated cost for the construction of the reservoir is approximately $4,013,000.
The SBMWD can commit to and will contribute not less than $3,400,OOO,leaving a shortfall of$613,OOO.
CURRENT ISSUE:
To overcome the $613,000 shortfall, the Agency proposes to enter into an agreement with SBMWD and
amend the Developer's DDA. Under the proposed SBMWD agreement and after the award of a bid by
the Board of Water Commissioners of the SBMWD and commencement of the construction of the
Reservoir has occurred, the SBMWD shall provide an invoice to the Agency in the amount of $613,000
("Agency Payment"), at least 30 calendar days prior to the date that the SBMWD reasonably believes that
the Agency Payment will be required to complete the contract payments to the general contractor for the
Reservoir.
Under the proposed amendment to the Developer's DDA ("Amendment No. I"), after the Agency
Payment has been made to the SBMWD, the Agency will invoice the Developer for an amount equal to
1/2 of the Agency Payment. The total financial liability to the Developer is not to exceed $306,500
("Developer Payment"). Upon the payment by the Developer to the Agency of the amount of the
Developer Payment, the Reimbursement Amount, as defined in Section 3.09(c) of the DDA, shall be
increased by the amount of the Developer Payment as actually remitted to the Agency. Additionally,
Exhibit "L" to the DDA shall be amended to include a new Section A.4 and Section C shall be added to
C read as follows:
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P\Acendas\Comm DevCorrmission\CDC 2008\02-19-08 HillwoodAmendmem No. I SR.doc COMMISSION MEETING AGENDA
Meeting Date: 02/1912008
Agenda ltem Number: ~
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Economic Development Agency Staff Report
Hillwood - Amendment No. 1
SBMWD - Agreement
Page 2
"4. Actual costs equal to the remittance of the principal amount of the Developer Payment to
the Agency pursuant to Amendment No.1 to the Agreement but not to exceed $306,500."
"c. Notwithstanding any other provisions contained in this Exhibit "L", to the extent the
Developer has remitted the Developer Payment to the Agency, the maximum Reimbursement
Amount shall be increased by an amount equal to the Developer Payment not to exceed $306,500;
provided, however, that the limitations for each line item maximum as set forth in A.I., A.2. and
A.3. above shall continue to be applicable."
The Agency will be entitled to recover from the previously agreed upon percentage payments of tax
increment revenues that would be paid to the Developer for the first $306,500 to reimburse the Agency
prior to any reimbursement payment to the Developer.
The Developer shall continue to have the obligation to comply with all provisions of the DDA with
respect to the increase in the Reimbursement Amount as authorized pursuant to Amendment No.1,
including, but not limited to, compliance with all provisions of Section 3.09 of the DDA, the Agency Tax
Increment Revenues Promissory Note (Exhibit "I" to the DDA), and the provisions of Exhibit "L" to the
DDA.
Also, at the time the DDA was approved, it was contemplated that the. costs referenced in Section A.3 of
Exhibit "L" to the DDA would not exceed $1,260,000. Now the work referenced in Section A.3 has been
completed, and the actual cost thereof is $1,697,273. Accordingly, the Agency is requested to determine
that such actual costs are eligible for and should be part of the Reimbursement Amount rather than the
originally estimated costs as set forth in Section A.3 of Exhibit "L" to the DDA. Therefore, the figure of
"$1,260,000" as used in Section A.3 of Exhibit "L" shall be amended to be "$1,697,273".
Further, as a result of the additional reimbursement amounts, the dollar figure of "$3,630,000", as used in
the following Sections of the DDA, shall be amended to read "$4,373,773" as noted herein:
(i) Section 3.09(d) of the DDA
(ii) Sections 1.10 and 11 ofthe Agency Tax Increment Revenues Promissory Note (Exhibit "I"
to the DDA), and
(iii) Sections A.3 and B,ofthe Reimbursement, Exhibit "L" to the DDA.
On January 15,2008, the Board of Water Commissioners for the City of San Bernardino Municipal Water
Department approved the Water Storage Capacity Payment Agreement with the Agency for the Hillwood
Interchange Proj ecl.
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P\AgendasIComrn Dev CommissionlCDC 2008\02-t9-08 Millwood Amendment No I SR_OOc
COMMISSION MEETING AGENDA
Meeting Date: 02/19/Z008
Agenda Item Number: J!1,~
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Economic Development Agency Staff Report
Hillwood - Amendment No.1
SBMWD - Agreement
Page 3
ENVIRONMENTAL IMPACT:
On July 25, 2006, the Agency received a letter from the State of California, State Clearinghouse and
Planning Unit, which stated that the Agency "had complied with the State Clearinghouse review
requirement for draft environmental documents, pursuant to the California Environmental Quality Act".
They also assigned a 10-digit State Clearinghouse number (SCR# 2005121040).
On September 18, 2006, after the completion of the Draft Environmental Impact Report ("EIR"); the
Notice of Completion was published in the San Bernardino County Sun newspaper with copies distributed
to public agencies; and copies of the Draft EIR were made available for public review and comment (June
8,2006 through July 24, 2006) the Commission adopted Resolution No. CDC/2006-41 certifying the EIR.
FISCAL IMPACT:
The fiscal impact is $743,773 which will be paid from State College Tax Increment funds.
RECOMMENDATION:
That the Community Development Commission adopt the attached Resolution.
Emil A. Marzullo, Interim Executive Director
C._-
P:\AgendlS\Corrm Dcv Corrmission'CDC 2008\02-19-08 HiIlwood A~melu No. I SR.doc
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COMMISSION MEETING AGENDA
Meeting Date: 02/1912008
Agenda Item Number: ..I!.:JA..
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RESOLUTION NO.
RESOLUT.ION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO ("COMMISSION") (1) APPROViNG
AMENDMENT NO. 1 TO THE 2006 DISPOSITION AND DEVELOPMENT
AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO ("AGENCY") AND HSB 1-215, L.P., A
CALIFORNIA LIMITED PARTNERSHIP AND SE 1-215, L.P., A
CALIFORNIA LIMITED PARTNERSHIP (COLLECTIVELY, REFERRED
TO AS "DEVELOPER"); (2) AUTHORIZING THE INTERIM EXECUTIVE
DIRECTOR OF THE AGENCY TO EXECUTE SAID AMENDMENT NO.1;
(3) APPROVING THE WATER STORAGE CAPACITY PAYMENT
AGREEMENT ("AGREEMENT") BY AND BETWEEN THE AGENCY AND
THE SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
("SBMWD"); AND (4) AUTHORIZING THE CHAIRMAN OF THE
COMMISSION TO EXECUTE THE AGREEMENT WITH SBMWD (STATE
COLLEGE REDEVELOPMENT PROJECT AREA)
WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency"), is a
public body, corporate and politic, existing under the laws of the State of California, Health and
Safety Code 33101, and is charged with the mission of redeveloping blighted and underutilized
land; and
WHEREAS, the Agency and HSB 1-215, L.P., a California limited partnership and SE 1-215,
L.P., a California limited partnership (collectively, referred to as "Developer") entered into that
certain 2006 Disposition and Development Agreement dated as of September 18, 2006 (the
"DDA"), for the acquisition by the Developer of certain Agency-owned property and the disposition
to the City of San Bernardino (the "City") of certain property of the Developer for public right-of"
way purposes in furtherance of the construction of the grade separation crossing on University
Parkway over the railroad tracks of the BNSF Railroad; and
WHEREAS, the DDA provides for the reimbursement to the Developer from the Tax
Increment Revenues (defined in Section 3.09(d) of the DDA) of the Reimbursement Amount as
defined in Section 3.09(c) of the DDA and as further provided in Exhibit "L" thereto; and
WHEREAS, after the Developer has received all entitlement approvals from the City and
from the City of San Bernardino Municipal Water Department (the "SBMWD") and paid all
required fees to the SBMWD, the Developer commenced construction of the private improvements
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P:\Agendas\RcsolwMlns\Resolutions\2008\02.19-08 Hillwood Amendment No I CDC Rcsodoc
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1 upon the property that is subject to the DDA, and, thereafter, the SBMWD received a'Water Master
2 Plan report from an independent engineering firm identifying certain deficiencies in the SBMWD
3 water distribution system and water storage system and setting forth the potential inability of the
4 SBMWD to serve the fire flow requirements that may be required by the development to be
5 undertaken pursuant to the DDA; and
6 WHEREAS, the Agency and the Developer seek to work in cooperation with the SBMWD
7 to alleviate water system deficiencies as identified by the SBMWD in their master plan analysis as
8 recently concluded by an independent water system engineering firm after the date that the
9 Developer received all entitlement approvals from the City and the SBMWD in a mutually
10 satisfactory effort to assure adequate water service for the project of the Developer and the other
11 businesses and residences in the vicinity of this project; and
12 WHEREAS, in an effort to assist the SBMWD in their funding requirements to assure the
13 completion of a 4,000,000 gallon capacity ground level water reservoir at the SBMWD property at
14 the intersection of Cajon Boulevard and Palm Avenue (the "Cajon/Palm Water Reservoir"), the
15 Agency and the Developer have agreed to equally share certain costs on a 50/50 basis as determined
16 by the SBMWD to be the shortfall amount not to exceed $613,000 as shall be shared between the
17 Agency and the Developer; and
18 WHEREAS, the Agency, in exchange for the Developer agreeing to advance one-half of the
19 not to exceed $613,000 amount has agreed to amend the DDA pursuant to Amendment No.1
20 attached hereto as Exhibit "A", to thus allow the Developer to increase the dollar amount of the
21 Reimbursement Amount as defined in the DDA payable from the Tax Increment Revenues of the
22 project as provided in the DDA and pursuant to the Agency Tax Increment Revenues Promissory
23 Note (Exhibit "I" to the DDA); and
24 WHEREAS, the Agency, concurrently with the execution and delivery of the Amendment
25 No.1, has entered into a certain agreement with the SBMWD entitled "Water Storage Capacity
26 Payment Agreement" dated as of January 15,2008, by and between the Agency and the SBMWD
C 27 (the "Agency/SBMWD Agreement") which Agency/SBMWD Agreement as referenced in Exhibit
28 "B" (see attached Exhibit "A" to Amendment No. I); and
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WHEREAS, the Agency/SBMWD Agreement will assure the continued water supply for
current and future development projects within both the State College Redevelopment Project Area
and the Northwest Redevelopment Project Area of the Agency for which the Agency may seek to
encourage subsequent development projects in both of said redevelopment project areas; and
WHEREAS, the City required the Developer to incur costs of construction of oversizing 0
the storm drain collection system to be installed upon the project identified in the DDA which
caused an increase to the costs of construction related to the overall storm drain and water detention
basin improvement from the original estimated amount of $1,260,000 to a current amount equal to
9 $1,697,273; and
10 WHEREAS, the original Reimbursement Amount set forth in the DDA has increased from
11 $3,630,000 to $4,373,773; and
12 WHEREAS, it is appropriate for the Community Development Commission of the City 0
13 San Bernardino ("Commission") to take action with respect to Amendment No. 1 of the DDA with
14 the Developer and the Agency/SBMWD Agreement and to approve Amendment No.1 of the DDA
15 and the Agency/SBMWD Agreement as set forth in this Resolution.
16 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
17 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
18 FOLLOWS:
19
The information set forth in the above recitals of this Resolution is true and
Section 1.
20 correct.
21
Section 2.
The Commission hereby approves Amendment No. 1 to the DDA. The
22 Interim Executive Director is hereby authorized and directed to execute Amendment No. 1 to the
23 DDA on behalf of the Agency together with nonsubstantive and conforming changes as may be
24 recommended by the Interim Executive Director and Agency Counsel. The Interim Executive
25 Director is hereby authorized to take all appropriate actions as set forth in Amendment No. 1 of the
26 DDA to accomplish the purposes of Amendment No.1.
Section 3.
The Commission hereby approves the Agency/SBMWD Agreement. The
Chairman of the Commission is hereby authorized and directed to execute the Agency/SBMWD
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1 Agreement on behalf of the Agency together with nonsubstantive and conforming changes as may
2 be recommended by the Interim Executive Director and Agency Counsel. The Interim Executive
3 Director is hereby authorized to take all appropriate actions as set forth in the Agency/SBMWD
4 Agreement to accomplish the purposes of the Agency/SBMWD Agreement..
5
The Resolution shall become effective immediately upon its adoption.
Section 4.
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PlAgendas\ResolutionsIRcsoluttons\2008\02+ 19-08 HiI1wood Ammdmem No. I CDC !leso doc
12 thereof, held on the day of
13 Commission Members: Aves
C 14 ESTRADA
15 BAXTER
16 BRINKER
17 DERRY
18 KELLEY
19 JOHNSON
20 MC CAMMACK
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RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO ("COMMISSION") (1) APPROVING
AMENDMENT NO. 1 TO THE 2006 DISPOSITION AND DEVELOPMENT
AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO ("AGENCY") AND HSB 1-215, L.P., A
CALIFORNIA LIMITED PARTNERSHIP AND SE. 1-215, L.P., A
CALIFORNIA LIMITED PARTNERSHIP (COLLECTIVELY, REFERRED
TO AS "DEVELOPER"); (2) AUTHORIZING THE INTERIM EXECUTIVE
DIRECTOR OF THE AGENCY TO EXECUTE SAID AMENDMENT NO.1;
(3) APPROVING THE WATER STORAGE CAPACITY PAYMENT
AGREEMENT ("AGREEMENT") BY AND BETWEEN THE AGENCY AND
THE SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
("SBMWD"); AND (4) AUTHORIZING THE CHAIRMAN OF THE
COMMISSION TO EXECUTE THE AGREEMI!;NT WITH SBMWD (STATE
COLLEGE REDEVELOPMENT PROJECT AREA)
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
Development Commission of the City of San Bernardino at a
, 2008, by the following vote to wit:
meeting
Navs
Abstain
Absent
Secretary
22
23
24
25
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day of
,2008.
The foregoing Resolution is hereby approved this
Patrick J. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
Appnw"" ~ to Frt J
By: ~ It---
Agency C sel
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EXHIBIT "A"
to
Resolution
Amendment No. I
(2006 Disposition and Development Agreement - Hillwood)
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AMENDMENT NO.1
2006
DISPOSITION AND DEVELOPMENT AGREEMENT
BY AND BETWEEN
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
AND
HSB 1-215, L.P. A CALIFORNIA LIMITED PARTNERSHIP
AND
SE 1-215, L.P., A CALIFORNIA LIMITED PARTNERSHIP
DATED AS OF FEBRUARY 19,2008
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AMENDMENT NO. I
2006
DISPOSITION AND DEVELOPMENT AGREEMENT
BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF
SAN BERNARDINO AND HSB 1-215, L.P. AND SE 1-215, L.P.
THIS AMENDMENT NO. I TO THE 2006 DISPOSITION AND DEVELOPMENT
AGREEMENT (this "Amendment") is entered into as of February 19, 2008, by and between the
Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the
"Agency"), and HSB 1-215, L.P., a California limited partnership, and SE 1-215, L.P., a California
limited partnership (collectively, "Developer").
RECITALS
WHEREAS, the Agency and the Developer entered into that certain 2006 Disposition and
Development Agreement dated as of September 18, 2006 (the "DDA"), for the acquisition by the
Developer of certain Agency owned property and the disposition to the City of San Bernardino (the
"City") of certain property of the Developer for public right-of-way purposes in furtherance of the
construction of the grade separation crossing on University Parkway over the railroad tracks of the
BNSF Railroad; and
WHEREAS, the DDA provides for the reimbursement to the Developer from the Tax
Increment Revenues (as defined in Section 3.09(d) of the DDA) of the Reimbursement Amount as
defined in Section 3.09(c) of the DDA and as further provided in Exhibit "L" thereto; and
WHEREAS, after the Developer had received all entitlement approvals from the City and the
all approvals from the City of San. Bernardino Municipal Water Department ("SBMWD") and paid all
required fees to the SBMWD, the Developer commenced construction of the private improvements
upon the property that is subject to the DDA. Thereafter, the SBMWD received a Water Master Plan
report from an independent engineering firm identifying certain deficiencies in the SBMWD water
distribution system and water storage system and setting forth the potential inability of the SBMWD to
serve the fire flow requirements that may be required by the development to be undertaken pursuant to
the DDA; and
WHEREAS, in an effort to assist the SBMWD in their funding requirements to assure the
completion of a 4,000,000 gallon capacity ground level water reservoir at the SBMWD owned
property at the intersection of Cajon Boulevard and Palm Avenue (the "CajonlPalm Water Reservoir"),
the Agency and the Developer have agreed to equally share certain costs on a 50/50 basis as
determined by the SBMWD to be the shortfall amount not to exceed $613,000 as shall be shared
between the Agency and the Developer, and the Agency net portion thereof shall be reimbursed from
the Tax Increment Revenues on a priority basis as further set forth herein; and
WHEREAS, the Agency, concurrently with the execution and delivery of this Amendment, has
entered into a certain agreement with the SBMWD entitled "Water Storage Capacity Payment
Agreement" dated as of January IS, 2008, by and between the Agency and the SBMWD (the
"Agency/SBMWD Agreement") which Agency/SBMWD Agreement is attached hereto as Exhibit "A"
and incorporated herein by reference; and
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WHEREAS, the Agency, in exchange for the Developer agreeing to advance one-half of the
not to exceed $613,000 amount has agreed to amend the DDA pursuant to this Amendment to thus
allow the Developer to increase the dollar amount of the Reimbursement Amount as defined in the
DDA payable from the Tax Increment Revenues of the project as provided in the DDA and pursuant to
the Agency Tax Increment Revenues Promissory Note (Exhibit "I" to the DDA); and
WHEREAS, the City required the Developer to incur the costs of construction for the upsizing
of the storm drain collection system to be installed upon the project identified in the DDA which has
caused an increase to the costs of construction related to the overall storm drain and water detention
basin improvements from the original estimated amount of $1,260,000 to a current amount equal to
$1,697,273, and the parties seek to increase the dollar amount of the Reimbursement Amount from
$3,630,000 to $4,373,773 based upon the costs incurred to upsize the storm drain collection system
and for the payment required by the Developer based upon the Agency/SBMWD Agreement, subject
to the same conditions for reimbursement as set forth in the DDA.
The Agency and the Developer hereby agree to amend the DDA based upon the Recitals as set
forth above in the manner as follows:
Section 1. The Developer recognizes and concurs in the Agency approval and execution and
delivery of the Agency/SBMWD Agreement and the provisions contained therein relating to the
Developer being a third party beneficiary to said Agency/SBMWD Agreement. The Developer agrees
to remit to the Agency upon written request in the manner and at the times as provided in the
Agency/SBMWD Agreement one-half of the Agency Payment as defined in the Agency/SBMWD
Agreement that shall be equal to a total financial liability of the Developer not to exceed $306,500 (the
"Developer Payment"). Failure of the Developer to remit the required Developer Payment to the
Agency pursuant to this Amendment will be deemed to be a default pursuant to Section 5.0I(c) of the
DDA, but without the applicable extensions of time as provided in Section 6.05 of the DDA, and the
Agency shall thereupon be entitled to pursue remedies in the manner as specified in Article V of the
DDA.
Section 2. (a) Upon the payment by the Developer to the Agency of the amount of the
Developer Payment required pursuant to Section 1 above, the Reimbursement Amount as defined in
Section 3.09(c) shall be increased by the amount of the Developer Payment as actually remitted to the
Agency. Additionally, Exhibit "L" to the DDA shall be amended to include a new Section AA. and
Section C. shall be added to read all as follows:
"4. Actual costs equal to the remittance of the principal amount of the Developer Payment
to the Agency pursuant to Amendment No.1 to the Agreement but not to exceed $306,500."
"C. Notwithstanding any other provisions contained in this Exhibit "L", to the extent the
Developer has remitted the Developer Payment to the Agency, the maximum Reimbursement
Amount shall be increased by an amount equal to the Developer Payment not to exceed
$306,500; provided, however, that the limitations for each line item maximum as set forth in
A.l., A.2. and A.3. above shall continue to be applicable."
(b)
The Developer shall continue to have the obligation to comply with all provisions of the
DDA with respect to the increase in the Reimbursement Amount as authorized pursuant
to this Amendment, including, but not limited to, compliance with all provisions of
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Section 3.09 of the DDA, the Agency Tax Increment Revenues Promissory Note
(Exhibit "I" to the DDA), and the provisions of Exhibit "L" to the DDA.
Section 3. As of the date of the DDA, it was contemplated that the costs referenced in Section
A.3 of Exhibit "L" to the DDA would not exceed $1,260,000. Such work now has been completed,
and the actual cost thereof is $1,697,273. Accordingly, the Agency and the Developer agree that such
actual costs are eligible for and should be part of the Reimbursement Amount rather than the originally
estimated costs as set forth in Section A.3 of Exhibit "L" to the DDA. Therefore, the figure of
"$1,260,000" as used in Section A.3 of said Exhibit "L" shall be amended to be "$1,697,273".
Section 4. The dollar figure of "$3,630,000" as used in the following Sections of the DDA
shall be amended to read "$4,373,773" as noted herein:
(i) Section 3.09(d),
(ii) Sections 1.10 and II of the Agency Tax Increment Revenues Promissory Note (Exhibit
"I" to the DDA), and
(iii) Sections A.3. and B. of the Reimbursement Amount, Exhibit "L" to the DDA.
Section 5. Notwithstanding anything to the contrary provided in the DDA, prior to any
payment to the Developer of the Tax Increment Revenues for the repayment of the Reimbursement
Amount, the Agency shall retain from amounts that otherwise would have been paid to the Developer
an amount equal to 50% of the funds paid by the Agency to SBMWD under the Agency/SBMWD
Agreement not to exceed $306,500, which dollar amount represents the net amount payable by the
Agency after taking into account the Developer Payment to the Agency as provided in Section I
above. Said amount shall be retained by the Agency free and clear of any claims of the Developer
prior to the payment of the Tax Increment Revenues to the Developer for the Reimbursement Amount.
At such time as the Agency has been paid in whole from the Tax Increment Revenues otherwise
payable to the Developer pursuant to the DDA, the provisions for the payment of the Tax Increment
Revenues to the Developer as provided in the DDA shall be operative for further payments of the
Reimbursement Amount as set forth in the DDA.
Section 6. Attached hereto as Exhibit "A" and incorporated by reference is the
Agency/SBMWD Agreement as executed and delivered by the Agency and the SBMWD containing
the concurrence ofthe Developer as the third party beneficiary to said Agency/SBMWD Agreement.
Section 7. This Amendment shall take effect upon its execution and delivery by the Agency
and the Developer and shall remain in full force and effect for the term of the DDA unless otherwise
amended, changed or modified with the written approval of the Agency and the Developer and
otherwise as provided in the DDA, as amended.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the
dates set forth below and this Amendment is effective as of the date set forth in the introductory
paragraph hereof.
AGENCY
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
Date:
By:
Emil A. Marzullo, Interim Executive Director
d egal Content:
By:
Agency Counsel
DEVELOPER
HSB 1-215, L.P.,
a California limited partnership
By:
HSB GP, LLC,
a California limited liability company,
Its general partner
By: HGI GP, LLC,
a Texas limited liability company,
its sole member
By: HGI Group, L.P.,
a Texas limited partnership,
its sole member
By: Hillwood Associates, L.P.,
a Texas limited partnership,
its general partner
By:
- -----
Name:
Title:
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SE 1-215, L.P.,
a California limited partnership
By: HSB GP, LLC,
a California limited liability company,
Its general partner
By: HGI GP, LLC,
a Texas limited liability company, its sole member
By: HGI Group, L.P.,
a Texas limited partnership, its sole member
By: Hillwood Associates, L.P.,
a Texas limited partnership,
its general partner
By:
Hillw9od1>eve1o . ent yompany, LLC,
a T~~ limite., i bilitf company, its general partner
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Title: ~. \
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EXHIBIT "A"
to
Amendment No. I
Water Storage Capacity Payment Agreement
4818.7233-242.1 Exhibit A
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WATER STORAGE CAPACITY PAYMENT AGREEMENT
(HilIwood Interchange Project)
THIS WATER STORAGE CAPACITY PAYMENT AGREEMENT is entered into as of
January 15, 2008, by and between the Redevelopment Agency of the City of San Bernardino, a public
body, corporate and politic, duly organized and existing pursuant to Health & Safety Code Section
33000, et seq. (the "Agency"), and the City of San Bernardino Municipal Water Department
("SBMWD"), by and through its Board of Water Commissioners (herein referred to as this
"Agreement").
WHEREAS, the Agency has entered into a certain Disposition and Development Agreement
dated as of September 18, 2006 (the "DDA"), with two (2) separate Hillwood Development Services
entities identified as HSB 1-215, L.P., a California limited partnership, and SE 1-215, L.P., a California
limited partnership (collectively, the "Developer"); and
WHEREAS, the Developer has commenced construction activities on the Developer owned
property identified in the DDA and has commenced the reconstruction and enlargement of the flood
control drainage basin as previously owned by the Agency and as conveyed by the Agency to the
Developer in furtherance of the on-site development requirements imposed by the City upon the
development project as contemplated by the DDA consisting of the construction of approximately
2,000,000 square feet of industrial distribution and warehouse buildings (the "Project"); and
WHEREAS, the Developer and the Agency seek to work in cooperation with the SBMWD to
alleviate water system deficiencies as identified by the SBMWD in their master plan analysis as
recently concluded by an independent water system engineering firm after the date that the Developer
received all entitlement approvals from the City and the SBMWD in a mutually satisfactory effort to
assure adequate water service for the Project of the Developer and the other businesses and residences
in the vicinity of this Project; and
WHEREAS, the SBMWD has recognized the need to provide for the construction of a
4,000,000 gallon above ground water reservoir (the "Cajon/Palm Water Reservoir") in the area of
Cajon Boulevard and Palm Avenue on property presently owned and improved by the SBMWD to
provide adequate water service for the potential fire flow requirements that may be necessitated by the
development of the Project pursuant to the DDA; and
WHEREAS, the Agency has agreed to enter into this Agreement with the SBMWD to assure
the continued water supply for current and future development projects within both the State College
Redevelopment Project Area and the Northwest Redevelopment Project Area of the Agency, and the
Agency seeks to encourage subsequent development projects in both of said redevelopment project
areas; and
WHEREAS, the Agency, concurrently with the execution of this Agreement with the SBMWD,
has entered into an Amendment No. 1 to the DDA with the Developer to fully implement the
commitments made by the Agency to the SBMWD pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:
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ARTICLE I
AGENCY PAYMENTS
Section 1.01. Determination of Al!encv Pavments. The Agency hereby commits to pay to
the order of the SBMWD an amount not to exceed $613,000 (the "Agency Payment"). The Agency
Payment shall be remitted by the Agency representing the final dollar amounts required to complete
the construction of the Cajon/Palm Water Reservoir after the SBMWD has expended all other funds
required to be committed by the SBMWD for the completion of the Cajon/Palm Water Reservoir in
accordance with the competitive public bid for the Cajon/Palm Water Reservoir without regard to
change orders which may increase the cost of the construction of the Cajon/Palm Water Reservoir.
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Section 1.02. Scolle of the Caion/Palm Water Reservoir. The parties recognize that the
Cajon/Palm Water Reservoir shall be designed and constructed as an above ground water reservoir
equal to 4,000,000 gallons of water storage capacity located at the present water well and water
reservoir site at the intersection of Cajon Boulevard and Palm A venue within the City. The SBMWD
commits and agrees to contribute not less than $3,400,000 of SBMWD funds, loans, assets or
subsequently issued municipal bond proceeds, which together with the Agency Payment and other
funds as shall be contributed by the SBMWD is intended to be sufficient to complete the design,
environmental review and approval, site preparation and actual construction of the Cajon/Palm Water
Reservoir. In the event the actual public bid for the construction, installation, labor and purchase of
materials and supplies for the site improvements, additional water wells, pumps and booster stations,
all ancillary facilities and equipment and the actual construction and installation costs of the
Cajon/Palm Water Reservoir (said items are collectively referred to herein as the "Public Bid Items")
are in excess $4,013,000, such additional costs for the Public Bid Items shall be paid by the SBMWD
at its sole obligation with no further payments to be made either directly or indirectly by either the
Agency or the Developer or any other customer of the SBMWD occupying a building located within
the Project identified in the DDA
Section 1.03. Time of Al!encv Pavment. Inunediately upon the receipt and opening of the
competitive public bids for the Public Bid Items, the SBMWD shall inform the Agency in writing as to
the dollar amount of the lowest responsible bid that is intended to be awarded by the SBMWD by a
date to be identified by the SBMWD in such writing to the Agency. After the award of such bid has
been made by the Board of Water Commissioners of the SBMWD to the lowest responsible bidder for
the Public Bid Items and the commencement of the construction of the Cajon/Palm Water Reservoir
has occurred, the SBMWD shall provide an invoice to the Agency at least thirty (30) calendar days
prior to the date that the SBMWD reasonably believes that the Agency Payment will be required to
complete the contract payments payable to the general contractor for the Cajon/Palm Water Reservoir
not to exceed the maximum amount of$613,000 as set forth in Section 1.01 hereof.
ARTICLE II
SBMWD OBLIGATIONS
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Section 2.01. Commitment to Pav Costs. The SBMWD hereby agrees to pay all of the
following items prior to the commencement of the construction of the Cajon/Palm Water Reservoir: all
design costs, master plan and water system evaluations and civil engineering; landscape engineering
and design; environmental processing and consultant costs for all California Environmental Quality
Act ("CEQA") and National Environmental Policy Act ("NEPA") compliance as necessary; all legal
and accounting costs; environmental mitigation assessments and implementation measures and
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including issues related to endangered species and obtaining replacement habitat; all permitting fees to
public agencies and utility companies; right-of-way acquisition costs and other land assembly costs;
utilities and utility service relocations; the costs associated with obtaining all required approvals and
permits; and all other related non-construction costs (collectively, the "Soft Costs"). Notwithstanding
the actual dollar amount of the Soft Costs to be paid by the SBMWD from funds of the SBMWD, the
contributions from the Agency and the Developer in furtherance of the CajonIPaIm Water Reservoir
shall not exceed the dollar amount of the Agency Payment as set forth in Section 1.01.
Section 2.02. Provision of Water Service. In consideration for the Agency agreeing to
provide the Agency Payment, the SBMWD hereby agrees to provide water service to all buildings and
uses, including water for landscaping and irrigation, typical domestic and industrial uses and fire
suppression, for the Project identified in the DDA regardless of the date of the completion of the
CajonlPalm Water Reservoir and with the SBMWD reserving the right to eliminate the need for the
CajonlPalm Water Reservoir in its entirety.
Section 2.03. Modifications to SBMWD Master Plan. The commitments of the Agency are
specific solely to the CajonIPaIm Water Reservoir and are not transferable by the SBMWD to any
other facility or other location except with the express written consent of the Agency and the
Developer each at their sole and absolute discretion. The SBMWD shall have the right at anytime to
modify the SBMWD Master Plan and to delete the requirement for the CajonIPaIm Water Reservoir or
to modify the SBMWD Master Plan in any other manner as deemed appropriate by the SBMWD. The
remittance of the Agency Payment shall only be applicable to the CajonIPaIm Water Reservoir as
contemplated and at the site identified by this Agreement. In the event that the SBMWD elects to
modify the SBMWD Master Plan or to delay the construction of the CajonlPalm Water Reservoir or to
eliminate the need for the CajonlPalm Water Reservoir in its entirety, and in consideration of the
Agency agreeing to provide the Agency Payment, the SBMWD shall continue to be obligated to
provide the water service to the Project of the Developer as committed in Section 2.02 hereof.
Section 2.04. Completion of CaionlPalm Water Reservoir. As of the Effective Date as
defined in Section 4.01 hereof, the SBMWD estimates that the construction of the CajonIPalm Water
Reservoir should commence during the 2008-2009 fiscal year of the SBMWD, and should be
completed within two (2) years after the commencement of on-site construction activities for the
CajonlPalm Water Reservoir. Notwithstanding the actual completion date and the ability of the
SBMWD to use the water storage capacity in the proposed CajonlPalm Water Reservoir, the SBMWD
commits to the provision of the initial and continued water service to the Project of the Developer as
set forth above in Section 2.02.
ARTICLE III
DEFAULTS
Section 3.01. Default: Notice of Default. For purposes of this Article III and the exercise and
enforcement of rights and remedies under this Agreement, the Developer as a third party beneficiary
shall be deemed to be a party to this Agreement for all purposes of this Article III. Failure or delay by
a party to perform any material term or provision of this Agreement shall constitute a default under this
Agreement; provided, however, that if the defaulting party commences to cure, correct or remedy the
default within thirty (30) calendar days after receipt of written notice specifying such default and
thereafter diligently completes such cure, correction or remedy, a breach of this Agreement shall not be
deemed to have occurred. The party claiming that a default has occurred shall give written notice of
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default to the defaulting party, specifying the default. Delay in giving such notice shall not constitute a
waiver of any default nor shall it change the time of default; provided, however, the nondefaulting
party shall have no right to exercise any remedy for a breach hereunder without delivering the written
default notice as specified herein.
Section 3.02. Failure to Cure: Remedies. In the event that the defaulting party fails to
commence to cure, correct or remedy a default within sixty (60) calendar days following written.
notice, as provided above, or thereafter fails diligently to complete such cure, correction or remedy, a
breach of this Agreement shall be deemed to have occurred. In the event of a breach, the
nondefaulting parties may (i) at their option, terminate this Agreement and/or (ii) seek any appropriate
remedy or damages available by law or in equity.
Section 3.03. No Waiver bv Failure or Delav: Cumulative Ril!hts.
(a) Any failure or delay by a party or parties in asserting any of its or their rights and remedies
as to any default shall not operate as a waiver of any default or of any rights or remedies associated
with a default.
(b) The rights and remedies of the parties set forth in this Article III are cumulative and the
exercise by any party or parties of one or more of such rights or remedies shall not preclude the
exercise by it or them, at the same or different times, of any other rights or remedies for the same
default or any other default by the defaulting party.
ARTICLE IV
GENERAL PROVISIONS
Section 4.01. Term of Al!reement. This Agreement shall be in full force and effect from the
date of execution hereof by the Agency and the SBMWD (the "Effective Date") and shall continue in
effect until terminated (i) by the mutual consent of the Agency and the SBMWD, or (ii) as otherwise
required by applicable law, or (iii) as provjded in Section 3.02, or (iv) automatically upon the date that
is ten (10) years from and after the Effective Date.
Section 4.02. Notices. All notices to be given under this Agreement shall be in writing and
shall be delivered personally, by Federal Express or other similar overnight courier or express delivery
service or by certified or registered United States Mail, return receipt requested. All notices shall be
given to the addresses of the parties as set forth herein, including the Developer and with copies as
noted herein. Unless specifically provided to the contrary in this Agreement, any notice pursuant to
this Agreement shall be effective upon delivery or refusal to accept delivery, if delivered personally,
one (1) day after deposit with Federal Express or other like overnight courier or express delivery
service, and two (2) days after mailing, if delivered by certified or registered United States Mail.
Notices to the Agency shall be sent to the following address:
Redevelopment Agency of the City of San Bernardino
201 North "E" Street, Suite 301
San Bemardino, California 92401
Attention: Interim Executive Director
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with a copy to:
Lewis, Brisbois, Bisgaard & Smith LLP
650 East Hospitality Lane, Suite 600
San Bernardino, California 92408
Attention: Timothy J. Sabo
Notices to the Board of Water Commissioners shall be sent to the following address:
if via express delivery:
if via US mail:
San Bernardino Municipal Water Department
San Bernardino City Hall
300 North "D" Street, Fifth Floor
San Bernardino, California 92418
Attention: General Manager
San Bernardino Municipal Water Department
P.O. Box 710
San Bernardino, California 92402
Attention: General Manager
City Attorney
San Bernardino City Hall
300 North "D" Street, Sixth Floor
San Bernardino, California 92418
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with a copy to:
Hillwood/San Bernardino, LLC
268 West Hospitality Lane, Suite 105
San Bernardino, California 92408
Attention: Project Manager
Each party to this Agreement, including the Developer, shall promptly notify the other parties
of any change or changes of address to which notices shall be sent pursuant to this Agreement.
Section 4.03. Entire Al!reement. This Agreement represents the sole agreernent regarding
the matters addressed herein that exist as of the date hereof with regard to the SBMWD. It is
recognized that other agreernents, including the DDA and amendments thereto, are in existence as
between the Agency and the Developer, and all of such agreements shall not affect or otherwise impact
the interpretation of this Agreement.
Section 4.04. Governinl! Law: Invalidity of Anv Provision of Aereement. This Agreement
shall be governed by the laws of the State of California. If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid or unenforceable as between the parties,
the remaining provisions will continue in full force and effect. Any court actions to enforce this
Agreement shall be filed in the San Bernardino County Superior Court, Main Branch, City of San
Bernardino.
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Section 4.05. Contlict of Interest: No Individual Liabilitv. No official or employee of the
SBMWD or the Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall
any official or employee of the SBMWD or the Agency participate in any decision relating to this
Agreement which affects such official's or employee's pecuniary interest in any corporation,
partnership or association in which such official or employee is directly or indirectly interested. No
official or employee of the SBMWD or the Agency shall be personally liable in the event of a breach
of this Agreement by the SBMWD or the Agency.
Section 4.06. Third Pam Beneficiaries. The Developer is and shall be a third party
beneficiary of this Agreement as to the rights and remedies of the Agency under Article II and Article
III of this Agreement only. Other than the right of the Developer to enforce Article II and Article III of
this Agreement, the Developer shall have no other rights or interests in this Agreement. This
Agreement shall not create any right or interest in any non-party (other than the Developer) or in any
member of the public as a third party beneficiary.
Section 4.07. Amendments. This Agreement may only be amended, changed, modified or
altered by a writing signed by both of the parties and approved by the respective governing boards
thereof with the concurrence of the Developer required solely as to those amendments, changes,
modifications or alterations as to Sections 1.02, 2.02, 2.03 and Article III with respect to matters
contained therein that would have an adverse financial effect upon the Developer.
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Section 4.08. Time of the Essence. Time is of the essence in this Agreement and the
undertaking of each and every obligation of the parties hereto.
Section 4.09. Execution of Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute one and the same
document.
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IN WITNESS WHEREOF, the parties and the Developer as the third party beneficiary hereto
have executed this Agreement as of the date provided herein as the Effective Date.
Board of Water Commissioners
BY.~ ~.f: Av\
ATTEST:
By:
(rL,:.- ~
Secretary
Redevelopment Agency
of the City of San Bernardino
By:
Chairman
ATTEST:
By:
Secretary/Assistant Secretary
Approved as to Form and Legal Content:
By:~J
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As to the Developer as the third party beneficiary pursuant to Section 4.06 of this Agreement.
DEVELOPER
HSB 1-215, L.P.,
a California limited partnership
By: HSB GP, LLC,
a California limited liability company,
Its general partner
By: HGI GP, LLC,
a Texas limited liability company,
its sole member
By: HGI Group, L.P.,
a Texas limited partnership,
its sole member
By: Hillwood Associates, L.P.,
a Texas limited partnership,
its general partner
C By:
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Title:
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EDA.WaterDeptOl.02.08 8
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SE 1-215, L.P.,
C a California limited partnership
By: HSB GP, LLC,
a California limited liability company,
Its general partner
By: HGI GP, LLC,
a Texas limited liability company, its sole member
By: HGI Group, L.P.,
a Texas limited partnership, its sole member
By: Hillwood Associates, L.P.,
a Texas limited partnership,
its general partner
c
By: Hillwood Development Company, LLC,
a Texas limited liability company,
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Name: .' . \0 ~~. L \~'-- ~>-')
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Title: 0"\ \
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EDA.WaterDeptO\.02-08 9
P,\Agendas\Agenda ArlachmenQ\Agmu-Amend 2008\02-19-08 Hillwood. Wiler Stol'aJt Capecity Payment Apeemcnt_doc