1991-0305_KINOSHITA PROPERTIES_Purchase and Sale AgreementPURCHASE AND SALE AGREEMENT/
JOINT ESCROW INSTRUCTIONS
To: First American Title
Insurance Company
114 East Fifth Street
Santa Ana, CA 92705
Telephone (714) 558-3211
Escrow No.: 1569009
Escrow Officer: Judy Moore
21 J1
re u' I r o
1
Title Company: First American
Title Insurance Company
114 East Fifth Street
Santa Ana, CA 92705
Telephone (714) 558-3211
Title Order No.: 1569009
formerly OR1494898-1)
Title Officer: Karl Pister
THIS PURCHASE AND SALE AGREEMENT/JOINT ESCROW INSTRUCTIONS
Agreement" herein) is entered into as of this 5th day of
March, 1991, by and between KINOSHITA PROPERTIES, a California
limited partnership ("Seller"), and the SAN JUAN CAPISTRANO
COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and
politic created and existing under the laws of the State of
California ("Buyer").
R E C I T A L S:
A. Seller is the owner of certain real property located
in the City of San Juan Capistrano, County of Orange, State of
California, constituting approximately 56.45 acres, and legally
described as set forth on Exhibit A attached hereto and by this
reference made a part hereof (the "Property"). For purposes
hereof, the term "Property" shall also include (i) all
buildings, improvements and structures located on the Property,
if any (collectively "Improvements"), and all appurtenances,
water rights, streets, alleys, easements, rights of way in or
to all streets or other interests in, on, across, in front of,
abutting, or adjoining the Property; (ii) all licenses,
permits, authorizations and approvals issued by governmental
authorities respecting the Property and Improvements, if any;
and (iii) all of the rights, title, interests, entitlements,
privileges and appurtenances which are in any way related to or
used in connection with the Property.
B. Seller desires to sell
desires to purchase the Property
conditions set forth herein.
C. Buyer and Seller desire
their Joint Escrow Instructions
to said sale and purchase.
the Property to Buyer and Buyer
from Seller on the terms and
that this Agreement constitute
to Escrow Holder with respect
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants, provisions and conditions contained herein,
the parties hereto agree as follows:
1. Purchase and Sale. Seller shall sell the Property tc
Buyer, and Buyer shall purchase the Property from Seller, on
and subject to the terms and conditions hereinafter set forth.
2. Escrow and Closing.
2.1 The consummation of the purchase and sale
contemplated by this Agreement shall take place at the offices
of First American Title Insurance Company, at the address set
forth above ("Escrow Holder"), through an escrow (the
Escrow"), which will be opened upon the execution hereof. The
Escrow shall close (the "Close of Escrow" or "Closing" herein)
on the date ("Closing Date") when Escrow is in a condition to
close pursuant to the terms hereof, but in no event later than
June 30, 1991, unless such date is extended by mutual agreement
of the parties. Time is of the essence herein.
2.2 A fully executed copy of this Agreement shall be
deposited with Escrow Holder as Joint Escrow Instructions upon
execution hereof by Buyer and Seller. Amended and/or
additional instructions may be received into Escrow from Buyer
and Seller. Escrow Holder is hereby appointed and designated
to act as such and is authorized and instructed to deliver
pursuant to the terms and conditions of this Agreement, the
documents and moneys to be deposited into Escrow as herein
provided, with terms and conditions contained herein to apply
to such Escrow. Seller and Buyer agree that each shall, during
the Escrow period, and thereafter if required by this Agreement
or Escrow Holder, execute any and all additional, amended
and/or supplemental escrow instructions and other documents and
perform any and all acts reasonably necessary and appropriate
to consummate the purchase and sale of the Property pursuant to
the terms of this Agreement. The covenant set forth in the
sentence immediately preceding shall survive the Close of
Escrow and delivery of the Deed. At the Closing, Seller shall
complete, execute and deliver to Buyer a Transferor's
Certificate of Non -Foreign Status ("Certificate") substantially
in the form of Exhibit B attached hereto and by this reference
made a part hereof.
2.3 The following environmental studies or surveys
Environmental Studies") have been completed relating to the
Property, and have been reviewed by and are fully acceptable to
Buyer; provided, however, that such review and acceptance shall
not prejudice in any way any of Buyer's rights against the
parties preparing the Environmental Studies:
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a) South Coast Geologic Services, Inc. report
dated December 18, 1990 relating to hydrocarbons,
pesticides and herbicides; and
b) ChemRisk (A Division of McLaren) report
dated January 28, 1991 and letter dated February 5,
1991, both relating to health -based soil cleanup
levels and DDT, DDE and DDD contamination.
Buyer agrees to bear the entire cost and expense
involved in obtaining the Environmental Studies. Except as
expressly set forth in Section 10.1 hereof, Buyer represents
and warrants to Seller that Buyer has made its own independent
investigation of the Property and is entering into this
Agreement in reliance solely on the Environmental Studies and
its own independent investigation of the Property, and not on
any representations whatsoever by Seller or on Seller's behalf
as to the condition of the Property, the presence or absence of
contaminated soil or other toxic materials, any restrictions
related to the development of the Property, or as to the
suitability of the Property for any purpose.
2.4 Seller hereby directs Escrow Holder to deliver,
immediately following the Close of Escrow, Seller's Escrow
proceeds according to the directions of Seller. At the
direction of Seller, the Note issued pursuant to Section 4.1
hereof shall be exchanged immediately following the Close of
Escrow for separate Notes. The recipients of the separate
Notes, their shares of the aggregate purchase price and prepaid
interest referred to in Section 4.1 hereof, and their addresses
and identification numbers are all set forth on Exhibit E
attached hereto and by this reference made a part hereof.
Any disputes regarding this Section 2.4 shall not affect Buyer
or Escrow Holder and shall in no event delay the Close of
Escrow.
3. Purchase Price. The purchase price for the Property
shall be Nine Million Five Hundred Thousand Dollars
9,500,000.00) (the "Purchase Price").
4. Payment of Purchase Price.
4.1 Prior to the Close of Escrow, Buyer shall execute
and deposit with Escrow Holder the San Juan Capistrano
Community Redevelopment Agency Non -Negotiable Note ("Note") in
the form attached hereto as Exhibit C and by this reference
made a part hereof.
Buyer shall also deposit with Escrow Holder the
prepaid interest installment of $1,000,000 due to Seller at the
Close of Escrow under the Note. All interest accruing on funds
deposited by Buyer shall be the property of Buyer.
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4.2 In addition, prior to the Close of Escrow, Buyer
shall deposit with Escrow Holder all such sums as Escrow Holder
shall require to cover Buyer's share of costs, prorated taxes
and insurance, if any, and other customary charges to be paid
by Buyer. Buyer shall also deposit with Escrow Holder such
other amounts as are provided in this Agreement to be paid by
Buyer, except as otherwise agreed by Seller and Buyer.
Title and Title Insurance.
5.1 Buyer has received a Commitment for Title
Insurance dated November 9, 1990 ("PTR") issued by First
American Title Insurance Company ("Title Company"). The
following exceptions contained in the PTR are hereby approved:
2, 6 (subject to Title Company providing CLTA Endorsement 103.1
for exception 6), 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, 18, 20,
and 23 (the "Approved Exceptions"). The following exceptions
contained in the PTR are disapproved: 1 (to the extent
delinquent), 21 and 22 (the "Disapproved Exceptions"). Title
Company has agreed to delete the following exceptions from the
PTR: 3, 4, 5, 13 and 19.
Buyer shall accept the Property subject to the
Approved Exceptions. With respect to the Disapproved
Exceptions, Seller, as its sole responsibility, shall use its
best efforts to remove or cause the same to be removed as
exceptions by the Title Company at its sole cost and expense.
Seller shall, at Closing, convey to Buyer fee
simple title to the Property by a grant deed in the form
attached hereto as Exhibit D and by this reference made a part
hereof (the "Deed") subject only to (i) current real property
taxes not yet due and payable, (ii) Approved Exceptions, and
iii) exceptions created by Buyer (collectively (i), (ii) and
iii) inclusive are hereafter referred to as the "Approved
Title Exceptions"). In the event Seller fails to cause the
removal of the Disapproved Exceptions by the Close of Escrow,
Buyer shall have the right, without prejudice to any rights and
remedies it may have at law or in equity for any damage or loss
caused by such failure, either to waive such objections and
close the Escrow or terminate this Agreement. Seller may elect
to remove any or all of the Disapproved Exceptions by
obtaining, at its sole cost and expense, an endorsement or
other insurance reasonably acceptable to Buyer, which
guarantees payment of all losses, damages, claims, obligations,
liabilities and expenses that may arise out of the Disapproved
Exceptions. Each party hereto reserves all rights it may have
against the other party hereto based on any breach of any
party's obligations under this Agreement.
5.2 Prior to the Closing, Seller shall deposit into
the Escrow the Deed duly executed and acknowledged and in
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recordable form sufficient to convey to Buyer fee title to the
Property in -accordance with Section 5.1 above.
5.3 At the Close of Escrow and as a condition
thereto, Seller shall furnish to Buyer an American Land Title
Association ("ALTA") Standard Coverage Owner's Policy of Title
Insurance or, at Buyer's election, a binder therefor (the
Policy") issued by Title Company insuring Buyer's interest in
the Property to be conveyed pursuant to this Agreement subject
only to: (i) the printed exceptions contained in the Policy,
and (ii) the Approved Title Exceptions. The Policy shall have
a liability limit in the amount of the Purchase Price. Seller
shall be responsible for the cost and expense of obtaining an
ALTA Standard Coverage Owner's Policy of Title Insurance with
respect to the Property, as well as the cost and expense of any
endorsements or other insurance that is used by Seller to
remove any or all of the Disapproved Exceptions. In the event
the cost of the ALTA Standard Coverage Policy is higher than
the cost of a CLTA Policy, Buyer shall be responsible for any
such extra cost. Buyer shall be responsible for the excess
cost of obtaining an ALTA Extended Coverage Policy (over the
ALTA Standard Coverage Policy cost), the cost and expense of
any additional endorsements or other insurance requested by
Buyer, and the cost and expense of any surveys obtained in
connection with the Property.
6. Escrow Costs and Closing Fees, Taxes and Charges.
Escrow costs and closing fees, taxes and charges shall be borne
by the parties at the Closing as follows:
a) Buyer and Seller shall each pay one-half (1/2) of
the escrow fees;
b) Seller shall bear all recording fees, documentary
and other transfer taxes and sales taxes;
c) Buyer and Seller shall bear their respective
costs of obtaining the Policy, any surveys, and other title
charges as provided in Section 5 hereof;
d) Buyer and Seller shall each pay its own legal,
accounting, and other advisory fees or costs; provided,
that Buyer shall be responsible for and shall reimburse
Seller for the legal fees payable to Paul, Hastings,
Janofsky & Walker in an amount not to exceed $60,000.00,
upon delivery to Buyer of statements or invoices evidencing
such amounts; and
e) Seller shall bear all premiums on insurance
policies relating to periods before the Close of Escrow, as
well as all delinquent taxes and interest and penalties
relating to the Property. Utility and similar deposits
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0
shall be transferred to Buyer only if Buyer accepts the
same; otherwise, such deposits shall belong to and be
recovered by Seller.
7. Cancellation of Escrow. If the Escrow does not close
in accordance with Section 2.1 hereof, the parties agree and
hereby instruct Escrow Holder to cancel this transaction
without further instruction from the parties hereto, and to
return all documents and funds to the parties depositing the
same. Such cancellation will not waive any breaches of this
Agreement, and the non -breaching party shall be entitled to
pursue all appropriate relief, including specific performance.
8. Proration. Current real property taxes, based upon
the latest available tax bill, and current special assessments
on the Property shall be prorated as of the Closing Date. Any
bond or assessment payable in installments shall be assumed by
Buyer.
9. Obligations of Escrow Holder at Closing. Upon
Closing, Escrow Holder shall promptly undertake all of the
following in the manner hereinafter provided:
a) Cause the duly executed and acknowledged Deed and
the Termination (as defined in Section 12.1(f) below) to be
recorded with the County Recorder of the County of Orange,
State of California;
b) Deliver the Note to Seller;
c) Cause the Title Company to issue to Buyer the
Policy referred to in Section 5.3, or a firm commitment
therefor;
d) Release the prepaid interest installment referred
to in Section 4.1 to Seller less Seller's costs and
expenses as set forth in this Agreement; and
e) Cause the duly executed and acknowledged Right of
First Refusal, in the form attached hereto as Exhibit I and
by this reference made a part hereof (the "Right of First
Refusal"), to be recorded with the County Recorder of the
County of Orange, State of California.
10. Representations and Warranties of Seller.
10.1 Seller hereby makes the following representa-
tions, covenants and warranties to Buyer, each of which shall
be deemed remade immediately prior to and at Close of Escrow:
a) Seller is a limited partnership duly
organized, validly existing and in good standing under the
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laws of the State of California, the persons executing this
Agreement on behalf of Seller are the general partners of
Seller and are duly authorized to do so, and Seller has
full power, right and authority to enter into this
Agreement and to complete all transactions in connection
herewith. The execution, delivery and performance of this
Agreement have been authorized by all necessary partnership
action and this Agreement is the legal, valid and binding
agreement of Seller enforceable in accordance with its
terms;
b) The closing of the transactions contemplated
by this Agreement will not constitute or result in any
default or event that with a notice or lapse of time, or
both, would be a default, breach or violation of any lease,
mortgage, deed of trust, or covenant affecting the Property
by which Seller or the Property is bound, or to Seller's
best actual knowledge any other agreement, instrument or
arrangement, by which Seller or the Property is bound. No
consent or joinder by any third party is required for this
Agreement or the performance of Seller's obligations
hereunder, other than: (i) the consent of Operator (as
defined below) to the Termination, which consent has been
or will be obtained by Seller; or (ii) the consent of the
partners of Seller and Kiyoko Kinoshita (the "Former
Partner"), which consent has been or will be obtained by
Seller in the form attached hereto as Exhibit F and by this
reference made a part hereof. Notwithstanding the
foregoing, the conveyance of the Property by Seller to
Buyer will terminate the right to use certain property and
pumping facilities as described in the Deed from Seller to
the City of San Juan Capistrano and described on Exhibit A
attached hereto;
c) Seller is not currently negotiating with any
other party for the sale of the Property and it has not
entered into any understanding (whether binding or not)
relative thereto;
d) To the best actual knowledge of Seller,
there is presently no claim, litigation, proceeding or
governmental investigation pending or threatened against or
relating to the Property or the transactions contemplated
hereby;
e) No notice of violation of any law, order,
judgment, ordinance, permit, rule, regulation, requirement,
covenants, conditions or restrictions or easement affecting
or relating to the use or occupancy of the Property has
been given to Seller by any governmental agency having
jurisdiction or by any other person entitled to enforce the
same; provided, that this clause shall not cover notices
that are not currently affecting the use of the Property or
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that are immaterial to Seller and Operator (as defined in
Section -12.1(f) herein;
f) To the best actual knowledge of Seller, the
Property conforms to all applicable ordinances and other
laws, orders, judgments, ordinances, permits, rules,
regulations and requirements, and to all covenants,
conditions and restrictions and easements affecting or
relating to the use or occupancy of the Property;
g) To the best actual knowledge of Seller, no
hazardous materials or wastes or other toxic substances of
any kind have been produced, disposed of, stored and/or
used on the Property other than: (i) pesticides,
herbicides and fertilizers, including DDT, DDE and DDD; and
ii) gasoline, diesel fuel, motor oil, and butane gas. To
the best actual knowledge of Seller, there are located on
the Property: (A) three underground storage tanks which
hold or held gasoline, one of which is being used on the
date hereof; (b) two above -ground storage tanks holding
diesel fuel on the date hereof; and (C) one above -ground
storage tank holding butane gas on the date hereof. To the
best actual knowledge of Seller, none of the three
underground storage tanks located on the Property are
leaking or are otherwise defective. To the best actual
knowledge of Seller, there is no proceeding or inquiry by
any governmental entity or authority or insurance
underwriter with respect to the matters described in this
Section 10.1(g). Notwithstanding any contrary provision in
this Agreement, any information contained in or disclosed
by the Environmental Studies shall automatically modify and
revise the matters otherwise set forth in this Section 10.1;
h) Seller is transferring the Property strictly
on an "AS -IS" and with all faults basis, without warranty
of any kind, whether express or implied, except as
expressly set forth in this Agreement. Seller represents
that the Improvements located on the Property in some cases
are over 112 years old and that, in Seller's opinion the
current uses of the Improvements should not be expected to
continue without material problems or material repairs
being needed to the Improvements. Seller hereby discloses
that all or a portion of the Improvements may be a
historical site or of other historical significance;
i) To the best actual knowledge of Seller, no
defects or conditions of the Property (other than the
Improvements) or the soil exist which will materially
impair the use of the Property as it is being used on the
date hereof. To the best actual knowledge of Seller, there
are no encroachments onto the Property or encroachments by
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the Improvements onto any easement area or any adjoining
property;
j) Seller has notified Buyer in writing of all
material adverse facts within Seller's actual knowledge
respecting the Property (excluding the Improvements);
k) Prior to the date of this Agreement, Seller
has provided to Buyer copies of the following documents, if
any, in the possession or control of, or reasonably
available to, Seller: (a) any surveys of the Property; (b)
all plans, drawings and specifications respecting the
Property and all soils and water reports, engineering,
archeological and architectural studies, site plans,
grading plans, topographical maps and similar data
respecting the Property; and (c) copies of any leases
affecting the Property.
1) If Seller becomes aware of any fact or
circumstances which would change a representation, covenant
or warranty, then Seller will immediately give notice of
such changed fact or circumstance to Buyer, but such notice
shall not relieve Seller of its liabilities or obligations
with respect thereto. Seller shall issue a certificate to
Buyer at the Closing Date stating that all of the
representations, covenants and warranties contained in this
Section 10 are true and correct as of said date, except as
to facts, if any, concerning which Buyer was notified in
writing by Seller.
10.2 All representations, covenants and warranties
contained in Section 10.1 shall be true and correct on the date
hereof, and on the Closing Date, and liability for
misrepresentation or breach of warranty, covenant or
representation shall survive the execution and delivery of this
Agreement, the Deed and the Closing for a period of three (3)
years following the Closing, except for (a) and (b) above,
which shall survive indefinitely. It is agreed that Buyer's
damages resulting from misrepresentation or breach of warranty,
covenant or representation by Seller shall include all loss,
damage, liability or expense, including court costs and
reasonable attorneys' fees, reasonably incurred or sustained by
Buyer in connection therewith.
11. Warranties and Representations of Buyer.
11.1 Buyer hereby makes the following representations,
covenants and warranties to Seller, each of which shall be
deemed remade immediately prior to and at Close of Escrow:
a) Buyer has full right, power and authority to
enter into this Agreement and to perform all of its
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obligations hereunder, and Buyer has full right and power
to acquire the Property as provided herein. The execution,
delivery and performance of this Agreement have been
authorized by all necessary action by Buyer and this
Agreement constitutes the legal, valid and binding
agreement of Buyer enforceable in accordance with its terms;
b) The Note is a general obligation of Buyer;
c) Buyer adopted Ordinance No. CRA 1 on
February 17, 1987 (the "Ordinance") which Ordinance is
effective on the date hereof. Pursuant to the Ordinance,
sales tax can be collected by Buyer without any other
action except a resolution of Buyer, which Buyer covenants
to adopt when and as provided in the Note;
d) Buyer will not take any action to impair the
pledge of Revenues (as defined in the Note). Buyer
recognizes that an impairment of the Revenues will
constitute an "impairment of contract" and is currently
prohibited under California Revenue and Taxation Code
Section 7202.8;
e) All requirements of the California
Environmental Quality Act ("CEQA") have been or will be
complied with by Buyer, with respect to the acquisition of
the Property by Buyer, as follows: (i) the Board of
Directors of Buyer has determined that the purchase of the
Property provided for in this Agreement is categorically
exempt from the requirements of CEQA pursuant to California
Code of Regulations, Title 14, Section 15317; (ii) the
Notice of Exemption, a copy of which is attached hereto as
Exhibit G and by this reference made a part hereof, will be
filed immediately following the Close of Escrow in the
Clerk's Office of Orange County, California; and (iii)
should it be necessary to prepare an environmental impact
report following the Closing, Buyer shall promptly do so at
its sole cost; provided, however, that Buyer discloses that
the 35 -day period for challenging the Notice of Exemption
will not have expired at the Close of Escrow;
f) The closing of the transactions contemplated
by this Agreement will not constitute or result in any
default or event that with a notice or lapse of time, or
both, would be a default, breach or violation of any lease,
mortgage, deed of trust, or covenant affecting Buyer or
Buyer's holding of the Property, or to Buyer's best actual
knowledge any other agreement, instrument or arrangement by
which Buyer is bound or affecting Buyer's holding of the
Property. No consent or joinder by any third party is
required for this Agreement or the performance of Buyer's
obligations hereunder; and
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g) The acquisition and holding of the Property
by Buyer following the Close of Escrow will not violate any
law, order, judgment, ordinance, permit, rule, regulation,
requirement, covenants, conditions or restrictions
affecting Buyer; provided, however, that a determination by
a court that the transfer of the Property violated CEQA
will not constitute a breach by Buyer of the foregoing
representation. Buyer is not legally obligated to sell or
otherwise transfer all or any portion of the Property to
the City of San Juan Capistrano or any other person or
entity at the date hereof, and will not be so obligated at
any time before the Close of Escrow.
11.2 All representations, covenants and warranties
contained in Section 11.1 or in the Note shall be true and
correct on the date hereof, and on the Closing Date, and
liability for misrepresentation or breach of warranty, covenant
or representation shall survive the execution and delivery of
this Agreement, the Deed and the Closing. It is agreed that
Seller's damages resulting from misrepresentation or breach of
warranty, covenant or representation by Buyer shall include all
loss, damage, liability or expense, including court costs and
reasonable attorneys' fees, reasonably incurred or sustained by
Seller in connection therewith.
12. Conditions Precedent.
12.1 The obligations of Buyer to consummate the
transactions contemplated by this Agreement are subject to the
satisfaction, or written waiver by Buyer, at or before the
Closing, of the following conditions:
a) Accuracy of Representations of Warranties.
All representations and warranties of Seller contained in
this Agreement shall have been true and correct when made
and shall be true and correct at and as of the Closing Date
with the same force and effect as if the same had been made
at and as of the Closing Date.
b) Performance. Seller shall have performed,
satisfied and complied with all of the covenants,
agreements, conditions and provisions of this Agreement to
be performed, satisfied or complied with by Seller on or
before the Closing Date.
c) Consents. Seller shall have obtained and
delivered to Buyer any and all approvals, consents,
novations and authorizations of third parties and
governmental agencies necessary to effectuate the
transactions contemplated by this Agreement.
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d) Certificate. Buyer shall have received at
the Closing a certificate signed by the general partners of
Seller, and dated as of the Closing Date, that (i) all
representations and warranties of Seller were true and
correct when made and remain true and correct as of the
Closing Date; (ii) all of the covenants, agreements,
obligations, and conditions of Seller required to have been
performed as of or prior to the Closing have been fully
performed and complied with; and (iii) all of the
conditions to Buyer's obligations under this Agreement
required to be satisfied by the Closing Date by Seller have
been satisfied and fulfilled.
e) Condition of Property and Title. All
requirements contained in Section 2 and Section 5 of this
Agreement shall have been satisfied.
f) Operator's Lease. The lease of the Property
to Kinoshita Farms, Inc., a California corporation
Operator"), shall have been cancelled and terminated by a
Termination of Lease ("Termination") executed and
acknowledged by Operator and Seller in the form attached
hereto as Exhibit L and by this reference made a part
hereof.
g) Litigation Certificate. Seller shall
provide Buyer with a certificate executed by the general
partners of Seller to the effect that no litigation
regarding this Agreement or the transactions contemplated
hereby is pending at the Close of Escrow; provided, that
Seller shall not be in default if such a certificate cannot
be delivered or if the Close of Escrow is delayed as a
result of the inability of Seller to deliver such a
certificate.
h) The sale of farm equipment and the execution
and delivery of the Contract Service Agreement mentioned in
Section 15 below shall have occurred or shall occur as of
the Closing.
12.2 The obligations of Seller to consummate the
transactions contemplated by this Agreement are subject to the
satisfaction, or written waiver by Seller, at or before the
Closing, of the following conditions:
a) Accuracy of Representations of Warranties.
All representations and warranties of Buyer contained in
this Agreement shall have been true and correct when made
and shall be true and correct at and as of the Closing Date
with the same force and effect as if the same had been made
at and as of the Closing Date.
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b) Performance. Buyer shall have performed,
satisfied and complied with all of the covenants,
agreements, conditions and provisions of this Agreement to
be performed, satisfied or complied with by Buyer on or
before the Closing Date.
c) Notice of Litigation. An appropriate
official of Buyer shall certify in writing to Seller that
there is no pending or threatened litigation affecting the
validity of the Note or the Notes.
d) CEQA. An appropriate official of Buyer will
execute and deliver to Seller the instrument entitled
Certification of Action Taken Pursuant to the California
Environmental Quality Act in the form of Exhibit M attached
hereto and by this reference made a part hereof.
e) Legal Opinion. Buyer's counsel, Stradling,
Yocca, Carlson & Rauth, shall have issued its legal
opinions in the form attached hereto as Exhibits H and J
and by this reference made a part hereof. Buyer's counsel
shall have delivered to Seller a reliance letter in the
form attached hereto as Exhibit K and by this reference
made a part hereof, which shall permit Seller and
subsequent holders of the Notes to rely on the two legal
opinions issued to Buyer and referenced in the preceding
sentence.
f) Consents. Buyer shall have obtained and
delivered to Seller any and all approvals, consents,
novations and authorizations of third parties and
governmental agencies necessary to effectuate the
transactions contemplated by this Agreement.
g) Certificate. Seller shall have received at
the Closing a certificate signed by Buyer, and dated as of
the Closing Date, that (i) all representations and
warranties of Buyer were true and correct when made and
remain true and correct as of the Closing Date; (ii) all of
the covenants, agreements, obligations, and conditions of
Buyer required to have been performed as of or prior to the
Closing have been fully performed and complied with; and
iii) all of the conditions to Seller's obligations under
this Agreement required to be satisfied by the Closing Date
by Buyer have been satisfied and fulfilled.
h) Litigation Certificate. Buyer shall provide
Seller with a certificate executed by Buyer to the effect
that no litigation regarding this Agreement or the
transactions contemplated hereby is pending at the Close of
Escrow; provided, that Buyer shall not be in default if
such a certificate cannot be delivered or if the Close of
03/04/91
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Escrow is delayed as a result of the inability of Buyer to
deliver -such a certificate.
i) The sale of farm equipment and the execution
and delivery of the Contract Service Agreement mentioned in
Section 15 below shall have occurred or shall occur as of
the Closing.
13. Rights of Escrow Holder.
13.1 If without fault on the part of Escrow Holder,
the Escrow is involved in any controversy or litigation, the
parties hereto shall jointly and severally hold Escrow Holder
free and harmless from and against any and all loss, cost,
damage, liability or expense, including court costs and
reasonable attorneys' fees to which Escrow Holder may be put or
which it may incur by reason of or in connection with such
controversy or litigation.
13.2 Escrow Holder shall not be held liable for the
sufficiency or correctness as to form, manner of execution or
validity of any instruments deposited in the Escrow, other than
documents prepared by Escrow Holder, nor as to the identity,
authority or right of any person executing the same, other than
on behalf of Escrow Holder, nor for the failure of any such
person to comply with any of the provisions of any agreement,
contract or other instrument referred to herein, other than
Escrow Holder. Its duties hereunder shall be limited to the
safety of any documents and moneys received by it as Escrow
Holder and for the disposition of the same in accordance with
the written instructions of the parties hereto.
13.3 Except as otherwise provided in this Agreement,
no party shall have the right to withdraw any money or
documents deposited by it with Escrow Holder prior to Closing
or termination of the Escrow in accordance with the terms of
this Agreement.
13.4 If necessary, Escrow Holder is hereby authorized
to insert the recordation date of the Deed as the Closing Date,
and to fill in blank spaces, in any and all documents and
instruments delivered to it, including the Note, so long as it
is done in conformance with this Agreement.
14. Public Use of Property.
14.1 It is understood by Buyer and Seller that the
Purchase Price was established, in part, based on Buyer's
intent to retain the Property for park uses, open space uses,
agricultural uses, and other public and quasi -public uses.
Accordingly, Buyer has no intention either now or in the future
of selling or otherwise transferring all or any portion of the
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Property for private development uses, private commercial uses,
or for-profit uses (collectively "Prohibited Uses"); provided
that leases of all or any portion of the Property for five (5)
years or less, and transfers in connection with uses that are
consistent with the zoning at the date hereof for that portion
of the Property so transferred, shall be permitted
collectively "Permitted Uses"). As a material inducement to
Seller to sell the Property to Buyer pursuant to this
Agreement, in the event that, at any time prior to payment in
full of the Note or the Notes, Buyer (or any successor in
interest to all or any portion of the Property) transfers all
or any portion of the Property for Prohibited Uses (other than
Permitted Uses), any "net profit" (as defined below) from such
transfer will be split fifty percent (50%) to Buyer and fifty
percent (50%) to Seller. The term "net profit" shall be
determined as the difference between: (a) the fair market
value, less closing costs and expenses of such transfer, or the
net sales price in the case of a sale, of that portion of the
Property transferred, less (b) the sum of (x) the Purchase
Price and all closing costs and expenses incurred by Buyer in
connection with this Agreement (other than prepaid interest)
and (y) such amount increased from and after the Close of
Escrow to the date of such transfer by the increase in the
United States Department of Labor, Bureau of Labor Statistics,
Consumer Price Index for Urban Wage Earners and Clerical
Workers, Los Angeles -Anaheim- Riverside Average, Sub -Group,
All Items" (1982/84=100) (the "Index"); provided, however,
that the rate of increase shall in any event not be less than
two percent (2%) per annum nor more than four percent (4%) per
annum. If at any time there shall not exist the Index in the
format recited herein, any official index published by the
Bureau of Labor Statistics or successor or similar governmental
agency shall be used as may then be in existence and shall be
most nearly equivalent thereto. This Section 14 shall apply to
any person or entity acquiring all or any portion of the
Property for which the Right of First Refusal does not apply.
14.2 In the event that Seller has dissolved as
described in Section 2.4 hereof, any "net profit" required to
be paid to Seller pursuant to Section 14.1 hereof shall instead
be paid to the partners of Seller and the Former Partner in the
proportions set forth on Exhibit E attached hereto. In such
event, the partners of Seller and the Former Partner shall be
notified regarding any matters referenced in this Section 14 by
Seller, using the addresses set forth on Exhibit E attached
hereto.
15. Operation of Property. The Property is leased by
Seller to Operator on the date hereof, and Operator conducts
flarming activities on the Property. Seller and Buyer
acknowledge that Buyer and Operator are entering into the
following separate agreements, which will be executed and will
close at the same time as the Close of Escrow:
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a) A sale of farming equipment for $50,000 in cash;
and
b) A Contract Service Agreement between Buyer and
Operator relating to farming activities to be conducted by
Buyer on the Property.
16. Disclosure. Neither party will issue any public
announcement concerning the sale of the Property without the
approval of the other party, which approval shall not be
unreasonably withheld or delayed, except as may be required by
law.
17. Covenant of Further Assurances. The parties mutually
covenant and agree that they will execute promptly all other
documents and perform all further acts as may be necessary or
desirable to carry out the purposes of this Agreement.
18. Assignment. Except as otherwise provided in the Right
of First Refusal, Buyer may not assign this Agreement or any
rights granted hereunder without the prior written consent of
Seller, which Seller in its sole discretion may deny or
approve. Except as otherwise provided in this Agreement or any
of its exhibits, Seller may not assign this Agreement or any
rights granted hereunder without the prior written consent of
Buyer, which Buyer in its sole discretion may deny or approve.
19. Legal and Equitable Enforcement of this Agreement. In
the event the Close of Escrow and the consummation of the
transactions herein contemplated do not occur by reason of any
default by Seller or Buyer, the non -defaulting party shall be
entitled to all of its out-of-pocket expenses incurred in
connection with the transaction, and shall have the right to
pursue any legal or equitable, including without limitation an
action for damages and/or specific performance of this
Agreement.
20. Notices. Any notice, demand, approval, consent, or
other communication required or desired to be given under this
Agreement shall be in writing and shall be either personally
served or mailed by depositing in the United States mails,
certified, return receipt requested, postage prepaid, addressed
to the party to be served, with the copies indicated below, at
the last address given by that party to the other under the
provisions of this section. All such communications shall be
deemed delivered at the earlier of actual receipt or three (3)
business days following mailing as aforesaid.
SELLER: Kinoshita Properties
P. O. Box 201
San Juan Capistrano, CA 92693
Attn: Mr. Shigeru Kinoshita
Mr. Yasuo Kinoshita
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Copy to: Gerald E. Wilson, Esq.
Paul, Hastings, Janofsky & Walker
695 Town Center Drive, 17th Floor
Costa Mesa, CA 92626
BUYER: San Juan Capistrano Community
Redevelopment Agency
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: Mr. Stephen B. Julian,
Executive Director
Copy to: Thomas P. Clark, Esq.
Stradling, Yocca, Carlson & Rauth
660 Newport Center Dr., Suite 1600
Newport Beach, California 92660
21. Brokers. Other than the fees or compensation payable
by Seller to James S. Okazaki and Edward E. Haworth in
connection with the transaction contemplated hereby, Buyer and
Seller each represent to the other that they have not entered
into any agreements or incurred any obligations which might
result in the obligation to pay a real property sales or
brokers commission or finders fee on this transaction. Each
party shall defend, indemnify and hold the other party harmless
from and against all claims for any real property sales or
brokerage commission or finder's fee on this transaction made
by any person or entity through or on behalf of such party.
22. Attorneys' Fees. If either party commences an action
against the other to enforce any of the terms hereof or because
of the breach by either party of any of the terms hereof, the
losing party shall pay to the prevailing party reasonable
attorneys' fees, costs and expenses incurred in connection with
the prosecution or defense of such action.
23. Binding Effect. Subject to the limitations on
assignment set forth in Section 18 above, each covenant,
condition, representation and warranty contained in this
Agreement shall inure to the benefit of and be binding upon the
parties to this Agreement, and their respective heirs, personal
representatives, permitted assigns and other successors in
interest.
24. Survival. All warranties, covenants and other
obligations contained in this Agreement shall survive the Close
of Escrow and continue in full force and effect after the Close
of Escrow except as otherwise provided in Sections 10 and 11.
25. Entire Agreement. This Agreement supersedes any prior
agreement, including without limitation, the Letter of Intent
signed by Seller and Buyer on October 30, 1990, and contains
03/04/91
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0
the entire agreement of the parties on matters covered. No
other agreement, statement or promise made by any party or to
any employee, officer or agent of any party that is not in
writing and signed by all of the parties to this Agreement
shall be binding.
26. California Law to Apply. This Agreement shall be
governed by the laws of the State of California and any
question arising hereunder shall be construed or determined
according to such laws.
27. Captions. Captions at the beginning of each numbered
section of this Agreement are solely for the convenience of the
parties and are not a part of this Agreement.
28. Time is of the Essence. Time is of the essence of
this Agreement.
29. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
30. Partial Invalidity. If any term or provision of this
Agreement or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement, or the application of such
term or provision to persons or circumstances other than those
as to which it is held invalid or unenforceable, shall not be
affected thereby, and each such term and provision of this
Agreement shall be valid and be enforced to the fullest extent
permitted by law.
31. Number and Gender. As used herein, the singular shall
include the plural, and any obligations of any two (2) or more
parties shall be joint and several; and as used herein, the
masculine shall include the feminine and neuter genders.
32. Effect of Waiver of Provision on Remedy. No waiver by
a party of any provision of this Agreement shall be considered
a waiver of any other provision or any subsequent breach of the
same or other provision, including the time for performance of
any such provision. The exercise by a party of any remedy
provided in this Agreement or at law shall not prevent the
exercise by that party of any other remedy provided in this
Agreement or at law.
33. Indemnification. Seller and Buyer shall each
indemnify the other (the "indemnitee") against and hold the
indemnitee harmless from any and all loss, damage, liability or
expense, including court costs and reasonable attorney fees,
which the indemnitee may reasonably incur or sustain by reason
03/04/91
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0 6
of or in connection with any misrepresentation made by or on
behalf of the indemnitor contained in any certificate or other
instrument furnished or to be furnished by the indemnitor
hereunder, any breach of the indemnitor's warranties or
representations in this Agreement, or the failure of the
indemnitor to fulfill any of its covenants or agreements under
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Purchase and Sale Agreement/Joint Escrow Instructions as of the
day and vear first above written.
SELLER:
BUYER:
Approved as to form:
STRADLING, YOCCA,
C RLSO 6
SiDecial Counsel
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KINOSHITA PROPERTIES, a
California limited partnership
By.
Shiger Kinos a,
Generafl Partner
By: / u
asuo Kihoshita,
General Partner
SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY
Chairman, ' v
Board of Directors
Attest:
FA
i
g y cretary
LIST OF EXHIBITS
A Legal Description of Property
B Transferor's Certificate
C Non -Negotiable Note
D Partnership Grant Deed
E Note Holders
F Consent of Partners
G Notice of Exemption
H Legal Opinion of Stradling, Yocca, Carlson &
Rauth
I Right of First Refusal
J Legal Opinion of Stradling, Yocca, Carlson &
Rauth (re prepaid interest)
K Reliance Letter
L Termination of Lease
M CEQA Certificate (Section 12.2(d))
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EXHIBIT "A"
DESCRIPTION OF PROPERTY
The East 60 acres of all that portion of the
hereinafter described land lying Easterly of the
center line of McKinley Avenue, as described in the
Deed recorded February 17th, 1897 in Book 29, Page 389
of Deeds.
Beginning at a stake at the Southeast corner of the
Northeast quarter of Section 11, Township 8 South,
Range 8 West, San Bernardino Base and Meridian; thence
North 69 1/2 deg. West 37.52 chains to a fence corner;
thence South 20 1/2 deg. West 35.26 chains; thence
East 38.97 chains to a pipe; thence South 9 links to a
pipe in the center of the West end of a lane; thence
East 1/2 deg. South 28.53 chains to a stake in the
center of said lane; thence North 20.82 chains; thence
West 20 chains to the point of beginning.
Excepting therefrom that portion included within the
land described in the Deed to the City of San Juan
Capistrano recorded February 17, 1976 in Book 11648,
Page 1825 of Official Records.
And excepting therefrom any crops growing on the land
at the date of recordation of the Deed of the San Juan
Capistrano Community Redevelopment Agency.
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EXHIBIT "B"
TRANSFEROR'S CERTIFICATE
To inform the San Juan Capistrano Community Redevelopment
Agency, a public body corporate and politic ("Transferee") that
withholding of tax under Section 1445 of the Internal Revenue
Code of 1986, as amended ("Code") will not be required upon the
transfer of certain real property to the Transferee by
Kinoshita Properties, a California limited partnership
Transferor"), the undersigned hereby certifies the following
on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms
are defined in the Code and the Income Tax Regulations
promulgated thereunder);
2. The Transferor's U.S. employer identification number
is 95-6317433; and
3. The Transferor's office address is P.O. Box 201, San
Juan Capistrano, CA 92693.
The Transferor understands that this Certification may be
disclosed to the Internal Revenue Service by the Transferee and
that any false statement contained herein could be punished by
fine, imprisonment, or both.
The Transferor understands that the Transferee is relying
on this Certification in determining whether withholding is
required upon said transfer.
The Transferor hereby agrees to indemnify, defend and hold
the Transferee harmless from and against any and all
obligations, liabilities, claims, losses, actions, causes of
action, rights, demands, damages, costs and expenses of every
kind, nature or character whatsoever (including, without
limitation, actual attorneys' fees and court costs) incurred by
the Transferee as a result of: (i) the Transferor's failure to
pay U.S. Federal income tax which the Transferor is required to
pay under applicable U.S. law; or (ii) any false or misleading
statement contained herein.
0 i
Under penalty of perjury the Transferor declares that it
has examined this Certification and to the best of its
knowledge and belief it is true, correct and complete.
Date: March 6, 1991
KINOSHITA PROPERTIES, a
California limited partnership
By:
Shigeru Kinoshita,
General Partner
By:
Yasuo Kinoshita,
General Partner
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0
EXHIBIT "C"
10
9,500,000 March 6, 1991
For value received, the SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY, a public body corporate and politic
created and existing under the laws of the State of California
the "Agency"), promises to pay to KINOSHITA PROPERTIES, a
California limited partnership (the "Note Holder"), on March 1,
2011, the principal amount of Nine Million Five Hundred
Thousand Dollars (1$9,500,000) in lawful money of the United
States of America in federal or other immediately available
funds, and to pay interest semiannually payable on March 1 and
September 1 of each year, commencing on September 1, 1991 (each
an "Interest Payment Date"), with interest commencing at the
rate of 8.5% per annum (calculated on the basis of twelve
thirty -day months and on a year of 360 days) and with such rate
to be adjusted semiannually (the "Interest Rate"). Such
adjustments in the Interest Rate shall be calculated on the
last day of the month immediately preceding each Interest
Payment Date, commencing August 31, 1991 (each a "Calculation
Date"), and the new Interest Rate shall equal 8.5% plus or
minus the incremental change in the Base Rate (as later
defined) from 7.34% (for example, an increase in the Base Rate
to 8.34% shall result in an increase in the Interest Rate to
9.5%). The term "Base Rate" shall mean the yield to maturity
of the Bond Buyer Municipal Bond Index (an index of 40
actively -traded tax-exempt bonds), as published by The Bond
Buyer, or, if such yield is no longer published, the most
nearly equivalent yield for tax-exempt bonds as published by
The Bond Buyer or The Wall Street Journal, and in such Case
this Note shall be amended to reflect the new Base Rate
determination procedures. The Base Rate shall be determined on
each Calculation Date, or if such publication is not published
on such Calculation Date, the first preceding date of
publication. The Interest Rate as so adjusted shall be the new
Interest Rate for the period commencing on the next Interest
Payment Date following the Calculation Date and ending on the
next following Interest Payment Date. In no event shall the
interest rate on this Note be less than seven percent (7k) or
more than ten percent (10%) per annum.
On the date hereof, the Agency shall, furthermore, pay the
Note Holder the amount of One Million Dollars ($1,000,000),
which represents prepaid interest on this Note, and which shall
be applied as a credit against semiannual interest installments
until such credit is depleted. In computing the amount of
prepaid interest available to credit against the first
semiannual interest installment, such amount of prepaid
interest shall be future valued (calculated on the basis of
twelve thirty -day months and on a year of 360 days) from the
date hereof to the first Interest Payment Date, assuming a
future value rate of eight percent (8%) per annum (the "Credit
Amount"). Interest payable on the first Interest Payment Date
shall be reduced by the Credit Amount. The remainder of the
unutilized Credit Amount on such date shall be future valued in
the same manner to the next Interest Payment Date and again
applied as a credit against the semiannual interest installment
then due. This method of computation and credit shall continue
until the full amount of the future valued prepaid interest is
depleted.
Payments with respect to this Note shall be made on each
respective payment date to the Note Holder, such payments to be
made at the following address, or at such other place as the
Note Holder may from time to time designate in writing:
Kinoshita Properties
P. O. Box 201
San Juan Capistrano, California 92693
Attention: Mr. Shigeru Kinoshita
Mr. Yasuo Kinoshita
This Note is executed and delivered pursuant to a Purchase
and Sale Agreement/Joint Escrow Instructions dated March 5,
1991 by and between the Agency and the Note Holder (the
Purchase Agreement"), to which reference is hereby made for a
description of the rights, limitation of rights, obligations
and duties thereunder and hereunder of the Agency and the Note
Holder.
This Note is not subject to prepayment by the Agency,
except by the prior written consent of the Note Holder, which
the Note Holder in its sole discretion may deny or -approve.
The unpaid principal balance of this Note and accrued interest
may be accelerated at the election of the Note Holder if the
Note Holder incurs, or is responsible for in the case of any
trust, federal estate taxes; provided, however, that (a) the
amount to be accelerated by this provision shall be limited to
the total estate and income tax liability resulting from the
holding of this Note or the acceleration hereof as a result of
this provision, (b) acceleration may only occur upon six (6)
months prior written notice to the Agency, such notice to be
sent to the address provided in the Purchase Agreement, and (c)
the total amount accelerated in any three (3) year period shall
not exceed Two Million Dollars ($2,000,000).
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This Note, together with interest hereon, is payable from
any sources legally available to the Agency. In addition, this
Note, together with accrued interest hereon, is specifically
secured by a lien on and pledge of all of the Agency's right,
title and interest to sales taxes (the "Revenues") collected
pursuant to Ordinance No. CRA 1 adopted by the Agency on
February 17, 1987, Ordinance No. 241 adopted by the City of San
Juan Capistrano on October 8, 1973, and Ordinance No. 593
adopted by the City of San Juan Capistrano on February 17, 1987
collectively, the "Ordinances"). Copies of the Ordinances
have been provided to the Note Holder.
The Agency hereby covenants with the Note Holder as follows:
1) Ordinances. If and to the extent any payment under
this Note is not paid when due, the Agency will apply the
Ordinances to the full extent permitted by law, and will levy a
sales tax within the project area covered by the Ordinances
sufficient to discharge all principal and interest due under.
this Note forthwith;
2) Impairment of Contract. This Note shall be in default
if the Agency takes or permits, if the Agency has such power,
any action to impair the pledge of Revenues under this Note or
the Agency does not ensure that this Note is not impaired by
any change in the Ordinances or the law governing collection of
sales taxes by the Agency generally, including but not limited
to the "impairment of contract" provisions of the California
Revenue and Taxation Code Section 7202.8;
3) Parity and Superior Debt. This Note will be in
default if the Agency at any time issues debt or other
obligations on a parity with, or superior to, this Note, unless:
a) At least 30 days' prior written notice shall have
been given to the Note Holder (such notice to be sent to the
address provided herein);
b) A sales tax revenue certificate and report of an
independent financial consultant, which consultant shall be
chosen by the Agency without the consent of the Note Holder,
shall have been delivered to the Note Holder stating that the
Revenues, assuming that the Revenues remain at a level at least
equal to the Revenues expected to be received in the fiscal
year in which the parity or superior debt will be issued, to be
received by the Agency throughout the term of this Note are at
least equal to one hundred twenty percent (120%) of the amount
payable (including both principal and interest) under this Note
and any parity or superior debt that will be outstanding
following the issuance of such parity or superior debt; and
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c) The Agency shall have delivered a written
certificate -stating that the Agency reasonably expects the
Revenues to be received in each subsequent fiscal year of the
Agency in which this Note and such parity or superior debt will
be simultaneously outstanding to be greater than one hundred
twenty percent (120%) of the amount of annual interest payable
under this Note and any parity or superior debt; and
4) Federal Tax Covenants. Notwithstanding any other
provision of this Note, absent an opinion of Bond Counsel that
the exclusion from gross income of interest with respect to
this Note will not be adversely affected for federal income tax
purposes, which opinion must be reasonably acceptable to the
Note Holder, the Agency covenants to comply with all applicable
requirements of the Internal Revenue Code of 1986, as amended
the "Code"), necessary to preserve such exclusion from gross
income and specifically covenants, without limiting the
generality of the foregoing, as follows:
a) Private Activity. The Agency will not take, omit
to take or permit, if the Agency has such power, any
action, and will not make any use of the proceeds of this
Note or of any other monies or property which would cause
this Note to be a "private activity bond" within the
meaning of Section 141 of the Code;
b) Arbitrage. The Agency will not make any use of
the proceeds of this Note or of any other amounts or
property, regardless of the source, and will not take, omit
to take or permit, if the Agency has such power, any action
that would cause this Note to be a "arbitrage bond" within
the meaning of Section 148 of the Code;
c) Federal Guarantee. The Agency will not make any
use of the proceeds of this Note or take, omit to take or
permit, if the Agency has such power, any action that would
cause this Note to be "federally guaranteed" within the
meaning of Section 149(b) of the Code;
d) Information Reporting. The Agency will take or
cause to be taken all necessary action to comply with the
informational reporting requirement of Section 149(e) of
the Code;
e) Hedge Bonds. The Agency will not make any use of
the proceeds of this Note or any other amounts or property,
regardless of the source, or take, omit to take or permit,
if the Agency has such power, any action that would cause
this Note to be considered a "hedge bond" within the
meaning of Section 149(g) of the Code unless the Agency
03/04/91
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takes all necessary action to assure compliance with the
requirements of Section 149(g) of the Code to maintain the
exclusion from gross income of interest on this Note for
federal income tax purposes; and
f) Miscellaneous. The Agency will not take, or
permit others to take, if the Agency has such power, any
action inconsistent with its expectations stated in that
certain Tax Certificate executed on the date of delivery of
this Note by the Agency in connection with this Note and
will comply with the covenants and requirements stated
therein and incorporated by reference herein.
This Note may be exchanged at the office of the Agency for
a like aggregate principal amount of Notes for any
denominations of the same maturity and interest rates. All
Notes surrendered in any such exchange shall thereupon be
cancelled by the Agency. In the event this Note is exchanged
for two (2) or more replacement Notes, each replacement Note
shall reflect the portion of the One Million Dollar
1,000,000.00) prepaid interest which will be a credit against
interest due under each such replacement Note. Further, the
reference to Two Million Dollars ($2,000,000.00) in subsection
c) of the third full paragraph on page two of this Note will
be deemed to mean Two Million Dollars ($2,000,000.00) in the
aggregate for all replacement Notes. The exchange rights set
forth in Section 2.4 of the Purchase Agreement and the
assignment rights set forth in Section 18 of the Purchase
Agreement shall specifically apply to this Note.
It is expressly agreed by the Note Holder that such Note
Holder shall never have the right to require or compel the
exercise of the ad valorem taxing power of the City of San Juan
Capistrano.
This Note shall be construed under the laws of the State of
California.
IN WITNESS WHEREOF, the Agency has issued this Note and has
caused this Note to be executed by the manual signature of its
Chairman, with the attest of its Secretary, all on the
day of 1991.
BUYER:
By:
Executive Director
03/04/91
93SBr/2299/37
SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY
By:
Chairman,
Board of Directors
5-
0
Approved as to form:
Special Counsel
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9388r/2299/37
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Attest:
City Clerk
Acting Agency Secretary
6-
EXHIBIT "D"
RECORDING REQUESTED BY AND )
When Recorded Mail To: )
San Juan Capistrano Community )
Redevelopment Agency )
32400 Paseo Adelanto )
San Juan Capistrano, CA 92675 )
Attn: Mr. Stephen B. Julian, )
Executive Director )
Mail Tax Statements To: )
Same as above
Space Above Provided For Recorder)
PARTNERSHIP GRANT DEED
The undersigned grantor(s) declare(s):
Documentary transfer tax is $
x) computed on full value of property conveyed, or
computed on full value less value of liens and
encumbrances at time of sale.
Unincorporated area: (XX) San Juan Capistrano, and
FOR A VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, KINOSHITA PROPERTIES, a California limited
partnership, hereby GRANT(S) to the SAN JUAN CAPISTRANO
COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and
politic created and existing under the laws of the State of
California, the following described real property in the City
of San Juan Capistrano, County of Orange, State of California:
See Exhibit "A" attached hereto and by this
reference made a part hereof.
Dated: March 5, 1991 KINOSHITA PROPERTIES, a California
limited partnership
By:
Shigeru Kinoshita,
General Partner
By:
Yasuo Kinoshita,
General Partner
0
STATE OF CALIFORNIA
ss.
COUNTY OF
On before me, the
undersigned, a Notary Public in and for said State, personally
appeared SHIGERU KINOSHITA, personally known to me or proved to
me on the basis of satisfactory evidence to be the person who
executed the within instrument as one of the partners of the
partnership that executed the within instrument, and
acknowledged to me that such partnership executed the same.
WITNESS my hand and official seal.
SEAL)
STATE OF CALIFORNIA
as.
COUNTY OF
On before me, the
undersigned, a Notary Public in and for said State, personally
appeared YASUO KINOSHITA, personally known to me or proved to
me on the basis of satisfactory evidence to be the person who
executed the within instrument as one of the partners of the
partnership that executed the within instrument, and
acknowledged to me that such partnership executed the same.
WITNESS my hand and official seal.
SEAL)
03/04/91
9388r/2299/37
EXHIBIT "A"
DESCRIPTION OF PROPERTY
The East 60 acres of all that portion of the
hereinafter described land lying Easterly of the
center line of McKinley Avenue, as described in the
Deed recorded February 17th, 1897 in Book 29, Page 389
of Deeds.
Beginning at a stake at the Southeast corner of the
Northeast quarter of Section 11, Township 8 South,
Range 8 West, San Bernardino Base and Meridian; thence
North 69 1/2 deg. West 37.52 chains to a fence corner;
thence South 20 1/2 deg. West 35.26 chains; thence
East 38.97 chains to a pipe; thence South 9 links to a
pipe in the center of the West end of a lane; thence
East 1/2 deg. South 28.53 chains to a stake in the
center of said lane; thence North 20.82 chains; thence
West 20 chains to the point of beginning.
Excepting therefrom that portion included within the
land described in the Deed to the City of San Juan
Capistrano recorded February 17, 1976 in Book 11648,
Page 1825 of Official Records.
And excepting therefrom any crops growing on the land
at the date of recordation of the Deed of the San Juan
Capistrano Community Redevelopment Agency.
03/04/91
9388r/2299/37
0 0
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property
conveyed by the Partnership Grant Deed dated March 5, 1991 from
KINOSHITA PROPERTIES, a California limited partnership, to the
SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public
body corporate and politic created and existing under the laws
of the State of California, is hereby accepted by the
undersigned officers on behalf of the SAN JUAN CAPISTRANO
COMMUNITY REDEVELOPMENT AGENCY pursuant to authority confirmed
by resolution of the SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY adopted on March 5, 1991, and the Grantee
consents to recordation thereof by its duly authorized officer.
Dated: March 6, 1991
By:
Executive Director
03/04/91
9388r/2299/37
SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY
By
Chairman, Board of Directors
ATTEST:
City Clerk
y Secretary
0
STATE OF CALIFORNIA
ss.
COUNTY OF
0
On this day of
in the year before me, the undersigned, a Notary
in and for said State, personally appeared
Public
personally known to me
or proved to me on the basis of satisfactory evidence) to be
the person who executed this instrument as the
of the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY and
acknowledged to me that the SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY executed it.
Signature of Notary Public
Name typed or printed
03/04/91
9388r/2299/37
KINOSHITA PROPERTIES rEXHIBIT
PREPAID
PURCHASE PRICE INTEREST NET PROFIT
PARTNER NAME ALLOCATION ALLOCATION ALLOCATION ADDRESSES I.D. NUMBERS
GENERAL PARTNERS
SNIGERU KINOSHITA 21,393.19 2,251.92 0.2252% SEE 1)
YASUO KINOSHITA 21,393.19 2,251.92 0.2252% SEE 2)
LIMITED PARTNERS
TME SHIGERU KINOSHITA 3,177,958.95 334,521.99 33.4522% SEE 1)
FAMILY TRUST
THE SHIGERU KINOSHITA 717,098.57 75,484.06 7.5484% SEE 2)
CHILDREN'S TRUST
THE YAS)D KINOSHITA 2,963,205.59 314,021.64 31.4022% SEE 2)
FAMILY TRUST
THE YAS(O KINOSHITA 1,075,647.86 113,226.09 11.3226% SEE 1)
CHILDREN'S TRUST
THE TADAICHI KINOSHITA 553,302.64 58,242.38 5.8242% SEE 3)
CHILDREN'S TRUST
FORMER PARTNER
KIYOKO KINOSHITA 950, 000.00 100,000.00 10.0000% SEE 3)
TOTALS 9,500,000.00 1,000,000.00 100.0000%
us.ouau..e.......................uavussss
ADDRESSES
1) 21015 CALLE REAL
CAPISTRANO BEACH, CA 92624
2) 31392 LA MATANZA
SNI JUAN CAPISTRANO, CA 92675
1) 26612 CALLE LAGO
CAPISTRANO BEACH, CA 92624
EXHIBIT "F"
THIS CONSENT (this "Consent") is made and entered
into as of March , 1991, by and among SHIGERV KINOSHITA
and YASUO KINOSHITA (colleetively, the "General Partners")J
the persons or entities executing this Consent and
designated on the execution pages as the Limited Partners
collectively, the "Limited Partners"); and KIYOKO KINOSHIT
the "Former Partner")J and provides:
1. The General Partners and the Limited Partners
collectively, the "Partners") constitute all of the
partners of the Partnership at the data hereof.
2. The Former Partner sold her interest in the
Partnership to the General Partners pursuant to a certain
Assignment dated March 2, 1988 (the "Assignment"). The
Assignment was executed pursuant to the terms of a certain
Settlement Agreement dated February 24, 1988 (the
Settlement Agreement"), among the General Partners, certain
of the Limited Partners, Kinoshita Farms, Inc., the
Partnership, and the Former Partner.
3. Each of the parties to this Consent consents
to and approves each of the following:
a) Termination of the Settlement Agreement
with respect to the sale of that certain real property
located in the City of San Juan Capistrano, County of
orange, State of California, described on Exhibit A attached
hereto and by this reference mads a part hereof (the
Property");
b) Removal of a certain Memorandum of
Settlement Agreement executed by the Partnership and
recorded March 28, 1988 as Instrument Number Be -139574 in
the Official Records of Orange County, California; and
c) sale of the Property to the Ban Juan
Capistrano Community Redevelopment Agency pursuant to the
terms of a certain Purchase and Sale Agreement/Joint Escrow
Instructions dated March 5, 1991, between the Partnership
and the Agency (the "Purchase Agreement").
1-
0 0
4. Each of the parties to this Consent hereby
approves the representations and warranties made by the
Partnership in the purchase Agreement, including but not
limited to the reference to this Consent in Section 10.1(b)
of the Purchase Agreement, and the reference to claims and
other matters in Section 10.1(d) of the Purchase Agreement.
S. This Consent shall be effective as of the
Close of Escrow (as defined in the Purchase Agreement).
SN WITNESS WHEREOF, the parties hereto have
executed this Consent as of the data first written above.
GENERAL PARTNERS:
BHIGERU KINOSHITA
YASUO KINOSHITA
LIMITED PASRTNERS :
SHIGTRU KINOSHITA, Trustee of
The Shigeru Kinoshita Family
Trust established June 17, 1974
YASUO KINOSHITA, Trustes of
The Shigeru Kinoshita Children's
Trust established March 8, 1979
YASUO KINOSHITA, Trustee of
The Yasuo Kinoshita Family Trust
established October 7, 1974
SHIGERU KINOSHITA, Trustee of
The Yasuo Kinoshita Children's
Trust established March 8, 1979
signatures on following page]
a-
0 0
KIYOKO KINOSHITA, Trustee of
The Tadaiehi Kinoshita Children's
Trust established March 8, 1979
FORMER PARTNER,
KIYOKO KINOSHITA
0.0f PU312 Z2/OQ.AOR
0VAI raa am —3—
Notioe of Exemption
To:
M
Office of Planning and Research
1400 Tenth Street, Room 121
Saaamano. CA 95814
W7wwNTVm
EXHIBIT wPPenala1
w t ..: ..r amu-. . . :.. ..- . - -
project Location - spsd t::
Name of Public Agency Approving project: Urn ,Tram Cani a Tann (Ymr•mi RPAau&Iap !P Aaem Ys
blame of Person or Agency Carrying Out Project: Scat alan CM, sty1mo rr11mMmi i VMfhyrat rmJ- Agamw
Exempt statue: (check one)
WWdsmM (Sec. 21080(bXl);15268);
Q Declared Emergency (Sec. 21080)M 15269(a));
Q Emergency Project (Sec. 2I080(bX4); 1526ftXc)).
3 Categorical ExunWion. State type and section number. i Sze ri Asa s *7, t rpm r, mj-rAr+
Statutory Esemptiona. State code oumba
1=1=
aWa0 11-1.. : •t _!_ - _ r
Land Agency IContactParson- Dick Bobextz Axa Code/felephoneBxtetnion: (714) 493-1171,_x-240
If Med by applicant:
1. Anach certifted document of exemption finding.
2. Hare ^a acice of exam)ptiron ban AW by die public agency approving the ptojxQ
Signanue: l"'t Darr
E2Signed by Leed Agency Date received for filing at OPR:
signed by Applicant
Yes No
Mtk actino nand use 14artucta
Revir dOcrobe 1989 1
03-04 04:33F}A FOE
0 i
EXHIBIT "H"
March 6, 1991
San Juan Capistrano Community
Redevelopment Agency
32400 Paseo Adelanto
San Juan Capistrano, California
Re: $9,500,000 San Juan Capistrano Community
Redevelopment Agency Non -Negotiable Note
Ladies and Gentlemen:
We have examined certified copies of the proceedings of
the San Juan Capistrano Community Redevelopment Agency (the
Agency") and other information and documents submitted to us
relative to the issuance by the Agency of its note, dated as of
the date hereof, in the principal amount of $9,500,000 (the
Note").
The Note has been issued pursuant to the authority
contained in Chapter 2 of Part 1 of Division 24 of the Health
and Safety Code of the State of California (the "Act") and a
resolution of the Agency adopted on March 5, 1991 (the
Resolution").
In rendering our opinion, we have examined the Act, the
Note and originals or certified copies of the Resolution, the
Purchase and Sale Agreement/Joint Escrow Instructions (the
Purchase Agreement"), dated March 6, 1991, by and between the
Agency and Kinoshita Properties, a California limited
partnership (the "Note Holder"), the Tax Certificate with
respect to the Notes, dated as of the date hereof, the Contract
Service Agreement for Management and Operation of a Farm,
entered into between Kinoshita Farms, Inc. ("Operator") and the
0
San Juan Capistrano Redevelopment Agency
March 6, 1991
Page Two
Agency, dated March 6, 1991, the Bills of Sale from the
Operator to the Agency, dated March 6, 1991, and such other
information and documents as we have deemed necessary to render
the opinions set forth herein and have relied upon certain
representations of fact and certifications made by the Agency
and others. We have not undertaken to verify through
independent investigation the accuracy of the representations
and certifications relied upon by us.
Based upon our examination of all of the foregoing, and in
reliance thereon, and on all matters of fact as we deem
relevant under the circumstances, and upon consideration of
applicable laws, we are of the opinion that:
1) The execution and delivery of the Note has been
authorized by the Agency, and the Note is a valid and
binding obligation of the Agency enforceable in accordance
with its terms, except to the extent that enforceability
may be limited by moratorium, bankruptcy, reorganization,
insolvency or other laws affecting creditors' rights
generally or by the exercise of judicial discretion in
accordance with general principles of equity.
2) Under existing statutes, regulations, rulings and
judicial decisions, interest on the Note is excluded from
gross income for federal income tax purposes and is not an
item of tax preference for purposes of calculating the
federal alternative minimum tax imposed upon individuals
and corporations; however, with respect to corporations,
interest on the Note may be included as an adjustment in
the calculation of alternative minimum taxable income which
may affect such corporation's alternative minimum tax
liability. The foregoing opinion is subject to the
condition that the Agency complies with all requirements of
the Internal Revenue Code of 1986, as amended, that must be
satisfied subsequent to the issuance of the Note to assure
that interest thereon will not become includable in gross
income for federal income tax purposes. The Agency has
covenanted to comply with all such requirements, absent an
opinion of bond counsel that the exclusion from gross
income of interest with respect to the Note will not be
adversely affected for federal income tax purposes by such
event of non-compliance. The failure of the Agency to do
so might cause interest on the Note to become included in
gross income retroactively.
03/04/91
9388x/2299/37
0 0
San Juan Capistrano Redevelopment Agency
March 6, 1991
Page Three
3) Interest on the Note is exempt from State of
California personal income tax.
The opinions expressed herein are based on an analysis of
existing statutes, regulations, rulings and judicial
decisions. Such opinions may be affected by actions taken (or
not taken) or events occurring (or not occurring) after the
date hereof. We have not undertaken to determine, or to inform
any person, whether any such actions or events are taken or do
occur. Except as specifically provided in this opinion and in
our opinion dated March 6, 1991, with respect to the treatment
of certain prepaid interest on the Note, we express no opinion
as to other tax consequences with respect to the Note.
Respectfully submitted,
EXHIBIT "I"
RECORDING REQUESTED BY )
AND WHEN RECORDED MAIL TO: )
PAUL, HASTINGS, JANOFSKY & WALKER )
695 Town Center Drive, 17th Floor )
Costa Mesa, California 92626 )
Attn: Gerald E. Wilson, Esq. )
Space Above for Recorder's Use)
RIGHT OF FIRST REFUSAL
THIS RIGHT OF FIRST REFUSAL ("Agreement") is granted
this 6th day of March, 1991, by the SAN JUAN CAPISTRANO
COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and
politic created and existing under the laws of the State of
California ("Grantor"), to KINOSHITA PROPERTIES, a California
limited partnership ("Grantee"), upon the following terms and
conditions:
R E C I T A L S:
A. Concurrent herewith, Grantor is purchasing from
Grantee that certain real property located in the City of
San Juan Capistrano, County of Orange, State of California
described on Exhibit "A" attached hereto and by this reference
made a part hereof, together with the improvements thereon and
all easements, rights-of-way, water rights, if any, and other
rights appurtenant thereto (collectively the "Property").
Grantor is purchasing the Property by delivering to Grantee the
San Juan Capistrano Community Redevelopment Agency
Non -Negotiable Note for Nine Million Five Hundred Thousand
Dollars ($9,500,000.00) dated March 6, 1991 (the "Note"), which
may be exchanged by Grantee for replacement notes ("Notes")
which will be payable to persons designated by Grantee ("Note
Holders"). The Property is being purchased by Grantor pursuant
to that certain Purchase and Sale Agreement/Joint Escrow
Instructions dated March 5, 1991 between Grantor, as Buyer, and
Grantee, as Seller (the "Purchase Agreement").
B. It is understood by Grantor and Grantee that the
purchase price for the Property (as set forth in the Purchase
Agreement) was established, in part, based upon the Agency's
intent to retain the Property for park uses, open space uses,
0 0
agricultural uses, and other public and quasi -public uses.
Accordingly; and as a material consideration inducing Grantee
to sell the Property to Grantor, Grantor has agreed to grant to
Grantee a right of first refusal (the "Right of First Refusal")
to acquire the Property as set forth herein.
W I T N E S S E T H:
NOW, THEREFORE, in consideration of the foregoing and
other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Grantor hereby grants to Grantee
the Right of First Refusal with respect to the Property as
follows:
Section 1. Grant of Right to Grantee.
a) This Agreement shall be applicable to any
transfer of the Property, or any portion thereof, for private
development uses, private commercial uses, or for-profit uses
collectively "Prohibited Uses"); provided that leases of all
or any portion of the Property for five (5) years or less, and
transfers in connection with uses that are consistent with the
zoning at the date hereof for that portion of the Property so
transferred, shall be permitted (collectively "Permitted
Uses"). In the event Grantor elects to transfer the Property
or any portion thereof for a Prohibited Use (other than a
Permitted Use), and the transferee (the "Transferee") is not
related or affiliated in any way with Grantor or the City of
San Juan Capistrano, Grantor shall first give to Grantee
written notice of such election together with a full copy of
any written offer received by Grantor from the Transferee and a
statement that the Transferee has made a bona fide offer and is
an unrelated and unaffiliated third person. Grantee shall have
ten (10) business days from the effective date of the notice to
elect to purchase the portion of the Property proposed to be
transferred, or the interest proposed to be transferred, on the
terms and conditions set forth in such notice and offer;
provided, that Grantee or its successors or assigns shall be
permitted to use part or all of the Note or the Notes as
payment for the exercise of Grantee's right to purchase the
Property, using the principal balance of the Note or the Notes,
and any accrued but unpaid interest thereon, as the equivalent
of cash for that purpose. Should Grantee so elect, it shall
give Grantor written notice thereof within said 10 days and
shall complete the purchase of the portion of the Property, or
the interest proposed to be transferred, pursuant to the terms
of the notice and offer (with the same right to substitute part
or all of the Note or the Notes as provided in the preceding
sentence); provided, that the purchase by Grantee or its
successors or assigns shall be completed within 30 business
days after Grantor receives notice of Grantee's election.
Should Grantee make such election and thereafter default in
03/04/91
9388r/2299/37 -2-
0 0
performing its obligations to purchase the portion of the
Property, of the interest proposed to be transferred, or should
Grantee fail to timely exercise the Right of First Refusal
granted hereby, it shall be conclusively presumed that Grantee
has elected not to exercise the Right of First Refusal
hereunder and Grantor shall be entitled to transfer the portion
of the Property, or the interest proposed to be transferred, to
the Transferee pursuant to the terms of the notice and offer;
provided, however, that the time for the closing of such
transfer may be changed by agreement of Grantor and the
Transferee subsequent to the giving of notice to Grantee;
provided, that Grantor shall not be permitted to transfer any
portion of the Property, or any interest therein, on terms or
conditions that are materially more favorable than those
previously disclosed to Grantee at the time Grantor provided
its original notice regarding the proposed transfer of any
portion of the Property, or any interest therein. Should
Grantor fail to complete said transfer to the Transferee, then
the Right of First Refusal shall reapply to any other proposed
transfer.
b) In the event that Grantee exchanges the Note for
replacement Notes payable to more than one (1) person pursuant
to the Purchase Agreement or the Note, this Agreement will run
in favor of all of the Note Holders; provided, however, that
Shigeru Kinoshita and/or Yasuo Kinoshita (the "General
Partners") shall act on behalf of all of the Note Holders in
exercising the Right of First Refusal. The General Partners
shall hold the Right of First Refusal collectively and shall be
solely responsible, as between Grantor and the General
Partners, for properly exercising the Right of First Refusal
and completing the purchase pursuant to such right. The
General Partners shall have the right to have the purchase of
any portion of the Property, or any interest therein, be made
by one or more nominees of the General Partners and in such
proportions or percentages as the General Partners in their
sole discretion shall determine. In the event that, as
provided in this Section 1(b), the General Partners will be
acting on behalf of Kiyoko Kinoshita or the Tadaichi Kinoshita
Children's Trust (collectively, "Mrs. Kinoshita"), Grantor
agrees to notify Mrs. Kinoshita as if she were one of the
General Partners. Notices shall be sent to Mrs. Kinoshita at
26612 Calle Lago, Capistrano Beach, California 92624, or at
such other address as determined using the procedures for
notices set forth in Section 2(a) hereof.
c) If the transfer is to be made in exchange for
property of the Transferee, the dollar value for which Grantee
may purchase the Property shall be the fair market value of
such exchange property as established by an appraisal conducted
by an appraiser appointed by Grantee and reasonably acceptable
to Grantor, who shall be a member of the American Institute of
Real Estate Appraisers. The ten (10) day period provided in
03/04/91
9388x/2299/37 -3-
0 0
Section 1(a) above for Grantee to deliver notice of exercise of
the Right of First Refusal shall be extended for so long as it
takes to complete such appraisal.
d) The Right of First Refusal shall terminate as to
the Property and each portion thereof upon the earlier to occur
of (i) transfer of the Property, or each portion thereof,
respectively, in conformance with this Agreement or (ii) upon
payment in full of the Note or all of the Notes; provided, that
the Right of First Refusal shall continue following any
transfer for Permitted Uses or as to any transfer to a person
or entity that is related or affiliated with Grantor or the
City of San Juan Capistrano (pursuant to a permitted assignment
of this Agreement), and in either of such cases this Agreement
and the Right of First Refusal shall continue with respect to
the successor transferee of the Property. Upon termination of
this Agreement, Grantee and all Partners shall execute,
acknowledge and deliver such documents as may be required by
Grantor or any title company to remove the cloud of this
Agreement from the title to the Property, including without
limitation, any necessary quit claim deeds.
Section 2. Miscellaneous.
a) Notices. Any notice to be given or other
document to be delivered by any party to the other hereunder,
may be delivered in person or may be deposited in the United
States mail, duly certified or registered, postage prepaid and
return receipt requested, as follows:
To Grantor at:
San Juan Capistrano Community
Redevelopment Agency
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attention: Stephen B. Julian,
Executive Director
With a copy to:
Thomas P. Clark, Esq.
Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
To Grantee at:
Kinoshita Properties
P. O. Box 201
San Juan Capistrano, CA 92693
Attention: Shigeru Kinoshita
Yasuo Kinoshita
03/04/91
9388x/2299/37 -4-
0 0
With a copy to:
Gerald E. Wilson, Esq.
Paul, Hastings, Janofsky & Walker
695 Town Center Drive, 17th Floor
Costa Mesa, CA 92626
Any party may from time to time, by written notice to the
other, designate a different address which shall be substituted
for the one above specified. If any notice is personally
delivered, it shall be deemed delivered on the day of delivery
if delivered before 5:30 p.m.; otherwise it shall be deemed
delivered on the day following personal delivery. If any
notice or other document is sent by mail as aforesaid, the same
shall be deemed served or delivered forty-eight (48) hours
after the mailing thereof as above provided.
b) Time of Essence. Time is of the essence of this
Agreement and each and every term and provision hereof.
c) Interpretation; Governing Law. This Agreement
shall be construed, interpreted and governed by the laws of the
State of California.
d) Severability. If any term, provision, condition
or covenant contained herein, or the application thereof to any
party or circumstance, shall, to any extent, be held invalid or
unenforceable, the remainder hereof and the application of such
term, provision, condition or covenant to persons or
circumstances other than those as to whom to which it is held
invalid or unenforceable, shall not be affected thereby, and
each term, provision, covenant and condition hereof shall
otherwise be valid and enforceable to the fullest extent
permitted by law.
e) Headings. The headings and captions used in this
Agreement are for convenience and ease of reference only and
shall not be used to construe, interpret, expand or limit the
terms of this Agreement.
f) Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and
the same instrument.
g) Effect of Waiver. The waiver by Grantee of any
breach or breaches by Grantor contained herein shall not be
deemed, nor shall the same constitute, a waiver of any
subsequent breach or breaches.
h) Successors and Assigns. This Agreement is made
for the sole benefit and protection of Grantee, and Grantee's
03/04/91
9388x/2299/37 -5-
successors and assigns, and no other person shall have any
right of action or right to rely thereon. This Agreement shall
bind subsequent transferees of all or any portion of the
Property except to the extent otherwise provided herein. This
Agreement may not be assigned by Grantor without the prior
written consent of Grantee, which Grantee in its sole
discretion may deny or approve.
i) Number; Gender. Wherever the context of this
Agreement requires, the singular shall include the plural and
masculine gender shall include the feminine and/or neuter.
j) Attorneys' Fees. In the event that any legal
proceedings shall be instituted in connection herewith or
arising out of the construction hereof, the losing party shall
pay to the prevailing party all sums paid and/or incurred by it
as costs and expenses in such proceedings, together with
reasonable attorneys' fees.
k) Profit Sharing. The parties hereto acknowledge
that Section 14 of the Purchase Agreement, which provides in
certain circumstances for a division of "net profit" derived
from the transfer of the Property, shall continue to apply to
any transferee of any portion of the Property, or any interest
therein, to which this Agreement provides that the Right of
First Refusal continues.
IN WITNESS WHEREOF, the undersigned have executed this
instrument as of the year and date first above written.
Grantor: SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY
By: By:
Executive Director Chairman, Board of Directors
ATTEST:
City Clerk
Agency Secretary
signatures continued)
03/04/91
9388r/2299/37 -6-
Grantee: KINOSHITA PROPERTIES, a California
limited partnership
By:
Shigeru Kinoshita,
General Partner
By:
Yasuo Kinoshita,
General Partner
03/04/91
9388r/2299/37 -7-
STATE OF CALIFORNIA
ss.
COUNTY OF
0
On this day of ,
in the year before me, the undersigned, a Notary
in and for said State, personally appeared
Public
personally known to me (or
proved to me on the basis of satisfactory evidence) to be the
person who executed this instrument as the
of the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY and
acknowledged to me that the SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY executed it.
Signature of Notary Public
Name typed or printed
STATE OF CALIFORNIA
ss.
COUNTY OF
On before me, the
undersigned, a Notary Public in and for said State, personally
appeared SHIGERU KINOSHITA and YASUO KINOSHITA, personally
known to me or proved to me on the basis of satisfactory
evidence to be the persons who executed the within instrument
as both of the partners of the partnership that executed the
within instrument, and acknowledged to me that such partnership
executed the same.
WITNESS my hand and official seal.
SEAL)
03/04/91
9388r/2299/37
EXHIBIT "A"
DESCRIPTION OF PROPERTY
The East 60 acres of all that portion of the
hereinafter described land lying Easterly of the
center line of McKinley Avenue, as described in the
Deed recorded February 17th, 1897 in Book 29, Page 389
of Deeds.
Beginning at a stake at the Southeast corner of the
Northeast quarter of Section 11, Township 8 South,
Range 8 West, San Bernardino Base and Meridian; thence
North 69 1/2 deg. West 37.52 chains to a fence corner;
thence South 20 1/2 deg. West 35.26 chains; thence
East 38.97 chains to a pipe; thence South 9 links to a
pipe in the center of the West end of a lane; thence
East 1/2 deg. South 28.53 chains to a stake in the
center of said lane; thence North 20.82 chains; thence
West 20 chains to the point of beginning.
Excepting therefrom that portion included within the
land described in the Deed to the City of San Juan
Capistrano recorded February 17, 1976 in Book 11648,
Page 1825 of Official Records.
And excepting therefrom any crops growing on the land
at the date of recordation of the Deed of the San Juan
Capistrano Community Redevelopment Agency.
03/04/91
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0 9
EXHIBIT "J"
March 6, 1991
San Juan Capistrano Community
Redevelopment Agency
San Juan Capistrano, California
Re: $9,500,000 San Juan Capistrano Community Redevelopment
Agency Non -Negotiable Note
Ladies and Gentlemen:
You have asked us to render an opinion as to whether
certain prepaid interest would be treated as interest under the
Internal Revenue Code of 1986, as amended (the "Code") under
the facts as hereinafter described. The San Juan Capistrano
Community Redevelopment Agency (the "Agency") has agreed to
purchase from Kinoshita Properties, a California limited
partnership ("Kinoshita"), that certain real property
the "Property") as described in that certain Purchase and Sale
Agreement/Joint Escrow Instructions dated March 5, 1991, by and
between the Agency and Kinoshita (the "Purchase Agreement").
In exchange for the Property, the Agency will issue that
certain San Juan Capistrano Community Redevelopment Agency
Non -Negotiable Note dated March 6, 1991 in the principal amount
of $9,500,000 (the "Note"). Pursuant to the Purchase
Agreement, the Note may be exchanged for notes the aggregate
principal amount of which shall be equal to the Note and the
terms of which shall otherwise be identical in all material
respects to the Ncte. Accordingly, reference herein to the
Note shall also refer to those notes. The terms of the Note
provide that interest will accrue at a variable rate of
interest ranging between 7 and 10 percent and shall be paid
semiannually. However, the Agency will pay, on the date of
delivery of the Note, $1,000,000 which will be credited against
approximately the first three (3) semiannual interest payments
on the Note. The entire principal balance of the Note is due
and payable 20 years from the date of the Note.
Generally, "interest" within the meaning of the Code is
compensation for the use or forbearance of money or a payment
that is made because the seller extends credit to the
purchaser. DuPont v. Deputy, 308 U.S. 488 (1940); Mele v.
Cgmmissioner, 61 T.C. 358 (1973). Interest arises only where
there exists a bona fide debt obligation. Titcher v.
Cgmmissioner, 57 T.C. 315 (1971).
A determination of whether a particular payment will be
treated as interest depends on the true nature of the payment
made and not the label affixed thereto by the parties. LaCroix
v. Commissioner, 61 T.C. 471 (1974). Also, in determining
whether a payment constitutes "interest" the economic realities
govern over the form in which a transaction is cast. Titcher,
supra.
A factual situation similar to the present situation arose
in Anderson v. Commissioner, 34 T.C.M. 1321, T.C. Memo.
1975-302. In that case, the taxpayer purchased real property
with an established purchase price of $2,995,000, upon the
following terms: $30,000 as a downpayment, and the balance
represented by a promissory note bearing interest at the rate
of 7 percent per annum from the date of the note with 30 months
of interest prepaid ($500,000). The issue in that case was
whether the taxpayer was entitled to deduct the $500,000
prepayment as interest pursuant to Section 163 of the Code.
The Internal Revenue Service (the "Service") argued that the
500,000 was an additional downpayment. The taxpayer had
characterized the payment as interest throughout his dealings
with the buyer. The court stated that the fact of payment and
the label given to it by the taxpayer are not controlling and
that the character of the payment depends on the economic
realities of the payment. The court held that, after examining
the economic realities of the transaction, the $500,000
designated as prepaid interest was in fact interest.
Another similar case is Russo v. Commissioner, 68 T.C. 135
1977). In that case, the taxpayer was seeking to exclude from
income the receipt of prepayments on the sale of real
property. The terms of the sale provided that the purchase
price would be $1,200,000, with a required downpayment of
12,000, points of $140,000, and a prepayment of interest for
the first full year equal to $97,658. The taxpayer sought to
treat the points and prepaid interest as additional purchase
price for the property. Although the downpayment was minimal,
2-
the tax court held that the economic realities of the
transaction -dictated that the points and prepaid interest would
be treated as interest.
Finally, in Male v. Commissioner, 61 T.C. 358 (1973), the
court held that five years of prepaid interest pursuant to a
sale of property in the amount of $2,875,000 with a cash
downpayment of $50,000 was to be treated as interest.
Two cases that hold that payments denominated as "prepaid
interest" were not to be treated as interest are
distinguishable. First, in LaCroix, supra, the tax court held
that a payment denominated as prepaid interest was not to be
treated as interest because that amount would be credited to
future principal payments. The court in LaCroix did state that
the fact that no downpayment was provided for under the
arrangement in that case was a factor to be used in determining
whether the prepayment was interest or a downpayment. However,
the court clearly held that it was the fact that the prepayment
would be credited against future principal payments that
required the court to hold that the prepayment was not
interest. In Russo, supra, the court minimized the factor of
the lack of a downpayment. The court in Russo stated that a
downpayment equal to 1 percent of the total purchase price was
sufficient to distinguish LaCroix. The court in Russo went on
to provide that the better way to distinguish LaCroix was by
virtue of the fact that in LaCroix the prepayment was credited
against future principal payments. Therefore, the fact of a
minimal or no downpayment appears to be of little importance in
these cases. In addition, the court in Anderson, supra,
distinguished LaCroix, citing as its reason the fact that the
prepayment was creditable against the principal amount of the
purchase price. Accordingly, although the present transaction
will be made without a downpayment, because the prepaid
interest will not be credited against the principal of the
Note, LaCroix is distinguishable.
A second case that refused to characterize a prepayment as
interest is Titcher, supra. In that case, the taxpayer
provided a payment upon the signing of a purchase agreement for
the purchase of property with the remaining balance of the
purchase price to be paid at closing. The taxpayer claimed
that the prepayment was interest on the obligation to pay the
full purchase price at closing. The court held that no valid
debt existed and that, therefore, no interest could arise. The
Titcher case was distinguished in Anderson, supra, based on the
fact that the debt in Anderson was a valid indebtedness. In
the present situation, a true debt exists, and, therefore, like
in Anderson, Titcher is distinguishable.
3-
In the present situation, the Note is similar to the Notes
described in Anderson and Russo, and unlike those in LaCroix
and Titcher. The Note provides for prepaid interest that is to
be credited against future interest and not principal
payments. Because the prepaid interest will not be credited
against principal payments, the present transaction is
distinguishable from LaCroix. Because the present situation
involves a true debt, Titcher is also distinguishable.
We assume for purposes of this opinion that the fair
market value of the Property is equal to the stated principal
amount of the Note. In addition, we have assumed that the
interest rate of the Note, given the stated principal amount,
stated interest rate including adjustments to such rate, term
to maturity, security, and sources and terms of repayment is
within a reasonable range of interest rates for an obligation
of this type, given the period of time in which the terms of
the Note were negotiated. Also, the Agency is creditworthy as
is evidenced by the fact that it has the ability to collect
sales tax within its jurisdictional boundaries for the purpose
of discharging the Note as well as to have allocated to it
certain ad valorem property taxes within its jurisdictional
boundaries which also can be used to discharge the Note. Based
on a review of all relevant documents, the foregoing factors
and the fact that the prepayment is credited to future interest
and not to principal, the prepayment under the Note appears to
be compensation for the use or forbearance of money or a
payment that is made because Kinoshita extends credit to the
Agency. Based on the facts, assumptions and legal authority
cited herein, we are of the opinion that the $1,000,000
prepayment designated as prepaid interest under the Note should
be treated as interest under the Code.
This opinion is based upon the facts and assumptions
described herein and our review of such other documents and
information as we have deemed relevant as of this date. Any
alteration of such facts or related documents, could adversely
affect this opinion. Furthermore, our opinion is based upon
existing law under the Code, current published administrative
positions of the Service contained in Revenue Rulings, and upon
judicial decisions, which are subject to change either
prospectively or retroactively. Such changes may significantly
alter the interpretation or application of the applicable laws
and regulations, thereby rendering our analysis and conclusions
obsolete. We specifically disclaim any undertaking to advise
you or any party relying on this opinion of any such changes
which may hereafter occur.
Our opinion is also based upon the assumption that any
person adversely affected by an outcome other than as described
herein will undertake the effort and expense necessary to
4-
0
present fully and adequately the case in support of the
position taken herein if challenged by the Service. This
opinion is also based on the assumption that the Note will be
performed in accordance with its terms. Our opinion is
dependent on the occurrence and accuracy of the foregoing
assumptions as well as the assumption described above with
respect to the fair market value of the Property and the
initial interest rate.
This letter is directed to the addressee, and no other
person may rely upon the opinion expressed herein except as set
forth in the reliance letter attached as exhibit K to the
Purchase Agreement.
Our opinion is not binding on the Service, and there can be
no assurance that the Service will agree with the conclusions
and opinions reached herein. Except as specifically provided
for herein, and as provided in the opinion contained in
exhibit H to the Purchase Agreement, we express no other
opinion with respect to the tax consequences of the
transactions described herein.
7632j/2299/37
Sincerely,
STRADLING, YOCCA, CARLSON & RAUTH
5-
n
u
EXHIBIT "K"
March 6, 1991
Shigeru Kinoshita
Yasuo Kinoshita
The Shigeru Kinoshita Family Trust
The Shigeru Kinoshita Children's Trust
The Yasuo Kinoshita Family Trust
The Yasuo Kinoshita Children's Trust
The Tadaichi Kinoshita Children's Trust
Kiyoko Kinoshita
Kinoshita Properties, A California limited partnership
P. O. Box 201
San Juan Capistrano, California 92693
Re: 9,500,000 San Juan Capistrano Community
Redevelonment Aaencv Non-Neaotiable Not
Ladies & Gentlemen:
On the date hereof we rendered the attached opinions.
You may rely on those opinions as if they were addressed to you.
Respectfully submitted,
03/04/91
9388r/2299/37
EXHIBIT "L"
TERMINATION OF LEASE
Reference is made to that certain Land Lease dated as
of February 1, 1979, which was subsequently replaced by letters
dated November 18, 1987, November 14, 1988, and November 16,
1989 (collectively, the "Lease"), by and between KINOSHITA
PROPERTIES, a California limited partnership ("Kinoshita"), as
Lessor, and KINOSHITA FARMS, INC., a California corporation
the "Corporation"), as Lessee, which covers that certain real
property located in the City of San Juan Capistrano, County of
Orange, State of California, described on Exhibit A attached
hereto and by this reference made a part hereof (the
Property").
Effective as of March 6, 1991, the close of escrow
the "Close of Escrow") for the sale of the Property by the
Partnership to the San Juan Capistrano Community Redevelopment
Agency (the "Agency"), the undersigned declare that: (a) the
Lease is completely terminated; (b) there are no terms or
options or monthly or yearly rental remaining under the Lease;
c) the Lease is of no further force or effect and the
Corporation has no interest of any kind whatsoever in or to the
Property; and (d) the Partnership hereby transfers to the
Corporation for no consideration (other than the final rental
payment under the Lease, which has been received by the
Partnership) any rights the Partnership has in the crops that
are not purchased by the Agency at the Close of Escrow.
Dated: March 5, 1991
KINOSHITA PROPERTIES, a California
limited partnership
By
Shigeru Kinoshita,
General Partner
By
Yasuo Kinoshita,
General Partner
signatures continued)
03/04/91
9388x/2299/37
KINOSHITA FARMS, INC., a
California corporation
By
Shigeru Kinoshita,
President
By
Yasuo Kinoshita,
Secretary
03/04/91
9388r/2299/37
STATE OF CALIFORNIA
ss.
COUNTY OF
On before me, the
undersigned, a Notary Public in and for said State, personally
appeared SHIGERU KINOSHITA and YASUO KINOSHITA, personally
known to me or proved to me on the basis of satisfactory
evidence to be the person who executed the within instrument as
one of the partners of the partnership that executed the within
instrument, and acknowledged to me that such partnership
executed the same.
WITNESS my hand and official seal.
SEAL)
STATE OF CALIFORNIA
s.
COUNTY OF
On before me, the
undersigned, a Notary Public in and for said State, personally
appeared SHIGERU KINOSHITA, personally known to me or proved to
me on the basis of satisfactory evidence to be the person who
executed the within instrument as the President, and
YASUO KINOSHITA, personally known to me or proved to me on the
basis of satisfactory evidence to be the person who executed
the within instrument as the Secretary of the corporation that
executed the within instrument and acknowledged to me that such
corporation executed the within instrument pursuant to its
bylaws or a resolution of its Board of Directors.
WITNESS my hand and official seal.
SEAL)
03/04/91
9388r/2299/37
0 0
EXHIBIT "A"
DESCRIPTION OF PROPERTY
The East 60 acres of all that portion of the
hereinafter described land lying Easterly of the
center line of McKinley Avenue, as described in the
Deed recorded February 17th, 1897 in Book 29, Page 389
of Deeds.
Beginning at a stake at the Southeast corner of the
Northeast quarter of Section 11, Township 8 South,
Range 8 West, San Bernardino Base and Meridian; thence
North 69 1/2 deg. West 37.52 chains to a fence corner;
thence South 20 1/2 deg. West 35.26 chains; thence
East 38.97 chains to a pipe; thence South 9 links to a
pipe in the center of the West end of a lane; thence
East 1/2 deg. South 28.53 chains to a stake in the
center of said lane; thence North 20.82 chains; thence
West 20 chains to the point of beginning.
Excepting therefrom that portion
land described in the Deed to the
Capistrano recorded February 17,
Page 1825 of Official Records.
03/04/91
9388r/2299/37
included within the
City of San Juan
1976 in Book 11648,
EXHIBIT "M"
CERTIFICATION OF ACTIONS
The undersigned hereby certifies that the following is true
and correct. On March 5, 1991, the Board of Directors of the
San Juan Capistrano Community Redevelopment Agency adopted
Resolution No. authorizing the acquisition by the Agency
of 56.45 acres of agricultural land located at the corner of
Alipaz and Camino del Avion in the City of San Juan Capistrano
to ensure preservation of agriculture within the community.
Section 2 of said Resolution set forth the Board's
determination that such acquisition of property was
categorically exempt from the requirements of the California
Environmental Quality Act ("CEQA") pursuant to California Code
of Regulations, Title 14, ' 15317. The Board directed Agency
staff to file a Notice of Exemption from CEQA with the County
Clerk of the County of Orange. A copy of the Notice of
Exemption which was prepared and executed by Agency is attached
hereto. Pursuant to my direction, the Notice of Exemption will
be filed with the County Clerk of the County of Orange today,
March 6, 1991.
Executed this 6th day of March, 1991.
SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY
By:
Stephen Julian
Its: Executive Director
03/04/91
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0
March 8, 1991
dwM
U IAIOP.01PI11
I{IPI III X f 0 1961
1776
Mr. Shig Kinoshita
P. O. Box 201
San Juan Capistrano, California 92693
Re: Purchase of Farm Property
Dear Mr. Kinoshita:
MEMBERSOF THE CITY COUNCIL
LAWRENCE F. BUCHHEIM
KENNETH E. FRIESS
GARY L. HAUSOORFER
GIL JONES
JEFF VASQUEZ
CITY MANAGER
STEPHEN B. JULIAN
At their meetings held March 5 and March 6, 1991, the City Council of the City of
San Juan Capistrano and the San Juan Capistrano Community Redevelopment
Agency approved the Purchase Agreement and Farm Management and Operation
Agreement for 56.45 acres known as the Kinoshita Farm. Enclosed are copies of
Resolutions No. CRA 91-3-5-1 and CRA 91-3-6-1, adopted by the Community
Redevelopment Agency relative to purchase of the property and City Council
Resolution No. 91-3-6-1, approving the sale of the property.
Thank you for your cooperation through this process and best wishes for your
future endeavors.
Very truly yours,
Cheryl Joh son
City Clerk
Enclosures
cc: Denise Harbaugh
Katrina Heller
Director of Administrative Services
32400 PASEO ADELANTO, SAN JUAN CAPISTRANO, CALIFORNIA 92675 0 (714) 493.1171
RESOLUTION NO. CRA 91-3-5-1
A RESOLUTION OF THE SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY, APPROVING THE EXECUTION OF A
PURCHASE AND SALE AGREEMENT/JOINT ESCROW
INSTRUCTIONS BETWEEN THE SAN JUAN CAPISTRANO
COMMUNITY REDEVELOPMENT AGENCY AND KINOSHITA
PROPERTIES
WHEREAS, the Community Redevelopment Agency of the City of San Juan
Capistrano (the "Agency") desires to enter into a Purchase and Sale Agreement and Joint
Escrow Instructions (the "Agreement") with Kinoshita Properties ("Kinoshita"), which
Agreement provides for Kinoshita to sell and the Agency to purchase certain real
property described therein; and,
WHEREAS, the Agency has duly considered all terms and conditions of the
Agreement and believes that the Agreement is in the best interests of the Agency and
the health, safety and welfare of the residents of the City of San Juan Capistrano, and in
accordance with the public purposes and provisions of applicable State and local law
requirements.
NOW, THEREFORE, the San Juan Capistrano Community Redevelopment
Agency, City of San Juan Capistrano, California, does hereby find, determine, order and
resolve as follows:
SECTION 1. The Agency hereby approves the Agreement and authorizes and
directs theCh—airman and the Executive Director to execute the Agreement and all
documents referenced in the Agreement necessary to effectuate the provisions of the t
Agreement.
SECTION 2. The Agency has received and considered the report of Agency
staff on the acquisition of real property to be carried out pursuant to said Agreement
and, as a result of said consideration and evidence presented at the hearing on the same
matter, the Agency has determined that the adoption of this resolution and the decision
to acquire an interest in the Property to ensure preservation of agriculture within the
community is categorically exempt from the requirements of the California
Environmental Quality Act ("CEQA") pursuant to the provisions of California Code of
Regulations, Title 14, Section 15317. Accordingly, the Agency staff will prepare and file
a Notice of Exemption with the County Clerk of the County of Orange.
U.
PASSED, APPROVED, AND ADOPTED this 6th
of r , 1991.
LAWRENCE U H HA MAN
ATTEST:
day
Receive and File:
It was moved by Director Friess, seconded by Director Jones,
and unanimously carried that the Mid -Year Budget Report for
the Community Redevelopment Agency be received and filed.
3. PURCHASE AGREEMENT -
written Communication:
Report dated March 5, 1991, from the Executive Director,
forwarding a Property Acquisition Agreement and a Farm
Management and Operation Agreement for the purchase of
Kinoshita Properties. The purchase price is $9.5 million for
56.45 acres, and the agreement provides for a 20 -year
interest -only tax exempt note. The term for the Farm
Management Agreement is five years, with assistance to be
provided by the Kinoshita family to manage the project for a
short period of time and long-term plans to be implemented at
a later date.
Mr. Julian made an oral presentation, noting that the agency
intends to reserve 10 acres for relocation of the adult
education facility and to sell the balance to the City. With
monies received from the sale, the Agency will repay a portion
to the debt owed to the City. He advised that sufficient tax
increments exist for the Agency to pay back the debt to the
City.
Councilman Vasquez expressed concern regarding the City's
responsibility should the tax-exempt status for. the Kinoshita
family be challenged and the possible conflict of interest
regarding counsel representing the Agency and also acting as
bond counsel, as had been noted in a recent Fair Political
Practices Commission ruling.
Tom Clark, Agency Counsel, clarified that the information
relative to possible conflicts of interest was contained in
an FPPC advice letter and suggested that where the same firm
acted as special counsel and was later brought in as bond
counsel there may be a conflict question. However, if a firm
is both special counsel and bond counsel pursuant to an
existing agreement, that same conflict did not exist and that
was the case in this instance. He further stated that his
firm had reviewed and analyzed the tax-exempt status and would
issue an unqualified opinion that there is no question that
in fact the interest on the Kinoshita Notes is tax exempt.
2-
C P_ P_ 3/5/91
r 343
AAporov 1 of Agreements and Joint Escrow Instructions:
It was moved by Director Friess, seconded by Director
Hausdorfer that the following Resolution be adopted approving
the Sale Agreement/Joint Escrow Instructions:
LKINOSHITA PROPERTIESI - A RESOLUTION OF THE SAN JUAN
CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, APPROVING
THE EXECUTION OF A PURCHASE AND SALE AGREEMENT/JOINT
ESCROW INSTRUCTIONS BETWEEN THE SAN JUAN CAPISTRANO
COMMUNITY REDEVELOPMENT AGENCY AND KINOSHITA
PROPERTIES
The motion carried by the following vote:
AYES: Directors Jones, Friess, Hausdorfer,
Vasquez, and Chairman Buchheim
NOES: None
ABSENT: None
The Property Acquisition Agreement and the Farm Management and
Operation Agreement for the Kinoshita Properties were approved
in the amount of $9.5 million and the Agency Chairman and the
Executive Director were authorized to execute the Agreements
on behalf of the Agency.
The meeting will be adjourned to Wednesday, March 6, 1991, at
7:00 p.m. in the La Sala at the City Library, to hold a joint
meeting between the Agency and the City Council to approve the
sale of Agency property to the City of San Juan Capistrano.
The Board recessed to the Council meeting at 10:10 p.m. and
reconvened in Closed Session at 10:59 p.m. for discussion of the
lease agreement with the Paisley Penguin, the Acting Agency
Secretary being excused therefrom, and reconvened at 12:25 a.m.,
March 6.
3-
3/5/91
w • •
AGENDA ITEM March 5, 1991
TO: Chairman and Members of the Community Redevelopment
Agency Board of Directors
FROM: Stephen B. Julian, Executive Director
SUBJECT: Purchase Agreement and Farm Management and Operation
Agreement for Kinoshita Property
SITUATION:
The City of San Juan Capistrano and the Community Redevelopment
Agency have, over the last 10 years, been working very diligently
with the Kinoshita Properties in an effort to establish the
preservation of this property in agricultural use while at the same
time providing the Kinoshita Family with the ability of meeting
their financial needs and goals.
With the passage of Measure D, the $21 million bond measure for the
purchase of open space and agriculture lands, the City was finally
in a position to move forward on the preservation of agriculture
area through the purchase of the Kinoshita Properties.
Before you is the Purchase Agreement and the Farm Management and
Operation Agreement for the Kinoshita Properties along with the
necessary environmental documents needed for this transaction. The
IF
purchase price is $9.5 million for the 56.45 acres or a cost of
168,290.52 per acre. The agreement provides for a 20 -year
interest -only tax exempt note with the principal due at the end of
the term. This method will allow the Kinoshita Family to receive
favorable tax treatment from the sale.
In order to finance this plan, the Community Redevelopment Agency
will purchase the Kinoshita Properties, and the City will in turn
buy from the Agency a portion of the property using bond proceeds.
The initial flow of funds for this purchase will be from bond
proceeds. However, it is anticipated that the City will be using
funding from its Parks and Recreation fund, Agricultural
Preservation fund and money from the California Coastal Conservancy
to reduce the amount of bond proceeds used for this acquisition to
approximately $6.5 million.
The Community Redevelopment Agency's role in this acquisition is
two -fold. The first is to reserve approximately 10 acres of the
Kinoshita Properties located adjacent to the Marco Forster Junior
High School as a potential site for the Adult Education Program
which is to be relocated by the Community Redevelopment Agency as
part of our agreement with the Capistrano Unified School District.
Although this action is not conclusive with respect to the use of
this property for adult education, it is necessary for the Agency
to reserve the right of usage at this time. It should be
understood that when discussing the relocation of the Adult
Education Program that this does not include the relocation of a
Continuation School Program for which they sites will be
considered. FOR CRY COUNCIL AGEN6?
Agenda Item - 2 - March 5, 1991
The second element of the Agency's involvement is to provide a
financial tool that allows the Kinoshita Family to receive tax-
deferred treatment on the sale of this property that would not be
possible if the City was the only party to the agreement. Quite
frankly, without Agency involvement, the cost of acquisition would
be much greater.
Finally, as part of the overall package, staff has prepared the
Purchase Agreement, the Farm Management and Operation Agreement and
several specific exhibits indicating the farming equipment
incorporated in the agreement, environmental documentation,
environmental assessment of the Kinoshita Properties and other
specific documents. The Farm Management and Operation Agreement
will allow the City to maintain the current operation of the
Kinoshita farm and at the same time evaluate the farming operation
and determine the extent to which farming operation should continue
in the future given other identified community goals including
preservation of the Joel Congden House; improved athletic facility
needs; Senior citizen Center/Community Center needs; not to mention
the Agriculture Preservation Plan required to qualify for Coastal
Conservancy funding. As part of the Acquisition and Management
Agreement, it should be noted that this does not preclude the City
from using some of the 56 acres for other open space or
recreational activity. In fact, the Management Agreement has a 6 -
month termination notice regarding the farming operation.
Once the Board of Directors of the Redevelopment Agency approves
the Purchase Agreement and_the Farm Management and Operation
Agreement, it will be necessary for the Agency Board of Directors
adjourn to a joint meeting with the City Council on March 6, 1991,
to consider the City's purchase from the Redevelopment Agency.
At the time the Agenda was finalized, not all of the agreements
were in final form. However, staff has prepared a packet that
presents the most complete agreement package to date, and it is
anticipated that only a few minor changes will occur prior to
Tuesday night's meeting at which time the Redevelopment Agency
Board of Directors will receive a complete Farm Management and
Operation Agreement package.
COMMISSION/BOARD REVIEW AND RECOMMENDATIONS:
Not applicable.
FINANCIAL CONSIDERATIONS:
As noted in the staff report, the purchase price for the 56.45
acres is $9.5 million. The financial transaction would include the
Community Redevelopment Agency issuing notes to the Kinoshita
Family along with.a prepaid interest tax payment at the beginning
of the transaction. The Redevelopment Agency, at the adjourned
meeting to be held the following day, would then sell the 46 acres
to the City which would acquire the property through the use of
t
0
Agenda Item - 3 - March 5, 1991
bond proceeds and funding from the noted Parks and Recreation and
Agriculture Preservation funds along with anticipated funding from
the California Coastal Conservancy.
All parties involved in the property acquisitions have been
notified and appropriate notification has been posted.
ALTERNATE ACTIONS:
1. Authorize the Chairman of the Community Redevelopment Agency
as well as the Executive Director to execute the both the
Property Acquisition Agreement and the Farm Management and
Operation Agreement with regard to the Kinoshita properties.
Adopt the attached resolution approving the Sale
Agreement/Joint Escrow Instructions. Additionally, adjourn
the Community Redevelopment Agency meeting of March 5, 1991,
to March 6, 1991, for a joint meeting of the Agency and the
City Council to approve the sale of Community Redevelopment
Agency property to the City of San Jan Capistrano.
2. Take no action at this time.
3. Request further information from staff. f"
RECOMMENDATION•
Authorize the Chairman of the Community Redevelopment Agency as
well as the Executive Director to execute the both the Property
Acquisition Agreement and the Farm Management and Operation
Agreement with regard to the Kinoshita properties. Adopt the
attached resolution approving the Sale Agreement/Joint Escrow
Instructions. Additionally, adjourn the Community Redevelopment
Agency meeting of March 5, 1991, to March 6, 1991, for a joint
meeting of the Agency and the City Council to approve the sale of
Community Redevelopment Agency property to the City of San Jan
Capistrano.
Respectfully submitted,
tep B. uli
City Manager
SBJ:JCP:rmb
attach
11
San Juan Capistrano
Community
Redevelopment
Agency
t
January 17, 1991
Mr. Shigeru Kinoshita
27015 Calle Real
Capistrano Beach, California 92624
Re: Property Acquisition
Dear Mr. Kinoshita:
i
At their meeting of January 15, 1991, the Board of Directors received a status
report regarding acquisition of the Kinoshita Farm property. In order to meet the
anticipated escrow closing date of January 31st, an adjourned meeting of the
Agency Board of Directors has been scheduled for January 29th at 6:00 p.m., in
the City Council Chambers to conclude the necessary business.
If you have any questions, please give us a call.
Verryy truly yours,
Cheryl Johnson
City Clerk
cc: Executive Director
32400 Paseo Adelanto
San Juan Capistrano
California 92675
714-493-1171
0
2.- PROPERTY ACQUISITION - KINOSHITA PROPERTY (670.20)
Written Communication:
Report dated January 15, 1991, from the Executive Director,
advising that with approval of the Letter of Intent to
acquire the Kinoshita Properties approved on October 30,
1990, the process of developing the necessary agreements
began. This acquisition would be the first to be made with
proceeds from the open Space Bond Measure approved in April
1990. The report advised that the necessary documents were
still being compiled and recommended that an adjourned
meeting be scheduled to take specific action on the purchase
agreement.
Mr. Julian made an oral presentation, noting that the Agency
made a commitment to close escrow on the acquisition by
January 31, 1991.
Setting of Date and Time for Adjourned Meeting:
It was moved by Director Friess, seconded by Director
Hausdorfer, and unanimously carried that the meeting be
adjourned to Tuesday, January 29, 1991, at 6:00 p.m. in the
Council Chamber to address the acquisition of the Kinoshita
Properties.
The Report was received and filed.
The Board expressed appreciation to the Executive Director
for his work on the acquisition and documents.
There being no further business before the Board, the meeting was
adjourned at 9:07 p.m. to the meeting date of Tuesday, January 29,
1991, at 6:00 p.m. in the City Council Chamber.
ATTEST:
iii!• C
Respectfully submitted,
2-
1/15/91
AGENDA ITEM January 15, 1991
TO: Chairman and Members of the Community Redevelopment
Agency Board of Directors
FROM: Stephen B. Julian, Executive Director
SUBJECT: Property Acquisition - Kinoshita Properties
SITU TION:
On October 30, 1990, the City announced the launching of the City's
Open Space Acquisition Program with the approval of a Letter of
Intent to acquire the Kinoshita Farm. This would be the first
acquisition to be made with proceeds from the $21 million bond
measure approved by San Juan Capistrano voters in April of last
year.
At the time that the Letter of Intent to acquire the Kinoshita
Properties was approved, staff began the process of developing the
necessary agreements and exhibits with the anticipation of closing
escrow on the acquisition by January 31, 1991.
Staff is currently pulling together several documents that will be
essential to concluding the purchase acquisition of the Kinoshita
Properties. They include the purchase agreement, a farm management
agreement, an exhibit listing the equipment that is being purchased
from the Kinoshita Properties, environmental documentation, soils
investigation report and documentation, title report and all other
necessary items to be included in the complete package for the
purchase of this property. It is anticipated that these agreements
and information will be compiled within the next several days, and
it is staff's recommendation and request that the Board of
Directors of the Community Redevelopment Agency adjourn their
regular scheduled meeting of January 15th to January 29th to take
specific action on the purchase agreement for the Kinoshita
Properties.
COMMISSION/BOARD REVIEW AND RECOMMENDATIONS:
Not applicable.
FINANCIAL CONSIDERATIONS:
All financial information will be provided as part of the complete
package to the Agency Board of Directors for the January 29th
meeting.
NOTI ICATION
Kinoshita Family.
FOR CITY COUNCIL AGEND i,y/ I
vvWWW
Agenda Item - 2 - January 15, 1991
ALTERNATE ACTIONS:
1. Receive and file the report and, by motion, adjourn the
meeting of January 15, 1991, to January 29, 1991, to take
action on the purchase agreement for the Kinoshita Properties.
2. Request additional information from staff.
3. Take no action on this matter.
RECOMMENDATION•
Receive and file the report and, by motion, adjourn the meeting of
January 15, 1991, to January 29, 1991, to take action on the
purchase agreement for the Kinoshita Properties.
Respectfully, tted,
sStepp J ian
Executive Director
SBJ:JCP:rmb
326 4 0 a
beo40
2. PROPERTY ACQUISITION -
Written Communication:
Report dated January 15, 1991, from the Executive Director,
advising that with approval of the Letter of Intent to
acquire the Kinoshita Properties approved on October 30,
1990, the process of developing the necessary agreements
began. This acquisition would be the first to be made with
proceeds from the Open Space Bond Measure approved in April
1990. The report advised that the necessary documents were
still being compiled and recommended that an adjourned
meeting be scheduled to take specific action on the purchase
agreement.
Mr. Julian made an oral presentation, noting that the Agency
made a commitment to close escrow on the acquisition by
January 31, 1991.
Setting of Date and Time for Adiourned Meeting:
It was moved by Director Friess, seconded by Director
Hausdorfer, and unanimously carried that the meeting be
adjourned to Tuesday, January 29, 1991, at 6:00 p.m. in the
Council Chamber to address the acquisition of the Kinoshita
Properties.
The Report was received and filed.
The Board expressed appreciation to the Executive Director
for his work on the acquisition and documents.
There being no further business before the Board, the meeting was
adjourned at 9:07 p.m. to the meeting date of Tuesday, January 29,
1991, at 6:00 p.m. in the City Council Chamber.
Respectfully submitted,
ECRETARY
ATTEST:
2-
1/15/91
MEMORANDUM
TO: Memo to File
FROM: Dawn M. Schanderl, Records Coordinator
DATE: Kinoshita Farm Property
SUBJECT: November 5, 1991
Regarding the Kinoshita Farm Property the following city and cra files contain relevant
information:
CRA FILES:
600-40 1991
Purchase & Sale Agreement
Kinoshita Properties
600-40 1991
Manage ment/Opertion Agreement
Kinoshita Farms, Inc.
670-20 1991
Acquisition 1991
Kinoshita Farm
Purchase (CRA) & Sale (City)
670-70 1991
Resolution Authorizing Sale
Kinoshita Farm Property
CRA to City
CITY FILES
670-20 1991
Acquistion Agreement
Community Redevelopment Agency
Kinoshita Farm Property
600-30 1991
Correspondence & Reports 1991
Kinoshita Farm, Inc.
Purchase/Management/Operation of Farm (CRA)