HomeMy WebLinkAboutRS01-Redevelopment Agency
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REDEVELOPMENT AGENCY.RI!QUI!ST FOR COMMISSION/COUNCL ACTION
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Glenda Saul, Ezecutive Director
Subject: OWNER PARTICIPATION AGREEMENT -
HAAGEN/GOLDING - TR.I CITY
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Dept:
Redevelopment Agency
Date: July 3, 1986
Synopsis of Previous Commission/Counc:i1 ection:
7-7-86
Approval in concept of Owner Participation Agreement
Recommended motion:
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(COMMUNITY DEVELOPMENT COMMISSION)
ADOPT RESOLUTION AUTHORIZING CHAIRMAN AND SECRETARY TO EXECUTE AN OWNER PARTICIPATION
AGREEMENT WITH ALEXANDER HAAGEN DEVELOPMENT AND DOUG GOLDING, TR.I CITY PROJECT AREA.
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Signature
Contect person:
G1f1!nda Saul
Phone: 383-5081
Supporting date attached:
YES
Ward: 1
FUNDING REQUIREMENTS:
Amount: $
700,000
Project: TC
No edverse Impect on City:
Ceil Notes:
Date: T1111 ".1 1QRf\
A___....I_ I~__ "1_
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iCITOOF SAN BERNARDI~ - REQUE~ FOR COUNCIL ACT~N
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75.0264
STAFF REPORT
Staff and Redevelopment Committee have met several times with Alexander Haagen
Development and Mr. Doug Golding for the development of a l67,000 SF retail
complex in the southeasterly portion of the Tri City project. The developer has a
signed 19 year lease for the Inland Empire area with Pace Warehouse (a Price
Club-type retail outlet). They would like to place this facility on their Tri
City site (100,000 SF). The developer is also negotiating with another retail
user for an additional 60,000 structure. Developer is seeking Agency assistance.
Analysis by Keyser Marston indicates that a typical warehouse project of this type
would not require Agency assistance. However, City and Agency staff recommend
that landscaping and improvements be of an upscale nature to conform with the
surrounding development. This requirement will, of course, increase the cost of
site improvements for the project. Please notice page 3 of the analysis wherein
it is indicated that the upscale on site costs would create a $400,000 gap.
Below is a recap in concept of the Owner Participation Agreement proposed.
Location: 12 acre site - South of Harriman Place, east of Gage Canal, north of
Interstate lO.
Developer Obligations
. Construct l67,000 SF of retail usage on a l2 acre site.
. Commence November, 1986.
. Complete March, 1987.
. Estimated Value of Development - $12,450,000.
. Projected yearly sales tax to the City -- $l,OOO,OOO (within 3 years).
($lOO,OOO,OOO estimate yearly sales).
. Projected Gross Tax Increment
$l24,000 per year.
. Projected Jobs Created - 330
Agency Obligation
. Reimburse developer $420,000 from net tax increments to be derived from
subject development. Yearly payments to be approximately $70,000 for
six years. After six years, as a bonus for providing the financial
benefits of the project as well as the newly created jobs, it is
proposed that rebate tax increment equivalent to lO% of sales tax income
generated each year to the City for four years be provided. Said bonus,
however, will not exceed $70,000 per year. Staff feels that this
incentive will act as a motivation to locate in the city and maintain a
projected work force of about 330 employees.
1195G/SL
07/07186
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75-02"
STAFF REPORT
Other Estimated Benefits
City Fees
(7% Rule of Thumb)
$700,000
Utility Ta:
(.045 per SF per month)
$ 90,000
Staff and Redevelopment Committee recommend approval.
One Time
Yearly
1195G/SL
07/07/86
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Richard L Bolli
c.Mn E. HoIJis,II
KeygrMarstonAssociatesInc.
SSO South Hill S....t. Suit. 9flO
Loo An,el... c.womia 9OOl3
2131622-8095
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SAN D1EOO6t9'9C:HI3IO
Heinz A. Sc:hiJJin,
S4N 1'Il4NC1SCO 4t51.l!1l1.J050
Timothy C. Kelly
A.Jmy Keyser
Michael Manton
Kat. Earle Funk
Roben J. \\Ctmore
Michael CanJon
July 15, 1986
Ms. Glenda Saul
Executive Pirector
San Bernardino aedevelopment Agency
300 North .p. Street
Room 320
San Bernardino, California 92418
~ Pear Ms. Saul:
In accordance with your request, Keyser Marston As.ociates, Inc.
(KMA) has reviewed the economics of the proposed 167,000 square
foot retail center at the Tri City project to be anchored by a Pace
Piacount store to determine whether the developer requires Agency
asaistance to make this project economically viable. To ascertain
what level of assistance ia required, if any, KMA prepared an es-
timate of the project's expected costs and revenues, which were
used in the determination of thecdeveloper's return on investment
from the development of the proposed project.
Development Costs
Keyser Marston has prepared an estimate of the development costs
for the proposed 167,000 square foot retail center. The direct
costs estimate includes an allowance of $2.00 per square foot for
surface parking and landscaping improvements, in addition to the
$6.50 per square foot land acquisition cost. The shell cost es-
timates vary by the nature of the use proposed. The Pace discount
atore, at 100,000 square feet, is essentially a warehouse facility
modified with air conditioning and special lighting to allow for
retail use. Additionally, a $5.00 per square foot allowance has
been provided for fixturization of the facility. As auch, typical
warehouse costs of $14 to $16 per square foot have been supple-
mented with the additional costs required to upgrade the facility,
reSUlting in estimated direct costs of $25 per square foot. The
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"So Glenda Saul
July 15, 1986
Page 2
other major tenant, a 60,000 square foot sporting goods store, will
consist of more traditional retail construction, with no fixturiza_
tion provided by the developer, at estimat.d Coats of $28 per
square foot. The center also includes 7,000 square feet of shop
space which can be constructed at an above average quality level
for $35 p.r square foot. The total direct costs are estimated at
approxi.ately $5.5 million as shown in Table 1. The indirect costs
include an allowance for arChit.cture, engineering permits and
f.esl l.gal, cloSing, tax.a and in.urance, development management;
and a contingency allowance. Each of the.e cost items have been
calculated as a perc.ntage of direct costs. Additionally, the in-
direct costs include financing fees incurred during construction
and leasing f.... The total indirect cOsts are esUmated at over
$1.84, which results in total development costs inClUding land of
approximately $10.94 million.
:Income
Table 2 presents the income prOjection for tbe proposed retail
center. As can be aeen in Table 2, tbe Pace DiSCOunt store rental
rate has been .stimated at $9.00 per square foot by tbe developer,
wbich could be considered at the upper-end of the market. The
Sports Club rent i. estimated at $7.00 per square foot, and the
shop .pace is at $15.00 per square foot, Both of tbese rent levels
represent market rate transactions. The gross effective income,
after a 5' vacancy and bad debt allowance on tbe ahop .pace, is es-
ti.ated at $1.42 million.
The gross effective income has been reduced by operating expenses
which inClUde, 1) a 3' managemen!: fee on the major tenant .pace, 21
a 5' management f.e on the .bop apace, 3) common area lIaintenance
expenses of $3 p.r square foot on vacant space, and 4) replacement
reserves of $.15 per square foot of bUilding area. Tbis results in
net operating income of approximately $1.35 million. Tbis income
must be further reduced by $80,000 annually to pay the assessment
district fee levied against the land for Off-Site improvements.
This results in net income before debt .ervice of approximately
U.2U million.
Developer Return
In order to determine wbetber Agency assistance is r.quired to make
the proposed project financially feasible, the expected developer
return has been calculated on two bases as sbown in Table 3, The
first method ia the return on total investment, which assumes that
the developer will maintain long-term ownership in the project. As
Can be seen in Table 3, the return on total investment upon stabi-
lization i. 11.6'. At today'. mortgage rates in the 10' to 10.5'
range, and aa.uming standard coverage ratios, this rate of return
~'serMarstonAssociatesJnc.
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"s. Glenda Saul
July 15, 1986
Page 3
on total inveatment reflects a return on developer's equity of
nearly 20'. The second method of determining the developer return
assumes thst tbe developer sells the project upon completion of
construction. The total value of the project is estimated on the
basis of net income before debt aervice capitalized at the rate
found for similar projecta in the market area. Given the strength
of the anchor tenants and the minimal level of ahop space incor-
porated into tbe center, a 9.5' capitalization rate has been
applied. Aaauming net income before debt service of $1.269
million, the completed project bas a total value of approximately
$13.4 million. This value must be reduced by the development costs
and the costa of sale, which results in a developer profit of $2.0
million or 15.1' of the estimated project value.
Conclusion
The expected developer return for the proposed project under the
assumptions outlined above indicates that no Agency assistance is
required in order to .ade the project financially feasible. The
return on total investment at 11.6' represents an adequate return
to cover debt service as well as to prOVide a aatisfactory return
on tbe developer's equity investment. The return to the developer
assuming a sale upon completion of the project is also adequate, at
15.1', to justify the risks inherent in the development of a
project such aa the proposed.
It should be noted, bowever, that the developer's current proposal
includes a greater than typical level of on-aite costs at $3.00 per
square foot. These costs are indicative of the landscaping quality
found in other of the developer's projecta, but are in excess of
the quality level typically found in retail centers of this type.
The typical site work and landscaping costs for utail centers of ~_
this type, fall within the range of $1.50 to $2.00 per aquare foot _
and if tbe City chooses to require an above average level of
landscaping, it is probable that these costs will exceed the $2.00
per square foot allowance provided in the lMA analysis of the
project economics. The results of our analysis indicate, however,
that the developer can afford to expend upwards of $2.50 per square
foot on-site work and landscaping while still maintaining an
adequate return on investment. At costa above this level, it is
likely that the developer will require some financial asaistance.
In our opinion, the proposed project with typical on site costs
does not require any Agency assistance in order to achieve finan-
cial feasibility. Bowever, in the event direct third party costs
related to landscaping and site work, as verified by actual Jk
receipts, are in excess of $2.50 per square foot, there is jus-
tification for Agency assistance to the project. lor .~am~~~: as-
aumina ~he dir.et on-ait.. cost. total '3.00 ~er .ouare f___~ the
warranted level of financial assistance is approximately $400,000. ,
K~ysert\1arstonAssociateslnc .
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HI. Glenda Saul
July 15, 1986
Page ..
We look forward to reviewing our findings with you at your earliest
convenience.
Yourl very truly,
... ...~.OCI.....
Richard L. Botti
INC.
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Kathleen B. Bead
RLB:KBB/gbd
86181.SNB
K~yserr.1arstonAssociatesl nc.
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:rut, 11, 1986
TAlLE I
ESTINTED JEYELOPIIUT COSTS
'ACE SHOPPING CENTER
SAN BERNARDINO, CALIFORNIA
UNO 549,292 SF 16.50 /SF 13,571l,OOO
lIRECT COSTS
_-SITES 549,292 SF 12.00 /SF 11,099,000
SllEU
'ACE 100,000 SF 125,oo/SF 2,500,000
SPORTS ClUB 60,000 SF 128.oo/SF 1,680,000
SHOPS 7,000 SF 135.00 /SF 2.5,000
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TOTAl llRECT COSTS 15,52.,000
~IRECT
. CH,ENG,PEIIIITS I FEES 6.00% DIRECT COSTS 1331.000
JNTEREST lURING CONSTRUCTION
UNO 357,000
IUILDING COSTS 311,000
F1IWlCING FEES 0.035 POINTS 2.2,000
LEGAL/ClOSING 0.50% DIRECT COSTS 28,000
KARKETING AND PIOKOTION AlLOIlANCE 25,000
. LEASING FEES AllONANCE 21& ,000
TAXES/INSURANCE 1.00% DIRECT COSTS 55,000
IEYELOPIIENT IlANAGEIlENT 2.00% DIRECT COSTS 110,000 ,
COIfIING[NCY 3.00% DIRECT COSTS 166,000
TOTAl INDIRECT COSTS 11,8'1,000
TOTAl DEYElOPIlENT COSTS 110,935,000
OR SAY
110,9.D,OOO
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-JIll 11, 1986
TAlLE 2 .
OllIlA TED IIET IIlCOIIE
PAtE SHOPPJ", CEIITER
SAN IEINARDJNO, CAlIFORNIA .
IIICOIIE
PACE
SPORTS ClUB
IIOPS .
IIOSS IHCOIIE
(LESS) VACANCY I COlLECYJOH
.ROSS EmCYJYE MOllE
IPERATING EXPENSES
IWIAGEllENT
~~~~HSE
IESEIYES
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1110,000 SF
60,000 SF
7,000 SF
1'-00 ISF
17.00 ISF
115.00 ISF
5.002 SIIOP IIlCOIIE
3.001 GROSS IHCOKE RAJOR TENANTS
5.00% GROSS JNCOKE SIlOP TENANTS
350 SF 13.00 ISF
ALLONANCE
TOTAL DPENSES
lET OPERATING IHCOIlE
(LESS) ASSESSKEHT DISTRICT PA\')tE1IT .
lET OPERATING I~. AnElASSESSKENJ DISt PAMIIT
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1900,000
420,000
J05,OOO
11,.25,000
5,000
'1,420,000
"0,000
5,000
J,OOO
25,000
171,000
'l,in,ooo
ID,OOO
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'1,269,000
'1,269,000
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MY 11, 1986
TAlLE 3
ESUlIA TED IEVElOPER RETURN
'ACE SNOPPIIIIi CENTER
SAN IEIllARDINO, CALIFORNIA
mURN ON TOTAL JIIY[STII[NT--
lET JIICOIIf IEFORE JElT $ElVlCE
TOTAL IEYELOPllENT COSTS I11tlUDIN6 lAND
IETURN ON TOTAL INVESTIlENT
SAlE UPON COIlPLETlON-
OIET JIlCOIIE IEFORE DEll SERVICE
CAPITALIZED VALUE '.501
(LESS) IEVElOPIlENT COSTS JIlCUlDIII6 LAND
(lESS) COST OF SALI 3.001 SAlES 'RICE
1EVEL0PER'S PlOFJT
PIOFlT AS I OF IEVElOPl\[NT COSTS
PlOFIT AS I OF SALIS 'UCE
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$1.269,000
110,"0,000
11.601
11,269.000
13,358,000
10,"0.000
401,000 .
12.017,000
18.441
15.101
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RESOLUTION NO.
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
CITY OF SAN BERNARDINO AUTHORIZING AND DIRECTING THE EXECUTION OF
A PROPERTY OWNER'S PARTICIPATION AGREEMENT BETWEEN THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND ALEXANDER
HAAGEN DEVELOPMENT (TRI-CITY PROJECT AREA).
BE IT RESOLVED BY THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO AS FOLLOWS:
SECTION 1. The Chairman and Secretary of the Community
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Development Commission of the City of San Bernardino are hereby
authorized and directed to execute for and on behalf of the
Redevelopment Agency of the City of San Bernardino a Property
Owner's Participation Agreement between the Redevelopment Agency
of the City of San Bernardino and Alexander Haagen Development,
with such non-substantive changes to said Agreement as may be
approved by the Chairman and Agency Counsel. A copy of said
Agreement is attached hereto as Exhibit .1" and incorporated
herein by this reference as though fully set forth at length.
Dated:
Approved as to form:
:~~~~
e R. Briggs
The foregoing resolution was duly adopted by the following
vote, to wit:
AYES: Members
NAYS:
ABSENT or
ABSTAIN:
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PROPERTY OWNER'S PARTICIPATION AGREEMENT
ALEXANDER HAAGEN DEVELOPMENT
TRI-CITY PROJECT AREA
SAN BERNARDINO, CALIFORNIA
THIS AGREEMENT, made and entered into this
day of , 19____ by and between the REDEVELOPMENT
AGENCY OF THE CITY OF SAN BERNARDINO, a public body corporate
and politic (hereinafter "Agency.), and ALEXANDER HAAGEN, DBA
ALEXANDER HAAGEN DEVELOPMENT (hereinafter "Participating
Owner").
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RECITALS
i. The Tri-City Project Area has been established by the
Mayor and Common Council of the City of San Bernardino as an
area which requires renewal and redevelopment in the interest
of the health, safety and general welfare of the citizens of
the City of San Bernardino.
ii. The Agency has prep~red, and the Mayor and Common
Council of the City of San Bernardino have adopted, the
official Redevelopment Plan for the renewal of the project
(hereinafter the "Plan"). The Plan was adopted by the City of
San Bernardino by Ordinance No. MC-283 on the 20th day of
June, 1983. A Certificate of Covenants, Conditions and
Restrictions applicable to this property was recorded June 30,
1983, as Document No. 83-146358, official records of San
Bernardino County, California.
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iii. The Plan provides for the participation in the
renewal and redevelopment of property in the project area by
the owners of various patcels of property if the owners of
such property agree to participate in the redevelopment in
conformance with the Plan, and enter into an agreement with
the Agency to give effect to various improvements of the
property.
iv. The Participating OWner owns or has an interest in
certain real property lying within the confines of the project
area, which land is described in Exhibit .AR attached hereto
and incorporated herein by reference. This agreement is made
with the express intent and purpose that the land described in
Exhibit "A" shall be redeveloped in accordance with the Plan,
and in accordance with the terms of this agreement.
v. The Participating OWner desires ~o participate with
Agency in the renewal and development of the property
described on Exhibit "A" by entering into an agreement for the
improvement of that property, ..and this agreement sets forth
the terms and conditions of such improvement.
IMPLEMENTATION
The Agency and Participating Owner, for the
considerations and under the conditions set forth hereinafter,
do agree as follows:
1. The Plan is incorporated herein by reference and made
a part of this agreement with the same force and effect as
though set forth in full herein.
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2. In order to assist the Participating OWner in the
redevelopment and improvement of the property covered by this
agreement, Agency agrees to provide certain inducements as
assistance to the participating Owner, which obligations and
undertakings of the Agency are set forth hereinafter as
Exhibit "B" to this agreement, "Undertakings and Obligations
of Agency".
3. The Participating Owner covenants for itself, its
heirs, executors, administrators, successors and assigns, that
it will undertake, or cause to be undertaken, the development
of the property described in Exhibit "A" by developing the
property and improving the property in accordance with those
.Undertakings and Obligations of Participating Owner" set
forth hereinafter on Exhibit .C", which is annexed hereto and
incorporated herein by reference. The undertakings set forth
in Exhibit "C" are made by Participating Owner with the
expectation that they will be relied upon by Agency, and are
undertaken with the knowledge that Agency is acting in
reliance thereon, and that each of the dates specified therein
is of the very essence of this agreement, and that the nature,
purpose and scope of the development, construction dates and
completion dates, are also of the very essence of this
agreement.
4. Participating Owner shall submit to Agency the
schematics and elevations for the proposed improvements no
later than the date set forth in Exhibit "CO, and Agency shall
examine and review the schematics and elevations, and advise
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the Participating Owner within thirty (30) days after
receiving such information whether the Agency is satisfied
that the schematics and ,elevations as submitted are acceptable
and in conformity with the Plan.
5. For all construction of the facilities contemplated
hereunder, all laborers and mechanics employed by the
Participating Owner and by any of its contractors,
subcontractors, or other entities working directly upon the
project covered by this agreement shall be paid
unconditionally and not less often than once each week, and
without subsequent deduction or rebate on any account the full
amount due (except such payroll deductions as are made
mandatory by law and such other payroll deductions as are
permitted by the applicable regulations issued by the Director
of Industrial Relations of the California Department of Labor.
The full amount due at the time of payment shall be computed
at wage rates not less than those contained in the published
wage determination decision of. the Director of Industrial
Relations applicable to San Bernardino County, regardless of
any contractual relationship which may be alleged to exist
between the Participating Owner, any contractor or
subcontractor, and any such laborers and mechanics.
Participating Owner further agrees that this section shall
inure to the benefit of the Agency and for the benefit of all
laborers and mechanics employed upon the work covered by this
agreement as third party beneficiaries. Agency and any
aggrieved employee are each authorized to file an action in
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any court of competent jurisdiction against the Participating
Owner and any of its contractors or subcontractors for the
recovery of the difference between the wage rates actually
paid and the wage rates legally required to be paid under the
provisions of this section and any applicable regulations,
statutes and laws, together with any other amounts authorized
to be collected as a result of such action. Participating
Owner agrees for itself, its contractors and sUbcontractors,
to pay reasonable attorney fees and court costs if the Agency
or employee prevails in any such action. The Participating
Owner agrees that this provision shall be inserted in any
contract between Participating Owner and any contractor, and
that all such contracts shall also contain a provision that
any contractor must make the same provisions applicable in any
of its subcontracts with subcontractors on this project.
6. No member, official or employee of the Agency shall
have any financial interest, direct or indirect, in this
agreement or in the Property described in Exhibit "A", nor
shall any member, official or employee participate in any
decision relating to this agreement or to the Property which
affects his or her financial interests or the financial
interests of any corporation, partnership or association in
which he or she is, directly or indirectly, interested.
7. Participating Owner agrees that no officer, employee
or agent of the Agency shall be personally liable to the
Participating Owner for any obligations under the terms of
this agreement. Any obligations undertaken are those of the
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Agency, and not of the individual officers, employees or
agents thereof.
8. The development covered by this agreement is a
private undertaking of the Participating Owner, and the
Participating Owner shall have full and exclusive control of
the property herein described, subject only to the limitations
and obligations of the Participating Owner undertaken herein,
and subject to the provisions of the Plan.
9. The Participating Owner, for itself, its executors,
Administrators, heirs, successors and assigns, and all persons
or entities claiming under or through them, or any of them, in
this paragraph collectively referred to as "Participating
Owner., covenants and agrees that:
A. The Participating Owner will and shall carry
out the work of the redevelopment of the property as
specifically provided for in this agreement and shall devote
such property only to the uses specified herein, and only to
uses authorized by the Plan.
B. Participating Owner shall not discriminate
against or permit any of its contractors or subcontractors to
discriminate against, or permit any of its tenants, lessees,
renters, or subsequent owners of the property, to discriminate
against any person or groups of persons on account of race,
sex, marital status, color, creed, religion, physical
handicap, national origin, or ancestry, in the construction,
improvement, sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the property covered by this agreement,
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nor shall any persons claiming under or through the
Participating Owner establish or permit any such practice or
practices of discrimination or segregation to exist with
reference to the selection, location, number, use or occupancy
of tenants, lessees or vendees in the property covered by this
agreement.
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c. This property is subject to a covenant running
with the land to enforce the terms and provisions of paragraph
9B, and this non-discrimination provision shall be
specifically referred to in any conveyance of the property
covered by this agreement hereafter, in addition to any other
covenants which may run with the land and which shall be
binding upon the Participating Owner, its heirs, executors,
administrators, successors and assigns, and all persons
claiming under or through them. These covenants shall inure
to the benefit of and be enforceable by the Agency, its
successors and assigns, and shall run in perpetuity in favor
of the Agency. In the event of any breach of said covenants,
the Agency shall have the right to exercise all the rights and
remedies available at law or in equity to cure such breach,
including the right to seek specific performance and to seek
specific compliance with the terms and conditions of this
agreement. In the enforcement of the provisions of these
covenants, Agency shall have the right to seek enforcement
only against the person who then owns, operates a business
upon, leases, subleases or otherwise uses the single lot or
specific portion of the property upon or to which the alleged
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breach relates, and shall bring no action against any person
not directly affected with the breach alleged to have
occurred.
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D. No provision in this agreement is intended to
limit, affect or impair the rights of other secured parties or
other encumbrances upon the property subject to this
agreement, and this agreement has no effect upon obligees
desiring to pursue any remedies as to the enforcement of any
pledge or lien upon the property subject to this agreement;
provided, however, that in the event of a foreclosure sale
under any mortgage, deed of trust, or other lien or
encumbrance, or a sale pursuant to any power of sale contained
in any such mortgage or deed of trust or the acceptance of a
deed in lieu of foreclosure, the purchaser or purchasers and
their successors and assigns, and the property covered hereby,
shall be and shall continue to be subject to all of the
conditions, restrictions and covenants herein provided for in
Paragraph 9b.
lO. Agency agrees that upon completion of the
development by the Participating Owner in performance of this
agreement, Agency shall, subsequent to the issuance of a
certificate of occupancy by the City of San Bernardino, cause
to be prepared and recorded a Certificate of Compliance
substantially in the form attached hereto as Exhibit "D", and
by this reference made a part hereof, which Certificate of
Compliance will state that the rights reserved to the Agency
under this agreement shall cease to exist, except those
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specific covenants of Paragraph 9B which shall continue in
effect. The covenant set forth in paragraph 9B shall run with
the land, and be binding upon all successor owners or
occupants of the premises in perpetuity, and that obligation
shall not be released by the recording of a Certificate of
Compliance.
11. The parties recognize that this property is adjacent
to a multi-million dollar development lying westerly of the
Gage Canal, which is establishing superior architectural
standards and significant artistic and environmental
improvements. Participating Owner agrees for itself, its
successors and assigns, that a high standard of architectural
design will be utilized and maintained on the premises to
assure that the buildings and parking areas do not detract
from the redevelopment of nearby and adjacent properties.
Participating Owner agrees to abide by the Design Criteria
annexed hereto as Exhibit "F" and incorporated herein by
reference. Participating Owner agrees that if the buildings,
parking areas and other improvements are allowed to
deteriorate to the point where the property detracts from or
adversely affects nearby or adjacent property owners, and is
not corrected within sixty (60) days after written notice from
Agency, Agency shall be authorized to discontinue any payments
due from it hereunder until such time as the condition of the
property is restored to a level satisfactory to Agency.
12. Participating Owner acknowledges that Agency is
incurring substantial financial obligations in order to carry
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out its obligations hereunder, and that ability of the Agency
to meet those financial obligations depends almost entirely
upon tax increment realized by Agency from the development
contemplated hereunder. All parties contemplate that Agency
shall borrow funds based upon expected tax increment from this
development as the major, if not sole, source of repayment.
If, for any reason whatever, including but not limited to
economic downturn, financial infeasibility of the project, or
any other reason whatever, Participating Owner fails to
develop the project at least as quickly and in at least the
minimum amounts of development provided for in Exhibit G (both
as to square footage of improvements and dollar values
thereof) Participating Owner promises and agrees to pay those
in lieu of development fees specified in Exhibit C. The
parties recognize that this is not a "penalty" or "default"
position, but only an alternative undertaking by Participating
Owner to induce Agency to undertake the expenditures and to
incur the indebtedness therefor contemplated by this
Agreement. Payment of the in lieu of development fee promptly
when due shall temporarily excuse any failure to develop in
accordance with the development schedule, and in such event no
default shall be declared based solely upon failure to
develop. In the event of any breach of this agreement,
participating Owner agrees to fully reimburse the Agency
forthwith for that amount of money paid or loaned by the
Agency to the Participating Owner up to the time of the
default, as a loan, advance, or reimbursement for the
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installation and construction of any improvements paid for by
Agency, and for any and all expenditures undertaken by Agency
for public improvements contemplated in the Agreement, or for
any other purpose, and shall reimburse to Agency all funds
expended by Agency as administrative costs, fees, expenses,
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attorney fees, or any other item of expense legitimately
encountered by the Agency during the term of this agreement.
All sums due shall bear interest at the rate applicable to
judgments from the date the expense was incurred or the money
paid out by the Agency, whichever is earlier. Agency shall
have such other rights and remedies as may be permitted by
law, with no remedy being deemed exclusive. Agency may pursue
any remedy or combination of remedies authorized by law,
without limitation.
13. This agreement shall be in full force and effect as
of the date that this agreement is signed by and on behalf of
both parties, and shall inure to the benefit of and be binding
upon the parties hereto, their respective heirs, executors,
administrators, successors or assigns from the date of its
execution.
14. Any notices required or authorized to be given by
one party to the other shall be deemed effective if mailed by
certified or registered mail, return receipt requested, to the
following address or such subsequent address as to which
notice of change of address has been served:
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AGENCY:
PARTICIPATING OWNER:
Redevelopment Agency of
the City of San Bernardino
Alexander Haagen
Alexander Haagen Development
II
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300 North .D" Street
San Bernardino, CA 92418
3500 Sepulveda Blvd.
Manhattan Beach, CA 90266
15. The parties contemplate that the actual development
will be undertaken by a partnership, limited partnership or
corporation in which Alexander Haagen has a majority interest
or in which Alexander Haagen is the sole general partner.
IN WITNESS WHEREOF, the Agency and Participating Owner
have executed this agreement effective as of the date first
above written.
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
PARTICIPATING OWNER
(Name)
By
By
Chairman
By
By
Secretary
Approved as to legal form
and adequacy:
AGENCY COUNSEL &
1Iffi I .
By {,f:J ,/ Y'o/l ' 11t /
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ATTACHMENTS:
Exhibit "A", Legal Description of Property;
Exhibit RB", Undertakings and Obligations of Agency;
Exhibit "CO, Undertakings and Obligations of
Participating Owner,
Exhibit "D", Form of Certificate of Compliance;
Exhibit "E", Resolution of Board of Directors,
Certificate of Partnership, or other evidence of authority to
execute Agreement.
Exhibit "F", Design Criteria
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EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
The property which is subject to this Agreement is that
certain parcells) of property situate in the City of San
Bernardino, County of San Bernardino, State of California,
described as follows:
A twelve-acre parcel of land in the Tri-City Project Area
bounded on the west by the Gage Canal, on the north by
Harriman Place, on the south by the 1-10 Freeway, and lying
westerly of Tippecanoe Avenue. The exact legal description is
to be provided by Participating Owner and included in this
Exhibit prior to its execution.
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EXHIBIT .B.
UNDERTAKINGS AND OBLIGATIONS OF AGENCY
AGENCY AGREES TO:
1. Upon completion of construction and commencement of
operations, pay, to Participating Owner the sum of $70,000 per
year for six years to offset the additional costs imposed upon
Participating Owner in meeting the higher standards of
landscaping, design and maintenance described by Agency.
2. For the seventh through tenth years after
commencement of operations, Agency shall pay to Participating
Owner a sum equal to 10% of the sales tax actually realized by
the City of San Bernardino from the businesses established and
operating on the subject property, up to but not to exceed
$70,000 per year for each of such years. The amount of sales
tax actually realized by the City of San Bernardino used as a
measure shall be based upon the last full year of actual sales
tax returns reported and paid by such businesses to the State
Franchise Tax Board, wherein one-sixth (1/6) of the sales
taxes collected are paid over to the City of San Bernardino.
By way of example, the following schedule indicates the
amounts the Agency would pay based upon various levels of
sales by all stores in the complex:
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0 AMOUNT OF SALES REPORTED
BY ALL BUSINESSES IN
COMPLEX DURING TWELVE-
MONTH PERIOD: $100,000,000 $70,000,000 $60,000,000 $40,000,000
STATE SALES TAX
PAYMENTS: $6,000,000 $4,200,000 $3,600,000 $2,400,000
CITY'S REALIZED AMOUNT
OF SALES TAX: $1,000,000 $700,000 $600,000 $400,000
TEN PERCENT (10%) OF
CITY'S REALIZED AMOUNT: $100,000 $70,000 $60,000 $40,000
AMOUNT DUE FROM AGENCY: * $70,000 $70,000 $60,000 $40,000
(* Maximum payment in any year is $70,000)
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3. In the event Agency's policy on prevailing wage shall
change as a result of studies presently underway, Agency
agrees to negotiate in good faith with participating Owner for
such lesser standards as may be adopted, upon request of
participating Owner.
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EXHIBIT .e"
UNDERTAKINGS AND OBLIGATIONS OF PARTICIPATING OWNER
PARTICIPATING OWNER AGREES TO:
1. Develop a 167,000 square foot retail complex to
include Pace Warehouse Store of approximately 100,000 square
feet building space, and another retail building of 60,000
square feet, with additional allied retail shops, and maintain
a lease with Pace Warehouse Store for not less than 19 years.
The estimated value of the development is $12,450,000.
2. Provide schematics and elevations for the project not
later than October 31, 1986.
3. Commence construction of the development not later
than November 30, 1986, and continuously pursue construction
until completion, with completion not later than March 3l,
1987, with a Certificate of Occupancy to be obtained by that
date.
4. No .in lieu of development fee" is contemplated
hereby since no Agency assistance will be given until the
project has been completed.
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CER;IFJCA TE OF COMPL3cE
No. 607
Augl""~982
,J
FOR PROPERTY OWNER'S PARTICIPATION AGREEMENT
WHEREAS.
hereinafter referred to as the "Owner Participant", has entered into a Property
Owner'. Participation Aareement with the REDEVELOPMENT AGENCY OF THE CITY
OF SAN BERNARDINO, CALIFORNIA, hereinafter called the "Aaency"; and
WHEREAS. said Property Owner's Participation Aareement. dated the
day of
,19 , was recorded on
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as Document No.
in the Official Records of the County Recorder of
the County of San Bernardino, State of California; and
WHEREAS. in Section _ of said Property Owner'. Participation Agreement
the o...'nu Participant and the Agency agreed that upon the completion by the Owner
Participant of the improvements, namely
, in a manner satisfactory
to the Agency and subsequent to the issuance of a Certificate of Occupancy by the City
of San Bernardino. the Agency ...'ould cause to be prepared and recorded a Certificate
of Compliance.
NO\'-'. THEREFORE. BE IT RESOLVED by the Redevelopment Agency of the City
of San Bernardino. California. that the Agency does hereby determine. conclusively
certifies. and gives notice that the o...'ner Participant has fully satisfied, terminatec.
and completed. for itself, its successors and assigns. all covenants and agreements
with respect to the Obligations of Owner Participant for the buildina upon and improve-
ments to said land. carried out in conformity with the fire. health, and buildinl; code-
requirements of the City of San Bernardino, and the provisions of the Redevelopment
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Plan for the
Project
Area, and the Declaration of Restrictions, and in accordance with the final plans
and specifications approved by the Aaency. and the dates for the beainnina and
completion thereof, provided for in said Alreement. upon the hereinafter described
real property:
IN WITNESS WHEREOF ,the Alenc:y has caused this certificate to be duly
executed on its behalf and its seal to be hereunto affixed and attested on this
day of
. 19
REDEVELOPMEh'T AGENCY OF THE CITY
OF SAN BERNARDINO. CALIFORNIA
(SEAL)
Chairman
.
Secretary
APPROVED AS TO LEGAL
FORM AND ADEQUACY:
Agency Counsel
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c:> EXHIBIT .E.
EVIDENCE OF CORPORATE OR OTHER AUTHORITY TO EXECUTE AGREEMENT
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EXHIBIT .p.
DESIGN CRITERIA
ELEVATIONS: Final elevations shall be submitted to the
Community Development Commission for review and approval. The
Executive Director of the Redevelopment Agency and the
Planning Director will review all elevations submitted and
report to the Community Development Commission.
Information to be provided shall include exterior
elevations depicting type of material and colors to be
utilized for the project. Said elevations shall be for all
exterior walls. A materials board depicting the types of
materials and colors shall be included as a part of the
overall development package, including at least one (1)
colored rendering.
LANDSCAPING: The landscaping plan showing a variety of
specimen trees and plants shall be included as a part of the
development plan, There is a fifty (50) foot setback
requirement along the freeway, which is a landscape easement.
Developer shall provide sections as to how this easement will
be treated. Landscaping along the freeway and the twenty (20)
foot landscaping setback from Harriman Place shall utilize
mature trees and shrubs for effective screening from the onset
of operations.
RESTRICTIONS: No outside storage of any type will be
allowed, whether temporary or permanent. With respect to
tires, batteries and accessories, there shall be restricted
visibility into work bays from all rights of way. Any
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departure from any approved plans will require re-submission
of plans to the Community Development Commission.
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