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09-0220_26755 VERDUGO, LLC_1st Amd to Owner Participation AgrFIRST AMENDMENT TO OWNER PARTICIPATION AGREEMENT This FIRST AMENDMENT TO OWNER PARTICIPA'T'ION AGREEMENT ("First Amendment") is made and entered into as of Py` .'(:Vt I, 2011, by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), and 26755 VERDUGO LLC, a California limited liability company ("Owner"). RECITALS A. The Agency and the Owner have entered into an Owner Participation Agreement dated as of February 17, 2009 ("Agreement"), pursuant to which the Agency has agreed to provide the Owner funds in the form of a loan ("Covenants Loan") to assist in the construction of additions to and remodeling of an existing building located at 26755 Verdugo Drive, San Juan Capistrano, California ("Property"). B. Section 301 of the Agreement provided that the Covenants Loan to be provided to the Owner by the Agency was to be in the amount of Nine Hundred Fifty Thousand Dollars ($950,000). Pursuant to Section 302 of the Agreement, the Covenants Loan was to be disbursed in portions as Owner reached certain Project milestones. C. Pursuant to the Agreement, and in consideration of Agency's agreement to make the Covenants Loan to Owner, Owner executed the Promissory Note and Deed of Trust, both dated February 20, 2009. The Deed of Trust was recorded in the official records of Orange County, California on ,March 5, 2009 as Instrument No. 2009000 103451. D. The amount of the Covenants Loan was originally intended and calculated by the parties to make the Project more feasible by partially off -setting the gap between the cost of development and the expected returns generated by leasing space at the completed Project (the "Feasibility Gap"). Subsequent to the execution of the Agreement, Promissory Note, and Deed of Trust, the parties have recalculated the Feasibility Gap and found that it is up to Seven Hundred Forty Bight Thousand Dollars $748,000 greater than previously expected, due to increased construction costs and a decrease of forecasted lease revenues arising from a reduction in the total leaseable space. E. The Agency entered into the Agreement in order to further the Agency's objectives of eliminating blight in the Project Area, increasing employment opportunities within the Project Area, and generating additional taxes with which the community can increase and assist in providing an environment for the social and economic growth and well-being of the citizens of San Juan Capistrano ("City"). In furtherance of these objectives. the parties desire to increase the amount of the Covenants Loan to an amount sufficient to ensure that construction of the Project may be successfully completed. F. This First Amendment and the implementation hereof are in the vital and best interest of the City and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements under which the redevelopment of the Project Area has been undertaken. DOCSOC/ 1462672v3/022299-0085 NOW, THEREFORE, the parties agree to amend the Agreement as follows. 1. Loan Amount. `Fhe amount of the Covenants Loan is hereby increased from Nine Hundred Fifty Thousand Dollars ($950,000) to an amount up to but not to exceed One Million Six Hundred Ninety Eight Thousand Dollars ($1,698,000) (such amount the "[roan Maximum"). The final amount of the Covenants Loan shall be the lesser of (x) an amount equal to the final audited Total Development Costs of the Project, reduced by the Supportable Private Investment, and further reduced by One Hundred Thirty Six Thousand Dollars ($136,000), or (y) the loan Maximum. (a) "Total Developn.ent Costs" means, with respect to the Project, the land acquisition cost; actual demolition costs; costs of constructing offsite and onsite improvements, building shell, and tenant improvements; architecture, engineering, and consulting costs; costs of public permits and fees; costs associated with taxes, insurance, legal and accounting services; marketing and leasing costs; development management costs; financing costs associated with carrying the land and paying interest through construction; loans points and fees; and other actual and direct third -party pre -development costs. (b) "Supportable Private Investment" means, with respect to the Project, the Stabilized Net Operating Income divided by a threshold return on investment of Seven and Twenty One IInndreths Percent (7.21°/x). (i) "Stabilized Net Operating Income" means gross monthly leasing income derived from the Project reduced by monthly operating expenses, which includes any u.nreimbursed office expenses, management costs, and operating & capital reserves. 2. Condition of Disbursement. The table of figures in Section 302 of the Agreement shall be replaced with the following: - - Milestones Disbursement Amount Advance for flans and Construction Documents $200,000 _— Building Permit Issuance uWW—W Building $250,000 Foundation Inspection Completion $2751,000 Roof Sheathing Inspection � $225,000 — -� -Final Framing/Rough Metal Electrical, Plumbing Inspection $275,000 u final Drywall Inspection $275,000 Certificate of Occupa��icy �_ $198,000 2. Loan Modification .Documents. In connection with the Agency's increase of the principal amount of the Covenants Loan to the Owner, the Owner shall execute and deliver to the Agency a First Amendment to Promissory Note, in the form attached .hereto as Exhibit A and DOCS OCI[462672v3/02?299-00861 incorporated herein, and a First Modification to Deed of Trust, in the form attached hereto as Exhibit B and incorporated herein. The First Modification to Deed of Trust shall be recorded against the Site in the official records of Orange County, California. 3. No Other Changes. Except as expressly provided to the contrary in this First Amendment, the terms of the Agreement, the Promissory Note, the Deed of Trust, and any other documents executed pursuant to the Agreement, shall remain in full force and effect as written. All capitalized terms used but not defined herein shall .have the meaning given to such terms in the Agreement. IN WI'T'NESS WHEREOF, the parties hereto have caused this First Amendment to be executed by duly authorized representatives as of the day and year first written above. DOCSOC/14626720/022299-€ 086 OWNER: 26755 VERDUGO LLC, a California limited liability company By: Its: AGENCY: SAN JUAN CA'ISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate a� politic By: Chairman EXHIBIT "A" FIRST AMENDMENT TO PROMISSORY NOTE This FIRST AMENDMENT TO PROMISSORY NOTE (the "Amended Note") is made and entered into as of '(.,""; 1`�-�' , 2011, by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), and 26755 VERDUGO LLC, a California limited liability company (the "Owner'). Y. Agreement. This Amended Note is given in accordance with the Owner Participation Agreement executed by the Agency and the Owner, dated as of February 17, 2009 (the "Agreement"), as amended by that certain First Amendment to Owner Participation Agreement, d date. , 2011. (the "First Amendment"). The rights and obligations of the Owner and the Agency under this Amended Note shall be governed by the Agreement as amended by the First Amendment, and by the additional terms set forth in this Amended Note. The Promissory Note executed by Owner dated February 20, 2011, shall continue in full force and effect, except that the principal amount owing thereunder is hereby increased from Nine Hundred Fifty Thousand Dollars ($950,000) to an amount up to but not to exceed One Million Six Hundred Ninety .Eight Thousand Dollars ($1,698.000) (such amount the "Loan Maximum"). The final amount of the Covenants Loan shall be the lesser of (x) an amount equal to the final audited Total Development Costs of the Project, reduced by the Supportable Private Investment, and further reduced by One Hundred Thirty Six Thousand Dollars ($136,000). or (y) the Loan Maximum. (a) "Total Development Costs" means, with respect to the Project, the land acquisition cost; actual demolition costs; costs of constructing offsite and onsite improvements, building shell, and tenant improvements; architecture, engineering, and consulting costs; costs of public permits and fees; casts associated with taxes, insurance, legal and accounting services; marketing and leasing costs; development management costs; financing costs associated with carrying the land and paying interest through construction; loans points and fees; and other actual and direct third -party pre -development costs. (b) "Supportable Private Investment" means, with respect to the Project, the Stabilized Net Operating Income divided by a threshold return on investment of Seven and Twenty One Nundreths Percent (7.21%). (i) "Stabilized Net Operating Income" means gross monthly leasing income derived from the Project reduced by monthly operating expenses, which includes any unreimbursed office expenses, management costs, and operating & capital reserves.. 2. No Other Amendment. Except as expressly provided to the contrary in this Amended Note, no other provision of the Promissory Nate shall be amended or modified by this Amended Note. 3. Terms. Any terms not separately definedherein shall have the same meanings as set forth in the Agreement, as amended. EXHIBIT A-1. 17OC:SOC /14626'72v3/€}22299-0086 26755 VERDUGO LLC, a California limited liability company By:, its: SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate anctpolitic By: CWa'lr an EXHIBIT A-2 DOC SOC/I 462672v3/022299-0086 This Document was electronically recorded by Cly South County B Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder NO FEE 2011000151751 03.50pm 03123111 FIRST MODIFICATION TO SWED D OF TRUST 0.00 4.00 0.00 0.40 15.00 0.€ 0 0.00 0.00 RECORDING REQUESTED BY: AND WHEN RECORDED RETURN TO: San Juan: Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 AND WHEN RECORDED, MAIL TO Maria Morris, City Clerk City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, California 92675 Chis document is exempt from payment of a recording fee pursuant to Government Code Section 27383 FIRST MODIFICATION OF DEED OF TRUST This FIRST MODIFICATION OF DEED OF TRUST ("First Modification") is made as of 2011, among the trustor, 26755 VERDUGO LLC, a California limited liability company ("Trustor"), whose address is 26755 Verdugo Street, Suite 200, San Juan Capistrano, California 92675, FIDELITY NATIONAL 'TITLE COMPANY, whose address is 1.300 Dove Street, Suite 310, Newport Beach, California 92660 ("Trustee"), and the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), whose address is 32400 Paseo Adelanto, San Juan Capistrano, California 92675, as Beneficiary. RECITALS A. Pursuant to the Owner Participation Agreement executed by the Agency and the Owner, dated as of February 17, 2009 ("Agreement"), the Beneficiary was to provide a loan to the Trustor in the amount of Nine Hundred Fifty Thousand Dollars ($950,000) ("Covenants Loan") to be used towards the development of certain real property located at 26755 Verdugo Street, San. Juan Capistrano, California and more particularly described in Attachment No. 1 attached hereto and incorporated herein ("Site"). B. In consideration for the Covenants Loan, the Trustor has executed that certain Promissory Note (the "Promissory Note") dated as of February 20, 2009, in favor of the Beneficiary, in. the principal amount of Nine Hundred Fifty Thousand Dollars ($950,000). EXHIBIT B-1 DOCSOC/ i 462672v3/622299-0086 C. The Promissory Note is secured by a Deed of Trust, dated as of February 20, 2009, and was recorded in the official records of Orange County, California on March 5, 2009 as Instrument No. 2009000103451 (the "Deed of Trust"). D. Trustor and Beneficiary have entered into a First Amendment to Owner Participation Agreement and a First Arnendment to Promissory Note, both of which are dated as of fi, 1__4 %,Ii*: -�' , 2011, and which increase the original. principal amount of the Promissory Note to an amount up to but not to exceed One Million Six Hundred Ninety Eight Thousand Dollars ($1,698,000). E. Trustor and Beneficiary now desire, by this first Modification, to modify the Deed of Trust to provide that the Deed of Trust secures payment of the Promissory Note, as amended by the First Amendment to Promissory Note, in an amount up to but not to exceed One Million. Six Hundred Ninety Eight Thousand Dollars ($1,698,000). NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Trustor hereby modifies the Deed of Trust as follows: 1. Amendment to Promissory Note. All references in the Deed of Trust to the "Promissory Note" shall mean the Promissory Note, as amended by the First Amendment to Promissory Note. 2. Maximum Secured Amount. The original principal amount secured by the Deed of Trust is hereby amended from Nine Hundred Fifty Thousand Dollars ($950,000) to an amount up to but not to exceed One Million Six Hundred Ninety Eight Thousand Dollars ($1,698,000). 3. No Other Modifications. Except as expressly provided to the contrary in this First Modification, no other provision of the Deed of Trust shall be modified or amended by this instrument. EXHIBIT B-2 DOCSOC 1462672v3/022299-0086 IN WITNESS WHEREOF, Trustor and Beneficiary have executed this First Modification as of the date set forth above. TRUSTOR: 26755 VERDUGO LLC, a California limited liability company B Y• Its: ACCEPTED BY AGENCY AS BENEFICIARY - SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporaand politic B✓ !: .. .. y. f Chairman ATTEST: - Secretary APPROVED AS TO FORM: m Stradling Yocca Carlson & 1 7thh Special Counsel to Benefiri EXHIBIT B-•3 DOCSCC11462672v31022299-0086 ATTACHMENT A LEGAL DESCRIPTION All that certain real properly in the County of Orange, State of California, described as follows: Lot 4 of Tract 135, in the City of San ,Tuan Capistrano, County of Orange, State of California, as per map recorded in Book 11, Page 23 of Miscellaneous Maps, Records of Orange County, California. ATTACHMENT NO. 1 TO EXHIBIT B DOCSOC/ I462572v3/022299-0085 STATE OF CALIFORNIA ) ss. COUNTY OF ) On zj- before me, ,Notary Public, personally appeared�f z.Z,r -' v , who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal OF NOTARY PUBLIC DOCSOC/ 1462672v3/022299-008 6 10JERI TA@BACK COMM. #1826755 � ORANMOOLwry MY CMM Ev. DEC. 13, 2012 r PUBLIC AGENCY FORM OF ACKNOWLEDGEMENT State of California ) County of Orange ) ss. City of San Juan Capistrano ) (Gov't Code 40814 & Civil Code 1181) On Mare 15, 2011, before me, Maria Morris, Agency Secretary, personally appeared Laura Freese, Agency Chair, who proved to me on the basis of satisfactory evidence to the be person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity, and that by his/her/there signature on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument . I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. (SEAL) WIT,NE-SS,my: hand and official seal. Marif Agency Secretary OPTIONAL Capacity Claimed by Signers Officer title Agency Chair Signers are Representing San .duan Capistrano Community Redevelopment Agency Description of Attached Document Title or Type of Document First Modification of Deed of Trust — 26755 Verdugo LLC. Date of Document: March 15, 2011 CRA RESOLUTION NO. 11-03--15-01 A RESOLUTION OF THE SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY APPROVING THE FIRST AMENDMENT TO OWNER PARTICIPATION AGREEMENT BETWEEN THE AGENCY AND 26755 VERDUGO, LLC AND MAKING CERTAIN OTHER FINDINGS IN CONNECTION THEREWITH WHEREAS, the San Juan Capistrano Community Redevelopment Agency ("Agency") is a community redevelopment agency duly organized and existing under the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ("CRL''), and has been authorized to transact business and exercise the power of a redevelopment agency pursuant to action of the City Council ("City Council") of the City of San Juan Capistrano ("City„); and WHEREAS, the existing Redevelopment Plan (the "Redevelopment Plan") and the boundaries of the Redevelopment Plan (the "Project Area") were duly established by ordinances of the City Council; and WHEREAS, Agency is vested with the power to implement the Redevelopment Plan and to carry out its goals and objectives of the Agency, including without limitation the goals and objectives adopted by the Agency's implementation plan (the "Implementation Pian") pursuant to the CRL; and WHEREAS, the Agency is authorized and empowered by the CRL to enter into agreements for the acquisition of real or personal property, to receive consideration for the provision by the Agency of redevelopment assistance and to make and execute contracts and other instruments necessary or convenient to the exercise of its powers; and WHEREAS, 26755 Verdugo, LLC ("Developer") is a California limited liability company duly organized under the laws of the State of California and experienced in the construction and rehabilitation of commercial buildings; and WHEREAS, the Agency and Developer have entered into an Owner Participation Agreement dated as of February 17, 2009 ("Agreement"), pursuant to which the Agency has agreed to provide the Developer funds in the form of a loan ("Covenants Loan") to assist in the construction of additions to and remodeling of an existing building located at 26755 Verdugo Drive, San Juan Capistrano, California ("Paseo de Verdugo Project").; and WHEREAS, Section 301 of the Agreement provided that the Covenants Loan to be provided to the Owner by the Agency was to be in the amount of Nine Hundred Fifty Thousand Dollars ($950,000), and pursuant to Section 302 of the Agreement, the Covenants Loan was to be disbursed in portions as Owner reached certain project milestones; and WHEREAS, pursuant to the Agreement, and in consideration of Agency's agreement to make the Covenants Loan to Owner, Owner executed the Promissory Note and Deed of Trust, both dated February 20, 2009, which Deed of Trust was recorded in the official records of Orange County, California on March 5, 2009 as Instrument No. 2009000103451; and WHEREAS, the amount of the Covenants Loan was originally intended and calculated by the parties to make the Paseo de Verdugo Project more feasible by partially off -setting the gap between the cost of development and the expected returns generated by leasing space at the completed Paseo de Verdugo Project (the "Feasibility Gap"); and WHEREAS, subsequent to the execution of the Agreement, Promissory Note, and Deed of Trust, the parties have recalculated the Feasibility Gap and found that it is up to Seven Hundred Forty Eight Thousand Dollars $748,000 greater than previously expected, due to increased construction costs and a decrease of forecasted lease revenues arising from a reduction in the total leaseable space; and WHEREAS, the Agency entered into the Agreement in order to further the Agency's objectives of eliminating blight in the Project Area, increasing employment opportunities within the Project Area, and generating additional taxes with which the community can increase and assist in providing an environment for the social and economic growth and well-being of the citizens of the City; and WHEREAS, in furtherance of these objectives, the parties desire, by execution of a First Amendment to Owner Participation Agreement ("Amendment") to increase the amount of the Covenants Loan to an amount sufficient to ensure that construction of the Paseo de Verdugo Project may be successfully completed; and WHEREAS, the Amendment and the implementation thereof are in the vital and best interest of the City and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. under which the redevelopment of the Project Area has been undertaken; and .. WHEREAS, the Agency has adopted the Implementation Plan pursuant. to CRL Section 33490, which sets forth the objective of eliminating blighting conditions including impaired investments; and WHEREAS, by providing for the operation of the Paseo de Verdugo Project, the Amendment will assist the Agency in meeting the development policies and objectives set forth in the Redevelopment Plan and Implementation Plan, specifically the goal of reducing blighting economic conditions by encouraging new investment in the community through facilitating the use of underutilized and vacant buildings; and WHEREAS, pursuant to the CRL, the Agency is authorized to acquire the "Covenants" as defined in the Agreement; and 2 3/15/2011 WHEREAS, on March 15, 2011, the Agency held a duly noticed public meeting on the proposed Amendment, at which time the Agency reviewed and evaluated all of the information, testimony, and evidence presented during the public meeting; and WHEREAS, all actions required by all applicable law with respect to the proposed Amendment have been taken in an appropriate and timely manner; and WHEREAS, the City Council has previously determined, in its adoption of the ordinance approving the Redevelopment Plan, that the Site was blighted; and WHEREAS, the Agreement will assist in the elimination of blight by providing for the operation of the Paseo de Verdugo Project; and WHEREAS, the Amendment will not result in physical impacts to the environment as it simply amends financial aspects of the Agreement; and . WHEREAS, the Agency has duly considered all terms and conditions of the proposed Amendment and believes that ensuring the completion and operation of the Paseo de Verdugo Project is in the best interests of the City of San Juan Capistrano and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. NOW, THEREFORE, BE IT RESOLVED by the San Juan Capistrano Community Redevelopment Agency as follows: 1. Each of the foregoing recitals is true and correct. 2. The Agency hereby finds and determines that the operation of the Paseo de Verdugo Project, pursuant to the Agreement as amended by the Amendment will assist in the elimination of blight within the Project Area by providing for the proper reuse of a portion of the Project Area, which was previously declared blighted and encourage the redevelopment of nearby blighted properties. 3. The Agency hereby finds and determines that the Amendment is consistent with the provisions and goals of the Redevelopment Plan and Implementation Plan. 4. The Agency hereby finds that the Amendment will not result in physical impacts to the environment as it simply amends financial aspects of the Agreement. S. The Agency hereby approves the Amendment between the Agency and Developer, in the form of the Amendment, which has been submitted herewith (Exhibit A). 6. The Agency Executive Director and the Agency Secretary are hereby authorized to execute and attest the Amendment, including any related attachments, on behalf of the Agency. Copies of the final form of the Amendment, when duly executed and attested, shall be placed on file in the office of the City Clerk. 3 3/15/2011 7. The Agency Executive Director (or his duly authorized representative) is further authorized to implement the Amendment and take all further actions and execute all documents referenced therein and/or necessary and appropriate to carry out the Amendment. The Agency Executive Director (or his duly authorized representative) is hereby authorized to the extent necessary during the implementation of the Amendment to make technical or minor changes thereto after execution, as necessary to properly implement and carry out the Amendment, provided the changes shall not in any manner materially affect the rights and obligations of the Agency. The Agency Secretary shall certify to the adoption of this Resolution PASSED AND ADOPTED this 15th day of March, 2011. SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY Laura Freese, Chairman ATTEST: Maria Morris, A&nay Secreta STATE OF CALIFORNIA j COUNTY OF ORANGE ) ss. CITY OF SAN JUAN CAPISTRANO ) 1, MARIA MORRIS, appointed Agency Secretary of the Community Redevelopment Agency of the City of San Juan Capistrano, do hereby certify that the foregoing Resolution No. CRA 11-03-15-01 was duly adopted by the Board of Directors of the Community Redevelopment Agency at a regular meeting. thereof, held the 15th day of March, 2011 by the following vote: AYES: DIRECTORS: Allevato, Kramer, Reeve, Taylor and Chair Freese NOES DIRECTORS: None ABSENT: DIRECTORS:; None t MARIA MORRIS ABeAcy Secretary 4 3/15/2011 CRA 3115/2011 B3 TO: Joe Tait, Executive Director FROM: Cindy Russell, Finance Officer SUBJECT: Consideration of Amendment to Owner Participation Agreement with 26755 Verdugo, LLC (Paseo De Verdugo) RECOMMENDATION By Motion, and per previous Agency Direction, adopt the Resolution approving the First Amendment to Owner Participation Agreement providing additional financial assistance for the Paseo de Verdugo project (26755 Verdugo, LLC) SITUATION: Please see the attached revised resolution. The title of the resolution previously provided has been changed to reflect the recommendation. Respectfully submitted, f� Cindy Russell Finance Officer Attachment: 1 CRA Resolution 2 Original Owner Participation Agreement CRA RESOLUTION NO, 11-03-15- A RESOLUTION OF THE SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY APPROVING THE FIRST AMENDMENT TO OWNER PARTICIPATION AGREEMENT BETWEEN THE AGENCY AND 26755 VERDUGO, LLC AND MAKING CERTAIN OTHER FINDINGS IN CONNECTION THEREWITH WHEREAS, the San Juan Capistrano Community Redevelopment Agency ("Agency") is a community redevelopment agency duly organized and existing under the California .Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ("CRL"), and has been authorized to transact business and exercise the power of a redevelopment agency pursuant to action of the City Council ("City Council") of the City of San Juan Capistrano ("City"); and WHEREAS, the existing Redevelopment Plan (the "Redevelopment Plan") and the boundaries of the Redevelopment Plan (the "Project Area") were duly established by ordinances of the City Council; and WHEREAS, Agency is vested with the power to implement the Redevelopment Plan and to carry out its goals and objectives of the Agency, including without limitation the goals and objectives adopted by the Agency's implementation plan (the "Implementation Plan") pursuant to the CRL; and WHEREAS, the Agency is authorized and empowered by the CRL. to enter into agreements for the acquisition of real or personal property, to receive consideration for the provision by the Agency of redevelopment assistance and to make and execute contracts and other instruments necessary or convenient to the exercise of its powers; and WHEREAS, 26755 Verdugo, LLC ("Developer") is a California limited liability company duly organized under the laws of the State of California and experienced in the construction and rehabilitation of commercial buildings; and WHEREAS, the Agency and Developer have entered into an Owner Participation Agreement dated as of February 17, 2009 ("Agreement"), pursuant to which the Agency has agreed to provide the Developer funds in the form of a loan ("Covenants Loan") to assist in the construction of additions to and remodeling of an existing building located at 26755 Verdugo Drive, San Juan Capistrano, California ("Paseo de Verdugo Project"); and WHEREAS, Section 301 of the Agreement provided that the Covenants Loan to be provided to the Owner by the Agency was to be in the amount of Nine Hundred Fifty Thousand Dollars ($950,000), and pursuant to Section 302 of the Agreement, the Covenants Loan was to be disbursed in portions as Owner reached certain project milestones; and ATTACHMENT 1 WHEREAS, pursuant to the Agreement, and in consideration of Agency's agreement to make the Covenants Loan to Owner, Owner executed the Promissory Note and Deed of Trust, both dated February 20, 2009, which Deed of Trust was recorded in the official records of Orange County, California on March 5, 2009 as Instrument No. 2009000'103451; and WHEREAS, the amount of the Covenants Loan was originally intended and calculated by the parties to make the Paseo de Verdugo Project more feasible by partially off -setting the gap between the cost of development and the expected returns generated by leasing space at the completed Paseo de Verdugo Project (the "Feasibility Gap"); and WHEREAS, subsequent to the execution of the Agreement, Promissory Note, and Deed of Trust, the parties. have recalculated the Feasibility Gap and found that it is up to Seven Hundred Forty Eight Thousand Dollars $748,000 greater than previously expected, due to increased construction costs and a decrease of forecasted lease revenues arising from a reduction in the total leaseable space; and WHEREAS, the Agency entered into the Agreement in order to further the Agency's objectives of eliminating blight in the Project Area, increasing employment opportunities within the Project Area, and generating additional taxes with which the community can increase and assist in providing an environment for the social and economic growth and well-being of the citizens of the City; and WHEREAS, in furtherance of these objectives, the parties desire, by execution of a First Amendment to Owner Participation Agreement ("Amendment") to increase the amount of the Covenants Loan to an amount sufficient to ensure that construction of the Paseo de Verdugo Project may be successfully completed, and WHEREAS, the Amendment and the implementation thereof are in the vital and best interest of the City and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements under which the redevelopment of the Project Area has been undertaken; and WHEREAS, the Agency has adopted the Implementation Plan pursuant to CRL Section 33490, which sets forth the objective of eliminating blighting conditions including impaired investments; and WHEREAS, by providing for the operation of the Paseo de Verdugo Project, the Amendment will assist the Agency in meeting the development policies and objectives set forth in the Redevelopment Plan and Implementation Plan, specifically the goal of reducing blighting economic conditions by encouraging new investment in the community through facilitating the use of underutilized and vacant buildings; and WHEREAS, pursuant to the CRL, the Agency is authorized to acquire the "Covenants" as defined in the Agreement; and 2 WHEREAS, on , 2011, the Agency held a duly noticed public meeting on the proposed Amendment, at which time the Agency reviewed and evaluated all of the information, testimony, and evidence presented during the public meeting; and WHEREAS, all actions required by all applicable law with respect to the proposed Amendment have been taken in an appropriate and timely manner; and WHEREAS, the City Council has previously determined, in its adoption of the ordinance approving the Redevelopment Plan, that the Site was blighted; and WHEREAS, the Agreement will assist in the elimination of blight by providing for the operation of the Paseo de Verdugo Project; and WHEREAS, the Amendment will not result in physical impacts to the environment as it simply amends financial aspects of the Agreement; and WHEREAS, the Agency has duly considered all terms and conditions of the proposed Amendment and believes that ensuring the completion and operation of the Paseo de Verdugo Project is in the best interests of the City of San Juan Capistrano and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of appiicable state and local laws and requirements. NOW, THEREF=ORE, DE IT RESOLVED by the San Juan Capistrano Community Redevelopment Agency as follows: t. Each of the foregoing recitals is true and correct. 2. The Agency hereby finds and determines that the operation of the Paseo de Verdugo Project, pursuant to the Agreement as amended by the Amendment will assist in the elimination of blight within the Project Area by providing for the proper reuse. of a portion of the Project Area, which was previously declared blighted and encourage the redevelopment of nearby blighted properties. 3. The Agency hereby finds and determines that the Amendment is consistent with the provisions and goals of the Redevelopment Plan and Implementation Plan. 4, The Agency hereby finds that the Amendment will not result in physical impacts to the environment as it simply amends financial aspects of the Agreement. 5. The Agency hereby approves the Amendment between the Agency and Developer, in the form of the Amendment, which has been submitted herewith (Exhibit A). 3 6. The Agency Executive Director and the Agency Secretary are hereby authorized to execute and attest the Amendment, including any related attachments, on behalf of the Agency. Copies of the final form of the Amendment, when duly executed and attested, shall be placed on file in the office of the City Clerk. 7. The Agency Executive Director (or his duly authorized representative) is further authorized to implement the Amendment and take all further actions and execute all documents referenced therein and/or necessary and appropriate to carry out the Amendment. The Agency Executive Director (or his duly authorized representative) is hereby authorized to the extent necessary during the implementation of the Amendment to make technical or minor changes thereto after execution, as necessary to properly implement and carry out the Amendment, provided the changes shall not in any manner materially affect the rights and obligations of the Agency. & The Agency Secretary shall certify to the adoption of this Resolution. IR PASSED AND ADOPTED this day of March, 2011. SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY Laura Freese, Chairman ATTEST: Maria Morris, Agency Secretary Thomas P. Clark, Jr., Stradling Yocca Carlson & Raufih Agency Special Counsel 5 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) 1, , Secretary. of the San Juan Capistrano Community Redevelopment Agency, hereby certify that the above and foregoing Resolution was duly and regularly adopted by the Agency at a regular meeting thereof held on the day of 2011, and that it was so adopted by the following vote of the Agency: AYES: NOES: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and seal this day of _ 12011. Maria Morris, Agency Secretary OWNER PARTICIPATION AGREEMENT by and between the SAN JUAN CAPISTR NO COMMUNITY TY REDEVELOPMENT AGENCY and 119(0117 DOCSOC/ I 292194v 16/022299-0086 ATTACHMENT 2 TABLE OF CONTENTS Page 100. INTRODUCTORY PROVISIONS........................................................................................... I 501. 141. Definitions., .................. ........ ................. .......................................... ................... __. 1 Operating Covenant.....................................................................................................14 102. Representations and Warranties....................................................................................5 Tenant Restrictions .......... .............................................. ,.............................................. 14 103. Prohibition Against Change in Ownership, Management and Control of 15 505. Rights of Access ............. .......................................... ...,,...... .................... ......... ........ ... Participant.................................................................................................................6 506. 200. CONDITION OF.THE SITE.....................................................................................................8 507. Repayment Obligation................................................................................................. 201. Hazardous Materials......................................................................................................8 Effect of Violation of the Terms and Provisions of this .Agreement ...........................1.7 202. Indemnity......................................................................................................................8 300: FINANCIAL PROVISIONS ................................................................................................8 301. Covenants Loan...........................:.................................................................................8 302. Condition of Disbursement........................................................................................... 8 400, DEVELOPMENT OF THE DEVELOPMENT PARCEL . ........ ........ ............................ a..... .....9 401. Development of the Site by Participant....... ..... .... _ ... ....... _'__9 401 Cost of Construction ............... ................... .......... __........ .......... ................... <......... _.'_9 403. Commencement and Completion of Construction.................,......................................9 404. City and Other Governmental Agency Permits ......................... ........... ............ ........__9 405. Bodily Injury and Property Damage Insurance.............................................................9 406. Rights of Access....................................................................................................<.....10 407. Nondiscrimination During Construction.....................................................................10 408. Taxes, Assessments, Encumbrances and Liens...........................................................10 409. Submission of Evidence of ,Financing Commitments and Loan Closing....................1 1 410. Mortgage, Deed of "frust, Sale and Lease -Back Financing; Rights of Holders, ..........1 1 411. Release of Construction Covenants.............................................................................13 500. COVENANTS, CONDITIONS, RESTRICTIONS AND REPAYMENT OBLIGATION.....................................................................................................................14 501. Uses. - .- _.. . ............................................................................................................... 14 502. Operating Covenant.....................................................................................................14 503, Tenant Restrictions .......... .............................................. ,.............................................. 14 504. Maintenance ........ ............................... ............... ....... ................ ................................... 15 505. Rights of Access ............. .......................................... ...,,...... .................... ......... ........ ... 15 506. Nondiscrimination.. ... ...... ......... _ ..... ................. ................................. ................ .... 15 507. Repayment Obligation................................................................................................. 1.7 508. Effect of Violation of the Terms and Provisions of this .Agreement ...........................1.7 600. GENERAL PROVISIONS......................................................................................................1'7 601. Notices, Demands and Communications Among the Parties ... ................... _ ..............17 602. Conflicts of Interest.....................................................................................................18 603. Enforced Delay, Extension of Times of Performance................................................18 604. Nonliability of Officials and Employees of the Agency....,......................R.....,........... 18 605. Commencement of Agency Review Period.._....... ................. .... _ ............ __ ....... 18 DOCS001 292194v 16/022299-0086 TABLE OF CONTENTS 700DEFAULTS AND REMEI}lES_.~.~............................. ....... ....... ......^.........~.............. l9 701. Defaults -~ General .... ...... _.--.......................... ............... ............................... .... ]q 702. Legal Actions .......... ...—.—.—............ ......,...~.....__..~--.................... l9 703. Rights and Remedies Are Cumulative ..... ......................... ................... ................ ..20 Attachment No. 6 704. Inaction Not uWaiver of Default ..... ..—,.......—............ —.—.—........ .................. 20 800. SPECIAL PROVISIONS ............ .................. ............... ................ .................................... 20 801. Indemnification ofthe Agency ..................... ............... --- ....................... ............... 20 802. Real Estate Commissions ............... .'....... ....—^..—....... ................................... ....... 2l 803. Successors lnInterest ........... ................................. ................ ---....... ....... ......... 2l *04. Amendments 10this Agreement ..... —.-.....—....—.—......................... ................. .... 2l 805. Entre Agreement, Waivers..—_—_ ---.—.....~.._._-_^-----.--..2l 806 Execution of........... --- ............... ................................. ................. ......... 2) ATTACHMENTS Attachment No. l Site Map Attachment No, 2 Site Legal [}oscr oi�o ' Attachment No, 3 Schedule ofPerformance Attachment No. 4 Release ofConstruction Covenants Attachment No. 5 Memorandum ofAgreement Attachment No. 6 Prevailing Wage and Public Works Requirements Attachment No. ? Promissory Note Attachment No. 0 DomdnfTnoot )� DOCSOC/I 292194v 16/022299-0086 This OWNER PARTICIPATION AGREEMENT (this "Agreement") is entered into by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic (the "Agency") and 26755 VERDUGG LLC, a California limited liability company (the "Participant"). RECITALS The following recitals are a substantive part of this Agreement; capitalized terms used herein and not otherwise defined are defined in Section 101 of this Agreement: A. The Agency is authorized and empowered under the Community Redevelopment Law, to enter into agreements for the acquisition, disposition and development of real property and otherwise to assist in the redevelopment of real property within a redevelopment project area in conformity with a redevelopment plan adopted for such area; to acquire real and persona[ property in redevelopment project areas; to receive consideration for the provision by the Agency of redevelopment assistance; to make and execute contracts and other instruments necessary or convenient to the exercise of its powers; and to incur indebtedness to finance or refinance redevelopment projects. D. Participant is the Owner of certain real property which is depicted on the Site Map attached hereto as Attachment No. I and more particularly described in the Site Legal Description attached hereto as Attachment No. 2 (the "Site"). The Site is located within the boundaries of the Project Area for the Redevelopment Plan (each as hereinafter defined). C. The Agency and the Participant desire to enter into this Agreement in order to provide for the making of a Covenants Loan (as hereinafter defined) by Agency to Participant, and for the improvement of the Site by Participant. D. The provision of the Covenants and construction of the Improvements by Participant will help to eliminate blight in the Project Area, increase the employment opportunities within the Project Area, generate additional taxes with which the community can increase and assist in providing an environment for the social and economic growth and well-being of the citizens of the City. K. . The construction .and. operation of the. Improvements. pursuant to this Agreement and the fulfillment generally of this Agreement are in the vital and best interests of the City and the health, safety, and welfare of its residents and in accord with the provisions of applicable federal, state and local law. NOW THEREFORE the Agency and the Participant hereby agree as follows: 101. Definitions. The following terms shall have the respective meanings assigned to them in this Section 101 unless the context in which they are used clearly requires otherwise: DOC SOC/ I 292194v 16/022299-0086 "Agency" means the San Juan Capistrano Community Redevelopment Agency, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law, and any assignee of or successor to its rights, powers and responsibilities. "Agreement" means this Owner Participation Agreement by and between the Agency and the Participant. "Certificate of Final inspection" shall mean the certificate issued by the official in the City's Building Department with authority over such issuance subsequent to the approval of the completion of the building core and shell by any and all city departments and public agencies with rights to condition and/or inspect the Improvements, including without limitation the City's Community Development Department, the Public Works Department, the Utility Department, the Orange County Fire Authority, the sanitation district, and the Orange County Sheriff's Department, which certificate shall evidence the Participant's satisfactory completion of the building core and shell portion of the Improvements, "City" means the City of San Juan Capistrano, a California municipal corporation. "Claims" is defined in Section 210.3 hereof. "Community Redevelopment Law" means California Health and Safety Code Sections 33000, et seq., as the same now exists or may hereafter be amended. "Construction Financing" means the conventional financing to be obtained by the Participant from an institutional lender for the construction and completion of the Project subject to the conditions set forth in Section 410 hereof. "Construction Financing Closing Date" shall mean the date of the closing of the Construction Financing obtained by the Participant in order to construct the Improvements on the Site in accordance with the provisions of Section 410 of this Agreement. "Covenants" is defined in Section 507. "Covenants Loan" is defined in Section 301. "County" shall mean the County of Orange. "Date of this Agreement'.' means "Deed of Trust" means the deed of trust which secures the Participant's obligation under the Promissory Mote in substantially the form attached hereto as Attachment No. S and incorporated herein by reference. "Default" means the failure of a'party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and opportunity to cure, as set forth in Section 701. hereof. "Disbursement Date" is defined in Section 303 of this Agreement. DOCSOC/I291-194Y 16/022299-0086 "Entitlements" means (AC) 06-12 the "Paseo De Verdugo"y project approved by Resolution No. 08-04-15-03. "Environmental Law" means any state or local law, statute, ordinance or regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous Materials, including, without limitation: (i) Sections 25115, 25117, 25122.7 or 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) Article 9 or Article l I of Title 22 of the California Administrative Code, Division 4, Chapter 20, (vi) Section 311 of the Clean Water Act (33 U.S.C. Section 1317), (vii) Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. .Sections 6901 et seq. (42 U.S.C. Section 6903), (viii) Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C, Sections 9601 et seq., or (ix) any state or federal lien or "superlien" law, any environmental cleanup stature or regulation, or any penrnit, approval, authorization, license, variance or permission required by any governmental authority having jurisdiction. "Governmental Requirements" means all valid and enforceable laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State, the County, the City or any other political subdivision in which the Site is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the Agency, the Participant or the Site, including, without limitation, all applicable state labor standards, the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, and all applicable disabled and handicapped access requirements; including without limitation (to the extent applicable) the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq. With respect to the construction of the Improvements, Participant and its contractors and subcontractors shall pay prevailing wages and employ apprentices in compliance with Labor Code Section 1770, et seq., and shall be responsible for the keeping of all records required pursuant to Labor Code Section 1776, complying with the maximum hours requirements of Labor Code Sections 1810 through 1815, and complying with all regulations and statutory requirements pertaining thereto. Such requirements are set forth in greater detail in Attachment No. 6 attached hereto and incorporated herein by reference. Upon the periodic request of the Agency, the Participant shall. certify to the Agency that it is in compliance with these requirements._ Participant shall indemnify, protect, defend and hold harmless the Agency and its officers, employees, contractors and agents, with counsel reasonably acceptable to Agency, from and against any and all loss, liability, damage, claim, cost, expense and/or "increased costs" (including reasonable attorneys fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction, and/or operation of the Improvements, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Participant of any applicable local, state and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Section 1781 of the Labor Code, as the same may be amended from time to time, or any other similar law; and/or (3) failure by Participant to provide any required disclosure or identification as required by Labor Code Section DOCSOC/1292194v 16/022299-0096 1781, as the sante may be amended from time to time, or any other similar law. It is agreed by the parties that, in connection with the development of the improvements, including, without limitation, any and all public works (as defined by applicable law), Participant shall bear all risks of payment or non-payment of prevailing wages under Califarnia law and/or the implementation of labor Code Section 1781, as the same may be amended from time to time, anal/or any other similar law, "Increased costs," as used herein, shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be amended from time to time. The foregoing indemnity shall survive termination of this Agreement and shall continue after completion of the construction and development of the Improvements by the Participant. "Hazardous Materials" means any substance, material or waste which is or becomes prior to the Closing regulated by any local governmental authority, the State of California or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Sections 251.15, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -'fanner Hazardous Substance Account Act), {iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California I1eal.th. and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response flans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls, (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article l I of Title 22 of the California Administrative Cade, Division 4, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317), (x) defined as a "hazardous waste„ pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et ,req. (42 U.S.C. Section 6903) or (xi) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601, et seq. "Improvements" shall mean the improvements to be constructed and operated by Participant upon the Site in accordance with the Entitlements. "Memorandum of Agreement" means the memorandum attached hereto as Attachment No. 5 and incorporated herein by this reference which shall be recorded upon approval hereof by the parties. "Operating Covenant" is defined in. Section 502_ "Operating Period" is defined in Section 502. "Permitted Transfer" is defined in Section 103. "Project" shall mean development and operation of the Improvements by the Participant on the Site pursuant to this Agreement. "Project Area" means the geographic area described as the Project Area in the Redevelopment Plan, DOCSOG 1292 t 9x4v W022299 -00M "Promissory Note" means the Promissory Note in substantially the form attached hereto as Attachment No. 7 and incorporated herein by reference. "Redevelopment Plan" means the redevelopment plan entitled the Central Redevelopment Project approved and adopted by Ordinance No. 488, dated July 12, 1983, as amended by Ordinance No. 509 dated May 15, 1984, as amended by Ordinance No. 547 dated July 16, 1983, as amended by Ordinance No. 582 dated August 19, 1986, as amended by Ordinance No. 756 dated December 6, 1994, as amended by Ordinance No, 883 dated July 15, 2003, as amended by Ordinance No. 923 dated May 15, 2007, as amended by Ordinance No. 932 dated December 18, 2007, as it may be further amended from time to time, "Release of Construction Covenants" means the document which evidences Participant's satisfactory completion of the construction of the Improvements, as set forth in Section 412 hereof, in the form of Attachment No. 4 hereto which is incorporated herein by reference. "Schedule of Performance" means that certain Schedule of Performance attached hereto as Attachment No. 3 and incorporated herein by reference, which schedule, subject to the provisions of Section 6013 of this Agreement sets out the dates and/or time periods by which certain obligations set forth in this Agreement must be accomplished. The Schedule of Performance is subject to revision from time to time as mutually agreed upon in writing between the Participant and the Agency's Executive Director, and the Agency's Executive Director is authorized on behalf of the Agency to agree to make such revisions as he or she deems reasonably necessary. It is understood that: the Schedule of Performance is subject to all of the terms and conditions set forth in the text of this Agreement. The summary of the items of performance in the Schedule of Performance is not intended to supersede or modify the more complete description in the text; in the event of any inconsistency between the Schedule of Performance and the text of this Agreement, the text shall govern. "Site" means that certain real property generally located at 26755 Verdugo Street, Sart Juan Capistrano, California 92675 and shown on the Site Map. "Site Legal Description" means the description of the Site attached hereto as Attachment No. 2 and incorporated herein by reference. "Fite Map" means the map of the Site attached hereto as Attachment No, I and incorporated herein by reference. 102. Representations and Warranties. 102.1 Agency Representations. Agency represents and warrants to Participant that the Agency is a public body, corporate and politic, existing pursuant to the Community Redevelopment Law, which has been authorized to transact business pursuant to action of the City. Performance and delivery of this Agreement by Agency has been fully authorized by all requisite actions on the part of Agency. This representation shall be deemed to be an. ongoing representation and warranty. The Agency shall advise the Participant in writing if there is any change pertaining to any matters set forth or referenced herein. .102.2 Participant Representations. The Participant represents and warrants to the Agency as fellows: DOCSOC/1292194v 16/022299-0486 a. Authority. The Participant is duly established and in good standing under the laws of the State of California and has duly authorized, executed and delivered this Agreement and, except as set forth. in this Agreement, any and all other agreements and documents required to be executed and delivered by the Participant in order to carry out, give effect to, and consummate the transactions contemplated by this Agreement. b. No Conflict. The Participant doses not have any material contingent obligations or any material contractual agreements which have not been fully disclosed in a separate writing to the Agency prior to the Date of this Agreement which could materially adversely affect the ability of the Participant to carry out its obligations as set forth in this Agreement. C. No Legal Proceedings. There are no material legal proceedings pending or, to the Participant's best knowledge, there are no legal proceedings threatened, to which the Participant is or may be made a party or to which the Site is or may become subject, which could materially adversely affect the ability of the Participant to.carry out its obligations hereunder. d. No Participant Bankruptcy. There is no action or legal or administrative proceeding pending or, to the Participant's best knowledge, threatened, looping toward the dissolution or liquidation of the Participant or any legal entity which comprises the Participant. C. Experience and Qualifications, The Participant represents to the Agency that the Participant has the experience and qualifications necessary to perform as Participant pursuant to this Agreement. f. Hazardous Materials. Except as to the Phase 1 Summary attached hereto as Attachment No, 9 and incorporated herein by reference which discloses the results of a Phase 1 Environmental Assessment dated June 7, 2006, neither Participant nor,, to the best of Participant's actual knowledge, any previous owner, tenant, occupant, or user of the Site used, generated, released, discharged, stored, or disposed of any Hazardous Materials on, under, in, or about the Site, or transported any Hazardous Materials to or from the Site in violation of applicable Environmental Law. g. Compliance with Environmental Law/Governmental Requirements. To the best of Participant's knowledge, the Site and the present and proposed use of the Site are not in violation of any applicable Environmental Law or Governmental Requirements, except as has been fully disclosed in a. separate writing to the Agency prior to the Date of this Agreement. Each of the foregoing items a. to g., inclusive shall be deemed to be an ongoing representation and warranty. The Participant shall advise the Agency in writing if there is any change pertaining to any matters set forth or referenced in the foregoing items a. to g., inclusive. 103. Prohibition Against Change in Ownership, Management and Control of Participant. The qualifications and identities of the Participant, including Eric Altman, the Managing Member of Participant, are of particular concern to the Agency. It is because of those qualifications and identities that the Agency has entered into. this Agreement with the Participant. No voluntary or involuntary successor in interest of the Participant shall acquire any interest in the Site or the Project nor any rights or powers under this Agreement except as expressly set forth herein. 6 DOCSCCIt 2 32 i'94v 16/022299-01086 During the Operating Period, the Participant shall not assign or transfer, all or any part of this Agreement or the Site, or any portion(s) thereof, or interest(s) therein, or any right(s) hereunder without the prior written approval of the Agency's Executive Director, Assignments for financing purposes shall be approved by the Agency's Executive Director in accordance with this Section 103 and with the requirements of Section 409 of this Agreement. Prior to any assignment which requires Agency's Executive Director approval hereunder being considered for approval, the participant shall be required to deliver to the Agency's Executive Director the form of a proposed written assignment and assumption agreement in which the assignee would expressly agree to assume all rights and obligations of the Participant under this Agreement which arise after the effective date of the assignment, and in which assignment and assumption agreement the assignee would agree to assume or Participant would expressly remain responsible for all performance of the Participant which arose prior to the effective date of the assignment. The assignment and assumption agreement shall be in a form reasonably satisfactory to the Agency's legal counsel and Agency's legal counsel shall have approved the assignment and assumption agreement prior to its execution and prior to it becoming effective. No later than the date the assignment becomes effective, Participant and the assignee shall deliver to the Agency a fully executed copy of the assignment and assumption agreement. Notwithstanding the foregoing, neither the lender approved by the Agency pursuant to Section 410 of this Agreement nor its successors or assigns shall be required to execute and deliver an assignment and assumption agreement and the rights of such lender and its successors and assigns shall be as set forth in Section 410 of this Agreement. Notwithstanding any other provision of this Agreement to the contrary, Agency approval of an assignment of this Agreement or the Site or any interest therein shall not be required in connection with any of the following (each a "Permitted Transfer"): (i) Any transfers in which the Participant retains a minimum of fifty-one percent (5I°lo) of the ownership and retains complete management and decision-making control; (ii) Transfers resulting from the death or mental or physical incapacity of an individual; (iii) The granting of temporary or permanent easements or permits to facilitate the development of the Project; (iv) The leasing of separate spaces in the building in the normal course of business pursuant to leases to commence no earlier than Participant's completion of the building core and shell as evidenced by the issuance of the Certificate of Final Inspection - Building Core and Shell; (v) Transfers or assignments in trust for the benefit of a spouse, children, or grandchildren; (vi) A sale of the Site at foreclosure (or a conveyance thereof in lieu of a foreclosure) pursuant to a foreclosure thereof by a lender approved by the Agency in accordance with Section 410 of this Agreement; 7 DOCSOC/I292194v 1&022299-0085 200. CONDITION OF THE SITE. 201. Hazardous Materials, Participant shall not cause or permit the presence, use generation, release, discharge, storage, or dispersal of any Hazardous Materials on, under, in, or about, or the transportation of any Hazardous Materials to or from, the Site in violation of applicable Environmental Law. 202. Indemnity. Participant agrees to and hereby does indemnify, defend and hold Agency and the City and their respective officers, employees and agents harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees) (hereinafter collectively the "Claims"), resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any such materials to or from, the Site in violation of applicable Environmental Law, whenever discovered or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating to the use, generation, release, discharge, storage, disposal, or transportation. of Hazardous Materials on, under, in, or about, to or from, the Site whenever discovered. This indemnity shall include, without limitation, any Claims for personal injury including sickness, disease or death, tangible or intangible property damage, compensation or lost wages, business income, profit,-, or other economic loss, damage to the natural resource or the environment, nuisance, pollution, contamination, leak, spill, release, or other adverse effect on the environment. This indemnity shall not include any Claim directly resulting from, arising out of, or based upon the negligent activities of Agency, City, or any of their officers, employees, or agents. 300. FINANCIAL PROVISIONS 301. Covenants Loan. In consideration for the.Covenants hereunder, which (except as to the Deed of Trust which shall be subordinate as hereinafter provided), shall be a non -subordinate lien on the Site prior and superior to the financing approved by the Agency pursuant to Section Olt} hereof, and subject to the terms and conditions set forth herein, the Agency hereby agrees to loan the Participant the sum of Dine Hundred Fifty Thousand Dollars ($950,000) ("Covenant Consideration"), 302, Condition of Disbursement. The Agency shall disburse the Covenant Consideration, as follows; Milestones Advance for flans and Construction Documents Building.Permit Issuance Foundation Inspection completion Roof Sheathing Inspection Final Framing/Rough Mechanical Electrical, Plumbing Inspection Final Drywall Inspection Certificate of Occupancy DOCSOCA 292194v 16/022299-0086 Disbursement Amount $150,000.00 S 100,000 m $100,000.00 $100,000.00 $200,000.00 $140,000.00 $160,000.00 400. DEVELOPMENT OF THE DEVELOPMENT PARCEL. 401. Development of the Site by Participant. The Site shall be developed in accordance with the Entitlements. 402. Cost of Construction. The Participant, at the Participant's sole cost and expense, shall construct and complete or cause the construction and completion of all of the Improvements to be constructed by the Participant pursuant to this Agreement, including any and all off-site and on-site public improvements as may be required by the Entitlements. 403. Commencement and Completion of Construction. The Participant hereby covenants and agrees to promptly begin and thereafter diligently proceed to completion the construction of the Improvements and the development of the Site in conformance with the Schedule of Performance. 404. City and Other Governmental Agency Permits, Before commencement of construction of the Improvements, the Participant shall, at its own expense, secure or cause to be secured any and all permits which may be lawfully required by the City or any other govemcmental agency affected by such construction, including without limitation building permits, and grading and encroachment permits. It is understood that the Participant is obligated to pay all necessary fees and to timely submit to the City final drawings with final corrections to obtain such permits. 405. Bodily Injury and Property Damage Insurance. The Participant shall protect, defend, indemnify, assume all responsibility for and hold harmless the Agency and the City and their elective and appointive boards, officers, boards, agents and employees, from any and all Claims, which may be caused by any of the P'articipant's activities under this Agreement, regardless of whether such activities or performance thereof be by the Participant or anyone directly or indirectly employed or contracted with by the Participant and regardless of whether such damage shall accrue or be discovered before or after termination of this Agreement. From the date of the Construction Financing Closing Date through the date the Agency issues the Release of Construction Covenants for the Improvements pursuant to Section 412 herein, the Participant shall: (i) obtain and maintain a policy of commercial general liability insurance, which shall include blanket contractual coverage, and shall have limits of not less than Two Million Dollars ($2,000,000) per occurrence, and if a policy form with a general aggregate limit is used or provided the aggregate limit shall be not less than twice the per occurrence limit, which policy(s) shall protect the Participant, the City, and the Agency from claims for such damages, and which policy shall be issued by an "ANI" or better rated insurance carrier as rated by A.M. Best Company, and shall provide all coverages on an occurrence basis; and (ii) obtain and maintain or cause to be obtained and maintained by the general contractor general liability insurance. The Participant shall furnish an endorsement(s) of insurance countersigned by an authorized agent of the insurance carrier on a force of the insurance carrier evidencing ,and/or effecting the requirements herein and/or the changes to the Participant's policy to effect such conformity and setting forth the general provisions of the insurance coverage and an endorsement that shall name the City and the Agency and their respective off=icers, boards, agents, and employees as additional insureds under the policy with respect to this Project and this Agreement with the Agency. The endorsement by the insurance carrier shall contain a statement of obligation on the part of the issuing agent or carrier to notify the City and the Agency of any material reduction, cancellation, or non- renewal of the coverage at least thirty (30) days in advance of the effective date of any such material 9 DOCSOC/1292194v 16/022299-0086 change, or non -renewal. Not less than fifteen (I5) days prior to the expiration date of any policy of insurance required by this Section 405, Participant shall cause to be delivered to Agency a binder or certificate of insurance with respect to each renewal or new policy, bearing a notation evidencing payment of the .premium therefor, or other proof of payment reasonably satisfactory to the Agency. In each instance of the provision of insurance, certified duplicate copies of the policy(s) or renewal policy(s), as applicable, shall be delivered to the Agency's Executive Director within thirty (30) days of the date of such policy(s), The Participant shall also furnish or cause to be furnished to the Agency evidence satisfactory to the Agency that it and any contractor with whom it has contracted for the performance of work on the Site or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. The Agency hereby delegates to the Agency's Executive Director, with and through consultation and advice from the Agency's and City's legal counsel and risk manager, the authority to consider, and approve or disapprove, written request(s) from the Participant concerning any proposed modifications) to the indemnification and/or insurance requirements of this Agreement. Provided, however, by such delegation the Agency expressly reserves to itself and the Agency's Executive Director the sole and absolute discretion to approve or disapprove any such modification(s) requested by the Participant. Unless and until any such requested modification(s) is approved in writing by the Agency's Executive Director, in his/her sole and absolute discretion, the Participant remains obligated hereunder and shall comply and continue to comply with the indemnity and insurance requirements set forth in this Agreement. 446. Rights of Access. For the purpose of assuring compliance with this Agreement, representatives of the Agency and the City shall have the right of access to the Site and Improvements, without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including, but not limited to, the inspection of the work being performed in constructing the Improvements, provided that they comply with all of the Participant's and the Participant's general contractor's safety rules. The Agency shall indemnify, defend, and hold the Participant harmless from any claims, losses, liabilities, and damages arising out of the negligent activities of the Agency and City as set forth in this Section 406. The Participant and the Agency agree to cooperate in placing and maintaining on the Site one sign indicating the respective parts of the Participant and the Agency in the Project. The costs of the sign and its installation shall be borne by the Participant. Governmental Requirements. Participant shall carry out the design and construction and operation of the Improvements in conformity with all Governmental Requirements. 447. Nondiscrimination During Construction. The Participant, for itself and its successors and assigns, agrees that in the construction of the Improvements provided for in this Agreement, the Participant will not discriminate against any employee or applicant for employment because of race, color, creed, religion, age, sex, marital status, physical or mental disability or medical condition, national origin or ancestry. 448. Taxes, Assessments, Encumbrances and Liens. The Participant shall pay when due all real estate taxes and assessments on the Site. Prior to first Sale of the Project by the Participant, the Participant shall not place or allow to be placed on the Site or any part thereof any DOCSOC/ 1292194v 361022299-0086 mortgage, trust deed, encumbrance or lien ether than as expressly allowed by this Agreement. The Participant shall remove or have removed any levy or attachment made on the Site or any part thereof, or assure the satisfaction thereof within a reasonable time but in any event prior to a sale thereunder. Nothing herein contained shall be deemed to prohibit the Participant from contesting the validity or amount of any tax assessment, encumbrance or lien, nor to limit the remedies available to the Participant in respect thereto. 409. Submission of Evidence of Financing Commitments and Loam Closing. Within the time established therefor in the Schedule of Performance; the Participant shall exercise reasonable diligence in an effort to obtain and submit to the Agency evidence that the Participant has obtained firm and binding commitments for financing for the purpose of securing loans of funds to be used for financing the direct and indirect costs of acquiring the Site (including refinancing the existing loan(s)) secured by the Site, the construction of the Improvements, and all other development costs relating to the Project (including, for example, offsite improvements, development and building fees, architectural engineering and legal fees, financing costs, and tenant. improvements), and operation of the Improvements after completion. The Agency's Executive Director after review by the Agency's economic consultant and legal counsel shall approve or disapprove such evidence of financing commitments within the time established in the Schedule of Performance. Approval shall not be unreasonably withheld or conditioned. If the Agency's Executive Director shall reasonably disapprove any such evidence of financing, the Executive Director shall do so by written notice to the Participant stating the reasons for such disapproval and the Participant shall exercise reasonable diligence in an effort to promptly obtain and submit to the Agency new evidence of financing. The Agency's Executive Director shall approve or disapprove such new evidence of financing in the same manner and within the same times established in this Section 409 for the approval or disapproval of the evidence of financing as initially submitted to the Agency. In the event, after the exercise of reasonable diligence to obtain Construction Financing, Participant is unable to obtain adequate Constructing Financing for the construction and completion of the Project, Participant shall return the full amount of any Disbursements Participant may have received form the Agency and neither party shall have any further obligation under this Agreement and this Agreement shall immediately become null and void. The obligations of this paragraph shall be secured by a deed of trust which will be reconveyed upon either the (i) recordation of the Construction Financing or the repayment of the Disbursements previously made by Agency. 410. Mortgage, Deed of Trust, Sale and Lease -Back Financing; fights of molders. 410.1 Mortgages, Deeds of Trust, or Sale and Lease -Bach. The .Participant shall notify the Agency in advance of any mortgage, deed of trust or sale and lease -back financing not previously approved pursuant to Section 410, if the Participant proposes to enter into the same before completion of the construction of all of the Improvements on the Site. The words "mortgage" and ";deeds of trust" as used hereinafter shall include sale and lease -back. 410.2 )Molder Not Obligated to Construct Improvements. The holder of any mortgage or deed of trust authorized by this Agreement shall not be obligated by the provisions of this Agreement to construct or complete the Improvements or to guarantee such construction or completion. Nothing in this Agreement shall be deemed to or be construed to permit or authorize D0050Ci 129219#v 16/022299-0086 any such holder to devote the Site to any uses or to construct any improvements thereon other than those uses or improvements provided for or authorized by this Agreement. 410.3 Notice of Default to Mortgagee or Beed of Trust Holders; Right to Cure. With respect to any mortgage or deed of trust granted by Participant as provided herein, whenever the Agency shall deliver any notice or demand to Participant with respect to any breach or default by the Participant hereunder, the Agency shall at the same time deliver to each holder of record of any mortgage or deed of trust authorized by this Agreement a copy of such notice or demand. No notice of default shall be effective as to the holder unless such notice is given. Each such holder shall (insofar as the rights of the Agency are concerned) have the right, at its option, within sixty (60) days after the receipt of the notice, to cure or remedy or commence to cure or remedy any such default and to add the cost thereof to the mortgage debt and the lien of its mortgage. In the event possession of the Site (or portion thereof) is required to effectuate such cure or remedy, the holder shall be deemed to have timely cured or remedied if it commences the proceedings necessary to obtain possession thereof within sixty (60) days, diligently pursues such proceedings to completion, and, after obtaining possession, diligently completes such cure or remedy. Any such holder properly completing such Improvements shall be entitled, upon compliance with the requirements of Section 412 of this Agreement, to a Release of Construction Covenants. 410.4 Failure of Holder to Complete Participant Improvement& In any case where, sixty (60) days after default by the Participant in completion of construction of the Improvements under this Agreement, the holder of any mortgage or deed of trust creating a lien or encumbrance upon the Site, or any part thereof has not exercised the option to construct, or if it has exercised the option and has not proceeded diligently with construction, the Agency may purchase the mortgage or deed of trust by payment to the holder of the amount of the unpaid mortgage or deed of trust debt, including principal and interest and all other sums secured by the mortgage or deed of trust. If the ownership of the Site or any part thereof has vested in the holder. the Agency, if it so desires, shall be entitled to a conveyance from the holder to the Agency upon payment to the holder of an amount equal to the sum of the following: a. The unpaid mortgage or deed of trust debt at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings); b. All expenses actually incurred with respect to foreclosure, including reasonable attorneys' fees; C. The net expense, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent management of the Site or part thereof; d. The actual costs of any improvements made by such holder; and e. An amount equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by the Agency. 410.5 Might of the Agency to Cure Mortgage or Deed of Trust Default, In the event of a mortgage or deed of trust default or breach by the Participant prior to the completion of the construction of the Improvements or any part thereof and the failure of the holder of any mortgage or 12 DOCSOCf 1292I94v 16/022299-0096 deed of trust to exercise its option to construct, the Agency may cure the default. In such event, the Agency shall be entitled to reimbursement from the Participant of all costs and expenses incurred by the Agency in curing such default. The Agency shall also be entitled to a lien upon the Site to the extent of such costs and disbursements. Any such lien. shall be subordinate to the construction Financing mortgages or deeds of trust. 410.6 Right of the Agency to Satisfy Other Liens on the Site After Title Passes. Prior to the completion of construction, and after the Participant has had a reasonable time to challenge, cure or satisfy any liens or encumbrances on the Site, the Agency shall have the right to satisfy any such liens or encumbrances, provided, however, that nothing in this Agreement shall require the Participant to pay or make provision for the payment of any tax, assessment, lien or charge, so.long as the Participant in good faith shall contest the validity or amount thereof, and so long as such delay in payment shall not subject the Site to forfeiture or sale. 4111. Release of Construction Covenants. Promptly after completion of construction of all of the Improvements required by this Agreement to be completed by the Participant upon the Site (which shall exclude interior tenant improvements, landscaping and any exterior signage), the Agency shall furnish the Participant with a Release of Construction Covenants upon written request therefor by the Participant. The Agency shall not unreasonably withhold issuance of such Release of Construction Covenants. Such Release of Construction Covenants shall be a conclusive determination of satisfactory completion of the construction required by this Agreement, and the Release of Construction Covenants shall so state. After recordation of such Release of Construction Covenants any party then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Site shall not (because of such ownership, purchase, lease or acquisition), incur any obligation or liability under this Agreement, relating to the obligation to construct and develop the Improvements or the Project. However, such party shall be bound by the Agreement to be Recorded Affecting Real Property, the Lien Instruments, and any other instrument or transfer, or other documents establishing covenants on the Site in accordance with the provisions of this Agreement, The Release of Construction Covenants shall be in such form as to permit it to be recorded in the Recorder's Office of Orange County. If the Agency refuses or fails to furnish a Release of Construction Covenants for the Site after written request from the Participant, the Agency shall, within thirty (30) days of written request therefor, provide the Participant with a written statement of the reasons the Agency refused or failed to furnish a Release of Construction Covenants. The statement shall also contain the Agency's opinion of the actions the Participant must take to obtain a Release of Construction Covenants. If'the reason for Agency's refusal to furnish a Release of Construction Covenants is confined to the immediate availability of specific items or materials for the completion of minor finish items to the landscaping, or other minor and typical "punchlist" items that do not present health or safety concerns, the Agency shall issue its Release of Construction Covenants upon the Participant's posting with the Agency of a bond, or other security reasonably satisfactory to the Agency, in an amount representing the fair value of the work not yet completed. if the Agency shall have failed to provide the Release of Construction Covenants or a written statement of the reasons for refusing or failing to provide such document within said thirty (30) day period, the Participant shall be conclusively deemed entitled to such Release of Construction Covenants. Such Release of Construction Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of the Participant to any holder of any mortgage, or any insurer of a 13 DOCSOCl 1292194v 16/022299-0086 mortgage securing money lent to finance the Improvements or construction of the Project, or any part thereof. Such Release of Construction Covenants is not a notice of completion as referred to in the California Civil Code, Section 3093.. 500. COVENANTS, CONDITIONS, RESTRICTIONS AND REPAYMENT OBLIGATION 501. Uses. The Participant covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Site or any part thereof, that after the Agency's issuance of Release of Construction Covenants pursuant to Section 412 of this Agreement, the Participant shall maintain, use, and operate the Site for no other use than as a commercial, office and retail facility with approximately 8,000 square feet of gross leasable building area devoted to the uses specified or permitted herein, as required in this Agreement in conformity with the limitations of the Entitlements for a period of twenty (20) years from the date of the issuance of the Release of, Construction Covenants pursuant to Section 412 of this Agreement (or the date the Agency was required to issue the Release of Construction Covenants, whichever occurs first No use(s) other than those specified herein shall be permitted without the prior written approval of the Agency (which approval the Agency may grant or deny in its sole discretion). 502. Operating Covenant. For a term commencing upon the disbursement Date and ending upon the twentieth anniversary thereof ("Operating Period"), the Owner hereby covenants and agrees to devote the entire building on a continuous basis to the operation of retail stores, comparable as to quality of merchandise and sales volume as of the date hereof, to Mission Promenade located at 26$32 Ortega Highway, San Juan Capistrano, California. Except with the prior written consent of the Agency for each instance, which consent may be granted or withheld in the Agency's sole and absolute discretion, the failure of the Owner to cause the Project to be operated as provided herein for thirty (30) or more consecutive days shall, at the Agency's option; constitute a Default hereunder; provided, however, that the Owner shall not be in default of this Section 502 during any period that any of the Owner's tenants are prevented from operating the Project due to (i) required or necessary renovation of the Improvements (provided that the period during which the Project is not operated as a result of the renovation of the Improvements shall in no event exceed one hundred fifty (150) days), or (ii) events of force majeure as set forth in Section 603 hereof. The Operating Period shall be extended for each day of closure permitted hereunder. 503. Tenant Restrictions. Participant shall use the total gross leasable building area on the Site in the following rnanner; provided, however, that the Agency's Executive Director in his or her sole and absolute discretion may approve minor deviations from the following conditions which are: requested by the Participant in writing and provided further that' Participant complies with any and all applicable City requirements in connection with such. deviation: a. The second floor leasable building area may be used for office, personal or business service facilities, or other non -retail uses as specified in Section 9-3.303 of the Municipal Code for the Tourist Commercial ("TC") district including, but not limited to the following; (i) Accountants, attorneys, consultants; (ii) Insurance agencies; (iii) Medical offices; 14 DOCSOC# 1292194v 16#422239-W86 (iv) Engineers, architects and planners; (v) Religious, fraternal or service organizations; (vi) Public facilities; (vii) Real estate offices; (viii) Travel agencies; and (ix) Full service laundry and dry cleaner business. (x) Massage therapy; (xi) Small business, vocational, professional schools; and (xii) Financial brokerage offices. b. Any remaining gross leasable building area not used for the above purposes shall be occupied by retail tenants consistent with Mission Promenade in terms of quality of merchandise and. sales volume, with an objective and emphasis on generating local revenues, and providing retail users generating nigh volume sales. 504. Maintenance. The Participant shall maintain the Improvements that exist on the Site from time to time in accordance with the Agreement to be Recorded Affecting Real Property the covenants, conditions, maintenance obligations and other restrictions of which shall remain in effect until the expiration of the Community Development Plan, that is until July 13, 2432. Issuance of a Release of Construction Covenants by the Agency shall not affect Participant's obligations under this Section 502. 505, Rights of Access. The Agency, for itself and for the City and other public agencies, at their sole risk and expense, reserves the right to enter the common areas on the Site or any part thereof which is owned or controlled by the Participant, at all reasonable times for the purpose of construction, reconstruction, maintenance, repair or service of any public improvements or public facilities located on the Site. The Agency or such other public agency exercising such right of entry shall take all reasonable measures to minimize interference with the operation of business on the Site and shall promptly repair and restore any damage caused by such entity to the Site or the Improvements thereon. Any such entry shall be made only after reasonable notice to and consent of the Participant, and Agency shall indemnify and hold Participant harmless from any costs, claims, damages or liabilities pertaining to any entry. The Participant agrees to cooperate with the Agency in providing its consent and such access, and acknowledges that the Agency may obtain an administrative inspection warrant or other appropriate legal or equitable remedies to enforce its rights pursuant to this Section 505, This Section 505 shall not be deemed to diminish any rights the Agency, the City, or any other public agencies may have without reference to this Section 505. The rights of access set forth in this Section 505 shall remain in effect until the expiration of the Redevelopment Plan. 506., Nondiscrimination. The Participant covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, physical or mental disability or 1.5 DOCSOC11292194Y16/022299-0086 medical condition, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Improvements or the Site, nor shall the Participant itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vend:ees of the Improvements or the Site. The foregoing covenants shall run with the land. All deeds, leases or contracts with respect to the Improvements or the Site shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: a. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Cade, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of. tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." b. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." c. In contracts: "There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, 16 DOCSOC11292194v 161022299-00861 sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." The covenants against discrimination, set forth in this Section 506 shah continue in effect in perpetuity. 507. Repayment Obligation. Participant shall repay the Covenants Loan in accordance with the Promissory Note, The Promissory Note shall be secured by the Deed of Trust. 508. . Effect of Violation of the Terms and Provisions of this Agreement. The obligations and covenants established in this Agreement, as set forth in Sections 103, 202, 403, 405, 407, 409, 501 through 506, inclusive (the "Covenants") shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, as to those covenants which are for its benefit. The covenants contained in this Agreement shall remain in effect for the periods specified herein. The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. The Agreement and the covenants herein shall run in favor of the Agency, without regard to whether the Agency has been, remains or is an owner of any land or interest therein in the Site or in the Community Development Project. The Agency shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. 600. GENERAL PROVISIONS 601.. Notices, Demands and Communications Among the Parties. Written notices, demands and communications between the Agency and the Participant shall be sufficiently given if delivered by hand (and a receipt therefor is obtained or is refused to be .given), sent by telecopy or overnight delivery service, or dispatched by registered or certified mail, postage prepaid, return receipt requested, to: Agency: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attention: Executive Director with a copy to : Stradling, Yocca, Carlson & Rauth 660 Newport Center Drive, Suite 16010 Newport Beach, California 92660 Attention: Thomas P. Clark, Jr. Participant: 26755 VERDUGO LLC 26755 Verdugo Street, Suite 200 San Juan Capistrano, California 92675 Attention: Eric Altman, Managing Member 17 DOCSOC11292191 v 16/022299-0086 with a copy to : Law Offices of Brian P. McGi lvray 16633 Ventura Boulevard, Suite 800 Encino, California 91436-7865 Attention: Brian McGiIvray Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided in this Section 601. Any written notice, demand or communication shall be effective upon receipt. 602. Conflicts of Interest, No member, official or employee of the Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any member, official or employee participate in any decision relating to the Agreement which.affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. 603. Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Agreement relating to tolled periods and extensions of time to perform, performance by any party hereunder shall not be dcerned to be in default, and all performance and other dates specified in this Agreement shall be extended where delays or defaults are due to: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fres; casualties; acts of Codd; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier; acts or omissions of any of the other parties; acts or failures to act of the City or any other public or governmental agency or entity (other than the acts or failures to act of the Agency which shall not excuse performance by the Agency); or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause_ Times of performance under this Agreement may also be extended in writing by the mutual agreement of Agency and the Participant. Notwithstanding the foregoing provisions of this Section 603, the Participant is not entitled pursuant to this Section 603 to an extension of time to perform because of past, present or future difficulty in obtaining suitable permanent financing for the construction of the Improvements. 604. Nonliability of Officials and Employees of the Agency. No member, official or employee of the Agency or the City shall be personally liable to the Participant, or any successors in interest, in the event of any default or breach by the Agency (or the City) or for any Default, or any amount which may become due to the Participant or any successors, or on any obligations under the terms of this Agreement. 605. Commencement of Agency Re -view Period. The time periods set forth herein for the Agency's approval of agreements, plants, drawings, or other information submitted to the Agency by the Participant and for any other Agency consideration and approval hereunder which is contingent upon documentation required to be submitted by the Participant, including without 18 DOCSOCf 1292194v]61022299-0086 limitation any requested approvals under Section 103 hereof, shall only apply and commence upon the Participant's complete submittal of all the required information. In no event shall an incomplete submittal by the .participant trigger any of the Agency's obligations of review and/or approval hereunder; provided, however, that the Agency shall notify the Participant of an incomplete submittal as soon as is practicable and in no event later than the applicable time set forth for the Agency's action on the particular item in question. 700. DEFAULTS AND REMEDIES 701. Defaults -- General. Subject to the permitted extensions of time and tolled periods set forth in this Agreement, failure or delay by any party to perform any term or provision of this Agreement constitutes a Default under this Agreement. The party who so fails 'or delays must immediately commence to cure, correct, or remedy such failure or delay, and shall complete such cure, correction or remedy with diligence. The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party, Except as required to protect against further damages, the injured party may not institute proceedings against the party in default until thirty (30) days after giving such notice or, provided that the party is proceeding with diligence to cure, such greater time as may be necessary to cure given the nature of the Default. Failure or delay in giving such notice shall not constitute a waiver of any Default, nor shall it change the time of Default, 702, Legal Actions. 702..1 institution of Legal Actions. In addition to any other rights or remedies and subject to the restrictions in Section 701, any party may institute legal action to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy consistent with the purposes of this Agreement in the Superior Court of the County of grange, State of California, in an appropriate municipal court in that county, or in the Federal District Court in the Central District of California. 702.2. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 702.3 Acceptance of Service of Process. In the event that any legal arbitration or action is commenced against the Agency, service of process on the Agency shall be made by personal service upon the Agency Secretary/City Clea or in such other manner as may be provided by law, In the event that any legal action is commenced against the Participant, service of process on the Participant shall be made by personal service upon a managing member of the Participant (or corporate officer if the Participant is a corporation) and shall be valid whether made within or outside the State of California or in such other manner as may be provided by law. 702.4 Attorney's bees. Except as otherwise expressly provided in this Agreement, in the event any legal action is instituted between Agency and Participant or any other member or partner of the Participant or its successor(s) and assign(s) in connection with this Agreement, then the prevailing party shall be entitled to recover from the losing patty all of its costs and expenses, 19 DOCS001292194v76/022299-0'185 including court costs and reasonable attorneys' fees, and all fees, costs, and expenses incurred on any appeal or in collection of any judgment. 703. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same Default or any other Default by any other party. 704. Inaction Not a Waiver of Default. Any failures or delays by any party in asserting any of their rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 800. SPECIAL PROVISIONS 801. Indemnification of the .Agency. The Participant agrees to protect, defend, indemnify, hold harmless, pay all costs, and provide a defense for City and Agency and their officers, boards and employees in any action by a third party challenging the validity, applicability, or interpretation of this Agreement including, without limitation, an action challenging the ability of the Agency to provide the Participant with the Agency Assistance. The City and Agency shall have the right, but not the obligation, to defend any such action. When Participant provides such defense the Agency will not take action or will not.fail to act so as to allow a default judgment to be taken. In addition, City and Agency shall provide reasonable assistance to Participant in defending any such. action at no expense to City or Agency. Such assistance shall include (i) making available upon reasonable notice, City and/or Agency officials and employees who are or may be witnesses in such action, and (ii) provision to Participant of other information within the custody or control of City or Agency that is relevant to the subject matter of the action. The Participant shall have the obligation to defend any such action; provided, however, that this obligation to defend shall not be effective if and to the extent that Participant determines in its reasonable discretion that the interests of the parties justify a compromise or a settlement of such action, in which case Participant shall compromise or settle such action in a way that fully protects Agency and City from any liability or obligation. Participant's obligation and right to defend shall include the right to hire (subject to written approval by the Agency and City) attorneys and experts necessary to defend, the right to process and settle reasonable claims, the right to enter into reasonable settlement agreements and pay amounts as required by the terms of such settlement, and the right to pay any judgments assessed against Participant, Agency, or City. If Participant defends any such action, as set forth in this Section 801, it shall indemnify and hold harmless Agency and City and their officers, employees, representatives and agents from and against any claims, losses, liabilities, or damages assessed or awarded against either of them by way of judgment, settlement, or stipulation. The participant further agrees to protect, defend, indemnify, hold harmless, pay al l costs, and provide a defense for City and Agency and their officers, employees and boards in any action by a third party for personal injury, including death, property damage or other damages arising out of or related to the construction and operation of the Project, such as for example, and without limitation, a slip and fall of a patron, guest, or customer of a retail establishment. The term of such foregoing indemnification shall be until the expiration of the Redevelopment Plan. The foregoing obligations 20 LDOCS001292194vi 022299-0086 shall not apply if such injury or damage is solely due to the negligent or intentional acts or omissions of the City or Agency or their officers, boards or employees. 802. Real Estate Commissions. The Participant represents to the Agency that it has not engaged the services of any finder or broker and that it is not liable for any real estate commissions, broker's fees, or finder's fees which may accrue by means of this transaction and agrees to hold harmless the Agency from such commissions or fees as are alleged to be due from the party making such representations, The Agency represents to the Participant that it has not engaged the services of any finder or broker and that it is not liable for any real estate commissions, broker's fees, or finder's fees which may accrue by means of this .transaction, and agrees to hold harmless the Participant from such commissions or fees as are alleged to be due from the party making such representations. 803. Successors In Interest. The terms, covenants, conditions and restrictions of this Agreement shall extend to and shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and assigns of the Participant. 804. Amendments to this Agreement. The Participant and the Agency agree to mutually consider reasonable requests for amendments to this Agreement which .may be made by lending institutions, or Agency's counsel or financial consultant, provided such requests are consistent with this Agreement and would not substantially alter the basic business terms included herein. The Agency's Executive Director shall have the authority to issue interpretations, waive provisions and enter into amendments of this Agreement on behalf of the Agency so long as such actions do not substantially change the uses permitted on the Site or the financial provisions of this Agreement as specified herein and as agreed to by the Agency Board. All other waivers or amendments shall require the consideration and written consent of the Agency Board. 805, Entire Agreement, Waivers. This Agreement may be signed in counterparts, and is executed in three (3) duplicate originals, each of which is deemed to be an original. This Agreement includes pages 1 through 22 and Attachment Nos. 1 through 8, which constitute the entire understanding and agreement of the parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Agreement must be in writing by and executed the appropriate authorities of the Agency and the Participant and all amendments hereto must be in writing and executed by the appropriate authorities of the Agency and the Participant, In any circumstance where under this Agreement any party is required to approve or disapprove any matter, approval shall not be unreasonably withheld, conditioned, or delayed. 846. Execution of Agreement. This Agreement, after being approved and authorized by the Agency must be executed by Participant within eighteen (1.8) days of such approval and delivered to the Agency. When executed by the Participant and delivered to the Agency, this Agreement must be executed and delivered by the Agency on or before three (3) days after signing and delivery of this Agreement by Participant or this Agreement shall be void, except to the extent that the Participant 21 DOCS001292194v161022299-0085 shall consent in writing to a further extension of time for the authorization, execution and delivery of this Agreement. The Bate of this Agreement shall be the date when it shall have been approved by action of the Agency. [Signature black begins on following page] 22 1' 3OCSOCl1292194v 1 6W2299-0086 IN WITNESS WHEREOF, the Agency and the Participant have signed this Owner Participation Agreement on the respective dates set forth. below. "AGENCY" SAN ,JUAN CAPISTRA.NO COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic G By: �« Chairman A APPROVED AS T 1VI: Stralking, Yocca, Ca" Rauth, Agency Special C©u I "PARTICIPANT" 26755 tyERDUGO, LLC, a California limited liability company Dated: By:- Its- Counsel y:Its: Counsel to 23 UOCSOUI292194} 16/022299-W86 ATTACUTgENT No, 1 SITE MAP [)O( -S ?CII 292194,161V22299-0086 ArI,q i4 1'tr NO, I-1 ATTACHMENT NO.2 SITE LEGAL DESCRIPTION Lot 4. of Tract 134, in the City of San Juan Capistrano, County of Orange, State of California, as per map recorded in Book 11, Page 23 of Miscellaneous Maps, Records or Orange County, California ATTACHMENT NO, 2.1 DOC OCII292194v16/022299-0086 ATTACHIMENT NO.3 SCHEDULE OF PERFORMANCE NOTES: l . mays are calendar days. 2. The Redevelopment Agency and the Participant may, by mutual written agreement, amend or modify any item contained herein or the date for performance. The Executive Director of the Agency is hereby authorized to approve minor amendments as set forth in this Schedule of Performance on behalf of the Agency. Any amendments deemed major shall be submitted to the Redevelopment Agency Board of Directors for consideration. 3. The City is not a party to the Agreement and is not bound by the times set forth herein. BUILDING APPROVALS .._......................................................................... .. I Submission of Construction Drawings to City. On or before February 1, 2010 The Participant shall submit construction drawings, public improvement plans, landscape plans, demolition plans and such other documents as may be reasonably required by the City for review and evaluation with respect to the construction of the Project pursuant to Section. 303. Participant may submit these plans to the Agency and City concurrently for plan check. 2 City Plan_ Check Approval. City shall complete City shall provide comments on first plan its building plan check approval. check within 15 business days of submittal. Participant shall provide revisions to first plan check comments within 15 business days of receipt of comments. The City and Participant shall respond within 10 business days thereafter i for each additional plan check round. 3 Completion of Building Plan Check and Issuance Upon satisfaction of all conditions of of Construction Permits. City shall issue approval for buildings, public construction permits. improvement, landscape and/or other required reviews and, payment of all required building permit and development impact fees. m Submission of Insurance Certificates and Prior to the commencement of Endorsements. Participant shall submit construction. Certificates of Insurance and Endorsements to Agency in accord with Section 405 and 412 of this Agreement. ATTACHMENT NO. 3-1 DOCSOCI 1292194v I6 /022299-0086 ATTACHMENT NO. 3-2 DOCSOC/ I 292194 16/€122299-0096 5 1 Avoroval of Flans. Participant shall have Prior to commencement of grading. approved plans for site grading, utilities and [ public improvements. j E CONSTRUCTION 6 Construction ,Manager. Participant shall submit _ Not less than two weeks prior to proposal for General Construction Manager to commencement of demolition and site oversee site development. preparation. 13 Commencement of demolition site re arition, 'Within 45 days of execution of GC grading building improvements, 3 contract. 14 Release of Construction Covenants. Agency to ' Within 30 days after Agency has famish Participant with a Release of Construction conclusively determined that such Covenants upon the completion of the ; construction improvements on the site Improvements. have been satisfactorily completed. ATTACHMENT NO. 3-2 DOCSOC/ I 292194 16/€122299-0096 ATTACHMENT NO.4 RELEASE OF CONSTRUCTION COVENANTS RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL TO ) ANIS SEND TAX STATEMENTS TO: } San Juan Capistrano Community ) Redevelopment Agency ) 32400 Paseo Adelanto ) San Juan Capistrano, CA 92575 ) Attention: } Space Above This Line for Recorder's Use This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. RELEASE OF CONSTRUCTION COVENANTS This RELEASE OF CONSTRUCTION COVENANTS (the "Release") is made as of 200, by the between the SART TUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic (hereinafter referred to as "Agency") and 26755 VERDUGO LLC, a California limited liability company (hereinafter referred to as the "Participant"). RECITALS A. The Agency and the Participant have entered into that certain Owner Participation Agreement. (the "OPA") dated 2048, concerning the redevelopment of certain real property situated in the City of San Juan Capistrano, California as more fully described in Exhibit A attached hereto and made a part hereof; All capitalized terms not defined herein shall have the meaning set forth in the OPA, B, As referenced in. Section 411 of the OPA, the Agency is required to furnish the Participant or its successors with a Release of Covenants upon completion of construction of the Improvements (as defined in Section 403 of the OPA), which Release is required to be in such form as to permit it to be recorded in the Recorder's office of Orange County: This Release is conclusive determination of satisfactory completion of the construction and development of the Improvements required by the OPA. C. The Agency has conclusively determined that such construction of the Improvements on the Site has been satisfactorily completed. ATTACHMENT NO. 4-1 DOCSOC/1292194v361022299-GO86 I . As provided in the OPA, the Agency does hereby certify that the construction of the Improvements on the Site has been satisfactorily performed and completed, and that such constructioncomplies with the OPA. 2. This Release of Covenants does not constitute evidence of compliance with or satisfaction of any obligation of the Participant to any holder of a mortgage or any insurer of a mortgage security money loaned to mance the work of construction of Improvements, or any part thereof. This Release of Covenants is not a notice of completion as referred to in Section 3093 of the California Civil Code.. The Release of Covenants does not constitute a completion and release of the covenants under the OPA except the obligation to construct the Improvements. JSignatures begin on following Pagel AT FACHMENT NO, 4-2 DOCSCLC'1292144vif fI 2° 99-0086 IN WITNESS WHEREOF, the Agency has executed this Release as of the date set forth above, ATTEST: Agency Secretary APPROVED AS TO FOR.M- Stradling Yocca Carlson & Rauth, Agency Special Counsel AGENCY - SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic Chairman. PAR'T'ICIPANT: 26755 VERDUGO LLC, a California limited liability company By: Its: ATTACHMENT NO. 4-3 DOCS001292194v 15!022299-00110 LEGAL DESCRIPTION Lot 4, of Tract 134, in the City of San ,duan Capistrano, County of Orange, State o California, as per map recorded in Book 11, Page 23 of Miscellaneous .Maps, Records or Orange County, California EXHIBIT A TO ATTACHMENT NO. DMOC/ 1292194-v 16/022299-0086 ATTACHMENT NO. S MEMORANDUM OF AGREEMENT RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL TO ) AND SEND TAX STATEMENTS TO: ) San Juan Capistrano Community ) Redevelopment Agency ) 32400 Paseo Adelanto ) San .Tuan Capistrano, CA 92675 ) Attention: Space Above This fine for Recorder's Use This document is exempt from the payment of a recording fee pursuant to Government Code Section 277383. MEMORANDUM OF AGREEMENT This MEMORANDUM OF AGREEMENT (the "Agreement") is entered into on 2008 by and between the SAN JUAN CA.P'ISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic (hereinafter referred to as "Agency") and 26755 VERDUGO LLC, a California limited liability company (hereinafter referred to as the "Participant"). A. Pursuant to an Owner Participation Agreement dated as of .2008 (the "OPA"), Participant has agreed to construct the Improvements and comply with the Covenants and Agency has agreed to the Covenant Consideration with respect to the Site described on Exhibit A attached hereto ("Site"). B. As a condition of such OPA, Agency has required the recordation of this Memorandum of Agreement, and Participant has agreed to execute and record this Agreement, which shalt run with the land. C. This Agreement is entered into and recorded in accordance with California Health and Safety Code Section 33437 and 33439 and the RedevelopmentPlan. NOW, THEREFORE, THE AGENCY AND PARTICIPANT AGREE AS FOLLOWS: 1. Incorporation of OPA Provisions. The provisions of the OPA are hereby incorporated by reference as though set forth in full. The inclusion of the following provisions shall not limit the incorporation of the OPA, but is merely for convenience. Capitalized terms not defined ATTACHMENT NO. 5-1 DOCSOC/I 292194v]6/022299-0096 herein shall have the meanings defined in the OPA. Paragraphs I through 13 hereof include some of the salient provisions of the OPA, 2, Prohibition Against Change in Ownership, Management and Control of Participant. The qualifications and identities of the Participant, including Eric Altman, the Managing Member of Participant, are of particular concern to the Agency. It is because of those qualifications and identities that the Agency has entered into this Agreement with the Participant. No voluntary or involuntary successor in interest of the Participant shall acquire any interest in -the Site or the Project nor any rights or powers under this Agreement except as expressly set forth herein. During the Operating Period; the Participant shall not assign or transfer, all or any part of this Agreement or the Site, or any portion(s) thereof, or interest(s) therein, or any right(s). hereunder without the prior written approval of the Agency's Executive Director. Assignments for financing purposes shall. be approved by the Agency's Executive Director in accordance with this Section 103 and with the requirements of Section 409 of this Agreement. Prior to any assignment which requires Agency's Executive Director approval hereunder being considered for approval, the Participant shall be required to deliver to the Agency's Executive Director the form of a proposed written assignment and assumption agreement in which the assignee would expressly agree to assume all rights and obligations of the Participant under this Agreement which arise after the effective date of the assignment, and in which assignment and assumption agreement the assignee would agree to assume or Participant would expressly remain responsible for all performance of the Participant which arose prior to the effective date of the assignment. The assignment and assumption agreement shall be in a forrn reasonably satisfactory to the Agency's legal counsel and Agency's legal counsel shall have approved the assignment and assumption agreementprior to its execution and prior to it becoming effective. No later than the date the assignment becomes effective, Participant and the assignee shall deliver to the Agency a fully executed copy of the assignment and assumption agreement. Notwithstanding the foregoing, neither the lender approved by the Agency pursuant to this Agreement nor its successors or assigns shall be required to execute and deliver an assignment and assumption agreement and the rights of such lender and its successors and assigns. Notwithstanding any other provision of this Agreement to the contrary, Agency approval of an assignment of this Agreement or the Site or any interest therein shall not be required in connection with any of the following (each a "Permitted Transfer"): (i) Any transfers in which the Participant retains a minimum of fifty one percent (51%) of the ownership and retains complete management and decision making control; (ii) Transfers resulting from the death or mental or physical incapacity of an individual; (iii) The granting of temporary or permanent easements or permits to facilitate the development of the Project; (iv) The leasing of separate spaces in the building in the normal course of business pursuant to leases to commence no earlier than Participant's completion of the building core and shell as evidenced by the issuance of the Certificate of Final Inspection - Building Core and Shell; A17ACHMENT NO. 5-2 DOC:SOCI 1292.194 Y 16/422299-0086 (v) Transfers or assignments in trust for the benefit of a spouse, children, or grandchildren; (vi) A sale of the Site at foreclosure (or a conveyance thereof in lieu of a foreclosure) pursuant to a foreclosure thereof by a lender approved by the Agency in accordance with this Agreement; 3. Indemnity. Participant agrees to and hereby does indemnify, defend and hold Agency and the City and their respective officers, employees and agents harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, line, penalty, punitive damage, or expense (including, without limitation, attorneys' fees) (hereinafter collectively the "Claims"), resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any such materials to or from, the Site in violation of applicable Environmental Law, whenever discovered or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating to the use, generation, release, discharge, storage, disposal, or transportation of Hazardous Materials on, under, in, or about, to or from, the Site whenever discovered. This indemnity shall include, without limitation, any Claims for personal injury including sickness, disease or death, tangible or intangible property damage, compensation or lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, pollution, contamination, leak, spill, release, or other adverse effect on the environment. This indemnity shall not include any Claim directly resulting from, arising out of, or based upon the negligent activities of Agency, City, or any of their officers, employees, or agents. 4. Commencement and Completion of Co>nstruetion. The Participant hereby covenants and agrees to promptly begin and thereafter diligently proceed to completion the construction of the Improvements and the development of the Site in conformance with the Schedule of Performance. 5. Bodily Injury and Property Damage Insuratnce. The Participant shall protect, defend, indemnify, assume all responsibility for and hold harmless the Agency and the City and their elective and appointive boards, officers, boards, agents and employees, from any and all Claims, which may be caused by any of the Participant's activities under this Agreement, regardless of whether such activities or performance thereof be by the Participant or anyone directly or indirectly employed or contracted with by the Participant and regardless of whether such damage shall accrue or be discovered before or after termination of this Agreement. From the date of the Construction Financing Closing Date through the date the Agency issues the Release of Construction Covenants for the Improvements pursuant to Section 412 herein, the Participant shall: (i) obtain and maintain a policy of commercial general liability insurance, which shall include blanket contractual coverage, and 'shall have limits of not less than Two Million Dollars ($2,000,000) per occurrence, and if a policy form with a general aggregate limit is used or provided the aggregate limit shall be not less than twice the per occurrence limit, which policy(s) shall protect the Participant, the City, and the Agency from claims for such damages, and which policy shall be issued by an "A:V1" or better rated insurance carrier as rated by A.M. Best Company, and shall provide all coverages on an occurrence basis; and (ii) obtain and maintain or cause to be obtained and maintained by the general contractor general liability insurance. The Participant shall furnish an endorsement(s) of insurance countersigned by an authorized agent of the insurance carrier on a form of the insurance carrier evidencing and/or ATTACHMENT NO. 5-3 DOCSC}M 292194v 16/022299-0096 effecting the requirements herein and/or the changes to the Participant's policy to effect such conformity and setting forth the general provisions of the insurance coverage and an endorsement that shall name the City and the Agency and their respective officers, boards, agents, and employees as additional insureds under the policy with respect to this Project and this Agreement with the Agency. The endorsement by the insurance carrier shall contain a statement of obligation on the part of the issuing agent or carrier to notify the City and the Agency of any material reduction, cancellation, or non -renewal of the coverage at least thirty (30) days in advance of the effective date of any such material change, or non -renewal, Not less than fifteen (15) days prior to the expiration date of any policy of insurance required by this Paragraph 5, Participant shall cause to be delivered to Agency a binder or certificate of insurance with respect to each renewal or new policy, bearing a notation evidencing payment of the premium therefor, or other proof of payment reasonably satisfactory to the Agency. In each instance of the provision of insurance, certified duplicate copies of the policy(s) or renewal policy(s), as applicable, shall be delivered to the Agency's Executive Director within thirty (30) days of the date of such policy(s), The Participant shall also furnish or cause to be furnished to the Agency evidence satisfactory to the Agency that it and any contractor with whom it has contracted for the performance of work on the Site or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. The Agency hereby delegates to the Agency's Executive Director, with and through consultation and advice from the Agency's and City's legal counsel and risk manager, the authority to consider, and approve or disapprove, written requests) from the Participant concerning any proposed modification(s) to the indemnification and/or insurance requirements of this Agreement. Provided, however, by such delegation the Agency expressly reserves to itself and the Agency's Executive Director the sole and absolute discretion to approve or disapprove any such modification(s) requested by the Participant. Unless and until any such requested modification(s) is approved in writing by the Agency's Executive Director, in his/her sole and absolute discretion, the Participant remains obligated hereunder and shall comply and continue to comply with the indemnity and insurance requirements set forth in this Agreement. 6. Governmental requirements. Participant shall carry out the design and construction and operation of the Improvements in conformity with all Governmental Requirements. 7. Taxes, .Assessments, Encumbrances and Liens. The Participant shall pay when due all real estate taxes and assessments on the Site. Prior to first Sale of the Project by the Participant, the Participant shall not place or allow to be placed on the Site or any part thereof any mortgage, trust deed, encumbrance or lien other than as expressly allowed by this Agreement. The Participant shall remove or have removed any levy or attachment made on the Site or any part thereof, or assure the satisfaction thereof within a reasonable time but in any event prior to a sale thereunder.. Nothing herein contained shall be deemed to prohibit the Participant from contesting the validity or amount of any tax assessment, encumbrance or lien, nor to limit the remedies available to the Participant in respect thereto. 8. Uses. The Participant covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Site or any part thereof, that aper the Agency's issuance of Release of Construction Covenants pursuant to this Agreement, the Participant shall maintain, use, and operate the Site for no other use than as a commercial, office and retail facility with approximately 8,000 square feet of gross leasable building area devoted to the uses specified or permitted herein, as ATTACHMENT NCS. 5-4 DOCS00 1292 1 94v 16/022299-0086 required in this Agreement in conformity with the limitations of the Entitlements for a period of twenty (20) years from the date of the issuance of the Release of Construction Covenants pursuant to this Agreement (or the date the Agency was required to issue the Release of Construction Covenants, whichever occurs first. No use(s) other than those specified herein shall be permitted without the prior written approval of the Agency (which approval the Agency may grant or deny in its sole discretion). 9. Operating Covenant. For a term commencing upon the disbursement Date and ending upon the twentieth anniversary thereof ("Operating Period"), the Owner hereby covenants and agrees to devote the entire building on a continuous basis to the operation of retail stores, comparable, as of the date hereof, to the Mission Promenade located at 26832 Ortega Highway, San Juan Capistrano, California. Except with the prior written consent of the Agency for each instance, which consent may be granted or withheld in the Agency's sole and absolute discretion, the failure of the Owner to cause the Project to be operated as provided herein for thirty (30) or more consecutive days shall, at the Agency's option, constitute a default hereunder; provided, however, that the Owner shall not be in default of this Paragraph 9 during any period that any of the Owner's tenants are is prevented from operating the Project due to (i) required or necessary renovation of the Improvements (provided that the period during which the Project is not operated as a result of the renovation of the Improvements shall in no event exceed ninety (90) days), or (ii) events of force majeure as set forth in Section 603 hereof, The (Operating Period shall be extended for each day of closure permitted hereunder. 10. Tenant Restrictions. Participant shall use the total gross leasable building area on the Site in the following manner; provided, however, that the Agency's Executive Director in his or her sole and absolute discretion may approve minor deviations from the following conditions which are requested by the Participant in writing and provided further that Participant complies with any and all applicable City requirements in connection with such deviation: a The second floor leasable building area may be used for office, personal or business service facilities, or other non retail uses as specified in Section 9-3.303 of the Municipal Code for the 'Tourist Commercial ("TC") district including, but not limited to the following: (i) Accountants, attorneys, consultants; (ii) Insurance agencies; (iii) Medical offices; (iv) Engineers, architects and planners; (v) Religious, fraternal or service organizations; (vi) Public facilities; (vii) Real estate offices; (viii) Travel agencies; and (ix) full service laundry and dry cleaner business. ATTACHMENT NO. 5-5 DOCSOC1292194v 16/022299-0086 (x) Massage therapy; (xi) Small business, vocational, professional schools; and (xii) Financial brokerage offices. b. Any remaining gross leasable building area not used for the above purposes shall be occupied by retail tenants consistent. with Mission Promenade in terms of quality of merchandise and sales volume, with an objective and emphasis on generating local revenues, and providing first quality recognized retail users generating high volume sales. 11. Maintenance. The Participant shall maintain the Improvements that exist on the Site from time to time in accordance with the Agreement to be Recorded Affecting Real Property the covenants, conditions, maintenance obligations and other restrictions of which shall remain in effect until the expiration of the Redevelopment flan, that is until July 13, 2032. Issuance of a Release of Construction Covenants by the Agency shall not affect Participant's obligations under this Section 504, 11 Rights of Access, The Agency, for itself and for the City and other public agencies, at their sole risk and expense, reserves the right to enter the common areas on the Site or any part thereof which is owned or controlled by the Participant, at ail.reasonable times for the purpose of construction, reconstruction, maintenance, repair or service of any public improvements or public facilities located on the Site, The Agency or such other public agency exercising such right of entry shall take all reasonable measures to minimizc interference with the operation of business on the Site and shall promptly repair and restore any damage caused by such entity to the Site or the Improvements thereon. Any such entry shall be made only after reasonable notice to and consent of the Participant, and Agency shall indemnify and hold Participant harmless from any costs, claims, damages or liabilities pertaining to any entry. The Participant agrees to cooperate with the Agency in providing its consent and such access, and acknowledges that the Agency may obtain an administrative inspection warrant or other appropriate legal or equitable remedies to enforce its rights pursuant to this Section 505. This Section 505 shall not be deemed to diminish any rights the Agency, the City, or any other public agencies may have without reference to this Section 505. The rights of access set forth in this Section 505 shall remain in effect until the expiration of the Redevelopment Plan. 13. Nondiscrimination, The Participant covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, physical or meatal disability or medical condition, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Improvements or the Site, nor shall the Participant itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Improvements or the Site. The foregoing covenants shall run with the land. All deeds, leases or contracts with respect to the Improvements or the Site shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: ATTACHMENT Na. 5-6 DOCSOC11292194v16/022299-0086 a. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 129226.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." b. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12355 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." c. In contracts: "There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12326.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." The covenants against discrimination, set forth in this Section 506 shall continue in effect in perpetuity. 114. Effect of Violation of the Tereus and Provisions of this .Agreement. The obligations and covenants established in this Agreement, as set forth in Sections 103, 202, 403, 405, 407, 409, 501 through 506, inclusive (the "Covenants") shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors ATTACHMENT NO. 5-7 DOCSOCI1292194v 16/022299-0086 and assigns, as to those covenants which are for its benefit. The covenants contained in this Agreement shat l remain in effect for the periods specified herein. The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. The Agreement and the covenants herein shall run in favor of the Agency, without regard to whether the Agency has been, remains or is an owner of any land or interest therein in the Site or in the Community Development Project, The Agency shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. IN WITNESS WHEREOF, the Agency and Participant have signed this Agreement as of the date first set forth above. ATTEST: Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth, Agency Special Counsel AGENCY: SAN .YUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic Chairman PARTICIPANT: 26755 VERDUGO LLC, a California limited liability company Its: ATTACHMENT NO. 5-8 DOCSOC/1292194v 16/022299-0086 ATTACHMENT NO.6 PREVAILING NAGE AND PUBLIC WORKS REQUIREMENTS 1. Participant's Requirements: (1) Obtain the prevailing wage rate from the Director of Industrial Relations in accordance with Labor Code Sections 1771 and 1773. (2) Specify the appropriate prevailing wage rates, in accordance with Labor Code Sections 1773.2 and 1777.5. (A) The posting requirement is applicable for each job site. EXCEPTION: If more than one worksite exists on any project, then the applicable rates may be posted at a single location which is readily available to all workers. (B) If a wage rate for a craft, classification or type of worker is not published in the Director's general prevailing wage determinations, a request for a special determination should be made by the awarding body to Chief, Division of Labor Statistics and Research, P.O. Box 420603, San Francisco, CA 94142, at least 45 days prior to the project bid advertisement date. (3) Notify the Division of Apprenticeship Standards, Department of Industrial Relations. See Labor Code Section 1773.3. (4) Inform prime contractors, to the extent feasible, of relevant public work requirements: NOTE: Requirement information may be disseminated at a preacceptance of bid conference or in a call for bids or at an award of bid conference. The public works requirements are: (A) the appropriate number of apprentices are on the job site, as set forth in Labor Code Section 1777.5. (B) workers' compensation coverage, as set forth in Labor Code Sections 1860 and 1861. (C) keep accurate records of the work performed on public works projects, as set forth in Labor Code Section 1812. (D) inspection of payroll records pursuant to Gabor Code Section 1776, and as set forth in Section 16400 (e) of Title 8 of the California Code of Regulations. (E) and other requirements imposed by law. (5) Withhold monies. See Labor Code Section 1727. ATTACHMENT NO. 6-1 DOCS001292194v 16/022299-0086 (6) Ensure that public works projects are not split or separated into smaller work orders or projects for the purpose of evading the applicable provisions of Labor Code Section 1771. (7) Deny the right to bid on public work contracts to contractors or subcontractors who have been debarred from bidding on public works contracts, as set forth in Labor Code Section 1777.7. (8) Not permit workers on public works to work more than eight hours a day or 40 hours in any one calendar week, unless compensated at not less than time and a half as set forth in Labor Code Section 1815. EXCEPTION: If the prevailing wage determination requires a higher rate of pay for overtime work than is required under Labor Code Section 1815, then that higher overtime rate must be paid, as specified in subsection 16200(a)(3)(F) of Title 8 of the California Code of Regulations. (9) Not take or receive any portion of the workers' wages or accept a fee in connection with a public works project, as set forth in Labor Code Sections 1778 and 1779. (10) Comply with those requirements as specified in Labor Code Sections 1776(8), 1777.5, 1.810, 1813, and 1860. III Contractor and Subcontractor Requirements. The contractor and subcontractors shall: (1) Pay not less than the prevailing wage to all workers, as defined in Section 16000 of Title 8 of the Callfornia Code of Regulations, and as set forth in Labor Code Sections 1771 and 1774; (2) Comply with the provisions of Labor Code Sections 1773.5, 1775, and 1777.5 regarding public works jobsites; (3) Provide workers' compensation coverage as set forth in Labor Code Section 1861; (4) Comply with Labor Code Sections 1778 and 1779 regarding receiving a portion of wages or acceptance of a fee; (5) Maintain and drake available for inspection payroll records, as set forth in Labor Code Section 1776; (6) Pay workers overtime pay, as set forth in Labor Code Section 1815 or as provided in the collective bargaining agreement adopted by the Director of Industrial Relations as set forth in Section 16200 (a) (3) of Title 8 of the California Code of Regulations; (7) Comply with Section 16101 of Title 8 of the California Code of Regulations regarding discrimination; (8) Be subject to provisions of Labor Code Section 1777.7 which specifies the penalties imposed on a contractor who willfully fails to comply with provisions of Section 1777.5; ATTACHMEN`1" NO.6-2 DOCSOCI i 292194v 161022299-0086 and (9) Comply with those requirements as specified in Labor Code Sections 1810 and 1813; (10) Comply with other requirements imposed by law. ATTACHMENT NO. 6-3 DOCS00l292194v16/022299-0086 ATTACHMENT NO. 7 PROMISSORY DOTE (Secured by Beed of Trust) , 2009 . California. FOR VALUE RECEIVED, the undersigned 26755 VERDUGO, LLC, a California limited liability company ("Participant"), having its principal place of business at 26755 Verdugo Street, Suite 200, San Juan Capistrano., California 92675, promises to pay to the order of SAN JUAN CAPI.STRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), at 32400 Paseo Adelanto, San Juan Capistrano, CA 92675, or at such other place as the holder of this Note from time to time may designate in writing, in accordance with the following; I. Recitals. Participant and Agency have entered into that certain Owner Participation Agreement dated , 2009 (the "OPA") pursuant to which the Agency will disburse to Participant the Covenant Loan in the principal amount of Nine Hundred Fifty Thousand Dollars ($950,000) ("Principal Amount") and the Participant is required to construct thereon the Improvements and fulfill all the Covenants all as more fully described in the OPA. All capitalized terms not defined herein shall have the meaning set forth in the OPA. 2. Definitions; "Agency Participation Payment" means, subject to the provisions of Section 8 below, fifty percent (50%) times the Net Operating Income in excess of the Participant Preferred Return. "Agency Refinance Share" means, fifty percent (50%) of the Distributable Refinance Proceeds. "Agency Sales Share" means, subject to the provisions of Sections 3 and 4 below, twenty- five percent (2511/0) of the Distributable Sales Proceeds. "Direct Casts" means those construction costs paid directly to contractors and/or suppliers in connection with the construction of the Improvements. "Distributable Refinance Proceeds" is defined in Section 3.2 below. "Distributable Sales Proceeds" is defined in Sections 3.3 and 3.4 below, as applicable. "Grand Opening Date" means the publicly announced date that the Project is open to. the public for business. "Gross Income" means all gross income from the Project including, without limitation, tents, common area maintenance charges and other reimbursements from the tenants. "Net Operating Income" means the aggregate annual Gross Income less Operating Expenses. .ATTACHMENT NO. 7-1 DOC SOCA 292194v 161022299-0086 "Net Refinance Proceeds" means gross refinance proceeds minus Refinance Costs. "Operating Expenses" means annual actual, "'reasonable and customary" costs, fees and expenses of retail developments directly incurred by the Participant commencing upon commencement of operation of the Project and attributable to the operation, maintenance, and management of the Improvements including, without limitation, reserves for capital expenses, painting, cleaning, maintenance costs, repairs and alterations, landscaping, utilities, rubbish removal, sewer charges, real and personal property taxes and assessments, insurance premiums and deductibles, security services, advertising, promotion and publicity, office. janitorial, cleaning and building supplies, the expensed portion of tenant improvement allowances, tenant improvements and leasing commissions, onsite management, and a management fee equal to three percent (3%) of Gross Income;. provided, however, that all payments to parties related to or affiliated with Participant shall not exceed market rates. Operating Expenses shall not include principal and intereston debt obligations or return of or on equity or non-cash expenses, including without limitation, depreciation other than reasonable reserves for capital expenditures (including, without limitation, roof replacement), and/or tenant allowances and tenant improvement costs or leasing commissions, to the extent that they are capitalized. "Participant Capital Return" means the value of the Participant's Preferred Return at refinancing, as computed in Section 3.2(a) or at sale as computed in Section 3.3(c). "Participant Costs" means the total actual costs incurred by the Participant, in acquiring the Site and planning, designing, engineering, financing, constructing, leasing and developing of the Improvements, in accordance with the plans and specifications to be acted upon by the Agency, as provided in the OPA. The Participant Costs shall include, without limitation, the following: all costs or fees paid to all contractors, costs of site preparation; the cost of construction of all of the Improvements, including required onsite and offsite improvements, architectural, engineering and design fees, reproduction costs, development permits, inspection fees charged by any public agency, general contractor fee, performance or completion bond premiums, construction loan fees and points, mortgage brokerage fees, title insurance premiums and endorsement costs, survey costs, documentary transfer taxes, tenant improvements, tenant improvement allowances, third party leasing commissions, insurance premiums, interest payments accrued in connection with the construction loan(s) through the date of issuance of the Release of Construction Covenants, consulting, insurance consultants and professional fees (including without limitation legal,. accounting, environmental and financial consulting fees) paid to third parties with respect to negotiating of the OPA, leasing, pre -opening marketing costs in connection with the grand opening and grand opening costs, attorney fees and costs, and expert witness fees and costs, and other costs of litigation and appeal, if any, incurred in connection with litigation against the Agency or Participant claiming that the City and/or Agency failed to comply with CEQA or other land use requirements and any other actual third party costs, not included above, for planning, designing, financing, constructing, and developing the Improvements which have not been paid by the City and/or Agency, tenants or other parties and which are approved by the Agency in its reasonable discretion. In addition to the foregoing, the Participant shall be entitled to Participant's fees and overhead equal to: three percent (3%) of Direct Costs. For purposes of calculating the "Participant Preferred Retum", "Participant. Costs" will be reduced by (i) costs incurred by .Participant but reimbursed by tenants; (ii) Net Operating Income in an amount that is equal to and not in excess of construction loan interest that accrues between the date of participant's first receipt of rental income (excluding any rental deposits) and terminating on the date of issuance of the Release of Construction Covenant and (iii) all Covenant Consideration Payments. ATTACHMENT NO, 7-2 DOCS001292 T 94v 16/022299-0086 "Participant Preferred Return" means annual cumulative and compounded return based on seven percent (7%) times the Participant Costs. "Refinance Costs" means all third party costs of refinancing including, without limitation, accrued but unpaid interest, prepayment penalties, yield maintenance payments, bank fees and points, rate lock fees, breakage fees, hedge fees, premiums for letters of credit, guaranty payment premiums, lender due diligence fees and costs, mortgage brokerage fees, title insurance fees, escrow costs, fees and prorations, legal fees., and other similar casts of refinance. "Third Party Costs of Sale" means all third party costs of sale of the Site, Project or any part thereof and/or Rental Housing Sales Parcel including, without limitation, prepayment penalties, yield maintenance payments, subdivision and/or lot line adjustment costs, title insurance fees, escrow costs, fees and prorations, legal fees, transfer taxes and other similar costs. 3. Payment. In lieu of a stated interest rate and/or principal repayment, subject to the provisions of Section 7 below, Participant shall pay to Agency the Agency Participation Payment from Net Operating Income, Refinance Proceeds and Sales Proceeds as described below and in the example attached hereto as Exhibit A and incorporated herein by reference. In the case of payments from Net Operating Income, such payments shall be made within sixty (60) days of the end of Participant's fiscal year. Payments due from refinance proceeds or sale shall be paid directly from escrow at closing of such sale or refinancing. 3.1 Payments. from Net O gratin, Income. In any year in which the Net Operating Income exceeds an amount equal to the applicable Participant Preferred Return, including any accrued but unpaid Participant Preferred Return and the Participant Preferred Return for the then current year, the Participant shall pay the Agency Participation Payment. Subject to the provisions of Section 4 below, following a refinancing described in Section 3.2 below, the Agency shall continue to be entitled to receive the Agency Participation Payment from Net Operating Income. 3.2 Pa mcnts of_Agency Refinance Proceeds Share. In the event of a refinancing, the Agency shall be paid the Agency Refinance Share based on the "Distributable Refinance Proceeds", calculated as follows; Subtract from Net Refinance Proceeds the greater of (a) Participant Capital Return, which is an amount equal to the Participant Preferred Return, calculated, as of the date of the closing, of the refinancing divided by the new refinancing debt constant (minimum annual debt service divided by the new mortgage amount) plus any accrued and unpaid Participant. Preferred Return, or (b) Participant Casts plus any accrued and unpaid Participant Preferred Return accrued to the date of the refinancing, or (c) Principal pay off amount of debt being repaid, if any, plus any accrued and unpaid Participant. Preferred Return. To either a) or b) or c) may be added any proceeds to be used for capital expenditures to be incurred within the forthcoming thirty-six (36) months, and to the extent that monies are not expended within such period, such excess shall be considered Distributable Refinance Proceeds and the Participant shall promptly thereafter pay to the Agency the Agency Refinance Share attributable to such excess. Examples of the application of the foregoing are set forth on .Exhibit "A" attached hereto, 3.3 Sale. in the event of a sale of the Site and/or Project, the Participant shall pay to the Agency, the Agency Sales Share based on Distributable Sales Proceeds, calculated as follows: ATTACHMENT NO, 7-3 DOCSOCI I 292194v 16/022299-0086 The Participant shall deduct from the gross sales proceeds: [A] Third Party Costs of Sale; [B] any accrued and unpaid Participant's Preferred Return; [C] the greater of (i) the Participant's Capital Return, which is an amount equal to the Participant's Preferred Return, calculated, as of the date of closing, based on Participant Costs at closing; , divided by the buyer's Capitalization ,Rate, or (ii) Participant Costs at closing; and .[D] an amount up to the Principal Amount accruing simple interest at the rate of two percent (2%) per annum from the date hereof to the date of payment less any Agency Participation Payment and/or Agency Refinance Share previously received . 3.4 Sale of Less Than I00% of Participant Ownership Interests. In the event that there is a change in the ownership in the interests of capital, profits, losses and cash flow of Participant (other than a Permitted Transfer), the Agency may deem such a transaction a "sale" for purposes of Section 3.3, Cessation of Agency Participation Amounts. 4.1 Acceptance of Agency Sales Share. Upon the transfer (other than a Permitted Transfer) of 100% of the Participant's ownership interest in all of the Site and./or Project, if the Agency accepts the Agency Sales Share, then the Agency Participation Payments, Agency Sales Share and Agency Refinance Share from the portion sold shall thereafter terminate. 4.2. Payoff of Promissory Note. Notwithstanding anything herein to the contrary, on or before June 30, 2035 Participant shall pay to Agency an amount equal to the Principal Amount accruing simple interest at the rate of two percent (2%) per annum from the date hereof to the date of payment less Agency Participation Payment and/or Agency Refinance Share previously received. In the event, after the exercise of reasonable diligence to obtain Construction Financing, Participant is unable to obtain adequate Constructing Financing for the construction and completion of the Project, Participant shall return the full amount of any Disbursements Participant may have received form the Agency and neither party shall have any further obligation under this Agreement and this Agreement shall immediately become null and void. The obligations of this paragraph shall be secured by a decd of trust which will be reconveyed upon either the (i) recordation of the Construction Financing or the repayment of the Disbursements previously made by Agency. 5. Net Operating Income Report. Can or before sixty (60) days following the expiration of the Participant's fiscal year during the term of this Note, the Participant shall annually provide the Agency a Net Operating Income report for the Project, in a form reasonably prescribed by the Agency, which shall describe in detail the Net Operating Income and all distributions for that year and a statement and calculations setting forth the amounts, if any, payable to the Agency. The Participant shall also submit to the Agency, annual financial .statements prepared and presented fairly in accordance with the provisions of this Note. Such financial statements shall be prepared in accordance with ,generally accepted accounting principles and shall be audited by an independent certified public. accounting firm and shall be accompanied by an unqualified opinion on such financial statements from such firm. The financial statements shall include a balance sheet, statements of operation, owners' equity and cash flows for the year then ended. In addition., a schedule of Net Operating Income will be presented as a supplemental schedule to the audited financial statements and will be audited in conjunction with the financial statements taken as a ATTAC14MENT NO. 7-4. DOCS001292194v 161022299-0086 whole. To the extent that the results of the Net Operating Income report and this Note require that an Agency Participation Payment be made, Participant shall make such payment within sixty (60) days following the expiration of the Participant's fiscal year during the term of this Note. Agency shall promptly advise Participant in the event that any party seeks disclosure of the Net Operating Income report, whether by subpoena, court order or otherwise and Participant shall be entitled to intervene in order to retain the confidentiality of such reports. 6. Participant Costs Report. Participant shall prepare and submit a report to Agency of all. Participant Costs as of the date upon which the Improvements are 50% complete, 75% complete and 90% complete, as certified by the Project architect, and on the date Participant is entitled to the issuance of a Release of Construction Covenants, and annually thereafter during the term of this Note, concurrently with the submission of the Net Operating Income Report. 7, Subordination. Notwithstanding any provision expressly or impliedly to the contrary herein, payment of the Agency Participation Payment and Agency Sales Share is expressly junior and subordinate in terms of priority and payment to the payment of all principal and interest payments and other payment and performance obligations approved by the Agency pursuant to Section 410 of the OPA that are secured, from time to time, by deeds of trust on the Site, the. Project or any part thereof, provided that any such deeds of trust are not additional security for or cross collateralized with any other obligation of the Participant. It is the intent of the parties that to the extent such funds are sufficient, annual debt service shall be made from the Participant's Preferred Return. 8. Miscellaneous. (a) Governing Law. All questions with respect to the construction of this Note and the rights and liabilities of the parties to this Note shall be governed by the laws of the State of California.. (b) Binding on Successors. This Note shall inure to the benefit of, and shall be binding upon, the successors and assigns of each of the parties to this Note. (c) Attomeys' Fees, (i) In any action to enforce this Note, the prevailing party shall be reimbursed by the other parry for all reasonable attorneys' fees, costs and expenses, incurred by it in costs and expenses for trial, appellate proceedings, out-of-court negotiations, workouts and settlements or for enforcement of rights under any state or federal statute, bankruptcy and insolvency proceedings such as (but not limited to) seeking relief from stay in a bankruptcy proceeding. The term "expenses" means any expenses incurred in connection with any of the out-of-court, or state, federal or bankruptcy proceedings referred to above, including, without limitation, the fees and expenses of any appraisers, consultants and expert witnesses retained or consulted in connection with any such proceeding. (ii) The prevailing party shall also be entitled to its attorneys' fees, costs and expenses incurred in any post -judgment proceedings to collect and enforce the judgment. This provision is separate and several and shall survive the merger of this Note into any judgment on this Note. ATTACIIMENT NO. 7-5 DOC SOC/1292194v 16/022299-0085 (d) Time of the Essence. Time is of the essence with respect to every provision hereof. (e) Waivers by Participant. Except as otherwise provided in any agreement executed in connection with this Note, Participant waives. presentment; demand; notice of dishonor; notice of default: or delinquency; notice of acceleration; notice of protest and nonpayment; notice of costs, expenses or losses and interest thereon; and diligence in taking any action to collect any sums arising under this Note or in any proceeding against any of the rights or interests in or to properties securing payment of this Note. (f) Non -waivers. No previous waiver and no failure or delay by Participant in acting with respect to the terms of this Note shall constitute a waiver of any breach, default, or failure of condition under this Note. A waiver of any term of this Note, or of any of the obligations secured thereby, must be made in writing; and shall be limited to the express written terms of such waiver. In the event of any inconsistencies between the terms of this Note and the terms of any other document related to the loan evidenced by this Note, the terms of this Note shall prevail. 9. Security for Payment, The security for the Agency's payment under this Promissory Note shall be the Deed of Trust. Failure of the Participant to make full and timely payment: to the Agency of the Agency Participation Payment and/or Agcncy Refinance Share and/or Agency Sales Share as and when required hereunder shall constitute an event of "Default" under the OPA. 26755 VERDUGQ, LLC, a California limited liability company By: Its: ATTACHMENT NO. 7-5 BQCSOCIt 292194v 16slt122299-4086 EXHIBIT A TO ATTACHMENT NO.7 DISTRIBUTION OF AGENCY PARTICIPATION PAYMENT, REFINANCE PROCEEDS AND SALE PROCEEDS Distribufim of Net Agency Parficipation PaVin]lertt First, to pay Participant's Preferred Return Second., to pay any unpaid Accrued Participant Preferred Return Any rernainder is distributed 50% to Agency as the Agency Participation Payment and 50% to Participant Distribution of Agency Reece Paroceeds First, to pay Refinance Costs Second, to pay any unpaid Accrued Participant Preferred Return Third, to pay the greater of the Participant Capital Return, Participant's Costs or the principal amount of any debt being repaid Fourth, any proceeds to be utilized to fund capital expenditures to be incurred within the forthcoming thirty-six months Any remaining proceeds shall be distributed 501/10 to the Agency as the Agency Participation Payment and 50% to Participant Dish ibuttion. of Gross Sale Proceeds First, to third party and/or Participant's closing costs Second, to pay any unpaid Accrued Participant Preferred Return Third, Participant`s Capital Return, which is an amount equal to the Participant's Preferred Return divided by the buyer's capitalization rate Fourth, to the Agency up to the Principal Amount plus accrued simple interest at the rate of 2.0% until the time of sale closing, reduced by any Agency Participation Payment or Agency Refinance Share previously received. Any remainder is distributed 25% to Agency and 75% to Participant EXHIBIT A-1 TO ATTACHMENT NO. 7 DOCSOC/I292194v16/022299-0086 TABLE $ DUPLE OF MOTE PAYMENTSAN6 PAYMENTS AT GALT MMXO Ld44y0-YAWERGWEST WLGISdt4 GAR.iiIAFlCAP16TRAN0, CA3,IFORMA Ya - = lua w IKI Isl w = w W XHLS PmhMNatePt#0 950,000 AcrautdWeliersd t0% 1pm 19,060 19,090 06,0[9 19000 10,900 18,QW 19,009 19009 I= prom wyNote ft4vlt dut of salt 9£'6,066 Culpul MAcerurdt oop INrmst Sip Gree AMowt O?m M Sade 1,140,606 Lm Ur Wfoe A" perwpAlim payments (231.756 ke knm Owidta Apmy i05alt mol P"dby: I"UtM-Amr rmcieta,kit. Ptonmmt: VmWn Wo- New$ CW Fm,, 111M, EXHIBIT A-2 TO ATTACHMENT NO. 7 DOCSOC/l 292194v 16/022299-0086 pommWOMse Ame 276,900 261700 293,000 304,700 316So1d 329,900 WAX 356,51N1 379,6GG 365490 Lt6c Vxenty1C4110:4at aim GAJ = L15309! I,i#.EQ31I = X -1m iliM a,�fi` f LiB M Gmalsomt 256,560 26716 3 216.300 2!5,590 301,109 313,1W 315,790 33k766 3523M 366"90 prang Eves LkxtiipbursedOtict by (33400) (34,O S) (35,006) 036,149} (37,201) (3E,30) (39,409) (40,690) (41,600) (43,190) mmigameN (7.500) 14000) 18,X06 {3,7tA} (90001 M,400) (0,6001 (10.20,1 (1G,6oC) {1(406} Reams iL]Q4) jam) 19 9@ 4a um = = = = = Tdcl Opw AN Exptraea dm 141M `4c 4.BC01 &19 (47.5991 [49.6601 Lam" 1 &Z mm I5l& NN 0;erruhy Nrto411t 1Sd,609 224,306 223,70➢ 242,47(( 253,800 264,100 275,209 2M,V 195.600 310,&90 Oxecl Ctats 4,0010000 aAneN UffildlMW P$YMCI (950,0001 plimputCads 1051000 ParWpenE "red Roturt 7.0% 113,570 213370 213,570 213.570 213,570 213,570 213,579 213,570 213,570 213:70 Paymod dtcr td Re6 m 4.770 Gt5tWWe6mna 0 5,960 20,133 2SA30 49030 59530 61830 03,(09 85,P39 97,339 AptltoyProdpfiomPmyamenl 56,0% 0 (2,960) (10,065) (IAA15} (29,915) (25,265) %,815) 00.515) (42.515} (48,685) Patk*t96sidrWCashHim 0 2.860 19,085 14,915 20,015 25,265 70,815 30,515 42.515 48405 mems, Amn4d perWWl RtWm 4,776 & 0 0 0 9 6 0 0 9 Cnsa Sats Pmteeda 6.596 t>sro 4,713,999 jA] Lsss Cods cl &k Taj Net Sale pmeaade 4496,009 �DlAmrmd wd Unpaid PubdpsN Pt *Tm Re= 0 parociperlcolalbam 6.5WCaprala 3,266,0.10 Apia Wt Pty"N gollm CWdg WeSdtPmoteds 301,750 Agmxy Sds Shn 154% €75,436 pnileptN Shrs €226,313 PmhMNatePt#0 950,000 AcrautdWeliersd t0% 1pm 19,060 19,090 06,0[9 19000 10,900 18,QW 19,009 19009 I= prom wyNote ft4vlt dut of salt 9£'6,066 Culpul MAcerurdt oop INrmst Sip Gree AMowt O?m M Sade 1,140,606 Lm Ur Wfoe A" perwpAlim payments (231.756 ke knm Owidta Apmy i05alt mol P"dby: I"UtM-Amr rmcieta,kit. Ptonmmt: VmWn Wo- New$ CW Fm,, 111M, EXHIBIT A-2 TO ATTACHMENT NO. 7 DOCSOC/l 292194v 16/022299-0086 TABLE4 MARPLE OF SECTION A.3 LOAN PAYOFF AT END OF YEAR i0 ME= LIMOLI-YAWEROWE&T BUILDING W JUAN CAMURN O, GALIFORMA iml Lm u Aml xw LOU 1w TJwl IM2 101 Yell Yam Pso)ae1 Reteweuas 4150,00 OmpAndx Ancn*d Safgla Irt Ktg 1= Tft kran Orad 1,144 000 Ctat1U WA Apsr" Pmd;ipdim Payawts _ (231.750) Het Amaatt Qaadto Apauy 1!(78.256 Pdalria[Grcmtnaorne 2]O.DaO Z81,7O0 2a3,aaa 904,70 316,43D 32&,fi0a 142,1#10 355,SOU 47O,8o0 335.6aD Lw Varancy4Colecdm (26,300) (14AD) (14,7041 (15,20x) {15,80) 116,$0) {17,t0Oy (17,&70) NO) (19910) Gmtslactane M,K*i 297,800 276,100 28950 301,P00 313,100 326,700 348.700 3529:0 368.300 ' pWakq E LkalimbtnadmaEvEv 133,000! (34AQ) (35,00) 136:100) (37,204) ia8,30a) 139,484) 440.6x4) (41,X4) (43,400) Iuaprre, {7,530) (6,W) 0.3001 (8,700) (9.0m) (9.400# 89=) ;18 01 (10,60) (31.00) Resm1es I= um L.}1311 = a.�Q' 1 am 11» 1 Lm = ToWOgralinp bposes (41,8(10) 443,306) (44,600) 146,104) {47,5001 (49,00] (56,5001 (52,100) N,704) (56 40D) Net Operttirp [no" 208, 0 224.300 23 no 20.400 253.600 264.100 276,Tt1G 288.800 228.606 310,400 Daea Cash 4,G01004 t'a+cnard [cnsida�vit Paynant EB6OA0} Paftiapm Cots 3.051.00 _ PaniciWtPrt*rodkoun TA 213,570 213.570 213,570 233.570 213,570 213,570 213570 215,570 213,570 213.570 PaynanlaiAcc MRetem 0 4.770 0 0 0 c a 0 0 0 pislf ;t4ls lncane a 5,980 20,130 79,830 40,038 50,634 81.634 73,0134 85,030 97 334 Agefry Pwdcipaien Pa3merd 5a81i, 0. (2,960) (10,0%) 114,9153 {(0.015) (25,265} (30,3151 536,9151 (42,515) (448651 PwdcOW Ras!&W Cash Flea 0 2,980 10,065 14,915 2x.015 25.7!35 90,315 36315 42,51$ 46:665 memo. kmved Pa+♦icipanl Rolm 4770 0 0 8 0 0 a a 0 0' PromitmNote PFBar.A &5OP00 Aesuad 5m* Interest LOX la.aa4 19,000 19,000 1000 10,00 *,00 19'am 18,004 10.000 19.00 hwrt nM Mata Prbapi 4150,00 OmpAndx Ancn*d Safgla Irt Ktg 1= Tft kran Orad 1,144 000 Ctat1U WA Apsr" Pmd;ipdim Payawts _ (231.750) Het Amaatt Qaadto Apauy 1!(78.256 Ntpuld by'. "videam AmociLm, IK Flmn VagwoMd-NOCahFla;17(11!.'2x8,KR EXHIBIT A-3 TO ATTACHMENT NO.7 DOCSOC/ 1292194v l 61622299-0086 ATTACHMENT NO, 8 DEED OF TRUST WITH ASSIGNMENT OF RENTS (SHORT FORM) RECORDING REQUESTED BY AND WHEN RECORDED MAIC, TO AND SEND TAX STATEMENTS TO: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attention; Space Above This Line :For Recorder's Use This document is exempt front the payment of a recording fee pursuant to Government Cade Section 27383. DEED OF TRUST WITH ASSIGNMENT OF RENTS (SHORT FORM) This DEED OF TRUST is made as of , 200_ between 26755 VERDUGO LLC, a California limited liability company ("Trustor"), whose address is 26755 Verdugo Street, Suite 200, San .Tuan Capistrano, California 92675, TITLE COMPANY ("Trustee"), and the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Beneficiary"). WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, that property in the City of San Juan Capistrano, County of Orange, State of California, described as; SEE EXHIBIT "A" ATTACHED HERETO AND ,MADE A PART HEREOF. together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of securing (1)that certain Promissory ]note more particularly described below, executed and delivered pursuant to aro. Owner Participation Agreement between Trustor and Beneficiary dated as of '200_ (the "Agreement"); a copy of the Agreement is on file with the Beneficiary as a public record. All capitalized terms not defined herein shall have the meanings established therefor under the Agreement. This Deed of Trust secures payment under that certain promissory note dated as of 204_, made by Trustor in favor of Beneficiary in the principal sura of U.S. $950,000.00 (the "Promissory Note"), and extensions or renewals thereof with the balance of the indebtedness, due and payable on occurrence of ars event of acceleration as defined in the Promissory Note,. (2) the performance of each agreement of Trustor incorporated by reference or contained herein, the: default under any of which shall constitute a default hereunder, (3) payments, if any, otherwise due and payable under the; Agreement, (4) payment of additional sums and interest thereon which may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by ATTACHMENT NO. 8-1 UCJCSOC"1292194v [6/022299-0086 this Deed of Trust, and (5) performance under Exhibit "B" which is attached hereto and incorporated herein by reference. To protect the security of this Deed of Trust, and with respect to the property above described, Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the Fictitious dived of trust recorded in Orange County August 17, 1964, and in all other counties August 18, 1964, in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, namely. COUNTY HOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY f3t5OK PAGE Alameda 1288 556 Kings 858 7t3 Placer 1428 179 Sierra -1 8 t87 Alpine 3 130-31 Lake 4557 114 Plumas 166 1307 siskiyau 516 762 McFarlane 133 438 Lassen 19.2 367 Riverside 3779 147 solano t287 66,21 Butte 1330 513 Los Angeles T3878 874 Sacramento 51139 124 soruarna 2%7 427 Calaveras 185 338 Madera 911 136 San Bcnitn 3110 405 Slanislaus 1470 56 . Colusa 323 391 Mann 1849 1.22 S, Bernardino 6213 768 surfer 655 585 Contra 4684 1 Mariposa 90 453 S. Ftarleisco A�804 596 Tehama 457 183 C051a Rel Norte 101 549 Mendocino 667 99 S, 3oayuin 2855 283 Trinity 108 595 EI Dorado 704 635 Merced 1660 753 S Luis Obispo 1311 137 Tulare 2510 108 Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237 Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16 Imperial 11a9 701 Napa 704 742 sante Cruz 1638 6107 Yuba 398 693 lnyo 165 672 Nevada 363 94 Shasta 800 633 Kern 3156 690 Orange 7182 18 San Diego 1964 149734 Scrics 5 shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and provisions contained in said subdivisions A and B thereof (identical in all counties, and printed on pages 3 and 4 hereof) are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does not exceed the maximum allowed by law. The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to hire at his address hereinbefore set forth. IN WITNESS WHEREOF, Trustor has duly executed this Deed of Trust as of the date first above written. "Trustor" Trunto" 26755 VERIIUGO, LLC, a California limited liability company By: Its, ATTACHMENT NO. 8-2 DOCSOCf 1292194v 16!022299-0086 EXHIBIT A TO ATTACHMENT NO.8 LEGAL DESCRIPTION Lot 4, of Tract 134, in the City of San .Tuan Capistrano, County of Orange, State of California, as per map recorded in Book 11, Mage 23 of Miscellaneous daps, Records or Orange County, California EXHIBIT A-1 TO ATTACHMENT NO. 8 DOCSOC 1292194v 161022299-0086 EXHIBIT B TO ATTACHMENT NO. 8 RIDER TO DEEB OF TRUST Exhibit B to Deed of Trust with Assignment of Rents dated as of , 200_ ("the "Beed of Trust"), executed by 26755 Verdugo LLC, a California limited liability company, , as "Trustor", to Company, a California corporation, as "Trustee", for the benefit of the San Juan Capistrano Community Redevelopment Agency, a public body, corporate and politic, as "Beneficiary" 1. DEFAULT. A default or breach under any of the following shall, at Beneficiary's option, constitute a default under this Deed of Trust: (a) A default under that certain Owner Participation Agreement, executed by Trustor as Participant and Beneficiary, as Agency; (b) A default under any other deed of trust encumbering the Site. 2. DUE ON SALE CFL ENCUM13RANCE. In the event of any Transfer (as defined below) of the Site, or any portion thereof or interest therein, Beneficiary shall have the absolute right. at its option, without prior demand or notice, to declare all sums secured hereby immediately due and payable. As used herein, the term "Transfer" means and includes the direct or indirect sale, transfer, conveyance, mortgage, further encumbrance, assignment, or other alienation of the Site, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract, sales agreement or similar instrument affecting all or a portion of the Site, granting of an option to purchase any portion of or interest in the Site or any interest therein, or the lease of all or substantially all of the Site or of all or substantially all of the improvements situated on the Site. Failure of beneficiary to exercise the option to declare all sums secured hereby immediately due and payable upon a Transfer will not constitute waiver of the right to exercise this option in the event of any subsequent Transfer. EXHIBIT B-1 TO ATTACHMENT NO, €7OCS00I 292194v 161022299-0086 ESTATE OF CALIFORNIA COUNTY OF On , before me, personally appeared } ss. } (Print Name of Notary Public) , Notary Public, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/shelthey executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the Mate of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary Public OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this farm. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer Tiile(s) ❑ Partner(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Gonservator ❑ Other: Signer is representing. Name Of Person(s) Or Entity(ies) DOCSOC/ 1292194 v 16/(122299-(1(186 DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document Number Docurnents 5 gacr(s) Otitar Than Named Above STATE OF CALIFORNIA ) ss. COUNTY OF ) On , before me, , Notary Public, (Print Name of Notary Public) personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/art; subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WIT"NESS my hand and official seal, Signature of Notary Public OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer ❑ Partner(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian!Conservator Other: Signer is representing: Mame Of Person(s) Or Cntity(ies) DOCSOCII 292194v 1161022299-0086 DESCRIPTION OF ATTACHED DOCUMENT Tttie Orr Tyke Of Document Number Of Pages Date Of Documents Othcr Than NaeKd Above CRA 3/15/2011 AGENDA REPORT B3 TO: Joe Tait, Executive Directo FROM: Cindy Russell, Finance Officer SUBJECT: Consideration of Amendment to Owner Participation Agreement with 26755 Verdugo, LLC (Paseo De Verdugo) RECOMMENDATION By Motion, and per previous Agency Direction, adopt the Resolution approving the First Amendment to Owner Participation Agreement providing additional financial assistance for the Paseo de Verdugo project (26755 Verdugo, LLC) SITUATION On February 17, 2009, the Community Redevelopment Agency (Agency) approved an Owner Participation Agreement (OPA) to provide the Paseo De Verdugo project financial assistance in the form of a $950,000 simple interest loan. In July 2010, the project owner and development applicant, Eric Altman, made a request to the Agency for additional financial assistance for the project (Attachment 5). The request was based on actual bids for construction received based on the final project plans. The City's economist, Keyser Marston and Associates (KMA) reviewed the updated development cost information and prepared an updated analysis dated September 30, 2010 (see Attachment 4, page 4). KMA indicated that the increased costs of development along with a lower net leasable area have increased the calculated feasibility gap on the project from $1,086,000 to $1,698,000, an increase of $612,000. The revised calculated feasibility gap was $748,000 larger than the originally approved loan amount. On November 2, 2010, the Agency Board of Directors considered the request for additional assistance and updated feasibility surplus/(gap) analysis prepared by KMA. At that meeting, the Agency Board of Directors voted 3-2 (Attachment 3) to approve the following: "Provide the additional $748,000 loan with the proviso that upon completion of the project, the project feasibility gap be calculated based upon the actual audited construction cost. If the actual gap is lower than the reviewed estimated gap of $1,698,000, then the final loan assistance amount will be based on the final calculated gap less the difference between the originally calculated gap of $1,086,000 and the original loan amount of $950,000, or $136,000 (the final loan amount will be the calculated actual gap less $936,000)" Agenda Report Page 2 March 15, 2011 The amendment has been prepared (Attachment 2) and is presented to the Agency for consideration. The amendment includes language outlining the total development costs and supportable investment components necessary to calculate the final gap on the project. Additionally, the loan disbursement milestones have been updated based on the new loan amount The updated schedule covers approximately 26.5% of the total loan amount within the first two milestones. To date, the project has drawn $182,433.14, which includes Transportation Corridor Agency (TCA) and Capistrano Unified School District (CUSD) fees, in loan proceeds based on the original milestones. The project has not drawn the remainder of the loan proceeds based on the original milestones pending the approval of this amendment. Pending the completion of this amendment, the City Council, on November 16, 2010 authorized the issuance of the building permits and deferral of the fees on the project until the commencement of construction or six months whichever occurred sooner. Building permit fees, in the amount of $132,423.31 are due no later than May 16, 2011. Based on the amendment, the amount available to be drawn at this time would be $276,566.86. Based on the Agency Board of Directors action taken on November 2, 2010, staff recommends the Agency Board of Director adopt the resolution (Attachment 1) approving the First Amendment to the Owner Participation Agreement with 26755 Verdugo, LLC (Paseo de Verdugo). I =1-L«I(HZ�I11 17 The Paseo de Verdugo project began the entitlement process with the City in 2006 and discussions with Agency staff regarding financial assistance for the project in 2007. KMA completed the original financial feasibility analysis in November 2007 identifying a financial feasibility gap of $1,086,000 on the project. The original pro forma was based on a project with net leasable area of 8,700 square feet. On June 1, 2008, Berrington made an official request for Agency assistance on the project for the $1.09 million. On February 17, 2009, the Agency approved the OPA. On April 15, 2008 the City Council approved the Paseo de Verdugo project pursuant to Architectural Control (AC) 06-012 and Resolution 08-04-15-03. The project is a substantial addition/remodel of an existing building that originally proposed 11,811 square feet on a 12,675 square foot lot located at 26755 Verdugo Street . The final approved project has a net leasable area of approximately 8,000 square feet and a more complex design than the original pro forma project. In response to plans submitted by the applicant, on November 30, 2009, the Community Development Department administratively approved a business friendly Architectural Control Modification in conformance with the Municipal Codes that authorized the following: Agenda Report Page 3 March 15, 2011 Increased building height from 25 feet to 27 feet (to help screen roof equipment), Authorized parking requirements (per the April 15, 2008 Council direction), and Altered and reduced building area to 10,026 sq. ft. (less 1,785 sq. ft due to more detailed calculations and design work undertaken by the applicant). COMMISSION REVIEW AND RECOMMENDATIONS FINANCIAL CONSIDERATIONS Upon City Council approval of the project on April 15, 2008, the Council directed staff not to charge the applicant any additional developer deposit fees. A cost center was created to track staff time and to date staff time expenditures are approximately $18,784.16. The Agency has provided the applicant approximately $182,433.14 in funding to date pursuant to the OPA. Funds in the amount of $950,000 were originally included in the FY 2009110 Agency Capital Improvement budget. $150,000 was disbursed last fiscal year and approximately $32,000 has been disbursed this fiscal year to date, leaving approximately $768,000 remaining to fund the $276,000 that would be due under the new milestone schedule. Based on discussions with the developer, the remainder of the $276,600 will be disbursed this fiscal year with the remainder of the loan amount anticipated to be released in FY 2011112 based on the milestones. Therefore, Staff will update the Agency's Capital Improvement Fund Budget to reflect loan amounts of $300,000 for FY 2010111 and the remainder $1,248,000 in FY 2011112 By Motion, and per previous Agency Direction, adopt the Resolution approving the First Amendment to Owner Participation Agreement providing additional financial assistance for the Paseo de Verdugo project (26755 Verdugo, LLC) Respectfully submitted, r 4 1 1 Cindy Resell, Finance Officer Attachments. Agenda Report Page 4 March 15, 2011 1. Resolution Approving an Amendment to Operating Covenant and Restrictive Covenants Between the Agency and 26755 Verdugo, LLC 2. First Amendment to Owner Participation Agreement 3, Community Redevelopment Agency Meeting Minutes dated November 2, 2010 4. November 2, 2010 Agenda Report regarding Status of Paseo de Verdugo (Vaquero West) and Request for Additional Financial Assistance 5. July 7, 2010 Letter from Eric Altman A RESOLUTION OF THE SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY APPROVING AN AMENDMENT TO OPERATING COVENANT AND RESTRICTIVE COVENANTS BETWEEN THE AGENCY AND 26755 VERDUGO, LLC AND MAKING CERTAIN OTHER FINDINGS IN CONNECTION THEREWITH WHEREAS, the San Juan Capistrano Community Redevelopment Agency ("Agency") is a community redevelopment agency duly organized and existing under the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ("CRL"), and has been authorized to transact business and exercise the power of a redevelopment agency pursuant to action of the City Council ("City Council") of the City of San Juan Capistrano ("City„); and WHEREAS, the existing Redevelopment Plan (the "Redevelopment Plan") and the boundaries of the Redevelopment Plan (the "Project Area") were duly established by ordinances of the City Council; and WHEREAS, Agency is vested with the power to implement the Redevelopment Plan and to carry out its goals and objectives of the Agency, including without limitation the goals and objectives adopted by the Agency's implementation plan (the "Implementation Plan") pursuant to the CRL; and WHEREAS, the Agency is authorized and empowered by the CRL to enter into agreements for the acquisition of real or personal property, to receive consideration for the provision by the Agency of redevelopment assistance and to make and execute contracts and other instruments necessary or convenient to the exercise of its powers; and WHEREAS, 26755 Verdugo, LLC ("Developer") is a California limited liability company duly organized under the laws of the State of California and experienced in the construction and rehabilitation of commercial buildings; and WHEREAS, the Agency and Developer have entered into an Owner Participation Agreement dated as of February 17, 2009 ("Agreement"), pursuant to which the Agency has agreed to provide the Developer funds in the form of a loan ("Covenants Loan") to assist in the construction of additions to and remodeling of an existing building located at 26755 Verdugo Drive, San Juan Capistrano, California ("Paseo de Verdugo Project"); and WHEREAS, Section 301 of the Agreement provided that the Covenants Loan to be provided to the Owner by the Agency was to be in the amount of Nine Hundred Fifty Thousand Dollars ($950,000), and pursuant to Section 302 of the Agreement, the Covenants Loan was to be disbursed in portions as Owner reached certain project milestones; and ATTACHMENT 1 WHEREAS, pursuant to the Agreement, and in consideration of Agency's agreement to make the Covenants Loan to Owner, Owner executed the Promissory Note and Deed of Trust, both dated February 20, 2009, which Deed of Trust was recorded in the official records of Orange County, California on March 5, 2009 as Instrument No. 2009000103451; and WHEREAS, the amount of the Covenants Loan was originally intended and calculated by the parties to make the Paseo de Verdugo Project more feasible by partially off -setting the gap between the cost of development and the expected returns generated by leasing space at the completed Paseo de Verdugo Project (the "Feasibility Gap„); and WHEREAS, subsequent to the execution of the Agreement, Promissory Note, and Deed of Trust, the parties have recalculated the Feasibility Gap and found that it is up to Seven Hundred Forty Eight Thousand Dollars $748,000.greater than previously expected, due to increased construction costs and a decrease of forecasted lease revenues arising from a reduction in the total leaseable space; and WHEREAS, the Agency entered into the Agreement in order to further the Agency's objectives of eliminating blight in the Project Area, increasing employment opportunities within the Project Area, and generating additional taxes with which the community can increase and assist in providing an environment for the social and economic growth and well-being of the citizens of the City; and WHEREAS, in furtherance of these objectives, the parties desire, by execution of a First Amendment to Owner Participation Agreement ("Amendment") to increase the amount of the Covenants Loan to an amount sufficient to ensure that construction of the Paseo de Verdugo Project may be successfully completed; and WHEREAS, the Amendment and the implementation thereof are in the vital and best interest of the City and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements under which the redevelopment of the Project Area has been undertaken; and WHEREAS, the Agency has adopted the Implementation Plan pursuant to CRL Section 33490, which sets forth the objective of eliminating blighting conditions including impaired investments; and WHEREAS, by providing for the operation of the Paseo de Verdugo Project, the Amendment will assist the Agency in meeting the development policies and objectives set forth in the. Redevelopment Plan and Implementation Plan, specifically the goal of reducing blighting economic conditions by encouraging new investment in the community through facilitating the use of underutilized and vacant buildings; and WHEREAS, pursuant to the CRL, the Agency is authorized to acquire the "Covenants" as defined in the Agreement; and 2 WHEREAS, on , 2011, the Agency held a duly noticed public meeting on the proposed Amendment, at which time the Agency reviewed and evaluated all of the information, testimony, and evidence presented during the public meeting; and WHEREAS, all actions required by all applicable law with respect to the proposed Amendment have been taken in an appropriate and timely manner; and WHEREAS, the City Council has previously determined, in its adoption of the ordinance approving the Redevelopment Plan, that the Site was blighted; and WHEREAS, the Agreement will assist in the elimination of blight by providing for the operation of the Paseo de Verdugo Project; and WHEREAS, the Amendment will not result, in physical impacts to the environment as it simply amends financial aspects of the Agreement; and WHEREAS, the. Agency has duly considered all terms and conditions of the proposed Amendment and believes that ensuring the completion and operation of the Paseo de Verdugo Project is in the best interests of the City of San Juan Capistrano and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. NOW, THEREFORE, BE IT RESOLVED by the San Juan Capistrano Community Redevelopment Agency as follows: I. Each of the foregoing recitals is true and correct. 1 The Agency hereby finds and determines that the operation of the Paseo de Verdugo Project, pursuant to the Agreement as amended by the Amendment will assist in the elimination of blight within the Project Area by providing for the proper reuse of a portion of the Project Area, which was previously declared blighted and encourage the redevelopment of nearby blighted properties. 3. The Agency hereby finds and determines that the Amendment is consistent with the provisions and goals of the Redevelopment Plan and Implementation Plan. 4. The Agency hereby finds that the Amendment will not result in physical impacts to the environment as it simply amends financial aspects of the Agreement. 5, The Agency hereby approves the Amendment between the Agency and Developer, in the form of the Amendment, which has been submitted herewith. b. The Agency Executive Director and the Agency Secretary are hereby. authorized to execute and attest the Amendment, including any related attachments, on behalf of the Agency. Copies of the final form of the Amendment, when duly executed and attested, shall be placed on file in the office of the City Clerk. 3 7. The Agency Executive Director (or his duly authorized representative) is further authorized to implement the Amendment and take all further actions and execute all documents referenced therein and/or necessary and appropriate to carry out the Amendment. The Agency ExecutiveDirector (or his duly authorized representative) is hereby authorized to the extent necessary during the implementation of the Amendment to make technical or minor changes thereto after execution, as necessary to properly implement and carry out the Amendment, provided the changes shall not in any manner materially affect the rights and obligations of the Agency. 8. The Agency Secretary shall certify to the adoption of this Resolution. 0 day of March, 2011. O N Al 21 I'vw Laura Freese, Chairman Maria Morris, Agency Secretary APPROVE C .A, Tom -FORM: Thomas P. lark Jr., Stradling Yocca Carlson & Rauth Agency Sounsel 5 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) I, , Secretary of the San Juan Capistrano Community Redevelopment Agency, hereby certify that the above and foregoing Resolution was duly and regularly adopted by the Agency at a regular meeting thereof held on the day of 2011, and that it was so adopted by the following vote of the Agency: AYES: NOES: ABSENT: IN WITNESS WHEREOF, I have hereunto set my band and seal this day of 2011. Maria Morris, Agency Secretary L FIRST AMENDMENT TO OWNER PARTICIPATION AGREEMENT This FIRST AMENDMENT TO OWNER PARTICIPATION AGREEMENT ("First .Amendment") is made and entered into as of , 2011, by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), and 26755 VERDUGO LLC, a California limited liability company ("Owner"). RECITALS A. The Agency and the Owner have entered into an Owner Participation Agreement dated as of February 17, 2009 ("Agreement"), pursuant to which the Agency has agreed to provide the Owner funds in the form of a loan ("Covenants Loan") to assist in the construction of additions to and remodeling of an existing building located at 26755 'Verdugo Drive, San Juan Capistrano, California ("Property"). B. Section 301 of the Agreement provided that the Covenants Loan to be provided to the Owner by the Agency was to be in the amount of Nine Hundred Fifty Thousand Dollars ($950,000). Pursuant to Section 302 of the Agreement, the Covenants Loan was to be disbursed in portions as Owner reached certain Project milestones. C. Pursuant to the Agreement, and in consideration of Agency's agreement to make the Covenants Loan to Owner, Owner executed the Promissory Note and Deed of Trust, both dated Febmary 20, 2009. The geed of `frust was recorded in, the official records of Orange County, California on March 5, 2009 as Instrument No. 2009000103451. ` D, The amount of the Covenants Loan was originally intended and calculated by the parties to make. the Project more feasible by partially off=setting the gap between the cost of development and the expected returns generated by leasing; space at the completed Project (the "Feasibility Gap"). Subsequent to the execution of the Agreement, Promissory Note, and Deed of Trust, the parties have recalculated the Feasibility Gap and found that it is up to Seven Hundred Forty Bight Thousand Dollars $748,000 greater than previously expected, due to increased construction costs and a decrease of forecasted lease revenues arising from a reduction in they total leaseable space. E The Agency entered into the Agreement in order to further the Agency's objectives of eliminating blight in the .Project Area, increasing employment opportunities within the Project .Area, and generating additional taxes with which the community can increase and assist in providing an environment for the social and economic growth and well-being; of the citizens of San Juan Capistrano ("City"). In furtherance of these objectives,the parties desire to increase the amount of the Covenants Loan to an amount sufficient to ensure that construction of the Project may be successfully completed. F. This .First Amendment and the implementation hereof are in the vital and best interest of the City and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements under which the redevelopment of the Project Area has been undertaken. DOC8001462672v3/022299-0086 1 of 12 ATTACHMENT 2 NOW, THEREFORE, the paries agree to amend the Agreement as follows; 1. Loan Amount. The amount of the Covenants Loan is hereby increased from Nine Hundred Fifty Thousand Dollars ($950,000) to an amount up to but not to exceed One Million Six Flundred Ninety Eight Thousand Dollars, ($1,69$,000) (such amount the "Loan Maximum"). The final amount of the. Covenants Loan shall be the lesser of (x) an amount equal to the final audited Total Development Costs of the Project, reduced by the Supportable Private Investment, and further reduced by One Hundred Thirty Six Thousand Dollars ($136,000), or (y) the Loan Maximum. (a) "Total Development Costs" means, with respect to the Project, the land acquisition cost; actual demolition costs; costs of constructing offsite and onsite improvements, building shell, and tenant improvements; architecture, engineering, and consulting costs; costs of public permits and fees; costs associated with taxes, insurance, legal and accounting services; marketing and leasing costs; development management costs; financing costs associated with carrying the land and paying interest through construction; loans points and fees; and other actual and direct third -party pre -development costs. (b) "Supportable Private Investment" means, with respect to the Project, the, Stabilized Net Operating Income divided by a threshold return on investment of Seven and Twenty One flundreths Percent (7.21%). (i) `:Stabilized Net Operating Income" means gross monthly leasing income derived from the Project reduced by monthly operating expenses, which includes any unreimbursed office expenses, management costs, and operating; & capital reserves. 2. Condition of Disbursement. The table of figures in Section 302 of the Agreement shall be replaced with the following: Milestones Disbursement Amount Advance for Plans and Construction Documents $200,.000 Building Permit Issuance $250,000 Foundation Inspection Completion ry^rv� $275,000 Roof Sheathing Inspection m $225,000 m Final Framing/Rough Metal Electrical, Plumbing Inspection i $275,000 Final Drywall Inspection $275,000 Shell Completion $198,000 2. Loan Fortification Documents. In connection with the Agency's increase of the principal amount of the Covenants Loan to the Owner, the Owner shall execute and deliver to the Agency a First Amondinent to Promissory Note, in the form attached hereto as Exhibit A and DOC;SOC"/1462672v31022299-0086 2 of 12 incorporated herein, and a First Modification to Deed of Trust, in the forma. attached hereto as Exhibit B and incorporated herein. The first Modification to Deed of Trust shall be recorded against the Site in the official records of Orange County, California. 3. No Other Changes. Except as expressly provided to the contrary in this First Amendment, the terms of the Agreement, the Promissory Note, the Deed of Trust, and any other documents executed pursuant to the Agreement, shall remain in full force and effect as written. All capitalized terms used but not defined herein shall have the meaning given to such terms in the Agreement. IN WITNESS WHEREOF, the parties hereto have caused this .first Aanendrnent to be executed by duly authorized representatives as ofthe day and year first written above. 5411 "1, REM 26755 VERD GO LLC, a California limited liability company IItts AGENCY: SAN JUAN CAP>ISTRAN€3 COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic By: ATTEST: Secretary APPROVED AS TO FORM: Stradling.Yocca Agency Special DOCSOC/ 14626'72v3{022299-0086 Chairman STATE OF CALIFORNIA } } ss. COUNTY OF _ ) On �- --- before me, Jet -W- I .W � � r�; , Notary Public, personally appeared �1 e `"<. 4 /.. ;�-xA7 , who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) Ware subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY Linder the laws of the. State of California that the foregoing paragraph is true and correct. WITNESS my hand and officialseal S� ' "TORE OF NOTARY PUBLIC DOC 800146267201022299-0086 4 of 12 EXHIBIT "A" FIRST AMENDMENT TO PROMISSORY NOTE This FIRST AMENDMENT TO PROMISSORY NOTE (the "Amended Note") is made and entered into as of , 2011, by and between the SAN JUAN CA.PISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), and 26755 VERDUGO LLC, a California limited liability company (the "Owner"). I. Agreement. This Amended Note is given in accordance with the Owner Participation Agreement executed by the Agency and the Owner, dated as of February 17, 2009 (the "Agreement"), as amended by that certain First Amendment to Owner Participation Agreement, dated _'2011 (the "First Amendment"'). The rights and obligations of the Owner and the Agency under this Amended Note shall. be governed by the Agreement as amended by the First Amendment, and by the additional terms set forth in this Amended Note, The Promissory Note executed by Owner dated February 20, 2011, shall continue in full force and effect, except that the principal amount owing thereunder is hereby increased from Nine hundred Fifty Thousand Dollars ($950,000) to an amount up to but not to exceed One Million Six hundred Ninety Eight Thousand Dollars ($1,698,000) (such amount the "Loan Maximum"), The final amount of the Covenants Loan shall be the lesser of (x) an amount equal to the final audited Total Development Costs of the Project, reduced by the Supportable Private Investment, and further reduced by One hundred Thirty Six Thousand Dollars ($136,000), or (y) the Loan .Maximum, (a) "Total Development Costs" means, with respect to the Project, the land acquisition cost; actual demolition costs; costs of constructing offsite and onsite improvements, building shell, and tenant improvements; architecture, engineering, and consulting costs; costs of public permits and fees; costs associated with taxes, insurance, legal and accounting services; marketing and leasing costs, development .management casts; financing costs associated with carrying the land and paying interest through construction; loans points and fees; and other actual and,direct third -party pre -development costs. (b) "Supportable Private Investment" means, with respect to the Project, the Stabilized Net Operating Income divided by a threshold return on investment of Seven and Twenty One hundreths Percent (7.21 %). (i) "Stabilized Net Operating Income" means gross monthly leasing income derived from the Project reduced by monthly operating expenses, which includes any unreimbursed office expenses, management costs, and operating & capital reserves. 2. No Other Amendment. Except as expressly provided to the contrary in this Amended Note, no other provision of the Promissory Note shall be amended or modified by this Amended Note. 3. Terms. Any terms not separately defined herein shall have the same meanings as set forth in the Agreement, as amended. EXHIB IT A- I DOCSOCII46267M/022299-0086 5 of 12 OWNER: 26755 VERDUGO LLC, a California limited liability company By:_ `f Its: AGENCY. SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic By: Chairman EXHIBIT A-2 DOCS00 I 462672v3/022299-0086 STATE OF CALIFORNIA ) ss. COUNTY OF On � Z—O / / before me, Notary Public, personally appeared 6Z-16- �_ , who proved to me on the basis of satisfactory evidence to be the person(s) whose names($) Ware subscribed to the within instrument and acknowledged to me that he/she/they executed the same in hisOhez/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official sea] INATURE OF NOTARY PUBLIC 3' �r DOCSOC11462672v3/022299-0486 7 of 12 EXHIBIT "B" FIRST MODIFICATION TO DEED OF TRUST RECORDING REQUESTED BY; AND W14ENN RECORDED RETURN TO - Sara Juan Capistrano Community Redevelopment .Agency 32404 Paseo Adelanto San Juan Capistrano, California 92675 AND WHEN RECORDED, MAIL TO Maria Morris, City Clerk. City of San Juan Capistrano 32400 Paseo Adelanto . San Juan Capistrano, California 92675 _... __ Mis document is exempt from payment of a . - a rocarding fcc pursuant to Govemment Code Section 27383 FIRST MODIFICATION OF DEED OF TRUST This FIRST MODIFICATION OF DEEM OF TRUST ("First Modification") is made as of 2011, among the trustor, 26755 VERDUGO LLC, a California limited liability company ("Trustor"), whose address is 26755 Verdugo Street, Suite 200, San Juan Capistrano, California 92675, FIDELITY NATIONAL TITLE COMPANY, whose address is 1300 Dove Street, Suite 310, Newport Beach, California 92660 ("Trustee"), and the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), whose address is 32400 Paseo Adelanto, San Juan Capistrano, California 92675, as Beneficiary. RECITALS A. Pursuant to the Owner Participation Agreement executed by the Agency and the Owner, dated as of February 17, 2009 ("Agreement"), the Beneficiary was to provide a loan to the Trustor in the amount of Nine Hundred Fifty Thousand Dollars ($950,000) ("Covenants Loan") to be used towards the development of certain real property located at 26755 Verdugo Street, San Juan Capistrano, California and more particularly described in Attachment No. 1 attached hereto and incorporated herein ("Site"). B. In consideration for the Covenants Loan, the Trustor has executed that certain Promissory Notre (the "Promissory Note") dated as of February 20, 2009, in favor of the Beneficiary, in the principal. amount of Nine Hundred Fifty Thousand Dollars ($950,000). EXHIBIT B-1 DOCSOCII462672v3i022299-0086 8 of 12 C. The Promissory Note is secured by a Deed of Trust, dated as of February 20, 2009, and was recorded in the official records of Orange County, California on March 5, 2009 as Instrument No. 2009000103451 (the "Deed of Trust"). D. Trustor and Beneficiary have entered into a First Amendment to Owner Participation. Agreement and a First Amendment to Promissory Note, both of which are dated as of '2011, and which increase the original, principal amount of the .Promissory Note to an amount up to but not to exceed One Million Six .Hundred Ninety Eight Thousand Dollars ($1,698,000). E. Trustor and .Beneficiary now desire, by this First Modification, to modify the Deed of Trust to provide that the Deed of Trust secures payment of the Promissory Note, as amended by the First Amendment to Promissory Note, in an amount up to but not to exceed One Million Six Hundred .Ninety Eight Thousand Dollars ($1,698,000), NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Trustor hereby modifies the Deed of Trust as follows: 1. Amendment to Promissory Note. All references in the Deed of Trust to the "Promissory Note" shall mean the Promissory Note, as amended by the First Amendment to Promissory Note. 2. Maximum Secured Amount. The original principal amount secured by the Deed of Trost is hereby amended from Nine Hundred Fifty Thousand Dollars ($950,000) to an amount up to but not to exceed One Million Six Hundred Ninety Eight Thousand Dollars ($1,698,000). 3. No Other .Modifications. Except as expressly provided to the contrary in this First Modification, no other provision of the Deed of Trust shall be modified or amended. by this instrument. EXHIBIT B-2 DOCSOCil462672v3l022299-0086 9 of 12 TN WITNESS WHERT;OF, `frustor and Beneficiary have executed this First Modification as of the date set forth above. TRUSTOR 26755 VER.DUGO LLC, a California limited liability company BY: Its: ACCEPTED BY AGENCY AS BENEFICIARY: SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic IN ATTEST: Secretary APPROVED AS TO FORM: Stradling Rocca Carlson & Rauth Special Counsel to Beneficiary Chairman EXHIBIT B-3 DOCSOC/ I 462672v3/022299-0086 10 of 12 ATTACHMENT A LEGAL DESCRIPTION All that certain real property in the County of Orange, State of California, described as follows: Lot 4 of Tract 135, in the City of San Juan Capistrano, County of Orange, State of California, as per leap recorded in Book 11, Page 23 of Miscellaneous Maps, Records of Orange County, California. ATTACHMENT NO. 1 TO EXHIBIT B DOCSOC1146267201422299-0086 11 of 12 STATE OF CALIFORNIA ) ss. COUNTY OF 1 ) On - f/ before me, Jew y z°' 'd e!'*, - , Notary Public, personally appeared ; � _ � _ > who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capaeity(ies), and that by hislher./their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. 1 certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal JE1 i TABBACK COMM. ORMWOOMN ST TURE OF NOTARY PUBLIC � my CMM �C13,2012 DOC SOC/1462672v3/D22299-0086 12 4f 12 MINUTES November 2, 2010 SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY REGULAR MEETING CLOSED SESSION (5'1[1.8__5): None RECESS UNTIL 7:00 P.M. BUSINESS SESSION Chair Freese called the Regular Meeting of the Community Redevelopment Agency Board of Directors to order at 8:30 p.m. DIRECTORS PRESENT: Tom Hribar, Dr. Londres Uso, Mark Nielsen, Vice -Chairman Sara Allevato and Chair Laura Freese, DIRECTORS ABSENT: None Agenda items, are presented in the originally agendized format for the benefit of the minutes' reader, but were not necessarily heard in that order. CONSENT CALENDAR Board Action: Moved by Director Nielsen, seconded by Director Hribar and carried unanimously to approve item 1 as recommended by staff. 1. COMMUNITY REDEVELOPMENT AGENCY MINUTES -- REGULAR MEETING OF OCTOBER 19, 2010, APPROVED 2. $2001,000 IN COMMUNITY REDEVELOPMENT AGENCY 2008 BOND FUNDS FOR A SIDEWALK EXPANSION PROJECT TO BE REALLOCATED FROM AN EXISTING ACCOUNT, APPROVED (800.20) Nasser Abbaszadeh, Public Warks Director, responded to questions. Board Action: Moved by Director Hribar, seconded by Director Nielsen and carried unanimously to approve a $200,000 in Community Redevelopment Agency 2008 Bond Funds for a sidewalk expansion project to be reallocated from an existing account. PUBLIC HEARINGS: None BOARD ACTIONS: None 11-02-2010 BOARD DISCUSSION: None 1, DISCUSSION REGARDING STATUS OF PASEO DE VERDUGO (VAQUERO WEST) AND REQUEST FOR ADDITIONAL FINANCIAL ASSISTANCE (600.401) Cindy Russell, Finance Officer, provided a staff report and responded to questions. Public Comments: • Eric Altman, Applicant, provided a status update can the project and responded to questions from the City Council. Board Motion: Moved by Director Uso and motion failed for a lack of a second to provide an additional loan amount of $600,000 for the project, defer the City's building permits fees to allow the permit to be issued and front the funds from the Agency assistance for permit fees to outside agencies, as necessary. ROLL CALL: AYES: DIRECTORS: Uso NOES: DIRECTORS: Hribar, Nielsen, Allevato and Chair Freese ABSENT: DIRECTORS: None Board Action: Moved by Director Nielsen, seconded by Vice Chair Allevato and carried 3-2 with Director Hribar and Director Uso opposed to provide the additional $748,000 loam with the proviso that upon completion of the project, the project feasibility gap be calculated based upon actual audited construction cost. If the actual gap is lower than the revised estimated gap of $1,698,000, then the final Iran assistance amount will be based on the final calculated gap less the difference between the originally calculated gap of $1,086,000 and the original loan amount of $960,040, or $136,000 (the final loan amount will be the calculated actual gap less $136,00)0) ROLL CALL: AYES: DIRECTORS: Nielsen, Allevato and Chair Freese NOES: DIRECTORS. Hribar and Uso ABSENT: DIRECTORS: None Director Hribar requested a report on the "old fruit stand", for a possible affordable housing site. ADJOURNMENT: There being no further business,k Chair Freese adjourned the meeting at 9:02 p.m. to Tuesday, November 16, 2010, at 6:30 p.m. for a Closed Session and 6:34 p.m. for public Business Session, in the City Council Chamber. 2 11-032-2010 Respectfully MARIA MUM"MNCY S)ERETARY Approved: November 16, 2010 ► �� 1 .�wi LAURA .. 11-02-2010 CRA 11/2/2010 AGENDA REPORT El TOS Joe Tait, Executive Direct o ) FROM: Cindy Russell, Finance Officer Grant Taylor, Development Services Director SUBJECT: Status of Paseo de Verdugo (Vaquero West) and Request for Additional Financial Assistance RECOMMENDATION By Lotion, provide direction to staff regarding additional financial assistance for the Paseo de Verdugo project (26755 Verdugo, LLC) SITUATION On February 17, 2009, the Community Redevelopment Agency (Agency) approved an Owner Participation Agreement (OPA) to provide the. Paseo De Verdugo project financial assistance in the form of a $950,000 simple interest loan. The Agency has received a request from the project owner and development applicant, Eric Altman, of Berrington Properties.(Berrington) for additional financial assistance for the project. The request is based on actual bids for construction received based on the final project plans. The City's economist, Keyser Marston and Associates (KMA) reviewed the updated development cost information and prepared an updated analysis dated September 30, 2010. KMA indicates that the increased costs of development along with a lower net leasable area have increased the calculated feasibility gap on the project from $1,086,000 to $1,698,000, an increase of $612,000. Although, the calculated feasibility gap is $748,000 larger than the approved loan amount, Berrington is requesting an increase in their loan amount of $500,000 and a revised milestone schedule accelerating their receipt of loan proceeds in order to construct the project. The City also received a letter from Berrington dated October 21, 2010 requesting an extension of the plan checks pending the decision regarding additional financial assistance. The plan checks due to expire are as follows: Grading Permit 11/912010 Demolition Permit 11/11/2010 Building Permit 12/8/2010 California Building Code Section 105.3.2 Time limitation of application, states "An application for a permit for any proposed work shall be deemed to have been abandoned 180 days after the date of filing, unless a permit has been issued." tit}57V I ATTACHMENT 4 1 of 9 Agenda Report Page 2 November 2, 2010 The three (3) plan checks have all been approved earlier this year but no permits have been issued_ The Building Code authorizes the Building Official to grant a one-time extension of 180 days for issued and unexpired building permits but does not authorize such extension for. plan checks unless the municipality amends the administrative . section of the Building Code to authorize such extensions_ Unless the fees are paid and permits issued prior to plan check expiration, the applicant would have to resubmit plans and repay all plan check fees in full. (Staff notes that State wide, new Building Codes. standards will go into effect next year which could require some plan details and/or presently proposed construction to be altered if new plans are .prepared to year 2011 standards.) Permit fees are as follows: Grading Permit (City) $ 5,017.45 Demolition Permit (City) $ 1,970.89 Building Permit (City) $ 125,434.97 Transportation Corridor Authority (TCA) $ 28,868.66 Capistrano Unified School District (CUSD) 1 3,564.48 TOTAL $ 154.856.46 The OPA provides fora draw of $100,000 at building permit issuance to cover the costs of the building permits. However, Berrington has requested a decision from the Agency regarding additional funding prior to drawing any additional'funds on the loan and having building permits issued. BACKGROUND The Paseo de Verdugo project began the entitlement process with the City in 2006 and discussions with Agency staff regarding financial assistance for the project in 2007. KMA completed the original financial feasibility analysis in November 2007 identifying a financial feasibility gap of $1,086,000 on the project. The original pro forma was based on a project with net leasable area of 8,700 square feet. On June 1, 2008, Berrington mane an official request for Agency assistance on the project for the $1.09 million. Can February 17, 2009, the Agency approved the OPA, On April 15, 2008 the City Council approved the Paseo de Verdugo project pursuant to Architectural Control (AC) 06-012 and Resolution 08-04-15-03. The project is a substantial addition/remodel of an existing building that originally proposed '11,811 square feet on a 12,675 square foot lot located at 26755 Verdugo Street . The final approved project has a net leasable area of approximately 8,000 square feet and a more complex design than the original pro forma project. In response to plans submitted by the applicant, on November 30, 2009 the Community Development Department administratively approved a business friendly Architectural Control Modification in conformance with the Municipal Codes that authorized the following: 2 of 9 Agenda Report Page 3 November 2, 2010 • Increased building height from 25 feet to 27 feet (to help screen roof. equipment); • Authorized parking requirements (per the April 15, 2008 Council direction), and • Altered and reduced building area to 10,026 sq. ft. (less 1,785 sq. ft due to more detailed calculations and design work undertaken by the applicant).). COMMISSION REVIEW AND RECOMMENDATIONS None FINANCIAL CONSIDERATIONS Upon City Council approval of the project April 15, 2008, the Council directed staff not to charge the applicant any additional developer deposit fees. A cast center was created to track staff time and to date staff time expenditures are approximately $98,784.16. The Agency has provided the applicant approximately $150,000 in funding to date pursuant to the OPA. The FY 2010/11 Agency budget has approximately $4 million of funds available for future projects. Providing the additional assistance on the Paseo de Verdugo project will reduce the available funds to $3.5 million for future projects. RECOMMENDATION By Motion, provide direction to staff regarding additional financial assistance for the Paseo de Verdugo project (26755 Verdugo, LLC) Respectfully submitted, Cindy Rssell, Finance Officer Attachments: Respe ,ally Submitted, Grant Taylor, Development Services Director 1) Updated Financial Feasibility Surplus/(Gap) Calculation 2) Building Permits Fees 3) Building Code Sections 105.3.2 &'105.5 4) Letter from Applicant dated 10/21/10 rasa^_a.� 3of9 TABLE 1 ESTIMATED DEVELOPMENT COSTS MIXED USE PROJECT : 4,350 SF OF RETAIL t 4,3506F OF OFFICE MEXICO LINDOVAQUERO WEST BUILDING SAN JUAN CAPISTRANO, CALIFORNIA 1. Land + Land Related Costs .1 Land Acquisition Demolition Total Land + Land Related Costs It. Direct Cosfs2 Off Site Improvements On -Site Improvements s Building Shell Tenant Improvements Total Direct Costs IL Indirect Costs Architecture, Eng, & Consulting Public Permits & Fees 4 'saxes, Insurance, Legal & Accounting Marketing/Leasing Development Management Contingency Allowance Total Indirect Costs Ill. Financing Costs Land Carty During Construction a Interest During Construction s Loan Points & Fees 7 Pre -Development Costs Total Financing Costs 12,675 Sf Land $125 1 Sf Lane! ' $1,590,000 Allowance 25,000 12,675 Sf Land $127 ! S€ Land $1,615,000 Allowance $36,000 12,675 Sf Land $20 !Sf Land 251,000 8,700 Sf NRA $156 /Sf GBA 1,359,000 8,700 Sf NRA $31 /Sf NLA 272.000 8,700 S€ NRA $221) !Sf GBA $1,918,000 6.D% Direct Costs 8,700 Sf NRA $18 /Sf GBA 2.13% Direct Costs 8,7007 Sf NRA $6 ISf GBA 3.0% Direct Costs 5.0% Other Indirect Costs, Fxcl• Mgmt. $1,615,000 Financed $2,889,1x70 Financed $2,718,000 Financed $231,004 Allowance $115,€)130 153,000 38,000 52,000 58,000 1$,001) 7.9% Interest $128,000 7,9% Interest 124,0(70 2.00 Points 54,000 231,0011 $434,000 $537,000 IV. Total E]evelo ertt Costs 8,700 Sf NRA $518 /Sf CBA $:1,504,000 ' Assumes Developers estimate. Land area per City Staff report of 7117/07. 2 Fstimated by KMA, assumes a prevailing wage premium of 15%. s KMA estimate. Assumes Developer's estimate Land area per City Staff report of 7117107, Assumes a blended debt and equity rate. Based ori a 12 month holding period. Average outstanding balance is set at 100%, e Assumes a blended debt and equity rate. Based on an 10 month construction period. Average' outstanding balance is set at 65%. ' Based on net operating income, a 7011/o loan to value ratio and a 5.21 % blended capitaltzation rate. a Assumes Developer's estimate. Land area per City Staff report of 7117/07, Prepared by Keyser Marston Associates, tnc. �Ne name: +aquas west 2010: ATT_9 4 of 9 TABLE 2 ESTIMATED STABILIZED NET OPERATING INCOME MIXED USE PROJECT : 4,350 SF OF RETAIL t 4,350 SF OF OFFICE MEXICO LIN©OVAQUERO WEST BUILDING SAN JUAN CAPISTRANO, CALIFORNIA I. Grin' Ground Level - Retail 2nd Story - Office Potent€al Base Income of Income Reimbursable Operating Expenses Potential Gross Income (Less) Vacancy & Collection Allowantm IL Effective Gross Income 4,350 Sf NRR $2.50 [Sf/Month $130,500 4,360 Sf NRA $2.56 ISf/Month 133,600 8,700 Sf NRA $2,53 /Sf/Monih $264,100 8,700 Sf NRA $0.00 ISf 0 $264,900 511/0 Potential Gres Income (13204) $250,900 Ill. Operating Expenses 2 Unreimbursed Office Expenses 4,360 Sf NRA $8.04 /Sf ($34,800) Management 5% EGI (12,500) Operating & Capital Reserves 8,700 Sf NRA ($4.15} 18f (1,300) Total Operating Expenses 8,700 Sf NRA ($5.59) /Sf ($48,600) IV. Stabilized Net Operating Income $2tY2,3QQ Office rent is based on KMA`s recent survey of San Juan Capistrano rents and represents a weighted average, assLmed to be gross or modified gross rents. KMA utilized the average retail rent provided by the Agency. 2 KMA assurnptlom based on its experience with similar projects Prepared by: Kayser Mallon Associates. Inc. File name: vaquero west 2090; A3"r_B 5of9 TABLE 3 FINANCIAL FEASIBILITY SURPLUS I (GAP) CALCULATION MIXED USE PROJECT: 4,350 SF OF RETAIL + 4,350 SF OF OFFICE MEXICO LINDOVAQUERO WEST BUILDING SAN JUAN CAPISTRANO, CALIFORNIA 1. $upRortahle Private Investment Calculation Stabilized .Net Operating Income - See TABLE 2 $202,300 Threshold Return on Investment7.21% Supportable Private Itwestrnent $2.800,000 11, Financial Fqas%biilty .y.1RIus ! ICap-_ Calct9ation , Supportable Private Investment $2,806,000 (Less) Estimated Development Costs See TABLE 1 (4,504,000 III. Financfai Feasiblli Su tus I (Gap) 12,675 Sf Land $134) /Sf Land ($1,698,000) ' Based on KMA's estimate of Developer's existing project return. Prepared by: Keyser Marston Associates, Inc - piia name: vaquero west 2wa0 AT t_s 6of8 Project Name: Project Address'. Plan Check#-. City of San Juan Capistrano PROJECT FEES ino Paseo de Verdugo 26756 Verdugo St, SIO -0054 Engineering (Public Works) Development Fees Utility Department included in BP total OCFA fees due Dbno Permit Includes Dernotrecy Rep. 1,970.89 Misc, Fees Misc, Fees These fees bm payaDfe4o THE -CITY OF SAN JUAN CAPISTRANO These fees are payable'67-HIE TRANSPORTATION CORRIDOR AGENCY # These fees are payable to CAPISITRANO UNIFIED SCHOOL DISTRICT Demo deposits included in Demo Permit Fee . $ 1,750.00 (See Deiena Berens) Grading Surety Bond Amount included in Grading Permit total 2068.2 (See Deena Berens) - C & 0 Bond Amount Included in BP fee $_ 16,500 -(See Deena Berens) 7 of 11. Swings and other playground equipment accessary to detached one- and two- family'dwellings. 12. Window awnings supported by an exterior wall that do not project more than 54 inches from the exterior waif and do not require additional support of Group R-3 and U occupancies. 13. Non faced and movable fixtures, cases, racks, counters and partitions not over 5 feet 9 inches in height. 14. Radio and television antenna, flagpoles not over twelve (12) feet In height measured from grade.' 'Unless otherwise exempted, separate pluml ing,„electeical and mechanical permits will be_required for the above -exempted items,” (3, Subseeflon 105.3.2 "Time limitation of application" is. hereby amended to read asllows_ 05.3.2 Time limitation of application. An application for a permit for any proposed. work shall be deemed to have been abandoned 180. days after the date of filing, unless a permit has been issued." 4. Subsection 105.6 "Expiration" is hereby amended to read in its entirety as follows. 11105.5 Expiration. Every permit Issued shall became invalid unless the work on the site authorized by such permit is commenced withiin 180 days after its issuance, or if the wont authorized on the site by such permit is suspended or abandoned for a period of 180 days after the time -the work commenced.. Before such work can be recommenced after a permit expires, a new permit shalt first be obtained to do so, and a fee therefore shall be one half the amount required for a new permit for such work, provided no changes have been mad6 or will be made in the original plans and specifications for such work, and provided further that such suspension or abandonment has not exceeded one year. In order to renew action on a permit after expiration, the permittee shall pay a new full permit fee. The building official is authorized to grant, in waiting, one extension of time, for a period not more than 180 days. Any -permittee holding an unexpired, permit may apply for an extension of the time within which work may commence under that permit when the permittee is unable to commence work within the time required. The extension shall be requested in writing prior to the permit expiring and show justifiable cause demonstrating that circumstances beyond the control of the permittee have prevented acticin from being taken. No permit shall be extended more than once.' 5. Subsection 106.1 "Submittal documents" is hereby amended to add a second paragraph that reads - 3 8 or 9 Mr. Eric Altman 26755 Verduge ,LLC 26755 Verdugo Street Suite 200 San Juan Capistrano, CA 92675 October 21, 2010 Mr. Brett Caulder City of San Juan Capistrano, Building Department 32400 Paseo Adelanto San Juan Capistrano, CA 92675 RE: Request for time Extension for Demo, Grading and Building Permits for the Mixed Use Paseo De Verdugo Project Dear Brett: Faseo de Verdugo i$ project that has received redevelopment funds from the City's Redevelopment Agency. Unfortunately, due to a variety of unforeseen economic and other issues, the project has been delayed. Currently we are waiting on the City's Redevelopment Agency to respond to an additional request for assistance. Without additional assistance the project is not economically feasible. We are Doping to have the City's Redevelopment Agency approve additional assistance within the next 60 days. Thereafter we would hope too move forward as soon as feasible. We are requesting an extension for the following permits: 810-0273 Demo permit - expires 11/11/2010 B09-0608 —Grading permit -expires 11/09/2414 810-0454 — Building permit - expires 12/11$/2010 Please let ane know if you need any additional information to process this request. Thank You for your time and consideration. Sincerely, Ert tman 26755 Verdugo LLC, Managing Member 9of9 Mn Eric Altman 26755 Verdugo LLC 26755 Verdugo Street Suite 200 San Juan Capistrano, CA 92675 July 22, 2010 Mrs. Marisa Norton City of San Juan Capistrano, Economic Development Department 32400 Pasco Adelanto San Juan Capistrano, CA 92675 RE': Request for additional Financial Assistance for Financial Feasibility Gap for the construction of the Mixed Use Paseo De Verdugo Project Dear Kansa: Pursuant to our discussions over the past couple of months, the purpose of this letter is to formally request additional financial assistance froze the City of San Jean Capistrano Redevelopment Agency for the mixed used development to be named "Paseo De Verdugo". The original request for assistance was supported by the financial feasibility gap in excess of $1.09 million dollars as delineated in the Keyser Marston Feasibility Analysis prepared for the City in November 2007. In February of 2009, the San Juan Capistrano Community Redevelopment Agency and 261755 Verdugo LLC entered into an Owner Participation Agreement for financial assistance in the amount of $950,000.00. To date, in accordance with the terms of the agreement, $150,000.00 has been advanced for plans and construction documents. Those plans have been prepared and were put out for bid with several contractors. Unfortunately, even with the economic deterioration that has occurred since this project was originally submitted, all the bids have come back with significantly higher costs than the pre -construction plan estimates by Keyser Marston and zee. As discussed at a recent meeting with Economic Development Manager Douglas Dumhail, Mayor Pro Tem and the Redevelopment Agency's Chairperson Laura Freese, Council Member and Redevelopment Co -Chair Sam Allevato and you, I have prepared a spreadsheet summary which includes all the project costs and have also enclosed copies of all project bids. It was further discussed, that the Agency would consider having that information assessed by Keyser Marston and thereafter if appropriate, consider any additional assistance. 1 of 22 ATTACHMENT It is our desire to move forward with this project within the next few months. However, without additional assistance from the City, the project does not make economic sense. We hope that the City's Redevelopment Agency twill review the information and farther assist in filling the economic gap. We understand that in today's economic climate any assistance must be weighed against a variety of projects and scarcity of resources. Even with additional assistance, we still believe thathis project will provide both short and long-term benefits to the City, and significantly add to the redevelopment of downtown. Sincerely, Eric KAltin 26755 Verdugo LIX, Managing Mernber Enclosure(s) 1) Summary Spreadsheet 2) Potential Development Expenses Beyond OC 3) Friess Construction Bid 4) Hearn Construction Bid 5) Bristlecone Construction Bid 6) Bergman Bid 7) Construction Management Services Agreement cc: Redevelop.ment Char, Mayor 1'ro-Teen Laura Freese Redevelopment CO -Chair, Sam Allevato 2 of 22 't m$ U c 6 q J C C y O 4 S mN 'b� tEu WG c cn a <2�mc°cSc: y a o w 3 o> n ¢ m w o a a E U LL 0 0 C, ac a 112, � 0< 3a E ca yip U � a o E -' 5 a C3 y, m Qr `�--� m �• ro' � j �-.., c. C) 'iy 0 U CJ. .E q_ ¢ci U m `m 'o u. m ti +ri c� o v, <o .-. v c {.3 in rL 4 ir.. Cl E m C3 w cn .� a m .` iu r. m 'u 'o' c �y as e[7 c l3 c � N N m a7i Ccs c m m v tts ro Cl. <Cd}--cac.)L a c m o. p 3 of 22 O 0 Oap 0 p 00 0 0 O o n 0 N N noap o c� apcsoo s7 M O CO O M O O [O.,� p tn(y O O C} M1 M b C1 66 C) 6 'n 4) a 00 C7 O Kp1 W qj Oni h pQ M '�t O G7 M O 1� C� W 3i (p Q> GS 4fl 40 V> 0SH fFy U3 [FT ffl fA CH Ei1 //3 (:y V) fA E� (A HI p q o ' � h b 9 0 0 o p' Cal o tU) q G O Ga OOP 4 ty' Q GJ 47p �tloi'! t c O U N N �' tn7 Ifl f� F9 Gh f9 Ff3 f+7 fF1 Hi FFj t� f� �fl fgqfl M Vr Q pp o O o b O C. 0 0 0 01©7. 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Nva . iii Ul (F) Efl f✓1 f� k 't m$ U c 6 q J C C y O 4 S mN 'b� tEu WG c cn a <2�mc°cSc: y a o w 3 o> n ¢ m w o a a E U LL 0 0 C, ac a 112, � 0< 3a E ca yip U � a o E -' 5 a C3 y, m Qr `�--� m �• ro' � j �-.., c. C) 'iy 0 U CJ. .E q_ ¢ci U m `m 'o u. m ti +ri c� o v, <o .-. v c {.3 in rL 4 ir.. Cl E m C3 w cn .� a m .` iu r. m 'u 'o' c �y as e[7 c l3 c � N N m a7i Ccs c m m v tts ro Cl. <Cd}--cac.)L a c m o. p 3 of 22 Verdugo Project Potential Development Expenses Beyond General Contractor Bid Item Included Excluded Onty Item Unit Cost Budget.. -total- otal Budget 1 Backflow certification 3 $ $ ` 2 t}tilit �4 Fe@S 3 SDGE 1 $ 35,000 $ 35,000 4 Gas Co 1 $ 4,000 $ 4,000 5 ATT 1 $ 2,000 $ 2,000 6 Cox 1 $ 2,000 $ 2,000 7 Grease trap cert 1 $ $ - 8 Grease tank 1 $ $ - 9 Survey 1 $ $ ' 10 So€Is 1 $ 4,000 $-----41000 11 Dep2!y Deputyins ection/testin 1 $ 3.000 $ 3,000 12 Mailboxes 1 $ - $ - 13 SDGE main power install ation 1 $ 12,500 $ 12,500 Encroachment ermit 1 $ 2.000 $ 2,000 Si na eiaddress 1 $ -$ [14 Fire extin Wsher with cabinet 4 $ - $ - Fire alarm 1 $ $ Dust control 1 $ $ - 19 Backflow devices 2 $ $ ' 20 Site fencin 1 $ $ ' 21 Access doors $ " 22 Knox box and processin 1 $ $ ' 23 Asbestos abatement 1 $ 8,000 $ 8,000 24 Front wall shoring 1 $ - $' 26 Roof cut outs 1 $ $ ` 26 Locksmith keying 1 $ 500 $ 500 27 Security system 1 $ 5,000 $ 5,000 28 Electric to fire riser 1 $ - $ - 29 Phone for fire alarm 1 $ 400 $ 400 30 Historic de iction program and 1 $ 3,000 $ 3,000 .processing 31 Second floor perete 1 $ - $ 32 Slur backfill in street 1 $ $ 33 Concrete coria and cutting3 $ $ " 34 Electric meters 6 $ 250 $ 1,500 35 Tenant subpanels 6 $ 2,000 $ 12,000 36 Sprinkler structural calc review 1 $ 5010 $ 500 37 Additional scaffold rental period for other trades 1 $ - $ - 38 Subtotal $ 95,400 39 Possible Project Casts 40 Site electrical service 41 Neighbor issues (special clean-up and schedulin 1 $ - $ - 42 Avenin s 1 $ 3,000 $ 3,000 43 Air balance 1 $ _ $ " 44 Off site p I umbing connection 1 $ - $ 45 Roof ladcterlhatch 1 $ - $ - 46 Subtotal $ 3,000 Total Additional Potential project Costs $ 98,400 4 of 22 SeCaontraCiora Trade eye Bid Tota#6Sd P.W. Old$ increased Cost % 5elocYed BW a ece Rid R6 Nal Dorno: Buildsn , S€a6. FOoti0 X Si 5.835.00 577,866.40 $2 030.00 12.82% 315,835:00 597.865-00 RO:EidY! _...____Y-,...�...._.....__ Gratlir y,-. _ :`=X �X 34855:00 S5-✓22.On fat 06700 30.555.00 55;922.OQ Kana?i iir,e ....-_---- 5Enrm O:sin 52l,25DA0 524.620.00 53.37060 1S-8Ge6 521250.60 524.620.00 [1YiX0YI OnS1 uc{!nn_ $IdrTTf C' -Cu{ _ �' .... ""X S34:AB7106 $24.4&1,00 $000 :..:0.001w ".. :. Starkey PEunt6irl P3umbilt X SG5,2S0.00 572,250.00 S7.00000 �10.73°h �SG5.250.00 572.254. D0 7{anL;onsitutlaa--: -_ __.�. RovghCa (rani -'- ..'.. ':.% StY?0,44t7.00 5215.002:06 -- S96,fM1200 --�SY.781a - .€Wi Cnntracbn Rath Cargeniry!T'ra11a5tFiFysn X 5240,000,00 S324 000 $64.000,00 35.0TA 400000 59_.... 63.1EGar€ractinaWina. CL -51-l6 5237859.00 871;3Ei1 (H1 �42893a S16$:299.OQ 5_i37.F3 :CFtY EQ CoastruC(�6n 22. h Ca( 5nl X 5208:200 00 $272,$00.60 5$4 664.(HI 31.03"0 - Shauiivr,`Barhotrr T5W G0110'a{ion foundalion X 3174,01.00 $98.455 006140,45.00 522 ccd.00 --3AjolulC 542.000,00 '27.$1% 42.66'n A74.a0100 - J&Fr9 Cars9reciaf5 :-:._.._.. __ founrlr�iiim_ '' _X: 5965,000,00 S243.OQO,irtY '577,000.r7t3 -�'46:33§k .. ' . Coast COnvely F0vndAf,4n X $155484,04 $299665.60 564,77500 41.271 __ _ _ Canthi-Gnattn Ca-trrc ....._ - Aa ha€✓5intw;a7Slgns X'''. - 84,655:.00 - .... .:54,535.00 ... •iti6.Gri% ., ...:-. - P..... K. ...11 an€racl€n Asphal;iSike Co=lctet¢ISiripr X 561 515.60 370_503 cc 56.9!}6 00 1461% $61,61500 S70 W3, 00 SV LarlidicApiu. :..- Pavaia X:': 532 X72::69 _..532.57?.00 -3Cfl�00Yc Krudwi i�4aspn PaverslGr.:UrCo{umnsrMasors 'X $81.987.00 5116,000.01) 533013.05 49-270 581-,9cl Go 9115,000,00 FA4-Fs'Scilfc T EE9clYica3'. '.X �.: $47Y.56$:Ofl 5177�588fl0 350% $174,696,40 $17q,W8 Cot Casis Ail Mechanical X $66548.00 $76,178-00 39630.00 14,47&0 33'&;540.00 576,178.00 1700"10 LTvOrs'SeiVices [j0pra(Ls)AlEalkxi .____ X 547.CN➢q.00 3171)00:00 '' S0 06 k;0(s5b Arch. Produ'ci Resource, 9r>c. GoDT&Winaow5 $0.00 xomw �. hillier Wrada �_ GonzsNitirtdnws T-. _-.- >0'-� 515 70:00 S'10,0�7.00 54;'73006 '"30.8®9sr . $35:21©00 _._�fffl00:60 C7eanie VNindavalS(wetronl- X Si 23,50066 $F3a,Suh^..CO 511 000.00 8.9195 5123,500.00 5734,504,{)0 $9?frKW:00 32i.180.OQ ;-88.280.005;994e 512:900.6692 1:184.00 Quality knlonar5- Hp i:onstn:ct3on:-(- 364.8?1:06 1200 $27,291 ; 327,28E 5134 42.04% .. $64.921.00 S92.2'EZ O0 - Q,est Ur ail T -Bar SoM _ #UIvtcl Crotm fird Protecllon__ fir®F'Flliec€ian X 355'.505-1117 S87,t1GS.46 .. ..591;320 OJ zua% .suM600 Adler Alarm Fire Alarm: Contractor X 56.834.40 56,834.400.00! 56.834.40 -_50760st7G 36.04 00 RaaFse Rool{n m: We9e:-i'datin 'Hopi:. X-' 53$&06.005113.200.00 4k629;, 534:HO3(k) :55S:0CD.tT6 PCH Sheet Metal ,. Sheet MetailG.11ws & E?owns X 551,866,00 569.440.00 517174 00 33.68% 551.86600 H815heeiP+telal :..' .-.:� . Shpe7Iv181�UGu14®ra&i''Yvvms X-:: $510.00 570:114 _tee ..:5066 '13.0026. ,......� :�; SS8:590.00 CuafiE Rain utters Gvi{ers & Dcwns outs X -. 396,330,60 00 -)40.00°k _ flan dane3'ConatnttitRn 3{ucra .:� X-� 1.03,3S2.0 5737.023 ,60 _110,330 533,581.(#7 ..325795 3903:.':�62.06 3737,&23 Richmond Riaoterin Sluew15catfoWin X 5719,000.00 41ll9l 000.06 100,00% SaOta rr Plaater ." StuccoJ$sstfci(drnq X.:: WASD OD 82171 490:130 $179;040'60 t35,84'!a Weslwsse{Vsater rootin NIa€ar roofin 310,00000 $14.500.00 $4,500.00 45.(V'/. Maslei38u€ 'NatgtRrgafit5,,..-.... -�_ X-:- $YB Y}pOOb 523:750:Q67;750 Aq 25:4654 Prince Tka _ X S50,115 00 1451660 00 531 546.00 62.95Y _ SSIY, 115110 58i,C80.OD 9ros't?airttmr5l: .,_._,.. P_8in] Sae-63Af :X` 3394,1X1 'SGY 391).00 314.LkfS0.0;1 I2,2T% 557,390009.,.5....,IY9fl.Ui7 �� FA CozIn s farm lS@e F3id X 523,38300 S26,$i38.00 59.313.00 14.11% P47Ttich'. um : Llgh{�lraigrEt COnct9id.-..w.._ X. - $S 45[l..QJ 57.760.00 59:806-00 3025 - f�a»m floOrS sterns l.� hlwe; hl Concrete X $5500.00 57.300.00 51.800.00 32.73°:> 55.506.60 57-30(5.00 daredk.fltter - - GuarArai[SiNandralls ,,.-..... °X .- $AXOG R 96030 S2 'no Jas h F@YCA Gonsi(ucaon Cc Gusrdrai[slHa I. r, its X _ 312.640.00 $12 5C(s.00 SC.00 0,00% 512,540.00 512,4G. Do 61)60100 $11,6Uc-00 ':.56,00 006% Scago{Urt.y Protessionais Cor - awfhyl((I X gi 1,605.40 517.00010 $5,59-51c 0 4G 0114 51 i 605.00 817,00000 Roux Scai£ei.7dEqulpmpM Icte- ScalfolUinR S8,8 .00 S15AG0.00 -5fi 505,130- F8JConslrucl. rnS ua llies Sa(h Accessor*s X 57,259.00 57?5000 50.00 000V, 57259.00 $7,259.0_0 TBiS ':: 'i FEogr+n � W ;r39 �R:(i0 S3QAOD.Ofl .530:181000 "530.fl1)10.;)0 7017 - Misc. Inte"Ors $25000.40 525.000,00 525,000.00 525.000.00 ._. 166' ':. ..'� Cai!Ine1s �; ... '�.-.: S3C 00B 00 -. 'Sid�0006 . . _. ,�,......'. ._..... .530,06001} -^ ..... 330,OSk0.G0 Tar) Site card�tian5 530.500.00 930;60000 $30,60400 530000,]MO TEfp '.. -'-_ �:�. fanrns�Gafes &C1�a::trot: '', s{0.006.130 540 irO4.i30 ,�.:.::„-> 570;OiklW PW Sin hens 05603103 ADatemaM X Srr 050.00 $7,0M.00 SUB TOTAL 51,623,559,40 ;4,970,991.00 8tagiRg.:..__ $2,74400 .--�,...:--<...-......._._._.__.._ .�..._,__„.,. 51(J000_0fr �M ,..,'310.00460 5500p.DG W.. 55,000 UU .................,_......._.___..,..,..,.... .,.- .-, _ 5651 600.06 ;64.800 44 Toilets _ 452300.00 Su erdsion 5x.10.000.00 - 400000 59_.... Gor.#ill enc 5750.000.00 9t56,C(XJ.{7{7 (;6i`(rif4idr fo@....,: .. ., .., .. -..�. ., .. :. .... ...:... .... .::... SY44 E11X5 GRAND TOTAL $2,557,832-94 5 of 22 TOTAL $1,438,690 $145.25 $1,730,746 20.311k 6 of 22 Bldg. 9,904 ST, BID PREVAILING 14 increase CARD # AMOUNT WAGE Prov. wage 0 SITEVWORK 9124,413 $12.56 $155,518 25.00% 1 LANDSCAPE & IRRIGAT€QN $60,000 $8.08 $100,000 25,00% 2 CONCRETE $125,264 $12.65 $157,658 2$-00°/a 3 MASONRY $18,779 $1.90 $2$,263 23.88% 4 STEEL $17,960 $1.61 $20,560 16.70% 5 ROUGH CARPENTRYIFINI8=1 CARPENTRY $166,700 $1$.83 $208,300 24.78% G CAULK &SEAL $7,509 $13.76 $8,000 6. SA% 7 INSULATICN $2,494 $0.25 $4,285 72.09% 8 RCQFtNG $32,477 $3.28 $36,146 97.46% 9 FLASHING SHEETMETAL $36,400 $1,68 $47,400 30,22% 10 DOORS/FRAMEWHARPWARE $16,€307 $1,62 $17,292 8.€3 % 11 STOREFRONT/WINDOWS $101,000 $10,213 $125,000 23.76°!a 12 LATH & PLASTER $70,520 $7.12 $106,130 50.50% 13 DRYWALL $15,385 $1.55 $24,400 56,00% 14 CERAM C TILE $54,481 $5 60 $59,000 8.29% 15 FLOORING NIC NIC 16 PAINTING $16,095 51.63 $2.0,000 24.260k 17 SPECIALTIES $5,950 $0.60 56,300 5.88% 18 T4014ETACCESSORIES & PARTITIONS $5,300 $0.54 $5,750, 8.49% 19 PLUMBING $50,336 $5.08 $50,336 0.00% 20 FIRE SPRINKLER $29,850 $3.01 $35,219 17.99% 21 HVAC $46,453 $4.89 $52,618 8.57% 22 ELECTRICAL $103,758 $10,48 $128,939 24.27% $U8 TOTAL $1,128,167 $114.01 $1,394,012 23.46% General Conditions $176,000 $175,000 0.40% OH&P 9.00% $117,374 $141,211 20.316/. LIABILITY INSURANCE 1.20%1S 7.0582�3 20,31°/u TOTAL $1,438,690 $145.25 $1,730,746 20.311k 6 of 22 CONSTRUCTIONINEARN PASEOw O 26756 VERDUGO STREET SAN JUANk 3r R., NA 04/28110 QUA€ IFICATtON$ Bid based upon mutually agreed upon contract terms, conditions, clarifications Bid does not include any plan check or any permit tees Bid does not inctude utility company tees Bid does not include datalphone/cable TV wiring Bid does not include security systems Bid does not include Builders Risk Insurance Bid does not indude removal of any hazardous materials Bid does not include signage (except for code required signs) Material not specified will be per contractor's spec. Bid does not include soils testing or special inspections Bid does not include historic depiction Bid does not€nciude elevator Bid does not include awnings Bid does not include window coverings Bld does not include drywall in the tenant spaces (not shown) Hid does not include joint trench or electrical service work (not shown) Bid does not include steel decking, FRP wall paneling, spray applied fireproofing, acoustical panel ceilings Bid does not include site lighting (not shown) Bid does not include tenant improvements (not shown) Credit to delete ceramic wall tile in the restrooms is - $ 9,000 Bid inctudes re -using the existing Bryant compressors Bid includes engineering and shoring for the existing wait to remain resilient flooring 7 of 22 BRISTL.ECONE STRUCTURES, INC. Paseo de Verdugo 26755 Verdugo St. San Juan Capistrano, CA 92625 May 13, 2010 Bristlecons Structures, Inc, is pleased to present this proposal to construct a new commercial building located at 26755 Verdugo St., San Juan Capistrano, CA. As a family owned business Bristlecone takes pride in constructing the highest quality commercial buildings, custom residences and other structures, We treat our clients projects as if they were our own. Scope of Work The scope of work for this proposal includes demolition of the existing structures, installation of wet and dry underground utilities, erosion control, traffic control, and all necessary labor and material to complete construction of the new structures, install flatwork and landscape the site per the design documents below. Bid Basis This proposal is based upon the following design documents: Architectural plans by Nunn Architecture, dated 2-20-2010; 4 Structural plans by structural engineer Patel Burida and Associates, Inc., dated 8-4-09; v Grading plan by Douglas Bender & Associates, prollMinary undated set; o Mechanical, Electrical & Plumbing plans by Ramin Parsi, dated 2-24-10; Soils report by Peter & Associates, Engineers, Geologists, Surveyors, Inc., dated 5-26-09. It is our understanding that the design documents have not yet been approved by the City of San Juan Capistrano. Changes to this set of plans may arise from plan check comments, Owner requirements, and utility engineering design development. Therefore, Bristlecone offers to perform this work on the following basls: Bid Basis Assumptions - The following assumptions were used as the basis for this proposal; All design documents, specifications and engineering will be complete prier to commencement of site work, ® Scope of work is limited to that shown on the above bid documents. Any significant change in design documents may affect the project cost. Written change orders are required prior to commencement of any change in scope. s Specimen oak tree is Quercus Agrifolia, 48" box. o Drywall will be smooth finish, unpainted in leased spaces, with square corners. No benchmarks were observed, therefore none are Included for replacement. ® Boor F2 on the second floor is an arched top single light pair of french doors in lieu of french doors with an arched transom window above per discussions with Nunn Architecture. All work will be done during normal working hours Monday - Friday. Work on weekends, holidays, overtime or night shift work is excluded, ® Owner will obtain written approvals from City and/or adjacent landowners for adequate lay down and construction parking areas adjacent to the site. Verdugo Proposal 5-13-10 8 of 22 ® owner will provide approved design documents as required for wet and dry utilities. • All furniture, appliances and. major contents shall be removed from structures prior to demolition. ® Panic bars were not noted on the plans for any doors, Optional pricing has been provided if building officials require panic bars. ® A new 3 phase transformer will be located across the street to the NW of the site adjacent to the existing 3 phase transformer. Two new 4" pvc conduits will be run from the new transformer to existing electrical vault in the street and continue from there to the electrical room in the new structure. SDG&E will provide and install the new transformer, and provide, pull and terminate the new feeder cables. « phone and coax cables will be run in joint trench with the electrical feeder cables from the existing pull box across the street to the iVW of the site. Water main and gas line are both located in street on the east side of the project site, where new laterals will be connected and extended to the site. o All trenching in the streets will be covered with trench plates at the end of work daily. After backfill, trenches will receive temporary asphalt patch. Final paving will be completed at one time after all wet and dry utility work and curb and gutter work is complete. Existing paving will be milled to a depth of 0.1 foot to a distance of 3 feet on both sides of trenches and repaved. All finish material will be removed from the exterior wall that will be saved from the existing structure, including interior drywall/plaster, exterior plaster/siding and existing windows and doors. d Wood windows will be fixed. Wood doors and windows will be painted. Trash can and light poles will be provided by City of San Juan Capistrano, Existing benches and light poles will be salvaged and returned to City of San Juan Capistrano. Glen Gery Thin Brick - Stratford or equal. Tree grates to be recycled black plastic 4' square. Allowances - Bristlecone is providing allowances for the following items which are not fully described in the design documents: $4.00 per sf for bathroom tile & exterior terra cotta tiles i Wet Utilities: including fire protection main extensiontrelocation, domestic water lateral and meter voxes, grease interceptor, sewer lateral and interconnection, and storm drain catch basin - Non Prevailing Wage $ 26,576 Prevailing Wage $ 32,470 f Dry utilities: including gas line relocation and new lateral extension, phone and coax cable laterals, new transformer pad and conduits from new transformer pad to electrical equipment room - Non Prevailing Wage $14,985 Prevailing Wage $ 22,666 Archaeologist/ Native Amoricanr Monitors . The City of San Juan Capistrano requires archaeological monitoring of excavations deeper than 16% Bristlecone Structures proposes to utilize the services of Dr. Gary Hurd. Dr. Hurd has extensive field experience in this area, including archaeological monitoring during excavation for the Franciscan Plaza Building directly across the street from this project site, During that excavation and the excavation for the AMTRAK parking structure some artifacts, from the historical period dating to approximately 1860, were found from a livery stable, a blacksmith shop, hotel and a walnut processing plant. Consequently, it is reasonable to expect that some artifacts will be found on the project site. Bristlecone's proposal includes an allowance of $3,200 for archaeological monitoring, based upon 4 days of over -excavation and re - compaction, it is unknown what type or quantity of artifacts or human remains may be found. Therefore, Bristlecone proposes the following not -to -exceed billing rates for monitoring and processing artifacts beyond the base ailowence: ® Certified Archaeologist $ 100/hr with a $500/day min. Archaeologist 4 pian crew (to document significant finds) $ 400/hr Native American Monitor (each) $ 175/hr 2 Verdugo proposal 5-13-10 9 of 22 wet Utilities - The bid set of design documents does not provide isometrics or hydraulic gradient drawings with station numbers or tie --in locations for wet utilities. This proposal includes all necessary labor and material to install a Jensen 2690 gallon grease interceptor, relocate the storm drain catch basin, install new connection to the sewer main, interconnection of the fire riser main and domestic water lines to existing water main assumed to be in the street to the east of the proiect site, with backfill and temporary ashpalt paving included. Pricing is based upon the bid assumptions listed above. Should there be a significant variation between the assumptions and the as -found conditions or installation requirements, a written change order will be required, Dr` Utilities -roved electrical service design. There is The bid set of design documents does not provide SDG&E app no information regarding the size or location of transformer(s), feeder cables, feeder conduits, pull boxes, vauits, transformer pads, cable and phone pull boxes, etc. Therefore, this proposal includes an allowance for dry utilities, based upon the bid assumptions listed above. The allowance assumes utility casts will be paid directly by Owner. When the approved design documents are available, a firm price will be provided to the Owner in lieu of the allowance included herein. Landscaping - Bristlecone's proposal includes 15 five gallon and 24 one gallon shrubs for the two planters on the east side of the building, as well as, 17 Lagerstroemia (in 24" box), and 15 five gallon vines. The species and size of the one specimen oak was not provided on the plans. Bristlecone`s proposal includes one Quercus Agrifolia, 48" box. This proposal also includes an irrigation timer and backflow preventer, Exceptions to Bid Documents - The following exceptions are taken to notes and specifications in the bid documents: • Ceilings in all leased spaces shall be insulated and unfinished in lieu of drywall ceilings in second floor leased spaces. An optional price for T -bar suspended ceiling is provided. • Air balance will not be performed due to the absence of duct work which will be Installed with the tenant improvements. • Resawn lumber will be used for all exterior exposed timber and T&G in lieu of sandblasted lumber. Optional pricing can be provided for sandblasting. • Bid pricing includes pre -finished aluminum gutters, leader heads and down spouts in lieu of copper. Optional pricing is provided for copper. • Light f=ixtures - an optional price is provided for BEGA fixtures. Specifications dated 6-2649 are guidelines only and will not be considered contract documents. ® Lath to be two layers of class p kraft paper in lieu of Tyvek a Tile roof to have 25% boost Exclusions - The above proposal specifically excludes the following: Fees for Architecture, Interior resign and Engineering for all improvements; ® Flan check, permit, impact and all other regulatory body fees, Bonds for bid, performance, warrantylmaintenance, or other security bonds or deposits that the City or Owner may require, ® Sub surface risk - delays and costs associated with ground water, archaeological or human remains found during excavation, over - excavation beyond 4 feet deep, or correction or replacement of existing infrastructure beyond the closest feasible tie in points, standby or demobilizationtremobilization costs due to archaeological finds. If these conditions are found, the remedial work will be performed per the Commercial Terms below. Overtime or extra costs for after hours work required by the City or Owner. Use of City of San Juan Capistrano waste disposal company for demolition and construction debris removal, recycling and disposal. , Verdugo Proposal 5-13-10 10 of 22 contact: Eric Altman Comparty Nat-rfet Berrington Properties, Inc. #Address. 26755 Verdugo Street - Suite 2€10 Ph, 800-243-2030 Fax: 26755 1lerduge Street - San Juan Cao}strano. CA 92675 SumpSumplary of .dab Cast (Include Prevaifl.n Wages) �--� 06121110 PmParnar!c�eano.o�$UQ _ i0t I Prat 00st $1>83,5 062.74 Sq Ft Cost: $185.29 Alternates: 1) Add to Upgrade to Copper Downspouta $ 25.199:00 2) Add for Beaded PIMI Doors Per Notes. (Confiicta 014 Door Scheduk-) $ 6,027.00 3) Add for Performance & Payment Bond if AppiicaWe $ 34,720,00 RFRGMAN 4300 Fdisan Avenue China C:nlEtarn'ta &1710 cortstrusEiun 7 davalopMont servlc�s 9€19.627.5425 IF 90,627.3951 1P Iftehcryxuin.wm Catltomla f Cotorada 1 Georgia f Mnai9 I ncrida 11 of 22 Project Name; Paseo De Verdugo Date: M121110 Project Address; 213755 Verduco Street - San Juan Cawstmr7a. CA 92675 &Usl Controi 02003 conswmrt ww)cing 02005 8,&04.013 Site Oemoition 02060 4,35.00 BuOding Demolition 02085 78,133.00 Earthworit ! Grale - SM 02200 23,182.00 FmVon C ittrcll azza5 4,10MOO Pf8C&AIOUmpers 02245 Asphalli Pavirgy 02811 4,933.00 Slte- Elsalrlcnl 02570 Pavement Mar€ung3 OM2 3,200.40 Back6vr preventar 626130 loou.UA Damesiic Water 02662 Et,175.8€1 , trrn Dfa4ls 02720 22,865.(34 Sanatory gevrer 02730 5,859.00 L&r4&"pe 02906 17,297.00 t,Oncrete For Ballads 03210 - Trutrcated Dames 03400 2,900.114 Concrele Sidewalk 0346E 8,919,00 Site Eurnituro 39,439.0€1 BERGMAN 4300 Edison Aveme Ch m CMwrtu 91710 COnslrtrction 7 dowlopment mrviea5 x i asung x ExrJucfad x Survey &Staling x Abatement Per Repast x barna 8"4din9 & Sao x Grading Pads & Sle x Fant Bags & Sill Scmn x INC4uded x Patch around the Cutts x EWWed x Stdping,df Parking Lot & Red CuMs & HC Signs x Alkwance tar Bacidlow Prevenfor x Water to Bki"ing x Stared Chains pest Pian x Storm Drains x Site Fua tore & Landaape x Excluded M Tairi tad Domes ................. . x curhs & Gutters & Pavers x Tr€� Coutes & fwd= 509 Q27 5426 f r 869 0213x57 -P Vwber9nwn Curn gii€ruriy€a 7 wlof4tjo J georgia 1 Mgowr I iloTida WSWIN rrckjoct Nanw; Paw De Werdugo Oats: 681211/0 Sct Address: 26165 Verdu. c 5lreet - San Joan Carrislfano. CA 92575 aenncuAN 43CO Edison Avenue (,Nnv Calot 101n 11710 009.82? 5425 1 i- 900627 3651 W ULteop n coin wmvUd;on IAavelaPO-11 svrvlcae whfwnla 1 cafa,ado ! quwg l f 01ir TN f tla:idA ' Wxr<skVarFw:n�,tua¢vMY w'a�a nt��P»wv Ca 4e�duRa �21.f3 13 of 22 .m ' ♦ Size ; 9,804 SF s 1, �7�molltian 8 Concrete --------- Comma ma Pad Foundation 63100 94.590,00 x f$uiiding Poundatonm Pre Cast Concrete Calumrrs 09300 19,821.00 x Pre Cost Columns IIi *C4rrtticB/ Special Concreta - 113410 x r%0004 Imian. Concrete 0.309 - x Excfui ed 2.�Easos}ry Unit m4mty 04200 9,943.131) x Seat Wait & f:o ng Stene_ 04400 45.206,(}0 z taltedorPavers l� iVSisc x Exoludoi! 1 3. Metals I StruaturwSteel 05120 18,535:00 Chaim Unk rendng 05500 x Eacft ded Ladders J Hawll 05519 x x Imiuded In Stnxlural Suet wric_ Steel 16,380.00 a mise, €iurtlk t+1s & Nan Catfiluq Homwans 4. Wood t Plastics R04gb Carperttry 06100 253.890.00 x WOW Fr 3ng.& Truss A eisi Siude 06105 x Excluded 6 unlbtir . Misielanrtous 061.28 x Innludod In Rough Carpentry Wait Trusses 08197. x lnclwWd in Nough Cmileary F€mjSh Catpeniry tSS?,(31 x F dt3dCt# misc, finish Ga€penny 06300 - x Eke Laminawa 86350 x Exdud6d T 1.01Interla Office Areas 06410. x Fxduded 5.Thormal Protection vvmetproorrpg 07910 7,225.00 x Tife Roar & Wgle Ply Ntombmna Caulking 07376 3,920.00 x Gaty. Dapm Spouts & Flashing �(nkling Infmlatton OrM 6,9715 as x Imer of wait I0suia m Firopraoting 07260 x Exdumw pwiing 07611 36,146.0p x Tle Rod & Singlet My membMee FInShing f Sheet Metal 97600 31,844.03 x Cala; Down spouts & f7tashing Sheet Natal Rooting 07610 x i Acruded Misc. Sheet Metals 05531 x EXCluded aenncuAN 43CO Edison Avenue (,Nnv Calot 101n 11710 009.82? 5425 1 i- 900627 3651 W ULteop n coin wmvUd;on IAavelaPO-11 svrvlcae whfwnla 1 cafa,ado ! quwg l f 01ir TN f tla:idA ' Wxr<skVarFw:n�,tua¢vMY w'a�a nt��P»wv Ca 4e�duRa �21.f3 13 of 22 l�tOJez # Nam.: Paseo €3e verdugo Date, 08121110 fr�?JeSt Address: 26755 Veadu o Sifeet- San Jaeea GA trano CA 92675 C)oom l Fasmas 1 Hqw Dai 11 93,849.80 x Woo Doors 06211 Access Doors 08305 LlverWad Doors 08330 SloralroM Doors _ 013450 - AOWynak. Door* 1}95"10 .0mr Hardware 06710 _ x Gress j. Gl€ enq 09711. 1013,1201, 00 X Finish Hardware D3713 Mop Plumper Flails 06600 7.3=inisl��s � Lath 1 Plasiv i Stucco 09200 100,230M X Meal Studs & Drywall 092M 20,20€3.00 K 5healhing 09262 F.lt:P3M.r€ la 08300 Restroom Ceram€ : TOP. 09310 44,800.00 x Ex{.n'or Coromio TRe 09512 AcauMcaiCtRiq 09548 WoDtl Flooring 09550 « Flooring 09560 Vinyl Base 09562 Corpat 09680 Fluor 5eulor 09936 lnterior?l,,Exterior Painting 0890€1 73, .0W as Mitt. Finishes 09959 ............... .SPeciaTO_$ i Miss. _ Uhoom PlAitons & AccessoriLs ............ ... 101J5 7,210.00 x Fire Hydrant 10256 signage €dT426 Knox Pax 01801 - yEise. speciallies 10£300 t" )Imac(ir 14200 Dock Seal 10420 rsrac7aAn1 4M Fdsan Avanssn Cnktu Crt�ramK18',710 wnaltucllan ldavalopmani sarvicas SF D mr Frames & Hardware x Indudod in Doors Frames & Hardware x Cxduded c Excdudad x CXcluded sc Excluded Included in Dadra Frames 8 Hardware Windows K Gazin per Plan X Excluded x Exuctad Latah & Plaster Vrywsl€ trr€vrkX W"S (No mew $1 ,00) x Exdtxled X Excluded tnteM'r TW & Pavers R Waterpme np Membrane X Eae:Jt€ttetl... X ExdudLkd X Excluded ExdUded x Excluded X Excluded x Excluded tzr€eaiaar & 1xlayr Peirr€ina x Exdcx�e4t R.OS. tflMria A(}LL $fi4ii�. x Excluded X Excluded x Excluded X Excluded X Eyclulle'l X Exdodod RVJ 627 5478 , F 909627 311511 M Ihota+grnan cam cel€rmnie 1 caiouxb 1 goxoa i €NIz's ! Rada aanrw: w,mrdvaa.,n as v�ra�ma'sd �ac�.,�rrnx„ ne vxa��uu-ear �o 14 at 22 pfajact Name Pasco tae Verdugo Date, 06121110 PrR eat Address; 2.8755 Verdrrgo $trent - Sen Juan Capistrano, CA 926 IS Size Food service Equipmtznt 11400 t mar & Trans Pad I hough & Finwh Per x Exc113ded Stainless steel Counters 11462 16910 x Excluded Mise stainless sieel 11465 Sottc ty5ystefna x ExUutiad Ritohen Hoods 11500 Fire Alafvn -Alia ance X Excluded Au Cnmp essor 11550 x Excluai Furniture 8fsath Psckage 12300 x Excluded Avin{gt 12550 3,48fi.Uo x Eaneftur Fabtick Awmgs Per Pert 10.Medianicai Plumbing 15100 55'mco x Poutth$Y F4nith Numbing 6t ImAor R$Strdorns; rife Protecllou 15200 24,60,00 x Fire SprmWer Par f -Ion Fire F xiirlguishers 95222 x Exciuded Supply & Inst - HVAC Equiprnerrt wilh Plenum H VAC .15509_ - 74.800.0.0. x FS`ltibs-..( T -Al afrd R $OrdflRrs 956if0 ,........ x Ext�d .. . Ilnsul 10524 .'...._ ... x Exduded s"GIAAN 43M Ecilaan Awn Chmo Cafifomis M 71 n 00 627 5425 1 r 909 627 051 W mehxermnn.cum cons€rualfon t 4tMopmnl 4elvicre s wlilotNa f cakuado f gaargia i Mpais : 8wda wanva� a>�+s,,., ao. una�w�'rwtru�acao�n nr aaz,awn � �2f.ia 15 of 22 t mar & Trans Pad I hough & Finwh Per Elpctficai 16100 9Hs,S55.0t3 x Par.IIncludesPanels Sal. wt€ihioBwzkam Swltctr Clear 16910 x Exduded Wisic System 16200 x EWWed Sottc ty5ystefna 16220 x Excluded ^ifs Alarm 16510 16,075.00 x Fire Alafvn -Alia ance s"GIAAN 43M Ecilaan Awn Chmo Cafifomis M 71 n 00 627 5425 1 r 909 627 051 W mehxermnn.cum cons€rualfon t 4tMopmnl 4elvicre s wlilotNa f cakuado f gaargia i Mpais : 8wda wanva� a>�+s,,., ao. una�w�'rwtru�acao�n nr aaz,awn � �2f.ia 15 of 22 Pasea De Verdugo 6!21!10 26756 Verdugo Street - Sart Juan Capistrano, CA 92675 uatift—C8Eions Hous of construction performed between lam - 5p{n, Mon0ay - Friday Only Existlrg Street Lights to Remin Excludes Retocatlon of Existing Tree Excludes Historical Depiction #ncludes Preuailirg Wages 01000 Gbnoral Conditions Addilionatty Insured Certificates . L3o��dc All City Fees Ilan cf ecit & Permit Fees Engineering f=ees f_Iwuktated Damages Utility Conne0on & Inspection t=ees i Wilily C;ampar+y Chartdei� & Meter Fees All U€ilky Meleis Site Sacuri9.y Deputy lnspections Special inspections Ea editing moa enol Moisture Testing 02050: 04molition Asbestos Hazardous Remediation Un(ondseen Conditions Ninolition Permits 02002 Hazardous Material Abatement Rbatomerrt fcr Hazardous Niatoriala & Reports Testing & Reports 03300A Site concre#c Concrete - Floor patch only 04120 Structural ,teat Engineering New Unit Stnwlural Steel Supports Shoring for rgsmoval Includes the structural steel for the revised storefront Testing & Inspections 055100 Meatal Fabrications Ruaglar Bfrrs Hand Flatting 05100 tuph Garpontsy Acceaptabie Molstorc Content Fire, Treated Lumber - Unless otherMSe noteC$ 16 of 22 07600 Roofing 17 of 22 No Roof Gut outs Walk off Mats at Roof Leak Detection Roof insulation Roof Warranty , Un3ess otherwise noted Warranty on Existing Roof 07800 Skylights Burglar Bays Curbs 08060 Baste Doors & Windovrs Panic Hardware Re -Keying i -ow or High Voltage Wiring related to boors 08360 Overhead Doom Roll Up Coors Includes new overhead door sea! 48400 Entrances & Storefronts Skyilghts Low Iron Glass Spandrel Film Etching Powder Coat Finishes Tinting andlor Colored Glass 09200 Loth & Plaster Lath and piaster for exterior front elevation EIFS ' Expansion Joints Foam Caulking Graffiti Seal 08260 Drywall/Metal StudsiGypsum Wallboard Vtre9ding Fire Blocking Fire Caulking Densgiass ! Ae nshield 48300 Tile Waterproof Membranes Bead Oasting Excess Leveling Moisture Testing Wax Finishing Cement Backer Board 17 of 22 09510 Acoustical Collings 18 of 22 Caulking insulation Light Fixture Wiring in Excess of two (2) 49620 Specialty Flooring Floor Prep Ardex or Floor Waterproofing Slope to Drain 09900 Painting Anti Graftatf Coating Excessive Surface Prep on Existing Wails Painting of FlreMlping Sprinklers, HVAC Ducts, Roof Structure & Scrim Sheets Includes exterior painting (see breakdown notes) 1f7430 Signage Exterior Signage 14522 Firo Extinguishers Cabinets 11111 Elevators Gab Finishes Beyond Standard Smoke floors Shunt Trip 11161 Dock L.aveters 13910 Fire protection Fireproofing 16300 Fire Sprinklers Fire Pump Structural Cateulations Painting and Caulking Underground Fife Line PIV FDC Hose Rack External Monitoring Double Detection Check Iwo Plumbing Off -Sita Connection Water Meter Sanitation Fees Insulation of Roof Dralns, Cold Water & Condensate Lines 15840 HVAC Includes new MVAC units and ductwork Smoke Detectors Duct Pressure Test Louvers Certified Balance Dampers 16400 Electrical Audio & Visual SyMemfirquipment Transformer Pad Low Voltage Wising Generator & Transformer Switch Conduit to PIV and FDC Underground Condu4s to Parking Lot Lights Burglar Alarm Conduits 16720 Alarm & Detection Systems includes Fire Alarm System Fire Hydrant Monitoring Security Systems 18 of 22 Job Name: Paseo De Verdugo Jots Location: 26755 Verdugo Street - San Juan Capistrano, CA 9', Plan Pages June 21, 2010 Title Page, Date TITLE SHEET T-1 4/92010 GENERAL NOTES T-2 8/10/2003 AREA CALCS T-3 1211/2009 FIRE MASTER PLAN COVER FIRE OVR 9/912008 FIRE MASTER FLAN T-4 215/2010 T24 ENERGY CALCS T-24.1 212012010 T24 ENERGY CALCS T-24.2 2/2012010 T24 ENERGY CALCS T-24,3 2/20/2010 EXISTING SITE PLAN C-1 71112009 DEMO PLAN C-2 711/2009 GRADING & DEMO PLANS COVER GR -DEMO 711/2009 PRECISE GRADING PLAN 1 OF 3 ND PRECISE GRADING PLAN 2 OF 3 Nil PRECISE GRADING PLAN 2 OF 3(2.) ND PRECISE GRADING PLAN 3 OF 3 ND ARCH,, SITE & PLANTING PLAN AS -1 2/20/2010 ARCH., SITE & PLANTING PLAN AS -2 2/20/2010 TRELLIS PLAN AS -3 2/20/2010 1sT FLOOR PLAN A-1 2120/2010 2ND FLOOR PLAN A-2 2120/2010 ROOF PLAN A-3 2120/2010 RESTROOM PLANS A-4 2/20/2010 EXTERIOR ELEVATIONS A-5 2/20/2010 PASEO ELEVATIONS A-6 2/20/2010 BUILDING SECTIONS A-7 2120/2010 WALL. SECTIONS A-8 2120/2010 WALL SECTIONS A-9 2/20/2010 WALL SECTIONS A-10 2/20/2010 STAIR PLANS A-11 2120/2010 IST FLOOR REFLECTED CEILING PLAN A-12 2120/2010 2ND FLOOR REFLECTED CEILING PLAN A-13 2/20/2010 DETAILS AD -1 2/20/2010 DETAILS AD -2 2/2(//2010 DETAILS AD -3 2/20/2010 STRUCTURAL COVER SHEET S -CS 814/2009 FOUNDATION PLAN 51 814/2009 FLOOR FRAMING PLAN S2 8/4/2005 ROOF FRAMING FLAN 33 8/4/2009 19 of 22 STRUCTURAL SPECIFICATIONS SDO 814/2009, STRUCTURAL DETAILS SDI 81412009 STRUCTURAL DETAILS S(D2 8/412009 STRUCTURAL DETAILS S[D3 8/4/2009 STRUCTURAL DETAILS SD4 814/2009 STRUCTURAL DETAILS SD5 8!4!2003 STRUCTURAL DETAILS SD6 81412009 MECHANICAL SCHEDULES AND NOTES M0.1 2124)2010 MECHANICAL (DETAILS NV10.2 2/2412010 FIRST FLOOR HVAC PLAN MIA 2/2412010 SECOND FLOOR HVAC PLAN M1.2 2/2412010 ROOF HVAC PLAN M1-3 2)24/2010 PLUMB#NG SCHEDULES AND NOTES P0.1 2/24/2010 PLUMBING DETAILS P0.2 2/24/2010 FIRST FLOOR PLUMBING PLAN P1.1 2/24/2010 SECOND FLOOR PLUMBING PLAN P1.2 2124/2010 ELECTRICAL SYMBOLS LEGEND, SPECS & ELEVATIONS E0.1 .2124/2010 ELECTRICAL PANEL & LIGHT[NG FIXTURE SCHEDULES E0.2 2124/2010 SINGLE LINE DIAGRAM E0.3 212412010 TITLE -24 SHEETS E0A 2124120/0 1ST FLOOR POWER PLAN EIA 2124/2010 2ND FLOOR POWER PLAN E1.2 2124/2010 E L ECTR ICAL ROO F PLAN E1.3 2124/2010 ELECTRICAL ROOF" PLAN E1.3(2) 212412010 1ST FLOOR LIGHTING PLAN EIA 2124/2010 2ND FLOOR LIGHTING PLAN E1.5 2/2412010 20 of 22 FRIESS PROPERTY SERVICE'S May 4, 2010 Eric Altman Berrington Properties, Inc. 26755 Paseo Verdugo San Juan Capistrano, CA 02675 Re: Construction Management Services proposal: 25755 Verdugo Ltd. San Juan Capistrano, CA Dear Eric, Thank you for the opportunity to provide a Construction Management Services Proposal for your project. As you know I have a very strong background in this type of construction and extensive experience with Nunn Architecture, having built several similar projects in San Juan Capistrano. I feel that I am aptly skilled for your project and fully believe that I can return a strong value for my fee. Below is a summary outline of my proposed services and fee. If this is acceptable to you I will provide a consulting services agreement for your review. Scope of Services: The following scope of services is based upon the shell construction as contemplated in the permitted set of plans by. Nunn Architecture. t. Preconstruction A. Qualification of general contractor B. Enid review of general contractor C. Contract preparation and negotiation, assumed to be using AIA 101 and its associated General Conditions documents. D. Qualification of subcontractors E. Bid review of subcontractors and their scope of work and exclusions F. Special services bidding and contract negotiation 2. Contract Administration A. Review and process and Request For Information or Clarification B. Review and negotiation of all Change Order Requests C. Contract budget tracking and reporting D. Construction schedule preparation, management, and tracking E. Management of independent consultants and services such as architectural or engineering support. F. Provide monthly project reporting of schedule, budget, changes, photographs and special issues for owner and funding entity. 21 of 22 G. Review of daily reports and site records H. Verification of prevailing wage requirements for both subcontractors and general contractor L Review and processing of all project billings, maintain master project budget, J. Manage lien notices and lien release process for general and subcontractors. I Field Services A, Three time weekly site visits with one weekly team meeting B. Coordination and processing of field services such as testing labs and deputy inspections. C. Coordination with City staff. D, Coordination with neighbors, maintain availability to manage site nuisances with neighbors and traffic matters. E. Maintain record of as -built changes. F. prepare with general contractor project closeout fifes and warranty documents. G. Assist owner with tenant improvement design and budgets for prospective tenants, Compensation Structure: We shall perform the above services on a fixed fee basis of $87,500 inclusive of normal office expenses and site visits. Extraordinary or direct expenses shall be reimbursed separately with a 10% administrative mark-up, Owner shall pay consultant a monthly draw of $8,000 during the duration of the project with the balance due at the completion of the project. We have assumed an eight month project inclusive of pre -construction and wrap-up services. Again, thank you for the opportunity to be of service Respectfully, Dan 1=riess 22 of 22 Today's Date:_ 313111 P. 11111 Xq Z.11 119 -CA 6 CIP No. (if any): Project Manager's last Name: Transmittal Routing (Check All That Apply) ❑ City Attorney ❑ City Manager ❑ City Clerk Russell Phone Extension: 6301 Council or CRA Fleeting Date (if applicable): 318; APPROVING AUTHORITY: (Check One) Ll Mayor X CRA Chair Ll City Manager Provide (1) executed original contract for each signing pz recorded — only (1) original will be recorded with certified col Please provide the mailing address of any party to recei+ included within the body of the agreement: to be -f' p ress is Names Street Cit St Zi Eric Altman 26755 Verdu o Street, Suite 200 San Juan Capistrano CA 92675 Form Date: 01-2004 D - 7