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11-0323_26755 VERDUGO, LLC_First Modification of Deed of Trust_2011000151751This Document was electronically recorded by CFS South County B Recorded in Official Records, Orange County Torn Daly, Cleric -Recorder �0lil111[11(111111�111� 1111111 X1111 II11 NO FEE 2011000151751 03:50pm 03123111 FIRST MODIFICATIO TO *MUD OF TRUST 0.00 0.00 0.00 0.00 15.00 0.00 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 Sart Juan Capistrano 32400 Pasco Adelanto San Juan Capistrano, California 92675 This document is exempt from payment of a recording fee pursuant to Government Code Section 27383 This FIRST MODIFICATION OF DEED OF TRUST ("First Modification") is made as of 2011, among the trustor, 25755 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 92615, 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. I 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 DOCSOG 146267200022299-0086 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 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 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/ 1462672v3/022299-0080 IN WITNESS WHEREOF, Trustor and Beneficiary have executed this First Modification as of the date set forth above. 26755 VERDUGO LLC, a California limited liability company B G y� �p Its: /di;Yri°tt //�•xr�e� ACCEPTED BY AGENCY AS BENEFICIARY: SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporat and politic By: Chairman ATTEST: Secretary /1:9w'.T62►10111 f►''ilLil�� 7►� _._.W.-,_ Stradling Yocca Carlson th Special Counsel to BeneffeltZ EXHIBIT B-3 DOCS©CI1462672v31022299-0086 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 map recorded in Book 11, Page 23 of Miscellaneous Maps, Records of Orange County, California. ATTACHMENT NO. 1 TO EXHIBIT B DOC SOC/ 1462672x3/022299-00&6 STATE OF CALIFORNIA ) Ss. COUNTY OF } On /.. before me, j''.!1"/ , Notary Public, personally appeared E " A ��.�. °° , 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 JERITABBACK COMM. #1826755 ORANGECOuNw OF NOTARY PUBLIC � MyOmm. Exp, DEC. 13,20V DOC SOC/ 1462672v3/622299-0086 PUBLIC AGENCY FORM OF ACKNOWLEDGEMENT State of California ) County of Orange ) ss. City o:f San .Tuan Capistrano ) (Gov't Code 40814 & Civil Code 118 1) On Marcia 15, 2011, before me, Maria Morris, Agency Secretary, personally appeared Laura Freese Agency Cbair, 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 hislher/their authorized capacity, and that by bis/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) Capacity Claimed by Signers Officer title Agency Chair Signers are Representing OPTIONAL San Juan 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 seg. ("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 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. 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). . 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 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. 8. The Agency Secretary shall certify to the adoption of this Resolution. PASSED AND ADOPTED this 15th day of March, 201'1. SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY Laura Freese, Chairman ATTEST.- Mina TTEST, Mana Morris, Ad en y Secretar STATE OF CALIFORNIA } 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: Alievato, Kramer, Reeve, Taylor and Chair Freese NOES DIRECTORS: None ABSENT: DIRECTORS, None CV Jt4 MARIA MORRIS Aber py Secretary 4 3/15/2011 CRA 3/15/2011 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, OIL( Cindy Rus�bll 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 Pian 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 CRI_; 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, 26155 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, 2000 ("Agreement"), pursuant to which the Agency has agreed to provide the Developer fends 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 Nina 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 snake the Covenants Loan to Owner, Owner executed the Promissory Mote and Geed 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 offsetting the gap between the cost of development and the expected returns venerated 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 Beed of Trust, the parties have recalculated the Feasibility Gap and found that it is up to Seven Hundred Forty Eight Thousand Dollars $743,000 greater than previously expected, due to incre sed 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 thy, 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 provision::-, of applicable state and local laws and requirements, NOW, THEREFORE, BE 1T RESOLVED by the San Juan Capistrano Community Redevelopment Agency as follows_ L 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 Agerncy hereby finds that the Amendment will not result in physical impacts to the environrrent 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 C. 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 ExeCrUtive Director (or his duly authorized representative) is further authorized to implement the Amendment and tape 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. Cl PASSED AND ADOPTED this day of larch, 2011. SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY Laura Freese, Chairman ATTEST: Maria Morris, Agency tSecretary APPROVED A5 TO FORM: Thomas P. dark, Jr., Stradling Yocca Carlson & Rauth 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 2011, Maria Morris; Agency Secretary 6 by and between the SAN JUAN CAP'ISTIUNO COMMUNITY REDEVELOPMENT AGENCY and 25755 VERDi1 O EIEC. DOCS U1292194Yf6/02zz99_t08() ATTACHMENT 2 EM 180. INTRODUCTORY PROVISIONS 101. Defi:\boou—.—........... ............................... ...... ..... ........................... ____ ......... .| lbZ. Representations and Warranties .......... ____ ...... ........ --................ ....... —......... .5 101 Prohibition Against in Owncrship, Managementand Control mf Participant... —.--.—'--.......... ....................................... .................. —.—........ 6 � 200 CONDITION OPT}lE8lT2—...................... ........ ................. .................... ----.----..8 201, Hazardous Materials ................... ................. --... ........ ... ._...................... ........... '8 202. | ...... ...................... ............ ....... —.... ........ ....................... ..... —............. 8 380FINANCIAL PROVISIONS .... .......... ...... .... ___ .... ............... ............... .......... .............. --8 3O). Covenants Loao—........ .............. .................. ........................... ................. ...... ........ �8 400i [)EYE LOPM[NT{}F THE DEVELOPMENT PARCEL.. .......... .......... .--.---..-....9 401. Development of the Site by.................... ....... ____ ........... ____ ............. 9 402, Cost of Construction 403' Commencement and Completion ufConstruction ............... _.......... —........ _—~'-9 404. 8g/and Other G&e,nmeunm Agency Pcnmitx''~.................. ............. —......... ...... 9 405. Bodily Injury uod Property Damage insurance ... ..... —...... ........... '—... ....... .—......... 9 406' Rights ofAccess ...... .,----............ —................... ........ ............. ..................... l0 407 Nondiscrimination During Construction ............... .......................... ................. ....... |0 408. Tuxey Assessments, Encnnmbnuooenand Liens— .................... ................. .--... |O 489. Submission ufEvidence o[ Financing Commitments and Loan Closing— ...... --'|} 4](1 Mortgage, Deed Salo and Lease -Back Financing; Rights of Bvbers—..... l} 503, COVENANTS, CONDITIONS, RESTRICTIONS AND REPAYMENT {]BLIGATl8N.,.... ._..'.--.^_—................. ............ ................. ....... .... ... —.... ...... .......... |4 50l. Duos.--... ........ ..... ...... ....... .................. ............ .......... .---.................... ..—}4 502 Operating Cnvenuot.—.............. ----.---..-.—...!4 503. Tenant Restrictions ......... .--............... ...... ........... —............ ............................ l4 504. Mmn<enuocc—..... ............... ................ —'.................. ...... ......... ...... ............ .l5 505. Rights ofAoce»a............. --......... —.... .......... ....... ............................... ........ l5 500 Nondiscrimination_ .............. --.......... ......... .......... ....... .............. —_—_--.l5 507. RepaymentO6 —..--........... ___ ....... ........... ___ .... ........ ~—........ }7 508. Effect of Violation of the Terms and Provisions of this Agreement,. ...... ........ 17 600. GENERAL PROVISIONS_ ................. ............. ....... ...... —......—...... —.---........ .l7 60. Nmjcoo Demands and CoozmuoicexkxzxAmong the Parties_ ... ...... ................ ——l7 602. Conflicts mf/otmo--.......... ...... .... ............... _'..................... ....... ....... ___ }8 603, EnfbnxcdDelmcExtension of Times of 9orfonmmnce........ ___ .... ___ ....... ....... ___ }8 604. Nonliability n[Officials and Employees nythe Agency ...................... ........... .,..... \8 605. Commencement o[,��oncy8ev�n/Perod_—.-------.-------..--]8 DOCS0012192 i 94v W1322299-0086 (Continued) 708 DEFAULTS AND REMEDIES...'.—................. ...... ---- .............. ...... ........ ....... ...... >9 701. Defaults ~-GcncrJ^....... .......... —.—_---............ ............. ......... —............ l.9 702.......... --- ........... .......... ............. .--- ................. .,—.—..—.../9 Release of Construction Covenants 703. Rights and Remedies Are Cumulative ...... ........ ....... —................... ...... ~_....... 20 704. Inaction Not eWaiver o[Default .... ...--.--.............. .......... --- .......... ........ ..2O Promissory Note 800 SPECIAL PROVISIONS ................ —............................................... ................ ................... 20 801. (odemoKfioadonofthe Agency ...... ............ ........ ..................... ......... ... .... ........... 2O 802. Real Estate Commissions. ... ......—'...—.—........... ......... ---- ................... —... 21 803. Successors lnInterest .---....^..................................—....—.—.2} 804. Amendments Cothis Agreement ...... ............ ......... ................. ....... .--~............ i 905. Entire Agreement, Waivers— ....................... ..... ............... --- ........ .,......... .^—..... 2l ATTACHMENTS Attachment No. t Site Map Attachment No.2 Site Legal Description Ancbmrn1No. J Schedule ofPerformance Attachment No. 4 Release of Construction Covenants Attachment No. 5 Memorandum oyAgree mcot Aoxchm*rtyJo.6 Prevailing Wage and Public Works Requirements Attachment No. 7 Promissory Note Attachment No. 8 Dewdoy'[tuxt 6 DOCSOCA 292194,W022299-WS0 OWNER PARTICIPATION AGREEMENT This OWNER PARTICIPATION AGREEMENT (this "Agreement") is entered into by and between the SAINT JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic (the "Agency") and 26755 VER DUGO LI,C, 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 plats adopted for such area, to acquire real and personal property in redevelopment project areas, to receive consideration for the provision by the Agency of redevelopment assistance; to remake 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. B. Participant is the Owner of certain real property which is depicted on the Site Map attached hereto as attachment No. 1 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. E. 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, 1". INTRODUCTORY PROVISIONS 101. Definitions, The following terms shall have the respective meanings assigned to them in this Section 10 unless the context in which they are used clearly requires otherwise: OCSOCi129219406/022299-0086 "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. "C'ommunity . 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 ProjoXt subject to the conditions set forth in Section 410 hereof. "Construction Financing Closing Da(e" 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. "Covenantsk9 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 Trost" means the Bleed of trust which secures the Participant's obligation under the Promissory Note in substantially the form attached hereto as Attachment No. 8 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 703. hereof. "Disbursement Bate" is defined in Section 303 of this Agreement. 2 DOCSOCJT292194v 15!022299-0096 "Entitlements" means (AC) 06-12 the "Paseo De Verdugo" 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 251.15, 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 25561 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 I 1 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (vi) Section 311 sof 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" lave, any environmental cleanup statute or regulation, or any permit, approval, authorization, license, variance or permission required by any governmental authority having jurisdiction. "Governmental Requirements" means all valid and enforceable lays, 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 seri., 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 Cade Section 1770, et seq., and shall be responsible for the keeping of all records required pursuant to Labor Cade 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 laves (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, andfor (3) failure by Participant to provide any required disclosure or identification as required by Labor. Code Section DOCSOC/1292194v 16/022299-0086 178.1, as the same 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 Calif6mia law and/or the implementation of Labor Code Section 1781, as the sante may be amended from time to time, and/or any other similar law. "Increased casts," as used herein, shall have the meaning ascribed to it in Labor Code Section 1781, as the sante 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 25115, 25117 or 25122.7, or listed pursuant to Section 25144 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substartee" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance." or "hazardous waste" under Section 25501 of the California Health and Safety Cade, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans 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 i 1 of Title 22 of the California Administrative Code, 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 [).S.C. Sections 6901 et se y. (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 9641, et seq. "Improvements" shall mean the improvements to be constructed and operated by Participant upon the Site in accordance with the Entitlements. "Afemorandum of Agreement" means the memorandum anarched' hereto as Attachment No, 5 and incorporated herein by this reference which shall be recordedupon 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 flan. DOC'SGC/ 1292 194-v 1,61022299-00M "Promissory ]Vote" means the Promissory Nate 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 adapted 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 Cortstruc•tion 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 603 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 gency'sExecutive Director, and the Agency's Executive Director is authorized on behalf of the Agency to agree to make such revisions as lie 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, San 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. "sate Map" means the reap of the Site attached hereto as Attachment No. l 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. 'Idris 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 Repmsentations, The Participant represents and warrants to the Agency as fol louts: 5 DOCSOCI1292 1 94 v 166022299-0086 a. Authority. 1"he Participant is duly established and in gond standing under the laws of the State of Califomia 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, gine effect to, and consummate the transactions contemplated by this Agreement. b. No Conflict. The Participant dues 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 late 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 par',y or to which the Site is or may became subject, which could materially adversely affect the ability of the Participant to carry outits obligations hereunder. d. No Participant Bankruptcy. There is no action or legal or administrative proceeding pending or, to the Participant's best knowledge, threatened, looking toward the dissolution or liquidation of the Participant or any Iegal entity which comprises the Participant. e, 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 I Summary attached hereto as Attachment No. 9 and incorporated heroin by reference which discloses the results of a Phase I Environmental Assessment dated June 7, 2006, neither Parlicipant 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 I,aw or Governmental Requirements, except as has been fully disclosed in a separate writing to the Agency prior to the late of this Agreement, Each of the foregoing items a. to g., inclusive stall be deemed to be an ongoing representation and warranty. The Participant shalt 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 DOCSOCI1292194,,,16/022299-0086 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 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 agreementthe 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 regal 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 assignmcnt 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 skull be required to execute and deliver an assignment and assumption agreement and the rights of such leader 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 (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 shcll 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 OCSOV r 292194�.16/022299-006 200. CONDITION OF THE SITE, 201. .Hazardous Materials. Participant shall not cause or permit the presence, use generation, release, discharge, storage, or disposal 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, Irmdemrrmnity. 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, cast, damage:, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees) (hereinafter collectively the .`Clairns"), 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 efr'ect 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 nen subordinate lien on the Site prior and superior to the financing approved by the Agency pursuant to Section 410 hereof, and subject to the terms and conditions set forth herein, the Agency hereby agrees to loan the Participant the sura of ]'vine Hundred Fifty Thousand Dollars ($950,000) ("Covenant Consideration'). 3€12, Condition of Disbursement. The Agency shall disburse the Covenant Consideration, as follows: Milestones Advance for Plans and Construction Documents Building.Pcrrnit Issuance Foundation Inspection completion Roof Sheat .ing Inspection Final Framing,"Rough Mechanical Electrical, plumbing. Inspection Final DrywalI .Inspection Certificate of Occupancy DOC.SOC /l242144v15/322244-0086 Disbursement Amount $150,000.00 $100,000.00 $100,000.00 $100,00U0 $200,000,00 $146,000.00 $160,000.00 400. DEVFLOPMENT O 'd'HF, DEVF-LOPMENI' PARCEL 4011.. Development of the Site by Participant. The Site shalt be developed in accordance with the Entitlements. 402. Cost of Construction. The Participant, at the P'articipant'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. 4134, City and father Governmental Agency Permits, Before commencement of construction of the Improvements, the Participant shall, at its awn expense, secure or cause to be secured any and all permits which may be lawfully required by the City or any other governmental 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 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 Irate 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 shalt have limits of not less than Two Million Dollars ($2,000,000) per occurrence, and if a policy fora 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) &.hall protect the Participant, the City, and the Agency from claims for such damages, and which policy shalt be issued by an "ANI"or better rated insurance carrier as rated by A.M, Best Company, and shall provide all coverages on art occurrence basis, and (ii) obtain and maintain or cause to be obtained and maintained by the general contractor general liability insurance. 1'he 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 efi`ecting 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 anymaterial reduction, cancellation, or non- renewal of the coverage at least thirty (30) days in advance of the effective date of any such: material 9 DOCS001292194 v 161027299-0086 change., or non -renewal. Not less than fifteen (15) days prior to the expiration date of any pcalicy 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 perfon-nance 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 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. 406. 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. 407. 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, calor, creed, religion, age, sex, marital status, physical or mental disability or medical condition, national origin or ancestry, 408. 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 101 DOCS / 1292194v 16/422299-€/485 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. 409. Submission of Evidence of Financing Commitments and Loan 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 existingloan(s)) secured by the Site; the construction of the Improvements, and all ether development costs relating to the Project (including„ for example, offsite improvements, development and building fees, architectural engineering and legal fees, financing casts, 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 neve 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 tithes 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, freed of Trust, Sale and Lease -Back Financing; Rights of Holders. 41€I.1 Mortgages, Deeds of Trust, or Sale and Lease -Back. The Participant shall notify the Agency in advance of any mortgage, deed of trust or sale and lease -bask financing not previously approved pursuant to Section 410, if the Participant proposes to enter into the same Before completion,cif 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 Holder 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 constrict 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 DOCSOC11292 194v16/022299-0086 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 Deed 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 . ( 0) 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 Constnaction Covenants. ` 410.4 Failure of Holder to Complete Participant Improvements. 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 decd 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 suras 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 sunt 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. Ali expenses actually incurred with respect to foreclosure, including reasonable amrneys' 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 improvernents 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 tight of the Ageney 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 DOCSOU 1292! 'Av [&/ 122299-(OS6 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 casts 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 rewire 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. 41 1. Release of Construction Covenants, Promptly after completdon 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 tinreasonably withhold issuance of such Release of Construction Covenants. Such Relcase 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 heal 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 laR dscaping, 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 DOCSOCI1292) 94v 16/02299-W86 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 (2€I) years from the date of the issuance of the Release of Construction Covenants pursuant to Section 412 of this Agreement (ter the date the Agency was required to issue the Release of Construction Covenants, whichever occurs first. No use(s) other than these specified herein shall be permitted without the prier 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 stares, comparable as to quality of merchandise and sales volume as of the date hereof, to 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 sale 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 542 during any p.criod that any of the Owner's tenants are prevented from operating the Project clue to (i) required or necessary renovation of the improvements (provided that the period during which the Project is neat operated as a result of the renovation of the I proverttents shall in no event exceed one hundred fifty (150) days), or (ii) events of farce majeure as set forth in Section 603 hereof. The Operating Period shall be extended for each clay of closure permitted hereunder. 503. 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 sale and absolute discretion may approve rninoT deviations from the fallowing 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 .�CiC'sCi�+' 1292 194v 16/e'? 2?�9-Ciifi (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 (xi i) 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 ars objective and emphasis on generating local revenues, and providing retail users generating high 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 obligatibris and other restrictions of which shall remain in effect until the expiration of the Community Development Plan, 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 502, 505. Rights of Access. The Agency, for itself and for the City and ether 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 ether public agency exercising such right of entry shall take all reasonable treasures 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 held 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 Nvarrant or ether 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. "rhe 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 15 D 3CSOC#f 292194v 161022299-0086 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 vendees of the Improvements or the Site, The foregoing covenants shall run Nvith 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 thetas, 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 these bases are defined in Sections 12326, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Govemment 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 hi.rn 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 teases: "The lessee herein covenants by and for himself or herself, his or her hairs, executors, administrators, and assigns, and all persons claiming under or through hire 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 Govemment 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 teasing, 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 hire 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, sulslessces, 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 Co ernment Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 1_2955.2 of the Government Cede, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyrnent of the premises which are the subject of this Agreement, nor shalt 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 ocettpancy of tenants, lessees, subtenants, 16 DOCSOO I 292194v 16!022299-0086 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. 507. Repayment Obligation. participant shall repay the Covenants Loan in accordance with the promissory Note. The Promissory ?dote 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, 402, 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 lana, 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 ruts 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 Ap:ency 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 lav or in equity or other proper proceedings to enforce the curing of such breaches to which it or any ether beneficiaries of this Agreement and covenants may be entitled. 600. GENERAL PROVISIONS 601, Notice%, Demands and Communications Among the .pasties. 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, Y'occa, Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Thomas P. Clam, Jr. Padicipant: 26755 VI: RDUGG LLC 26755 Verdugo Street, Suite 200 San Juan Capistrano, California 921675 Attention: Uric Altman, Managing Member 17 DOCSOC( r 292194v W022299-0096 with a copy to: Law Offices of Brian P. V1cGilvray 166.33 Ventura Boulevard, Scute 801 Encino, California 91436-7865 Attention: Briars McGilvray 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 snail as provided in this Section 601, Any written notice, demand or communication shah 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 interest' -d. 603. Enforced Delay; Extension of Times of P'erformunce. 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 deemed to be in default, and all performance and ether dates specified in this Agreement shall be extended where delays or defaults are due to; war; insurrection; strifes; lockouts; riots; floods; earthquakes; fires; casualties; acts of Cod; 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 cyther 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 dim to perforin 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 an any obligations tinder the terms of this Agreement, 605. Commencement of Agency Review Period. The time periods set fords herein for the Agency's approval of agreements, plaits, 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 DOC SOU t 292194y] 6/022299=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 RENUMIES 701. Defaults -- General. Subject to the pertnimd 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 cormmencc to cure, correct, or remedy such failure or delay, and shalt complete such cure, correction or remedy with diligence. "Phe 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. 7€12. Legal Actions. 702A Instituflan 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 Orange, 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 enforccrnent 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 Agencyshall be made by personal service upon the Agency Secretary/City Clea or in such ether manner as may he 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 Fees. 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 A,greement, then the prevailing party shall be entitled to recover from the lasing party all of its costs and expenses, 19 DOCSOCrt 29w t 44v1 MQ 2299-0086 including court costs and reasonable attorneys' fees, and all fees, casts, 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 Haat 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, 500. SPECIAL PROVISIONS NS 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 ravailabl.c 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 front 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 actions, asset forth in this Section 901, 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 therm by way of judgment, settlement, or stipulation. The Participant further agrees to protect, defend., indemnify, !told harmless, pay all costs; and provide a defense for City and Agency and their officers, employees and beards 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 DOCSOC: / 1292194Y 161022299-0086 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. 801 Real Estate Commissions'. The Participant represents to the Agency that it has not engaged the services of any tinder or broker and that it is not liable for any real estate commissions, broker's fees, or f'inder's fees which may accrue by means of this transaction and agrees to bold 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 clue from the party snaking such representations. 803. Successors In Interest, The terms, covenants, conditions and restrictions of this Agreement shail 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 can behalf of the Agency so long as such actions do not substantially change the uses permitted on the Site or the financial previsions of this Agreement as specified herein and as agreed to by the Agency .Board. All other waivers or amendments shail 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 ars original. This Agreement includes pages l through 22 and Attachment Nos. I 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 ary part of the subject smatter 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, 806. 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 DOCS,OC'11292I94v 16,;Q22299-0096 shall consent in writing to a farther extension of time for the authorization, execution and delivery of this Agreement. The Date of this Agreement shall be the date when it shall have been approved by action of the Agency. [Signature block begins on following Sage] 2� DOC SOC ,'1292 ! 91 v 16,'022299-0096 IN WITNESS WHEREOF, the Agency and the Participant have signed this Owner Participation Agreement on the respective dates set forth below, A APPROVED AS stratoing, yocca, Agency Special ( CdA GEN SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic Z. /&, . Chairman "PARTICIPANU' 26755 VERDUGO, LLC, a California limited, liability company Dated: By - Its: APPROVED AS TO FORM: Counsel to 23 DOCSOC1121)2194v 16/022299--0086 ''TTACRMENTNO. I SITE MAP DOC'SOC/12X12 194'1 ClAj22299-0086 A7rACtMEN,I,No, 1_1 ATTACHMENT NO.2 SITE LEGAL DESCRIPTION Lot 4, of "Traci 134, in the City of San Juan Capistrano, County of Orange, Stateof California, as per map recorded in took 11, page 23 of Miscellaneous Maps, Records or Orange County, California ATTACIINMENT NQ. 2-1 WCSOC 1292194vt6302.2299-00836 ATTACHMENT NO.3 SCHEDULE OF PERFORMANCE NOTES, I . Days 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 DING APPROVALS I Submission of Construction Drawings_ toty. Op or before February 1, 2010 The Participant shall submit construction drawings, public improvement plaits, landscape plans, dernolltlon 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 to 3 1 pursuant Section 303. Participant may submit these plans to the Agency and City concurrently for plan j 1 check, 2 ._. City Plan Check Art oval. City shall complete j City sha11 provide comments on first pian i its building plan check approval. E check within 15 business days of submittal. Participant shall provide revisions to first plan :fleck comments within 15 business days of receipt of comments. The City and Participant shall respond within 10 business days thereafter for each additional plant check round. 3 Completion letion f Building Plan Check and Issuance Upon satisfaction of all c, rnditiorls of approval for buildings, public Of Construction Permits. City shall issue construction permits. improvement, landscape and/or other required reviews and payment of all , required building permit and development ees- impact fees- lStl� » w Wbmission of Insurance Certificates and ['T-Submission � Prior to the commencement of ; construction. Endorsements. Participant shall submit i Certificates of Insurance and Endorsements to agency in accord with Section 405 and 412 of this ! i Agreement. L.. ATTACHMENT NO. 3-1 DOCSOC11292194vWG22299-0086 ATTACHMENT NO.3 -Z DOCS Cart i 292194v 16,'02-1299-0096 E 5 Approval of Plans, participant shall have _ Prier to commencerntnt of grading. approved plans for site grading, utilities and public improvements. Co?°dSTRu cTIoN 6 Construction Manager. Participant shall submit Not . less than two weeks prior to proposal for General Construction Manager to commencement of demolition and site j oversee site development_ preparation. i 13 Co rrenc -demolition-.site Preparation. Within 45 days of execution of OC 1,n �of gradin & building improvements, I contract. _]'4 WRelease of Construction Cotenants. Agency to 1 Within 30 days after Agency has E I furnish Participant with a Release of Construction i conclusively determined that such Covenants upon the completion of the : construction improvements on the. site Improvements. have been satisfactorily completed. ATTACHMENT NO.3 -Z DOCS Cart i 292194v 16,'02-1299-0096 ATTACHMENT NO.4 RELEASE OF CONSTRUCTION COVENANTS RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO AND SEND ,rAX STATEMENTS TO: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attention: Space Above This Lime for Recorder's Use This document is exempt from the payment of a recording fee pursuant to Caovernment Code Seeder) 2738.1. RELEASE OF CONSTRUCTION COVENANTS This RELEASE OF CONSTRUCTION COVENANTS (the "Release") is made as of 200--, by the between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic (hereinafter referred to as "Agency") and 26755 VERDUGO LLC, a Cal'if'ornia 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") :fated . 2008, concerning the redevelopment of certain real property situated in the Cit} 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 fumish 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 Grange County. This Release is conclusive determination of satisfactory completion of the construction and development of the Improvements requited by the OPA. C. The Agency has conclusively determined that such construction of the Improvements on the Site has been satisfactorily compieted. ATTACHMENT NO. 4-1 D005OCIt 292E 94 v l &022299-086 NOW THEREFORE, 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 construction.complies 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 finance the work of construction of Improvements, or any part therefaf. 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, [Signatures begirt + nfollowing page] ATTACHMENT NO. 4-2 DOC SOC'1292t94v 16/02'2299-0086 IN WITNESS WHEREOF, the Agency has executed this Release as of the date set forth above. ATTEST: Agency Secretary APPROVED AS TO FORM: Stradling Yucca Carlson & Rauth, Agency Special Counsel AGENCY; SAN MAS CAPISTRANO COMMUNITY RF -DEVELOPMENT AGENCY, a public body corporate and politic Chairman PARTICIPANT: 26755 VERDUGO LLC, a California limited liability company By., Its: ATTACHMENT NO. 4-3 DOC900 EXHIBIT A TO ATTACHMENT NO. 4 LEGAL DESCRIPTION Lot 4, of Tract 1334, in the City of San Juan Capistrano, County of grange, State of California, as per map recorded in Book 11, Page 22 of Miscellaneous Maps, Records or Orange County, California EXHIBIT A TO ATTACiI.M1=NT NO.4 DOC SOCI 1292194Y W022299-0086 ATTACHMENT A1C}. 5 MEMORANDUM OF AGREEMENT RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL TO ) AND SEND TAX STATEMENTS TO: ) San Juan Capistrano Community ) Redevelopment Agency ) 314400 Pasco A.delanto ) San Juan Capistrano, CA 92675 ) Attention: ) Space Above This Gine lot Recorder's Use This document is exempt from the payment of a recording fee pursuant to Govvmrnerit Code Scctifirt 27383, MEMORANDUM OF AGREEMENT This MEMORANDUM OF AGREEMENT (the "Agreement") is entered into on 2008 by and between the SAN .JUAN CAE"ISTRANO COMMUNITY (REDEVELOPMENT AGENCY, a public body corporate and politic (hctteinafter referred to as "Agency") and 26755 VERDUGO LLC, a California limited liability company (hereinafter referred to as the "participant"). RECITALS A. Pursuant to an O%,ner 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 "L attached hereto ("Site"). B. As a rendition of such OPA, Agency has required the recordation of this Memorandum ofAgmement, and Participant has agreed to execute and record this Agreement, which shall run with the land. C. This Agreement is entered into and recorded in aceordance with California Health and Safety Cade Section 33437 and 33439 and the Redeveloplment.Plan. 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 DOC:SOC /1292194v 16/022299-0086 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. 'rhe 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 tender 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 tender 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; A'ITACHMENT NO. 5-2 D005OC i 2921344 i 61022299-0086 (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, 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 Lave, 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 Naxardous 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 econornic 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 Claire 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 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. 5. 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 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 darnage 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 occurrene , and if a policy form with a general aggregate limit is used or provided the aggregate limit shall be not fess 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:Vl"' or better rated insurance carrier as rated by A.Ivi. 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 endorsements) of insurance countersigned by an authorized agent of the insurance carrier on a form of the insurance carrier evidencing andlor ATTACHMENT NO. 5-3 DOCSOCI1292194Y WOU'299-0086 effecting the requirements herein andtor 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 nage the City and the Agency and their respective officers, boards, agents, and employees as additional in 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 furnish e:d to to Agency evidence satisfactory to the Agency that it and any contractor with whom it has contracted for the performance of wort{ 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 proposers modification (,$) 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 sale and absolute discretion, the Participant refrains 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 al I Governmental Requirements. 7. Taxes, Assessments, Encumbrances and Liens. The Participant shall pay when due all real estate taxes and assessments ort 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 pari 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 after 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 per€nined herein, as ATFACHMEN1' Nth: 5-4 DOCS001292194v 10022299-0086 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 its 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 2£832 Ortega Highway, Sari 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 clays shall, at the Agency's option, constitute a. N -fault 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 sof farce rna pure as set forth in Section 603 hereof. "t"he Operating Period shall be extended for each day of closure permitted hereunder. 10. Tenant Restrictions, Participant shall use the total grass 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 fallowing 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 ("`l'C"") 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 smice organizations; (vi) Public facilities; (vii) Real estate offices: (viii) Travel agencies; and (ix) Full ser -Oce laundry and dry cleaner business. A17AC:HMENT NO, 5-5 DOC S00 t 292 t 94v 161022299--0096 (x) Massage therapy; (xi) Small business, vocational, professional schools, and (xii) Financial brokerage of'f'ices, 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 Plan, 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, 12. 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.reascnable 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 ether 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. 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 rnental 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 ruck 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 nonsegregatior. clauses, ATTACHMENT NO. 5M6 DOCS0ClU 1292194v 16/022299-0086 a, In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executers, administrators, and assigns, and all persons claiming under or through thorn, 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, 12326.1, subdivision (rn) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Cade, 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 throughhim 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 (rn) 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. 14. Effect of Violation of the Terms and Provisions o; this Agreement. 'rhe obligations and covenants established in this Agreement, as set forth in Sections 103, 202, 4€13, 405, 407, 409, 501 through 5061, inclusive (the "Covenants") shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors Ar'FACHML—:N,r NO. 5-7 DOCS001292194v 16.422299-0086 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. IN WITNESS WHEREOF, the Agency and Participant have signed this Agreement as of the date first set forth above. ATTEST: Agency Secretary APPROVED AS T®OI2.M.— Stradiing Yocca Carlson & Rauth, Agency Special Counsel AGENCY: SAN JUAN CAIPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic Chairman PARTICIPANT: 26755 VERDUGO LLC, a California limited liability company -0 its; ATTACHMENT NO. 5-5 DC)CSOCI3.292194v [ 6I022299-WM ATTACHMENT NO. b REVAILING WAGE ANIS PUBLICWORKS REQUIREMENTS I. 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 Cade Sections 1773.2 and 1777,5. (A) The posting requirement is applicable for each jab 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 Francisca, CA 94142, at least 45 clays prior to the project bid advertisement date. (3) Notify the Division of Apprenticeship Standards, Department of industrial Relations. See Labor Code Section 1173.3. (4) Inform prime contractors, to the extent feasible, of relevant public work. requirements: NOTE,: Requirement information may be disseminated at a preaceeptance of bid conference or in a call for bids or at an award of bill 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 1864 and 1861. (C) keep accurate records of the work performed an public works projects, as set forth in Labor Code Section 1812. (D) inspection of payroll records pursuant to Labor Cade Section 17761, and as set forth in Section 16404 (e) of Title 8 of the California Code of Regulations. (E) and other requirements imposed by law. (5) Withhold monies. See Labor Code Section 1.727. ATTACHMENT NO. 6-1 DOCS00 I 292194v 161012299-0086 (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 44 hours in any one calendar week, unless compensated at €gat 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(g), 1777.5, 1810, 1813, and 1860. 111. Contractor and Subcontractor Requirements. The contractor and subcontractors shall.: (1) Pay not less than the prevailing wage to all workers, as defined in Section 16604 of Title 8 of the Califomia 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 r-nake 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 16244 (a) (3) of Title 8 of the California Code of Regulations; (7) Comply with Section 16101 of Titie 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 Sec.tiom 1777.5; ATTACHMENT NO. 6-2 DOC'4 .`t292i94r,16M22"-0086 and (9) Comply with those requirements as specified in Labor Code Sections 18 10 and 1813; (10) Comply with other requirements imposed by law. ATTACH M NT NO, 6-3 DOCS001 292 f94v 16/022299-W86 ATTACHMENT NO. 7 PROMISSORY MOTE (Secured by Deed of Trust) , 2009 California FOR VALUE RECEIVED, the undersigned 26"155 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, premises to pay to the order of SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), at 32400 Pasco 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 '1009 (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. Definitions: "Agency Participation Payment" .means, subject to the provisions of Section & below, fifty percent (50%) times the Net Operating Income in excess of the Participant Preferred Return. "Agency Refinance Share" means, fifty percent (5(r/o) of the Distributable Refinance Proceeds.. "Agency Sales Share" means, subject to the provisions of Sections 3 and 4 below, twenty- five percent (25%) of'the Distributable Sales Proceeds. "Direct Costs'" means those construction costs paid directly to contractors and/car 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 tht, public for business. "C'rross Income" means all gross income from the Project including, without limitation, rents, common area maintenance charges and other reimbursements from the tenants. "Net Operating Income" means the aggregate annual Gross Income less Operating Expenses, ATTAC HMEN% NO, 7-1 DOCSOCI t 292 i 94v W022299-0086 "Not Refinance Proceeds" m€;ans 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 comme'ricing 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 casts, 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, clearing 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 (%) 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 interest on 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 requirod onsitc 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 casts, 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 lana 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 parthtis and which are approved by the Agency in its reasonable discretion. In addition to the foregoing, the Participantshall be entitled to P'articipant's fees and overhead equal to-. three percent (3%) of Direct Costs. For purposes sof calculating the "Participant Preferred Return", "Participant Costs" will be reduced by (i) costs incurred by Participant but reimbursed by tenants; (H) 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 elate of issuance of the Release of Construction Covenant and (iii) all Covenant Consideration Payments. ATTACHMENT : O. 7-2 DOC:SOC/ 1292194v 3 6/.022299-0096 "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 lack fees, breakage fees, hedge fees„ premiums for letters of credit, guaranty payment premiums, tender due diligence fees and costs, mortgage brokerage fees, title insurance fees, escrow casts, fees and prorat:ions, legal fees, and other similar costs of refinance. "Third Party Costs of Sale" means all third party, casts of sale of the Site, Project or any part thereof and/or mental Housing Sales Parcel including, without limitation, prepayment penalties, yield maintenance payments, subdivision and/or lot litre adjustment costs, title insurance fees, escrow assts, fees and prorations, legal fees, transfer taxes and other similar casts. 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 Maid directly from escrow at closing of such sale or refinancing, 3.1 Payments from Net O eratin 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 PaymMs of _Agency R.efirtance 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 arn.ourit 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 forth( coming 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 DOC OC/1291t94vt6tts22294-0086 The Participant shall deduct from the gross sales proceeds-, [A] Third Party Costs of Sale; [13] any accrued and unpaid Participant's Preferred Rettim; [C] the greater of (i) the Participant's Capital Return, which is an amount equal to the Participant's Preferred Retu..m, calculated, as of the date of closing, based on Participant Costs at closing; , divided by the buyers 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 I40% of Participant OwnershipInterests. In the event that there is a change in the ownership in the interests of capital, profits, lasses and cash flow of Participant (other than a Permitted Transfer), the Agency may deem such. a transacting. a "sale" for purposes of Section 3.3, 4. Cessation of Agency . Participation Amounts, 4.1 Acceptance of Agency Sales_ Sham. 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 tho 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. 5. Net O gratin x Income Re ori. Can or befbrce 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 forms 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 tete financial statements taken as a .ATTACHMENT NO. 7-4 DOCSOC 1292194v 1 € fO22299-0086 whole. To the extent that the results of the Net Operating Income report and this dote 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 4 10 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 outer 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) Qoycrnin I.,avv. All questions with respect to the construction of this Note and the rights and liabilities of the parties to this Dote shall be governed by the laws of the State of California.. (b) Bindin cin 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) AttgMpy_s',Fees, (i) In any action to enforce this Note, the prevailing party shall be reimbursed by the other party for all reasonable attorneys' fees, costs and expenses, incurred by it in casts 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, casts 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 Neste. ATTACHMENT NO. 7-5 DOCS00 I 292194v 16/022299.0086 (d) Time of the essence. Time is of the essence with respect to every prevision 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 casts, 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 ,,aiver 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 betwt-an the terms of this Note and the terrns of any rafter document related to the loan evidenced by this Note, the terms of this Note shall prevail. 9. Securky. 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 anti/or Agency Refinance Share and/or Agency Sales Share as and when required hereunder shall constitute an event of "Default" under the OPA. 26755 VERDUGO, LLC, a California limited liability company Its: ATT'A.CHMFNT NO- 7-6 DOCSOO 1292194v 1 6fG22299-0096 EXHIBIT A TO ATTACHMENT NO. 7 DISTRIBUTION OF AGENCY PARTICIPATION PAYMENT, REFINANCE PROCEEDS AND SALE PROCEEDS Dishibufion ofNet Affna Parfidpation Payment First, to pay Participant's Preferred Return Second, to pay any unpaid Accrued Participant Preferred Return Any =wyfer is distributed W1, to Agency as the Agency Participation Payment and 5CP/o to Participant Distribution of Agengy Refinance Proceeds 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 proo=6 to be utirv4d to fund capital expenditures to be incurred within the forthcoming Chitty -six mondis Any =iairmg prom,; shall be distributed 50% to the Agaicy as the Agency Participation Payment and 50% to Participant Distribution of Gmss SaIt Proceeds First, to third party and/or Participant's closing costs Second, to pay any unpaid .Accrued Participant Preferred R( -,tum Jbird—Parficipanfs Capital Return, which is an amount equal to the Participads 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 10% 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- I TO ATTACHMENT NO. 7 DOCSOCIT 292194v 16/022299-0086 TA6.9 3 MWIEOF ROTE PAtWDff$A41G PAY192iTSkj Ua K=0 LACO-VAIWM WW KALM BAR,lLid14CAPISTWO, CALO:OR" YAU P€6m Resvru¢t PttnxaIImsti, r M%& W?W 243,6+70 364,700 Me= MW 342 HOW 770,600 31£5,600 tno: Vxtsnrf&CdYe m =0 UA UrA Ll) am f1m L= Lm 41 x} Ltd: GmuIrmcme 150,800 267600 VS,3M 760,:00 701100 dS3,100 025,7[41 030.7]0 352.300 AIM Uvdrtb.sVA ON* Exp f37cw) (74,x) 0590 ;38,IM .0,200) `39,x0} (l9,4M( `7t.a0. 141.566) (45,100, Mxr#wgctrerY (7.100) (5000) 48,7001 it,t t 10 61 19.F:Oi (434p71 0C.2il 118,6GOy 114,0401 Rearm 11 3 Ltd ES 7 n SS ]} LL Tdx! Dpm*V ETtrms ma) ) a 4L m Atm 14" ;,5001 am Lam! &lm mm 2%m Wopmsrlr IM -00 ,:6,,100 734300 231.730 243,403 253,800 264,700 775,2[41 2A8,t430 Ss sac 314,£00 AOmlcmit 4401,0 U,ArAN Ctatl omit n4 rtnf Pxftdpar4Catts 3461,M0 . 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P"ells Ntlkna 9Owedu Apxy it Solt 806.m 'bT"W4dby: 1 Ysiilun,lsscAIDLh FkN! 9tq:xv WO-1idk3Cot W. 12Mfl=, -M EXHIBIT A-2 TO ATTACHMENT NO, 7 DOCSOCI1292194v 161022294-0085 TAUL14 EYAWLE OF SECTKA 4A LOAN PUOff V END OF'tM M $EIDCCLNiiJ0-VAlOiF 0YR3T39iJ1LWG SRN XAFFUPIffrAOM1 CRiJFORNIA ftpmmwj Nate Pr1 Iml Sax.[ lal lwa ilia 1111[: lw rial %i Teal Yaac 10 Ntl-11d 91 387 pdwl EG sMwme 27*.PW 2$1,700 2aXG W700 MUM 529,50+1 342 0 35(,50: VOU 305.996 L� uas�a, I29,3a)> rla,sa7) t1+7r16� [s5,26r,) (16,�i0! n4,5iPj Is7,+� n7,am3) (1a.�6) €1113ro) citm Imam 2F%,6pG WAD 215,300 2g9,5w 301,1o0 313,1m, 326,?m 339,700 MV 38Fi300 oparadrtlO E06nm Uamlmbi id Mm Exp. 45.0061 (34.064) ;�,tl94) (35,100) (37,200) f3aXOC (NAM) 140,5007 (41,= (41AO) mmmomft f1Wj X2,000) {000) 4 XOi 49,020) (8.4770) 5.01?0) 1102001 i10,%O6 (11.000) '��1 ta.� s�am,1 sit sit t?,�1 Lt,1 7roadOpan6rAExpaaes (11,803$ (43,000) (446007 (48,100) €41jM (45)00) (%300) 152,1M) ,33,T00; (554m NM opemlK Ermwa 209,&00 274,300 233,100 213.400 255,5(10 254,100 276,% 19 AGO -UW 310,900 OlrcstCasta 4,001900 Cmrtiet4Casid�'atia^.Px�dit 7950.000) Pa�f Coax S,aSs � PwF>sbr "poet "d bag" 7,0% 243,50 213,5T0 113,570 213,5774 213,570 21$$70 211,570 213570 211574 213.579 pipwo(dccmlRelvm 0 4.791) a L 0 0 0 0 0 4 Drdrb»abas )ma a 9 5,080 20.130 20,330 4,000 30,530 57,030 73,030 85.7136 97334 AWXIP-dpr -P y"Wd 59,0% D. (4809k mm) (14,9151 (?fl.otOj 13'sx6l t3Jxo (38,515) (47.5151 (48.5857 Pwdsgwt R#VO4 cwa Fin 9 2,980 10,955 11,915 - 20.015 25250 70,d 15 30,915 42,515 4$,956 mama. hmed Pardcgsmd R mn 4.779 0 0 t 0 0 0 0 O 0' Pramk mNehftam mm Ac=ed snot klaacai 20% 19.000 4F,660 19,000 'h1,U 19,000 10,0007 IDIOM €9,000 10,6170 10.000 ftpmmwj Nate Pr1 950,$70 Cumkwkc 11,tt3 and 7rWs kim d. TOW km=l6aed 1,140 m CtmAc +¢ Aqmq P&lWpadimPayrtm(t E23i,75O} Ref Amway Nodla Ap q 02% Faaxav*bf Fr1sa+ Mmmi Apmems,w Flm ''A4wg d-i�AxGsrhAw..IL'sOW.AR EXHIBIT A-3 TO ATTACHMENT NO. 7 DOCSOCf i 292194Y 761022299-0096 ATTACHMENT NO, 8 DEED OF TRUST WITH ASSIGNMENT OF RENTS (SHORT FORM) RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO AND SEND TAX STATEMENTS EMENTS 1 0: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelarito San Juan Capistrano, CA 92675 Attention; S pace Above This Line for Recorder's Use This doc=ent is exempt from the payment of a recording fee pursuant to Government Code Section 27383, DEED OF TRUST WITH ASSIGNMENT OF RENTS (SHORT FORM) This DEED OF TRUST is made as of _ , 240_ between 26755 V11±R.DUGO LLC, a California limited liability company ("Truster"), whose address is 26755 Verdugo Street, Suite 240, San Juan 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 its the City of Sari 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) than certain. Promissory Note more particularly described below, executed and delivered pursuant to an Owner Participation Agreement between Trustor and I3enef"ici ry dated as of _ , 200 (the "Agreement"); a copy of the Agreement is on ftie with the Beneficiary as a public record. All capitalized terms not defined herein shall have, the meanings established therefor under the Agreement. This Beed of Trost secures payment under that certain promissory mote dated as of 200, made. by Truster in favor cif Beneficiary in the principal scam of U. S. $950,400.00 (the -Promissory Norte"), and extensions or renewals thereof with the balancc of the indebtedness, due and payable on occurrence of an event of acceleration as defined in the Promissory Note, (2) the performance of each agreement of Trustor incorporated by reference or contained herein, thedefault tinder any of which spall constitute a default hereunder, (3) payments, if any, otherwise due and payable under the Agreement, (4) payment of additional suras and interest thereon which may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a promissory note or nates reciting that they are secured by A°ITACHMENT NO. 8-1 i)OCSOC,'1292194vf6i02221.I9--CYC S6 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 performs 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 13 of the fictitious deed of trust recorded in Orange County ,August 17, 1964, and in all other counties August 18, 1954, 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: COUi^rry BOOK t'AGF COUNTY BOOK PAGE COU14TY }3WK PAG31: COUNTY 130<5K PAU Alameda '-ISS 55.5 Kings 858 713 Racer €028 374 � sierra- .iii tS7 Alpine s 1., 6. 1 lake 457 110 1'4=35 €6#, 1367 5isksyou 566 762 McFarlsna 133 4 9 Lessen 192 367 R,vestidc 3778 147 5olwko 1287 02, BuEtc 73:6 5i3 Lvr Angeles T3879 B74 Sactamenio 5074 :24 Snrmma 2067 #2? C_laveras 185 338 Madera 941 136 Sar. Bcni;o 360 463 5Midaux 1970 S6 Coiusa $23 391 Mann 1849 t22 S. Bernardino 6-13 75$ ivnce- 0 589 C.ra 404 I M'Iiipasa go 453 S. Ftrncisco ZP-04 SV6 Tcharna 4S7 I87 Costa Od Nor1a 7131 549 Mendocino 657 99 S. Soaquio 2855 281 Trinity 108 595 El Dorldo 704 535 Mereed 1660 753 5 Luis Ob,spu 311 i37 Tulare 2536 f 18 Fresno 5052 623 Modal 191 43 San Mateo 4778 175 Tu .lumne 177 10 Glenn 469 76 Mono fig 302 Santa satban 2t16s 881 Vzotura 260 237 Hvmbaldl 801 83 Munwrey 357 239 Santa Clara e626 6b4 Yrdo 7bq 16 trnpenal 1180 701 Napa 704 742 SantaC'ntz E63E1 607 Yuba 348 693 inyo 164 672 Nevada 363 94 Shasta so 533 Kern 37% 690 iXangv 7182 Is San Clingy 1464 149"4 series 5 shall inure to and bind the parties hereto, with respect to the property above described. Said agreernents, terries 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 notexceed 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 him athis address hereinbefore set forth. MWI;TNESS WHEREOF, Trustor has duly executed this Deed of Trust as of the date first above written. "Trustor" 26755 V1MRi UGO, EEC, a California. limited liability company Lay_ ATTACI- HENT ANO. 8-2 I)OCSOCf =29Z194YI6.'Q22299-0086 EXHIBIT A TO ATTACHMENT NO. 8 LEGAL DESCRIPTION Lot 4, of Tract 134, in the City of San Juan Capistran.e, County of Orange, State of California, as per map recorded in Book H, Page 23 of Miscellaneous Maps, Records or Orange County, California EXI It BITA-1 TO ATTACHMENT NO. 8 DOCSOC,ll 292194v 16,1022299-0086 EXHIBIT B TO ATTACHMENT NO.8 RIDER TO DEED OF TRUST Exhibit B to peed of Trust with Assignment of Rents dated as of , 200 ("the "Deed of Trust"), executed by 25755 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 "BQneficiary" I. DFFAUL"r. A default or breach under any of the following shall, at Beneficiary's option, constitute a dcfau.lt under this peed of Trust: (a) A default under that certain Owner Participation Agreement, executed by Trustor as Participant and Beneficiary, as Agency; (b) A default sander any other Gleed of trust encumbering the Site. 2. pi,1B ON SALE OR ENCUMBRANCI . 1n the event of any Transfer (as defined below) of the Site, or any portion thereof or interest thmin, Beneficiary shall have the absolute richt at its option, without prior demand or notice, to declare all ,sums secured hereby immediately clue anti payable. As used herein, the term "Transfer" means and includes the direct or indirect sate, 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, EXI-11BIT B-1 TO ATTACHME —T NO. 8 DOC:SO ,1292194u16,022299-0086 STATE OF CALIFORNIA } } ss. COUNTY OF � On .. , before me, _ _ , Notary Public, (I'rin( Name of Nolary Public) personally appeared .. who proved to me on the basis of satisfactory evidence to be the person(s) whose narne(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in hislherltheir authorized capacity(ies), and that by his/her/their signature(s) can the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. 1 certify under PENAI.,TY OF PERJURY under the lames of the State of Califomia that the foregoing paragraph is true and correct. WITNESS 'my hand and official seal. Sign.aurc of Noiary ?uhlic OPTIONAL ihouL,h the data below is not required by law, it tttay prove valuable to persons retying on the docurnent and could prevent fratidulent reattachment of this form_ CAPACITY CLAIMED ttSV SIGNER 0 Individual 0 Corporate Officer' Tiff -W Parnerfsi Cl Limited [ General rl Attorney -In -Fact El Trustee(s) E3 GuardianiCor.Servatur C Cather: Signer is representing• Name Jfl'ersonts; E7r i nistv(ie5) DOC'SC}( I2r? 194v16.10,12299 -0186 DESCRIPTION OF ATTACHED DOCUMENT T-ide Or Type Of Docurnent Number Of Pages Dale Of Doczame s __._........ ................ ._..........___........__. Sigrwrfuj Otbu Thao Namud ,Above STATE OF CALIFORNIA ) COUNTY OF On - _ before me, _ Notary Public, (Print Ntunr t�f Notary Pubiiti) personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) islare 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 hiAer/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, execrated the instrument. I certify under PENALLY OF PERJURY under the laws of the Stale of California that the foregoing paragraph is true and correct, WITNESS my hand and official sW. Signature of Nota y Public — — OPTIONAL 'Dough the data below is not required by lawn it may prove valuable to persons relying on the document and could prevent fraudule€Et reatfachnitnt of this form. CAPACITY CLAIMED ED BY SIGNER El lr,di--dual Cl Corporate Officer gltie�s) lj Parmer(s) C G Limited Il General © Attomey-1 ri-Fact Trustee(s) GuardianiConsen ator Cl Jtiter: Signer is representing: Name ofPerson(s) Or Gn:i ro(ics) DOC'SC)Oil292194vT5/(}22299-QN6 DESCRIPTION OF ATTACHED DOCUMENT Title Ur Type Of Document _. -::...W ..:. - Nu€rtaer (al Pages Dare 0f Docurnerxs — gncrls) Othcr 'f hay Namcd ,? bavc 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 ars 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 cast. If the actual gap is lower than the reviewed estimated gap of $1,698,000, then the final loam assistance amount will be based on the final calculated gap less the difference between the originally calculates/ gap of $1,086,000 and the original Ivan amount of $950,000, or $136,000 (the final loam amount will be the calculated actual gap less $136,000)' Agenda Report Page 2 March 15, 2€711 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 lean 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 loam 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 corrimencement 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 $276,5616.86. 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). 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 fallowing: Agenda Report Page 3 March 15, 2011 ® Increased building height from 25 feet to 27 feet (to Delp 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 Nene 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 coast center was created to trach 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 2000/10 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 $276,000 will be disbursed this fiscal year with the remainder of the loan amount anticipated to be released in FY 2011/12 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 2011/12 RECOMMENDATION. By Motion, and per previous Agency Direction, adapt the Resolution approving the f=irst Amendment to Owner Participation Agreement providing additional financial assistance for the Paseo de Verdugo project (26755 Verdugo, LLC) Respectfully submitted, Cindy Russell, 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 267551Verdugo, LLC 2, First. Amendment to Owner Participation Agreement 3. Community Redevelopment Agency meeting Minutes dated November 2, 2010 4. November 2, 2410 Agenda Report regarding Status of Paseo de Verdugo (Vaquero West) and Request for Additional Financial Assistance 5, July 7, 2010 Letter from Eric Altman RESOLUTION NO. 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 {ETHER 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 Goan 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 mare 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 $74€3,000 greater than previously expected, due to increased construction casts 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 laves 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 4 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. 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. 1 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. 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 ?. The Agency Executive Director (or his duly authorized representative) is farther authorized to implement the Amendment and take all further actions and execute all documents referenced therein andfor 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. S. The Agency Secretary shall certify to the adoption of this Resolution. 0 day of March, 2011. Laura Freese, Chairman FLUTAM Maria Morris, Agency Secretary APPROVE: 0(4 1-0--F,0 RM: Thomas P',Zfark� Jr., Stradling Yocca. Carlson & Rauth Agency S�e�al-Counsel STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) I, , Secretary of the Sar? 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 vete of the Agency: AYES: NOES, ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and seal this day of _ 2011.. Maria Morris, Agency Secretary L FIRST AMENDMENT TO OWNER PAWFICIPATION AGREEMENT This FIRST AMENDMENT TO OWNER PARTICIPATION AGREEMENT C First Amendment") is made and entered into as of , 2411, by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGE, NCY, a public body, corporate and politic ("Agency") and 26755 VERDUGO LLC;, a California limited liability company RECITALS A. The Agency and the Owner have entered into an Owner Participation Agreement dated as of February 17, 2049 C Agreement" ), pursuant to which the Agency has agreed to provide the Owner funds in the form of a loan ("Covenants Lean") to assist in the construction of additions to and remodeling of an existing building located at 26755 Verdugo Drivc, San Juan Capistrano, California f"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 retake the Covenants Loan to Owner, Owner executed the; Promissory Note and Deed of Trust, both dated February 20, 2009. The Decd of Trust 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 € oke the Project more feasible by partially off=setting the ;ap betweenthe; 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 Nate, and Dc;ed of Trust, the parties have recalculated the hemibiliity 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 Ieaseable slaace, 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 Joan Capistrano ("City"). In furtherance of these objectives, the; parties desire to increase the aanount of the Covenants Loan to an arnount 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 tyre public purposes and provisions of applicable state; and local laws and requirements under which the redevelopment of the Project Area has been undertaken. DOCSOCF14626720/022299-0086 1 of 12 ATTACHMENT NOW, THEREFORE, the parties agree to amend the; Agreement as follows; k. Loan Amount. The amount of the Covenants Loan is hereby increased from `eine Hundred Fifty Thousand Dollars ($950,000) to an amount up to but riot to execed One Million Six Hundnr,d Ninety Eight Thousand .Dollars ($1,698,000) (such amount the "Loan Maximum"), The Final amoi3 nt of the Covenants Doan shall be the lesser of (x) an amount equal to the final audited Total Development Costs of the Project, reduced by the Supportable Private Invostment, and further reduced by One: Hundred Thirty Six Thousand .Dollars ($1311,000), or (y) the Loan Maximum. (a) `'Total Development Casts" means, with respect to the Project, the land acquisition cost; actual demolition coasts; 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 servicers; 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 casts. (b) "Supportable Private Investment" means, with. respect to the Project, the Stabilized Net Operating Income divided by a threshold return or, investment of Sever? and Twenty One 1-1un.dreths Percent (7.21%) (i) "Stabilized Net Operating Inccome" means gross monthly leasing income derived from the Project reduced by monthly operating expenses, which includes any r nreirnbursead office expenses, management costs, and Operating & capital reserves. 2. Condition of Disbursement. The table of figures in Section 302 of thr; Agreement shall be replaced with the following. ilewstonea Advance for Plans and Construction Docuinenls Disbursement Amount ! $200 000 Building Pen -nit Issuance � $250,000 ........... Foundation Inspection Completion $27:5,000 Roof Sheathing Inspection----- $225,000 Final Framing/Rough Metal Electrical Plumbing Inspection, Final Drywall Inspection $275,000 111 $275;000 �...�..�. Shell Completion .$1I8,000�'__,.�.__m...�M.w.�. 2. Loata M.odific:ation Documents, In connection with the Agency's increase of the principal amount of the Covenants `,clan. to the Owrier, the; Owner shalt execute and deliver to the Agency a First Amendment to Promissory Note, in the foarm attached hereto as Exhibit A and DOCSOC/I462072v3!022299-€1086 2 o4 12 incorporated herein, and a First Modification to Deed of Trust, in the forin 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 grange County, California.. 3. No Other Changes. Except as expressly provided to the contrary in this First Amendment, the ternns of the Agreement, the Promissory Note, the Deed of Trust, and any other documents executed pursuant to the Agreement, shall remain in full f2orce and effect as written. All capitalized terms used but not defined herein shall have the meaning given to such terms, its the Agreement. IN WITNESS WHE .E.Or,, the parties hereto have caused this First Amenchaient to be executed by duly authorized representatives as of the day and year first written above. OWNER: 26755 VERDUCO LLC, a California limited liability company BY: ,.,. Its: "'-&l AGENCY. SAID JUAN C PISTRANO CO14/dMUNITY RE DEVELOPMENT AGENCY, a public body, corporate and politic By: IN -Mm Secretary APPROVED AS TO QRM Stradling Yocca Carlso'irk Rauth _ ... Agency Special Counsel Chairman DOCSOCI t 4626720/022299-0086 3of12 STATE OF CALIFORNIA } } ss. COUNTY OF ✓,x Jg _ ) Ora _ Z2,011 before me, 'Jew- zF.-,P-, of e.. , Notary Pubtic, personally appeared�� t � �� d � � � �� -_- _ -- who proved to rner on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to mo that he/sloe/they executed the same in his/leer/their authorized capacity(ies), and that by leis/her/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 officialseal z/11 1� Sl ...s - TORE OF NOTARY PUELIC My n rte, DEC. 43, 412 DOCSOUI462672v3/022299.0086 4 of 12 EXHIBIT "A" FIRST AME NDMENT TO PROMISSORY NOTE This FIRST AMENDMENT TO PROMISSORY NOTE (the "Amended Norte") is made and entered into as of _, 201.1; by and between the USAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT LOPMENT AGENCY, a public body, corporate and politic (the "Agency"), and 26755 VERDUGO LLC, a California limited liability company (the "Owner"). 1. Agreement. This Amended Note is given in accordance with the Owner Participation Agreement executed by the Agency and the towner, dated as of February 17, 2009 (the "Agreement"), as amended by that certain First Amendment to Owner �articipatiort Agreement, dated . 2011 (the "First Arnendrnene). The rights and obligation-, 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 farce and effect, except that the principal arnount owing thereunder is hereby increased frorn Nitre 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 tessera of (x) an amount equal to the final audited Total Development Costs of the Project, reduced by the Supportabit Private Investment, and further reduced by One Hundred Thirty Six Thousand Dollars ($1.36,000), or (y) the Loan .Maximum. (a) "Total Development Costs" means, with respect to the Project, the land acquisition cost; actual demolition costs; posts 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 casts; financing costs associated with carrying; the land and paying interest through construction; loans points and tees; and other actual and direct third -party pre -development costs. (b) "Supportable Private Investment" mearts, 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 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. EXHIBIT A - .l OCSOCIT462672v:i/022299-0086 5o112 OWNER: 26755 VERDLTGO LLC, a California limited liability company, Y: AGENCY; SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic By: chirman EXHIBIT A-2 DOCSOC/ I 46267203/022Z99-0086 6 of 12 STATE OF CALIFORNIACOUNTY OF. � } ss, (art� � �r � � before ane, __�, Z-_ ,t Z4 M k - _, Notary Public, personally appeared . '.:........_ � M , who proved to ane on the basis of satisfactory evidence to be the person(s) whose names(s) isiare subscribed to the within instrument and acknowledged to me that he/she/they executed the samcs iti his/het/their authorized capacity(ics), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of'which -tht Nrson(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 nay hand and official seal f 2,2 SrATURE OF NorrARY PUBLIC ,a RI TASBACK MY Ott, EV. DEC. 13, M D0<;SQC/I46267XV022299-0086 7 of 12 9.' iWIR7IT "B" FIRST MODIFICATION TO DEED CSE `;!'RUST RECORDING REQUESTED BY; AND WHEN RECORDED RETl RIN TQ: San Juan Capistrano Community Redevelopment Agency 32400 Masco Adelanto San Juan Capistrano, California 92675 AND W14EN RECORDED, MAIL TO: Maria Morris, City Clerk City of San Juan Capistrano 32400 Paseo Adelanto . San Juan Capistrano, California 92675 This dExusnent is exempt from payment of a recording fee purwant to Governtnent Cade &�dion 27383 FIRST MODIFICATION OF DEED OF TRUST This FIRST MODIFICATION OF DEED OF TRUST ("First Modification") is made as of 2011, among the trustor, 261755 VERDUGO LLC, a California. limited liability company ("Trustor"), whose address is 26755 Verdugo Street, Suite 200, San .Tuan Capistrano, California 92675, FIDELITY NATIONAL TITLE. COMPANY, whose address is 1300 Dewe Street, Suite 310, Newport Beach, California 92660 ("Trustee"), and the SAN .TITAN CA.IPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency") whose address is' 2400 Paseo Adelanto, San Juan Capistrano, California 92675, as Beneficiary. RECITALS A, Pursuant to the Owner Participation Agreement cxcauted by the Agency and the Owner, dated as of February 17, 2009 ("Agreement"), the Beneficiary was to provide a loan to the Trustox in the amount of Nine Ilundred Fifty Thousand Dollars ($450,1300) ("Covenants Loan") to be used towards the development of certain real property located of 26755 Verdugo Street, San Juan Capistrano, California and more particularly described in Attachment No. l attached hereto and inCOTporated herein ("Site"j. B, In consideration for the Covenants Loan, the Trustor has executed. that certain Promissory Note (tire "Promissory ?vote") dated as of February 20, 2009, in favor of the Beneficiary, in the principal amount of Nine Hundred F"ifiy 'l'�ousand Dollars ($950,000), EXHIBIT B-1 DOCSOU1462672Q/022299-0086 8 of 12 C. The Promissory Niue 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. 200900010:3451 (the "Deed of l"zrrst"). 1). Trustor and Beneficiary have entered into a First Amendment to Owner participation Agreement and a First Amendment to Promissory Nate, bath of which are dated as of , 2011, and which increase the original. principal amount of the Promissory Nate to an amount up to but not to exceed One Million Six Hundred Ninety eight Thousand Dollars ($1,698,000)- E. Trustor and Beneficiary noir 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 Nesta, in ars amount up to but not to exceed One Million Six Hundred Naieity Eight Thousand Dollars ($1,698,000). NOW, THEREFORE, for valuable consideration., the receipt and sufficiency of which are hereby acknowledged, Trustor hereby m.od.iiies the Deed of Trust as follows: t. Amendment to Promissory Note. All references in the Deed of Trust to the "Promissory Nate" shall mean the Promissory Note, as amended by the First Amendment to Promissory Nate. 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 arnended. by this instrument. EXHIBIT :B-2 DOCSOCI 14626 72-Y 31M29 J-QUS6 IN WITNESS WHEREOF, Trustor and Beneficiary have exeouted this First Modification as of the date set forth above. TRUSTOR, 26755 VERDUGO LLC, a California limited liability compally By: Its: ACCEPTED BY AGENCY AS BENEFICIARY: SAN JUAN CAPISTRANO COMMUNITY RE' DEVELOPMENT AGENCY, a public body, corporate and politic By: ATTEST Secretary APPROVED AS TO FORM.: Stradling Yocca Carlson & Rauth Special Counsel to Beneficiary Chairman EXHIBITB-3 DOCSOU 1 462672Y31022299-08 6 10 of 12 ATTACHMENT A UQU 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 C affl'oxmiz, as per map recorded in Book 11, Page 23 of Miscellaneous Maps, Records of Oranp County, California. ATTACEMENT NTC). I TO EXHiBITB DOCSOC/1 46267201022299-0086 11 of 12 STA.n OF CALIFORNIA ) ss. COUNTY o> on A-3 before me, �f . _, Notary Public, personally appeared ....... - _':� ! �' r l who proved to ine on the basis of satisfactory evidence to be the persons) whose names(s) is/are subscribed to the within instrument and acknowledged tote. that he/she/they executed the same in hWher/their authorized capauity(ies), and that by his/ber/their signatures) on the instrument the person(s), or the oatity upon behalf of which the person(s) acted, executed the instrunneiit. 1 certify tinder PENALTY OF PERJURY under the laws of the Mate of California that the foregoing paragraph is true and correct, WlII"NESS my Band and official seal SI :, TXTUR1w OF NOTARY PUBLIC JERI QAC COMM. #106755 5 �tlb t€tds�y� DOC 900140 672v3/022299-0086 12 0# 12 MINUTES November 2, 2010 SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY REGULAR MEETING CLOSED SESSION (610.86): 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. Langres Usti, Mark Nielsen, Vice -Chairman Sam 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 Z $200,000 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 Works 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 1 11-02-2010 BOARD DISCUSSION, None 1. DISCUSSION REGARDING STATUS OF PASEO DE VERDUGO (VAQUERO WEST) AND REQUEST FOR ADDITIONAL FINANCIAL. ASSISTANCE (600.40) Cindy Russell, Finance Officer, provided a staff report and responded to questions. Public Comments: Eric Altman, Applicant, provided a status update on the project and responded to questions from the City Council. Board lotion: Moved by Director Uso and motion failed for a lack of a second to provide an additional loan amount of $500,000 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 loan 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, thea 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 Ivan amount of $950,000, or $136,000 (the final loam amount will be the calculated actual gap less $186,000) 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 farther business, Chair Freese adjourned the meeting at 9:02 p.m. to Tuesday, November 16, 2010, at 5:80 p.m. for a Closed Session and 6.30 p.m. for public Business Session, in the City Council Chamber, 2 11-02-2010 Respectfully MARIA MORiRJ "C- -NCY SEVeRETARY Approved; November 16, 2010 11-02-2010 CSA 11/2/2010 AGENDA g,PORT El TO'. Jae Tait, Executive DirectoOK 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 Motion, 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 ({SPA) to provide the. Paseo pe 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,QO0, 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,O00 and a revised milestone schedule accelerating their receipt of loam proceeds in order to construct the project. The City also received a leiter from Berrington elated October 21, 2010 requesting an . extension of the plan checks pending the decision regarding additional financial assistance. The plan checks duan to expire are as follows: Grading Kermit 11/9/2090 Demolition Permit 11/11/2010 Building Permit 12/8/2090 California Building Code Section 105.3.2 Time limitation of application, shies "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.", 0512(/- i ATTACHMENT 4 Y Of 9 Agenda Report Page 2 November 2, 2010 The three (3) plait checks have all been approved "earlier this year but no permits have been rued. The Building Code authorizes the Building Official to grant a orae -time extension, of 180 days for issued and unexpired building permits but does nol: authorize such extension for pian 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 plaits 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 2€111 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 (CUED) 1 3,564,48 TOTAL Q4 856 . The OPA provides fora dray of $100,000 at building permit issuance to cover the costs of the building permits. However, Serrington has requested a deck1on from the Agency regarding additional funding prior to drawing any additional'.funds on the loan and having building perms issued. 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 faro forrr:a 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 tate Paseo de Verdugo project pursuant to Architectural Control (AC) 05-012 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, can 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: 2of�3 Agenda Report Page 3 November 2, 2010 Increased building height from 25 feet to 27 feet (to help screen roof equlpment); 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 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 $150,000 in funding to date pursuant to the (SPA. The FY 2010111 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, 01C 0 Cindy R ssell, Finance Officer Attachments, R 7ely 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 1 0/2 1110 01i2r,.A 3 of 9 TABLE 1 ESTIMATED DEVELOPMENT COSTS MIXED USE PROJECT ; 4,360 SF OF RETAIL + 4,350 SF 6F OFFICE MEXICO 1..lNDO-VAQUERO WEST BUILDING SAN JUAN CAPISTRANO CALIFORNIA I. Land + Land Related Cosla •t Land Acquisition 12,675 Sf Land $125 1 Sf Land, $1,590,000 Dernolltton Allo"nce 25,ti00 Total Lancs + Land Related Costs If. Direct off-site Improvements On -Site Improvements' Building She( Tenant Improvements Total DfrootCosis It. Indirect Costs Architecture, ling. & OonsulAng Public Permits & Fess R Taxes, Insurance, Legal & Accounting (marketing/? easing Development Management Contingency Allowance Total Indirect Costs 12,875 Sf Land $127 f Sf Land $1,615,000 Allowance $36,000 12,675 5f Land $2€3 /Sf Land 251,000 8,700 5f NRA $156 IV GSA 1,359,000 8,700 Sf NRA $31 ISf NLA 272,0€00 8,700 Sf NRA $220 ISf GSA $1,518,oflo 6.11Direct Costs 8,7UO Sf NkA $18 15f GBA 2. (r/0 Direct Costs 8,700 Sf NIDA . $6 !Sf GBA 3. CPA Direct Cost 600/6 Other Indirect Casts, Excl. Mg€nt. $115,000 153,0(70 88,000 52,000 58, 0300 18,001) Ill. Financing Costs Lang carry During Constructions $1,615,000 Financed 7.9% Interest $128.000 Interest Du€inq Construction 5 $2,889,000 Flnanced 7.9% Interest 124.000 Loan Points & Fees 7 $2,718,000 Financed 2.O0 Points 54,000 Pre Development Costs $231,000 Allowance 231,0700 $434,000 Total Financing Costs $537,00 1V. TotW Devela ent Costs 0,700 Sf NRA $518 ISf GSA $4,504,000 ' Assumes Developer's estimate. Land area per City Stmt report of 7117/07, 7 Estimated by KMA, assumes a prevailing wage premium of 16%. a KMA estimate. A Assumes Developers estimate. Land area per City Staff repar'. of 7i1710T - Assumes a blended debt and equity rate. Based on a 12 month hosting period. Average outstanding balance is set at 140%. 5 Assumes a blended dein and equity rate. Based on an 10 month construction period' Average outstanding balance is set at ' Based coni ,net operating income, a 7011/oloan to value rano and a 5.21 % blended capltalizatlon rate. $ Assumes Developer's estimate, Land area per City Staff report of 7117107, Prepares by Keyser garsiWi Associates, Inc, Filo name: uaquem west 2010: A7r_5 4af9 TABLE 2 E5TWATEi3 STABILIZED NVT OPERATING INCOME MWED USE PROJECT : 4,35U SF OF RETAIL+ 4,350 SF OF OFFICE MEXICO UNDO-VAdVERO WEST BUILDING SAN JUAN CAPISTRANO, CAUFORNIA L Cass Incorr* r i Ground Level - Retail 4,8501 Sf NRA $2.50 €SWonth $130,500 2nd Story - Office 4,350 Sf NRA $2.56 Isfimonth 133;8041 Potential Base Incom 5,700 Sf NRA $2.53 €SViVIonth $264,100 other j rw2M2 Reimbumable Operating Expenses; 8,700 Sf NRA $0.00 18f 0 Potenffal Grass Income $261,100 ! (Less) Vacamy & Co4ectlon Allowance 6% Potential Gmss Income 18,200) 11, Ewffettive Gross Income $250,91" E. III. QWratr>3.E RSB es 2 E, I [ Unreimbursed Oflice Expenses 4,350 Sf NRA $8.00 ISf ($3400) Management 5% EGI (12,500) Operating & Capital Reserves 8,7010 Sf NRA f$'0_15) ISf (1,300) TOW oper fng Expenses 8,700 Sf NRI {$5,59) (Sf ($48,600) I�. Stal�Ilixe>i Net Operating Income $202,300 Office rent is based on KMA's recant survey of San Juan Capistrano rents and represents a weighted average, assmed to be gross or modified grass rents. KMA utilized the average reW rent provided by the agency. KMA assumptions based on Ifs experience ;with similar projects. Pr"red oy. Keyser Marstw Assoeiales, ilio, File name: vaquero weal 2Otq ATT_8 5of9 TABLE 3 FINANCIAL FEASIBILITY SURPLUS 1(GAP) CALCULATION MIXED USE PROJECT, 4,350 SF OF RETAIL + 4,350 SF OF OFFICE MEXICO LINDO-VAQUERO WEST BUILDING SAN JUAN CAPISTRA! , CALIFORNIA 1. Su n bile Private lav stmertt C Icula#ion Slabilfzed.Net. Operabrq Income See TABLE 2 $202,300 Threshold Return on investment7.21% Supportable Private Inves'trmnt $2,806,000 IL Financial Feasiti lus 1 (Gapl Calctilation Supportable Private Investment $2,806,000 (Less) Estimated Development Costs Sea TABLE 1 (4,504,EI Ill Flt racial Feasiblll $urplus f (Gap) 92,675 SF Land ($9N 1Sf Land Based on itMNs estimate d DevelopWs existing project return. preparect byxeyssr mswpri Associffies, h'.c. FI€a nine' vacniem gyres# G07G', A'IL 0 6 of 9 City of Spin Juan Capistrano PROJECT FEES Project Name: Paseo de Verdugn Project Address: 25755 Verdugd St. Plan Check #, BIO -0054 "::.,., Ii1C4U.ES-'i it�dlii Tx�t ori°1rs :??'ls " *1. ! odawh Co'rr 6( �ToA),. $28L68-86 C.tJ;S.i3. $3,554,48 Engineering (Public Works) Development Fees * included in BP total Utility [Department OCFA fees arae Demo P"it includes Demwre dep. Misc. Fees Misc, Fees * included in BP total These lis are payable:to THE CITY OF SAN JUAN CAPIS` RANO These fees are payable 6:THE TRANSPORTATION PO RT'ATION CORRIOOR AGENCY # These fees are payable to CAPISITRANO UNIFIED SCHOOL DISTRICT Demo deposits included in Demo Permit Fee $ 1,750.00 (See Deena Berths) r•.r--.. Grading Surety Bond Amount Included in Grading Permit total $ 2(36$.2 (Sets Deena Berens) C & D Bone! Amount Included In BP fee $ 16,500 (,See Deena Berens) 7 of 9 11. Swings and offer playground equipment accessory to detached one- and two- farmly'dwellings. 12M inflow awnings smpfiorted by an exterior wall that do not project more than 54 inches from the exterior wall and do not require additional support of Group R-3 and U occupancies. 13, Non foxed and movable fixtures, cases, racks, counters and partitions .not over 5 feet g inches in Freight. 14. Radio and television antenna, flagpole's not over twelve (12) feet In height measured from grade, "Unless otherwise exempted, separate piuttr�i€�g, elo ctrir�l ap rmecFianical permits veil] be.required for the above -exempted. item." �� 3. Srlsecnn 911.3,2 "Time [Imitation of application" Is hereby amended to read as follows: "905.3.2 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 106.6 "Expiration" is hereby amended to read in Its entirety as follows, "'105.5 Expiration. Every permit issued shall become invalid unless the work on the site authorized by such permit is commenced within 180 drys after its issuance, or if the work 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 caro be recommenced ,. miter a permit, expires, a new permit shall first be obtained to do so, and a fee therefore shall be erre half the amount required for a neer permit for such work, provided no changes have been rmad6 or will be made in the original plans and specifications for such work, and Prov" 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 Wrfting, one extension of time, for a period not more than 180 days. Any •pe7ittee holding an unexpired permit may apply for ori exiension of the time within which work may commence ander that permit when the permittee is unable to commence work within the time required. The extension shall be requested in writing pricer to the permit expiring and shove justifiable cause demonstrating that circumstances beyond the control of the permittee have prevented action from being taken, No permit shall be extended more than once." 5. Subsection 106.1 "Submittal diocurnonts" is hereby amended to add a second paragraph that reads: Mr. Erie Altman 26755 Verdugo LLC 26755 Verdugo street . Shite 200 Sara Yuan Capistrano, CA 92675 C)etotaer21, 2010 fir, Brett Caulder City of San Juan Capistmo, Building Depart tent 32400 Paseo Adetanto San Juan C;apis'trazao, CA, 92675 RE: Request for time Extension for Demo, Grading and Build-perraits for the Mixed Uae Paseo De Verdugo Project Ing Dela` Brett: Paseo de Verdugo is project that has received redevelopmo�t funds from the City's Redevelopment Agency, Unfortunately, due to a variety of unforeseen ecoiaomic and Other issues, the project has been delayed.. Ctmvatly we are waiting on the City's Redevelopment Agency to re'spond to an additional request for assistance. Without additional assistance the project is not economically t°easibie. We are hoping to have the City's Redevelopment Agency approve additional assistance within tlae next 60 days. Thereafter we would hope too move fomard as soon as feasible. We are requesting an e0msion fbrtho following permits: B 10-0273 --- Demo permit - expires 1 I /11/2010 B09-0608 - Caxading permit - expires 11109/2010 B 10405 — Building permit - expires I2/08/2010 Please let me .know if you need any addition.! in%rnmtiora 10 process thi.-, request. Than You for your time and consideratioa. Siz�eerely, Ert tir�aaz 26755 Verdugo LLC, Managing Member 9 of 9 Mr, Eric Altman 26755 Verdugo LLC 26755 Verdugo Street Suite 200 San Juan Capistrano, CA 92675 July 22, 2010 Mrs. Karisa Norton City of San ,Tuan Capistrano, Economic Development Department 32400 Paseo Adelaiato San Joan Capistrano, CA 92675 RE.- bequest for additional Financial Assistance for Financial Feasibility Gap for the cOnstr Uction Of the Mixed Usti Paseo De Verdugo Project Dear Karisa: Pursuant to our discussion-, over the past couple: ofrnombs, the purpose of this letter is to formally request additional financial assistance fr()m the City of Sara Juan Capistrano Redevelopment Agency for the mixed used develop- ent to be named "Vasco De Verdugo". The original request for assistance was supported by the financial feasibility gala in excess Of $1,0€3 million dollars as delineated in the Keyser Marston Feasibility Analysis prepared for the City in November 2047. In February of 2009, the San :luau Capistrano Comrrzttnity Redevelopment Agency and 26755 Verdugo LLC entered into an Owner Participation Agreernent for financial assistance in thQ,, amount of $950,000.00. To date, in accordance with the terms of the agreement, $150000.00 has been advanced for plans and construction documents, Those plans have beers prepared and were put out for bid with several contractors, Unfortunately, evexr with the econorTai.c deterioration that has occurred since this project was originally submitted, all the bids have come basic with significantly higher costs than the pr -e- construction plan estimates by Keyser• Mi ar•ston and rnC, As discussed at a recent meeting with 1• coelomic Developnitnt Manager Douglas Dumhart, Mayer Pro -Tern and the Redevelopment Agency's Chairperson Laura Freese, Co"IfIcil Member and Rodevelopme nt Ce -Chair Sam Allevato and yotr, I have prepared a spr•ead�;hee;t summary which includes all the project costs and have also enclosed copies Of all project bids. 1t was further discussed, that the: Agency wot ld consider- Waving that information assessed by Keyser Marston and thereafter if approOriatc, consider any additional asszsianc.e. 1 of 22 R is our desire to move forward with this project within the nett few mouths. However, Nvithout additional assistance from the City, the project does not make ecotloni c sense. Wu hope that the City's Redevelopment Agency will review the information and further assist its filling Coe economic gap. We understand that in today's ec.ononlic cjijna €te ally assistance €nu.st be weighed against a variety of projects and scarcity of resources. l ven with additional assistance, we still believe that this project will provide both short and long; -term benefits to the City, and significantly acid to the redevelopment of downtown, Sincerely, Eric AiMian 26755 Verdugo LLC, Managing Member 1 j Summary Spreadsheet 2) Potential Developmentsxpe sr s Beyond GC 3) l�=riess Cot�str€.tction .Birt 4) Heam Construction .Biel 5) Bristleeone Construction Biel 6) Bergn7an Bid 7) Construction )1'1ana47 e€it Services Agreement cc; Rodevelopnient ('h r, Mayor Pro- i'e`m I'laura. feese Redevelopment, Co-Cbair, Sate Allevato 2 or 22 [ R g V t0 d ,� E t� O c s. a p t b � A s,, ` 47 U c G' �¢ cC ��v W wy's c'3E C; [� '� n `) <! c CP, C7 CJ � � _ v >n � cn �� i6 r � (..? � �. a7 rui -o ti Ga � a _ a � c. a.s a} 0 c n a m 3 of 22 C rni v v V'i V FA UD 1� w W G4 W to 44 vz V C� V, !F} 4�7 0, V, £A 4F3 000c?O Qn O p -6 O O QOO a00 {� p 6 Ca66 G7O' O O Q Cf Q O C] O iT t: O Od O O Cd7 vv Q q Q :A [v! to cl l � r f ES7 j 1 f9 19 0 j N4 0 V'O mm 13 V3 [A 6fl E9 i!3 49 ca, d N a o ©ono c>ocio 0 t?� 0 o ri 0 S5 C1 C' COi iJ O ; O O O D 01 _ Q N a) Cv r 'n ap> 0 ' = 4 1 VT v] G9 N �3 V3 ,fr rA V) V4 Vi Nb V5 (O t9 W v3 W/ 6R <» G JC5 QOj bO (6 LMS ., h rti G Ca C Ci 61 0 ' fJ Cl C ©d L7 b O O a n .:J 01 9 fJ 12 zA e') - nota o c? Qj 60i rte- C) d i0 fti ('� d 4Y i a Cp? p O n q�rn.,op ra o c '� o ac, p p n.) c c© za o ��rLLSjjcin aci dCi Verdugo Project Potential Development Expenses Beyond General Contractor Bid Item Included Eycluded qnt Unit Cost }3ud eft Total i u l et 1 backtlow certlfseation 3 ' $ 2 ytilit Go t ees 3 SUGI 4 Gas Co 1 1 $ $ 36,060 4,000 $ $ 35,000 4,000 5 AT 1 $2,000 $ 2,O00 �8 Cox 7 Grease trap cert 1 1 $ $ 2,t3i36 $ $ 2,000 - 8 Grease tank 1 $ 10 Snits 4,000 11 17e ut ins ectionitestin 1 $ 3,000 $ 3,64fl 12 Mailboxes T$ $ - 13 SDGE main power installation 14 Er:croachrrrent ermitermit 1 17s7 $ 12,500 2,000 $ $ 12,50fl 2,600 15 Si rsa eladdress 1 $ $ 16 Fire exiin wisher with cabinet 4 $ $ 17 Fire alarm 1 $ $ - 18 Dust control 1 $ $ " 19 Backflow devices 2 " W 20 Site fencln 1 $ $ - 21 Access doors $ 22 Knox box and rocessin 1 $ $ 23 Asbestos abatement 1 $ 8,000 $ 8,D06 24 Front waft shorin 25 Roof cut outs 26 Locksmith keying 1 $ 500 $ 500 27 Securit system 1 $ 5,000 $ 5,000 _ _ 28 Electric to fire riser 1 $ $ - 29 IyhonWfor fire alarm 1 $ 400 $ 400 30 Historic de icfion ro rams and rocessir 1 $ 3.000 $ 3,000 31 5 and floor crate 1 $ $ - 32 Sluty backfill in street 1 $ $ 33 Concrete corin and cutting 3 $ $ - 34 Electric meters 6 $ 250 $ 1,500 35Tenint subpanels 6 $ 2,000 $ 12,000 35 S rinkler structural talc review 1 $ 506 $ 506 37 Additional scaffold rental period for other trades 1 $ $ 38 Subtotal $ 95,400 39 Possible Pro act Casts 40 Site electrical service ! hbor issues (special clean-up and scheduling)1 $ $ ' Awnin 1 $ 3,000 3,Go0 Air balanceOff r42 site lumbin connection 9 Roof ladderfhatch 1 $ $ 46 Subtotal �98, Total Additional Potential Pro'eatCosts 4 of 22 5unenntYsttor8 Trado nve laid Totll Bid A.W. Bids Increasotl Cas{ . %1e;,Nd 5WI ROG6 Bid ge fip i : ., _. womb: u as;n . SiaG. Paatin - X 5t:,&7S.G9 S17,615.*G 52.070.00 12M% 315,83$ Q' 57 r.t 66.00 Kara £3a Fng Storm nru°a X 5?1.25G.Cr3 524.G20.O0 57,370 CQ +. E.S6W 82 f,2,Y�,0O 52A,82O.OP Gruor Gansu it r SSoin1�EN8,n„�__„_ .._. K:.� 83L,4'W, 2 534487:411 � t10 U-.nfl4: 5iafk F.umO ,._ _ plu�r�L:r� X .0{1 57:,25p.{lj735° 52?5.(32.tif}.VG ......._.:...� 5fa5 8:514,13Gp 60Qc $231 653 V(3Tt:5£+O.UEI <2,itiY. StBS:299:9ri 8237..vh: 5272,FIOD 00 TU_ 56i4G'0004 314X'._- ._.y, i:OC S2[7.#Q6:Oq7SW Cwwwatiort Fourtcatmn GO $540.4"05.00jwC,nhfra..lary �':: Fdwrjafiun X`' • .no 87x309il.9f Gonst CcttCr¢Fo FOunaatirrs _ }f $15'rJBh 00 11-116116 10 $64,S1E.00 41.2 7`1. _ Ca!ion t,aah£i '"=mc .____.__ asnli 3u`STr 2n § i:s-' X-: fri G96'Ca'7 -SAI6_3C_60 .1iD.w% ir3G:}ic 1 n. 811 C nlWI6 hsAtOSrlo Cwi WO1S0... Pr's! X E9 53; EC $ ij 503 DO 59 598 QC1 t4 51% tG t 37±<pp _ S70.15,1013 00 F'.rvu\m h4asnn � s°avers1GUclrCwomru+Ma84np K58�^.g579V 55 OWOq(r,OO 53$0; 3, C0 40.0A 581.907-OU r,1 co F41 E1kclrre ._--- ».^,. �Iuctn6wi .....-�.._ 7C�. 6r7Y +0_8_5 GA 5Y77 BG CA S6:9GG f30 3'.5654 Si i4.5RP:iK1 5377.5ft5:.0Ef Oasis dir Mocnanical X $GS,50.00 576,178,00 Sg\$3C..'p 1447Y $5&,546.00 6aoi.'Ya OoaIS'satyiUas cum%: �a76.i78.CO . hrU�, Prodack ResDu+ce,�l:ro OaGrsrY=.cuos.�s-......_-..,-..-..,. 5C tffi1 e0iU10+ ..,... vYh':7-7777 [liaf Wr�arfs"-t+cssMil:�dovis , -,.. ... %_,,.: 515270�A0 ._ 52D,Oi5t#y0 Sh;f3G SSIl 30:904e 51521Q_tpp 52L10(X3`00 CEYKrvmw _ 2ltiacnursf5lare£rani X 5SP3,$OO.Ab V34 LO S1 x,000.01? D.Sik 9123,GOO,pp S3'3A x00, ti9 PmOraxS >!YrsuFeiiP ..._.m_�___ 3ns�ilaiior. _,, -M'- St ,a00.C4 57t, 00 m 58.209'. !`iri'l9t.'c SE2 ;f40 S?7:E9p,4iG Ckui: fnlen9f� a NaIE!T-EiBr SOx 6'J31101 ei'£,r 1�•i�On--,....-,.. _ 3tivrali -A''!.SCb,i'+?i.LG_.'602232,Otl 00 42:154% -:...k,92i.00 -SG2.21192 Chvesf or air T-Uar 5c 00 8111V+C� §oit F; aPf4tccti6!1 '..-.- ,__,_ P'm Nounctio, - v__, -X ': $5`a ii139,U6-Sv.bz}9.vO_.,_ x$ti,3'iC�d(i 1�a% 355:.G26Oi! "v87005 iK! :,tllrt• Aiarll f a Awn., Contracldr X Se,A34 40 Sc.834 40 S6 OG V.O=*%c $G.930..50 5,S34 OD ilaml 4 ifao£In - 'waf6tf)rfK{r rFtaof •_T X 5'+B 90;C0 Sia7>,GU 955.iw.00 4G;£?Tx, 576:t19+1.9it --553,9Q0.4G pOH Spee 1°ietaf Shey AdeiaUruitc s & OvIns X S51.666.9p 50.44000 Si7.F;14 00 3_3.58;4 SS t,aC•G00 Sheol MeinUG 91B s�. G)p19 R. 5a8,5i J.,00 _&+E,S -C 6"s rt 5U fl4 4.00°A, _, SS$:StR;0E7 O.aitt Rain u!ter4 G, iLors B (3wvnsPcuts X$i0,73!J.00 .100.WN 0. On � 'X- 8iO3"362,6b gi $7�23,N1333.P:i;;.GC .U2;57=N a$tG3,3&Z:DO 0,0.3 iTJ FkhtnpnG P£aSIe; in SvuS;aclScat[n3tlEn 5199�C`iG,bG -SS t9.0�•0.G0 FOO.DO'�, _SY a b• »rascar . �� 5_ cco 5s€{aicEna _X k``,. sa_4,:W sxolz�iia4 51:t�:oao:aa €ax��°r;✓ -. 4Vcs:caust Wsfe� raafin0 Vynlerproofnag 850,Ab0.00 514,5p0,60 $C.SG300 45.06% Nm t',rse i _ 1R�td a�fn.. X$f9.uC00ii- S_ I,,g:W 54.-75C?;4a 26.00% N-r,! Tlie _ _Tae X 550.1150G 58r fic PW $Sf,a5.GP 62.£15°h 85O.1'500 $ai.060.00 Pt, CValiYx}c.. f'nrni iSee Dod X ks38Q.00 533,345 GG 573yC C- S25.Gfr8 OO .._...,-.w.......,.., _Si4mG D 53.3Y500 n27hSi...,7 14,171' ,�.-.._..,. ._ ti3 fJRw�n fEUpr$vssa_s nlwchC C�o:.creto k c!; 570. no S7 cc CO 51:Sn0100 2g 355C3.U(j 57 "i9U.G0 J ri f.!flrer rw .+ca pa Ff.CO CUrSIFL'Ui4fC6 i+®nirBVlS�t'ard flf.a_____ G�'s[O:e�FgRiA�r4`%afiS X_66�4`3i.. k' 942.510.0E m .._.5 560 G0 4b._OC?o ..._ . lS+k4K lhe, ,s S7agi»�_Ulc .r.sifolGkig ________. _.x,: 5.'F fiOII.Ct; 'St1.OGG.^-0 - SCrylig;drrry prafessmat5 Carp S nfl Ids _Y. X Sf 1_$05.L+: 31 QOC CP .. M.�Stf.G7 SS' 30w.G� _.vim% dfi ARY _ 5' i G05.Ot..^: S• T,L`pt7.40 fi;:f!s Sca!taby E,Euu4�menf; Iris: ' S.atlSldi�� 7t' �51r.8UAL'G 5 5.i9v.4C. _,54_SU5:G0 - 3. 3.°L n�,.fnafirucl�arlE apartie5 101E r-ccasscaas X 57.259 QC 6?2:�4f Y+V SCCA Doti% _-., 57.259.91 ., .,M:�._ $7.2.,4-00 ,BiS &20 tiC9.pi1 30.t70.5.P0 6- >nto+:vrs $2, GOO C, $23,9CG.40 $25 3FY3,00 _, S2S,0Gc-00 . t3A SAe Card!tions S3� OOO:OQ $3pA40.tl0 �8000 00 .530MOM Q $30,CO0.09 iaa>�� an e.:GaiOs 8 Q pmm'i_u l 91 qY6 S 0 SOS $#0,1#W4:0 310000, PW $ie hens Asnasos nhatemar<r X 9G,OOC.GYe 5",OGO,GO 55 tiVp.cs? 5'I,OUO.OV' T9t;'--'', Lkndcfh' o � .5•;5.006,44 549.OU4:C0 � _ Sd5,t�:ttCi 545;DL�.pC' SUki TO'[AL 61,52&,$58,0.0 51,850,892.4#7 (TEAM) TOTAL $2,557.8$2.94 6 of 22 HEARN C20NSTRUCTION PASE4 DEVERDUGC ilAi 26766 VEROUGQ STREET SAN JUAN CAPISTRANO, CA Q412srtQ , Bldg. - BID PREVAILING % Increase CARD AMOUNT WAGE Prsv. Wage 0 SIT-EVVOR-K 5124,413 $12.56 $155.5'16 25.00% I LANDSCAPE & IRRIGATION $80,000 S8.0a $100,0011 25.00 % 2 CONC;RETF. $126,284 $12.$5 $1157,858 26.00% 3 MASONRY . 318,779 $1.90 $23,263 23.8816 4 STFEL $17960 $1.81 $20.960 16,70% 5 R©UGH CARPENTRYIFIMSH GARP mIU` RY $166.700 $16.83 $208.000 24.78% 6 CAULK & SEAL - $7,509 $07e $5.000 6.54 i 1NSU=.ATION $2,496 $0.25 $4,2&6 72.05°4 8 ROOFING $32:477 .53.26 $38,146 17 af"%, G FLASHING SHEETMETAC $36400 S3Aa $47,400 30,22°✓ 10 DOORSIF'RAMESIHARD�AIARE $16.067 $1,52 $17,292 8.0% 11 STOREFRONT/WiNDCVS 3101,000 $4fl.24 $125,000 23,78°/n 12 LATH &PLASTFR $70,520 17,12 t1GD,130 50.50°/4 13 DRWi AL,L $15385 $1,55 524,0£0 66,001A 14 CERAMIC f4LE $54,481 55.50 559..000 8.29% 15 FLOORING NIC NIC 16 PAIN-r!.$!G 516LWS IS1.63 $20,000 24.25%a 17 5PECWA 71E8 $5,9501 $0.60 $6,300 5.88% 16 TOILET ACCES,SCRIES & PAR'FiTiON87 55;300 50.54 $6,760 B, 49% 10 PLUMBItvu 550,339 $5.08 $50,336 0.0010 20 9K SPRINK1,FR $23,850 $3.01 $35,219 17.99�/u 21 HVAC" 548,463 $4.39 $52,618 8.571A 22 FLECIFMOIAL $10.758 $10.48 $'€28,938 24.27% $USTOTA4 $4,129,167 $114.01 $1,3KC12 23.46% i'ie7letsl condfVons $175,(100 $175,°360 0.00% OH&P 9,00% $1'17,374 $141,211 20.31% LIABILITY INSURANCE 1.201A 17 658 ZG 523 20 31°F TOTAL $1,438,534 $145.24 $1,730,746 20.31% HERRN CONSTRUCTION PASEO DE VERDUGO 26755 VERDUGO STREET SAN JUAN CAPI TRANO, CA 04128110 QUALIFICATIONS Bid based upon mutually agrood upon contract tarms, conditions, otarifications Bid does not include any plan check or any permit fees Lid does not include uiitity company fees Bid does not include datafphonelcable ?V wiring fid does nal inctude security systems Bid does not include Sul€dors Risk insurance Bid does not include removal of any hazardous materials Bid does not incWde signege (excepi for code required signs) Mated8l not spe; ified wlit be per contractofs spec. Sid does not include soils testing or special inspections Hid does not include historic depiction Bid does not inciltd,- elevator [aid does not inc tide awDings Blit does not include Wlndaw ctwerings Bid does not include drywall in the tenant spaces (not shown) Bid does not in=clude jo€rit french or eleotricai service vmrk (riot shown) Bid does not include steef decking, FRP wall paneling, spray applied fireproofing, aeousfjoaf panel ceilings, resil;enfi flooring Bid does not include site lighting (nof stlowrl) Bid does not include teriant improverrrents (riot stsown) Credil to delete ceramic wail file in Me restrooms Is - $ %oorj Bid includes re -using the existing avant compressors Bid inctudes englrreering and shoring for the existirta watt to renaln 7 of 22 BRISTLECONE STRUCTURES, INC, Paseo de Verdugo 267555 Verdugo St. San Juan Capistrano, CA 92625 May 13, 2010 Bristlecone Structures, Inc. is pleased to present this proposal to construct a new commercial building tocated at 26756 Verdugo St., San duan Capistrano, CA. As a family owned business Bristecone takes pride in constructing the highest quality commercial buildings, custom residences and other structures. We treat our client's projects as if they were our own. Scapa 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 fiatwork and landscape the site per the design documents below. Bid Basis This proposal is based upon the foflowing design documents: • Architectural plans by Nunn Architecture, hated 2.20-2010; o Structural plans by structural engineer Patel Burioa and Associates, Inc,, dated 8-4-09; Grading plan by Douglas Sender & Associates, prdurinary undated set; 6 Mechanical, Electrical & Plumbing plans by Ramin Parsi, dated 2-24-10; Sails report by Peter & Associates, Engineers, Geologists, Surveyors, Inc., dated 6-26-09. 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 pian check comments, owner requirements, and utility engineering design development. Therefore, Bristlecone offers to perform this work on the following basis: aid 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. 0 Scope of work is limited to that shown on the above bid doi=ents. Any significant change in design documents may affect the project coast. Written change orders are required prior to commencement of any change in scope, ® Specimen oak tree is Quercus Agrifolia, 48" box. a Drywall will be smooth finish, unpainted in leased spaces, with square corners. 4 No benchmarks were observed, therefore none are included for replacement. Door 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 drone during normal working hours Monday - Friday. Mork 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 PropQsai 5-13.10 8 of 22 ® owner will provide approved design docurrients as required for wet and dry utilities. m 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 rewire 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 NW of the site. Water main and gas line are both located in street on the east side of the project site, where new, laterals wail be connected and extended to the site. Ali trenching in the streets will be covered with trench plates at the end of wont dally. 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 wail that will be saved from the existing structure, including interior drywalliplaster, exterior piaster/siding and existing windows and doors. • Wood windows will be fixed, Wood doors and windows will be painted. m Trash can and light poles will be provided by City of San duan Capistrano. ® Existing benches and light poles wilt be salvaged and returned to City of San Juan Capistrano, ® Glen Gery Thin Brick - Stratford or equal. 10 Tree grates to be recycled black plastic 4' square. Allowances - Bristlecone is providing allowances for the hallowing items which are not fully described in the design documents: o $4.00 per sf for bathroom the & extorior terra cotta tiles 0 Wet Utilities, including fire protection main extensionlrelocation,-domestic water lateral and meter boxes, grease interceptor, sewer lateral and interconnection, and storm drain catch basin - Non Prevailing Wage $ 26:576 Prevailing Wage $ 32,470 Cary 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 - bion Prevailing Wage $ 14,985 Prevailing Wage $ 22,656 Archaeologist'/ Native American MOnlfars - The City of San Juan Capistrano requires archaeological monitoring of excavations deeper thart 1$". Bristlec€ane Structures proposes to utilize the services of tar. Gary Hurd, Dr. Hurd has extensive field experience in this area, including archaeological rnonitoring 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 1880, 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 bNIng rates for monitoring and processing artifacts beyond the base aliovwance; Certified Archaeologist $ 1001hr with a $600/day min. e Archaeologist 4 man crew (to document significant finds) $ 400/hr Native American Monitor (each) $ 1751hr Verdugo Proposa[ 6-13-10 9 of 22 wet utilities - The bid set of design documentsdoes riot provide isometrics or hydraulic gradient drawings with station numbers or tie-in locations for wet util#ties. This proposal includes all necessary labor and material to install a Jensen 2000 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 project site, with backfill and temporary ashpalt paving included. Pricing is teased 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. MY utilities - The bill set of design documents does not provide SDG&E approved electrical service design. There is no information regarding the size or location of transformer(s), feeder cables, feeder conduits, pull boxes, vaults, transformer pads, cable and phonic pull boxes, etc. Therefore, this proposal includes an allowance for dry utilities, based upon the bid assurnptlons listed above. The allowance assumes utility costs will be paid directly by Owner, When the approved design documents are available, a firm price Witt be provided to the Owner in lieu of the allowance included herein. Landscaping - Bristlecone`s proposal includes 15 five gallon and 20 one gallon shrubs for the two planters on the east side of the building, as well as, 17 t.agerstroemia (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 ars irrigation timer and backflow preventer. Excop;tions to Beth Documents - The following exceptions are taken to notes and specifications in the bid documents: b Ceilings in all leased spaces shall be insulated and unfinished in lieu of drywatl 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 w hide will be installed wtth the tenant improvements, b 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. 0 Bid pricing includes pry' -finished aluminurn gutters, leader heads and down spouts in lieu of copper. Optional pricing is provided for copper. O fight Fixtures - ars optional price is provided for BGA fixtures, mSpecifications dated 6-26-1 9 are guidelines only and will not be considered contract documents, 0 Lath to be two layers of class D kraft paper in lieu of Tyvek $ Tile roof to have 25%n boost Exclusions The above proposal specifically excludes the following: : fees for Architecture, Inter€ser Design and Engineering for all improvemeriW, Plays check, permit, impact and all other regulatory Body fees; w 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 excavations, over excavation beyond 4 feet deep, or correction or replacement of existing infrastructure beyond the closest feasible tie in points, standby or demobilixationlrerrsobilization costs due to archaeological finds. If these W"ditions are found, the remedial work VIII 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. 3 Verdugo Proposal, 5w13-10 10 of 22 Company Name" Berrington Properties; Inc. Address; 28755 Verdugo Street - Suite 200 Ph: 800-243-2030 =ax: Jot- Name. Paseo3 Da Verdago_- Job Location: 26755 Verdugo Street - San Juan Capistrarso, CA 92675 Summary of Job Cost (includes Frew qli q Wages) 0611110 Net tq;,zj f_iand area 8,000 $32V'00,00 Cost nsf $4021 1 Esup Total -Z4 P39 092.74 P menti $0.00 iotyf Pr e t C"os Sq Ft Cast: Alternates: 1) Arica to Upgrade to Cj)pper L1avvnspoat:r S Z5.499.fi(Y 2) Add for Beaded Panel Dom Po! bates. (C:onll cts w4h Door 5rhedLEe; i} A:�d far Pe.=forr=tante: & PRy€nent Bas'€d if Applicable 4�0ot:diSnr,Avers:._.0€::nC: nnVa�t7'.r� 94?9.F".7.542,'4 F & wm rafsiauct un 1 dFvaroRn3ani serviec;s t,alEPor!,ia f Coiu+rado f grwt{�€ i iRlnn:� fiowa 11 of 22 w . . Ptalect Namw Paseo D3 l Verdugo Data: 06{ 111 Q trq(eet. Addtvss: 26755 Verdu(m 51met - San hen Capistrano? CA 92675 mus czuvu z,eaesr�o x S'[9T9sf FJnst Gonval O8003 xxctuded CA7?SU�# igfl $tiiKfll�j QFQQ5 $,Sfft1.©6 x Survey 8,9takng . 5Ha f7 mtHillon 42000 a 7s a:tici x Abmtoment Per i{epori Suiidfnt� emarEtiate 02M6 x 1 o-= 9cf71d+ng S 5i1ti E4rlll%vvK / Cfad6 - RF 42204 23,1$7.,i3t1 9 Grad ng pads d Ro Emsior7 Cc wd (71205 4,7000 x Sam ams &;sift S=On Precast Bumpers U24t, X Exdjdod - iAsphart Pa,/ rq 02911 41933. D x Pe -ch arouna:fw Cu"bis $i#e- Ezotr) w 02570 X Exdudaa Ptwverrreni haariungt, Q2572 f,2t3O.OV x Striping ar Pwi&g Lot & tied Curbs & S;qn5 gackfiav! Prevenlaf Wfisc 9,500.06 x Mo wan,<e for F Or- aw Preventor 00mealic Miter x:285) 21,.75.0 X - WOW to Bukrng $lcrm DtaNss 02720 2060-00 x Stafne i MOOT Per Plan son,ury Sewot 02730 5,069,00 x "WfM Orarns Land #pe 02900 17,297.00 X Sita f tum tum & t,and=npe =Cwnxota7 nrRodards 03210 % xlurifa9 Mjrin nted Domes 03406 21900.00X Tntnsaldal Dwges ICave(! SrdLwalk 654O0 76,945.00F _.... % Ccu31s & 6SUM 6 pavan SIE! Eurr,€ we 39,431.110 x noe ('rates& Bc:n,%" O Rt MAH - 43OU E: diSCn kvvnvF Chao 917!0 944 tl7 54?5 IF KV 62) 3661 AG IMnnrgtmn rnrn c06sl."e.0 a t av iuP, p 14 ar,rv,ces uai ,V'10 f Cahxe is / r}ncrge. 1 iNncls f 9arrdo 12 of 22 Ptb7factNarna: Plan* OGVemago Oace UEf71 G Fmject Ad(lydsa. 26755 Veda o Slreef - Snn Juan Capistrano, CA 92076 9,954 SP cfete Pati FoundaVon G31 UO 94,590.00 x SUffdVV. FoLmda*OM Cast CanCrnts cc),IUMfJ$ 33306 18,821,00 x Pre C,asf. Cotumns 9rslive t SpsGal Conom'.0 3341C - x Exci-aded :. COMrretg 03IJ98 x Excluded !brat Mzt;S my .. - 04200 9943 00 x Caulkiftg Sam Well & FC-Ang stone 44300 45,269.00 x 6,976.M x Intbrior Pavers FirapfQofatg W2W .- x Excluded x Excftideci 3, Metals ireRod a8inw,&"M!ernomne FlWiinq 1 Sheet idetal 0760U 31,&f4R0 Guiv: Dvwn Spouts & rushing >true;uraE 5toal 05120 16,515.ff0 x 'PX-; Sheet Aoelalg Re ng lLadder }Sates -hain 4.,nr, Fer:rit g 05500 X Excitided a lees f F>a t 055 tb - n n lnct dasf in S Ucwrat Sw ANC sloe] 9G,9i83�.Ot3 x 1 l sc. f3vci eif $ i ran Cata >�; hea�ilHrNsa k, VVoad ! Plasks Lough C:rtrpentty. � --- -- 06100 P53,895.00 % 'f,�pct F'taeszl}t�% Tn�wsie� xie:nl Studs W05 x Exdurfod unrtYat - hhisref€aneous 06128 Irtc#uded i€r Rough Ctzrpa3'i Yi od ft1&Sh8 8151 x hlcc ldoo Fri RFGuQh czrporl ey 'imzh Carpentry - -„ C67.UC - x ENClUrf4'Fi: %c ~£Wish Cafpenity 063N - x exckK bd niiftyfieG c6n6Q x _ i"..74CfUf�6Yf i. Ofinte'[O G`1iseA(Ou!S C64":�: x Exr.#trdo1 v+larafproo[or,g 07110 T,x. .UO x 'Re Rod & single P y membrane - Caulkiftg 07176 3,92{7.011 x Galv, POKI Spon $ & 6 Gtishing Sodding tnsufat ar U7210 6,976.M x Ittieffar Wall Insulation FirapfQofatg W2W x Excluded Roofmg 97511 3€3,146.00 x ireRod a8inw,&"M!ernomne FlWiinq 1 Sheet idetal 0760U 31,&f4R0 Guiv: Dvwn Spouts & rushing sheet P nal ROO iW 076110 x E%CIUCINi 'PX-; Sheet Aoelalg Ms i 431}3' tSR56x: HVflxluC i;hl{36 CArttr'i:ia W"10 WS E127542E +r 9Q3 G278u5S ff' 'hpr:CfQR1Cff LCC^ V3:ist1'v:tipn 1 �rg;q:tlQf .e Etl kpry;GyS �fw is i 1[3EIEFSJ 11 =' FNI:fI➢Ei 1 (itrrie.A S:w�aMa[x 1�wh�p.dR VnHzy :Sia lvuga�:/�w,p>L4 VeFdupu M12E-s� 13 of 22 Pr'ojectupifte: Passo00VardUgo pato 05121fir} Project Address: 26759 VefdU90 Strata( -San .Iuar) Capistrano: CA 92679 � � Stxu: S.Sttd 5F aElam Doors i Frames i Hdw 015111 13,848,00 x poor t=ames 6 t lArdwate Wood tlanre 082 t' x IrtdVoi;d in Otoom Framee S Hwdwam Ac,"s5Ocurs 08305 x Fxdudud Oyerhuad Ours 08330 x I�xdadod 61Motreani Doors _ OR460 - rxdtttind - Ao[omaTa Daofs 08590 _X x Ezduded Owv Hardware, E 9714 x Incknlad ¢1 Do= Pramos & Hardw6re €z fnsstGlaxE.lg E387i? 153,i91.(iiT x .. WirdowaAgtaz7ngPer iF;rttishHardware G$713 x _plem Exc€uded Vinyl Bumper RWa £3880:1 x Exrgudacl .. '1.1-411$hes Lent # ta#Asiti!r i Stucco —09200 100.230,00 x Lath & Plaster !Metal Sluds & [Dlpol4r {18250 26,24[7.00 x Oryw55 tmc w WiWq (oto �%Ul $tiio) �heafhrng 402&2 x Excfudad PI�.Ptrs'ar ie 093GO Restroom Csramlo Tde 08:x30 44,140 Q(F N in(n ar'r9a & tzsuots &Vli54Y rp7rC�tilz�,�i! YS1biAl1$ E=Aer'tar CemralG T€la 09511 .. x Exduded -- - AG tustecaf i;eu r g F 9549 x Ew der IR%d Fiwr.SFIg 0B58p x Excluded Fhsannq M95FIG - x Ekouicd Viclyi Bass 095P. X Excluded Carpet - 4i8riki{a X ExdutfAd .. FEonr Sealer 48835 x Excluded irtt�[iDr 3: Extenar PaiRtma _ {34800 IS,266,00 x {rs?_arinr & CXwfs or Pah:bn y .. 'til{i5^. Fulls{>i'6 _ 4909 _ xZCI[.tt}txi- athscam PrltiitiLnS & Accassaries 101 SS 7,210.00 AW—Issorfos Ra kydmanl pi r5 x Excluded Si4nage L47s g Excluded Knox 8rW _ 01401 - x FKOvded Misr: Sp°ciklit435 10,604 x m.WEsiod Ca€tePaeini 14200 x Exdudod Cock Sent 10425 - x t--,tauded OTTOMAN ,, LW Fd-vAy<—. £:;�3�£;arlfr,.rwn Ef t'Y:d 9U3 G2�ss7U !* RU'3 b'LP 3E5t r� rh:�r5[rnan crnm cneat,,O= tauvelnpmera see r<cres ca:ffnrr-;:a r u.Wan E 1 t'svica uan�uiw, Yuev�:cros e.Yw,.ra�ydM kxcvga^C»ro 1.`u Jrih 5:-W1l.f, 14 at 22 �;?f•t�ir3. l7roja €Aittre: Fetedd aVardr;go Date; 06121116 Pru n¢R hU€iress. 28Y55 "rd;agn StreM - Son Ju©n Cbplls€ra'ao, CA aMS .c a a a base : . 904 SF WiCfAAM 4506 4i 173 949s273a25 ts. pC�sz'T 3!367 tt' n:e;tu;p�nnn�w�n cn..si�r4.i i it[-�uWnmenl scs rets uewcf.o r ar—fo ! raamg,a � ilfrnos 1 i:xids vwvYc m io 15 of 22' 9.�ctuFpinent __ food Se vtto Equipmmn€ 14404 x Exdudsd Striinfexs S€aai Counlars 11462 x Extruded ',v4c S.ainlasa Stacl 19465 - % exauaad Kltc#ien Hoods 115110 % Excluded - Compf"=j 1,w Mllia X EXC€rx eeS Fiji frifurd south PciCkago 123U0 x Extuded Awn rigs 12550 3,4w.i1if x Fx=,'ar Fabnck Awitiitgs Per P€an 1Ct.�eGi�ar?ical . pfb07brnq 15100 tis,",am x hauljlT K fir -4;h Pf.QTUmq at Inlic4orResYrcr ms Pine Proleviian 15200 88,6666 10 x Fire Spioldee Per Furs Fire I'Ai guiviers 151,2? x Exaiuded Supply & ln-, D - HVAC riufp x Plerturst MVAO 155170 _ 74;M,00 s: Siuh4049 T, l.,} ftalrigeraRa 95SC0 r Exduded Ansvt 111524 x Ezriud�3 11. EI�c�'iral %kit,h Gew & Trans Pat! i Rough & F-Wsh Per :F.itscdtu:al `.61 Cis i6l- AG5.00 x Man 1 lin mdts i' is Sot w1it NoOMakcm _.- S',,Acn Gear ?iii YU - x Fxci+.3deft MMC System 162W - k E:)OtVdrrti - sccodty $yainms 16220 x Exduded FlmAtsrrn ?6510 15,675,00 % HivAlam -Nlowrante WiCfAAM 4506 4i 173 949s273a25 ts. pC�sz'T 3!367 tt' n:e;tu;p�nnn�w�n cn..si�r4.i i it[-�uWnmenl scs rets uewcf.o r ar—fo ! raamg,a � ilfrnos 1 i:xids vwvYc m io 15 of 22' Qualifications & Exclusions Paseo De Verduga W 111 26755 Verdugta Strut- San Juan Capsstrano, CFS 92676 uatii'1caCistns Hours of cortatruction pertorrm d hetwoen 7amn - 5orn, Maneay- Friday Only Existlrmg Street Lights to ReM841 ExClu0s Relcoailon of Existing Tme Exc€uaes Historical Depiction inpludes Preualling Wages xGtusii�m Q4i3#id Genorat Conditions Aeditfi�rvaity Jrnsmmrud Certificates Borlds Mc,y fees Ptan Check & pe.T mit fees E`Lng r3awinig Fr—s Uqumdatod Damages GtiliJy Ccnneol on & ?nsparaon J"ees hlity Com pawj Cirargos &Meier noes All UtJlity m(!tess Site aecuelly D-puly Inspections Special limpectinrs Ex'POOIir*g Materi$f € oistmte Te5ling 02060 Dernolitton Asbestos htazardom, Remediation UnI mr'ssesn cwlditiona De moittiofl sPerrnil$ 0208Z Hazardous Material Abatarrlant Rhaternerd for Hazardous Materials Reports Testing & Deports U�3d6J! Sit* Concr€eto Conrre€e , Floor Patel) only 05120 Structural Steel Er4meerMg Nrw Unit SJrkmCt€oral Steel Suppons "�hOO inn for stor fiont remnva€ Includes the structural steel for the revised storefront Tey ing & lnspectians 06600 metot Pahr'catiams Burglar Bars €'JamRaifior ) 00100 F#tsugh Carpentry Acce€at3ule MOstore CGnIur"t File hoot&& Lumber • Unless othm. vise noletH 16 of 22 07900 Roofing No Roof cut Outs Welk off Mats at 10of Leak 0kDteation Roof Insulation Root Warranty - unless ot;erMse noted Warranty on Estisting Roof 07800 Skylights BLgfar Warr, . rvrtm Nose Sus [v Doors & Windows Pan?c Hardware Re-Keying Low or Hign Voltage Wiring related to doors 08360 Overhead Doors Foil Uzi Doors Inciudes new overhear$ dour Seal 0€ 400 Entrances & Storefronts Sky>Ights Law Iron Mass Sf,�rrdret Flat , Etct1'sng Powder Coat Finishes Tinting sndtor Colored Glass 09200 Lath & Plaster Lath and piaster for exterior front elevation E€FS ` Expansion Joints Foam Caulyfou Graffii Seal 0976D Drywaf€lMelat Studs/Gypsum Wallboard Welding Fire B[ocking F ire Caulking Uensgiass t Deoshieid 08300 Tife, WaterproofPumlaranes Bead Blasting Excess Leveling Moistwe Testing Wax Finishing Cement Backer Roard 17 of 22 09510 Acoustical Ceilings CaU[kirtg insulation - L,ght Fixture Wiring En Fxcess of two M20 Specialty Flooring Floor Prep Aidex or Floor Waterproofing Slope to nr&s 09900 PaintIng Ant! Graffiti Coating Excesswe Surface Prep on Existing Walls Painting of FlrelPiping Sprinklers, HVAC Ducts, Roof Structure & Scrim Sheets Includes exterior painting (see breaWown notes) itJ430 Signage Exterior Signage 4G822 Flre `=xtitfguishers Cabinets 11111 irlevatars C,it rintshes Beyond Standard Sm=oke Doors Strum Trip 11161 pock Lovelors 139i0 Fire Protectlon t'irepfpQlltlt� . 16300 Fire Sprinklers Fire Pump Structural Calculations Paneling and Caulking ilndarground Fires Lira PIs/ FpC Hose Rack Externa# Monitoring Double Detection Chuck Iwo Mumbtng Off -Site Conneclic€k Water Meter Sanitatlo€t Fees insulation of Roof [trains. COW Water & Condensate Linos 15800 HVAC ,noiudea new HVAC units and ductwork Smoke DolHvtom _ Duct PressuTa mist Louvers (versifiers Satanee Dampers 160DQ Electrical Audio 8& Visual SyistemfFquipment Transformer Fad Low Voltags Mitring Cenarator & Sranatof mer Switch Conduit to PIV and F[3C Underground Conduits to Parking Lot Lights Nrrglar Alarm£ Condults 1672Q Alarm & Detection Systems Inclodes Fire Alarm System Fire Hydrant Moniloring Security Sy:.terns 18 of 22 Job Game: Paseo De Verdugo Joh Location: 26755 Verdugo Street - Sar! Juarl Capistrano, CA Z Plan Pages June 21, 2010 Title Page Cate TITLE SHEET T-1 41112010 GENERAL NOTES T-2 811012003 AREA CALCS T-3 121l/2009 FIRE MASTER PLAN COVER FIRE GVR 91912009 FIRE MASTER PLAN T-4 2/512010 T24 ENERGY CALLS T-24.1 2120/2010 T24 ENERGY CALLS T-24.2 212012010 T24 ENERGY CALLS T-24.3 2120!2010 EXISTING SITE PLAN C-1 7/112009 DEMO PLAN C-2 71112009 GRADING & DEMO PLAINS COVER GR -DEMO 711/2009 PRECISE GRADING PLAN 1 OF 3 ND PRECISE GRADING PLAN 2 OF 3 ND PRECISE GRADING PLAN 2 OF 3{2} ND PRECISE GRADING PIAN 3 OF 3 NI) ARCH., SITE & PLANIiNG PLAN AS -1 2/201 20'0 ARCH., SITE & PLANTING PLAN AS -2 212012010 TRELLIS PIAN AS -3 2/20/2010 IST FLOOR PLAN A-1 2/20/2010 2ND FLOOR PLAN A-2 212012010 ROOF PLAN A-3 2120/2010 RESTROOM PLANS A-4 2120/2010 EXTERIOR ELEVATIONS A-5 2!20/2010 PASEO ELEVATIONS A-6 2120/.010. BUILDING SECTIONS A-7 212012010 WALL SECTIONS A-8 2120112010 WALL SECTIONS A-9 2120/2010 WALL SECTIONS A-10 2120;20111 STAIR PLANS A-11 2/2012010 1STFLOOR REFLECTED CEILING PLAN A-12 2/2012010 2ND FLOOR RFFLEC:TED CEILING, PLAN A-13 2/2012010 DETAILS Aft -1 212.012010 DETAILS AD -2 2/20/2010 DETAILS AD -3 212012010 STRUC', URAL COVER SHEET S -CS 6,1412009 FOUNDAT0N PLAN 81 814/2009 FLOOR FRAMING PLAIN S2 81412009 ROOF- FRAMING PLAN S3 814f2009 19 of 22 STRUC'T'URAL SPEC IFIGA.TIONS SDO 8/4/2009. STRUCTURAL DETAILS SI)i W412009 STRUCTURAL DETAILS SD2 61412009 STRUCTURAL DETAILS SD3 8/412009 STRUCTURAL DETAILS SD4 8/4/2009 STRUCTURAL DETAILS SD5 8/4/2008 STRUCTURAL DETAILS SIS 814121109 MECHANICAL SCHEDULES AND NOTES h1O.1 212412.010 MECFfANiCAL DETAILS fv10.2 2124'20113 FIRST FLOOR HVAC PLAN mi. 1 2124,12010 SECOND FLOOR HVAC FLAN IM1.2 212 412010 ROOF HVAC PLAN mt3 2124!2010 PLUMBING SCHEDULES AND NOTES P0.° 2124W10 KUTOWNG DETAILS P0.2 2/2412410 F,RST FLOOR PLUMBING PLAN P1.1 2!2.4!2010 SECOND FLOOR Pt.UMBING PLAN P1,2 2/2412010 ELECTRICAL. SYMBOLS LEGEND, SPECS & eLEVATIONS E4.1 .212412010 ELECTRICAL PANEL & 4.!CHTINC FIXTURE SCHEDULES E0.2 212412010 SINGLE LINE DIAGRAM E0.3 2124(2010 TITLE -24 SHEETS EO.4 2/2412010 IST FLOOR POWER PLAN E1,1 212412010 2ND FLOOR POWER PLAN E1,2 2/2412010 ELECTRICAL ROOF PLAN E1.3 2124(2010 ELECTRICAL ROOF PLAN E1.3(2) 2f2412010 1ST FLOOR LIGHTING PLAN E1.4 212412010 2ND FLOOR UGHTiNG PLAN E1.5 2t24/2010- 20 of 22 FRIESS PROPERTY 5—CRVICtS May 4, 2010 Eric Altman Berrington Properties, Inc. 26755 Paseo Verdugo San Juan Capistrano, CA 92675 Re: Construction Management Services Proposal 26755 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 she[[ construction as contemplated in the permitted set of plans by Nunn Architecture. 1. Preconstruction A. Qualification of general contractor B, Bid 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 I. Review and processing of ail 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. E. Prepare with general contractor project closeout files 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