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HomeMy WebLinkAbout31-Mayor's Office CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: Mayor Tom Minor Subject: RESOLUTION APPROVING LOAN AGREEMENT WITH SBIAA AND ACKNOWLEDGING CERTAIN OBLIGATIONS PURSUANT TO JOINT POWERS AGREEMENT ESTABLISHING THE SAN BERNARDINO INTERNATIONAL AIRPORT AUTHORITY Dept: Mayor's Office Date: October 3. 1996 ORIGINAL Synopsis of Previous Council action: Recommended motion: ADOPT RESOLUTION ~1tu~ Tofu Minor, Mayor Signature Contact person: Mayor Tom Minor Phone: (909) J~/,-5' 3J Citywide Supporting data attached: Ward: FUNDING REQUIREMENTS: Amount: See attached report Source: (Acct. No.) (Acct. DescriPtion) Finance: TABLED Council Notes:, :fu /l6~ EXIt",/I,//I1h? It~ ~ Au ~ /25:3 5~c 1<e l,dUJI /1--tW7 i:/:- P5 3 /'1,/" (' ,t~, 1./,1, r: n r;.' ,-,;;.uvJ J./J u........., ---"f' <' "" ,;-.....(.-'-,. . ~' ( '(:--" r" i~ 1 t,J~')Il\.I) }'iI..J/T/ ,)-,~:~ f:&' j,-I'- , " , .J;/:? , . " Agenda Item No. :.3/ . /tJ/7/f'to STAFF REPORT The Mayor and Common Council previously approved a guaranty of the proposed indebtedness of the San Bernardino International Airport Authority ("SBIAA") in an amount not to exceed $2,000,000 representing the amount allocable to the City of San Bernardino. Actions were also taken by the Community Development Commission on September 11, 1996, to allow the Economic Development Agency ("EDA") to pay from tax increment revenues any amounts that may need to be paid by the City of San Bernardino under the guaranties as approved by the City. The SBIAA had initiated a 1inancing plan to issue $3,000,000 of short-term Notes that would have become due and payable on June 30, 1997, which Notes would have been secured by the (i) guaranties of each member of the SBIAA equal to the percentage allocable to each member based upon the six (6) Board member voting structure, and (ii) the guaranty agreement with the Note Trustee to be executed by the County and the City of San Bernardino whereby the County would have agreed to "unconditionally advance $1,000,000 and the City of San Bernardino $2,000,000. Buch payments from the county and the City ofoSan Bernardino would have been required only in the event all or any of the other members of the SBIAA failed to remit the necessary payments on or before June 30, 1997, and no other refinancing source was then available to pay off this short-term indebtedness of the SBIAA. On September 25,1996, the SBIAA agreed to invoke the provisions of the Section 11 of the Joint Powers Agreement establishing the SBIAA which requires each member to pay their proportionate share of the expenses of the SBIAA. Failure of any member to either (i) remit the necessary cash as a loan, (ii) enter into a loan agreement with the SBIAA, or (iii) adopt a guaranty resolution acceptable to the SBIAA, would commence the provisions for termination of participation in the SBIAA after three (3) months of inaction by any such member and eventual termination of their membership in the SBIAA after twelve (12) months for any such default. The proposed loan amounts from the County and the City of San Bernardino, together with the available funds of the SBIAA of approximately $250,000 and the estimated Airport revenues and lease payments of $50,000 per month, should be adequate to operate the SBIAA for the current fiscal year and to provide for the payment ofthe following: (i) anticipated operating deficits of $1,100,000 for the current fiscal year, (ii) repayments of amounts owed to the County, the City of San Bernardino and the IVDA, (iii) local matching funds for the $4,500,000 FAA grant as recently received, and (iv) local matching funds for the Airport terminal road and parking lot improvements that are nearing completion. The County has previously advanced payroll expenses of the SBIAA in an amount equal to $180,000 which amount was to have been reimbursed immediately after each payroll advance to the SBIAA employees. The City of San Bernardino will be owed approximately $188,000 upon the City submitting the final invoices for reimbursements to the federal Economic Development Administration for the terminal road and parking lot project. These federal grant funds will reimburse the City for 75% of the project costs with the remaining 25% reimbursement to be paid by the SBIAA. 1 . On October 1, 1996, the County of San Bernardino approved a loan to the SBIAA in an amount not to exceed $1,000,000. It is the recommendation that the City of San Bernardino approve a similar loan to the SBIAA in an amount not to exceed $2,000,000. The combined loans from the County and the City in the aggregate amount of $3,000,000 would be an alternative to the funding arrangement that was previously approved by the City on September 16, 1996. The previous City approval was for a unconditional10an guaranty not to exceed the $2,000,000 amount with the assumption that the SBIAA would have issued a short term note equal to the $3,000,000 amount supported by the guaranties from the City and the County. In an effort to expedite the funding process for the SBIAA, a loan agreement will be executed among the five member jurisdictions and the SBIAA whereby the County and City loan amounts will be drawn on an as needed basis as moneys are necessary for the operation and capital improvements of the SBIAA. The cities of Colton, HigWand and Loma Linda will also execute the loan agreement and will commit to loan their proportionate share of the $3,000,000 in an aggregate amount not to exceed $1,500,000 if other funding sources are not available to the SBIAA by June 30,1997. It is anticipated that the SBIAA will be able to refinance the entire indebtedness prior to the conclusion of the 1996-97 fiscal year. In the event that such refinancing is not available, then the cities of Colton, Highland and Loma Linda would be obligated on June 30, 1997 to advance their loan amount which would have the effect of paying down the County and City loan amounts to not in excess of $500,000 for the County and not in excess of$I,OOO,OOO for the City. The Commission had previously approved a funding arrangement with the City to authorize the EDA to fund any amount that may have been required to be advanced by the City pursuant to the previously proposed loan and guaranty arrangement. It is recommended that the previous Resolution of the Commission not be changed or modified at this time and that the EDA should fund the City loan draws as requested by the SBIAA. The EDA will access funds that are available under the Wells Fargo Bank line of credit which would currently accrue interest at a rate of Prime less .625% (presently, 8.25% minus .625% equals 7.625%) and the City loan to the SBIAA will earn interest at the LAIF rate plus 2% which combined rate is currently equal to 7.566%. EDA staff is presently considering the possibility of issuing additional bonds by the Comission at a tax- exempt rate for other projects. Use of the available bond proceeds from this additional issuance of bonds will enable the City and the EDA to lower the interest cost for this loan to the SBIAA even when considering the bond issuance costs. The City will thus be able to initially finance this SBIAA loan with an interim borrowing through the Wells Fargo Bank line of credit and then substitute the funding source with the interim use of the tax-exempt bond proceeds. Based upon the foregoing, staff recommends adoption of the form resolution. SBINOOOIIDOC/243tjs 10/3/96 I 100 ct 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 RESOLUTION NO. RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING A CERTAIN LOAN AGREEMENT WITH THE SAN BERNARDINO INTERNATIONAL AIRPORT AUTHORITY AND MEMBERS OF SAID AUTHORITY AND ACKNOWLEDGING CERTAIN OBLIGATIONS INCURRED BY THE CITY OF SAN BERNARDINO PURSUANT TO A JOINT POWERS AGREEMENT ESTABLISHING THE SAN BERNARDINO INTERNATIONAL AIRPORT AUTHORITY WHEREAS, the City of San Bernardino (the "City") together with the County of San Bernardino and the Cities of Colton, Lorna Linda and Highland (collectively, the "Members") and the City of Redlands have adopted a certain Joint Exercise of Powers Agreement, as amended, dated as of May 20, 1992 (the "JPA Agreement"), creating the San Bernardino International Airport Authority ("SBIAA"); and WHEREAS, the City of Redlands by official action of the 20 City Council of the City of Redlands has determined to 21 22 23 24 25 26 27 28 voluntarily resign from the membership of the SBIAA; and WHEREAS, the SBIAA has received the conveyance of the airport portions of the former Norton Air Force Base (the "SBD Airport") from the United States Air Force and is presently operating the aviation facilities thereon as a general aviation airport; and 1 3//f 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WHEREAS, the SBIAA requires additional funds at this time for the purposes of: (i) undertaking public improvement projects to gain better vehicular access to the SBD Airport, (ii) upgrading the aviation facilities located on the SBD Airport by contributing local match funds together with federal grant funds, and (iii) paying the operating deficits created by the ongoing operations of the SBD Airport and the payment of the necessary administrative expenses of the SBIAA; and WHEREAS, Section 11 of the JPA Agreement requires each of the Members to pay their proportionate share of the operating deficits and other debt of the SBIAA as may be assessed by the SBIAA to the respective Members; and WHEREAS, it has become necessary for the SBIAA to obtain funds by obtaining a loan from the Members by way of a Loan Agreement for the funding of the ongoing capital improvement budget and the operating deficits of the SBIAA for the 1996-97 fiscal year of the SBIAA for which the financial commitments of all the Members to extend loans to the SBIAA will be required; and 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WHEREAS, the City has been requested by the SBIAA to adopt this Resolution pursuant to the provisions of Section 11 of the JPA Agreement and to thereby commit to the extension of the San Bernardino Loan, as defined in the Loan Agreement; and WHEREAS, the City of San Bernardino currently has two (2) of the six (6) votes on the Board of the SBIAA since the date of the voluntary resignation by the City of Redlands from the voting membership of the SBIAA, and each of the other Members of the SBIAA, including the County of San Bernardino and the Cities of Colton, Highland and Lorna Linda shall each have one (1) of the total of six (6) votes on the Board of the SBIAA. NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The City hereby finds and determines that the above set forth recitals are true and correct in all respects. Section 2. The City hereby approves the execution by the City of the Loan Agreement substantially in the form as 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 attached hereto, whereby the SBIAA will incur indebtedness in the principal amount not to exceed $3,000,000. The City acknowledges the existence of the obligations of the City to be incurred pursuant to Section 11 of the JPA Agreement establishing the SBIAA and consents to all terms, conditions and provisions thereof. Section 3. The City by the adoption of this Resolution does hereby incur the general fund obligation to loan to the SBIAA, under the terms of the Loan Agreement, a portion of the principal amount to be borrowed by the SBIAA in an amount not to exceed $2,000,000, to be drawn as needed by the SBIAA and in accordance with the terms of the Loan Agreement, concurrently with draws from the County Loan as defined in the Loan Agreement, with two-thirds of each draw to be funded by the City and one- third by the County. The City agrees that in the event the City should fail to extend the required loan amounts to the SBIAA as required by the Loan Agreement on or before June 30, 1997, representing a proportionate amount of the SBIAA financing attributable to the City, this Resolution shall constitute an amendment to the JPA Agreement establishing the SBIAA as referenced in the recitals 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 hereof and shall have the effect of automatically expelling the City from the membership of the SBIAA as of June 30, 1997, without any further action being required by either the City or any other member jurisdiction of the SBIAA. The City agrees and represents to the Members that in the event of such automatic expulsion from the membership of the SBIAA, the City shall execute such documents as may reasonably be requested by any trustee or lender in connection with any subsequent financing or by the SBIAA to evidence such expulsion from the membership of the SBIAA, including, but not limited to, any formal amendment document or certificate of amendment to the JPA Agreement. Upon any such automatic expulsion of the City from the membership of the SBIAA as of June 30, 1997, the City acknowledges and agrees that the City shall remain liable to the SBIAA and its remaining Members for a principal amount not to exceed $1,000,000, plus accrued and unpaid interest with respect to the principal amount thereof. Section 4. The City agrees that in the event one or more current Members of the SBIAA should fail to extend the required loan amounts applicable to said Member or Members as provided in the Loan Agreement, that portion allocable to any 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 such defaulting Member or Members of the SBIAA may be assumed by the City, but the City shall not be required to so assume nor will the City be compelled to assume such allocable portion attributable to a defaulting Member or Members. Such allocable portion of obligated Member or Members may be assumed either in whole or in cooperation with one (1) or more nondefaulting Member or Members. Under such voluntary assumption by the City of the allocable portions of a defaulting Member or Members the amount of the loan to the SBIAA for which the City shall be responsible will be increased by a proportionate amount as required to reallocate the delinquent amounts not loaned by a defaulting Member or defaulting Members. The City further acknowledges and agrees that in the event all other Members should default in their respective obligations to pay all amounts when due, either pursuant to the terms of the Loan Agreement or with respect to the other debts, obligations and administrative and operating expenses of the SBIAA, the City may assume, but shall not be required to assume nor will the City be compelled to assume, either separately or in cooperation with one (1) or more nondefaulting Member or Members, the total principal amount of the loan obligation, and all debts, obligations and administrative and operating expenses incurred by the SBIAA whether such has become due and payable either at the time of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 adoption of this Resolution or at a latter date if payment is required pursuant to the JPA Agreement. Section 5. The findings and determinations herein shall be final and conclusive. This Resolution shall be effective from and after the date of its adoption and shall be non-repealable prior to the time the City has advanced to the SBIAA all of the principal which it is obligated to loan under the term of the Loan Agreement. III III III III III III III 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING A CERTAIN LOAN AGREEMENT WITH THE SAN BERNARDINO INTERNATIONAL AIRPORT AUTHORITY AND MEMBERS OF SAID AUTHORITY AND ACKNOWLEDGING CERTAIN OBLIGATIONS INCURRED BY THE CITY OF SAN BERNARDINO PURSUANT TO A JOINT POWERS AGREEMENT ESTABLISHING THE SAN BERNARDINO INTERNATIONAL AIRPORT AUTHORITY Section 6. The findings and determinations herein shall be final and conclusive. 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 day of thereof, held on the 1996, by the following vote, to wit: ~ ~ ABSTAIN ABSENT Council Members: NEGRETE CURLIN ARIAS OBERHELMAN DEVLIN ANDERSON MILLER The foregoing day of resolution is , 1996. City Clerk hereby approved this Mayor of the City of San Bernardino Approved as to form and legal content: City Attorney By: SBIA\OOOl\DOC\241 8 SBIA\0001\DOC\24o 10\3 \96 8: 40 as LOAN AGREEMENT THIS LOAN AGREEMENT is made and entered into as of 1996, by and among the SAN BERNARDINO INTERNATIONAL AIRPORT AUTHORITY, a joint powers authority organized and existing under the laws of the State of California (the "Authority"), THE COUNTY OF SAN BERNARDINO (the "County"), THE CITY OF SAN BERNARDINO ("San Bernardino"), THE CITY OF HIGHLAND ("Highland"), THE CITY OF COLTON ("Colton") and THE CITY OF LOMA LINDA ("Lorna Linda"). The County, San Bernardino, Highland, Colton and Lorna Linda are all public bodies, corporate and politic, duly existing under the laws of the State of California, and shall be collectively referred to herein as the "Lenders". WIT N E SSE T H: WHEREAS, the Authority is a joint powers authority, duly established and authorized to transact business and exercise powers under and pursuant to a Joint Exercise of Powers Agreement, as amended (the "Joint Powers Agreement") by and among the County, San Bernardino, Highland, Colton, Lorna Linda and the City of Redlands ("Redlands"); and WHEREAS, Redlands has voluntarily withdrawn as a member of the Authority; and WHEREAS, the Authority was established for the purposes of acquiring, operating, repairing, maintaining and administrating the aviation portions of the former Norton Air Force Base, now known as the San Bernardino International Airport (the "Airport"); and WHEREAS, the Authority has the powers set forth in the Joint Powers Agreement and as provided in the Joint Powers Act, Chapter 5, Division 7, Title 2 of the Government Code of the State of California; and - 1 - WHEREAS, the Authority desires to borrow money for the purpose of paying certain operating costs and other expenses of the Authority; and WHEREAS, the Lenders individually possess the legal ability and authority to loan funds to the Authority for the purposes specified above (the "Loans") and desire to do so; and WHEREAS, in order to establish and declare the terms and conditions upon which the Loans are to be made, the Authority and the Lenders desire to enter into this Loan Agreement; and WHEREAS, all acts and proceedings required by law necessary to make this Loan Agreement, when executed by the Authority and the Lenders, the valid, binding and legal obligation of the Authority and each of the Lenders, and to constitute this Loan Agreement as a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Loan Agreement have been in all respects duly authorized by the respective parties. NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto do hereby agree as follows: - 2 - ARTICLE I Definitions Section 1.01. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms in this Loan Agreement shall have the respective meanings as defined in this Section 1.01, for all purposes of this Loan Agreement. "Certificate of the Authority" means a certificate in writing signed by the President, vice President, Airport Director, Treasurer or Secretary of the Authority or by any other officer of the Authority duly authorized by the Authority in writing for that purpose. "LAIF" means the Local Agency Investment Fund. "Loan Agreement" means this Loan Agreement by and among the Authority and the Lenders, as originally entered into or as amended or supplemented pursuant to the provisions hereof. "Request of the Authority" means a request in writing signed by the President, Vice-President, Airport Director, Treasurer or Secretary of the Authority or by any other officer of the Authority duly authorized by the Authority for that purpose. Section 1.02. Rules of Construction. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Loan Agreement, and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Loan Agreement as a whole and not to any particular Article, Section or subdivision hereof. ARTICLE II Agreements to Extend Loans Section 2.01. Count v Loan. The County hereby agrees to loan the Authority (the "County Loan") a sum not to exceed One Million Dollars ($1,000,000). The County Loan will be made on the terms set forth in Section 2.06 hereof. - 3 - Section 2.02. San Bernardino Loan. San Bernardino hereby agrees to loan the Authority (the "San Bernardino Loan") a sum not to exceed Two Million Dollars ($2,000,000). The San Bernardino Loan will be made on the terms set forth in Section 2.06 hereof. Section 2.03. Hiahland Loan. Highland hereby agrees to loan the Authority a sum not to exceed Five.Hundred Thousand Dollars ($500,000), which loan (the "Highland Loan") will be made on the terms set forth in Section 2.07 hereof. Section 2.04. Colton Loan. Colton hereby agrees to loan the Authority a sum not to exceed Five Hundred Thousand Dollars ($500,000), which loan (the "Colton Loan") will be made on the terms set forth in Section 2.07 hereof. Section 2.05. Lorna Linda Loan. Lorna agrees to loan the Authority a s~m not to exceed Thousand Dollars ($500,000), which loan (the "Lorna will be made on the terms set forth in Section 2.07 Linda hereby Five Hundred Linda Loan") hereof. Section 2.06. Terms ADDlicable to Bernardino Loans. The terms on which the County Bernardino Loan will be made are as follows: Countv and San Loan and the San a. The Authority may draw upon the County Loan and the San Bernardino Loan from time to time in such principal amounts as requested in a Request of the Authority, so long as the total principal drawn under the County Loan does not exceed $1,000,000, and the total principal drawn under the San Bernardino Loan does not exceed $2,000,000, providing that, at each time the Authority seeks to draw upon said loans, the Authority has available to it cash on hand (exclusive of the Highland, Colton and Lorna Linda Loans) in an amount equal to or less than One Hundred Thousand Dollars ($100,000). b. Any draws under this Section 2.06 will be made by way of a Request of the Authority specifying the amount of the draw requested, and shall be accompanied by a Certificate of the Authority certifying that the Authority, as of the date of the Certificate, has available to it funds in an amount equal to or less than $100,000. The Authority shall not make more than two (2) draws under this Section 2.06 in any calendar month. Each Request - 4 - of the Authority under this Section 2.06 shall be made concurrently to the County and San Bernardino, and shall request one-third of the sums specified in said Request of the Authority from the County and two-thirds from San Bernardino. The County and San Bernardino will each have three (3) business days after the receipt by it of a Request of the Authority seeking each draw, together with the required Certificate of the Authority, within which to pay to the Authority the amount of the draw requested from it. c. The principal amount of said loans will bear simple annual interest at the rate of two (2) points over the LAIF rate in effect at the time each principal amount is received by the Authority, with said rate being adjusted from time to time as the LAIF rate changes so as to always be two (2) points over the LAIF rate, with interest accruing on all unpaid principal from the date said principal is received by the Authority until all of said principal is paid in full. d. Except as provided in subsection e. below, all of the principal of the loans made under this Section 2.06, together with all accrued interest thereon, shall be paid in full in a single payment due on or before June 30, 1997. e. In the event the loans provided for in Section 2.07 hereof are required to be made to the Authority on June 30, 1997, the County Loan shall thereupon be repaid from the proceeds of such loans on a proportionate basis by an amount to produce a principal balance not in excess of $500,000, and the San Bernardino Loan shall be repaid by an amount to produce a principal balance not in excess of $1,000,000. The then outstanding principal balances of the County Loan and the San Bernardino Loan shall be repaid, together with interest thereon, when and to the extent financially possible from the available revenues and other funding sources of the Authority. Lorna Loan Section 2.07. Linda Loans. The and Lorna Linda Loan Terms Apolicable to Hicrhland. Colton and terms on which the Highland Loan, Colton will be made are as follows: a. Said loans will be made only upon service on Highland, Colton and Lorna Linda of a Request of the Authority, specifying the total amount of the loan requested by the Authority (the "Total Loan Request"). The Authority may serve more than one - 5 - Request of the Authority but the total principal amount sought from Highland, Colton and Lorna Linda, from all of the Requests of the Authority may not exceed the sum of One Million Five Hundred Thousand Dollars ($1,500,000). Any Request of the Authority under this Section 2.07 must be made to Highland, Colton and Lorna Linda concurrently, and must request from each city one-third of the total principal amount indicated in said Request of the Authority. No Request of the Authority under this Section 2.07 may be served prior to June 30, 1997. b. Any principal advanced by Highland, Colton and Lorna Linda under the provisions of this Section 2.07 will bear simple annual interest at the rate of two (2) points over the LAIF rate in effect on the date which said principal is received by the Authority, with said rate being adjusted from time to time as the LAIF rate changes so as to always be two (2) points over the LAIF rate, with interest accruing on all unpaid principal from the date on which any portion of the principal under this Section 2.07 is received by the Authority until all of said principal has been paid in full. c. The Authority shall repay the principal and interest of the loans made under this Section 2.07 when and to the extent financially possible from the available revenues and other funding sources of the Authority. Section 2.08. Subordination of IVDA Loans. The Authority represents that it will consider the Loans made by the Lenders under the provisions of this Loan Agreement to be superior to the various loans previously extended to it by the Inland Valley Development Agency (the "IVDA") pursuant to written loan agreements, as amended, and that it will consider said IVDA loans to be subordinate to the Loans made hereunder. - 6 - ARTICLE III Default provisions Section 3.01. Default As to Highland Loan. Colton Loan or Lorna Linda Loan. In the event that Highland, Colton or Lorna Linda fail or refuse to make the loans provided for in this Loan Agreement as and when called for herein on June 30, 1997, then the city or cities so failing shall be in default of this Loan Agreement, providing only that the defaulting city or cities first receive written notice, given in accordance with Section 4.09 hereof, specifying the nature of the default. If a default is established under the provisions of this Section 3.01, the defaulting city or cities shall be immediately terminated from membership and participation in the Authority upon receipt of such notice of default and otherwise as provided in Section 11 of the Joint Powers Agreement, as applicable. Any such defaulting city or cities shall continue to remain liable hereunder to remit to the Authority the full principal amount of their respective loans pursuant to this Loan Agreement. Section 3.02. Default As to Count v Loan or San Bernardino Loan. In the event that the County or San Bernardino has advanced principal amounts totaling less than $500,000 in the case of the County or $1,000,000 in the case of San Bernardino, on or before June 30, 1997, then the County or San Bernardino, as applicable, shall be in default of this Loan Agreement, providing only that it first receive written notice, given in accordance with Section 4.09 hereof, specifying the nature of the default. If a default is established under the provisions of this Section 3.02, the defaulting party shall be immediately terminated from the membership and participation in the Authority upon receipt of such notice of default and otherwise as provided in Section 11 of the Joint Powers Agreement, as applicable. The defaulting party shall continue to remain liable hereunder to remit to the Authority a principal amount not to exceed $500,000 in the case of the County, or $1,000,000 in the case of San Bernardino. The County or San Bernardino will not be considered in default of this Loan Agreement for any refusal or failure to extend loan draws if it has previously extended such draws in a principal amount of not less than $500,000 in the case of the County, or $1,000,000 in the case of San Bernardino. - 7 - ARTICLE IV Miscellaneous Provisions Section 4.01. Ootional Preoavrnent. The Authority has the right to prepay any portion of the various loans made under the provisions of this Loan Agreement without penalty at any time and from time to time on a proportionate basis to the Lenders in proportion to the principal amount of the advances then outstanding with respect to each Lender. Any payments made by the Authority shall be credited first to unpaid interest in proportion to the interest then owed to each Lender, and then to unpaid principal in proportion to the principal then owed to each Lender. Section 4.02. Books and Accounts: Financial Statement. The Authority will keep, or cause to be kept, proper books of record and accounts, in which complete and correct entries shall be made of all transactions relating to the loans made under this Loan Agreement. Such books of record and accounts shall at all times during business hours be subject, upon prior written request, to the reasonable inspection of the Lenders or their representatives authorized in writing. Section 4.03. Further Assurances. The Authority and the Lenders, and each of them, will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Loan Agreement. Section 4.04. Benefits Limited to Parties. Nothing in this Loan Agreement, expressed or implied, is intended to give to any person other than the Authority and the Lenders, any right, remedy or claim under or by reason of this Loan Agreement. Section 4.05. No Aareement. this Loan Agreement may assign or transfer created by this Loan Agreement without the of all of the other parties. None of the parties to any right or obligation express written consent Section 4.06. Amendment. amended by the parties hereto but approval of all parties hereto, governing body of each party. This only in and the Loan Agreement may be writing and with the authorization of the - 8 - Section 4.07. Waiver of Personal Liability. No member, officer, agent or employee of the Authority or the Lenders shall be individually or personally liable for the payment of the principal of or interest provided for in this Loan Agreement, but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law. Section 4.08. Pavrnent on Business Davs. Whenever in this Loan Agreement any amount is required to be paid on a day which is not a business day, such payment shall be required to be made on the business day immediately following such day. Section 4.09. Notices. All written notices to be given under this Loan Agreement shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective 48 hours after deposit in the United States mail, postage prepaid or, or in the case of personal delivery to any person, upon actual receipt at the address set forth below: If to the Authority: San Bernardino International Airport Authority 294 S. Leland Norton Way San Bernardino, CA 92408 Attn: Airport Director If to the County: County of San Bernardino 385 North Arrowhead Avenue San Bernardino, CA 92415 Attn: County Administrative Officer If to the City of San Bernardino: City of San Bernardino 300 North "D" Street, Sixth Floor San Bernardino, CA 92418 Attn: City Administrator If to the City of Colton: City of Colton 650 North La Cadena Drive Colton, CA 92324 Attn: City Manager - 9 - If to the City of Highland: City of Highland 26985 Base Line Highland, Ca 92346 Attn: City Manager If to the City of Lorna Linda: City of Lorna Linda 25541 Barton Road Lorna Linda, CA 92354 Attn: City Manager Section 4.10. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Loan Agreement shall for any reason be held illegal, invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this Loan Agreement. Section 4.11. Governina Law. shall be construed and governed in accordance State of California. This Loan Agreement with the laws of the Section 4.12. be executed in one or constitute an original. Counter~arts. This Loan Agreement may more counterparts, each of which shall Section 4.13. paritv of Loans. Each loan made by the Lenders under this Loan Agreement shall be deemed to have equal dignity and priority with the other loans made hereunder, and no Loan, plus interest thereon, made by any Lender shall have any priority or superior payment position over any other Loan made by the other Lenders pursuant to this Loan Agreement, except as may result from Section 2.06.e. In the event the Loans required by the provisions of this Loan Agreement to be repaid on or before June 30, 1997, are not so paid, and the additional Loans pursuant to the provisions of Section 2.07 are required to be made to the Authority, then commencing on July 1, 1997, and thereafter the provisions of Section 11 of the Joint Powers Agreement shall determine the principal amounts required to be loaned by the Lenders to the Authority for the continued funding of the operations and capital requirements of the Authority. - 10 - IN WITNESS WHEREOF, the San Bernardino International Airport Authority, the County of San Bernardino, the City of San Bernardino, the City of Highland, the City of Colton and the City of Lorna Linda have caused this Loan Agreement to be signed by their respective officers, all as of the day and year first above written. SAN BERNARDINO INTERNATIONAL AIRPORT AUTHORITY By: Name: Title: ATTEST: By: Secretary APPROVED AS TO FORM: By: Authority Counsel - 11 - COUNTY OF SAN BERNARDINO By: Name: Title: ATTEST: By: APPROVED AS TO FORM: By: County Counsel - 12 - CITY OF SAN BERNARDINO By: Name: Title: ATTEST: By: City Clerk APPROVED AS TO FORM: By: City Attorney - 13 - CITY OF HIGHLAND By: Name: Title: ATTEST: By: City Clerk APPROVED AS TO FORM: By: City Attorney - 14 - CITY OF COLTON By: Name: Title: ATTEST: By: City Clerk APPROVED AS TO FORM: By: City Attorney - 15 - ATTEST: By: City Clerk APPROVED AS TO FORM: By: City Attorney CITY OF LOMA LINDA By: Name: Title: - 16 -