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Home My WebLink AboutR8- Economic Development ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REQUEST FOR COMMISSION/COUNCIL ACTION FROM: RONALD E.WINKLER SUBJECT: PREMIS PARTNERS DDA Development Director (HATLE) DATE: October 29, 1996 COPY ------------------------------------------------------------------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s): On 8/22/96 the Redevelopment Committee heard this matter and recommended that a joint public hearing be advertised to allow consideration by the Community Development Commission. On 10/7/96 the Community Development Commission continued this item to allow staff to obtain updated appraisal information. ------------------------------------------------------------------------------------------------------------------------------------------- OPEN PUBLIC HEARING CLOSE PUBLIC HEARING Recommended Motion(s): (Mayor and Common Council) MOTION A: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING A CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND PREMIS PARTNERS PERTAINING TO THE DEVELOPMENT OF A WAREHOUSING AND DISTRIBUTION FACILITY (Motion(s)Continued to Neat Page....) ------------------------------------------------------------------------------------------------------------------------------------------- Contact Person(s): Ronald E.Winkler/ Phone: 5081 Project Area(s): Northwest Ward(s): Six(6) Supporting Data Attached: ® Staff Report❑ Resolution(s)® Agreement(s)/Contract(s)❑ Map(s)❑ Memorandum FUNDING REQUIRE NTS: Amount: $N/A Source: N/A Budget Authority: N/A ( _ SIGNATURE: <• Admini Ronald E. inkier,Director Development ------------------------------------------------------------------------------------------------------------------------------------------- Commission/Council Notes: ------------------------------------------------------------------------------------------------------------------ REW:JBH:mym:premis.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/07/1996 Res 96— 351 Agenda Item Numberk REQUEST FOR COMIl HSSIONXOUNCIL ACTION Premis Partners DDA(Hatle) October 2, 1996 Page Number-2- ------------------------------------------------------------------------------------------------------------------ Recommended Motion(s) Continued: (Community Development Commission) MOTION B: RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING A CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND PRENUS PARTNERS PERTAINING TO THE DEVELOPMENT OF A WAREHOUSING AND DISTRIBUTION FACILITY ------------------------------------------------------------------------------------------------------------------ REW:JBH:mym:premis.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/07/1996 Agenda Item Number: _ ECONOMIC DEVELOPMENT AGENCY STAFF REPORT ------------------------------------------------------------------------------------------------------------------ Premis Partners DDA Made) This item was continued on 10/7/96 to obtain updated appraisal information. The appraiser has completed his review and filed an updated report with staff. Staff will distribute copies of the revised appraisal to Commission members under a separate memorandum. It should be noted that the updated appraisal continues to support the land sale price recommended in our original report. BACKGROUND In November of 1994, the Agency received title to 40 acres of heavy industrial land in the Northwest Industrial Park. The land lies adjacent to I-215 and is connected to the State College Business Park by means of Hallmark Parkway which runs through the center of the 40 acres. The land has been divided into parcels as shown on the lot line adjustment map. Last year, the Agency sold Parcel 2 to Mr. Russ Hatle who has now completed construction of a packaging and distribution facility for Prime Line Products, a San Bernardino based supplier of hardware goods shipped throughout the United States. The completed building totals 100,528 SF and currently houses 115 employees. There is room for an expansion that will accommodate an additional 40 employees in the future. W. Hatle now proposes to develop an adjacent parcel for a similar but even larger user This new proposal is for Parcel 1 which is shown on the attached map as a slender triangular piece of property northwesterly of the Prime Line building. This parcel can accommodate a building as large as 285,000 SF. Mr. Hatle would have two years to obtain a tenant during which time he would pay the Agency an option fee that is the equivalent of property tax(the property does not currently produce tax due to the Agency's ownership). During this same time period he must design, process and obtain approval of development plans on a specified time table. Upon successfully obtaining a tenant, he would buy the property at its full appraised price and carry out actual construction. If a use cannot be found within two years then the Agency will keep both the land and the option payments. An economic impact analysis has been completed for this proposal. It indicates impressive benefits from the proposed operation. These include: • Direct creation of 425 new jobs in the primary sector which will also cause the creation of 367 new jobs in the secondary tier of the economy for a total increase of 792 jobs. • Creation of a new primary payroll of$9,500,000 plus an increase of$7,080,000 in ------------------------------------------------------------------------------------------------------------------ REW:JBH:mym:premis.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/07/1996 Agenda Item Number: _ ECONOMIC DEVELOPMENT AGENCY STAFF REPORT Premis Partners DDA(Hatle) October 2, 1996 Page Number-2- ------------------------------------------------------------------------------------------------------------------ secondary income for a total income increase of$16,581,195 per year. • Generation of new City sales taxes of$46,951 per year. • Generation of new tax increment of$76,000 per year. • The development produces approximately$500,000 in one time fees to the City. • The sale results in a one time payment of$807,000 in cash for the Agency from the land sale. This proposal fits the criteria for a Priority One project as defined in the Commission's adopted Economic Strategic Plan. It produces jobs in the basic tier of the economy that are mainly supported by revenues coming from outside of the community. This brings new money into the economy which, in turn, creates employment and earnings in the secondary tier of the area economy. The above numbers are based upon a 283,000 SF facility and the results (but not the sales price)would be reduced pro rata for a smaller building. The proposed agreement specifies a minimum building of 200,000 SF but the actual size will depend upon actual the marketing results. In addition, building a facility with higher improvement standards that are now typical of new industrial buildings will show corporate location specialists that San Bernardino has industrial product comparable to that in Ontario and Rancho Cucamonga. This project has the capacity to cause a distinct increase in national awareness of San Bernardino as an effective location for manufacture, assembly and distribution to the Western United States and the Pacific Rim. The high cubic storage density, high capacity fire suppression systems, large number of truck wells and very large truck turning radii combine to produce a product very different from that of even a few years ago. RUSS HATLE, PRIMUS PARTNERS Primus Partners would be a California Limited Partnership formed to carry out the development of this project. The Agency would rely on the general partner who is Mr. Russ Hatle. Mr. Hatle has been building redevelopment projects in San Bernardino for more than 20 years and is responsible for a significant share of the industrial and retail product built in Agency project areas during that time. His Agency association started with the land development of the Hospitality area in 1975 where he built Bobby McGees, GuadlaHarry's and more than half a dozen other buildings and ------------------------------------------------------------------------------------------------------------------ REW:JBH:mym:premis.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/07/1996 Agenda Item Number: _ ECONOMIC DEVELOPMENT AGENCY STAFF REPORT Premis Partners DDA(Haile) October 2, 1996 Page Number-3- ------------------------------------------------------------------------------------------------------------------ complexes. He did all the land development of 66 acres west of Waterman and north of Hospitality Lane. In 1980 he developed 297,000 SF of industrial buildings on 16 acres in the eastern portion of the South East Industrial Park project area. Also in 1980 he partnered with Mr. Ray Fox to acquire and restore the Heritage Building on Court Street;this was renovated and upgraded again in 1993 when it was converted to an entertainment use. In 1988 he took over a failed project from another developer and completed 153,000 SF on 9 acres of Agency land in SEIP, attracting Carrier, International Technology, Super Shops, and eventually Rockwell Corporation. In 1989 he build 120,000 SF on 7.26 acres in the State College Business Center. Most recently he completed 100,528 SF on 7.1 acres for Prime Line in the Northwest Industrial Park. Mr. Hatle has been a very active developer in the San Bernardino/Redlands area and is currently active in Denver, Colorado as well. He is experienced at construction of multifamily residential, commercial office, and industrial product. He has also been active in development of foreign investment in Southern California real estate and has traveled for that purpose to Pacific Rim countries including Hong Kong, Japan, and the Peoples Republic of China. LARRY TAYLOR. LEE& ASSOCIATES The developers marketing effort will be carried out by a team led by Mr. Larry Taylor who is a Senior Vice President with Lee&Associates. Mr. Taylor has specialized in industrial and commercial properties in the Inland Empire for more than 15 years. He has worked on many Agency projects and delivered many users for developments in the Central City South, Southeast Industrial Park, State College, and Northwest Redevelopment Project Areas. Despite the economic slowdown of the past three years he has nevertheless maintained a high level of activity including deals with more than 1 million square feet of buildings and 300 acres of land totaling in excess of$30 million dollars. THE MARKETING PLAN The key service being provided by the developer during the 24 month option period is an aggressive marketing effort. In addition the developer will submit and process plans through DRC so as to shorten the development time for potential users. This allows for construction of a custom facility that matches the user's needs while dramatically shortening the time required before move-in. The marketing effort will be nationwide to distribution warehousing users who have more than 100 employees. It will target client companies of Lee& Associates plus those on a nationwide ------------------------------------------------------------------------------------------------------------------ REW:JBH:mym:premis.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/07/1996 Agenda Item Number: —q, — ECONOMIC DEVELOPMENT AGENCY STAFF REPORT Premis Partners DDA(Hatle) October 2, 1996 Page Number-4- ------------------------------------------------------------------------------------------------------------------ list that will be created by matching targeted SIC codes. It will include personal contact and direct mail components and feature a specific effort to contact and influence corporate location specialists making recommendations to companies considering relocation to the Southwestern United States. This is especially important as many companies make decisions based upon the advice of these specialists. Such companies often restrict their search to a narrow list of finalists before even disclosing the possibility that they may relocate. If San Bernardino is not on that short list then the City never hears of that a company is considering relocating and the company never learns about the possibilities of San Bernardino. NACORE, IDRC and SIOR are among the most influential associations of corporate location specialists. Larry Taylor is a member of SIOR and Lee& Associates will provide networking access to the others. This awareness campaign will benefit San Bernardino both for future industrial warehousing projects and for manufacturing facilities. THE PROPERTY This is 18.57 acres of land located on the northerly side of Industrial Parkway and lies between the Cable Canyon Flood Control Channel and Interstate Route 215. It was appraised by an MAI appraiser within the last 12 months at $1.00 per square foot which indicates a full market value of $807,000. It is very roughly graded with a fairly large amount of large rock debris on site. The site-features a long expanse of freeway frontage with excellent visibility. Challenges in the development of the site include limited access and the inefficient narrow triangular shape of the property. The large amount of upgraded landscaping required along the freeway and the on-site rock handling add somewhat to the development costs. THE PROPOSED AGREEMENT The agreement gives the developer 24 months to attract a user and provides performance benchmarks to be met during that time period. Plans and other documents are required on a schedule that begins 30 days after execution and ends with submission of development plans and fees for DRC approval at 180 days. The marketing effort is to be fully engaged at 180 days and will be reviewed in depth at 180 day intervals. Escrow will not open unless a user has executed a lease or sales agreement. Escrow will not close unless the Agency is satisfied with the evidence that binding commitments of capital are in place and building permits are ready to be issued for construction of the improvement. These provisions are aimed at assuring that the project is ready to go forward before title is transferred. ------------------------------------------------------------------------------------------------------------------ REW:JBH:mym:premis.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/07/1996 Agenda Item Number: __ ECONOMIC DEVELOPMENT AGENCY STAFF REPORT Premis Partners DDA(Hatle) October 2, 1996 Page Number-5- ------------------------------------------------------------------------------------------------------------------ Meanwhile, the developer has assurance that the land is available at a known price and can commit to the predevelopment activities of design and marketing. The developer will pay an option fee equivalent to property tax during the planning period. This is a benefit to the Agency because it does not currently earn property tax on this land. The sales price will be $807,000 which is the appraised value. RECOMMENDATION It was the recommendation of the Redevelopment Committee to forward this item to the full Commission for approval. This matter involves the possible disposition of property acquired with tax increment funds so that certain provisions of California's Health and Safety Code apply. For that reason, staff advertised a joint public hearing for todays meeting. After the hearing is closed, the Council may take action to adopt the resolutions and enabling motion. Based upon the foregoing, staff recommends adoption of the form motion. RONALD . WINKLER, Director Develop ent Department ------------------------------------------------------------------------------------------------------------------ REW:JBH:mym:premis.cdc COMMISSION MEETING AGENDA MEETING DATE: 11/07/1996 Agenda Item Number: �_ ECAP economic and political analysis 3142 Cactus Circle highland, CA 92346-1739 (909)425-8952 FAX (909)425-8952 ECONOMIC IMPACT OF A NEW WAREHOUSING & DISTRIBUTION CENTER by John E. Husing, Ph.D. In order to determine the economic impact of a new Warehousing & Distribution center on the area in and around the City of San -Bernardino, it is necessary to deal with both short term and long term considerations. 1. Warehousing & Distribution jobs are assumed to be in the basic tier of a city's economy. This is the case as they are mainly supported by revenues coming from outside of the community. In this sense, they are comparable to gold miners in an old western town. In the short term, adding a new Warehousing & Dis- tribution center thus creates new basic employment and earnings . When the new job holders spend their incomes locally, they in turn create employment and earnings in the secondary tier of the area's economy. The immediate impact of the new Warehousing & Dis- tribution facility is thus the combination of the jobs and income added at the facility, plus the jobs and income set off in the secondary tier of the economy. 2 . For the City of San Bernardino, the building of a major new Warehousing & Distribution center has long term consequences for the community as it provides the opportunity to show corporate location specialists that it now has the complete infrastructure necessary to back-up modern manufacturing, storage and, distri- bution operations. SHORT TERM ANNUAL ECONOMIC IMPACT In order to estimate the impact of a new Warehousing & Distribution center located in the City of San Bernardino, the following as- sumptions are made: 1. The new facility will have 283, 000 square feet. 2. it will employ 1.5 people per 1, 000 square feet. 1 3 . The warehousing facility will be associated with a trucking distribution operation placing it in SIC code 4214. 4. The average employee will earn $22, 374, the average income for employees working in firms in SIC code 4214. This figure comes from the 1993 ES202 reports of the California Employment Development Department for the Inland Empire. 5. 1000 of the employees will live in the Inland Empire, primarily in San Bernardino. 6. Each $1. 00 in payroll will cause a total of $1.7458 in payroll to be created in the Inland Empire, primarily in San Bernardino. This ratio comes from the Input- Output model created for the Inland Empire by the U.S. Bureau of Economic Analysis. 7. Each one job at the facility will cause 1. 8652 new jobs to be created in the Inland Empire, primarily in San Bernardino. This ratio also comes from the Input-Output model created for the Inland Empire by the U.S. Bureau of Economic Analysis. 8 . Inland Empire recipients of income are assumed to spend it in the pattern identif ied for the greater Los Angeles area by the U.S. Bureau of Labor Statistics for 1988-89 . 9 . The portion of the spending in each sector which is assumed to occur within the area in and around San Bernardino is estimated by ECAP. In the WAREHOUSING & DISTRIBUTION-ANNUAL ECONOMIC IMPACT table, these assumptions lead to the following JO ,, conclusions: 1. 283, 000 feet of new Warehousing & Distribution space will generate 425 new jobs in that primary sector. 2 . These in turn will create 367 jobs in the secondary tier of the economy, for a TOTAL JOB INCREASE OF 792. In the WAREHOUSING & DISTRIBUTION-ANNUAL ECONOMIC IMPACT table, these assumptions lead to the following EARNINGS conclusions: 1. 425 new jobs at $22,374 each will create a new primary payroll of $9,497,763 in the Warehousing & Distribution sector. 2 . Spending of this payroll will in turn create secondary incomes of $7,083, 065, for a TOTAL INCOME INCREASE OF $16. 581. 195. 3 . The table shows how this total income change is used by sector of the economy (e.g. new apparel purchases $851, 772) . 2 WAREHOUSING& DISTRIBUTION - ANNUAL ECONOMIC IMPACT Square Fee 283,000 Inland Empire Warehousing Inl. Emp. Em to eeeSi1,000 Ft. 1.5 Worker Multiplier New Jobs EMPLOYEES 425 1.8652 792 AVERAGE EARNINGS 1993 S22-374 Inland Empire Warehousing with Trucking jobs (SIC 4214) TOTAL PAYROLL $9,497,763 Percent Inland Empire 100.0% LOCAL DIRECT HOUSEHOLD PAYROLL $9,497,763 Warehousing &Transportation Earnings Multiplier 1.7458 TOTAL LOCAL INCOME CREATED $16,581,195 HOUSEHOLD INCOME USE, SOUTHERN CALIFORNIA FAMILIES, 1990 CATEGORY PERCENT SPENDING EAST SB SPENDING TAX SALES 1.0% Food at Home 7.6% $1,252,956 99% $1,240,426 0 Food Out 6.0% 1,000,901 90% 900,811 $900,811 $9,008 Alcohol 0.9% 147,756 99%, 146,279 146,279 1,463 Home Mortgage Interest 8.0% 1,321,116 50%, 660,558 0 Home Property Tax 1.7°/0 289,566 100% 289,566 0 Home Maintenance &Repairs 1.7% 279,502 95% 265,527 0 Rented Dwellings 8.0% 1,324,318 100% 1,324,318 0 Other Dwellings 1.5% 243,821 100% 243,821 0 Utilities 4.6% 767,144 100% 767,144 0 Household Services 2.1% 341,715 100% 341,715 0 Household Supplies 1.2% 199,906 95% 189,910 189,910 1,899 Furniture &Fixtures 3.6% 589,196 75%, 441,897 441,897 4,419 Apparel 5.1% 851,772 75% 638,829 638,829 6,388 ! Vehicle Purchases 6.8% 1,123,955 75% 842,966 842,966 8,430 Gas&Oil r 2.7% 455,620 70% 318,934 318,934 3,189 Vehicle Insurance 2.0% 336,683 15% 50,502 0 Vehicle Maintenance/Repair/Other 3.3% 549,855 90% 494,870 494,870 4,949 Public Transportation 1.3% 214,087 100% 214,087 0 Health Insurance 1.4% 227,353 15% 34,103 0 Medical Service 2.1% 355,439 95% 337,667 0 Drugs&Medical Supplies 0.7% 115,735 95% 109,948 0 Entertainment 4.4% 729,175 65% 473,964 0 Personal Care Products 1.4% 228,268 95% 216,854 216,854 2,169 Reading 0.4% 6$160 95% 64,752 64,752 648 Education 1.1% 179,320 65% 116,558 0 Tobacco 0.5% 89,203 99% 88,311 88,311 883 Miscellaneous 2.2% 369,162 95% 350,704 350,704 3,507 Contributions 3.1% 512,344 95% 486,727 0 Life&Other Personal insurance 0.511/6 87.830 15% 13,175 0 Pensions&Social Security 6.4% 1,064,486 0% 0 0 Federal Income Tax 6.1% 1,013,252 0% 0 0 State Income Tax 1.5% 245,193 0% 0 0 Other Taxes 0.0% 6.404 0% - 01 0 EMPLOYEE DIRECT PAYROLL SPENDING $16,58 195 $11 664,923 1 $4,6695,117 546,951 Sources: U.S.Bureau of Labor Statistics, Consumer Expenditure Survey, 1988-89 Los Angeles Region. U.S.Bureau of Economic Analysis,Regional Input-Output Modeling System (RIMS 11),Inland Empire. 1994. .,CA Employment Development Department,ES202 Earnings Reports by Sector Inland Empire,1993. 29 4 . It also estimates how much of the new spending in each sector would be in and around San Bernardino. Thus, new apparel purchase of $851, 772 would have 75% or 638, 829 spent locally. 5 . Finally, the table estimates the amount of local sales taxes generated off of these local sales. Thus, $638, 829 times lk would yield $6, 388 per year in new sales taxes from the apparel sector. 6. The table shows that the new facility would generated NEW TOTAL SALES TAXES OF JAfi 951 per year from all sectors. LONG TERM ANNUAL ECONOMIC IMPACT At this point in San Bernardino' s history, the city' s economy is in repair mode, making up for the job and earnings losses caused by the closure of Norton Air Force Base. Crucial to this phase in the city's development is the ability to show location scouts from U.S. and international corporations that the community has the infrastructure to support modern goods manufacturing and distri- bution. IVDA' s and the San Bernardino International Airport are working to bring local air cargo capacity on line. Santa Fe Railroad already has excellent intermodal rail/truck handling capability, and is looking to expand it. What the area lacks is an example of a new large, successful warehousing & distribution facility comparable to those in Ontario and Rancho Cucamonga. The building and leasing of such a complex would prove that the area now stands ready to compete with West San Bernardino County locations at every level of the industrial and warehousing & dis- tribution market . in fact, since warehouses in the westend must ship goods to Santa Fe' s intermodal depot, San Bernardino in fact is more competitive in some ways. Thus, beyond the strictly employment & earnings impact, the con- struction and successful occupancy of a 200,000+ square foot Wa- rehousing & Distribution facility in San Bernardino could represent a major breakthrough for the city' s economy. The timing is certainly right, as commercial realtors indicate that almost no speculative space of this size is currently available in the Inland Empire. SUMMARY Altogether, the proposed Warehousing & Distribution facility in San Bernardino would annually generate a total of 792 jobs, $16, 581, 195 in income, and $46,951 in local sales taxes. in addition, it would highlight the fully developed infrastructure now available in the city. N 3 s �s w U VIII Z O'i M)I. 1 ! � \ _ SE 52- gag I w c =� I • I \ ♦i � 1� r I ` n: EXH181T "E" _ PARCELS AFTER ADJUSTMENT U) R w 1935.00' T• 274.14' z N• A L w 544.65' y y• 00FESS 10H ' i 413 QrL � N � ct ��5r clyo, F Qr CAU40 '-N z � DiS�1 5/o,J 0 .- 1a�' Lp CHANNEL R/w PER 130' v O DEED TO SAN 9ERNARUNO - COUNTY FLOOD CONTROL G DISTRICT BK. 2253/145. r 0 F. 6 O to R/M/ UNE PER 2 DEED TO STATE 0- OF CAUFORNIA Q a 8K. 3772/92 Wk. 140. 53 9�S li .2 So sit '4 p L 1 L INDUSTRIAL PKMr .I�. 46 2 95 PER CITY OF CA $b + T6. 6• Z TO dT`f OF CAN —� IN AR ST. 91�-4 u 15443 O.R �• 'Y 4 \ Gem sr� A- 44'56'2 z • Rw640.0y ��"�'•d` L r 501�79" Nf ft ; • 493.49' , p� p 447. 4 S.F. i PAS Ln ci P / ET , 157,130 S.F. N NET a: 769.83' 451.36' • N 52'08.09' E 1251.21' If 64'23'54' 1.r 55.79• °. DEVII CREEK FLOOD C0NTR0l CHANNEL //�� A. 04,29'55' CHmtim R/W PER Q� R w 2065.05' DEED TO SAN SERNARDINO r 61.13' awNTY n000 � POINT OF HECINNINC DRAFT RECORDING REQUESTED BY ) REDEVELOPMENT AGENCY OF THE ) CITY OF SAN BERNARDINO ) AND WHEN RECORDED MAIL TO: ) SABO & GREEN ) A Professional Corporation ) Suite 1015 ) 23501 Calabasas Road ) Calabasas, California 91302 ) (Space Above for Recorder's Use) Disposition and Development Agreement DRAFT � DRAFT TABLE OF CONTENTS ARTICLE I SUBJECT AGREEMENT Section 1.01 Purposes of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1.02 The Project Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.03 Parties to the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.04 Prohibition Against Change in Ownership, Management and Control of Developer, for Assignment of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE II DISPOSITION OF PROPERTY Section 2.01. Purchase of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 2.02 Developer's Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 2.03. Condition Precedent to the Opening of Escrow . . . . . . . . . . . . . . 5 Section 2.04. Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 2.05 Conveyance of Title and Delivery of Possession . . . . . . . . . . . . . 9 Section 2.06. Form of Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 2.07 Condition of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. 11 Section 2.08 Conditions for Close of Escrow . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 2.09 Time and Place for Delivery of Documents toEscrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ° 14 Section 2.10 Payment of the Consideration and Recordation Of the Grant Deed(s) and other Documents . . . . . . . . . . . . . . ° 15 Section 2.11 Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ° 16 i DRAFT DRAFT Section 2.12. Taxes and Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ° 16 Section 2.13. Zoning of the property and Environmental Approvals . . . . . . . ° 16 Section 2.14. Condition of the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ° 16 Section 2.15. Submission of Evidence of Financing Commitments . . . . . . . . . 17 Section 2.16 Pre-Disposition Consideration . . . . . . . . . . . . . . . . . . . . . . . . . A19 ARTICLE III DEVELOPMENT OF THE SITE Section 3.01. Development by Developer . . . . . . . . . . . . . . . . . . . . . . . . . . . ° 21 Section 3.02. Responsibility of the Agency . . . . . . . . . . . . . . . . . . . . . . . . . . A33 Section 3.03. Taxes, Assessments, Encumbrances and Liens . . . . . . . . . . . A- 33 Section 3.04. In Lieu Tax Payments/Tax Appeals . . . . . . . . . . . . . . . . . . . . . ° 34 Section 3.05. Prohibition Against Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . A. 34 Section 3.06. Security Financing; Right of Holders . . . . . . . . . . . . . . . . . . . . A. 35 Section 3.07. Right of the Agency to Satisfy Other Liens on the Property after Conveyance of Title . . . . . . . . . . . . . . . . . . °41 Section 3.08.. Certificate of Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . °42 ARTICLE IV USE OF SITE Section 4.01. Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . °44 Section 4.02 Maintenance of the Property . . . . . . . . . . . . . . . . . . . . . . . . . . °45 Section 4.03 Obligation to Refrain from Discrimination . . . . . . . . . . . . . . . . . A46 Section 4.04 Form of Nondiscrimination and Nonsegregation Clauses °46 Section 4.05 Effect and Duration of Covenants . . . . . . . . . . . . . . . . . . . . . . . A48 ii DRAFT DRAFT ARTICLE V DEFAULTS, REMEDIES AND TERMINATION Section 5.01. Defaults - General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . °49 Section 5.02. Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Section 5.03. Rights and Remedies are Cumulative . . . . . . . . . . . . . . . . . . . . 51 Section 5.04. Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ° 51 Section 5.05. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ° 52 Section 5.06 Rights and Remedies of Termination . . . . . . . . . . . . . . . . . . . . . 52 Section 5.07. Right to Reenter, Repossess, Terminate and Revest . . . . . . . . 56 Section 5.08. Limitation on Rights and Remedies After Issuance of Certificate of Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 ARTICLE VI GENERAL PROVISIONS Section 6.01. Notices, Demands and Communications Between the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . °60 Section 6.02. Conflict of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Section 6.03. Warranty Against Payment of Consideration For Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ° 62 Section 6.04. Nonliability of Agency Officials and Employees . . . . . . . . . . . . °62 Section 6.05. Enforced Delay; Extension of Time of Performance . . . . . . . . . ° 62 Section 6.06. Inspection of Books and Records . . . . . . . . . . . . . . . . . . . . . . . °63 Section 6.07. Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . °64 Section 6.08. Real Estate Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . ° 65 Section 6.09. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ° 65 Section 6.10. Release of Developer from Liability . . . . . . . . . . . . . . . . . . . . . A65 iii DRAFT DRAFT Section 6.11. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ° 66 Section 6.12. Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Section 6.13. Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 ARTICLE VII ENTIRE AGREEMENT, WAIVERS AND AMENDMENT Section 7.01. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 ARTICLE VIII TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY AND RECORDATION Section 8.01. Execution and Recordation . . . . . . . . . . . . . . . . . . . . . . . . . . . ° 69 EXHIBIT "A" - LEGAL DESCRIPTION EXHIBIT "B" - SCOPE OF DEVELOPMENT EXHIBIT "C" - GRANT DEED EXHIBIT "D" - SCHEDULE OF PERFORMANCE EXHIBIT "E" - CERTIFICATE OF COMPLETION iv DRAFT 93 DRAFT ------------------ COMPARISON OF FOOTERS ------------------ -FOOTER 1- -3- -FOOTER 2- -FOOTER 3- Exhibit A - Page ° 74 -FOOTER 4- Exhibit B - Page 2 -FOOTER 5- Exhibit C - Page 2 -FOOTER 6- ` Exhibit D - Page ° 6 v DRAFT DRAFT DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND PREMIS PARTNERS a California limited partnership DRAFT DRAFT THIS AGREEMENT is entered into by and between the Redevelopment Agency of the City of San Bernardino (the "Agency"), and Premis Partners, a California limited partnership (the "Developer"). The Agency and the Developer agree as follows: ARTICLE I SUBJECT OF AGREEMENT Section 1.01. Purposes of Agreement. The purpose of this Disposition and Development Agreement(the"Agreement") is to effectuate redevelopment within the boundaries of the City of San Bernardino (the "City") by providing for the purchase and the redevelopment by the Developer of certain real property located within a duly established redevelopment project area of the City designated as the State College Redevelopment Project Area (the "Project Area"), and as described in Exhibit"A" attached hereto and incorporated herein by reference (the "Property"). The purchase and the redevelopment of the Property by the Developer pursuant to this Agreement, and the fulfillment generally of the Agreement, are in the vital and best interests of the City, the Agency, and the health, safety, morals, and welfare of the City's residents, and are in accord with the public purposes and provisions of applicable federal, state and local laws and requirements. DRAFT DRAFT Section 1.02. The Project Area. The State College Project Area was approved and adopted by the City Council of the City of San Bernardino by duly adopted ordinance in accordance with the provisions of the Community Redevelopment Law of the State of California (the "Community Redevelopment Law"). This Agreement shall be subject to the provisions of the Community Redevelopment Law. The Agency represents and warrants that the uses and improvements to be constructed on the Property in accordance with the Scope of Development attached hereto as Exhibit "B" and incorporated herein by reference (the "Project") comply with the provisions of the Community Redevelopment Law. Section 1.03. Parties to the Agreement. a. The Agency is a public body, corporate and politic, exercising governmental functions and powers, and organized and existing under Chapter 2 of the Community Redevelopment Law, Health and Safety Code Section 33000, et sec.. The principal office of the Agency is located at 201 N. "E" Street, San Bernardino, California 92401-1507. As used in this Agreement, the term "Agency" shall be deemed to include the Agency and any assignee and/or successor to the Agency or to its rights, powers and responsibilities under this Agreement. 2 - DRAFT DRAFT - b. The Developer is Premis Partners, a California limited partnership. The principal office of the Developer for purposes of this Agreement is located at 74-225 Highway 111, Suite C, Palm Desert, California 92260, (Telephone Number: (619) 776-8838), and for purposes of Section 6.01 hereof, any and all notices, demands or communications shall be sent to the Developer addressed to the attention of"Russ Hatle". Prior to the Agency's execution of this Agreement and, in addition, on or before ten (10) calendar days prior to the close of escrow, as set forth hereafter, the Developer shall provide to the Agency satisfactory evidence of the legal formation and existence of the Developer and the good standing of the Developer with the State of California (the "State") to transact business within the State, to hold title to the Property and to develop the Project, as hereinafter defined. Section 1.04. Prohibition Against Change in Ownership. Management and Control of Developer. for Assignment of Agreement. a. The qualifications and identities of the persons and entities comprising the Developer are of particular concern to the Agency. It is because of these qualifications and identities of the Developer that the Agency has entered into this Agreement with the Developer. No voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under this Agreement, except as expressly set forth herein. 3 DRAFT DRAFT b. Except as otherwise provided in this Agreement, the Developer shall not assign all or any part of this Agreement prior to the issuance of a Certificate of Completion applicable to all portions of the Property without the prior written approval of the Agency, which approval shall not be unreasonably withheld. C. The Developer shall promptly notify the Agency in writing of any and all changes whatsoever in the identity of the parties either comprising or in control of the Developer, as well as any and all changes in the interest or the degree of control of the Developer by any such party, of which information the Developer or any of its members, officers or shareholders has been notified or may otherwise have knowledge or information. This Agreement may be terminated by the Agency and the Agency may declare Developer in default if there is any significant or material change, whether voluntary or involuntary, in membership, ownership, management or control of the Developer (other than such changes occasioned by the death or incapacity of any individual) that has not been approved by the Agency at the time of such change, prior to issuance of a Certificate of Completion for the Property as hereinafter provided; provided, however, that: (a) the Agency shall first notify the Developer in writing of its intention to terminate this Agreement pursuant hereto, and (b) the Developer shall have twenty (20) calendar days following the date of receipt of such written notice to commence and thereafter diligently and continuously proceed with the cure of the default of the Developer under this Section 1.04(c), and (c) the Developer shall submit evidence of the satisfactory - 4 - DRAFT DRAFT completion of such cure to the Agency within thirty (30) calendar days following the receipt of such written notice in a form and substance deemed satisfactory to the Agency, in its reasonable discretion. ARTICLE II DISPOSITION OF PROPERTY Section 2.01. Purchase of Property. The Developer shall purchase, and the Agency shall sell, the Property under the terms of this Agreement and the attachments hereto. Section 2.02. Developer's Purchase Price. As the purchase price for the Property, the Developer shall pay to the Agency on or before the Close of Escrow, as hereinafter defined, and by means of the escrow hereunder a sum equal to Eight Hundred Seven Thousand Dollars ($807,000) (the "Purchase Price"). Section 2.03. Condition Precedent to the Opening of Escrow. Prior to the opening of Escrow, as hereinafter described, and as a condition precedent to the Agency's obligation to sell the Property to the Developer, the Developer shall have completed the following tasks: 5 DRAFT DRAFT a. Within the times set forth in the Schedule of Performance (Exhibit "D"), the Developer shall prepare and submit to the Agency preliminary plans and performance specifications for the proposed Project; b. Within the times set forth in the Schedule of Performance, the Developer shall prepare and submit application and pay all fees required for the City's Design Review Committee ("DRC") for approval of the Project by the City; c. Within the times set forth in the Schedule of Performance, the Developer shall complete Site Plan, Floor Plan, Elevations and Renderings, Preliminary Grading Plan, Landscape Plan and Preliminary Drainage and Utility Plans, all in accordance with Design Review Committee approval of the Project;° d. The Developer shall provide a full report on marketing efforts and results, thirty (30) days before the end of each one hundred eighty (180) day period after the date of this Agreement; and e. The Developer shall have obtained and submitted to the Agency an executed lease or contract of sale from a qualified tenant or purchaser who will lease or purchase the Project for uses in accordance with the provisions of Section 4.01 hereof;° - 6 - DRAFT DRAFT Section 2.04. Escrow. a. The Agency and the Developer agree to establish an escrow for the purchase and sale of the Property at First American Title Insurance Company, San Bernardino, California Telephone: (909) 889-0311), Attention: (the "Escrow Agent"). The escrow shall be opened within twenty-four(24) months of the date of this Agreement b. Prior to the opening of escrow, the Agency shall cause a Preliminary Title Report to be prepared and issued by First American Title Insurance for Order No. (the "Title Company") within ninety (90) days of the date of execution of this Agreement and shall provide the Developer with copies thereof along with legible copies of all reported title exceptions. Developer will respond in writing within sixty (60) days of receipt of said Preliminary Title Report and will indicate any exceptions which Developer requests to be removed. Within thirty (30) days of receipt of said response,Agency may terminate this Agreement and any obligations hereunder if the Agency believes, in its sole discretion, that removing such title exception(s) will place an undue burden on the Agency. The Agency and the Developer must approve the Preliminary Title Report in writing as a condition precedent to close of escrow C. The Agency and the Developer shall provide and execute such additional escrow instructions consistent with this Agreement as shall be necessary. The Escrow Agent hereby is empowered to act under this Agreement, and, upon - 7 - DRAFT DRAFT indicating its acceptance of this Section in writing, delivered to the Agency and the Developer, within five (5) calendar days after the establishment of the escrow, shall carry out its duties as the Escrow Agent hereunder. ° d. The Agency and the Developer shall deliver to the Escrow Agent all documents necessary for the conveyance of title to the Property, to the extent provided in this Agreement, in conformity with, within the times, and in the manner provided in this Agreement. ° e. The Agency and the Developer shall pay all fees, related to the transfer of the Property from the Agency to the Developer, promptly after the Escrow Agent has notified the Developer and the Agency of the amount of such fees, charges, pro rations and costs. The allocation of fees, charges, pro rations and costs shall be in accordance with the customary practice of Escrow Agent. °f. The Agency shall timely and properly execute, acknowledge and deliver to the Escrow Agent a grant deed conveying to the Developer title to the Property in accordance with the requirements of this Agreement. ° - 8 DRAFT DRAFT g. All funds received in escrow shall be deposited by the Escrow Agent in an insured account with any state or national bank doing business in the State of California, and such funds may be combined with other escrow funds of the Escrow Agent. Such funds shall draw the highest reasonable rate of interest and such interest shall accrue to the party to this Agreement who shall have made the deposit thereof with the Escrow Agent. h. All communications from the Escrow Agent to the Agency or the Developer shall be directed to the respective parties at the addresses set forth in Section 1.03 of this Agreement for notices, demands and communications between the Agency and the Developer. Section 2.05. Conveyance of Title and Delivery of Possession. a. Subject to the conditions set forth in Section 2.08 hereof and to any mutually agreed upon written extension of time or extensions otherwise authorized by this Agreement, conveyance to the Developer of title to the Property in accordance with the provisions of this Section and Section 2.07 of this Agreement shall be completed on or prior to within sixty (60) days of the opening of escrow ("Close of Escrow"). The Agency and the Developer agree to perform all acts necessary for conveyance of title to the Property, in the form and to the extent required herein, in sufficient time for title to be conveyed in accordance with this provision. - 9 - DRAFT DRAFT b. Possession of the Property shall be delivered to the Developer concurrently with the conveyance of title, or as otherwise provided in this Section. The Developer shall accept title and possession to the Property on the date established therefor in this Section. C. The acquisition of the Property or the acquisition of any parcels comprising the Property by the Developer must occur prior to June 30, 1998. In the event that the date for Close of Escrow cannot be met due to one or more of the conditions for Close of Escrow set forth in Section 2.08 of this Agreement having not been satisfied or waived, this Agreement shall be automatically extended for an additional period of thirty (30) days to permit the satisfaction or waiver of such unsatisfied conditions. The Agency and Developer may agree to such additional extensions not to exceed an additional ninety (90) days, provided there is a reasonable likelihood that such additional time will permit the satisfaction of the unsatisfied condition or conditions. To the extent the Property is not acquired within the times set forth herein, as extended, then the Agency's obligations under this Agreement shall be deemed terminated. Section 2.06. Form of Deed. The Agency shall convey to the Developer title to the Property in the condition provided in Section 2.07 of this Agreement by a grant deed substantially in the form attached hereto as Exhibit "C". - io - DRAFT DRAFT Section 2.07. Condition of Title. The Title to the Property conveyed by the Agency to the Developer shall be a marketable title free and clear of encumbrances and exceptions, except for: (a) the agreements, covenants and conditions of this Agreement and the Grant Deed, (b) such pre-existing easements or rights-of-way as may be disclosed by the Preliminary Title Report and approved by the Agency and the Developer and (c) real property taxes for the fiscal year in which escrow closes which constitute a lien not yet payable. Section 2.08. Conditions for Close of Escrow. a) The Agency's obligation to convey the Property to the Developer and the Close of Escrow shall be expressly conditioned upon satisfaction or waiver by the Agency of each of the following: 1. The Developer shall have deposited into the escrow the Purchase Price and all other sums required to be deposited by it into the escrow pursuant to this Agreement; 2. The Developer shall have provided to the Agency satisfactory evidence of the legal formation and existence of the Developer and the good standing of the Developer with the State of California to transact business within the State, to hold title to the Property and to develop the Project, as provided in Section 3.01(a) hereof; DRAFT DRAFT 3. The Developer shall have received approval from the Agency of financing commitments as set forth in Section 2.15 hereof; and 4. The Developer shall have received final approval by the Design Review Committee for the Project and shall have completed the obligations set forth in Section 2.03 hereof. 5. The City shall be prepared to issue building permits for the construction of the building improvements comprising the Project. b. The Developer's obligation to purchase the Property from the Agency and the Close of Escrow shall be expressly conditioned upon satisfaction or waiver by the Developer of each of the following: 1. The Agency shall be able to convey good, marketable and insurable title to the Property to Developer, subject only to those exceptions as set forth in Section 2.07 of this Agreement and delivery of title insurance evidencing such title as set forth in Section 2.11 of this Agreement. 12 - DRAFT DRAFT 2. The Developer shall have submitted in a timely manner all applications for any approvals required hereunder and shall have diligently pursued receipt of such approvals. The Developer shall have received final approval of any changes in zoning, variances, special use permits, site plan approvals, environmental approvals or other approvals under applicable law as are required for Developer's intended use of the Property as described in the Scope of Development (the "Intended Use"). For the purposes of this Agreement, "final approval" shall mean approval by the applicable governmental agency authorized to grant such approval and expiration of any and all appeal or challenge periods with respect to any such approval without any appeal being taken or judicial challenge to such approval being filed or threatened. 3. The results of any inspection, soil tests, drainage tests, survey, topographical analysis, engineering and/or architectural drawings (all to be performed at Developer's expense) do not disclose that the Property is unsuitable for the Intended Use as described in the Scope of Development. The Agency shall provide to Developer, its employees and agents, a license for access over and through the Property for the purposes of conducting any of the foregoing tests, inspections or surveys, provided the Developer shall hold the Agency harmless from any liability, damage or expense which either may incur by reason thereof. This requirement shall be deemed satisfied and the Agency's obligations and/or liability with respect thereto shall be deemed terminated if Developer has not provided - 13 - DRAFT DRAFT Agency with written objections within one hundred twenty (120) days of date of execution of this Agreement. 4. The Property shall constitute a single legal parcel and shall be in compliance with all of the applicable provisions of the Subdivision Map Act. 5. The results of any hazardous substance site assessment to be performed at Developer's expense on the Property does not disclose evidence suggesting the presence of any hazardous materials or environmental contamination, or if present, the same shall have been approved by Developer based on such assessment. The Developer agrees and acknowledges that Developers reliance on previously completed environmental assessment performed for the benefit of the Agency shall be at Developers own risk and shall not impose any liability upon the Agency. The requirements set forth in this subparagraph shall be deemed satisfied and the Agency's obligations or liability with respect thereto shall be deemed terminated if Developer has not provided the Agency with written objections within one hundred twenty (120) days of the date of execution of this Agreement. Section 2.09. Time and Place for Delivery of Documents to Escrow. Subject to any mutually agreed upon written extensions of time or any extensions otherwise authorized by this Agreement, the parties shall deposit with the Escrow Agent promptly at - 14 - 1DRAFT DRAFT such time as such documents have been fully prepared and executed, but in no event later than ten (10) calendar days before the date established for the conveyance of the Property, any and all documents which are required in order for escrow to close in accordance with this Agreement. The grant deed conveying the Property from the Agency to the Developer hereunder shall be prepared by the Agency, at the Agency's expense. The legal descriptions regarding the Property will be supplied by the Agency. All other documents required to be recorded in order to permit the Close of Escrow shall be prepared by the Developer at its cost and expense. Section 2.10. Payment of the Consideration and Recordation of the Grant Deed(s) and other Documents. Payment of the Purchase Price shall be made by the Developer to the Escrow Agent within five (5) business days following the date that the Escrow Agent submits notice to the Developer in writing that the grant deed conveying the Property to the Developer has been delivered to the Escrow Agent, that title is in the condition to be conveyed in conformity with the provisions of this Agreement and that escrow otherwise is in a condition to close. When the parties have deposited into escrow all documents and funds as required by this Agreement and all conditions for the Close of Escrow have been satisfied, the Escrow Agent shall promptly file for recordation among the land records in the Office of the County Recorder where the Property is located: (1) the grant deed to the Property, and (ii) this Agreement. The Escrow Agent shall thereafter promptly provide a copy of said recorded documents to both parties, shall promptly deliver - 15 - DRAFT DRAFT the Purchase Price to the Agency and shall promptly deliver to the Developer a title insurance policy insuring title in conformity with this Agreement. Section 2.11. Title Insurance. Concurrently with recordation of the grant deed to the Property, the Title Company shall provide and deliver to the Developer an ALTA owners policy of title insurance issued by the Title Company insuring that the title to the Property is as required pursuant to the terms of this Agreement. The title insurance policy shall be in the amount of the Purchase Price of the Property. Section 2.12. Taxes and Assessments. Ad valorem taxes and assessments, if any, on the Property and taxes upon this Agreement or any rights hereunder levied, assessed or imposed as to any period prior to conveyance of title through the escrow, shall be borne by the Agency. Section 2.13. Zoning of the Property. The Developer will undertake the obligation to confirm that the City's general plan and zoning ordinance permit the contemplated development, construction and operation of the Property in accordance with this Agreement, and Developer agrees to obtain any and all necessary conditional use permits required pursuant to the zoning ordinance, and Developer agrees to obtain any and all modifications or variances including, but not limited to, those modifications or variances necessary for height, parking, signs and any and all other matters. - 16 - DRAFT DRAFT Section 2.14. Condition of the Property. a. The Property shall be conveyed in an "as is" condition with no warranty or liability, except as otherwise provided herein, express or implied on the part of the Agency as to the condition of the soil, its geology or the presence of known or unknown faults or defects. b. It shall be the responsibility solely of the Developer, at the Developer's expense, to investigate and determine the soil and seismic conditions of the Property and its suitability for the development to be constructed thereon. It shall be the responsibility solely of the Developer, at the Developer's expense, to perform all work necessary to prepare the Property for development. The Developer shall not disapprove any soils report or soils condition which would permit the construction with normal foundation conditions of the contemplated improvements. Section 2.15. Submission of Evidence of Financing Commitments. a. As a condition to the Close of Escrow, the Developer shall submit to the Agency evidence reasonably satisfactory to the Agency that the Developer: (a) has obtained sufficient equity capital and firm and binding commitments for land purchase financing; (b) either has obtained or can obtain, as evidenced by a letter of intent or similar instrument, sufficient equity capital and firm and binding commitments for construction financing; and (c) either has obtained or can obtain, as evidenced by a letter of intent or similar instrument, sufficient equity capital and - 17 - DRAFT 8 DRAFT firm and binding commitments for permanent financing; all as may be necessary for the purchase of the Property and construction of the Project on the Property in accordance with this Agreement. In lieu of the foregoing, the Developer may submit evidence to the Agency that it has sufficient funds of its own for the purposes set forth in this Section. b. Any and all financing for the development of the Property shall be obtained from reputable, recognized and well-established financial institutions or lending sources including, but not limited to, banks, savings and loan institutions, insurance companies, real estate investment trusts, pension programs and the like. Whenever the source of financing for all or any part of the development is from other than the Developer, the Developer shall promptly submit the following to the Agency: 1. Copies of all construction and/or land purchase financing commitments received by the Developer; and 2. Proof of acceptance of each such loan commitment by the Developer and proof of payment of all up-front loan commitment fees, if any. C. The Director of the Agency shall approve or disapprove such documents and/or financing commitments or sources within fifteen (15) business - ls - DRAFT DRAFT days of receipt by the Agency of the documents and information required hereunder; provided, however, that the failure of the Director to disapprove any of the foregoing matters in writing within said fifteen (15) business day period shall be deemed to constitute approval thereof. d. Prior to submitting documents and evidence to the Agency as required by this Section, the Developer shall obtain approval by its lender for the Project of the form and manner of conveyance of the Property by the Agency to the Developer, as set forth in Sections 2.05, 2.06 and 2.07 hereof. In the event that said lender for the Project selected by the Developer disapproves of the form and manner of conveyance of the Property, as set forth in Sections 2.09, 2.10 and 2.11 hereof, the Developer shall in good faith use its best efforts to obtain the necessary financing for the Project from such other lender or lenders who approve said form and manner of conveyance. Section 2.16. Pre-Disposition Consideration. The Developer shall pay to the Agency each month during the term of this Agreement, and up until the sale of the Property from the Agency to the Developer, beginning on the date of execution of this Agreement, an amount equal to the ad valorem taxes, prorated, that would otherwise be paid on the Property if° the Property had an assessed valuation equal to Eight Hundred Ten Thousand Dollars ($810,000). If the sale of the Property is culminated, - 19 - DRAFT DRAFT then the total amount of in lieu payments described in this Section shall be applied as a credit (without credit for interest) to the Purchase Price for the Property. IN THE EVENT THAT THIS AGREEMENT EXPIRES WITHOUT THE SALE OF THE PROPERTY DUE TO THE FAILURE OF THE DEVELOPER TO PERFORM THE CONDITIONS PRECEDENT AS REQUIRED IN THIS ARTICLE Il, THE AGENCY SHALL HAVE THE RIGHT TO RETAIN ALL OR A PORTION OF THE AMOUNTS OTHERWISE PAID BY THE DEVELOPER TO THE AGENCY EQUAL TO ANY COSTS AND EXPENSES INCURRED BY THE AGENCY IN PREPARING AND IMPLEMENTING THIS AGREEMENT, AS LIQUIDATED DAMAGES AND/OR AS COMPENSATION FOR ITS EXPENSES, TIME AND EFFORT, AND FOR HAVING KEPT THE PROPERTY OUT OF THE REDEVELOPMENT MARKET DURING THE PENDENCY OF THIS AGREEMENT. EACH OF THE PARTIES ACKNOWLEDGES AGREEMENT TO THE FOREGOING PROVISION AND THE REASONABLENESS THEREOF UNDER THE CIRCUMSTANCES BY EXECUTION OF THIS AGREEMENT. Developer: Agency: - 20 - DRAFT DRAFT ARTICLE III DEVELOPMENT OF THE SITE Section 3.01. Development by Developer. a. Scope of Development. The Developer agrees to develop the Property as a two hundred thousand (200,000) square foot warehousing and distribution facility in accordance with and within the limitations established in the Scope of Development set forth in Exhibit "B" attached hereto and incorporated herein by reference. b. The City's zoning ordinance including, but not limited to, parking and height requirements, and the City's building requirements are applicable to the use and development of the Property pursuant to this Agreement. The Developer acknowledges that any change in the plans for development or the use of the Property as set forth in the Scope of Development shall be subject to the City's zoning ordinance and building requirements. No action by the Agency or the City with reference to this Agreement or related documents shall be deemed to constitute a waiver of any City parking, height or other requirements which are applicable to the Project or to the Developer, any successor in interest or tenant of the Developer or any tenant or successor in interest pertaining to the Property, except by modification or variance approved by the City consistent with this Agreement. The Agency shall cooperate with and shall assist the Developer in - 21 - DRAFT DRAFT order to obtain modifications or variances from City zoning regulations necessary to develop the Project consistent with this Agreement and, in particular, with the Scope of Development, within forty-five (45) calendar days following written application therefor by the Developer. Any failure by the City either to approve or disapprove any of such modifications or variances within said forty-five (45) calendar day period shall constitute an enforced delay hereunder, and the Schedule of Performance, as defined hereinafter, shall be extended by that period of time beyond said forty-five (45) calendar day period in which the City approves or disapproves such modifications or variances. C. The Scope of Development set forth in Exhibit"B" is hereby approved by the Agency upon its execution of this Agreement. The Project shall be developed and completed in conformance with the approved Scope of Development and any and all other plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and between the Developer and the Agency. The Agency agrees to approve preliminary and final construction plans and preliminary and final landscaping plans, if reasonably consistent with the approved Scope of Development. d. The approval of the Scope of Development by the Agency hereunder shall not be binding upon the City Council or the Planning Commission of the City - 22 - DRAFT DRAFT with respect to any approvals of the Project required by such other bodies. If any revisions of the Scope of Development as approved by the Agency shall be required by another government official, agency, department or bureau having jurisdiction over the development of the Property, the Developer and the Agency shall cooperate in efforts to obtain waivers of such revisions, or to obtain approvals of any such revisions which have been made by the Developer and have thereafter been approved by the Agency. The Agency shall not unreasonably withhold approval of such revisions. e. Notwithstanding any provision to the contrary in this Agreement, the Developer agrees to accept and comply fully with any and all reasonable conditions of approval applicable to all permits and other governmental actions affecting the Project and consistent with this Agreement. f. The Developer shall cause landscaping plans for the Project to be prepared by a licensed landscape architect. The Developer shall prepare and submit to the Agency for its approval, preliminary and final landscaping plans for the Property. These plans shall be prepared, submitted and approved within the times respectively established therefor in the Schedule of Performance as shown on Exhibit "D" attached hereto and incorporated herein by reference and shall be consistent with the Scope of Development. 23 - DRAFT � DRAFT g. The Developer shall prepare and submit development plans, construction drawings and related documents for the development of the Property consistent with the Scope of Development to the City and the Agency for review (including, but not limited to, architectural review of the exterior of structures); provided, however, that the Agency shall not have the right or responsibility to approve development plans, construction drawings or related documents for purposes of the issuance of a building permit or otherwise on behalf of the City, but shall only have the right of review and approval of such plans, drawings and documents for purposes of: (a) architecture and design of structures and the overall development of the Project, and (b) conformity of such plans, drawings and documents with the terms and conditions of this Agreement. The development plans, construction drawings and related documents shall be submitted in two stages -- preliminary and final drawings (i.e., working drawings), plans and specifications. Final drawings, plans and specifications are hereby defined as those which contain sufficient detail necessary to obtain a building permit from the City. Any such items submitted to and approved in writing by the Agency shall not be subject to subsequent disapproval by the Agency, and any such Agency approval shall not be unreasonably withheld. h. During the preparation of all drawings and plans for the Project, the Agency Staff and the Developer shall hold regular progress meetings to coordinate the preparation by the Developer, and the submission to and review by the City and - 24 - DRAFT DRAFT the Agency of construction plans and related documents. The Agency Staff and the Developer shall communicate and consult informally as frequently as is necessary to ensure that any such plans and related documents submitted by the Developer to the City and the Agency can receive prompt and speedy consideration. i. The Agency shall have the right of reasonable architectural review and approval of building exteriors and design of the Project. The Agency shall also have the right to review all plans, drawings and related documents pertinent to the development of the Property in order to ensure that they are consistent with this Agreement and with the Scope of Development set forth in Exhibit "B". j. The Developer shall timely submit to the City for its review and approval any and all plans, drawings and related documents pertinent to the development of the Property, as required by the City. The Agency shall cooperate with and shall assist the Developer in order for the Developer to obtain the approval of any and all development plans, construction drawings and related documents submitted by the Developer to the City consistent with this Agreement within thirty (30) calendar days following the City's receipt of said plans. Any failure by the City to approve any of such plans or to issue necessary permits for the development of the Property within said thirty (30) calendar day period shall constitute an enforced delay hereunder, and the Schedule of Performance shall be extended by that period of time beyond said thirty (30) calendar day period in which the City approves said - 25 - D AFT DRAFT plans; provided, however, that in the event that the City disapproves of any of such plans, the Developer shall within thirty (30) calendar days after receipt of such disapproval revise and resubmit such plans in accordance with the City's requirements and in such form and substance so as to obtain the City's approval thereof. k. The Agency shall in good faith use its best efforts to cause the City to approve in a timely fashion any and all plans, drawings and documents submitted by the Developer hereunder and to cause the City not to impose new conditions inconsistent with: (a) prior plans, drawings and documents approved by the City or (b) the Scope of Development. I. The Agency shall approve any modified or revised plans, drawings and related documents to which reference is made in this Agreement within the times established in the Schedule of Performance as long as such plans, drawings and related documents are generally consistent with the Scope of Development and any other plans which have been approved by the Agency. Upon any disapproval of plans, drawings or related documents, the Agency shall state in writing the reasons for such disapproval. The Developer, upon receipt of notice of any disapproval, shall promptly revise such disapproved portions of the plans, drawings or related documents in a manner that addresses the reasons for disapproval and reasonably meets the requirements of the Agency in order to obtain the Agency's - 26 - DRAFT DRAFT approval thereof. The Developer shall resubmit such revised plans, drawings and related documents to the Agency as soon as possible after its receipt of the notice of disapproval and, in any event, no later than thirty (30) calendar days thereafter. The Agency shall approve or disapprove such revised plans, drawings and related documents in the same manner and within the same times as provided in this Section for approval or disapproval of plans, drawings and related documents initially submitted to the Agency. M. If the Developer desires to make any change in the final construction drawings, plans and specifications and related documents after their approval by the Agency and/or the City, the Developer shall submit the proposed change in writing to the Agency and/or the City for approval. The Agency shall notify the Developer of approval or disapproval thereof in writing within thirty (30) calendar days after submission to the Agency. This thirty (30) calendar day period may be extended by mutual consent of the Developer and the Agency. Any such change shall, in any event, be deemed to be approved by the Agency unless rejected, in whole or in part, by written notice thereof submitted by the Agency to the Developer, setting forth in detail the reasons therefor, and such rejection shall be made within said thirty (30) calendar day period unless extended as permitted herein. The Agency shall use its best efforts to cause the City to review and approve or disapprove any such change as provided in Section 3.01(b) hereof. - 27 - DRAFT DRAFT n. The Developer, upon receipt of a notice of disapproval by the Agency and/or the City, may revise such portions of the proposed change in construction drawings, plans and specifications and related documents as are rejected and shall thereafter resubmit such revisions to the Agency and/or the City for approval in the manner provided in Section 3.01(b) hereof. o. The Developer shall have the right during the course of construction to make changes in construction concerning the interior of structures and "minor field changes"without seeking the approval of the Agency; provided, however, that such changes do not affect the type of use to be conducted within all or any portion of a structure. Said "minor field changes" shall be defined as those changes from the approved final construction drawings, plans and specifications which have no substantial effect on the improvements and are made in order to expedite the work of construction in response to field conditions. Nothing contained in this Section shall be deemed to constitute a waiver of or change in the City's Building Code requirements governing such "minor field changes" or in any and all approvals by the City otherwise required for such "minor field changes." P. The costs of developing the Property and of constructing all improvements thereon and adjacent thereto as set forth in the Scope of Development shall be borne by the Developer. Developer shall pay for the costs of any off-site improvements described in the Scope of Development. - 28 - DRAFT DRAFT q. The Developer shall at its expense cause to be prepared, and shall pay any and all fees pertaining to the review and approval thereof by the City, all required construction, planning and other documents reasonably required by governmental bodies pertinent to the development of the Property hereunder including, but not limited to, specifications, drawings, plans, maps, permit applications, land use applications, zoning applications and design review documents. r. The Developer shall pay for any and all costs as described in the Scope of Development which are attributable to the Developer concerning the design, construction, relocation and securing of permits for utility improvements and connections. The Developer shall obtain any and all necessary approvals prior to the commencement of applicable portions of said construction, and the Developer shall take reasonable precautions to ensure the safety and stability of surrounding properties during said construction. S. The Developer shall begin and complete all construction and development and undertake all obligations and responsibilities of the Developer within the times specified in the Schedule of Performance shown in Exhibit "D" attached hereto, or within such reasonable extensions of such times as may be granted by the Agency or as otherwise provided for in this Agreement. The Schedule of Performance shall be subject to revision from time to time as mutually agreed upon in writing by and between the Developer and the Agency. Any and all - 29 - DRAFT DRAFT deadlines for performance by the parties shall be extended for any times attributable to delays which are not the fault of the performing party and are caused by the other party, other than periods for review and approval or reasonable disapprovals of plans, drawings and related documents, specifications or applications for permits as provided in this Agreement. t. Prior to and during the period of construction of the Project, the Developer shall submit to the Agency written progress reports when and as reasonably requested by the Agency but in no event more frequently than every two (2) weeks. The reports shall be in such form and detail as may reasonably be required by the Agency, and shall include a reasonable number of construction photographs taken since the last such report submitted by the Developer. U. Prior to the commencement of construction on the Property, the Developer shall furnish, or shall cause to be furnished, to the Agency duplicate originals or appropriate certificates of public indemnity and liability insurance in the amount of One Million Dollars ($1,000,000.00) combined single limit, naming the Agency and the City as additional insureds. Said insurance shall cover comprehensive general liability including, but not limited to, contractual liability; acts of subcontractors; premises-operations; explosion, collapse and underground hazards, if applicable; broad form property damage, and personal injury including libel, slander and false arrest. In addition, the Developer shall provide to the Agency adequate proof of comprehensive automobile liability insurance covering - 30 - DRAFT DRAFT owned, non-owned and hired vehicles, combined single limit in the amount of One Million Dollars ($1,000,000.00) each occurrence; and proof of workers' compensation insurance. Any and all insurance policies required hereunder shall be obtained from insurance companies admitted in the State of California and rated at least B+: XII in Best's Insurance Guide. All said insurance policies shall provide that they may not be canceled unless the Agency and the City receive written notice of cancellation at least thirty (30) calendar days prior to the effective date of cancellation. Any and all insurance obtained by the Developer hereunder shall be primary to any and all insurance which the Agency and/or City may otherwise carry, including self insurance, which for all purposes of this Agreement shall be separate and apart from the requirements of this Agreement. Any insurance policies governing the Property as obtained by the Agency shall not be transferred from the Agency to the Developer. Appropriate insurance means those insurance policies approved by the Agency Counsel consistent with the foregoing. Any and all insurance required hereunder shall be maintained and kept in force until the Agency has issued the Certificate of Completion for the Property. V. The Developer for itself and its successors and assigns agrees that in the construction of the improvements on the property provided for in this Agreement, the Developer will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, religion, creed, national origin, or ancestry. - 31 - DRAFT DRAFT W. The Developer shall carry out its construction of the improvements on and off the Property in conformity with all applicable laws, including all applicable federal and state labor standards and requirements. The Agency covenants and agrees likewise to meet the requirements set forth in this Subsection with regard to any and all construction undertaken by the Agency in accordance with this Agreement. X. Before commencement of construction and development of any buildings, structures or other work or improvements upon the Property, the Developer shall, at its own expense, secure or shall cause to be secured, any and all permits which may be required for such construction, development or work by the City or any other governmental agency having jurisdiction thereof. The Agency shall cooperate in good faith with the Developer in the Developer's efforts to obtain from the City or any other appropriate governmental agency any and all such permits and, upon completion of applicable portions of the Project, certificates of occupancy. Y- Officers, employees, agents or representatives of the Agency and the City shall have the right of reasonable access to the Property, without the payment of charges or fees, during normal construction hours during the period of construction of the Project for the purposes of this Agreement including, but not limited to, the inspection of the work being performed in constructing the Project. Such officers, employees, agents or representatives of the Agency and/or the City - 32 - DRAFT DRAFT shall be those persons who are so identified by the Director. Any and all officers, employees, agents or representatives of the Agency and the City who enter the Property pursuant hereto shall identify themselves at the job site office upon their entrance on to the Property and shall at all times be accompanied by a representative of the Developer while on the Property; provided, however, that the Developer shall make a representative of the Developer available for this purpose at all times during normal construction hours upon reasonable notice from the Agency. The Agency shall indemnify and hold the Developer harmless from injury, property damage or liability arising out of the exercise by the Agency and/or the City of this right of access, other than injury, property damage or liability relating to the negligence of the Developer or its officers, agents or employees. Section 3.02. Responsibility of the Agency. The Agency, without any expense of the Developer therefor and without the creation of the assessments or claims against the Property as a result thereof, shall perform the work specified for the Agency to perform, if any, and shall assume the other obligations imposed on the Agency, if any, as set forth in the Scope of Development. Section 3.03. Taxes, Assessments. Encumbrances and Liens. The Developer shall pay prior to the delinquency all real property taxes and assessments assessed and levied on or against the Property subsequent to the close of the escrow and the conveyance to the Developer of title to the Property hereunder. The Developer shall not place and shall not allow to be placed on the Property any mortgage, trust deed, deed - 33 - DRAFT DRAFT of trust, encumbrance or lien not otherwise authorized by this Agreement. The Developer shall remove, or shall have removed, any levy or attachment made on the Property, or shall assure the satisfaction thereof, within a reasonable time but in any event prior to a sale of the Property, or any portion thereof, thereunder. Nothing herein contained shall be deemed to prohibit the Developer from contesting the validity or amounts of any tax assessment, encumbrance or lien, nor to limit the remedies available to the Developer in respect thereto. The covenants of the Developer set forth in this Section relating to the placement of any unauthorized mortgage, trust deed, deed of trust, encumbrance or lien, shall remain in effect only until all Certificates of Completion have been recorded with respect to the Property. Section 3.04. In Lieu Tax Payments/Tax Appeals. In addition to the provisions set forth in Section 2.16, to the extent the Developer fails to develop the Property in accordance with the terms and provisions of this Agreement once it has acquired the Property from the Agency, the Developer shall pay to the Agency an in lieu tax payment in the amount equal to the amount otherwise payable had the Property had an appraised valuation of° Five Million Five Hundred °Thousand Dollars °($5,500,000), at the end of each year that the Property remains undeveloped. The Developer agrees that for the duration of the Redevelopment Plan, it shall not institute, file or participate in any property tax assessed valuation appeals or challenges related to the Property or any portion thereof. Section 3.05. Prohibition Against Transfer. - 34 - DRAFT DRAFT a. Prior to the recordation of all Certificates of Completion with respect to the Property as set forth in Section 3.08 of this Agreement, the Developer shall not, without prior written approval of the Agency, or except as permitted by this Agreement, (1) assign or attempt to assign this Agreement or any right herein or (ii) make any total or partial sale, transfer, conveyance, lease, leaseback, or assignment of the whole or any part of the Property or the improvements thereon. This prohibition shall not apply to any of the following: (1) the reasonable grant of limited easements or permits to facilitate the development of the Property; (ii) leases, other than ground leases, to prospective tenants whose use of the Property is in conformity with the Community Redevelopment Law and all applicable zoning laws or ordinances. b. It is understood and agreed by the Developer that neither the Developer, nor its assigns or successors in interest to the Property or this Agreement, shall use or otherwise sell, transfer, convey, assign, lease, leaseback or hypothecate the Property or any portion thereof to any entity or party, or for any use of the Property, that is partially or wholly exempt from the payment of real property taxes pertinent to the Property, or any portion thereof, or which would cause the exemption of the payment of all or any portion of such real property taxes. C. In the absence of specific written agreement or approval by the Agency, no unauthorized sale, transfer, conveyance, lease, leaseback or - 35 - lDAFT DRAFT assignment of the Property shall be deemed to relieve the Developer or any other party from any obligations under this Agreement. Section 3.06. Security Financing: Right of Holders. a. Notwithstanding any provision set forth in Section 3.05 hereof to the contrary, mortgages, deeds of trust, or any other form of lien required for any reasonable method of financing are permitted before the recordation of the Certificate of Completion (referred to in Section 3.08 of this Agreement), but only for the purpose of securing loans of funds to be used for financing the acquisition of the Property, and any other expenditures necessary and appropriate to develop the Property under this Agreement. The Developer shall notify the Agency in writing in advance of any mortgage, deed of trust, or other form of lien for financing if the Developer proposes to enter into the same before the recordation of the Certificate of Completion. The Developer shall not enter into any such conveyance for financing without prior written approval of the Agency, b. In any event, the Developer shall promptly notify the Agency of any mortgage, deed of trust or other refinancing, encumbrance or lien that has been created or attached thereto prior to completion of the construction of the improvements on the Property whether by voluntary act of the Developer or otherwise; provided, however, that no notice of filing of preliminary notices or mechanic's liens need be given by the Developer to the Agency prior to suit being filed to foreclose such mechanic's lien. - 36 - DRAFT 19 DRAFT C. The words "mortgage" and "deed of trust" as used herein shall be deemed to include all other customary and appropriate modes of financing real estate acquisition, construction and land development. The Agency agrees to make such amendments regarding the rights of any lender as the approved lender shall reasonably require. d. The holder of any mortgage, deed of trust or other security interest authorized by this Agreement shall in no manner be obligated by the provisions of this Agreement to construct or complete the improvements or to guarantee such construction or completion; nor shall any covenant or any other provision in the grant deed for the Property be construed so to obligate such holder. Nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Property to any uses, or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement. e. Whenever the Agency shall deliver any notice or demand to the Developer with respect to any breach or default by the Developer in the completion of construction of the improvements, or any breach or default of any other obligations which might entitle the Agency to terminate this Agreement or exercise its right to re-enter under Section 5.07 hereof, the Agency shall at the same time deliver to each holder of record of any mortgage, deed of trust or other security interest authorized by this Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights of the Agency are concerned) have the right, at - 37 - DR`4FT DRAFT its option, to commence the cure or remedy of any such default and to diligently and continuously proceed with such cure or remedy, within thirty (30) calendar days after the receipt of the notice; and to add the cost thereof to the security interest debt and the lien of its security interest. If such default shall be a default which can only be remedied or cured by such holder upon obtaining possession, such holder shall seek to obtain possession with diligence and continuity through a receiver or otherwise, and shall remedy or cure such default within thirty (30) calendar days after obtaining possession; provided that in the case of a default which cannot with diligence be remedied or cured, or the remedy or cure of which cannot be commenced, within such thirty (30) calendar day period, such holder shall have such additional time as is reasonably necessary to remedy or cure such default of the Developer. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the improvements (beyond the extent necessary to conserve or protect the improvements or construction already made)without first having expressly assumed the Developer's obligations by written agreement satisfactory to the Agency. The holder in that event must agree to complete, in the manner provided in this Agreement, the improvements to which the lien or title of such holder relates and must submit evidence satisfactory to the Agency that it has the qualifications and financial responsibility necessary to perform such obligations. Any such holder completing such improvements in accordance herewith shall be entitled, upon written request made to the Agency, to be issued a Certificate of Completion by the Agency. - 38 - DRAFT DRAFT f. In any case where, ninety (90) calendar days after default by the Developer in the completion of construction of improvements under this Agreement, the holder of any mortgage, deed of trust or other security interest creating a lien or encumbrance upon the Property or any portion thereof has not exercised the option to construct the applicable portions of the Project, or has exercised the option but has not proceeded diligently and continuously with construction, the Agency may purchase the mortgage, deed of trust or other security interest by payment to the holder of the amount of the unpaid debt, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the holder by the Developer under the loan documents between holder and the Developer. If the ownership of the Property has vested in the holder, the Agency, if it so desires, shall be entitled to a conveyance from the holder to the Agency upon payment to the holder of an amount equal to the sum of the following: 1. The unpaid mortgage, deed of trust or other security interest debt, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the holder by the Developer under the loan documents between the holder and the Developer, at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings.) 39 - DRAFT DRAFT 2. All expenses, if any, incurred by the holder with respect to foreclosure. 3. The net expenses, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent ownership or management of the Property, such as insurance premiums and real estate taxes. 4. The cost of any improvements made by such holder. 5. An amount equivalent to the interest that would have accrued on the aggregate on such amounts had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by the Agency. 6. After expiration of the aforesaid ninety (90) calendar day period, the holder of any mortgage, deed of trust or other security affected by the option created by this Section, may demand, in writing, that the Agency act pursuant to the option granted hereby. If the Agency fails to exercise the right herein granted within ninety (90) calendar days from the date of such written demand, the Agency shall be conclusively deemed to have waived such right of purchase of the - 40 - DRAFT DRAFT applicable portion of the Property or the mortgage, deed of trust or other security interest. g. In the event of a default or breach by the Developer of a mortgage, deed of trust or other security interest with respect to the Property (or any portion thereof) prior to the issuance of a Certificate of Completion for the applicable portion or portions of the Property, and the holder has not exercised its option to complete the development, the Agency may cure the default prior to completion of any foreclosure. In such event, the Agency shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the Agency in curing the default. The Agency shall also be deemed to have a lien upon the Property (or any portion thereof) to the extent of such costs and disbursements. Any such lien shall be subordinate and subject to mortgages, deeds of trust or other security instruments executed for the sole purpose of obtaining funds to purchase and develop the Property as authorized herein. Section 3.07. Right of the Agency to Satisfy Other Liens on the Property after Conveyance of Title. After the conveyance of title to the Property by the Agency to the Developer and prior to the recordation of the Certificate of Completion (referred to in Section 3.08 of this Agreement), and after the Developer has had a reasonable time to challenge, cure or satisfy any unauthorized liens or encumbrances on the Property, the Agency shall after sixty (60) calendar days prior written notice to the Developer have the right to satisfy any such liens or encumbrances; provided, however, that nothing in this - 41 - DRAFT DRAFT Agreement shall require the Developer to pay or make provisions for the payment of any tax, assessment, lien or charge so long as the Developer in good faith shall contest the validity or amount thereof, and so long as such delay in payment shall not subject the Property, or any portion thereof, to forfeiture or sale. Section 3.08. Certificate of Completion. a. Following the written request therefor by the Developer and the completion of construction and development of the improvements, excluding any normal and customary tenant improvements and minor building "punch-list" items, to be completed by the Developer upon the Property, the Agency shall furnish the Developer with a Certificate of Completion for the Property, substantially in the form in Exhibit "E" attached hereto. Notwithstanding any provision set forth herein to the contrary, the completion of construction and development of improvements on the Property shall be deemed to include the completion of construction and development of any and all buildings on said Property and any and all parking, landscaping and related improvements necessary to support or which meet the requirements applicable to the building and its use and occupancy on said Property. b. The Agency shall not unreasonably withhold the issuance of such Certificate of Completion. The Certificate of Completion shall be, and shall so state, that it is a conclusive determination of satisfactory completion of all of the obligations of this Agreement with respect to the development of the Property. After the recordation of the Certificate of Completion, any party then owning or thereafter - 42 - DRAFT DRAFT purchasing, leasing or otherwise acquiring any interest in the Property shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement, except that such party shall be bound by any covenants contained in the grant deed, lease or other instrument of transfer which grant deed, lease or other instrument of transfer shall include the provisions of Section 4.01 through 4.05, inclusive, of this Agreement. Neither the Agency nor any other person, after the recordation of the Certificate of Completion, shall have any rights remedies or controls that it would otherwise have or be entitled to exercise under this Agreement with respect to the Property, as a result of a default in or breach of any provision of this Agreement, and the respective rights and obligations of the parties shall be limited to those set forth in the grant deed. C. The Certificate of Completion shall be in such form as to permit it to be recorded in the Recorder's Office of the County where the Property is located. d. If the Agency refuses or fails to furnish a Certificate of Completion for the Property after written request from the Developer, the Agency shall, within fifteen (15) calendar days of the written request or within three (3) calendar days after the next regular meeting of the Agency, whichever date occurs later, provide to the Developer a written statement setting forth the reasons with respect to the Agency's refusal or failure to furnish a Certificate of Completion. The statement shall also contain the Agency's opinion of the action the Developer must take to obtain a Certificate of Completion. If the reason for such refusal is confined to the - 43 - 1DRA►FT DRAFT immediate unavailability of specific items or materials for construction or landscaping at a price reasonably acceptable to the Developer or other minor building "punch-list" items, the Agency will issue its Certificate of Completion upon the posting of a bond or irrevocable letter of credit, reasonably approved as to form and substance by the Agency Counsel and obtained by the Developer in an amount representing a fair value of the work not yet completed as reasonably determined by the Agency. If the Agency shall have failed to provide such written statement within the foregoing period, the Developer shall be deemed conclusively and without further action of the Agency to have satisfied the requirements of this Agreement with respect to the applicable portion of the Property as if a Certificate of Completion had been issued therefor. e. Such Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the improvements described herein, or any part thereof. Such Certificate of Completion shall not be deemed to constitute a notice of completion as referred to in Section 3093 of the California Civil Code, nor shall it act to terminate the continuing covenants or conditions subsequent contained in the Grant Deed attached hereto as Exhibit "C". - 44 - DRAFT DRAFT ARTICLE IV USE OF THE SITE Section 4.01. Uses. The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property, or any part thereof, that upon completion of construction, Developer shall cause to be opened on the Property a fully fixtured warehouse and distribution facility. Developer agrees that at the time of opening, the Project will result in the creation of at least two hundred seventy five ( 275) direct jobs and two hundred (200) secondary jobs. It is understood and agreed by the Developer that neither the Developer, nor its assigns or successors in interest to the Property or this Agreement, shall use or otherwise sell, transfer, convey, assign, lease, leaseback or hypothecate the Property or any portion thereof to any entity or party, or for any use of the Property, that is partially or wholly exempt from the payment of real property taxes pertinent to the Property, or any portion thereof, or which would cause the exemption of the payment of all or any portion of such real property taxes. Section 4.02. Maintenance of the Property. The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property, or any part thereof, that the Developer, such successors and such assigns shall maintain in good condition the improvements on the Property, shall keep the Property free from any accumulation of debris or waste material, subject to normal construction job-site conditions, - 45 - DRAFT DRAFT and shall maintain in a neat, orderly, healthy and good condition the landscaping required to be planted in accordance with the Scope of Development. In the event the Developer, or its successors or assigns, fails to perform the maintenance as required herein, the Agency and/or the City shall have the right, but not the obligation, to enter the Property and undertake, such maintenance activities. In such event, the Developer shall reimburse the Agency and/or City for all reasonable sums incurred by it for such maintenance activities. Section 4.03. Obligation to Refrain from Discrimination. The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property; nor shall the Developer, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees of the Property. Section 4.04. Form of Nondiscrimination and Nonsegregation Clauses. The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property, or any part thereof, that the Developer, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any part thereof) on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person. All - 46 - !DRAFT 00 DRAFT deeds, leases or contracts pertaining thereto shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: a. In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." b. In leases: "The Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, - 47 - DRAFT DRAFT or occupancy, of tenants lessees, sublessee, subtenants, or vendees in the premises herein leased." c. In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of the premises herein transferred." The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument. Section 4.05. Effect and Duration of Covenants. The covenants established against discrimination shall remain in effect in perpetuity. The covenants respecting uses of the Property shall remain in effect for a period of ten (10) years from the date of execution of this Agreement, shall run with the land and shall constitute equitable servitudes thereon, and shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, and the City. - 48 - DRAFT DRAFT The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land for and in its own rights and for the purposes of protecting the interests of the community. The Agency shall have the right, if such covenants are breached, to exercise all rights and remedies and to maintain any actions or suits at law or in equity or such other proper proceedings to enforce the curing of such breaches to which it or any other beneficiary of such covenants may be entitled, including, without limitation, to specific performance, damages and injunctive relief. The Agency shall have the right to assign all of its rights and benefits hereunder to the City. ARTICLE V DEFAULTS, REMEDIES AND TERMINATION Section 5.01. Defaults - General. a. Subject to the extensions of time set forth in Section 6.05 hereof, failure or delay by either party to perform any term or provision of this Agreement shall constitute a default under this Agreement; provided, however, that if a party otherwise in default commences to cure, correct or remedy such default within thirty (30) calendar days after receipt of written notice specifying such default and shall diligently and continuously prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits), such party shall not be deemed to be in default hereunder. - 49 - DRAFT DRAFT b. The injured party shall give written notice of default to the party in default, specifying the default complained of by the nondefaulting party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. C. Any failure or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by either party in asserting any of its rights and remedies shall not deprive either party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. Section 5.02. Legal Actions. a. In addition to any other rights or remedies, either party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purposes of this Agreement. Such legal actions must be instituted in the Superior Court of the County of San Bernardino, State of California, in any other appropriate court in that County, or in the Federal District Court in the Eastern District of California. b. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. - 50 - DRAFT � DRAFT C. In the event that any legal action is commenced by the Developer against the Agency, service of process on the Agency shall be made by personal service upon the Director or Chairman or the Agency, or in such other manner as may be provided by law. d. In the event that any legal action is commenced by the Agency against the Developer, service of process on the Developer shall be made by personal service on Premis Partners (or such other Agent for service of process and at such address as may be specified in written notice to the Agency), or in such other manner as may be provided by law, and shall be valid whether made within or without the State of California. Section 5.03. Rights and Remedies are Cumulative. Except with respect to any rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the parties are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. Section 5.04. Damages. If either party defaults with regard to any provision of this Agreement, the nondefaulting party shall serve written notice of such default upon the defaulting party. If the defaulting party does not diligently commence to cure such default within thirty (30) calendar days after service of the notice of default and promptly - 51 - DRAFT DRAFT complete the cure of such default within a reasonable time, not to exceed ninety (90) calendar days (or such shorter period as may otherwise be specified in this Agreement for any specific default), after the service of written notice of such default, the defaulting party shall be liable to the other party for damages caused by such default. Section 5.05. Specific Performance. If either party defaults under any of the provisions of this Agreement, the nondefaulting party shall serve written notice of such default upon such defaulting party. If the defaulting party does not commence to cure the default and diligently and continuously proceed with such cure within thirty (30) calendar days after service of the notice of default, and such default is not cured within a reasonable time thereafter (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits), the nondefaulting party, at its option, may institute an action for specific performance of the terms of this Agreement, except as otherwise provided in Section 5.04 hereof. Section 5.06. Rights and Remedies of Termination. a. Termination by the Developer. The Developer may terminate this Agreement if the Agency does not tender conveyance of title to and possession of the Property to the Developer in the manner and condition and by the date provided in this Agreement (or any and all extensions thereof as authorized by this Agreement), and if any such failure is not cured within thirty (30) calendar days after written demand therefor submitted by the Developer to the Agency. Such written demand shall specify the Agency's default - 52 - DRAFT DRAFT and the action required to cure same. Developer may also terminate this Agreement if one or more of the conditions set forth in Section 2.08(b) of this Agreement have not been satisfied or otherwise waived by Developer by the date set for Close of Escrow, such termination to be effective thirty (30) calendar days after receipt by Agency of written notice from Developer specifying the one or more conditions set forth in Section 2.08(b) which have not been satisfied or waived by Developer. b. Termination by the Agency. 1. Notwithstanding any provision set forth in this Agreement to the contrary, upon written notice of default which shall specify the Developer's default and the action required to cure same and upon thirty (30) calendar days notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this Section, the Agency at its option may terminate this Agreement if following satisfaction of all conditions precedent for conveyance of the Property by the Agency to the Developer and at the time the Developer is required to deposit into escrow the Purchase Price, the Developer has not in fact made such deposit. 2. Subject to written notice of default which shall specify the Developer's default and the action required to cure same and upon thirty (30) - 53 - DRAFT DRAFT calendar days notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this Section, the Agency at its option may terminate this Agreement if the Developer in breach of this Agreement assigns or attempts to assign this Agreement, or any right therein, or attempts to make any total or partial sale, lease or leaseback, transfer or conveyance of the whole or any part of the Property or the improvements to be developed thereon in violation of the terms of this Agreement, and the Developer does not correct such violation within thirty (30) calendar days from the date of receipt of such notice. 3. Subject to written notice of default, which shall specify the Developer's default and the action required to cure same and upon thirty (30) calendar days notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this Section, the Agency at its option may terminate this Agreement if the Developer: (a) does not within the time limits set forth in this Agreement or as specifically provided in the Schedule of Performance, subject to extensions authorized by this Agreement due to force majeure or otherwise, submit development plans, construction drawings and related documents acceptable to the Planning Department and Building Division of the City for plan check purposes and in order to obtain building permits for the Project, together with applicable fees therefor, - 54 - DRAFT DRAFT all prepared to the minimum acceptable standards as required by the Planning Department and Building Division of the City for commencement of formal review of such documents and as required by this Agreement, or (b) does not carry out its other responsibilities under this Agreement or in accordance with any modification or variance, precise plan, design review and other environmental or governmental approvals and such default is not cured or the Developer does not commence and diligently and continuously proceed with such cure within thirty (30) calendar days after the date of receipt of written demand therefor from the Agency. 4. Subject to written notice of default which shall specify the Developer's default and the action required to cure same and upon thirty (30) calendar days notice to the Developer of the Agency's intent to terminate this Agreement pursuant to this Section, the Agency at its option may terminate this Agreement if upon satisfaction of all conditions precedent and concurrent therefor under this Agreement, the Developer does not take title to the Property under tender of conveyance by the Agency, and such breach is not cured within thirty (30) calendar days after the date of receipt by the Developer of written demand therefor from the Agency. - 55 - DRAFT 9) DRAFT Section 5.07. Right to Reenter. Repossess. Terminate and Revest. a. The Agency shall, upon thirty (30) calendar days notice to the Developer which notice shall specify this Section, have the right, at its option, to re-enter and take possession of all or any portion of the Property, together with all improvements thereon, and to terminate and revest in the Agency the estate conveyed to the Developer hereunder, if after conveyance of title, the Developer (or its successors in interest) shall: 1. Fail to commence construction of `all or any portion of the improvements as required by this Agreement for a period of ninety (90) calendar days after written notice to proceed from the Agency; provided that the Developer shall not have obtained an extension or postponement to which the Developer may be entitled pursuant to Section 6.05 hereof; or 2. Abandon or substantially suspend construction of all or any portion of the improvements for a period of ninety (90) calendar days after written notice of such abandonment or suspension from the Agency; provided that the Developer shall not have obtained an extension or postponement to which the Developer may be entitled to pursuant to Section 6.05 hereof; or - 56 - 1DRAFT DRAFT 3. Assign or attempt to assign this Agreement, or any rights herein, or transfer, or suffer any involuntary transfer, of the Property or any part thereof, in violation of this Agreement, and such violation shall not have been cured within thirty (30) calendar days after the date of receipt of written notice thereof from the Agency to the Developer. b. The thirty (30) calendar day written notice specified in this Section shall specify that the Agency proposes to take action pursuant to this Section and shall specify which of the Developer's obligations set forth in Subsections (1) through (3) herein have been breached. The Agency shall proceed with its remedy set forth herein only in the event that the Developer continues in default of said obligation(s) for a period of thirty (30) calendar days following such notice or, upon commencing to cure such default, fails to diligently and continuously prosecute said cure to satisfactory conclusion. C. The right of the Agency to reenter, repossess, terminate, and revest shall be subject and subordinate to, shall be limited by and shall not defeat, render invalid or limit: 1. Any mortgage, deed of trust or other security interest permitted by this Agreement; 57 - D AFT DRAFT 2. Any rights or interests provided in this Agreement for the protection of the holders of such mortgages, deeds of trust or other security interests; 3. Any leases, declarations of covenants, conditions and restrictions, easement agreements or other recorded documents applicable to the Property. d. The grant deed or ground lease to any portion of the Property conveyed or leased by the Developer to another party shall contain appropriate references and provisions to give effect to the Agency's right, as set forth in this Section under specified circumstances prior to the recordation of the Certificate of Completion, to reenter and take possession of such parcel, or any part thereof, with all improvements thereon, and to terminate and revest in the Agency the estate conveyed to the Developer. e. Upon the revesting in the Agency of title to the Property, or any part thereof, as provided in this Section, the Agency shall, pursuant to its responsibilities under State law, use its best efforts to resell the Property, or any part thereof, at fair market value as soon and in such manner as the Agency shall find feasible and consistent with the objectives of such law, to a qualified and responsible party or parties (as determined by the Agency) who will assume the obligations of making or completing the improvements, or such other improvements in their stead as shall - 58 - DRAFT DRAFT be satisfactory to the Agency and in accordance with the uses specified for the Property, or any part thereof. Upon such resale of the Property, or any part thereof, the proceeds thereof shall be applied: 1. First, to make any payment made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations incurred with respect to the making or completion of the agreed improvements or any part thereof on the Property, or part thereof; next to reimburse the Agency on its own behalf or on behalf of the City for all actual costs and expenses incurred by the Agency and the City, including but not limited to customary and reasonable fees or salaries to third party personnel engaged in such action (but excluding the Agency's or the City's general overhead expense), in connection with the recapture, management and resale of the Property or part thereof; all taxes, assessments and water and sewer charges paid by the City and/or the Agency with respect to the Property or part thereof; any amounts otherwise owing to the Agency by the Developer and its successor transferee; and 2. Second, to the extent that any and all funds which are proceeds from such resale are thereafter available, to reimburse the Developer, or its successor transferee, up to the amount equal to the sum of: (1) the - 59 - DRAFT DRAFT Purchase Price paid by the Developer for the Property (or allocable to the applicable part thereof); and (2) the costs incurred for the development of the Property, or applicable part thereof, or for the construction of the improvements thereon including, but not limited to, costs of carry, taxes and items set forth in the Developer's cost statement which shall be submitted to and approved by the Agency. 3. Any balance remaining after the foregoing application of proceeds shall be retained by the Agency. Section 5.08. Limitation on Rights and Remedies After Issuance of Certificate of Completion. After issuance by the Agency of the Certificate of Completion under Section 3.08 of this Agreement, the rights and remedies contained in this Article V shall be applicable only with respect to the covenants and agreements contained in Article IV of this Agreement. ARTICLE VI GENERAL PROVISIONS Section 6.01. Notices. Demands and Communications Between the Parties. a. Any and all notices, demands or communications submitted by any party to another party pursuant to or as required by this Agreement shall be proper - 60 - DRAFT � DRAFT if in writing and dispatched by messenger for immediate personal delivery, or by registered or certified United States mail, postage prepaid, return receipt requested, to the principal office of the Agency and the Developer, as applicable, as designated in Section 1.03(a) and Section 1.03(b) hereof. Such written notices, demands and communications may be sent in the same manner to such other addresses as either- party may from time to time designate as provided in this Section. Any such notice, demand or communication shall be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is dispatched by messenger for immediate personal delivery, or two (2) calendar days afterit is placed in the United States mail as heretofore provided. b. In addition to the submission of notices, demands or communications to the parties as set forth above, copies of all notices to any party shall also be sent to: (if the Developer) Premis Partners 74-225 Highway 111, Suite C Palm Desert, CA 92260 Attn: (if the Agency) San Bernardino Redevelopment Agency 201 N. "E" Street, 3rd Floor San Bernardino, CA 92401-1507 (with copy to) Sabo & Green, A Professional Corporation 23801 Calabasas Road, Ste. 1015 Calabasas, CA 91302 - 61 - 1DRA T DRAFT Section 6.02. Conflict of Interest. No member, official or employee of the Agency having any conflict of interest, direct or indirect, related to this Agreement and the development of the Property shall participate in any decision relating to the Agreement. The parties represent and warrant that they do not have knowledge of any such conflict of interest. Section 6.03. Warranty Against Payment of Consideration for Agreement. The Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. Third parties, for the purposes of this Section, shall not include persons to whom fees are paid for professional services if rendered by attorneys, financial consultants, accountants, engineers, architects and the like when such fees are considered necessary by the Developer. Section 6.04. Nonliability of Agency Officials and Employees. No member, official or employee of the Agency shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the Agency or for any amount which may become due to the Developer or to its successor, or on any obligations under the terms of this Agreement, except for gross negligence or willful acts of such member, officer or employee. Section 6.05. Enforced Delay: Extension of Time of Performance. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; - 62 - DRAFT DRAFT lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of public enemy; epidemics; quarantine restrictions; freight embargoes or lack of transportation; weather- caused delays; inability to secure necessary labor, materials or tools; delays of any contractors, subcontractor or supplier; acts of the other party other than as permitted or required by the terms of this Agreement; acts or failure to act of any public or governmental agency or entity other than as permitted or required by the terms of this Agreement(except that action or failure to act by the City or the Agency shall not extend the time for the Agency to act unless such extension is otherwise expressly authorized herewith unless such action or failure to act is the result of a lawsuit or injunction including by way of illustration, but not limited to, lawsuits pertaining to the adoption of the Agreement, the EIR and any other environmental documentation and procedures, eminent domain, and the like) or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. Any extension of time for any such cause hereunder shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) calendar days of the commencement of the cause. Times of performance under this Agreement may also be extended by mutual agreement in writing by and between the Agency and the Developer. Section 6.06. Inspection of Books and Records. The Agency shall have the right at all reasonable times at the Agency's cost and expense to inspect the books and records of the Developer pertaining to the Property and/or the development thereof as necessary for the Agency, in its reasonable discretion, to enforce its rights under this - 63 - 1DRAFT � DRAFT Agreement. Matters discovered by the Agency shall not be disclosed to third parties unless required by law or unless otherwise resulting from or related to the pursuit of any remedies or the assertion of any rights of the Agency hereunder. The Developer shall also have the right at all reasonable times to inspect the books and records of the Agency pertaining to the Property and/or the development thereof as pertinent to the purposes of this Agreement. Section 6.07. Approvals. a. Approvals required of the Agency or the Developer, or any officers, agents or employees of hither the Agency or the Developer, shall not be unreasonably withheld and approval or disapproval shall be given within the time set forth in the Schedule of Performance or, if no time is given, within a reasonable time. b. The ° Chairman of the Commission, the Secretary of the Agency and the Director of the Agency are each authorized to make such determinations as are provided for herein on behalf of the Agency. Each of the preceding officers when acting with the consent of legal counsel is further authorized to execute such documents and instruments as are necessary to carry jthe intent of this Agreement . Each such officer is further authorized to sign on his own authority amendments to this Agreement which are of routine or technical nature, including minor adjustments to the Schedule of Performance. - 64 - DRAFT 16 DRAFT Section 6.08. Real Estate Commissions. The Agency shall not be liable for any real estate commissions, brokerage fees or finder fees which may arise from or related to this Agreement. The Agency represents to Developer that it has not retained or entered into any Agreement with any broker in connection with the sale of the Property or negotiation of this Agreement. Section 6.09. Indemnification. The Developer agrees to indemnify and hold the City and the Agency, and their officers, employees and agents:harmless from and against all damages, judgments, costs, expenses and fees arising from or related to any act or omission of the Developer in performing its obligations hereunder. The Agency agrees to indemnify and hold the Developer and its officers, employees and agents, harmless from and against all damages,judgments, costs, expenses and fees arising from or related to any act or omission of the Agency in performing its obligations hereunder. Section 6.10. Release of Developer from Liability. Notwithstanding any provision herein to the contrary, the Developer shall be relieved of any and all liability for the obligations of the Developer hereunder with regard to the Property when a Certificate of Completion has been issued by the Agency hereunder, other than any covenants and obligations provided by the grant deed by which the Property is conveyed to the Developer hereunder. - 65 - DRA►FT DRAFT Section 6.11. Attorneys' Fees. If either party hereto files any action or brings any action or proceeding against the other arising out of this Agreement, seeks the resolution of disputes pursuant to Section 6.12 hereof, or is made a party to any action or proceeding brought by the Escrow Agent, then as between the Developer and the Agency, the prevailing party shall be entitled to recover as an element of its costs of suit or resolution of disputes pursuant to Section 6.12 hereof, and not as damages, its reasonable attorneys' fees as fixed by the Court or other forum for resolution of disputes as set forth in Section 6.12 hereof, in such action or proceeding or in a separate action or proceeding brought to recover such attorneys' fees. Section 6.12. Dispute Resolution. If any dispute shall arise concerning the provisions of this Agreement including, but not limited to, those provisions set forth in the Scope of Development attached hereto, such dispute shall be submitted to reference pursuant to Code of Civil Procedure Sections 638 to 645.1, inclusive, or, alternatively, to arbitration, on written notice of demand for arbitration ("Notice of Demand") of either party hereto given to the other. The arbitration shall be conducted pursuant to the provisions of Title 9 of Part 3 of the California Code of Civil Procedure (statutory section references in this Section shall be deemed to be references to the Code of Civil Procedure), as amended, amplified and modified by the following provisions: The arbitration shall be by a single neutral arbitrator. If the parties hereto have not agreed on the selection of the arbitrator within five (5) calendar days after giving of Notice of Demand, then either party hereto may petition the court to select the arbitrator pursuant to Section 1281.6. Each party hereto shall submit its nominees, if any, to the court within five (5) calendar days after - 66 - DRAFT DRAFT said petition is served and filed. The arbitrator shall make his award within forty-five (45) calendar days after his appointment. Certain periods of time set forth in said Title 9 shall be shortened as follows: Section 1284, 1288.4, 1290.2 and 1290.6--halved; Section 1288- -four (4) years to sixty (60) calendar days, and one hundred (100) days to thirty (30) calendar days; and Section 1288.2--one hundred (100) days to thirty (30) calendar days. Venue of the arbitration hearing and any court proceedings referenced below shall be in the county where the Property is located. The parties hereto as parties to any such arbitration shall have the right to petition the court to confirm, correct or vacate the arbitrator's award pursuant to Section 1285 and to appeal the decisions of the Superior Court in any such proceeding as provided in Section 1294 and 1294.2; provided, however, that any such appeal shall not stay or have the effect of staying the decision of the Superior Court. The costs of the arbitration and reimbursement to the other party for any and all legal fees related thereto pursuant to this Agreement, shall be borne by the losing party or in such proportions as the arbitrator shall decide. Nothing contained in this Agreement shall preclude either party hereto from seeking judicial relief which may not be obtainable or enforceable in, or which is in aid of, the arbitration proceedings referenced in this Section; provided that such judicial relief shall be sought in good faith and not as a subterfuge to avoid the arbitration procedures. Section 6.13. Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns.. - 67 - DRAFT DRAFT ARTICLE VII ENTIRE AGREEMENT, WAIVERS AND AMENDMENT Section 7.01. Entire Agreement. a. This Agreement shall be executed in four (4) duplicate originals each of which is deemed to be an original. This Agreement includes _ pages and 5 attachments, which constitute the entire understanding and Agreement of the parties. b. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to all or any part of the Property and the development thereof. C. None of the terms, covenants, agreements or conditions set forth in this Agreement shall be deemed to be merged with the grant deed conveying title to the Property, and this Agreement shall continue in full force and effect before and after such conveyance until issuance of the Certificate of Completion for the Property. 68 - DRAFT � DRAFT d. All waivers of the provisions of this Agreement and all amendments hereto must be in writing and signed by the appropriate authorities of the Agency and the Developer. ARTICLE Vlll TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY AND RECORDATION Section 8.01. Execution and Recordation. a. Following its execution by the Developer and prompt delivery thereafter to the Agency, this Agreement must be approved, executed and delivered by the Agency to the Developer within forty-five (45) calendar days after the date of signature by the Developer. In the event that the Agency has not approved, executed and delivered the Agreement to the Developer within the foregoing period, then this Agreement shall be deemed to be of no further force or effect unless the time for such approval, execution and delivery is extended by written notice from the Developer to the Agency. The date of this Agreement shall be the date when the Agreement shall have been approved by the Agency. b. The Developer and the Agency agree to permit recordation of this Agreement or any portion thereof against the Property in the Office of the County Recorder for the County where the Property is located. 69 - DRAFT DRAFT IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the dates set forth below. REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO a By: ° Director By: Secretary APPROVED AS TO FORM: SABO & GREEN, A Professional Corporation Agency Counsel PREMIS PARTNERS Date: By: Its: (All Signatures Must Be Notarized) SBEO/0001/DDA/PREMIS PARTNERS ONE 09/19/961:36 MMC - 70 - DRAFT 16 DRAFT EXHIBIT "A" LEGAL DESCRIPTION a� Exhibit A - Page 1 DRAFT DRAFT EXHIBIT"B" SCOPE OF DEVELOPMENT The Property shall be developed as a 200,000 square foot warehouse and distribution facility consisting of one or more structures, all as described herein and with a minimum assessed valuation upon completion of Five Million Five Hundred Thousand Dollars ($5,500,000). Structures on the Property shall generally be located as shown on the Site Plan approved by the City. The Property may be developed in accordance with this Agreement, but subject to the requirements of the Zoning ordinance of the City and any variances or modifications therefrom as approved by the City. The Developer shall cause the design and construction of the 18.57 plus/minus acre Property in accordance with the Schedule of Performance (Exhibit"D") and this Agreement as follows: The development shall be first class, constructed of quality materials, to City Code, and shall be unified in architectural theme and treatment throughout the Property and adjacent off-site areas, insofar as reasonable and practicable. All improvements to be constructed by the Developer shall be constructed or installed in accordance with the technical specifications, standards and practices of the City and in accordance with plans and specifications approved by the City. The Developer shall cause the proper documents to be filed and fees paid to all governmental or regulatory agencies, including utilities, for applications for all required permits and approvals. The Developer shall at its cost and expense be responsible for the design and construction of off-site improvements in accordance with any and all standards and requirements of the City, utilities, or other governmental authorities. The Project shall include on-site parking in accordance with applicable City regulations. The Developer shall design all structures, landscaping and parking areas to achieve a high degree of attractiveness and compatibility with the Property and area in which the Property is located. The Developer has heretofore at its cost and expense undertaken and completed any and all soils, utility and drainage studies, plans and reports pertinent to the development of the Property and has provided a copy of said studies and reports to the Agency. Exhibit B - Page 1 DRAFT � DRAFT EXHIBIT "C" GRANT DEED Recording Requested by: After Recordation, Mail to: Redevelopment Agency of the City of San Bernardino Mail Tax Statements to: GRANT DEED For valuable consideration, the receipt of which is hereby acknowledged, THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic, of the State of California (the "Grantor"), pursuant to and in accordance with the Community Redevelopment Law of the State of California, hereby grants to Premis ° Partners, a California limited partnership (the "Grantee"), the real property(the "Property") legally described in the document attached hereto, labeled Exhibit A, and incorporated herein by this reference. 1. The Property is conveyed subject to the Disposition and Development Agreement entered into between the Grantor and the Grantee, dated , 1996 (herein referred to as the "Agreement"). The provisions of the Agreement are incorporated herein by this reference and shall be deemed to be a part hereof as if set forth at length herein. 2. The Grantee covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, age, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Property. Exhibit C - Page 2 DRAFT DRAFT All deeds, leases or contracts made relative to the Property, shall contain the following nondiscrimination clauses: (a) In deeds: "The grantee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, age, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee, himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the following ` conditions: That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, age, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall the lessee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, subtenants, sublessees or vendees in the land herein leased." (c) In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, age, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land." 3. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Grant Deed shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or security instrument permitted by the Agreement; provided, however, that any successor of Grantee to the Property shall be bound by such remaining covenants, conditions, restrictions, limitations and provisions, whether such successor's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. Exhibit C - Page 3 DRAFT DRAFT 4. The terms and conditions set forth in Article IV of the Agreement and the covenants otherwise contained in this Grant Deed shall remain in effect for a period of five (5) years from the date hereof, except that the covenants against discrimination set forth in Article IV of the Agreement shall remain in effect in perpetuity and the covenants set forth in Article III of the Agreement shall remain in effect until they are satisfied in full. 5. The covenants contained in this Grant Deed shall be binding for the benefit of the Grantor and its successors and assigns, and such covenants shall run in favor of the Grantor for the entire period during which such covenants shall be in full force and effect, without regard to whether the Grantor is or remains an owner of any land or interest herein to which such covenants relate. The grantor, in the event of any breach of any such covenants, shall have the right to exercise all of the rights and remedies, and to maintain any actions at law or suits in equity or other proper proceedings to enforce the curing of such breach as provided in the Agreement or by law. The covenants contained in this Grant Deed shall be for the benefit of and shall be enforceable only by the Grantor and its successor. Exhibit C - Page 4 DRAFT DRAFT IN WITNESS WHEREOF, the Grantor and Grantee have caused this instrument to be executed on their behalf by their respective officers thereunto duly authorized, this day of , 19 Grantor: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO_ By: Chairperson By: Secretary APPROVED AS TO FORM: By: Counsel for Grantor The provisions of this Grant Deed are hereby approved and accepted. Grantee: By: Title: By: Title: APPROVED AS TO FORM: By: Exhibit C - Page 5 DRAFT DRAFT Counsel for Grantee EXHIBIT "D" SCHEDULE OF PERFORMANCE (Days shall be calendar days, and all dates herein are subject to change due to force majeure in accordance with Section 6.05 of the Agreement) (1) Agency approval of DDA (2) Developer prepares and submits Within 30 days of DDA approval preliminary soils report to Agency and preliminary financing plan (3) Developer submits to Agency and City Within 90 days of DDA approval concept site plan, floor plan elevations and related documents. (4) City and Agency review and approve or Within 30 days of Step 3 above disapprove concept site plan, floor plan, elevation and related documents (5) Developer submits revised site plan, floor Within 30 days of Step 4 above plan, elevations and preliminary landscape and grading plans with Agency comments and revisions incorporated (6) Developer submits complete marketing Within 30 days of Step 4 above plan, including budgets, target market lists and consultants employed (7) Developer submits complete Design Within 60 days of Step 4 above Review Submittal to City Planning Department, along with payment of all required fees and required number of submittal plans (8) Developer submits complete list of Each 180 days after Step 1 above prospective user inquiries and responses to marketing efforts Exhibit D - Page 1 DRAFT DRAFT (9) Developer opens escrow, Agency Within 24 months of Step 1 above deposits deed in escrow (10) Escrow closes, developer pulls permits Within 180 days of opening Exhibit D - Page 2 DRAFT DRAFT EXHIBIT "E" When Recorded, Mail to: CERTIFICATE OF COMPLETION We, , Chairman and , Secretary of the Redevelopment Agency of the City of San Bernardino (the "Agency") hereby certify as follows: By its Resolution No. _, adopted and approved , 199_, the Agency has resolved as follows: Section 1. The improvements required to be constructed in accordance with that certain Disposition and Development Agreement (the "Agreement") dated , by and between the Agency and Premis Partners, a California limited partnership (the "Developer") on that certain real property (the "Property") more fully described in Exhibit"A" attached hereto and incorporated herein by this reference, have been completed in accordance with the provisions of said Agreement. Section 2. This Certificate of Completion shall constitute a conclusive determination of satisfaction of the agreements and covenants contained in the Agreement with respect to the obligations of the Developer, and its successors and assigns, to construct and develop the improvements on the Property, excluding any normal and customary tenant improvements and minor building "punch-list" items, and including any and all buildings and any and all parking, landscaping and related improvements necessary to support or which meet the requirements applicable to the building and its use and occupancy on the Property, whether or not said improvements are on the Property or on other property subject to the Agreement, all as described in the Agreement, and to otherwise comply with the Developer's obligations under the Agreement with respect to the Property and the dates for the beginning and completion of construction of improvements thereon under the Agreement; provided, however, that the Agency may enforce any covenant surviving this Certificate of Completion in accordance with the terms and conditions of the Agreement and the grant deed pursuant to which the Property was conveyed under the Agreement. Said Agreement is an official record of the Agency and a copy of said Agreement may be inspected in the office of the Secretary of the Exhibit E - Page 1 DRAFT DRAFT Redevelopment Agency of the City of San Bernardino located at the 201 N. "E" Street, 3rd Floor, San Bernardino, California 93514, during regular business hours. Section 3. The Property to which this Certificate of Completion pertains is more fully described in Exhibit "A" attached hereto. DATED AND ISSUED this _day of , 199_. Exhibit E - Page 2 DRAFT