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CIM/Huntington, LLC - aka CIM Group, LLC - 1999-06-17
DISPOSITION AND DEVELOPMENT AGREEMENT by and between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, Agency and CIM GROUP, LLC Developer 5iKigg TABLE OF CONTENTS [§ 100] SUBJECT OF AGREEMENT ................................. 1 [§ 101] Purpose of the Agreement .............................. 1. [§ 102] The Redevelopment Plan ............................... 1 [§ 103] The Redevelopment Project Area ........................ 2 [§104] The Site ............................................ 2 [§ 105] Parties to the Agreement ............................... 2 [§106] Agency ............................................. 2 [§107] Developer ........................................... 3 lo [§ 108] Deveper's Deposit ................................... 3 [§ 109] Method of Financing ................................... 5 ARTICLE 2. ACQUISITION AND DISPOSITION OF THE SITE ................. 5 201.1. Developer's A&.1 - cdf Acquisition • • 201.2. Acquisition Costs• § 201.4. Precondition io Agency's Right to Make Draws under the Letterof -• 202. Escrow • 205. Condifion of 16 Time For .it PI ce ForDelivery of a--• § 207. Recordation of the Grant Deed �nd Agreement Co 1: Title Insurance • 212. Haza•ous Substances Suitability of 1 • 215. Submissi6n of •-1 - of 1.1 M 1 •] Proiect Costs 11] DEVELOPMENT OF 1 Development • 1 ,•p- 6f Development 1'] Landscaping .1• Grading Plans 161 "1 •1 •11 1"• • 1 • •Constriction • 1 4 • 19] Indemnification ..1• Insurance R*6hts of • Noncloscrimination duri1� •1 •1 • ' Assignment,•1 :1Transfer or Other C• I . 1 for t e 1 1 t for Developmen a4luto • : Release of •1 •1 • -1.1 411 OF • 41 • 414Obligatoon to R" 1 from Discrimination : [§ 406] Agreement Conta*ning Covenants Aff6etbu Real Property . . . . 39 • 41Effect.1• Duration of Covenants ........................ 39 •5001 DEFAULTS, REMEDIES AND TERMINATION,41 1 D- •1 . 1 ►• •1 1 •• ' 1 1Termination by D- •2- ' 1 11 1. •1 by Agency or Developer [§ 600] GENERAL PROVISIONS ................................... 45 § 601] Notices, De ands and Communications between the Parties . . 45 . 61 Nonliability of .1• Lg-1 Officuals :1•. Employees [§ 604] Enforced belay 86 Performance for Causes . 615] Inspection of Books .1• ►- • 4. .6 . 61-. •1111 •1 ' ii 1 Interpretatim of Agreement -1 4: ` • 4: ` 6151 Severability.. ` • : Terr6wnoloqy49 1 Third Paky Beneficiary 1 [§ 700]c SPECIAL PROVISIONS .................................... 50 [§ 701] Agency Participation Payment .......................... 50 [§ 702] Buyout Provisions ................................... 52 [§ 800] COMPOSITION OF AGREEMENT ............................ 53 [§ 900] TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY ........ 53 iii ATTACHMENT NO. 1 - MAP OF THE SITE ATTACHMENT NO. 2 - LEGAL DESCRIPTION OF THE SITE ATTACHMENT NO. 3 - SCHEDULE OF PERFORMANCE ATTACHMENT NO.4 - SCOPE OF DEVELOPMENT ATTACHMENT NO. 5 - FORM OF GRANT DEED ATTACHMENT NO. 6 - FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY ATTACHMENT NO. 7 - FORM OF RELEASE OF CONSTRUCTION COVENANTS ATTACHMENT NO. 8 - SCHEDULE OF FEASIBILITY GAP PAYMENTS ATTACHMENT NO. 9 - FORM OF PRE -CONVEYANCE TERMINATION NOTE iv Thi DISPOSITION AND DEVELOPMENT AGREEMENT (this "Agreement") dated as of 7, 1999, is entered into by and between the REDEVELOPMENT AGENC OF THE CITY OF HUNTINGTON BEACH ("Agency") and CIM GROUP, LLC ("Developer'). [§ 100] SUBJECT OF AGREEMENT 1 �• • �- A -I&P-11,11Q114 The purpose of this Agreement is to effectuate the public purposes of Agency by providing for the disposition of the hereinafter defined Site and the development and operation by Developer on the Site of the improvements described in the Scope of Development, including without limitation the following: a new hotel containing at least 115 and approximately 130 guest rooms, at least 130,000 and approximately 135,000 square feet of gross leasable area of new retail and restaurant improvements, a public parking facility, and other amenities, all in accordance with plans and land use entitlements first approved by the City. The disposition of the Site, and the development and operation of such improvements, and the fulfillment generally of this Agreement are in the vital and best interests of the City of Huntington Beach (the "City") and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements. This Agreement is made in accordance with and subject to the redevelopment plan for the Main -Pier Redevelopment Project, which was approved and adopted by Ordinance No. 2578 of the City Council of the City of Huntington Beach, amended by Ordinance No. 2634, and merged with certain other redevelopment projects in the City by the adoption of Ordinance No. 3343 on December 16, 1996 to form the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project"). The Redevelopment Plan for the Merged Redevelopment Project (the "Redevelopment Plan") is incorporated herein by reference and made a part hereof as though fully set forth herein. Any amendments hereafter to the Redevelopment Plan which change the uses or development permitted on the Site as described in this Agreement, or otherwise change the restrictions or controls that apply to the Site, shall require the prior written consent of Developer. No other amendments to the Redevelopment Plan, nor the currently proposed amendment thereto, shall require the consent of Developer. 1 The Merged Redevelopment Project area is located in the City. The exact boundaries of such Project area are specifically and legally described in the Redevelopment Plan and Ordinance No. 3343. [§ 104] The Site (a) Subject to the provisions of paragraph (b) of this Section 104, the "Site" is that certain real property illustrated and designated as such on the "Map of the Site" (which is attached hereto and incorporated herein as Attachment No. 1) and having the legal description set forth in the "Legal Description of the Site" (which is attached hereto and incorporated herein as Attachment No. 2). The Site consists of parcels which are presently owned by the Agency (collectively "Parcel A"), and parcels which are currently owned by third parties (collectively "Parcel B") as designated on Attachment No. 1 and more particularly described in Attachment No. 2. (b) The Agency and Developer may by mutual written agreement exclude from the Site all or any portion of the Site which has not theretofore been conveyed to Developer. In the event any portion is excluded from the Site pursuant to this paragraph (b), the following shall apply: (i) Developer and the Agency shall cooperate in signing implementation agreements and/or other documents necessary or appropriate to effectuate the intent of this paragraph (b). (ii) If and to the extent required by the reduction in size of the Site, Developer shall submit for approval by the Agency a modification of the Scope of Development and/or previously approved plans and drawings reflecting such reduced Site. Any such modification shall, to the maximum extent feasible and consistent with sound planning principles, conform to the existing Scope of Development and previously approved plans and drawings. li►3i'r1 -•• • IT��•-'It-1� [§ 1061 Agency_ Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Part 1 of Division 24 of the California Health and Safety Code (California Health and Safety Code Section 33000 et =.). The principal office of Agency is located at City Hall, 2000 Main Street, Huntington Beach, California 92648. 2 "Agency," as used in this Agreement, includes the Redevelopment Agency of the City of Huntington Beach, and any assignee of or successor to its rights, powers and responsibilities. [§ 107] Develop Developer is a California limited liability company. The principals of CIM Group, LLC are Shaul Kuba and Avraham Shemesh. Within ninety (90) days of the date of approval of this Agreement by Agency, Developer shall assign all of its rights and delegate all of its duties under this Agreement to a new entity owned and controlled by (1) CIM Group, LLC, a California limited liability company, and (2) one of the following: (a) Federal Realty Investment Trust; or (b) Street Retail West G. P., Inc., a wholly owned subsidiary of Federal Realty Investment Trust; or (c) subject to the approval of the Agency's Executive Director, another wholly owned subsidiary of Federal Realty Investment Trust through which Federal Realty Investment Trust typically invests in retail projects such as the subject development; or (d) another equity partner first approved in writing by the Agency pursuant to the immediately following paragraph. Such assignment shall be pursuant to an assignment and assumption agreement approved as to form and content by the Agency's Executive Director and legal counsel under which the new entity shall expressly assume and be bound by the duty to perform all of Developer's obligations hereunder. Within thirty (30) days of the date of approval of this Agreement by Agency, Developer may request that the Agency approve a financial coventurer other than Federal Realty Investment Trust. Such approval by Agency of a substitute financial coventurer shall be at the discretion of the Agency and shall only be granted if the Agency determines, based upon evidence and documentation satisfactory to Agency, that such substitute financial coventurer possesses at least the same financial strength, ability to attract tenants and ability to assure the success of the subject development as Federal Realty Investment Trust. The principal office of Developer is located at 10960 Wilshire Boulevard, Suite 500, Los Angeles, California 90024. Wherever the term "Developer" is used herein, such term shall also include any permitted assignee or successor in interest as herein provided. MOUTOTOM (a) Concurrently with the execution by Developer of this Agreement, Developer shall deliver to the Agency a security deposit (the "Developer's Deposit") in the amount of one hundred and fifty thousand dollars ($150,000), of which $40,000 has already been deposited by Developer pursuant to the Exclusive Negotiating Agreement. Agency and Developer agree that such $40,000 shall be retained by Agency as part of the Developer's Deposit required by this Agreement. (b) In the event the Agency terminates this Agreement pursuant to Section 505.2 by reason of the Developer's failure to timely submit to the Agency of the Original Letter of Credit or any Additional Letter of Credit in accordance with the provisions of this Agreement, or in the event the Agency terminates this Agreement pursuant to Section 505.2(a) for any reason prior to the timely submittal of the Original Letter of Credit to the Agency in accordance with the provisions of this Agreement, the Agency shall be entitled to retain the Developer's Deposit as liquidated damages. In the event the Developer terminates this Agreement pursuant to Section 505.1 or 505.3 or in the event the Agency terminates this Agreement pursuant to Section 505.2(b) or 505.3 prior to the time Developer is required to submit the Original Letter of Credit, the Developer's Deposit (plus interest accrued thereon, if any), shall be returned to Developer. (c) Developer and the Agency acknowledge and agree that it would be extremely difficult to quantify the loss or damage to the Agency in the event of such a termination covering the period of time referred to in subparagraph (b) above, and that one hundred and fifty thousand dollars ($150,000) is a reasonable estimate of such loss or damage as of the date of this Agreement for such period of time. (d) The Developer's Deposit shall be in the form of (i) cash; or (ii) cashier's or certified check issued by a national or state bank first approved in writing by the Agency; or (iii) an irrevocable and unconditional letter of credit first approved by the Agency as to form, content and issuer, or (iv) the ownership by Agency pursuant to documentation approved by Agency's legal counsel of a beneficial interest in funds contained in an account of a national or state bank first approved in writing by the Agency (provided that Santa Monica Bank shall be deemed acceptable). Subject to the terms and conditions of this paragraph (d), Developer shall have the right, from time to time, to substitute one form of the Developer's Deposit for any other form in which the Developer's Deposit was previously delivered to Agency (e.g., cash for letters of credit, or letters of credit for cash). (e) The Agency shall be under no obligation to pay or earn interest on the Developer's Deposit, but Agency shall cooperate with Developer to arrange for an interest bearing account, and if interest shall accrue or be payable thereon, such interest, when received by the Agency, shall be the property of the Developer, and shall be promptly paid to the Developer. (f) If the Developer's Deposit is in the form of a letter of credit, it shall meet the requirements of (iii) of paragraph (d) above, the term thereof shall be at least one (1) year and Developer shall renew or replace such letter of credit at least thirty (30) days before its expiration or the Agency may draw on the letter of credit and use the proceeds thereof as Developer's Deposit hereunder. 4 (g) If this Agreement has not been terminated and the Developer's Deposit has not been previously disposed of as set forth in this Agreement, the Developer's Deposit (plus, if the Developer's Deposit was made in cash and invested, interest accrued thereon, if any, as provided in paragraph (e), above) shall be returned to the Developer upon the timely posting by Developer of the Original Letter of Credit in the amount and form required by Sections 201 to 201.4, inclusive, of this Agreement. Upon such return of Developer's Deposit to Developer, the liquidated damages provisions of this Section 108 shall no longer be in effect, and the rights and remedies of the parties hereto with respect to damages shall be as referred to in Section 504 hereinbelow. (h) BY SIGNING THEIR INITIALS IN THE SPACE BELOW, THE DEVELOPER AND THE AGENCY ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND ALL OF THE PROVISIONS OF THIS SECTION 108 AND HAVE VOLUNTARILY AGREED TO ALL SUCH PROVISIONS. Developer: "yv` Agency: (a) Developer and the Agency acknowledge and agree that due to substantial project costs in the areas of property acquisition, relocation, demolition, clearance, public improvements and site preparation, the development of the Site as contemplated under this Agreement would not be feasible in the absence of Developer's agreement to initially pay such costs and the Agency's conditional agreement to reimburse a portion of such costs. (b) The Agency shall make the payments required in and shall otherwise comply with the Schedule of Feasibility Gap Payments appended to this Agreement as Attachment No. 8 and incorporated herein by this reference. (c) Without limiting either party's rights or remedies in the event of the other party's default, the Agency shall have no obligation to reimburse Developer for any costs paid or amounts advanced by Developer pursuant to this Agreement except as specified in the Schedule of Feasibility Gap Payments (Attachment No. 8) and, subject to the provisions of Section 201.4 of this Agreement, the Pre -Conveyance Termination Note and the Pre -Conveyance Termination Deed of Trust. ARTICLE 2. ACQUISITION AND DISPOSITION OF THE SITE In accordance with, subject to, and conditioned on all the terms, covenants, and conditions of this Agreement, including but not limited to Section 505.2(b), and in consideration of the performance by each party of all of its obligations under this k Agreement, the Agency hereby agrees to use good faith efforts to acquire title to Parcel B (to the extent not first acquired by Developer) from third parties (following the expiration of the period specified in paragraph (a) of Section 201.3) in accordance with the provisions of this Agreement, and to sell Parcel A and Parcel B (to the extent not first acquired by Developer) to the Developer and, upon the acquisition of title (and/or upon obtaining orders of prejudgment possession meeting the requirements for conveyance of Parcel B or any portion thereof under Section 205) to Parcel A and Parcel B (to the extent not first acquired by Developer) by the Agency, the Developer agrees to purchase Parcel A and Parcel B (to the extent not first acquired by Developer) from the Agency, for the consideration and subject to the.terms, conditions and provisions set forth herein. The Agency may, in its sole discretion, decide either to limit its attempts to acquire Parcel B to voluntary negotiation with property owners or to consider exercising the power of eminent domain. The Agency expressly reserves the right to comply with all applicable laws in connection with any exercise or potential exercise of the power of eminent domain. In accordance with Section 201.3 of this Agreement Developer shall advance to Agency all Acquisition Costs incurred or to be incurred by Agency (as defined in Section 201.2(b) of this Agreement). The Agency shall have no obligation to repay or reimburse Developer for Acquisition Costs except as provided in the Schedule of Feasibility Gap Payments (Attachment No. 8) and, subject to the provisions of Section 201.4 of this Agreement, the Pre -Conveyance Termination Note and the Pre -Conveyance Termination Deed of Trust. "Acquisition Costs" shall mean the costs of acquisition of Parcel B (a) incurred by the Developer in the form of purchase price payments to third party owners and related closing costs (including brokers' fees paid by Developer) in an amount first approved in writing by the Agency Executive Director, and (b) incurred by the Agency by negotiation or eminent domain including, but not limited to, the purchase price, just compensation for the taking or threatened taking of property interests (land, building, fixtures, equipment, loss of goodwill and improvements); costs for payment of goodwill as provided under California law in eminent domain actions; fees and actual expenses of acquisition agents; escrow fees; costs of drawing the deeds for each property acquired; recording fees; notary fees and premiums for title insurance policies; any state, county or city documentary stamps or transfer tax; court costs; witness fees; expert witness fees; prorated taxes; appraisal fees; reasonable attorney fees; deposits to obtain an order of prejudgment possession, if incurred; amounts to satisfy judgments of condemnation; costs necessary to permit early acquisition of property interests where delays would create a hardship for the owner; abandonment costs and/or damages which the Agency may be ordered to pay in any eminent domain proceeding; and any additional costs incurred to settle or pay claims of inverse condemnation, or judgments in inverse condemnation. 2 (a) For a period of ninety (90) days beginning on the date of this Agreement, the Developer shall use its best efforts to acquire fee title to Parcel B, or as much thereof as possible, through voluntary negotiation without any Agency involvement. Developer shall, prior to the expiration of such 90 day period, either complete such acquisition or request in writing the Agency's assistance in acquiring such portions of Parcel B as Developer shall have been unable to acquire. Upon receipt of such Developer request for assistance, Agency shall undertake the completion of acquisition appraisals for such parcels of property. (b) Subject to the extension provisions in the last sentence of this subparagraph (b), and provided the Agreement has not theretofore been terminated pursuant to Section 505, within one hundred and fifty (150) days after the date of this Agreement Developer shall deliver to the Agency an irrevocable letter of credit, first approved in writing by the Agency as to form, content and issuer, in an amount determined pursuant to subparagraph (c) below, and otherwise complying with the requirements of this Agreement (the "Original Letter of Credit"). Developer may, by written notice delivered to Agency within the time originally required for delivery of the Original Letter of Credit, extend the time for delivery of the Original Letter of Credit by up to sixty (60) days; but in no event shall the time for delivery to Agency of the Original Letter of Credit be later than two hundred and ten (210) days after the date of this Agreement. (c) The amount of the Original Letter of Credit shall be established by the Agency's Executive Director based on Agency appraisals of the property comprising Parcel B and Agency estimates of all other contemplated Acquisition Costs. The Agency shall consult with the Developer in making such determination and shall provide written notice to Developer of the amount of the Original Letter of Credit no later than fifteen (15) days prior to the date Developer is required to deliver the Original Letter of Credit to Agency. (d) Within fifteen (15) days after the Agency provides written notice to Developer that Acquisition Costs are likely to exceed the amount of the Original Letter of Credit, Developer shall deliver to the Agency additional letter(s) of credit and/or amendment(s) to the Original Letter of Credit, first approved in writing by the Agency as to form, content and issuer (each referred to herein as an "Additional Letter of Credit"), in such amounts as are requested by the Agency. The Agency may provide such notice at any time and from time to time. The Original Letter of Credit, together with all Additional Letters of Credit, are referred to collectively herein as the "Letter of Credit." (e) Commencing with the Agency's first draw on the Letter of Credit, Developer shall be responsible to pay to the issuer of the letter of credit all interest incurred in respect to each draw on the Letter of Credit. (f) The Agency shall have the right to draw on the Letter of Credit from time to time to pay any and all Acquisition Costs, as defined in Section 201.2 of this Agreement. The only condition for any draw on the Letter of Credit shall be a certification by the Agency Executive Director or designee that the draw is permitted under the terms of this Agreement. Developer and Agency shall consult so as to attempt to schedule relocating and business closures so as to lawfully minimize Acquisition Costs without delaying completion of the Project. Within thirty (30) days following each draw on the Letter of Credit, the Agency shall provide the Developer with a written report showing the specific nature and amount of each such draw. (g) The term of the Original Letter of Credit shall be not less than two (2) years, and such term shall be subject to extension if Acquisition Costs will or might be incurred following the scheduled expiration of the Letter of Credit. If the term of the Letter of Credit is not so extended within fifteen (15) days following a request by the Agency for such an extension, the Agency shall have the right to draw on the Letter of Credit in an amount deemed sufficient by the Agency in its discretion to cover any Acquisition Costs that may be incurred after the expiration of the Letter of Credit. If the Letter of Credit has expired and the Agency gives notice to Developer that Acquisition Costs will or may be incurred following such expiration, Developer shall immediately cause the issuance of a new letter of credit first approved in writing by the Agency as to form, content and issuer, in the amount requested by the Agency, for a term consistent with the contemplated timing of the Agency's need to make additional Acquisition Costs expenditures. • The conditions precedent to the Agency's right to make draws on the Letter of Credit are as follows: 1. The Agency shall not draw on the Letter of Credit unless, prior to or concurrently with such draw, the Agency has, with respect to all portions of Parcel B which have not been acquired by Developer, either (i) adopted, in the sole discretion of the Agency, a resolution of necessity pursuant to California Code of Civil Procedure Sections 1245.210 at =. authorizing the acquisition thereof using the Agency's power of eminent domain; (ii) acquired fee title; or (iii) entered into a binding and enforceable agreement to purchase fee title without contingencies on the seller's obligations other than the payment of the purchase price, and opened an escrow for purposes of acquiring title. 2. The Agency shall not draw on the Letter of Credit unless, prior to or concurrently with such draw, the Agency's Executive Director has executed and delivered to Developer on behalf of the Agency a promissory note in substantially the form appended to this Agreement as Attachment No. 9 and incorporated herein by this reference (the "Pre - Conveyance Termination Note"), the performance of which shall be secured by a deed of trust first reasonably approved -in writing by the Agency and Developer (the "Pre- E:1 Conveyance Termination Deed of Trust"), which the Agency's Executive Director shall execute, acknowledge and deliver on behalf of the Agency concurrently with the Pre - Conveyance Termination Note. The Agency shall not encumber any portion of the Site during the term of this Agreement except in implementing the provisions hereof, and shall not during such term take any steps to impair the contemplated security to be provided by the Pre -Conveyance Termination Deed of Trust. The property subject to the Pre - Conveyance Termination Deed of Trust shall be Parcel A and any portion of Parcel B then owned by the Agency, provided that the Pre -Conveyance Termination Deed of Trust shall provide for a partial reconveyance thereunder of any portion of Parcel A or Parcel B which either (a) is conveyed to Developer, or (b) is excluded from the Site pursuant to Section 104 of this Agreement, or (c) is to be conveyed to a third party as provided by Section 2(d) of the Pre -Conveyance Termination Promissory Note, subject to concurrent payment of Net Sales Proceeds to Developer. 3. The Agency shall not draw of the Letter of Credit unless prior to such draw the City and the Agency have entered into a cooperation agreement committing the City to allow sales tax revenue and transient occupancy tax revenue otherwise payable to the City and generated from the Site pursuant to the subject development to be used as required by the terms and conditions of Attachment No. 8. § 202. Escrow The Agency agrees to open an escrow for conveyance of Parcel A and Parcel B (to the extent not first acquired by Developer) in the City of Huntington Beach with a title insurance company or escrow company acceptable to both the Agency and the Developer, which acceptance shall not be unreasonably withheld, as escrow agent (the "Escrow Agent"), within the time provided in the Schedule of Performance which is attached hereto as Attachment No. 3 and incorporated herein by this reference. Sections 104 through 107 inclusive and 200 through 209 inclusive of this Agreement constitute the joint escrow instructions of the Agency and the Developer, and a duplicate original of this Agreement shall be delivered to the Escrow Agent upon the opening of the escrow. The Agency and the Developer shall provide such additional escrow instructions consistent with this Agreement as shall be necessary. The Escrow Agent hereby is empowered to act under such instructions, and upon indicating its acceptance thereof in writing, delivered to the Agency and to the Developer within 5 days after opening of the escrow, the Escrow Agent shall carry out its duties as Escrow Agent hereunder. Upon delivery of a grant deed for Parcel A and Parcel B (to the extent not first acquired by Developer) in compliance with Sections 203 and 205 hereof to the Escrow Agent by the Agency pursuant to Section 206 of this Agreement, the Escrow Agent shall record such deed in accordance with these escrow instructions, provided that the title to 9 the entire Site can be vested in the Developer in accordance with the terms and provisions of Section 205 of this Agreement. The Escrow Agent shall buy, affix, and cancel any transfer stamps required by law. Any insurance policies covering the individual properties comprising the Site are not to be transferred with the property. The Developer shall pay in escrow to the Escrow Agent the following fees, charges and costs promptly after the Escrow Agent has notified the Developer of the amount of such fees, charges, and costs, but not earlier than five (5) days prior to the scheduled date for the close of escrow: one-half of the escrow fee, recordings fees, and notary fees; 2. the premiums for the title insurance policies as forth in Section 208 of this Agreement; and 3. any State, County, or City documentary stamps or transfer tax. The Agency shall timely and properly execute, acknowledge and deliver a grant deed for Parcel A and Parcel B (to the extent not first acquired by -Developer) in substantially the form established in Section 204 of this Agreement, conveying to the Developer title to or possession of Parcel A and Parcel B (to the extent not first acquired by Developer) in accordance with the requirements of Section 205 of this Agreement, together with an estoppel certificate certifying that the Developer has completed all acts, necessary to entitle the Developer to such conveyance, if such be the fact. The Agency shall pay in escrow to the Escrow Agent, the following fees, charges and costs promptly after the Escrow Agent has notified the Agency of the amount of such fees, charges and costs, but not earlier than five (5) days prior to the scheduled date for the close of escrow: 1. Costs necessary to place the title in the condition for conveyance required by the provisions of this Agreement, with respect to Parcel A and Parcel B (to the extent acquired by Agency); 2. One-half of the escrow fee; 3. One-half of recording fees, if any; 4. One-half of notary fees; 5. Ad valorem taxes, if any, for any time prior to conveyance of title, with respect to Parcel A and Parcel B (to the extent acquired by Agency). 10 The Escrow Agent is authorized to: 1. Pay and charge the Developer and the Agency for any fees, charges and costs payable under this Section 202 of this Agreement. Before such payments are made, the Escrow Agent shall notify the Agency and the Developer of the fees, charges and costs necessary to clear title and close the escrow. 2. Disburse funds and deliver the Grant Deed and other documents to the parties entitled thereto when the conditions of the escrow have been fulfilled by the Agency and the Developer with respect to the Site. 3. Record any instruments delivered through this escrow if necessary or proper to vest title in the Developer in accordance with the terms and provisions of the escrow instructions portion of this Agreement (Sections 104 through 107 and 200 through 209). All funds received in this escrow shall be deposited by the Escrow Agent in a separate interest bearing account acceptable to the Developer and the Agency with any state or national bank doing business in the State of California and reasonably approved by the Developer and the Agency, and all interest accruing on the account shall be payable to the party which deposited the funds. If this escrow is not in condition to close on or before the time for conveyance established in the Schedule of Performance (Attachment No. 3), either party who then shall have fully performed the acts to be performed before the conveyance of title may, in writing, demand the return of its money, papers, and/or documents from the Escrow Agent. No demand for return shall be recognized until 20 days after the Escrow Agent (or the party making such demand) shall have mailed copies of such demand to the other party or parties at the address of its principal place of business. Objections, if any, shall be raised by written notice to the Escrow Agent and to the other party within the 20-day period, in which event the Escrow Agent is authorized to hold all money, papers, and documents with respect to Parcel A and Parcel B until instructed by a mutual agreement of the parties or, upon failure thereof, by a court of competent jurisdiction. If no such demands are made, the escrow shall be closed as soon as possible. If objections are raised as above provided for, the Escrow Agent shall not return any such money, papers, or documents except upon the written instructions of both the Agency and the Developer, or until the party entitled thereto has been determined by a final decision of a court of competent jurisdiction. If no such objections are made within said 20- day period the Escrow Agent shall immediately return the demanded money, papers, or documents. 11 Any amendment to the escrow instructions shall be in writing and signed by both the Agency and the Developer. At the time of any amendment the Escrow Agent shall agree to carry out its duties as Escrow Agent under such amendment. All communications from the Escrow Agent to the Agency or the Developer shall be directed to the addresses and in the manner established in Section 601 of this Agreement for notices, demands, and communications between the Agency and the Developer. (a) Subject to any mutually agreed upon extension of time, the Agency's obligation to convey to Developer title to Parcel A and Parcel B (to the extent not first acquired by Developer) shall be subject to Developer's satisfaction, on or before the date specified in the Schedule of Performance (Attachment No. 3), of all conditions precedent for conveyance of Parcel A and Parcel B (to the extent not first acquired by Developer), including without limitation the following: 4. Developer's submission, and the Agency's approval of, Evidence of Financing in accordance with Section 215 of this Agreement. 5. Developer's submission and approval by the City of all required land use entitlements and construction and landscaping plans for development of the Site. 3. Completion of all City approvals required for Developer to obtain a grading and excavation permit for the development of the Site. 4. Completion of all approvals from governmental entities other than the City, if any, including without limitation, any approvals required from the California Coastal Commission, required in connection with the development of the Site. 5. Developer's submission of evidence satisfactory to the Agency demonstrating that Developer has obtained all insurance required under this Agreement. 6. Developer's delivery to the Agency of the Original Letter of Credit and any subsequently required letter(s) of credit in accordance with Section 201 of this Agreement. 7. Developer shall have canceled and returned to the Agency the Pre - Conveyance Termination Note and shall have executed and delivered to the Agency a reconveyance of the Pre -Conveyance Termination Deed of Trust, all in form and substance satisfactory to the Agency. 12 8. Developer shall have submitted and obtained the Agency's approval of a Project Cost Budget pursuant to Section 216 of this Agreement. 9. Developer shall have entered into a hotel franchise agreement, first approved in writing by the Agency as to form, content and franchisor, pursuant to Section 403 of this Agreement. 10. Developer shall have entered into a hotel management agreement, first approved in writing by the Agency as to form, content and manager, pursuant to Section 402 of this Agreement. 11. The representations and warranties set forth in Section 606 shall be true and correct as of the date of conveyance. 12. Developer shall be in full compliance with its obligations under this Agreement. 13. Developer shall have signed in recordable form, for recordation concurrently with the close of escrow for conveyance from Agency to Developer of Parcel - A and Parcel B (or portions thereof), an Agreement Containing Covenants Affecting Real Property approved as to form and content by Agency legal counsel, and in the form of Attachment No. 6 hereto, burdening the Site with the covenants running with the land as are to be imposed by this Agreement in connection with the conveyance of the Site to Developer from Agency. 14. Developer's submission, and the Agency's approval of, an acceptable guaranteed price construction contract for the public parking garage to be built on the Site by Developer. (b) Subject to the provisions of Section 104 of this Agreement and the Pre - Conveyance Termination Note, Developer shall not be required to accept conveyance of any portion of the Site unless title to all of Parcel A and Parcel B (to the extent not first acquired by Developer), or possession pursuant to orders of prejudgment possession meeting the requirements for conveyance of Parcel B or any portion thereof under Section 205 of this Agreement, is conveyed or delivered to the Developer at one time. I--• The Agency shall convey to the Developer title to Parcel A and Parcel B (to the extent not first acquired by Developer) in the condition provided in Section 205 of this Agreement by one or more grant deeds substantially in the form attached hereto and incorporated herein as Attachment No. 5 (the "Grant Deed"). 13 • • • romm- (a) The Agency shall convey to the Developer fee title to Parcel A and Parcel B (to the extent not first acquired by Developer), free and clear of all recorded liens, encumbrances, covenants, restrictions, easements, leases, taxes and other defects, except (i) those which do not impede or render the development of the Site pursuant to this Agreement economically infeasible and are otherwise consistent with the development of the Site pursuant to this Agreement; and (ii) the covenants, conditions, restrictions and easements arising out of the provisions of this Agreement, (iii) the lien of the Bonds contemplated to be issued pursuant to Attachment No. 8, (iv) those easements and covenants burdening the Site arising from agreements previously entered into between Agency and third parties with respect to property abutting the Site; provided however Agency shall cooperate with Developer and such third parties so that such easements and covenants do not impede or render the development of the Site pursuant to this Agreement economically infeasible and are otherwise consistent with the development of the Site pursuant to this Agreement; and (v) reserving to the Agency by documentation first approved by Agency's Executive Director and legal counsel fee title to that portion of the Site to be devoted to the contemplated public parking facility required to be constructed by Developer pursuant to the Scope of Development (Attachment No. 4), consistent with plans submitted by Developer and approved by City. (b) Notwithstanding paragraph (a) above, if at (or prior to, if requested by the Developer in accordance with the terms of this Agreement) the dates for conveyance of title to Parcel A and Parcel B (to the extent not first acquired by Developer) to Developer as set forth in the Schedule of Performance (Attachment No. 3), and subject to the provisions of Section 501(a) of this Agreement, the Agency may convey and the Developer shall accept conveyance of any "Condemnation Parcel" (hereby defined as a property within Parcel B to which the Agency has not obtained title, but in which the Agency has a right of exclusive possession pursuant to an order of prejudgment possession or similar judicial order), if the following conditions are met: 1. the Agency delivers exclusive possession of the Condemnation Parcel to the Developer; and 2. all occupants, if any, have been relocated from the Condemnation Parcel as of the date of such conveyance; and 3. an appropriate title policy insuring Developer's interest in the Condemnation Parcel, subject only to exceptions set forth in paragraph (a) of this Section 205, is available to the Developer from a title company reasonably satisfactory to the Agency and the Developer (the "Title Company"); and 4. the Agency is diligently proceeding with all condemnation actions; and 14 5. the Agency deposits the grant deed to the Condemnation Parcel in the escrow provided in Section 202 of this Agreement, for recordation and delivery to Developer upon the Agency's obtaining of fee title. (c) In the event the Agency tenders possession of the Condemnation Parcel as herein provided, the Developer shall not terminate this Agreement under the provisions of Section 505.1(i) of this Agreement, but shall accept such right of possession and shall proceed with the development of the Site in accordance with the Scope of Development (Attachment No. 4). . (d) The Agency shall diligently proceed with all condemnation actions to obtain final judgments in such matters on or before the date set forth in the Schedule of Performance, and take any other action necessary to perfect the transfer of title to the Developer. (e) All references to conveyance of title in this Agreement shall, without limitation, also be deemed to include the conveyance permitted under paragraph (b) of this Section 205. Subject to any mutually agreed upon extension of time, the Agency shall deposit the Grant Deed or other instrument conveying Parcel A and Parcel B (to the extent not first acquired by Developer) to the Developer with the Escrow Agent on or before the date established for the conveyance of the Site in the Schedule of Performance (Attachment No. 3). § 207. Recordation of the Grant Deed and Agreement Containing Covenants Affecting Real Propedy Concurrently with the conveyance of Parcel A and Parcel B (to the extent not first acquired by Developer) to Developer (or upon the Agency's subsequent obtaining of fee title), Escrow Agent shall cause the filing of the Grant Deed for recordation among the land records in the Office of the County Recorder of Orange County. Concurrently with the conveyance of Parcel A and Parcel B (to the extent not first acquired by Developer) to Developer, Escrow Agent shall cause the filing of the Agreement Containing Covenants Affecting Real Property for recordation among the land records in the Office of the County Recorder of Orange County. Concurrently with recordation of the Grant Deeds or instruments conveying possession of Parcel A and Parcel B (to the extent not first acquired by Developer), and as a precondition of close of escrow, Title Company shall provide and deliver to the Developer a title insurance policy issued by Title- Company insuring that Developer's 15 interest in Parcel A and Parcel B is in the condition required by Section 205 of this Agreement. The Title Company shall provide the insurance policies and the title insurance policies shall be in such amount as the Developer may request, provided that the Developer pays any cost of such policies. Concurrently with the issuance of the title policy for the Site, the Title Company shall, if requested by the Developer, provide the Developer with .such further policies, additional endorsements, and extended coverage as the Developer deems necessary to insure its title in the Site, including but not limited to an additional title policy to insure the amount of the Developer's estimated construction costs of the improvements to be constructed thereon, provided however that the Developer shall pay the costs of such additional endorsements and extended coverage. The Developer shall pay for all premiums for title insurance, including those for any extended coverage or special endorsements which it may request. -�MorTIM MMIR.-III Ad valorem taxes and assessments levied, if any, assessed or imposed on Parcel A and Parcel B (to the extent acquired by Agency) prior to the conveyance of title to the Developer shall be borne by the Agency and either paid or canceled prior to close of escrow. Ad valorem taxes and assessments, if any, on Parcel A and Parcel B, and taxes upon this Agreement or any rights hereunder, levied, assessed or imposed for any period, commencing after conveyance of title or possession of Parcel A and Parcel B to the Developer, shall be borne by the Developer. Title to Parcel A and Parcel B (to the extent not first acquired by Developer) shall be conveyed free of any possession or right of possession except that of the Developer, unless waived by the Developer in writing, except for Agency's rights to the public parking facility parcel. As a precondition of close of escrow, zoning of the Site at the time of conveyance of Parcel A and Parcel B (to the extent not first acquired by Developer) to the Developer shall be such as to permit development of the Site and construction of improvements thereon in accordance with the provisions of this Agreement and the use, operation and maintenance of such improvements in accordance with the provisions of this Agreement. The Agency shall provide all proper assistance to the Developer in connection therewith, 16 and it shall not take any action to interfere with the Developer's attempt to obtain any discretionary permits required for the development of the Site. (a) "Hazardous Substance," as used in this Agreement means any substance, material or waste which is or becomes regulated by the United States government, the State of California, or any local or other governmental authority, including, without limitation, any material, substance or waste which is (i) defined as a "hazardous waste," "acutely hazardous waste," "restricted hazardous waste," or "extremely hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code; (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code; (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code; (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code; (v) petroleum; (vi) asbestos; (vii) a polychlorinated biphenyl; (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Chapter 20; (ix) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x) defined as a "hazardous waste pursuant to Section 1004 of the Resource Conservation and Recovery Act (42 U.S.C. Section 6903); (xi) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601); or (xii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any governmental requirements either requires special handling in its use, transportation, generation, collection, storage, treatment or disposal, or is defined as "hazardous" or is harmful to the environment or capable of posing a risk of injury to public health and safety. (b) Developer hereby represents and warrants that the development, construction and uses of the Site permitted under this Agreement do not require the presence of any Hazardous Substance on the Site. (a) Prior to the close of escrow for the conveyance to Developer of Parcel A and Parcel B (to the extent not first acquired by Developer), Developer shall have the right, at its sole cost and expense, to engage its own environmental consultant ("Developer's Environmental Consultant'), to make such investigations as Developer deems necessary, including without limitation any "Phase 1" and/or "Phase 2" investigations of Parcel A and any portion of Parcel B owned by the Agency, and the Agency shall promptly be provided a copy of all reports and test results provided by Developer's Environmental Consultant (the "Environmental Reports"). Promptly after receipt and in any event prior to such close of escrow, Agency shall have given Developer soils reports, if any, actually known by the 17 Agency's Executive Director and the City's Director of Economic Development to exist concerning the Site in the files of the Agency. (b) Parcel A and Parcel B (to the extent not first acquired by Developer) shall be delivered from Agency to Developer in an "as is" physical condition, with no warranty, express or implied by Agency as to the presence of Hazardous Substances, or the condition of the soil, its geology or the presence of known or unknown faults. If the condition of the Site is not in all respects entirely suitable for the use or uses to which the Site will be put, then it is the sole responsibility and obligation of Developer to place the Site in all respects in a condition entirely suitable for the development thereof at the sole cost, risk and expense of the Developer. (c) By this Agreement, Developer provides to the Agency, effective upon the date of this Agreement, an indemnification of the Agency and the City and their respective members, officers, employees, agents, contractors and consultants relating to the environmental condition of the Site and the presence of Hazardous Substances thereon. Therefore, except to the extent caused by the intentional misconduct of the Agency, its employees, officers or agents, Developer hereby agrees to indemnify, defend and hold harmless Agency and City and their respective members, officers, agents, employees, contractors and consultants, from any claims, actions, suits, legal and administrative proceedings, liability, injury, deficiency, damages, fines, penalties, punitive damages, costs and expenses (including, without limitation, the cost of any cleanup, remediation, removal, mitigation, monitoring or testing of Hazardous Substances, and reasonable attorneys' fees) resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Substances on, under, in or about, or the transportation of any Hazardous Substances to or from, the Site; 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 or Hazardous Substances on, under, in or about, to or from, the Site. (d) From the date of this Agreement, Developer hereby waives, releases and discharges the Agency, the City and their respective members, officers, employees, agents, contractors and consultants, from any and all present and future claims, demands, suits, legal and administrative proceedings, and from all liability for damages, losses, costs, liabilities, fees and expenses (including, without limitation, attorneys' fees) arising out of or in any way connected with the Agency's or Developer's use, maintenance, ownership or operation of the Site, any Hazardous Substances on the Site, or the existence of Hazardous Substances contamination in any state on the Site, however the Hazardous Substances came to be placed there, except that arising out of the intentional misconduct of the Agency or its employees, officers or agents. Developer acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. As such relates to this Section 213, Developer hereby waives and relinquishes all rights and benefits which they may have under Section 1542 of the California Civil Code. • tt t-t+ I • . • t- i- - •�- 1. Prior to the conveyance of title to Parcel A or Parcel B (or any portion. of Parcel A or Parcel B), representatives of the Developer shall have the right of access to and entry upon such properties which are owned by the Agency or of which the Agency has possession, at all reasonable times, for the purposes of performing clean up and removal of hazardous, toxic, and/or contaminating substances, and for the purposes of obtaining data and making surveys and tests necessary to carry out this Agreement. 2. In addition, in all negotiated purchase agreements for the acquisition of Parcel B or any portion thereof, the Agency shall use good faith efforts to require the sellers to permit the Developer to have the right to enter such properties and at the Developer's sole cost and expense to investigate and determine the conditions of such properties pursuant to this Section 214. The Agency agrees to assign such entry rights as it acquires pursuant hereto to the Developer. 3. Investigations shall be performed by Developer on and beneath all portions of the Site and all improvements thereon for the presence of hazardous, toxic and/or contaminating materials. Developer agrees to pay the entire costs of such investigations. 4. The Developer hereby agrees to indemnify, defend and hold harmless the Agency and the City, and their officers, employees and consultants, for any and all claims, liability and damages arising out of any work or activity of the Developer, its agents, or its employees permitted pursuant to this Section 214. After the Agency conveys Parcel A and Parcel B (to the extent not first acquired by Developer) or any portion thereof or any interest therein to the Developer, and so long as the Agency fulfills its obligations to withhold amounts from deposits in escrow or court deposits in connection with obtaining orders of prejudgment possession to meet its obligations pursuant to this Section 213, the Developer hereby further agrees to defend and hold harmless the Agency and the City, and their respective officers, employees and consultants, for any and all claims, liability, costs, fines, penalties, charges and/or claims of any kind whatsoever relating to the existence and removal of hazardous, toxic and/or contaminating materials, except where such claims, liability, costs, fines, penalties, charges and/or claims are due to the actions of the Agency or the City. 19 5. The Agency agrees to provide, or cause to be provided, to the Developer all data and information pertaining to Parcel A and Parcel B, which, to the actual knowledge of the Agency's Executive Director or Assistant Executive Director, is in the possession of the Agency. 6. At the reasonable request of the Developer and otherwise as warranted by the circumstances in the opinion of the Agency, Agency shall apply for appropriate pre -condemnation orders for the purpose of permitting Developer to make all appropriate tests and inspections where owners' consent for entry cannot be obtained. Within the times established therefor in the Schedule of Performance (Attachment No. 3), the Developer shall submit to the Agency evidence reasonably satisfactory to the Agency that the Developer has obtained sufficient equity capital and firm and binding commitments for the financing necessary for the acquisition of the Site and the construction and development of improvements thereon in accordance with this Agreement. The Agency shall approve or disapprove such evidence of financing commitments within the times established in the Schedule of Performance (Attachment No. 3). Such approval shall not be unreasonably withheld. If the Agency shall disapprove any such evidence of financing, the Agency shall do so by written notice to the Developer specifying the reasons for such disapproval. The Developer shall promptly obtain and submit to the Agency new evidence of financing. The Agency shall approve or disapprove such new evidence of financing in the same manner and within the same times established in this Section 214 for the approval or disapproval of the evidence of financing as initially submitted to the Agency. Such evidence of financing shall include the following for each of the Parcels comprising the Site: 1. (a) The financing documents for the construction of the improvements in accordance with the Scope of Development, Attachment No. 4, which may include a legally binding, firm and enforceable commitment from Federal Realty Investment Trust, or permitted wholly owned subsidiary thereof, or other equity provider or financial coventurer approved by Agency pursuant to Section 107, in such form and content acceptable to the Agency; or (b) A copy of the commitment or commitments obtained by the Developer for the mortgage loan or loans sufficient to finance the construction of the improvements in accordance with the Scope of Development, certified by the Developer to be a true and correct copy or copies thereof. The commitments for financing shall be in such form and content acceptable to the Agency as reasonably evidences a legally binding, firm and enforceable commitment; provided however, such commitments may be subject to standard and customary conditions (including but not limited to conditions 20 regarding the status of title, receipt of all required consents, licenses and permits and approvals of plans, specifications and studies); and 2. A copy of the contract between the Developer and one or more general contractors for the construction of such improvements, certified by the Developer to be a true and correct copy thereof or other evidence reasonably satisfactory to the Agency establishing that the financing commitments are sufficient to construct the improvements in accordance with the Scope of Development; and 3. A financial statement as evidence of other sources of capital sufficient to demonstrate that the Developer has adequate funds to cover the difference, if any, between acquisition and construction cost minus financing authorized by mortgage loans. The Agency shall approve the financial statement as evidence of sources of equity capital if such is approved by the lender making the mortgage loan and the Agency approves such mortgage lender. [§ 216] Project Costs (a) As a condition precedent to the Agency's obligation to convey any portion of the Site, Developer shall submit and obtain the Agency's approval of a Project Cost Budget. The Project Cost Budget shall have a reasonable relationship with the pro forma used to calculate the $45,800,000 amount referred to in paragraph (a) (3) (B) of Attachment 8 of this Agreement, and shall state the anticipated amount of Project Costs and shall include a separate dollar amount for each category ((a) through (p)) in the definition of Project Costs in paragraph (c) below and a reasonable description or itemization of the costs in each such category. (b) Except for Approved Post -Construction Capital Expenditures provided for in Section 216 (e) below, a cost or expense which is not included in the Project Cost Budget approved by the Agency shall not be a Project Cost for purposes of this Agreement (including the Agency Participation Payments and Schedule of Feasibility Gap Payments) unless Developer submits evidence satisfactory to the Agency, at the earliest possible date and before the cost is incurred, demonstrating that such cost or expense (i) will be actually incurred or paid for by or on behalf of Developer for or in connection with the development of the improvements on or with respect to the applicable Parcel in connection with the initial construction; and (ii) cannot reasonably be or have been avoided or reduced; and (iii) was not foreseeable on the date of this Agreement. (c) "Project Costs" as used herein means the following actual costs and expenses of the development work to be performed by or on behalf of Developer for or in connection with the development of the improvements required or contemplated by this Agreement and plans approved therefor by the City on or with respect to the Site (the "Improvements"), to the extent that such costs and expenses are incurred and paid for by Developer to third parties in connection with the initial construction and are either included 21 in the Agency -approved Project Budget or approved in writing by the Agency pursuant to paragraph (b) above: a. Land development work, including demolition and excavation, asbestos abatement, soils compaction and remediation, utility relocation and abandonment and off -site improvements. b. Construction of the Improvements and installation of the required fixtures, furniture, machinery and equipment, and repair of any damage caused and arising. during construction from a casualty not covered by insurance proceeds. C. Building permits and entitlement fees not paid for or reimbursed by Agency. d. Premiums for casualty, public liability and property damage and other similar insurance during construction and on bonds securing work against liens for labor and materials. e. Real estate taxes and assessments upon the Premises or the Improvements during the period of construction. f. Interest on construction loans and an imputed cost of equity funds at 10% per annum prior to the issuance by Agency of the Release of Construction Covenants. g. Fees for (i) architects, engineers, accountants; and (ii) real estate and financial advisors and attorneys previously identified to Agency. Saybrook Capital, LLC, and Sonnenschein Nath & Rosenthal have previously been so identified to Agency. h. Purchasing fees paid to third parties not affiliated with Developer in connection with the purchase of furniture, fixtures and equipment. i. Development fees paid to government agencies, including traffic mitigation costs and fees and other governmental exactions. j. Charges and premiums for searching and insuring title. k. Out-of-pocket costs incurred by Developer in connection with construction financing, including, without limitation, commitment fees, mortgage broker fees, standby fees and fees of a like nature, printing and duplicating expenses, documentary transfer tax stamps, mortgage taxes, recording charges. 22 Customary and reasonable pre -opening expenses. M. Costs of required studies, reports and inspections. n. Broker's commissions or finders fees for land assembly and leasing. o. The cost of initial tenant improvements paid for by Developer to be reimbursed to Developer in the form of rental payments, but excluding any such costs to the extent reimbursed or paid for in any other form by any third party, and the cost of the lease buy-out of an existing tenant within the Site improvements developed by Developer where necessary to obtain the initial occupancy of another tenant therein. P. A Developer's Fee of three percent (3%) of Project Costs, excluding the public parking facility costs and tenant improvements, but not in any event to exceed a Developer's Fee of Five Hundred Thousand Dollars ($500,000). Any item previously included as an Acquisition Cost to be reimbursed Developer by Agency as a part of the Agency Obligation defined in Attachment No. 8 shall not also be included as a Project Cost. (d) Within ninety (90) days after the recording of the Release of Construction - Covenants to be issued by the Agency pursuant to this Agreement, Developer shall submit to Agency, for the review and written approval or disapproval of the Agency's Executive Director, a statement (the "Certified Project Cost Statement') setting forth the total amount of Project Costs, a separate amount for each category ((a) through (m)) in the definition of Project Costs in paragraph (c) above, and a reasonable description or itemization of the costs incurred in each such category, together with a certificate of an independent certified public accountant reasonably acceptable to Agency (the "Accountant"). The Accountant's certificate shall be addressed to Agency, and shall state that the Accountant is familiar with the definition of Project Costs in this Agreement and attest to the accuracy of the Certified Project Cost Statement, subject to usual and customary qualifications. The Accountant shall be selected by Developer, but shall be one of the following: i) Arthur Andersen & Co., LLP; ii) Deloitte & Touche, LLP; iii) Ernst & Young, LLP; iv) Coopers and Lybrand, LLP; v) KMPG Peat Marwick, LLP; vi) Price Waterhouse, LLP; 23 vii) Any national accounting firm, first approved in writing by the Agency, having at the time of delivery of the Certified Project Cost Statement reputation and stature in the accounting community comparable to the foregoing firms as of the date of this Agreement. (e) The parties acknowledge that additional significant capital expenditures involving items included as Project Costs under Section 216 (c) a, b, c, g, i, and m above, and related tenant improvements and lease -buyouts as described for initial tenancies under Section 216 (c) o above, may be made by Developer after the recordation of the Release of Construction Covenants, which expenditures are not a normal re -tenanting expense, are not a maintenance or operational expenditure typical for the normal maintenance or operation of a development similar to the subject development, and are not made in connection with the initial tenanting of commercial space within the improvements developed on the Site, but are instead made in order to materially augment Gross Revenues. Such expenditures meeting the description of the immediately preceding sentence (referred to in this Agreement as "Proposed Post -Construction Capital Expenditures"), however, shall not be included in Project Costs for any purpose under this Agreement, unless first submitted to the Agency's Executive Director prior to such expenditure and -approved as a Project Cost (referred to in this Agreement as "Approved Post -Construction Capital Expenditures"). The Agency's Executive Director shall reasonably consider each submitted Proposed Post -Construction Capital Expenditure for approval or disapproval, provided such expenditure is not a normal re -tenanting expense, is not made in connection with the initial tenanting of commercial space within the improvements developed on the Site, is not a maintenance or operational expenditure typical for the normal maintenance or operation of a development similar to the subject development, and provided such approval will not have any adverse economic impact on the Agency's economic interests, including without limitation the Agency Participation Payments. [§ 3001 DEVELOPMENT OF THE SITE [§ 301] Development of the Site 1 ft ••- • I- - •TGNI-1-t Developer shall develop, or cause to be developed, the Site in accordance with and within the limitations established therefor in the Scope of Development (Attachment No. 4). 24 Developer shall prepare and submit to the City applications for a Conditional Use Permit, Tentative Tract Map and other required entitlements, which shall, among other things, depict and describe building locations, densities, subdivision lot lines, landscaping and circulation, for review and written approval or disapproval by the City within the times established therefor in the Schedule of Performance (Attachment No. 3). The Site shall be developed as generally established in such approved Conditional Use Permit, Tract Map and other required entitlements, except for such changes as may be mutually agreed upon between Developer and the City. Any such changes shall be within the limitations of the Scope of Development (Attachment No. 4). Developer shall prepare and submit to the City for its approval preliminary and finish grading and drainage plans, and preliminary and final landscaping plans, for the Site. Those plans shall be prepared and submitted within the times established in the Schedule of Performance (Attachment No. 3). The landscaping plans shall include hardscape plans, sections and elevations, including lighting, equipment, furnishings and planting schedules. The landscaping plans shall be prepared by a professional landscape architect and the grading plans shall be prepared by a licensed civil engineer. Such landscape architect and/or civil engineer may be the same firm as Developer's architect. Within the time established therefor in the Schedule of Performance (Attachment No. 3), Developer shall submit to Agency for approval the name and qualifications of its architect, landscape architect and civil engineer for the Site. Developer shall prepare and submit to the City construction drawings and related documents (collectively called the "Drawings") for the development of the Site for processing as required for City approval at the times established therefor in the Schedule of Performance (Attachment No. 3). Such Drawings shall include, without limitation, floor plans, roof plans, elevations and project sections, tabulation of areas and uses, elevations of major public spaces, graphics and signage plans, lighting plans and a preliminary parking analysis. Final Construction Drawings are hereby defined as those in sufficient detail to obtain a building permit. 25 1• 1 '1 •1. O11 1"• •I ii I1 • • •1 •1 (a) The cost of developing the Site and constructing all improvements thereon or in connection therewith (including, without limitation, all work described in the Scope of Development and all conditions of approval, infrastructure, dedications and mitigation measures related to approval of entitlements, and all demolition, grading, excavation and site improvement and remediation, and all items referred to in the definition of Project Costs set forth in Section 216 (c) above) shall be borne solely by Developer, except as follows: (1) The Agency shall make payments required in and shall otherwise comply with the Schedule of Feasibility Gap Payments (Attachment No. 8). (2) The Agency shall pay the cost of performing the Agency's affordable housing obligations, if any, under the Community Redevelopment Law, including, without limitation, replacement housing, inclusionary housing and the expenditure of a percentage of tax increment revenue on low- and moderate -income housing. • I '-1 101 N 11-1 Following the conveyance or delivery of possession of Parcel A or Parcel B (or any portion of Parcel A or Parcel B), Developer shall promptly begin and thereafter diligently prosecute to completion the construction of the improvements thereon and the development thereof as provided in the Scope of Development (Attachment No. 4). Developer shall begin and complete all construction and development within the times specified in the Schedule of Performance (Attachment No. 3), with such reasonable extensions of said times as may be granted by Agency. The Schedule of Performance is subject to revision from time to time as mutually agreed upon in writing between Developer and Agency's Executive Director. During periods of construction, Developer shall submit to Agency written reports of the progress of the construction when and as requested by Agency, but not more frequently than monthly. The reports shall be in such form and detail as may be reasonably required by Agency and shall include a reasonable number of construction photographs (if requested) taken since the last report by Developer. 26 (a) During the period commencing with the undertaking by Developer of any entry or work on the Site or any portion thereof, Developer agrees to and shall defend, indemnify and hold harmless Agency, the City and their officers, employees, agents, contractors and consultants from and against all claims, liability, loss, damage, costs or expenses (including reasonable attomeys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss or damage whatsoever caused to any person or to the property of any person which shall occur on or adjacent to the Site and which shall be directly or indirectly causedby or based on the Developer's rehabilitation, development, construction, use or operation of the Site or any portion thereof or any improvements thereon or any of Developer's activities under this Agreement, whether such actions or inactions thereof be by Developer or anyone directly or indirectly employed or contracted with by Developer and whether such damage or injury shall accrue or be discovered before or after the termination of this Agreement. Developer shall not be responsible for (and such indemnity shall not apply to) property damage or bodily injury to the extent caused by the negligence of the Agency or its designated employees or agents. (b) Prior to the undertaking of any preliminary work on the Site or any portion thereof, Developer shall furnish, or cause to be furnished, to Agency duplicate originals or appropriate certificates of personal injury and property damage insurance policies in an amount not less than Five Million Dollars ($5,000,000) combined single limit, naming Agency, the City and their officers, employees, agents, contractors and consultants as additional insureds, or a combination of functionally equivalent policies, including umbrella coverage, subject to the prior approval of Agency legal counsel. Any such policy shall be primary and not contributing to policies carried by Agency, or the City and shall be maintained in full force and effect at all times. Before commencement of construction or development of any building, structure or other work of improvement upon the Site or any portion thereof, Developer shall at its own expense secure, or cause to be secured, any and all permits which may be required by the City or any other governmental agency having jurisdiction over such construction, development or work. Agency shall provide all proper assistance to Developer in securing. permits from other governmental agencies. This Agreement shall not be construed to limit in any manner (i) the right or the authority of the City of Huntington Beach, or any other governmental agency having jurisdiction, to require public improvements, dedications, exactions or other conditions of approval in connection with the development of the Site or any portion thereof; or (ii) Developer's responsibility to pay for the cost of complying therewith. 27 Representatives of Agency shall have the reasonable right of access to the Site 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. Such representatives of Agency shall be those who are so identified in writing by the Agency Executive Director. No such representatives shall interfere with any work being done at the Site during such access. Developer shall have the right to accompany such Agency representatives during such Site access. [§ 312] Local, State and Federal Laws Developer shall carry out the construction of the improvements on the Site in conformity with all applicable laws, including all applicable federal and state labor standards. [§ 313] Nondiscrimination during Construction Developer for itself and its successors and assigns agrees that in the construction of the improvements on the Site provided for in this Agreement, Developer will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, creed, religion, national origin or ancestry. •1 • C-o- - rMTOMINVIOURM Developer recognizes that: 1. Development of the Site is important to the general welfare of the community; and 2. Substantial financing and other public aids have been made available by law and by the government for the purpose of making redevelopment possible; and 3. The qualifications and identity of Developer are of particular concern to the community and Agency. Accordingly, Developer agrees to comply with the provisions of Section 316. W (a) For the reasons set forth above in Section 315, Developer shall not assign this Agreement nor sell the Site or any portion thereof, nor lease nor make any total or partial conveyance or transfer in any mode or form of all or any part of the Site or the improvements thereon, or any interest therein, nor shall there be any change in the identity of Developer or change in the ownership of Developer or in the relative proportions thereof, or with respect to the identity of the parties in control of Developer or the degree thereof, by any method or means (other than such changes occasioned by the death or incapacity of any individual), (collectively, "Transfer"), without the prior written approval of Agency, which approval shall not be unreasonably withheld or delayed if the proposed Transferee (as defined hereinbelow) is determined by the Agency to have qualifications equal to or better than the original Developer as of the date of this Agreement in all material respects, including but not limited to (a) financial strength, (b) experience in the successful development, operation, management and marketing of hotels, restaurants, and retail improvements, (c) character and reputation, and (d) the ability to perform all of the agreements, undertakings, and covenants of this Agreement, the Grant Deed, the Agreement Containing Covenants Affecting Real Property and all other agreements entered into by Developer which relate to the development, management, operation, maintenance, and restoration of the Site and of the improvements thereon. Developer shall promptly notify Agency of any and all changes whatsoever in the identity of the parties in ownership or control of Developer or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. Any entity formation agreements and documents (or changes therein) related to a Transfer, as well as the agreements and documents effectuating any Transfer, shall be subject to the approval of Agency's Executive Director in connection with its approval of the Transfer. (b) To assist Agency in determining whether or not the proposed Transferee is so qualified, Developer shall furnish to Agency at no expense to Agency, prior to that Transfer, detailed and complete financial statements of the proposed Transferee, audited by a certified public accountant reasonably satisfactory to Agency, together with detailed and complete information about the business of the proposed Transferee, including its experience in developing and operating improvements of the type to be constructed on the Site, the use to be made of the Site and the improvements thereon by the proposed Transferee, projections by the proposed Transferee of the sources of funds to be used to pay any indebtedness that the proposed Transferee will assume or take subject to, or agree to pay, in connection with the Transfer, and other claims on and requirements for those funds, together with any other information Agency may reasonably require to assist Agency in determining whether or not the proposed Transferee is so qualified. To the greatest extent permitted by law, if Developer or such Transferee provides Agency with any proprietary financial information relating to a proposed Transferee, Agency shall not, without Developers prior written consent, disclose or make any such financial information available to the public. 29 (c) Approval by Agency of any Transfer shall be conditioned upon such assignee, conveyee or transferee (collectively "Transferee") agreeing, in writing, to assume the rights and obligations thereby transferred and to keep and perform all covenants, conditions and provisions of this Agreement, the Grant Deed and the Agreement Containing Covenants Affecting Real Property which are applicable to the rights acquired. (d) The limitations on Transfer contained in this Section 316 shall not be deemed to apply to or prevent, nor shall Agency's approval be required under this Section in connection with, the granting of any security interest expressly permitted under this Agreement (it being understood that the granting of such a security interest shall not be considered a Transfer pursuant to this Section 316, but shall be governed solely by the provisions of Section 317 of this Agreement); nor the exercise by any mortgagee of its right to foreclose its mortgage by power of sale or judicial foreclosure; nor any Transfer of an interest by a mortgagee having acquired Developer's interest in the Site as a result of its rights under the mortgage, or by any successor to the mortgagee whose interest shall have been acquired by, through or under any mortgage or shall have been derived immediately from any holder thereof. Notwithstanding the foregoing provisions of this paragraph (d), the limitations on Transfer contained in this Section 316 shall apply to any mortgagee which acquires its interest in the Site or the improvements thereon other than by the exercise of its rights pursuant to the mortgage or deed in lieu of foreclosure. (e) Any purported Transfer shall be null and void unless it complies with the terms of this Section. (f) Subject to Developer's right to lease space within the Improvements for occupancy as expressly provided in subparagraph (h) of this Section 316, and subject to Developer's right to Transfer the Hotel Parcel pursuant to the provisions of subparagraph (i) of this Section 316, Developer shall only Transfer Developer's entire interest in the Site and the Improvements thereon as a whole and shall not re -subdivide the Site or the improvements thereon beyond the subdivision contained in the initial Tract Map approved by the City for the development of the Site by Developer without the prior written approval of Agency, which Agency may grant or withhold in its discretion. Without limiting the foregoing or Agency's right to approve all Transfers pursuant to the provisions of this Agreement, Developer shall apply to the City for approval of a subdivision tract map so as to parcelize the Site consistent with applicable City codes and with the development of the Site contemplated by this Agreement. (g) All costs incurred by Agency to review any Transfer proposed by Developer as reasonably necessary to close any Transfer shall be paid by Developer. With respect to each Transfer, Developer shall deliver a retainer to Agency in the sum of Five Thousand Dollars ($5,000), to be applied to the payment of Agency's costs. The administrative costs of Agency shall be charged at the actual cost thereof not to exceed an hourly rate of Fifty Dollars ($50.00). The costs of Agency for consultants or legal services required for providing such assistance shall be the actual sums billed to Agency for such consulting or 30 legal services. All such costs in excess of Five Thousand Dollars ($5,000) shall be paid within ten (10) days after written request therefor by Agency. If such costs incurred by Agency for a Transfer equal less than Five Thousand Dollars ($5,000), the balance shall be refunded promptly following the closing. (h) With respect to the leasing of space for occupancy, Developer shall not be required to submit the documentation otherwise required for a Transfer by subparagraph (b), nor the assignment and assumption agreement otherwise required by subparagraph (c), nor pay the costs referred to in subparagraph (g); provided, however, that such lease shall contain appropriate provisions conforming the use and operation of the premises to this Agreement and the covenants of the Grant Deed and the Agreement Containing Covenants, and further provided, that such tenant is a first quality nationally or regionally recognizable and reputable retailer or restaurant of the nature and quality customarily included in retail/restaurant centers meeting the requirements and restrictions of the Scope of Development (Attachment No. 4). (i) The Developer may, subject to all of the requirements of this Agreement and Section 316 other than the prohibition on subdivision or resubdivision of the Site, separately convey a portion of the Site as may be demonstrated to the reasonable satisfaction of the Agency to be necessary for the development and operation of the Agency approved hotel to be developed on the Site. Notwithstanding Section 316, mortgages, deeds of trust, or any other form of conveyance required for any reasonable method of financing are permitted, but only for the purpose of securing loans of funds to be used only for financing the acquisition of the Site and the construction of improvements on the Site, and any other expenditures necessary and appropriate to develop the Site in accordance with this Agreement, including without limitation the Project Costs. The Developer shall not enter into any such mortgage or deed of trust without the prior written consent of the Agency, which the Agency shall not unreasonably withhold or delay if the Developer submits evidence satisfactory to the Agency demonstrating (a) that the mortgage, deed of trust or other security instrument is consistent with the provisions of this Agreement; and (b) the mortgage, deed of trust or other security instrument expressly acknowledges that the rights of any holder or person acquiring title through or following foreclosure are subordinate and subject to the provisions of the Grant Deed and the Agreement Containing Covenants Affecting Real Property. The words "mortgage" and "deed of trust" as used herein include all other modes of financing real estate acquisition, construction, and land development. Developer shall not place or allow to be placed on the Site or any part thereof or the improvements thereon, any mortgage, deed of trust, encumbrance or lien other than as expressly authorized by this Section 317. The Developer shall remove or cause to be 31 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. The Developer shall notify the Agency in advance of any mortgage, deed of trust or sale and lease -back financing, if the Developer proposes to enter into the same. ■• •- ►519019"1 Mw Wi• of 11• • "11"1 MERS The holder of any mortgage, deed of trust or other security interest authorized by this Agreement (the "Mortgagee") shall in no way be obligated by the provisions of this Agreement to construct or complete the construction of improvements, or to guarantee such construction or completion. Each such holder shall (insofar as the rights of the Agency are concerned) have the right at its option to cure or remedy or commence to cure or remedy any Developer default consistent with the terms and conditions of this Agreement. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the improvements without first having expressly assumed the Developer's obligations to the Agency by written agreement satisfactory to the Agency. The holder in that event must agree to complete,. in the manner provided in this Agreement, the improvements to which the lien or title of such holder relates, and submit evidence satisfactory to the Agency that it has the financial responsibility and, itself or through contract with qualified parties, the qualifications necessary to perform such obligations. Any such holder properly completing such improvements shall be entitled, upon request made to the Agency, to a Release of Construction Covenants from the Agency with respect to such improvements. :- • •1 1. •1 • "1 :1 Promptly after completion of all construction and development required by this Agreement to be completed by Developer upon or with respect to the Site, Agency shall furnish Developer with an executed and acknowledged Release of Construction Covenants in substantially the form appended to this Agreement as Attachment No. 7 and incorporated herein by this reference, upon written request therefor by Developer. Agency shall not unreasonably withhold the Release of Construction Covenants. The Release of Construction Covenants shall be a conclusive determination of satisfactory completion of the construction required by this Agreement upon or with respect to the Site, and a termination of the covenants contained in this Agreement and the Construction Covenants of the Agreement Containing Covenants (Attachment No. 6), and the Release of Construction Covenants shall so state. 32 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 Agency refuses or fails to furnish a Release of Construction Covenants after written request from Developer, Agency shall, within thirty (30) days of the written request, provide Developer with a written statement of the reasons Agency refused or failed to furnish the Release of Construction Covenants. The statement shall also contain Agency's opinion of the action Developer must take to obtain a Release of Construction Covenants; provided, however, that the statement need not contain technical information or instructions. Failure by the Agency to provide the written statement shall in no event be deemed to entitle Developer to the Release of Construction Covenants. If the reason for Agency's refusal to issue a Release of Construction Covenants is confined to Developer's failure to complete specific punch list items which cannot immediately be completed due the short-term unavailability of required materials, Agency shall issue the Release of Construction Covenants upon the posting of a bond by Developer, first approved in writing by the Agency as to form and substance, in favor of the Agency in an amount representing the fair value of the work not yet completed. The bond shall specify a deadline for completion of the outstanding items, which shall be the earliest reasonable date and shall not be more than ninety (90) days after the issuance of the Release of Construction Covenants. The Release of Construction Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the improvements, or any part thereof, or of Developer's performance of any obligation under this Agreement other than completion of the construction to which the Release of Construction Covenants pertains. The Release of Construction Covenants is not notice of completion as referred to in Section 3093 of the California Civil Code. [§ 400] USE OF THE SITE [§ 4011 Usea Developer hereby covenants and agrees on behalf of itself and any successors and assigns in the Site or any portion thereof or any improvements thereon or any interest therein that Developer and such successors and assigns shall: 1. Develop and construct improvements on the Site solely in accordance with the Redevelopment Plan, the Grant Deed, the Agreement Containing Covenants Affecting Real Property, this Agreement (including but not limited to the Scope of Development, Attachment No. 4), and plans approved by the City of Huntington Beach, with at least 115 and approximately 130 hotel rooms, and at least 130,000 and approximately 135,000 square feet of gross leasable area of retail and restaurant uses, and a public parking facility conforming with City approved plans. In addition to all of the other requirements 33 under this Agreement, the hotel to be developed on the Site shall be of first quality and have an overall standard of quality equal to or better than a limited service hotel such as a Marriott Courtyard Hotel or Marriott Residence Inn, and the retail and restaurant uses to be developed on the Site shall be first quality nationally or regionally recognizable and reputable retailers or restaurants of the nature and quality customarily included in retail/restaurant centers meeting the requirements and restrictions of the Scope of Development (Attachment No. 4).. 2. Devote the Site, or cause the Site to be devoted, to use solely in accordance with the Redevelopment Plan, the Grant Deed, the Agreement Containing Covenants Affecting Real Property, this Agreement, and plans approved by the City of Huntington Beach for hotel, retail, restaurant and parking uses, with at least 115 and approximately 130 hotel rooms, and at least 130,000 and approximately 135,000 square feet of gross leasable area of retail and restaurant uses, and a public parking facility conforming with City approved plans. In addition to all of the other requirements under this Agreement, the hotel to be maintained on the Site shall be of first quality and have an overall standard of quality equal to or better than a limited service hotel such as a Marriott Courtyard Hotel or Marriott Residence Inn, and the retail and restaurant uses to be maintainedon the. Site shall be first quality nationally or regionally recognizable and reputable retailers or restaurants of the nature and quality customarily included in retail/restaurant centers meeting the requirements and restrictions of the Scope of Development (Attachment No. 4). 3. Use reasonable best efforts to operate or cause the hotel, restaurants, retail stores, parking facility and all other improvements to be constructed on the Site to be operated and continuously open for business to the general pubic in accordance with the standards set forth in this Agreement, the Grant Deed and the Agreement Containing Covenants Affecting Real Property, including without limitation the existence at all times of a binding and effective hotel franchise agreement and hotel management agreement, both of which have been first approved in writing by the Agency as provided in Sections 402 and 403 of this Agreement. 4. (a) Maintain, repair and operate the Site and all improvements constructed or to be constructed thereon (including landscaping, lighting and signage), or cause the Site and all such improvements to be maintained, in a first quality condition, free of debris, waste and graffiti, and in compliance with the terms of the Redevelopment Plan, the City of Huntington Beach Municipal Code, and the following: (1) All improvements on the Site shall be maintained in good condition in accordance with the custom and practice generally applicable to comparable first quality hotels, restaurants or retail stores, as applicable, in Orange County, and in conformance and compliance with all plans, drawings and related documents approved by the Agency pursuant to this Agreement, all conditions of approval of land use entitlements 34 adopted by the City or the Planning Commission, including painting and cleaning of all exterior surfaces of all private improvements and public improvements to the curbline. (2) Landscape maintenance shall include, without limitation, watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning, trimming and shaping of trees and shrubs to maintain a natural and healthy appearance, road visibility, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. (3) Clean-up maintenance shall include, without limitation, maintenance of all sidewalks, paths and other paved areas in a clean and weed -free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements and landscaping; clearance and cleaning of all areas maintained prior to the end of each day on which maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. (b) If the Agency gives written notice to Developer that the maintenance or condition of the Site or any portion thereof or any improvements thereon does not comply with this Agreement and such notice describes the deficiencies, Developer shall correct, remedy or cure the deficiency within thirty (30) days following the submission of such notice, unless the notice accurately states that the deficiency is an urgent matter relating to public health and safety in which case Developer shall cure the deficiency with all due diligence and shall complete the cure at the earliest possible time. In the event Developer fails to maintain the Site or any portion thereof or any improvements thereon in accordance with this Agreement and fails to cure any deficiencies within the applicable period described above, the Agency shall have, in addition to any other rights and remedies hereunder, the right to maintain the Site and the improvements thereon, or portion thereof, or to contract for the correction of any deficiencies, and Developer shall be responsible for payment of all such costs incurred by the Agency. 5. Pay when due all real estate taxes and the special taxes or assessments of the bond financing contemplated by Attachment No. 8 of this Agreement assessed and levied on the Site or any portion thereof or any improvements thereon or any interest therein and refrain from appealing, challenging or contesting in any manner the validity or amount of any ad valorem property tax assessment, encumbrance or lien; provided, however, that Developer may appeal, challenge or contest (i) the initial assessment of the assessed value of the Site following the issuance of the Release of Construction Covenants by Agency to the extent that such initial assessment is more than ten percent (10%) higher than the Project Cost approved by the Agency pursuant to Section 216 (d) of this Agreement; and (ii) any increase in assessment of the Site improperly assessed because of a purported change of ownership where no such change took place; and (iii) any increase in assessment of the Site occurring by reason of a bona fide arms -length sale 35 to the extent such increase in assessment results in an assessment in excess of the . purchase price of such bona fide arms -length sale, provided, however, that no such appeal, challenge or contest shall be permitted to attempt to obtain or result in an assessment which is lower than that existing prior to such sale. 6. Not discriminate upon the basis of race, color, creed, religion, sex, age, marital status, handicap, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any improvements erected or to be erected thereon, or any part thereof. 7. Refrain from making any Transfer of all or any portion of the Site, or any improvements thereon, or any interest therein, without the prior written approval of the Agency's Executive Director. 8'. Pay when due the Agency Participation Payment in accordance with Section 701 hereinbelow. At the time specified in the Schedule of Performance, Developer shall enter into a hotel management agreement first approved in writing by the Agency, it being understood and agreed that Developer may redact from such agreement when submitted to Agency for approval any confidential business information not relevant to the purposes of this Agreement (the "Original Management Agreement'). Prior to the expiration or termination of the Original Management Agreement (and any successor hotel management agreement(s)), Developer shall obtain the Agency's written approval of a new hotel management agreement which shall become effective concurrently with the expiration or sooner termination of the hotel management agreement which it replaces. Each such hotel management agreement shall be with a manager determined by the Agency to have not less than eight (8) years of experience in the successful operation of first quality hotels comparable to the hotel to be constructed on the Site. Approvals required of the Agency under this Section 402 shall follow and be limited by the following procedures: Within twenty (20) days after receipt of Developer's request for approval, Agency shall respond in writing by stating what further information, if any, Agency reasonably requires in order to determine whether or not to approve the agreement. Developer shall promptly furnish to Agency such further information as may be reasonably requested. Developer's request for approval shall be deemed complete twenty (20) days after Agency's receipt thereof, if no timely response requesting further information is delivered to Developer, or, if such a timely response requesting further information is received, on the date that Developer delivers such additional information to Agency, provided that Devleoper's additional information is responsive to Agency's request. Agency shall approve or disapprove the matter within thirty (30) days after Developer's request for such approval is accepted as complete or is deemed complete. Approval will not be W. unreasonably withheld if Developer demonstrates that the proposed management agreement will provide capable, competent and experienced operation of hotels similar in quality, size and type as required to be maintained on the Site pursuant to this Agreement. If Agency shall disapprove a hotel operator, Agency shall do so by written notice to Developer stating the reasons for such disapproval.. At all times, the Site and all improvements thereon shall be managed or caused to be managed by Developer in a prudent and business -like manner as necessary to maintain the Site and all improvements thereon in a first-class condition. Developer shall assume responsibility for the operation and maintenance (including repair, restoration and reconstruction) of all of the improvements constructed on the Site and the costs thereof, and Agency and the City shall have no liability for costs of such operation and maintenance by Developer or for any claims arising from the operation and maintenance (including repair, restoration and reconstruction) of such improvements. Without limiting the generality of the foregoing, Developer, in the maintenance of the improvements, shall observe the following standards: 1. Maintain the surface of all automobile and pedestrian areas level, smooth and evenly covered with the type of surfacing materials originally installed thereon or such substitute thereof as shall be in all respects equal thereto or better in quality, appearance and durability. 2. Comply with the maintenance and repair requirements of Section 401.4 of this Agreement. 3. Maintain such appropriate entrance, exit and directional signs, markers and lights as shall be reasonably required and in accordance with the practices prevailing in the operation of similar developments. 4. Clean lighting fixtures and relamp and/or reballast as needed. 5. Repaint striping, markers, directional signs, etc., as necessary to maintain in first-class condition. 6. Provide reasonable amounts of security personnel and security measures. Developer shall seek the advice of the police department in planning appropriate security measures. 7. Maintain public right-of-way items between the property and the street, including sidewalks, curbs, gutters, driveways, signs and poles, curb painting and markings. 37 8. Maintain all surface and storm lateral drainage systems. 9. Maintain all sanitary sewer lateral connections. At the time specified in the Schedule of Performance, Developer shall enter into a hotel franchise agreement (the "Original Franchise Agreement") which has been approved in writing by the Agency using the same approval procedures as are set forth in Section 402 herein above for the hotel management agreement, and which provides for the operation of a hotel meeting the size, level of quality and other requirements and restrictions referred to in Sections 401.1 and 401.2 above. Prior to the expiration or termination of the Original Franchiser Agreement (and any successor franchise agreement(s)), Devleoper shall obtain the Agency's written approval of a new franchise agreement (pursuant to said approval procedures) which shall become effective concurrently with the expiration or sooner termination of the franchise agreement which it replaces. Each such franchise agreement shall be with a franchisor determined by the Agency to be comparable to, or of higher quality than, the franchisor under the Original Franchise Agreement. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall Developer itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the premises herein agreed to be leased. • �1 • 0•i• a m- 111�1 Developer shall refrain from restricting the rental, sale or lease of the Site or improvements thereon, or any portion thereof, on the basis of race, color, creed, religion, sex, marital status, ancestry or national origin of any person. All deeds, leases or contracts for the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site or improvements thereon, or any portion thereof, shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 1. In deeds: 'The grantee herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through it, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises m herein conveyed, nor shall the grantee 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 in the land herein conveyed. The foregoing covenants shall run with the land." 2. In leases: 'The lessee herein covenants by and for itself, its heirs, executors, administrators and assigns, and all.persons claiming under or through it, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased, nor shall the lessee itself, or any person claiming under or through it, establish or permit 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 land herein leased. 3. In contracts: 'There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee 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 land." Concurrently with the recordation of the Grant Deed, Developer shall execute and cause to be recorded in the Official Records of Orange County an Agreement Containing Covenants Affecting Real Property in substantially the form appended to this Agreement as Attachment No. 6 and incorporated herein by this reference. The Agreement Containing Covenants Affecting Real Property shall be recorded with reference to the entire Site. The covenants established in this Agreement, the Grant Deed and the Agreement Containing Covenants Affecting Real Property shall, without regard to technical classification and designation, be binding on Developer and any successor in interest to the Site, or any part thereof, for the benefit and in favor of Agency, its successors and assigns, and the City. The covenants against discrimination shall remain in effect in perpetuity. All covenants contained in this Agreement and the covenants for the construction of improvements on the Site contained in the Grant Deed (Attachment No. 5) W and the Agreement Containing Covenants (Attachment No. 6) shall expire upon the recording of the Release of Construction Covenants to be issued by the Agency pursuant to this Agreement. All other covenants shall remain in effect pursuant to the applicable provisions of the Grant Deed (Attachment No. 5) and the Agreement Containing CoveQnts (Attachment No. 6) unless and until they expire in accordance with the terms thereof. [§ 500] DEFAULTS, REMEDIES AND TERMINATION [§ 501] Default Each of the following shall constitute an Event of Default under this Agreement: A. Failure or delay by a party to perform any term or provision of this Agreement within the time provided herein, as such times may be extended pursuant to Section 604 of this Agreement. B. Breach of any covenant, warranty or agreement contained in this Agreement. Subject to the extensions of time set forth in Section 604, the party who fails to perform or delays performance of any term or provision of this Agreement shall immediately commence to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with all due diligence. [§ 502] Notice If an Event of Default under this Agreement occurs, the injured party shall give written notice (a "Default Notice") of the Event of Default to the party in default, specifying 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, nor shall it operate as a waiver of any rights or remedies of the injured party; but the injured party shall have no right to exercise any remedy hereunder prior to delivering the Default Notice as provided herein. Delays by either party in asserting any of its rights and remedies shall not deprive either party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. [§ 503] Cure Period With respect to defaults or events for which a specific cure period is provided elsewhere in this Agreement, the specific cure period in that Section shall be applicable in lieu of the cure periods provided in this Section 503 and in no event shall the cure periods set forth in this Section 503 be in addition to any other cure period set forth in this Agreement. 40 The injured party shall have no right to exercise a right or remedy hereunder unless the subject Event of Default continues uncured for a period. of thirty (30) days after delivery of the Default Notice with respect thereto, or, where the default is of a nature which cannot reasonably be cured within such thirty (30) day period, the defaulting party fails to commence such cure with all due diligence or fails to proceed diligently to complete the same; provided, however, that (a) in no event shall the injured party be prevented from exercising its rights or remedies for more than one hundred and twenty (120) days following delivery of the Default Notice; and (b) a remedy necessary to prevent further damage may be obtained at any time following delivery of the Default Notice. An Event of Default for failure to pay a sum of money is a default which can be cured within thirty (30) days. If the default is not cured within the time periods specified above, the non - defaulting party, at its option, may pursue such other rights and remedies as it may have. Upon the occurrence of an Event of Default and the expiration of the applicable cure period provided herein or by law, the injured party shall have all rights and remedies against the defaulting party as may be available at law or in equity to cure, correct or remedy any default, to obtain specific performance, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. Such rights and remedies are cumulative, and except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the exercise of one or more of such rights or remedies shall not preclude the exercise, at the same or different times, of any other rights or remedies for the same default or any other default by the defaulting party. 1 - 11 0. •� • 9- - 41-0 In addition to other remedies set forth in this Agreement, Developer shall have the right to terminate this Agreement with respect to any then-unconveyed portion of the Site at its option (i) if (a) the Agency, in violation of the terms of this Agreement, fails to convey fee title to Developer; and (b) Developer delivers a Default Notice pursuant to Section 502 above and any pertinent cure period applicable pursuant to Section 503 with respect thereto has expired; or (ii) if, prior to the time Developer is required by this Agreement to deliver to Agency the Original Letter of Credit, (a) Developer, after and despite diligent and good faith efforts, is unable to obtain the Developer Advance of Acquisition Costs by reason of materially changes in the condition of the national financial markets involving the widespread and general unavailability of capital so as to materially adversely affect the availability or feasibility of the financing of the development of the Site pursuant to this Agreement, and such inability to obtain the Developer Advance by reason of such material changes is documented in an opinion obtained by Developer from an economic or financial expert approved by Agency, who has established qualifications in the national real estate and capital markets; or (b) the power of eminent domain is 41 potentially needed to acquire all or any portion of the Site for the public parking facility but is not legally available for any reason; or (c) the projected cost of the public parking facility, increases by more than ten percent (10%) due to geotechnical or other major unforseen conditions discovered by Developer in the course of conducting pre -development tests, and such increase in cost is documented to the reasonable satisfaction of Agency's Executive Director; or (d) the City and Agency have not entered into a cooperation agreement regarding the use of sales tax and transient occupancy tax revenue as provided in Attachment No. 8. (a) Agency may terminate this Agreement at its option with respect to any then-unconveyed portion of the Site if (1) any of the following events occurs, (2) Agency delivers a Default Notice pursuant to Section 502 above; and (3) any pertinent cure period applicable pursuant to Section 503 with respect thereto has expired: 1. Developer (or any successor or assign of Developer) assigns or purports to assign this Agreement or any right therein or its interest in the Site or any portion thereof or any improvements thereon, contrary to the provisions of this Agreement; or 2. There is a change in ownership of Developer contrary to the provisions of this Agreement; or 3. Developer fails to timely submit the Original Letter of Credit or any additional Letter of Credit in accordance with all of the requirements of this Agreement; or 4. Developer fails to timely execute the Agreement Containing Covenants Affecting Real Property or to permit the recordation thereof, or to perform any of its obligations thereunder; or 5. Developer fails to accept a conveyance of any portion of the Site when required by the provisions of this Agreement; or 6. Developer fails to assign this Agreement to the new CIM/Federal Realty Investment Trust joint venture, within the time and as required by Section 107 hereinabove; or 7. Developer fails to perform any of its material obligations under this Agreement. 42 (b) Prior to the Agency drawing funds from the Original Letter of Credit, the Agency may terminate this Agreement at its option in the event that in the sole discretion of the Agency the Agency determines not to adopt a resolution of necessity pursuant to California Code of Civil Procedure Sections 1245.210 et aaq to authorize the acquisition of all or any part of Parcel B using the Agency's power of eminent domain. Nothing herein changes any of the preconditions set forth in this Agreement on the Agency's right to draw on the Original Letter of Credit or any additional letter of credit delivered to Agency under this Agreement. Either Agency or Developer may terminate this Agreement upon thirty (30) days written notice to the other in the event that (a) all land use entitlements required for the development of the Site pursuant to this Agreement are not finally approved by the City and all other governmental agencies having jurisdiction thereof, on or before December 31, 2000, or (b) the total amount payable to Developer from Agency pursuant to Attachment No. 8 exceeds the sum of Ten Million Five Hundred Thousand Dollars ($10,500,000), and such 30 day termination notice is delivered prior to the issuance of the Bonds contemplated to be issued pursuant to the provisions of Attachment No. 8, or (c) the City requires more than 400 parking spaces to be provided for the development of the Site in connection with its consideration of the required land use entitlements. (a) After conveyance of Parcel A and Parcel B (or any portion of either such parcel) to Developer, Agency shall have the right, at its option, to reenter and take possession of Parcel A and Parcel B (or any portion of either such parcel) with all improvements thereon, and revest in the Agency the estate theretofore conveyed to Developer, if after conveyance of title and prior to the recordation of the Release of Construction Covenants to be issued by Agency, Developer or its successors or assigns, in violation of this Agreement: 1. Subject to the provisions of Section 604 hereinbelow, fails to proceed with the construction of the improvements on the Site as required by this Agreement for a period of ninety (90) days after written notice thereof from the Agency; 2. Subject to the provisions of Section 604 hereinbelow, abandons or substantially suspends construction of the improvements on the Site for a period of ninety (90) days after written notice thereof from the Agency; 3. Assigns or purport to assign this Agreement (or any rights therein), or sells, Transfers, conveys, assigns or leases the whole or any part of the Site, or any of the improvements to be constructed thereon, in violation of this Agreement. 43 L (b) Such right to reenter and repossess shall be subject to and limited by and shall not defeat, render invalid or limit: i. Any bona fide mortgage, deed of trust or other security instrument, provided that such mortgage, deed of trust or other security instrument is permitted by this Agreement; ii. Any rights or interest provided in this Agreement for the protection of the holder of such bona fide, permitted mortgages, deeds of trust or other security instruments; (c) Upon the revesting in Agency of title to Parcel A and Parcel B (or any portion thereof) as provided in this Section 506, the Agency shall, pursuant to its responsibilities under the California Community Redevelopment Law (Health and Safety Code Sections 33000 et seq.), use its reasonable best efforts to resell Parcel A and Parcel B (or any such portion thereof) as soon as possible and in such manner as the Agency shall find feasible and consistent with the objectives of the law and of the Redevelopment Plan, to a qualified and responsible party or parties (as determined by Agency), who will assume the obligation of making or completing the improvements, or such other improvements in their stead, as shall be reasonably satisfactory to Agency and in accordance with the uses specified for Parcel A and Parcel B (or such portion thereof) in the Redevelopment Plan. Upon such resale of Parcel A and Parcel B (or any portion thereof), the proceeds thereof shall be applied as follows: i. First, to reimburse the Agency on its own behalf and/or on behalf of the City of Huntington Beach, for all costs and expenses of the Agency incident to such sale and/or conveyance, for all costs and expenses incurred by the Agency (less any net income derived by Agency therefrom in connection with such management); all taxes, assessments and water and sewer charges with respect thereto; any payments made, or necessary to be made, to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of Developer, its successors or transferees; any expenditures made or obligations incurred with respect to the making or completion of the improvements or any part thereof on Parcel A and Parcel B (or any such portion thereof); and any amounts otherwise owing to Agency by Developer or its successors or transferees; and ii. Second, to reimburse Developer, its successors or transferees up to the amount equal to the sum of (A) Acquisition Costs allocable to the reverting properties and (B) Project Costs allocable to the reverting properties, less (C) gains or income withdrawn or made by Developer, its successors or assigns therefrom or from the improvements thereon or as a result of any amounts payable by the Agency pursuant to this Agreement. 44 iii. Any balance remaining after such reimbursements shall be retained by Agency as its property. (d) The rights established in this Section 506 are to be interpreted in light of the fact that the purpose of this Agreement is the redevelopment of the Site and not land speculation. [§ 600] GENERAL PROVISIONS Formal notices, demands and communications between Agency and Developer shall be sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt requested, or by courier not affiliated with the sender at the cost of the sending party with written evidence of receipt, to the principal offices of Agency and of Developer as designated in Section 106 and Section 107 hereof. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate, by mail as provided in this Section. . •1 •li • • ' To the extent prohibited by law, no member, official or employee of Agency shall have any personal interest, direct or indirect, in this Agreement nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested'. Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. No member, official or employee of City or Agency shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by Agency or for any amount which may become due to Developer or successor or on any obligations under the terms of this Agreement. Developer hereby waives and releases any claim it may have against any member, official or employee of the Agency or the City with respect to any default or breach by the Agency (or the City) or for any amount which may become due to Developer or its successors, or on any obligations, under the terms of this Agreement or any Conveyance Instrument. Developer makes such release with full knowledge of Civil Code Section 1542 and hereby waives any and all rights thereunder to the extent of this release, if such Section 1542 is applicable. Section 1542 of the Civil Code provides as follows: 45 "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time .of executing the release, which if known by him must have materially affected his settlement with the debtor." For the purposes of any of the provisions of this Agreement, neither Agency nor Developer, as the case may be, nor any successors in interest, shall be considered in breach of, or default in, its obligations under this Agreement (excepting therefrom obligations to pay money) as a result of the enforced delay in the performance of such obligations due to causes beyond its reasonable control and without its fault or negligence, including failure of governmental agencies to act or to issue necessary permits or licenses, acts of God, acts of the public enemy, acts of the Federal Government, acts of the other party (including but not limited to delays in performing such other party's obligations pursuant to this Agreement), fires, floods, epidemics, quarantine restrictions, strikes, labor disputes, freight embargoes, inability to obtain materials or supplies or unusually severe weather or delays of contractors or subcontractors due to such causes; it being the purpose and intent of this provision that in the event of the occurrence of any such enforced delay, the time or times for performance of the obligations of Agency or Developer, as the case may be, shall be extended for the period of the enforced delay. Provided that the party seeking the benefit of the provisions of this Section shall promptly notify the other party in writing of such enforced delay and of the causes thereof, the extension of time for performance shall run from ten (10) days prior to the date on which such notice is given, but in no event earlier than the date of commencement of the cause. Financial inability shall not extend the time for performance, or excuse non-performance or untimely performance, of any obligation under this Agreement. Agency has the right upon three (3) business days' notice (excluding weekends and holidays) at all reasonable times to inspect the books and records of Developer pertaining to the Site as pertinent to the purposes of this Agreement. The books and records referred to in this Section 605 shall be maintained or made available in a single location in Los Angeles or Orange County. Except as expressly provided otherwise in this Agreement, approvals required of Agency or Developer shall not be unreasonably withheld or delayed. If this Agreement requires Developer to submit plans, drawings or other documents or information to Agency for approval, which shall be deemed approved if not acted on by Agency within the specified time, said plans, drawings or other documents shall be accompanied by a letter stating that they are being submitted and will be deemed approved unless disapproved by OR Agency within the stated time. If Developer fails to include such a letter with its submission, said plans, drawings or other documents shall not be deemed approved based on the Agency's failure to act within the specified time. • .1 �-. suu •� Agency shall not be liable for any real estate commission or brokerage or finders fees which may arise from this Agreement. Developer agrees to indemnify and hold harmless Agency from any claim by any broker, agent or finder retained by Developer. Each party represents to the other party that it has not incurred any liability for the payment of any real estate commission or brokerage or finder's fee in connection with this Agreement, except that Developer has hired Pat Hurst for such purposes, and Developer agrees that Developer shall be solely responsible for any cost or expense in connection therewith. The Developer hereby represents the following to Agency for the purpose of inducing Agency to enter into this Agreement and to consummate the transactions contemplated hereby, all of which shall be true as of the date hereof: (a) The Developer has the legal power, right and authority to enter into this Agreement and the instruments and documents referenced herein to which the Developer is a party, to consummate the transactions contemplated hereby, to take any steps or actions contemplated hereby, and to perform its obligations hereunder. (b) All requisite action has been taken by the Developer and all requisite consents have been obtained in connection with the entering into this Agreement and the instruments and documents referenced herein to which the Developer is a party, and the consummation of the transaction contemplated hereby, and the same are authorized by the Redevelopment Plan and comply with all applicable laws, statutes, ordinances, rules and governmental regulations. (c) This Agreement is duly executed by the Developer, and all agreements, instruments and documents to be executed by the Developer pursuant to this Agreement shall, at such time as they are required to be executed hereunder, be duly executed by the Developer, and each such agreement is, or shall be at such time as it is required to be executed hereunder, valid and legally binding upon the Developer and enforceable in accordance with its terms and the execution and delivery thereof shall not, with due notice or the passage of time, constitute a default under or violate the terms of any 47 indenture, agreement or other instrument to which the Developer is a party. (d) There is no pending or threatened litigation which, in the reasonable opinion of the Developer, would prevent the Developer from. performing their duties and obligations hereunder. (e) Developer is not the subject of a bankruptcy proceeding. Nothing contained in this Agreement shall be deemed or construed as creating a partnership, joint venture, or any other relationship between the parties hereto other than as specified in the provisions contained herein, or cause the Agency to be responsible in any way for the debts or obligations of Developer or any other party. This Agreement has been negotiated at arm's length and between persons sophisticated and knowledgeable in the matters addressed in this Agreement. In addition, each party has been given the opportunity to consult with experienced and knowledgeable legal counsel. Accordingly, any rule of law (including Civil Code section 1654) or legal decision that would require interpretation of any ambiguities in this Agreement against the party that has drafted it is not applicable and is waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the purpose and intent of the parties to this Agreement. • • G �• -• mo - -1 - MMO1F.&TOUNLONJ Unless otherwise specified or the context requires otherwise, all references in this Agreement and its attachments to the Agency shall mean the Executive Director of the Agency or any officer or employee of the Agency to whom the Executive Director or the Board of the Agency delegates authority to perform, carry out and/or enforce this Agreement. [§ 612] Waivers The waiver by Agency of any term, covenant, or condition herein contained shall not be a waiver of such term, covenant, or condition on any subsequent breach. Time is of the essence of this Agreement and each and all of its provisions in which performance is a factor. • • .1• • 1611 If any action or proceeding is brought by either party against the other under this Agreement, whether for interpretation, enforcement or otherwise, the prevailing party shall be entitled to recover all costs and expenses, including the fees of its attorney and any expert witnesses in such action or proceeding. This provision shall also apply to any postjudgment action by either party, including without limitation efforts to enforce a judgment. [§ 615] Severability Any provision of this Agreement which shall prove to be invalid, void, or illega[ shall in no way affect, impair, or invalidate any other provision hereof and such other provisions shall remain in full force and effect. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. • • •11• �• '1 --1 a•1 (l- •- (a) This Agreement, including any document or instrument incorporated herein by reference, contains a complete and final expression of the agreement between Agency and Developer, and there are no promises, representations, agreements, warranties, or inducements either express or implied other than as are set forth in this Agreement. Any and all previous discussions or agreements between Agency and Developer with respect to the premises, whether oral or written, are superseded by this Agreement. (b) None of the terms, covenants, agreements or conditions set forth in this Agreement shall be deemed to be merged with any Grant Deed or Agreement Containing Covenants Affecting Real Property. When the context so requires when used in this Agreement, the masculine gender shall be deemed to include the feminine and neuter gender and the neuter gender shall be deemed to include the masculine and feminine gender. When the context to requires when used in this Agreement, the singular shall be deemed to include the plural. The paragraph and section headings have been used for convenience only, and shall not be used in the interpretation hereof. 49 No amendment, change, or addition to, or waiver of termination of, this Agreement or any part hereof shall be valid unless in writing and signed by both Agency and Developer. The parties to this Agreement acknowledge and agree that the provisions of this Agreement are for the sole benefit of Agency and Developer and the State, and not for the benefit, directly or indirectly, of any other person or entity, except as otherwise expressly provided herein. The individual executing this Agreement on behalf of Developer hereby represents that he has full authority to do so and to bind Developer to perform pursuant to the terms and conditions of this Agreement. • • �• •i• :- - -I - Each of the attachments and exhibits attached hereto is incorporated herein by this reference. •. •..-[0-Mi Each party hereto agrees that upon reasonable notice at reasonable times it shall, at the request of the other party, execute estoppel certificates regarding the status of the performance of the other party of their obligations hereunder. The Agency's Executive Director shall be authorized to execute such estoppel certificates on behalf of the Agency. [§ 700] SPECIAL PROVISIONS As an additional consideration for the conveyance of the Site from Agency to Developer and for the performance by Agency of its obligations hereunder, Developer shall pay the Agency Participation Payment to the Agency each Operating Year commencing with the Operating Commencement Date. Subject to the Buyout Provisions of Section 702 below, the obligation of the Developer to make the Agency Participation Payments shall continue for a period of forty (40) Operating Years after the Operating Commencement Date, and shall, during such 40 year term, survive the sale, Transfer or refinance of the 50 Site and the Improvements or any portion thereof, and not be affected or reduced in any way by reason of any such sale, Transfer or refinance. The Agency Participation Payment shall be paid to Agency by Developer for each Operating Year within ninety (90) days of the end of such Operating Year, together with a Certified Statement submitted for Agency's approval or disapproval documenting in detail the basis for the calculation of the Agency Participation Payment due Agency. Each Agency Participation Payment shall be made in an amount consistent with the Agency approved Certified Statement for the subject Operating Year. For purposes of calculation and payment of the Agency Participation Payment, the following terms shall have the following respective meanings: "Operating Commencement Date" means the last to occur of the date of issuance by the City of the first Certificate of Occupancy for the development of the improvements on the Site, and the opening for business to the general public of the hotel and at least fifty percent (50%) of the retail and restaurant square footage required by this Agreement to be developed on the Site by Developer. "Operating Year' means each twelve month period that commences on the Operating Commencement Date and each anniversary of the Operating Commencement Date, provided that Developer may convert Operating Years to be calendar years provided appropriate and equitable adjustments are made for any partial year to the reasonable satisfaction of the Agency's Executive Director, and provided that there is no reduction in the required 40 year term of the Agency Participation Payments. "Agency Participation Payment" means an amount equal to thirty percent (30%) of the Adjusted Gross Revenues for each Operating Year. "Gross Revenues" means all revenue of any kind or nature paid to Developer or Developer's agents each Operating Year from the rental, lease, licensing, operation, use or ownership of the hotel space and for the rental, lease, licensing, operation, use or ownership of retail, restaurant and other commercial spaces on the Site; provided, however, that Gross Revenues shall not include any proceeds from the sale or refinancing of the Site or its improvements. "Adjusted Gross Revenues" means the excess of eighty percent (80%) of the Gross Revenues for each Operating Year over, Developer's Annual Return. "Developer's Annual Return" means an amount equal to twelve percent (12%) of Adjusted Project Costs (including, without limitation, Annual Return Shortfalls, if any). 51 "Adjusted Project Costs" means Project Costs as approved by the Agency less the net proceeds of the Community Facility District Bonds referred to in Attachment No. 8 (or in the absence of the issuance of such Bonds, the Agency Obligation and accrued interest, as defined in said Attachment No. 8), plus Approved Post -Construction Capital Expenditures, if any, plus the total of all Annual Return Shortfalls, if any. "Approved Post -Construction Capital Expenditures" means capital expenditures made by Developer after the recordation of the Release of Construction Covenants, if any, approved as a Project Cost by the Agency pursuant to Section 216 (e) above. "Annual Return Shortfall" means the amount in any Operating Year by which Developer's Annual Return exceeds eighty percent (80%) of Gross Revenues for that Operating Year. "Buyout Amount means an amount equal to: (a) for a Buyout with an Effective Date occurring on or prior to the twentieth anniversary of the Operating Commencement Date, the quotient obtained by dividing the amount of Agency Participation Payment payable with respect to Gross Revenues for the twelve month time period prior to the Effective Date by .095; or (b) for a Buyout with an Effective Date occurring after the twentieth anniversary of the Operating Commencement Date, the net present value of the remaining Agency Participation Payments until the fortieth anniversary of the Operating Commencement Date (the "End Date"), assuming Gross Revenues will be equal to Gross Revenues for the twelve month period preceding the Effective Date, and increasing such projected Gross Revenues by 9% on each fourth anniversary of the Effective Date. The discount rate used to calculate the net present value shall be equal to the annual rate equal to the sum of (i) the interest rate on U.S. Treasury bills or notes having a maturity date closest to and no later than the End Date as reported in the Wall Street Journal on the Effective Date (or if the Wall Street Journal is not published on the Calculation Date, the first publication date thereafter) and (ii) three percent (3%). If the Wall Street Journal is no longer published at least weekly, the calculation shall be made using a financial reporting service proposed by Developer and reasonably acceptable to Agency. 52 "Buyout" means the termination of the Developer's obligation to continue paying any further Agency Participation Payments beyond the Effective Date by paying the Buyout Amount to the Agency. "Effective Date" means the date on which the Buyout, if any, shall occur, Prior to the tenth (10th) anniversary of the Operating Commencement Date, Developer may Buyout the Agency Participation Payments and terminate any obligation to continue paying any further Agency Participation Payment by paying the greater of (i) the sum of Two Million Four Hundred Thousand Dollars ($2,400,000) and (ii) the Buyout Amount to the Agency within sixty (60) days of the Effective Date, provided that either of the following two events has occurred: (a) the Agency has approved a sale of the entire Site from the Developer to an approved Transferee or (b) after the third (31d) anniversary of the Operating Commencement Date, Agency has disapproved one or more Proposed Post -Construction Capital Expenditures with a total aggregate amount in any three year period of One Million Two Hundred Thousand Dollars ($1,200,000). For purposes of such Buyout the Effective Date shall be the date of the sale or the date of the Proposed Post - Construction Capital Expenditure. Commencing with the tenth (10th) anniversary of the Operating Commencement Date, Developer may at any time Buyout the Agency Participation Payments and terminate any obligation to continue paying any further Agency Participation Payment by paying the Buyout Amount to the Agency within sixty (60) days of the Effective Date, provided Developer shall have given Agency written notice of its intent to effect such Buyout, and shall have identified in such written notice the Effective Date of such Buyout, and further provided such identified Effective Date shall be a date which is on or after the date the Agency receives such written notice. [§ 800] COMPOSITION OF AGREEMENT This Agreement is executed in four (4) duplicate originals, each of which is deemed to be an original. This Agreement includes fifty five (55) pages and nine (9) attachments. [§ 900] TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY This Agreement shall not take effect unless and until it is approved, executed and delivered by the Agency. This Agreement, when executed by Developer and delivered to the Agency, must be authorized, executed and delivered by the Agency within thirty (30) days thereafter, or this Agreement may be terminated by Developer on written notice to the Agency. The date of this Agreement shall be the date on which it is executed by the Agency. 53 r 1� Date: ATTEST: - Z - Ageric'y Clerk, REVIEWED AND APPROVED AS TO FORM, - Agency General Counsel REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Agency) By: Chairman By: APPRV�ED AS TO FORM: %mil KANE, BALLMER & BERKMAN �� I v 54 [Signature page continued from page 54) DEVELOPER CIM GROUP, LLC, a California limited liability company By: Its Manager, ORCHARD CAPITAL CORPORATION, Date: 17Zq? Richard S. Ressler, President Date: By: Nick Morosoff, Secretary 0 01 55 14 6.49 AC. ATTACHMENT No. 1 MAP OF THE SITE 124_1� AVENUE s Fi — -- �r 26 TRACT u n • 10.3 2 22 a O PIER HIGHWAY LOT @f f760 AC. 154 13722 W Parcels A PARCEL B ATTACHMENT NO. 2 LEGAL DESCRIPTION OF THE SITE 24-152-02 24-153-01 24-152-03 24-153-02 24-152-04 24-153-03 24-152-05 24-153-10 24-152-10 24-153-11 24-152-11 24-153-16 24-152-12 24-153-21 24-152-13 24-152-14 24-152-10 24-153-4 24-153-5 24-153-7 24-153-11 24-153-17 24-152-18 As per Preliminary Title Reports Issued by First American Title on July 21, 1998 through July 29, 1998 6/ 1 /99:104/ 105: LEGADES 2. Doc ATTACHMENT NO. 3 SCHEDULE OF PERFORMANCE Submission - Developer's Deposit. Concurrently with Agency's execution Developer shall , submit Developer's of this Agreement. Deposit to Agency pursuant to Section 108 of this Agreement. 2 Submission - Original Letter of Credit. Not later than 210 days after the date . Developer shall submit Original Letter of of this Agreement. Credit to Agency pursuant to Section 201.3 of this Agreement. 3 Submission - Applications for Grading and Not later than thirty (30) days prior to Excavation Permits. Developer shall close of escrow. submit to City for approval applications for grading and excavation permits and related documents. - 4 . Submission - Evidence of Financina. Developer shall submit to Agency for approval the evidence of financing referred to in Section 215 of this Agreement and the guaranteed maximum contracts for public parking and other public improvements. Not later than thirty (30) days prior to close of escrow. 5 Approval - Evidence of Financing. Agency Within 30 days after receipt by Agency. shall approve or disapprove evidence of financing and guaranteed maximum contracts. 6 Submission - Hotel Franchise Agreement. Not later than thirty (30) days prior to Developer shall submit to Agency for close of escrow. approval or disapproval a proposed Hotel Franchise Agreement pursuant to Section 403 of this Agreement. 7 Approval - Hotel Franchise Agreement. Within 30 days after receipt by Agency Agency shall approve or disapprove the proposed Hotel Franchise Agreement. ATTACHMENT NO. 3 SCHEDULE OF PERFORMANCE 1 8 Submission - Hotel Manaa ment Not later than thirty (30) days prior to Agreement. Developer shall submit to close of escrow. Agency for approval or disapproval a proposed Hotel Management Agreement pursuant to Section 402 of this Agreement. 9 Approval - Hotel Management Agreement. Within 30 days after receipt by Agency Agency shall approve or disapprove the proposed Hotel Management Agreement. 1 0 Submission - Project Cost Budget. Concurrently with submission of Developer shall submit to Agency for Evidence of Financing. approval or disapproval a proposed Project Cost Budget pursuant to Section 216 of this Agreement. 1. 1 Approval - Project Cost Budget. Agency Within 30 days after receipt of shall approve or disapprove the proposed proposed Project Cost Budget. Project Cost Budget. 1 2 Offing of Escrow. Agency shall open No later than 90 days prior to close of escrow for conveyance of the Site. escrow. 1 3 Conveyance of Site; Close of Escrow. Not later than December 31, 2000, but Agency and Developer shall execute and only if all conditions precedent for cause to be recorded the Grant Deed. conveyance of the Site have been satisfied or waived by the benefitted party or parties. 1 4 . Commencement of Construction. Within 30 days after close of escrow. Developer shall commence the work and improvements required for development of the Site. 1 5 . Completion of Construction. Developer Not later than twenty-four (24) months shall complete construction of all after commencement of construction. improvements. ATTACHMENT NO. 3 SCHEDULE OF PERFORMANCE 2 NOTES: (May 14, 1999), 1. Deadlines set forth in this Schedule of Performance are subject to the enforced delay provisions of Section 604 of the Agreement. 2. Extensions may be approved in writing by the Agency's Executive Director pursuant to Section 308 of the Agreement. 3. Descriptions of items of performance and deadlines in this Schedule of Performance are not intended to supercede more complete descriptions in the text of the Agreement; and in the event of any conflict between the text of the Agreement and this Schedule, the text of the Agreement shall govern. ATTACHMENT NO. 3 SCHEDULE OF PERFORMANCE 3 ATTACHMENT NO. 4 SCOPE OF DEVELOPMENT DEVELOPMENT OF THE SITE Developer shall develop the Site accordance with plans first approved in writing by the City with a new hotel including at least 115 and approximately 130 guest rooms, at least 130,000 and approximately 135,000 square feet of new retail and restaurant improvements, a parking facility with the number of public parking spaces required by the City per applicable City requirements, and other amenities, all in accordance with entitlements and plans first approved by the City. In addition, the work specified in II. of this Scope of Development shall be completed as a condition precedent to the issuance of a Release of Construction Covenants. The design and construction of the development shall be coordinated in order to maximize its compatibility with the abutting commercial uses and to minimize traffic and other impacts on adjacent uses. Restaurants and retail establishments on the Site shall be of a quality and nature consistent with the City's specific plan for the area, and shall first be approved in writing by Agency. No fast food restaurants which typically include "drive -through" features shall be permitted. No increase in the number of liquor stores on the Site shall be permitted. No tattoo parlors, massage parlors, or adult entertainment uses shall be permitted, nor shall the sale or exhibition of obscene or pornographic items be permitted. No Bar Establishments shall be permitted. "Bar Establishment" means a place of business providing the on premises service of alcoholic beverages, beer or wine, without bona fide hot food service and with less than 75% of the customers served at tables. II. PUBLIC IMPROVEMENTS AND SITE PREPARATION The public parking facility and other public improvements to be constructed with the proceeds of the Community Facility District Bonds contemplated to be issued as described in Attachment No. 8 hereof shall be constructed by Developer pursuant to plans and budget approved by the City. The public parking facility shall contain approximately 375 of the parking spaces required for the development of the Site. The Developer shall construct such improvements without undertaking a formal competitive bidding process normally required for the construction of public improvements. Because of the scope and location of such public improvements within the overall development to be constructed on the Site by Developer, there is an integral relationship between the public and the private improvements to be constructed which requires using a single plan of construction and general contractor for both public and private improvements in order to avoid disruptive and costly duplication of many necessary construction activities. Neither the Agency nor the City would obtain any material financial advantage by publicly bidding such public improvements, and would in all likelihood suffer a material financial disadvantage from such multiplicity of construction plans and contractors. Developer shall construct the public parking facility and other public improvements to be funded by said Bonds for a guaranteed amount first approved in writing by the Agency's Executive Director. (May 20, 1999) ATTACHMENT NO. 5 FORM OF GRANT DEED Recording Requested by and When Recorded Return to: CIM Group, LLC 10960 Wilshire Boulevard, Suite 500 Los Angeles, California 90024 Attention: GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, herein called "Grantor," hereby grants to CIM GROUP, LLC, a California limited liability company, and FEDERAL REALTY INVESTMENT TRUST, herein collectively called "Grantee," the real property described in the legal description attached hereto as Exhibit A and incorporated herein by this reference, and shown on the Property Map attached hereto as Exhibit B and incorporated herein by this reference (the "Property"), in accordance with and subject to the covenants, conditions and restrictions set forth in this Grant Deed, and further subject to [insert appropriate items from Section 205 (1) to (v) of the DDA]. The Property is subject to the Redevelopment Plan for the Main -Pier Redevelopment Project, which was approved and adopted by Ordinance No. 2578 of the City Council of the City of Huntington Beach, amended by Ordinance No. 2634, and merged with certain other redevelopment projects in the City by the adoption of Ordinance No. 3343 on December 16, 1996 to form the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project"). This Grant Deed is made pursuant to that certain Disposition and Development Agreement by and between Grantor and Grantee dated , 1999 (the "DDA"), which is a public record on file at the offices of Grantor. The Property is a portion of the real property referred to in the DDA as the "Site." Upon conveyance of the Property pursuant to this Grant Deed there shall be no merger of the DDA, provided, however, that the DDA shall have no further force or effect upon recordation of the Release of Construction Covenants described in Paragraph 8 below. All capitalized terms in this Grant Deed shall have the meanings ascribed to them in the DDA unless indicated to the contrary herein. ATTACHMENT NO. 5 FORM OF GRANT DEED 1 (May 20, 1999) Grantor and Grantee agree as follows: 1. Grantee hereby covenants and agrees on behalf of itself and any successors and assigns in the Property or any portion thereof or any improvements thereon or any interest therein that Grantee, such successors and assigns shall comply with and be bound by all of the requirements of those certain Construction Covenants and Surviving, Covenants set forth in that certain Agreement Containing Covenants Affecting Real Property entered into of even date herewith by and between Grantor and Grantee with respect to the Property and recorded concurrently with the recordation of this Grant Deed. All such Construction Covenants and Surviving Covenants are hereby incorporated herein by this reference as if fully set forth at length herein, subject to any termination or expiration provisions set forth in such Agreement. 2. Grantee covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, creed, religion, age, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Grantee itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees of the Property. 3. Grantee shall refrain from restricting the rental, sale or lease of the Property on the basis of sex, marital status, race, color, creed, religion, age, ancestry or national origin of any person. All deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: a. In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race, color, creed, religion, age, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." a. In leases: "The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: ATTACHMENT NO.5 FORM OF GRANT DEED 2 (May 20, 1999) That there shall be no discrimination against or segregation of any person or group of persons, on account of sex, marital status, race, color, creed, religion, age, national origin or ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessee, subtenants, or vendees in the land herein leased." C. In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of sex, marital status, race, color, religion, age, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees of the land." 4. The following. provisions of this Grant Deed shall expire and be of no further force or effect upon recordation of the Release of Construction Covenants described in Paragraph 8 below: (a) After conveyance of the Property to Grantee, Grantor shall have the right, at its option, to reenter and take possession of the Property (or portion thereof) with all improvements thereon, and revest in the Grantor the estate theretofore conveyed to Grantee, if after conveyance of title and prior to the recordation of the Release of Construction Covenants to be issued by Grantor with respect to the Property, Grantee or its successors or assigns, in violation of the DDA or this Grant Deed: i. Subject to the provisions of Section 604 of the DDA, fails to proceed with the construction of the improvements on the Property as required by the DDA for a period of ninety (90) days after written notice thereof from Grantor; ii. Subject to the provisions of Section 604 of the DDA, abandons or substantially suspends construction of the improvements on the Property for a period of ninety (90) days after written notice thereof from Grantor; iii. Assigns or purport to assign the DDA (or any rights therein), or sells, Transfers, conveys, assigns or leases the whole or any part of the Property, or any of the improvements to be constructed thereon, in violation of the DDA or this Grant Deed. ATTACHMENT NO. 5 FORM OF GRANT DEED 3 (May 20, 1999) (b) Such right to reenter and repossess shall be subject to and limited by and shall not defeat, render invalid or limit: i. Any bona fide mortgage, deed of trust or other security instrument of sale and leaseback or other conveyance for financing, provided that such mortgage, deed of trust, or other security instrument is permitted by the DDA; ii. Any rights or interest provided in the DDA for the protection of the holder of such bona fide, permitted mortgages, deeds of trust or other security instruments, the lessor under such sale and leaseback, or the grantee under such other conveyance for financing; (c) Upon the revesting in Grantor of title to the Property (or any portion thereof) as provided in this Section 4, Grantor shall, pursuant to its responsibilities under the California Community Redevelopment Law (Health and Safety Code Sections 33000 et seq.), use its reasonable best efforts to resell the Property (or any such portion thereof) as soon as possible and in such manner as Grantor shall find feasible and consistent with the objectives of the law and of the Redevelopment Plan, to a qualified and responsible party or parties (as determined by Grantor), who will assume the obligation of making or completing the improvements, or such other improvements in their stead, as shall be reasonably satisfactory to Grantor- and in accordance with the uses specified for the Property (or such portion thereof) in the Redevelopment Plan. Upon such resale of the Property (or any portion thereof), the proceeds thereof shall be applied as follows: i. First, to reimburse Grantor on its own behalf and/or on behalf of the City of Huntington Beach, for all costs and expenses of Grantor incident to such sale and/or conveyance, for all costs and expenses incurred by Grantor (less any net income derived by Grantor therefrom in connection with such management); all taxes, assessments and water and sewer charges with respect thereto; any payments made, or necessary to be made, to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of Grantee, its successors or transferees; any expenditures made or obligations incurred with respect to the making or completion of the improvements or any part thereof on the Property (or any such portion thereof); and any amounts otherwise owing to Grantor by Grantee or its successors or transferees; and ii. Second, to reimburse Grantee, its successors or transferees up to the amount equal to the sum of (A) the purchase price (or allocated portion thereof) paid to Grantor by Grantee for the Property or any such portion thereof; and (B) costs incurred for the development of the Property, or any such portion thereof, and for the improvements existing thereon and the time of reentry and repossession; less (C) gains or income withdrawn or made by Grantee, its successors or assigns therefrom or from the improvements thereon. ATTACHMENT NO. 5 FORM OF GRANT DEED 4 (May 20, 1999) iii. Any balance remaining after such reimbursements shall be retained by Grantor as its property. (d) The rights established in this Section 4 are to be interpreted in light of the fact that the purpose of the DDA is the redevelopment of the Property and not land speculation. 5. (a) All obligations of "Grantee" under this Grant Deed (and all of the terms, covenants and conditions of this Grant Deed) shall be binding upon Grantee, its successors and assigns and every successor in interest of the Property or any portion thereof or any interest therein (but only with respect to such portion or interest), for the benefit and in favor of the Grantor, its successors and assigns, and the City of Huntington Beach. (b) All rights of "Grantee" under this Grant Deed shall inure to the benefit of Grantee and its permitted successors and assigns. 6. This Grant Deed shall not merge with or into any other agreement between Grantor and Grantee. - 7. Breach of any of the covenants, conditions, restrictions, or reservations contained in this Grant Deed shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value as to the Property, whether or not said mortgage or deed of trust is subordinated to this Grant Deed, but unless otherwise herein provided, the terms, conditions, covenants, restrictions and reservations of this Grant Deed shall be binding and effective against the holder of such mortgage or deed of trust and any owner of the Property, or any part thereof, whose title thereto is acquired by foreclosure, trustee's sale, or otherwise. 8. The Construction Covenants referred to in paragraph 1 shall remain in effect until the Release of Construction Covenants to be issued by Grantor with respect to the Property pursuant to the DDA is recorded in the Official Records of Orange County. The covenants against discrimination contained in paragraphs 2 and 3 shall remain in effect in perpetuity. The Surviving Covenants shall remain in effect for a period of thirty (30) years after the date this Grant Deed is executed by the Agency unless earlier discharged or expired in accordance with the express terms thereof. 9. Upon written request, Grantor shall execute, acknowledge and deliver an estoppel certificate upon which Grantor and any Transferee or mortgagee of all or a portion of Grantee's interest in the Property can rely, stating whether Grantor has knowledge of any default by Grantee or any successor or assign under the terms of this Grant Deed. ATTACHMENT NO.5 FORM OF GRANT DEED 5 (May 20, 1999) IN WITNESS WHEREOF, the Grantor and Grantee have caused this instrument to be executed on their behalf by their respective officers thereunto duly authorized, this _ day of , REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Grantor) Dater APPROVED AS TO FORM: Agency General Counsel KANE, BALLMER & BERKMAN go GRANTEE hereby accepts and approves each of the conditions, covenants and. restrictions set forth in this Grant Deed. CIM GROUP, LLC (Grantee) Date: By: Date: FEDERAL REALTY INVESTMENT TRUST ml- ATTACHMENT NO. 5 FORM OF GRANT DEED 6 (May 20, 1999) Parcels A PARCEL B EXHIBIT A LEGAL DESCRIPTION OF THE SITE 24-152-02 24-152-03 24-152-04 24-152-05 24-152-10 24-152-11 24-152-12 24-152-13 24-152-14 24-152-10 24-153-4 24-153-5 24-153-7 24-153-11 24-153-17 24-152-18 24-153-01 24-153-02 24-153-03 24-153-10 24-153-11 24-153-16 24-153-21 As per Preliminary Title Reports Issued by First American Title on July 21, 1998 through July 29, 1998 6/ 1 /99:104/ 105: LEGALDES. Doc EXHIBIT B MAP OF PROPERTY 14 6.49 AC. PIER 24 AVENUE k goal 26 TRACT -103. 7 22 HIGHWAY 16 LOT @ I 1760 AC. )..13722 28, 94 EXHIBIT B MAP OF PROPERTY i-�4 -15 14 t. y 2DI18 �a•`J AVENUE s (- rr. a• — A TB -- v' - 26 ro.r• TRACT �.eo• LOT .17 1 1760 AC. 3 _ 103 z TT 3 TO 16 w ro• �• x 154 e I� R NO: 13722 L 1� HIGHWAY 16 6.49 AC. O 6 .�• PIER 9.*1 Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:36AM;J9jyA #185;Page 2/27 ATTACHMENT NO. 6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY Recording Requested by and When Recorded Return to: CIM Group, LLC 10960 Wilshire Boulevard, Suite 500 Los Angeles, California 90024 Attention: AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY This AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY (this "Covenant Agreement") is made and entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (the "Agency") and CIM GROUP, LLC, a Delaware limited liability company and FEDERAL REALTY INVESTMENT TRUST (collectively the "Owner") with reference to the following: A. Owner holds fee title to that certain real property described in the Legal description attached hereto as Exhibit A and incorporated herein by this reference, and shown on the Property Map attached hereto as Exhibit B and incorporated herein by this reference (the "Property"). B. The Property is subject to the Redevelopment Plan for the Main -Pier Redevelopment Project, which was approved and adopted by Ordinance No. 2578 of the City Council of the City of Huntington Beach, amended by Ordinance No. 2634, and merged with certain other redevelopment projects in the City by the adoption of Ordinance No. 3343 on December 16, 1996 to form the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project"). C. This Covenant Agreement is made pursuant to that certain Disposition and Development Agreement by and between the Agency and Owner dated 11999 (the "DDA"), which is a public record on file at the offices of the Agency. The Property is referred to in the DDA as the "Site." Agency and Owner agree as follows: 1. Owner hereby covenants and agrees on behalf of itself and any successors and assigns in the Property or any portion thereof or any improvements thereon or any interest therein that Owner, such successors and assigns shall comply with and be bound by the following covenants (hereinafter referred to as the "Construction Covenants"): ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 1 (May 20, 1999) Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:36AM;JgffyA #185;Page 3/27 a. Develop and construct improvements on the Property solely in accordance with the Redevelopment Plan, the Grant Deed, this Agreement Containing Covenants Affecting Real Property, the DDA (including but not limited to the Scope of Development, Attachment No. 4), and plans approved by the City of Huntington Beach, with at least 115 and approximately 130 hotel rooms, and at least 130,000 and approximately 135,000 square feet of gross leasable area of retail and restaurant uses, and a public parking facility conforming with City approved plans. In addition to all of the other requirements under this Agreement, the hotel to be developed on the Property shall be of first quality and have an overall standard of quality equal to or better than a limited service hotel such as a Marriott Courtyard Hotel or Marriott Residence Inn, and the retail and restaurant uses to be developed on the Property shall be first quality nationally or regionally recognizable and reputable retailers or restaurants of the nature and quality customarily included in retail/restaurant centers meeting the requirements and restrictions of the Scope of Development (Attachment No. 4). b. Comply and be bound by all of the Surviving Covenants. 2. Owner hereby covenants and agrees on behalf of itself and any successors and assigns in the Property or any portion thereof or any improvements thereon or any interest therein that Owner, such successors and assigns shall comply with and be bound by the following covenants (hereinafter referred to as the "Surviving Covenants"): a. Devote the Property, or cause the Property to be devoted, to uses solely in accordance with the Redevelopment Plan, the Grant Deed, this Agreement Containing Covenants Affecting Real Property, and plans approved by the City of Huntington Beach for hotel, retail, restaurant and parking uses, with at least 115 and approximately 130 hotel rooms, and at least 130,000 and approximately 135,000 square feet of gross leasable area of retail and restaurant uses, and a public parking facility conforming with City approved plans. In addition to all of the other requirements under this Agreement, the hotel to be maintained on the Property shall be of first quality and have an overall standard of quality equal to or better than a limited service hotel such as a Marriott Courtyard Hotel or Marriott Residence Inn, and the retail and restaurant uses to be maintained on the Property shall be first quality nationally or regionally recognizable and reputable retailers or restaurants of the nature and quality customarily included in ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 2 (May 20, 1999) Sent by: KANE, BALLMEA & BERKMAN 213 625 0931; 05/20/99 9:37AM;jeLFax #185;Page 4/27 retail/restaurant centers, and meeting the following requirements and restrictions: Restaurants and retail establishments on the Property shall be of a. quality and nature consistent with the City's specific plan for the area, and shall first be approved in writing by Agency. No fast food restaurants which typically include "drive -through" features shall be permitted. No increase in the number of liquor stores on the Property shall be permitted. No tattoo parlors, massage parlors, or adult entertainment uses shall be permitted, nor shall the sale or exhibition of obscene or pornographic items be permitted. No Bar Establishments shall be permitted. "Bar Establishment" means a place of business providing the on premises service of alcoholic beverages, beer or wine, without bona fide hot food service and with less than 75% of the customers served at tables. b. Owner shall use its reasonable best efforts to operate or cause the hotel, restaurants, retail stores, parking facility and all other improvements to be constructed on the Property to be operated and continuously open for business to the general pubic in accordance with the standards set forth in the Grant Deed and this Covenant Agreement, including without limitation the existence at all times of a binding and effective hotel franchise agreement and hotel management agreement, both of which shall be first approved in writing by the Agency. The hotel franchise agreement shall be with a hotel meeting the size, level of quality and other requirements and restrictions referred to in this Agreement. The hotel management agreement shall be with a hotel operator or manager who has at least eight (8) years experience demonstrating the capable, competent and experienced operation of hotels similar in quality, size and type as required to be maintained on the Property pursuant to this Agreement. C. Pay when due all real estate taxes, and the special taxes or assessments of the bond financing issued by the Agency or City to finance a portion of the Agency's obligations in connection with the redevelopment of the Property, assessed and levied on the Property or any portion thereof or any improvements thereon or any interest therein and refrain from appealing, challenging or contesting in any manner the validity or amount of any ad valorem property tax assessment, encumbrance or lien, or the special tax or lien of such bonds; provided, however, that Owner may appeal, challenge or contest (i) the initial assessment of the assessed value of the Property ATTACHMENT NO. 6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 3 (May 20, 1999) MA Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:37AM;J ff3 #185;Page 5/27 following the issuance of the Release of Construction Covenants by Agency to the extent that such initial assessment is more than ten percent (10%) higher than the Project Cost approved by the Agency pursuant to Section 3 of this Agreement; and (ii) any increase in assessment of the Property improperly assessed because of a purported change of ownership where no such change took place; and (iii) any increase in assessment of the Property occurring by reason of a bona fide arms -length sale to the extent such increase in assessment results in an assessment in excess of the purchase price of such bona fide arms -length sale, provided, however, that no such appeal, challenge or contest shall be permitted to attempt to obtain or result in an assessment which is lower than that existing prior to such sale. d. Not discriminate upon the basis of race, color, creed, religion, sex, age, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any improvements erected or to be erected thereon, or any part thereof. e. Refrain from making any Transfer of all or any portion of the Property, or any improvements thereon, or any interest therein, and refrain from any subdivision or resubdivision of the Property or any portion thereof, without the prior written approval of the Agency, to the extent required by the provisions of paragraph 4 below. f. Pay when due the Agency Participation Payment in accordance with the provisions of Paragraph 5 below. g. Solely at Owner's expense, maintain and repair or cause to be maintained and repaired the Property and all improvements thereon (including but not limited to landscaping, lighting and signage), in a first quality condition, free of debris, waste and graffiti, and in compliance with the terms of the Redevelopment Plan, the City of Huntington Beach Municipal Code, and the following: (1) All improvements on the Property shall be maintained in good condition in accordance with the custom and practice generally applicable to comparable first quality hotel, restaurant, retail and parking areas, as applicable, in Orange County, and in conformance and compliance with all plans, drawings and related documents approved by the City, all conditions of approval of land use entitlements adopted by the City or the ATTACHMENT NO. 6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 4 (May 20, 1999) �C' Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:37AMj9ffFa #185;Page 6/27 Planning. Commission, including painting and cleaning of all exterior surfaces of all private improvements and public improvements to the curbline. Owner shall assume responsibility for the operation and maintenance (including repair, restoration and reconstruction) of all of the improvements constructed on the Property and the costs thereof, and Agency and the City shall have no liability for costs of such operation and maintenance by Owner orfor any claims arising from the operation and maintenance (including repair, restoration and reconstruction) of such improvements. Without limiting the generality of the foregoing, Owner, in the maintenance of the improvements, shall observe the following standards: Maintain the surface of all automobile and pedestrian areas level, smooth and evenly covered with the type of surfacing materials originally installed thereon or such substitute thereof as shall be in all respects equal thereto or better. in quality, appearance and durability;. Maintain such appropriate entrance, exit and directional signs, markers and lights as shall be reasonably required and in accordance with the. practices prevailing in the operation of similar developments; Clean lighting fixtures and relamp and/or reballast as needed; Repaint striping, markers, directional signs, etc., as necessary to maintain n first-class condition; Provide reasonable amounts of security personnel and security measures. Owner shall seek the advice of the police department in planning appropriate security measures; Maintain public right-of-way items between the property and the street, including sidewalks, curbs, gutters, driveways, signs and poles, curb painting and markings; Maintain all surface and storm lateral drainage systems; and Maintain all sanitary sewer lateral connections. (2) Landscape maintenance shall include, without limitation, watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning, trimming and shaping of trees and shrubs to maintain a natural and healthy appearance, road visibility, and irrigation coverage; replacement, as needed, of all plant materials; ATTACHMENT NO. 6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 5 (May 20, 1999) Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:38AM;J9ff# #185;Page 7/27 control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. (3) Clean-up maintenance shall include, without limitation, maintenance of all sidewalks, paths and other paved areas in a clean and weed -free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements and landscaping; clearance and cleaning of all areas maintained prior to the end of each day on which maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. If the Agency gives written notice to Owner that the maintenance or condition of the Property or any portion thereof or any improvements thereon does not comply with this Covenant Agreement and such notice describes the deficiencies, Owner shall correct, remedy or cur: the deficiency within thirty (30) days following the submission of such notice, unless the notice states that the deficiency is an urgent matter relating to public health and safety in which case Owner shall cure the deficiency with all due diligence and shall complete the cure at the earliest possible time. In the event Owner fails to maintain the Property or any portion thereof or any improvements thereon in accordance with this Grant Deed and fails to cure any deficiencies within the applicable period described above, the Agency shall have, in addition to any other rights and remedies hereunder, the right to maintain the Property and the improvements thereon, or portion thereof, or to contract for the correction of any deficiencies, and Owner shall be responsible for payment of all such reasonable costs incurred by the Agency. h. There shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status. race, color, creed, religion, age, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Owner itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees of the Property. i. Owner shall refrain from restricting the rental, sale or lease of the Property on the basis of sex, marital status, race, color, creed, religion, age, ancestry or national origin of any person. All deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 6 (May 20, 1999) Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:38AM;J9JEyx #1B5;Page 8/27 (1) In deeds: 'The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race, color, creed, religion, age, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (2) In leases: "The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of sex, marital status, race, color, creed, religion, age, national origin or ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessee, subtenants, or vendees in the land herein leased." (3) In contracts: 'There shall be no discrimination against or segregation of any person or group of persons on account of sex, marital status, race, color, religion, age, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees of the land." j. Advance to the Agency all Acquisition Costs required by Paragraph 6 below. ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL. PROPERTY 7 (May 20, 1999) MOV_')p_q omo FAO- Al ni 7 G'7S pg71 qG,% P SP Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:38AM;JetFex #185;Page 9/27 k. Provide the Hazardous Substance indemnity, waiver and release required by Paragraph 7 below. Provide the general indemnity and insurance required by Paragraph 8 below. 3. (a) "Project Costs" as used herein means the following actual costs and expenses of the development work performed or to be performed by or on behalf of Owner for or in connection with the development of the improvements required or contemplated by this Agreement and plans approved therefor by the City on or with respect to the Property (the "Improvements"), to the extent that such costs and expenses are incurred and paid for by Owner to third parties in connection with the initial construction and are either included in the Agency -approved Project Budget or approved in writing by the Agency pursuant to paragraph 3 (b) below: a. Land development work, including demolition and excavation, asbestos abatement, soils compaction and remediation, utility relocation and abandonment and off -site improvements. b. Construction of the Improvements and installation of the required fixtures, furniture, machinery and equipment, and repair of any damage caused and arising during construction from a casualty not covered by insurance proceeds. C. Building permits and entitlement fees not paid for or reimbursed by Agency. d. Premiums for casualty, public liability and property damage and other similar insurance during construction and on bonds securing work against liens for labor and materials. e. Real estate taxes and assessments upon the Premises or the Improvements during the period of construction. f. Interest on construction loans and an imputed cost of equity funds at 10% per annum prior to the issuance by Agency of the Release of Construction Covenants. g. Fees for (i) architects, engineers, accountants; and (ii) real estate and financial advisors and attorneys previously identified to Agency. Saybrook Capital, LLC, and Sonnenschein Nath & Rosenthal have previously been so identified to Agency. ATTACHMENT NO, 6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 8 (May 20, 1999) MAY-2R-1ggq nq:41 717 F75 Rq-31 qF,X P Pq Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:39AMJeffpA #185;Page 10/27 h. Purchasing fees paid to third parties not affiliated with Owner in connection with the purchase of furniture, fixtures and equipment. i. Development fees paid to government agencies, including traffic mitigation costs and fees and other governmental exactions. j. Charges and premiums for searching and insuring title. k. Out-of-pocket costs incurred by Owner in connection with construction financing, including, without limitation, commitment fees, mortgage broker fees, standby fees and fees of a like nature, printing and duplicating expenses, documentary transfer tax stamps, mortgage taxes, recording charges. Customary and reasonable pre -opening expenses. M. Costs of required studies, reports and inspections. n. Broker's commissions or finders fees for land assembly and leasing. o. The cost of initial tenant improvements paid for by Owner to be reimbursed to Owner in the form of rental payments, but excluding any such costs to the extent reimbursed or paid for in any other form by any third party, and the cost of the lease buy-out of an existing tenant within the Property improvements developed by Owner where necessary to obtain the initial occupancy of another tenant therein. p. A Developer's Fee of three percent (3%) of Project Costs, excluding the public parking facility costs and tenant improvements, but not in any event to exceed a Developer's Fee of Five Hundred Thousand Dollars ($500,000). Any item previously included as an Acquisition Cost to be reimbursed Owner by Agency shall not also be included as a Project Cost. (b) Except for Approved Post -Construction Capital Expenditures provided for in Paragraph (d) below, a cost or expense which is not included in the Project Cost Budget approved by the Agency shall not be a Project Cost for purposes of this Agreement (including the Agency Participation Payments) unless Owner submits evidence satisfactory to the Agency, at the earliest possible date and before the cost is incurred, demonstrating that such cost or expense (i) will be actually incurred or paid for by or on behalf of Owner for or in connection with the development of the improvements in connection with the initial construction; and (ii) cannot reasonably be or have been avoided or reduced; and (iii) was not foreseeable on the date of this Agreement. ATTACHMENT NO. 6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 9 (May 20. 1999) a nnn n0 • Al 717 a7S ng7I qrl% P In Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:39AM;JtffA #185;Page 11/27 (c) Within ninety (90) days after the recording of the Release of Construction Covenants to be issued by the Agency, Owner shall submit to Agency, for the review and written approval or disapproval of the Agency's Executive Director, a statement (the "Certified Project Cost Statement") setting forth the total amount of Project Costs, a separate amount for each category (a through p) in the definition of Project Costs in paragraph 3 (a) above, and a reasonable description or itemization of the casts incurred in each such category, together with a certificate of an independent certified public accountant reasonably acceptable to Agency (the "Accountant"). The Accountant's certificate shall be addressed to Agency, and shall state that the Accountant is familiar with the definition of Project Costs in this Agreement and attest to the accuracy of the Certified Project Cost Statement, subject to usual and customary qualifications. The Accountant shall be selected by Owner, but shall be one of the following: i) Arthur Andersen & Co., LLP; ii) Deloitte & Touche, LLP;. iii) Ernst & Young, LLP; iv) Coopers and Lybrand, LLP; v) KMPG Peat Marwick, LLP; vi) Price Waterhouse, LLP; vii) Any national accounting firm, first approved in writing by the Agency, having at the time of delivery of the Certified Project Cost Statement reputation and stature in the accounting community comparable to the foregoing firms as of the date of this Agreement. (d) The parties acknowledge that additional significant capital expenditures involving items included as Project Costs under Paragraph 3 (a) a, b, c, g, i, and m above, andrelated tenant improvements and lease -buyouts -as described for initial tenancies under Paragraph 3 (a) o above, may be made by Owner after the recordation of the Release of Construction Covenants, which expenditures are not a normal re -tenanting expense, are not a maintenance or operational expenditure typical for the normal maintenance or operation of a development similar to the subject development, and are not made in connection with the initial tenanting of commercial space within the improvements developed on the Property, but are instead made in order to materially augment Gross Revenues. Such expenditures meeting the description of the immediately preceding sentence (referred to in this Agreement as "Proposed Post -Construction Capital Expenditures"), however, shall not be included in Project Costs for any purpose under this ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL. PROPERTY 10 (May 20, 1999) Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:40AM;jetFax #185;Page 12/27 Agreement, unless first submitted to the Agency's Executive Director prior to such expenditure and approved as a Project Cost (referred to in this Agreement as "Approved Post -Construction Capital Expenditures"). The Agency's Executive Director shall reasonably consider each submitted Proposed Post -Construction Capital Expenditure for approval or disapproval, provided such expenditure is not a normal re -tenanting expense, is not made in connection with the initial tenanting of commercial space within the improvements developed on the Property, is not a maintenance or operational expenditure typical for the normal maintenance or operation of a development similar to the subject development, and provided such approval will not have any adverse economic impact on the Agency's economic interests, including without limitation the Agency Participation Payments. 4. Owner recognizes that: Development of the Property is important to the general welfare of the community; and Substantial financing and other public aids have been made available by law and by the government for the purpose of making redevelopment possible; and The qualifications and identity of Owner are of particular concern to the community and Agency. Accordingly, Owner agrees to comply with the provisions of this Agreement relating to Transfer. (a) For the reasons set forth above in this Paragraph 4, Owner shall not assign this Agreement nor sell the Property or any portion thereof, nor lease nor make any total or partial conveyance or transfer in any mode or form of all or any pan: of the Property or the improvements thereon, or any interest therein, nor shall there be any change in the identity of Owner or change in the ownership of Owner or in the relative proportions thereof, or with respect to the identity of the parties in control of Owner or the degree thereof, by any method or means (other than such changes occasioned by the death or incapacity of any individual), (collectively, 'Transfer"), without the prior written approval of Agency, which approval shall not be unreasonably withheld or delayed if the proposed Transferee (as defined hereinbelow) is determined by the Agency to have qualifications equal to or better than the original Owner as of the date of this Agreement in all material respects, including but not limited to (a) financial strength, (b) experience in the successful development, operation, management and marketing of hotels, restaurants, and retail improvements, (c) character and reputation, and (d) the ability to perform all of the agreements, undertakings, and covenants of this Agreement, the Grant Deed, this Agreement Containing Covenants Affecting Real Property and all other agreements ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 11 (May 20, 1999) Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:40AM;)etEwx #185;Page 13/27 entered into by Owner which relate to the development, management, operation, maintenance, and restoration of the Property and of the improvements thereon. Owner shall promptly notify Agency of any and all changes whatsoever in the identity of the parties in ownership or control of Owner or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. Any entity formation agreements and documents (or changes therein) related to a Transfer, as well as the agreements and documents effectuating any Transfer, shall be subject to the approval of Agency's Executive Director in connection with its approval of the Transfer. (b) To assist Agency in determining whether or not the proposed Transferee is so qualified, Owner shall furnish to Agency at no expense to Agency, prior to that Transfer, detailed and complete financial statements of the proposed Transferee. audited by a certified public accountant reasonably satisfactory to Agency, together with detailed and complete information about the business of the proposed Transferee, including its experience in developing and operating improvements of the type to be constructed on the Property, the use to be made of the Property and the improvements thereon by the proposed Transferee, projections by the proposed Transferee of the sources of funds to be used to pay any indebtedness that the proposed Transferee will assume or take subject to, or agree to pay, in connection with the Transfer, and other claims on and requirements for those funds, together with any other information Agency may reasonably require to assist Agency in determining whether or not the proposed Transferee is so qualified. To the greatest extent permitted by law, if Owner or such Transferee provides Agency with any proprietary financial information relating to a proposed Transferee, Agency shall not, without Owner's prior written consent, disclose or make any such financial information available to the public. (c) Approval by Agency of any Transfer shall be conditioned upon such assignee, conveyee or transferee (collectively "Transferee") agreeing, in writing, to assume the rights and obligations thereby transferred and to keep and perform all covenants, conditions and provisions of this Agreement, the Grant Deed and this Agreement Containing Covenants Affecting Real Property which are applicable to the rights acquired. (d) The limitations on Transfer contained in this Paragraph 4 shall not be deemed to apply to or prevent, nor shall Agency's approval be required under this Paragraph 4 in connection with, the granting of any security interest expressly permitted under this Agreement; nor the exercise by any mortgagee of its right to foreclose its mortgage by power of sale or judicial foreclosure; nor any Transfer of an interest by a mortgagee having acquired Owner's interest in the Property as a result of its rights under the mortgage, or by any successor to the mortgagee whose interest shall have been acquired by, through or under any mortgage or shall have been derived immediately from any holder thereof. Notwithstanding the foregoing provisions of this paragraph (d), the limitations on Transfer contained in this Paragraph 4 shall apply to any mortgagee which ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 12 (May 20, 1999) rnnv_-,ra_ , n-n nC3- nZ 34-7 cIDc M071 qr1 P. 17 Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:41AM;Itffja #185;Page 14/27 acquires its interest in the Property or the improvements thereon other than by the exercise of its rights pursuant to the mortgage or deed in lieu of foreclosure. (e) Any purported Transfer shall be null and void unless it complies with the terms of this Section. (f) Subject to Owner's right to lease space within the Improvements for occupancy as expressly provided in subparagraph (i) of this Paragraph 4, and subject to Owner's right to Transfer the Hotel Parcel pursuant to the provisions of subparagraph (i) of this Paragraph 4, Owner shall only Transfer Owner's entire interest in the Property and the Improvements thereon as a whole and shall not re -subdivide the Property or the improvements thereon beyond the subdivision contained in the initial Tract Map approved by the City for the development of the Property by Owner without the prior written approval of Agency, which Agency may grant or withhold in its discretion. Without limiting the foregoing or Agency's right to approve all Transfers pursuant to the provisions of this Agreement, Owner shall apply to the City for approval of a subdivision tract map so as to parcelize the Property consistent with applicable City codes and with the development of the Property contemplated by this Agreement. (g) All costs incurred by Agency to review any Transfer proposed by Owner as reasonably necessary to close any Transfer shall be paid by Owner. With respect to each Transfer, Owner shall deliver a retainer to Agency in the sum of Five Thousand Dollars ($5,000), to be applied to the payment of Agency's costs. The administrative costs of Agency shall be charged at the actual cost thereof not to exceed an hourly rate of Fifty Dollars ($50.00). The costs of Agency for consultants or legal services required for providing such assistance shall be the actual sums billed to Agency for such consulting or legal services. All such costs in excess of Five Thousand Dollars ($5,000) shall be paid within ten (10) days after written request therefor by Agency. If such costs incurred by Agency for a Transfer equal less than Five Thousand Dollars ($5,000), the balance shall be refunded promptly following the closing. (h) With respect to the leasing of space for occupancy, Owner shall not be required to submit the documentation otherwise required for a Transfer by subparagraph (b), nor the assignment and assumption agreement otherwise required by subparagraph (c), nor pay the costs referred to in subparagraph (g); provided, however, that such lease shall contain appropriate provisions conforming the use and operation of the premises to the covenants of the Grant Deed and this Agreement Containing Covenants, and further provided, that such tenant is a first quality nationally or regionally recognizable and reputable retailer or restaurant of the nature and quality customarily included in retail/restaurant centers meeting the requirements and restrictions of this Agreement. (i) The Owner may, subject to all of the requirements of this Agreement and ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 13 (May 20, 1999) Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:41AM;JtJEj #1B5;P2ge 15/27 Paragraph 4 other than the prohibition on subdivision or resubdivision of the Property, separately convey a portion of the Property as may be demonstrated to the reasonable satisfaction of the Agency to be necessary for the development and operation of the Agency approved hotel to be developed on the Property. 5. Agency Participation Payment (a) As an additional consideration for the conveyance of the Property from Agency to Owner and for the performance by Agency of its obligations hereunder, Owner shall pay the Agency Participation Payment to the Agency each Operating Year commencing with the Operating Commencement Date. Subject to the Buyout Provisions of Paragraph 5 (b) below, the obligation of the Owner to make the Agency Participation Payments shall continue for a period of forty (40) Operating Years after the Operating Commencement Date, and shall, during such 40 year term, survive the sale, Transfer or refinance of the Property and the Improvements or any portion thereof, and not be affected or reduced in any way by reason of any such sale, Transfer or refinance. The Agency Participation Payment shall be paid to Agency by Owner for each Operating Year within ninety (90) days of the end of such Operating Year, together with a Certified Statement submitted for Agency's approval or disapproval documenting in detail the basis for the calculation of the Agency Participation Payment due Agency. Each Agency Participation Payment shall be made in an amount consistent with the Agency approved Certified Statement for the subject Operating Year. For purposes of calculation and payment of the Agency Participation Payment, the following terms shall have the following respective meanings: "Operating Commencement Date" means the last to occur of the date of issuance by the City of the first Certificate of Occupancy for the development of the improvements on the Property, and the opening for business to the general public of the hotel and at least fifty percent (50%) of the retail and restaurant square footage required by this Agreement to be developed on the Property by Owner. "Operating Year" means each twelve month period that commences on the Operating Commencement Date and each anniversary of the Operating Commencement Date, provided that Owner may convert Operating Years to be calendar years provided appropriate and equitable adjustments are made for any partial year to the reasonable satisfaction of the Agency's Executive Director, and provided that there is no reduction in the required 40 year term of the Agency Participation Payments. "Agency Participation Payment" means an amount equal to thirty percent (30%) of the Adjusted Gross Revenues for each Operating Year. ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 14 (May 20, 1999) MOv_7r1-4000 00 • AA ^14 Z G'JS SQ71 Qr% P _ IS Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:41AM;j 1E8X #185;Page 16/27 "Gross Revenues" means all revenue of any kind or nature paid to Owner or Owners agents each Operating Year from the rental, lease, licensing, operation, use or ownership of the hotel space and for the rental, lease, licensing, operation, use or ownership of retail, restaurant and other commercial spaces on the Property; provided, however, that Gross Revenues shall not include any proceeds from the sale or refinancing of the Property or its improvements. "Adjusted Gross Revenues" means the excess of eighty percent (80%) of the Gross Revenues for each Operating Year over Owner's Annual Return. "Owner's Annual Return" means an amount equal to twelve percent (12%) of Adjusted Project Costs (including, without limitation, Annual Return Shortfalls, if any). "Adjusted Project Costs" means Project Costs as approved by the Agency less the net proceeds of the Community Facility District Bonds issued in connection with the redevelopment of the Property (or in the absence of the issuance of such Bonds, the Agency Obligation and accrued interest, as defined in that certain Schedule of Feasibility Gap Payments attached as Attachment No. 8 to the DDA), plus Approved Post - Construction Capital Expenditures, if any, plus the total of all Annual Return Shortfalls, if any. "Approved Post -Construction Capital Expenditures" means capital expenditures made by Owner after the recordation of the Release of Construction Covenants, if any, approved as a Project Cost by the Agency pursuant to Paragraph 3 (d) above. "Annual Return Shortfall" means the amount in any Operating Year by which Owner's Annual Return exceeds eighty percent (80%) of Gross Revenues for that Operating Year. (b) Buyout Provisions "Buyout Amount" means an amount equal to: (a) for a Buyout with an Effective Date occurring on or prior to the twentieth anniversary of the Operating Commencement Date, the quotient obtained by dividing the amount of Agency Participation Payment payable with respect to Gross Revenues for the twelve month time period prior to the Effective Date by .095; or (b) for a Buyout with an Effective Date occurring after the twentieth anniversary of the Operating Commencement Date, the net present value of the remaining Agency Participation Payments until the fortieth anniversary of the ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 15 (May 20. 1999) r1.n71 nG-i n A G Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:42AM;Jtffu—#185;Page 17/27 Operating Commencement Date (the "End Date"), assuming Gross Revenues will be equal to Gross Revenues for the twelve month period` preceding the Effective Date, and increasing such projected Gross Revenues by 9% on each fourth anniversary of the Effective Date. The discount rate used to calculate the net present value shall be equal to the annual rate equal to the sum of (i) the interest rate on U.S. Treasury bills or notes having a maturity date closest to and no later than the End Date as reported in the Wall Street Journal on the Effective Date (or if the Wall Street Journal is not published on the Calculation Date, the first publication date thereafter) and (ii) three percent (3%). If the Wall Street Journal is no longer published at least weekly, the calculation shall be made using a financial reporting service proposed by Owner and reasonably acceptable to Agency. "Buyout" means the termination of the Owner's obligation to continue paying any further Agency Participation Payments beyond the Effective Date by paying the Buyout Amount to the Agency. "Effective Date" means the date on which the Buyout, if any, shall occur, Prior to the tenth (1001) anniversary of the Operating Commencement Date, Owner may Buyout the Agency Participation Payments and terminate any obligation to continue paying any further Agency Participation Payment by paying the greater of.(i) the sum of Two Million Four Hundred Thousand Dollars ($2,400,000) and (ii) the Buyout Amount to the Agency within sixty (60) days of the Effective Date, provided that either of the following two events has occurred: (a) the Agency has approved a sale of the entire Property from the Owner to an approved Transferee or (b) after the third (31) anniversary of the Operating Commencement Date, Agency has disapproved one or more Proposed Post - Construction Capital Expenditures with a total aggregate amount in any three year period of One Million Two Hundred Thousand Dollars ($1,200,000) or more. For purposes of such Buyout the Effective Date shall be the date of the sale or the date of the Proposed Post -Construction Capital Expenditure. Commencing with the tenth (101) anniversary of the Operating Commencement Date, Owner may at any time Buyout the Agency Participation Payments and terminate any obligation to continue paying any further Agency Participation Payment by paying the Buyout Amount to the Agency within sixty (60) days of the Effective Date, provided Owner shall have given Agency written notice of its intent to effect such Buyout, and shall have identified in such written notice the Effective Date of such Buyout, and further provided such identified Effective Date shall be a date which is on or after the date the Agency receives such written notice. ATTACHMENT NO. 6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 16 (May 20, 1999) Mnv_-)M-I OOO P.1n • n n .,, - Inc fTO71 Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:42AM;J9fM #185;Page 18/27 6. (a) "Acquisition Costs" shall mean the costs of acquisition of the Property after the approval of the DDA by the Agency (a) incurred by the Owner in the form of purchase price payments to third party owners and related closing costs (including brokers' fees paid by Owner) in an amount first approved in writing by the Agency Executive Director, and (b) incurred by the Agency by negotiation or eminent domain including, but not limited to, the purchase price, just compensation for the taking or threatened taking of property interests (land, building, fixtures, equipment, loss of goodwill and improvements); costs for payment of goodwill as provided under Califomia law in eminent domain actions; fees and actual expenses of acquisition agents; escrow fees; costs of drawing the deeds for each property acquired; recording fees; notary fees and premiums for title insurance policies; any state, county or city documentary stamps or transfer tax; court costs; witness fees; expert witness fees; prorated taxes; appraisal fees; reasonable attorney fees; deposits to obtain an order of prejudgment possession, if incurred; amounts to satisfy judgments of condemnation; costs necessary to permit early acquisition of property interests where delays would create a hardship for the owner; abandonment costs and/or damages which the Agency may be ordered to pay in any eminent domain proceeding; and any additional costs incurred to settle or pay claims of inverse condemnation, or judgments in inverse condemnation. (b) Within fifteen (15) days after the -Agency provides written notice to Owner that Acquisition Costs are likely to exceed the amount of the original letter of credit delivered to Agency by Developer pursuant to the DDA, Owner shall deliver to the Agency additional letter(s) of credit and/or amendment(s) to the original letter of credit, first approved in writing by the Agency as to form, content and issuer (each referred to herein as an "Additional Letter of Credit"), in such amounts as are requested by the Agency. The Agency may provide such notice at any time and from time to time. (c) Commencing with the Agency's first draw on the Additional Letter of Credit, Owner shall be responsible to pay to the issuer of the letter of credit all interest incurred in respect to each draw on the Additional Letter of Credit. (d) The Agency shall have the right to draw on the Additional Letter of Credit from time to time to pay any and all Acquisition Costs, as defined in Paragraph 6 (a) of this Agreement. The only condition for any draw on the Additional Letter of Credit shall be a certification by the Agency Executive Director or designee that the draw is permitted under the terms of this Agreement. Owner and Agency shall consult so as to attempt to schedule relocating and business closures so as to lawfully minimize Acquisition Costs without delaying completion of the Project. Within thirty (30) days following each draw on the Additional Letter of Credit, the Agency shall provide the Owner with a written report showing the specific nature and amount of each such draw. ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 17 (May 20, 1999) Me,)V_^)M_I 000 rAM - A -„-a c")c M074 Mc., o 40 Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:43AM;JeJE9A #185;Page 19/27 (e) The term of the Additional Letter of Credit shall be not less than two (2) years, and such term shall be subject to extension if Acquisition Costs will or might be incurred following the scheduled expiration of the Additional Letter of Credit. If the term of the Additional Letter of Credit is not so extended within fifteen (15) days following a request by the Agency for such an extension, the Agency shall have the right to draw on the Additional Letter of Credit in an amount deemed sufficient by the Agency in its discretion to cover any Acquisition Costs that may be incurred after the expiration of the Additional Letter of Credit. If the Additional Letter of Credit has expired and the Agency gives notice to Owner that Acquisition Costs will or may be incurred following such expiration, Owner shall immediately cause the issuance of a new letter of credit first approved in writing by the Agency as to form, content and issuer, in the amount requested by the Agency, for a term consistent with the contemplated timing of the Agency's need to make additional Acquisition Costs expenditures 7. Hazardous Substances (a) "Hazardous Substance," as used in this Agreement means any substance, material or waste which is or becomes regulated by the United States government, the State of California, or any local or other governmental authority, including, without limitation, any material; substance or waste which is (i) defined as a "hazardous waste," "acutely hazardous waste," "restricted hazardous waste," or "extremely hazardous waste under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code; (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code; (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code; (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety' Code; (v) petroleum; (vi) asbestos; (vii) a polychlorinated biphenyl; (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title', 22 of the California Code of Regulations, Chapter 20; (ix) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act (42 U.S.C. Section 6903); (xi) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601); or (xii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any governmental requirements either requires special handling in its use, transportation, generation, collection, storage, treatment or disposal, or is defined as "hazardous" or is harmful to the environment or capable of posing a risk of injury to public health and safety. ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 18 (May 20, 1999) MAY-PP-1ggq Pq:4S 717 a7S nq-�1 qri D 10 Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:43AM;j9Fax #185;Page 20/27 (b) Owner hereby represents and warrants that the development, construction and uses of the Site permitted under this Agreement do not require the presence of any Hazardous Substance on the Property. (c) That portion of the Property which was conveyed from Agency to Owner was conveyed and delivered in an "as is" physical condition, with no warranty, express or implied by Agency as to the presence of Hazardous Substances, or the condition of the soil, its geology or the presence of known or unknown faults. If the condition of the Property is not in all respects entirely suitable for the use or uses to which the Property will be put, then it is the sole responsibility and obligation of Owner to place the Property in all respects in a condition entirely suitable for the development thereof at the sole cost, risk and expense of the Owner. (d) By this Agreement, Owner provides to the Agency, effective upon the date of this Agreement, an indemnification of the Agency and the City and their respective members, officers, employees, agents, contractors and consultants relating to the environmental condition of the Property and the presence of Hazardous Substances thereon. Therefore, except to the extent caused by the intentional misconduct of the Agency, its employees, officers or agents, Owner hereby agrees to indemnify, defend and hold harmless Agency and City and their respective members, officers, agents, employees, contractors and consultants, from any claims, actions, suits, legal and administrative proceedings, liability, injury, deficiency, damages, fines, penalties, punitive damages, costs and expenses (including, without limitation, the cost of any cleanup, remediation, removal, mitigation, monitoring ortesting of Hazardous Substances, and reasonable attomeys' fees) resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Substances on, under, in or about, or the transportation of any Hazardous Substances to or from, the Property; 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 or Hazardous Substances on, under, in or about, to or from, the Property. (e) From the date of this Agreement, Owner hereby waives, releases and discharges the Agency, the City and their. respective members, officers, employees, agents, contractors and consultants, from any and all present and future claims, demands, suits, legal and administrative proceedings, and from all liability for damages, losses, costs, liabilities, fees and expenses (including, without limitation, attorneys' fees) arising out of or in any way connected with the Agency's or Owner's use, maintenance, ownership or operation of the Property, any Hazardous Substances on the Property, or the existence of Hazardous Substances contamination in any state on the Property, however the Hazardous Substances came to be placed there, except that arising out of the intentional misconduct of the Agency or its employees, officers or agents. Owner acknowledges that ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 19 (May 20, 1999) -^11 -- a --- ran. 11 M -in Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:43AM;J9ffJ #185;Page 21/27 it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." As such relates to this Section 213, Owner hereby waives and relinquishes all rights and benefits which they may have under Section 1542 of the California Civil Code. 8. Indemnity and Insurance (a) During the period commencing with the undertaking by Owner of any entry or work on the Property or any portion thereof, Owner agrees to and shall defend, indemnify and hold harmless Agency, the City and their officers, employees, agents, contractors and consultants from and against all claims, liability, loss, damage, costs or expenses (including reasonable attomeys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss or damage whatsoever caused to any person or to the property of any person which shall occur on or adjacent to the Property and which shall be directly or indirectly caused by or based on the Owner's rehabilitation, development, construction, use or operation of the Property or any portion thereof or any improvements thereon or any of Owner's activities under this Agreement, whether such actions or inactions thereof be by Owner or anyone directly or indirectly employed or contracted with by Owner and whether such damage or injury shall accrue or be discovered before or after the termination of this Agreement. Owner shall not be responsible for (and such indemnity shall not apply to) property damage or bodily injury to the extent caused by the negligence of the Agency or its designated employees or agents. (b) Prior to the undertaking of any work on the Property or any portion thereof, Owner shall fumish, or cause to be furnished, to Agency duplicate originals or appropriate certificates of personal injury and property damage insurance policies in an amount not less than Five Million Dollars ($5,000,000) combined single limit, naming Agency, the City and their officers, employees, agents, contractors and consultants as additional insureds, or a combination of functionally equivalent policies, including umbrella coverage, subject to the prior approval of Agency legal counsel. Any such policy shall be primary and not contributing to policies carried by Agency, or the City and shall be maintained in full force and effect at all times. 9. All obligations of "Owner' under this Covenant Agreement (and all of the terms, covenants and conditions of this Covenant Agreement) shall be binding upon ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 20 (May 20,1999) Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:44AM;)gff8)L-#185;Page 22/27 Owner, its successors and assigns and every successor in interest of the Property or any portion thereof or any interest therein, jointly and severally, for the benefit and in favor of the Agency, its successors and assigns, and the City of Huntington Beach. All rights of "Owner" under this Covenant Agreement shall inure to the benefit of Owner and its permitted successors and assigns. 10. This Covenant Agreement shall not merge into any other agreement between Agency and Owner. 11. Breach of any of the covenants, conditions, restrictions, or reservations contained in this Covenant Agreement shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value as to the Property, whether or not said mortgage or deed of trust is subordinated to this Covenant Agreement, but unless otherwise herein provided, the terms, conditions, covenants, restrictionsand reservations of this Covenant Agreement shall be binding and effective against the holder of such mortgage or deed of trust and any owner of the Property, or any part thereof, whose title thereto is acquired by foreclosure, trustee's sale, or otherwise. 12. The Construction Covenants shall remain in effect until the recording of the Release of Construction Covenants to be issued by the Agency with respect to all improvements to be constructed pursuant to the DDA. The covenants against discrimination shall remain in effect in perpetuity. The Surviving Covenants shall remain in effect until a date which is thirty (30) years after the date this Covenant Agreement is recorded, unless and until they expire earlier in accordance with the express terms thereof, except for the covenant set forth in Section 2.f hereinabove to pay the Agency Participation Payment, which shall remain if effect for forty (40) years from the Operating Commencement Date unless and until terminated in accordance with the Buyout provisions of Paragraph 5 of this Agreement. Upon the issuance and recordation of the Release of Construction Covenants by the Agency pursuant to the DDA, Owner shall have the right to have this Covenant Agreement restated and re -recorded with the deletion of the Construction Covenants, and the Agency agrees to enter into documents as may be reasonably required, subject to the approval of Agency legal counsel as to form, so as to effectuate the provisions of this paragraph. 13. Upon written request, Agency shall execute, acknowledge and deliver an estoppel certificate upon which Owner and any Transferee or mortgagee of all or a portion of Owner's interest in the Property can rely, stating whether Agency has knowledge of any default by Owner or any successor or assign under the terms of this Agreement. 14. Except as expressly provided otherwise in this Agreement, approvals required of Agency or Owner shall not be unreasonably withheld or delayed. If this Agreement requires Owner to submit plans, drawings or other documents or information ATTACHMENT NO.6 FORMA OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 21 (May 20, 1999) Sent by: KANE, BALLMEA & BERKMAN 213 625 0931; 05/20/99 9:44AM;j t91 #165;Page 23127 to Agency for approval, which shall be deemed approved if not acted on by Agency within the specified time, said plans, drawings or other documents shall be accompanied by a letter stating that they are being submitted and will be deemed approved unless disapproved by Agency within the stated time. If Owner fails to include such a letter with its submission, said plans, drawings or other documents shall not be deemed approved based on the Agency's failure to act within the specified time. 15. No member, official or employee of City or Agency shall be personally liable to Owner, or any successor in interest, in the event of any default or breach by Agency or for any amount which may become due to Owner or successor or on any obligations under the terms of this Agreement. Owner hereby waives and releases any claim it may have against any member, official or employee of the Agency or the City with respect to any default or breach by the Agency (or the City) orfor any amount which may become due to Owner or its successors, or on any obligations, under the terms of this Agreement or any Conveyance Instrument. Owner makes such release with full knowledge of Civil Code Section 1542 and hereby waives any and all rights thereunder to the extent of this release, if such Section 1542 is applicable. Section 1542 of the Civil Code provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.' 16. Nothing contained in this Agreement shall be deemed or construed as creating a partnership, joint venture, or any other relationship between the parties hereto other than as specified in the provisions contained herein, or cause the Agency to be responsible in any way for the debts or obligations of Owner or any other party. 17. The waiver by Agency of any term, covenant, or condition herein contained shall not be a waiver of such term, covenant, or condition on any subsequent breach. 18. Time is of the essence of this Agreement and each and all of its provisions in which performance is a factor. 19. If any action or proceeding is brought by either party against the other under this Agreement, whether for interpretation, enforcement or otherwise, the prevailing party shall be entitled to recover all costs and expenses, including the fees of its attorney and any expert witnesses in such action or proceeding. This provision shall also apply to any postjudgment action by either party, including without limitation efforts to enforce a judgment. ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 22 (May 20, 1999) MAY-7)P-1 qqq Mq: d7 71-�z G7S Llq'R1 qr% P :)7 Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:45AM;Jgffju #185;Page 24/27 20. Any provision of this Agreement which shall prove to be invalid, void, or illegal shall in no way affect, impair, or invalidate any other provision hereof and such other provisions shall remain in full force and effect. 21. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 22. When the context so requires when used in this Agreement, the masculine gender shall be deemed to include the feminine and neuter gender and the neuter gender shall be deemed to include the masculine and feminine gender. When the context to requires when used in this Agreement, the singular shall be deemed to include the plural. The paragraph and section headings have been used for convenience only, and shall not be used in the interpretation hereof. 23. No amendment, change, or addition to, or waiver of termination of, this Agreement or any part hereof shall be valid unless in writing and signed by both Agency and Owner. 24. The parties to this Agreement acknowledge and agree that the provisions of this Agreement are for the sole benefit of Agency and Owner, and not for the benefit, directly or indirectly, of any other person or entity, except as otherwise expressly provided herein. IN WITNESS WHEREOF, the Agency and Owner have caused this instrument to be executed on their behalf by their respective officers thereunto duly authorized. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Agency) Date: APPROVED AS TO FORM: Agency General Counsel ATTACHMENT NO.6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 23 (May 20, 1999) M1'W-7n-1 000 MQ: d7 1�1 7 a"Dcz MQ71 oc i 0 -)A Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 05/20/99 9:45AM;jetFax #1B5;Page 25/27 KANE, BALLMER & BERKMAN m Dater Date: (Owner) CIM GROUP, LLC By: FEDERAL REALTY INVESTMENT TRUST By: ATTACHMENT NO. 6 FORM OF AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY 24 (May 20, 1999) MAY-20-1999 09:47 213 625 0931 96% P.?� Parcels A PARCEL B EXHIBIT A LEGAL DESCRIPTION OF THE SITE 24-152-02 24-152-03 24-152-04 24-152-05 24-152-10 24-152-11 24-152-12 24-152-13 24-152-14 24-152-10 24-153-4 24-153-5 24-153-7 24-153-11 24-153-17 24-152-18 24-153-01 24-153-02 24-153-03 24-153-10 24-153-11 24-153-16 24-153-21 As per Preliminary Title Reports Issued by First American Title on July 21, 1998 through July 29, 1998 6/l /99:104/105:LEGALDES.Doc ATTACHMENT NO. 7 FORM OF RELEASE OF CONSTRUCTION COVENANTS Recording Requested by and When Recorded Return to: CIM Group, LLC 10960 Wilshire Boulevard, Suite 500 Los Angeles, California 90024 Attention: WHEREAS, CIM Group, LLC, a Calfornia limited liability company and FEDERAL REALTY INVESTMENT TRUST (collectively the "Developer") are the owners of certain real property situated in the City of Huntington Beach, California described in Exhibit A which is attached hereto and made a part hereof (the 'Property"), and has agreed to construct certain improvements thereon (the "Improvements"); and WHEREAS, pursuant to the Disposition and Development Agreement ("DDA") entered into by and between the Redevelopment Agency of the City of Huntington Beach (the "Agency") and Developer, the Agency has agreed to furnish Developer with a Release of Construction Covenants ('Release") upon the completion of construction and development of the Improvements, and such certificate is to be in such form as to permit it to be recorded in the Recorder's Office of Orange County; and WHEREAS, the DDA states that the Release shall be conclusive determination of satisfactory completion of the construction and development of the Improvements as required by the DDA; and WHEREAS, the Agency has determined that the construction and development of the Improvements on the Property as required by the DDA has been satisfactorily completed; and ATTACHMENT NO.7 FORM OF RELEASE OF CONSTRUCTION COVENANTS -I- (May 14, 1999) NOW THEREFORE, it is hereby acknowledged and agreed by the parties hereto that: 1. The Agency does hereby certify that the construction and development of the Improvements on the Property have been fully and satisfactorily performed and completed as required by the DDA and that Developer has fully complied with the terms of the DDA with respect to such construction and development, and that the right of reverter provisions set forth in Section 4 of the Grant Deed are no longer of any force or effect. 2. Pursuant to Section 318 of the DDA, the covenants set forth in the DDA, the Grant Deed and the Agreement Containing Covenants for the construction of the Improvements on the Property expire upon the recording of this Release. IN WITNESS WHEREOF, the Agency has executed this Release this day of ATTEST: Agency Secretary REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ATTACHMENT NO.7 FORM OF RELEASE OF CONSTRUCTION COVENANTS -2- (May 14, 1999) Parcels A - EXHIBIT A LEGAL DESCRIPTION OF THE SITE 24-152-02 24-152-03 24-152-04 24-152-05 24-152-10 24-152-11 24-152-12 24-152-13 24-152-14 24-152-10 24-153-4 24-153-5 24-153-7 24-153-11 24-153-17 24-152-18 24-153-01 24-153-02 24-153-03 24-153-10 24-153-11 24-153-16 24-153-21 As per Preliminary Title Reports Issued by First American Title on July 21, 1998 through July 29, 1998 6/1/99:104/ 105:LEGALDES.Doc ATTACHMENT NO. 8 SCHEDULE OF FEASIBILITY GAP PAYMENTS (a) Subject to all of the terms and conditions of this Agreement (including, without limitation, the provisions of paragraph (c) below limiting the Agency's payment obligation hereunder to a maximum amount and to particular sources of funds), the principal amount payable by the Agency to Developer under this Attachment No. 8 (the "Agency Obligation") shall be the sum of (1) nine hundred thousand dollars ($900,000), plus (2) the amount of the Acquisition Costs advanced to the Agency by Developer or paid to third party property owners by Developer in amounts approved by the Agency, plus (3) the lesser of (A) the amount (if any) of Extraordinary Costs or (B) the amount (if any) by which Project Costs exceed forty-five million eight hundred thousand dollars ($45,800,000). (b) The Agency Obligation shall bear interest at the rate of 10% per annum from the Completion Date as to items (1) and (3) of the Agency Obligation, and from the date of disbursement or payment by Developer as to item (2) of the Agency Obligation, until the date of repayment by Agency to Developer hereunder. (c) The Agency Obligation shall be a special and limited obligation payable to Developer solely from the sources of funds expressly identified in this Attachment No. 8. The Agency shall have no -obligation to pay any amounts to Developer pursuant to this Attachment No. 8 except as follows: be satisfied: (i) The following conditions precedent to each payment hereunder shall (A) The Completion Date shall have occurred; and (B) Developer shall not have failed to cure any default within the applicable cure period, if any, as to any of its obligations under this Agreement or the Agreement Containing Covenants Affecting Real Property or the Grant Deed. (ii) Subject to all of the terms and conditions of this Agreement, including without limitation paragraph (h) below, on or prior to September 30 of each year, beginning with the first September 30 which follows the Completion Date, and continuing until the Agency Obligation (and any accrued interest thereon) has been paid in full, the Agency shall pay to Developer an amount equal to the lesser of (i) one hundred percent (100%) of Available Site -Generated Property Tax Increment received by the Agency during the prior Agency fiscal year (July 1-June 30), or (ii) such portion of such Available Site - Generated Property Tax Increment received by the Agency during the prior Agency fiscal year that is sufficient, when added to the Available Site -Generated Transient Occupancy Tax to be paid for such fiscal year by Agency pursuant to this Attachment No. 8, and the annual net operating income parking revenues payable pursuant to paragraph (c) (iv) ATTACHMENT NO. 8 SCHEDULE OF FEASIBILITY GAP PAYMENTS 4- below, to repay the Agency Obligation, plus interest, within a twenty-five (25) year amortization period commencing with the Completion Date. Agency hereby covenants to refrain from taking any action which would diminish or impair in any way its receipt (and subsequent payment of the Agency Obligation and interest thereon) of Available Site - Generated Property Tax Increment. (iii) Subject to all of the terms and conditions of this Agreement, including without limitation paragraph (h) below, on or prior to September 30 of each year, beginning with the first September 30 which follows the Completion Date, and continuing until the Agency Obligation (and any accrued interest thereon) has been paid in full, the Agency shall pay to Developer an amount equal to the following percentages of the Available Site - Generated Transient Occupancy Tax received by City during the prior City fiscal year (July 1-June 30): (A) for the first five (5) years of such payments, sixty percent (60%); and (B) for the remaining years in which payments are required, fifty percent (50%). Agency hereby covenants to refrain from taking any action which would diminish or impair in any way its receipt (and subsequent payment of the Agency Obligation and interest thereon) of Available Site -Generated Transient Occupancy Tax. (iv) All annual net operating income revenues from the operation of the parking facility on the Site, except for those referred to in subparagraph (c) (vi) below, shall each year first be applied as a credit against the Agency Obligation (and any accrued interest thereon), prior to the payment of the funds referred to in subparagraphs (ii) and (iii) above. (v) In the event the annual debt service of the bonds referred to in paragraph (e) below exceeds in any year the total amount of funds payable to Developer pursuant to paragraphs (c) (ii), (iii) and (iv), then, solely for purposes of, and only to the extent necessary for, repaying that portion of such debt service incurred to support net bond proceeds in excess of an amount equal to (1) the total estimated Acquisition Costs for all of the property comprising Parcel B used by the Agency in connection with establishing the amount of Developer's Original Letter of Credit, plus (II) $900,000, the Agency shall also pay to or reimburse Developer with Available Site -Generated Transient Occupancy Tax and sales taxes received by the City generated from the Improvements developed on the Site by Developer. The Agency and City have entered into a Cooperation Agreement of even date herewith to effectuate the purposes of this subparagraph (c) (v), and Agency shall not modify such Cooperation Agreement without Developer's consent. Agency hereby covenants to refrain from taking any action which would diminish or impair in any way its receipt (and subsequent payment of the Agency Obligation and interest thereon) of such additional Available Site -Generated Transient Occupancy Tax and/or of such sales taxes received by the City.. ATTACHMENT NO.8 SCHEDULE OF FEASIBILITY GAP PAYMENTS -2- (vi) In the event that the amount of the guaranteed price construction contract approved by the Agency for the public parking facility to be constructed by Developer on the Site is in excess of Six Million Dollars ($6,000,000) (excluding that portion of such cost necessary to provide adequate foundations and, support for Developer's private improvements to be constructed by Developer above such parking facility, but including costs of construction, design, engineering and permitting and fees for such parking facility), then Agency shall pay to Developer as additional consideration for the construction of the public parking facility pursuant to such guaranteed price contract, that portion, if any, of the annual net operating revenues of such parking facility which exceed in each year the projected amount of such net operating revenues for each year, as shown on the Schedule of Projected Public Parking Facility Annual Net Operating Revenues attached hereto as Exhibit 1, but not to exceed in any year fifty percent (50%) of such annual excess net operating revenue amount, and not to exceed in any year the amount needed to amortize that portion of such excess parking facility cost above $6,000,000 over a period of 25 years at 10% interest. (d) The Agency's obligations hereunder may be prepaid by the Agency, in whole or in part, at any time and from time to time without penalty. (e) The Agency and Developer shall use their reasonable best efforts to cause the City to consider and facilitate the issuance of Community Facilities District bonds or similar instruments secured by a special tax on Developer's title to the Site and the improvements to be constructed thereon pursuant to this Agreement for the purpose of generating net proceeds sufficient to fully pay the Agency's Obligation and accrued interest thereon, if the Agency and the City determine that such an issuance is feasible and would not adversely affect the financial objectives of the Agency or the City. Developer hereby expressly agrees to the formation of such district and the issuance of such bonds and the levy of such special tax, subject to Agency reimbursement pursuant to this Attachment No. 8. The net proceeds of such bonds would be used to pay for all or part of the cost of the construction of the parking facilities to be constructed on the Site as a public parking facility, and other public improvements as approved by Agency. In the event of such an issuance, Agency conveyance of Parcels A and B shall be subject to the retention by the Agency for conveyance to the City of air space fee title or other appropriate property interest for the public parking facility, and, to the extent Developer has acquired all or portions of Parcel B, Developer shall convey to City such property interest therein. In the event of such an issuance, the amount owed to Developer by Agency under this Attachment No. 8 shall be reduced by the amount of the net proceeds of such bonds, and the annual payments of Available Site -Generated Tax Increment and Available Site - Generated Transient Occupancy Tax otherwise payable to Developer under paragraph (c) of this Attachment No. 8, and sales taxes, if any, otherwise payable to Developer through the Cooperation Agreement under paragraph (c) (v) of this Attachment No. 8, and the net operating income revenues from the parking facility referred to in paragraph (c) (iv) shall be applied instead to reimbursing Developer for all or a portion of the above -described ATTACHMENT NO. 8 SCHEDULE OF FEASIBILITY GAP PAYMENTS -3- special tax which is (X) levied in the same year as that in which such revenues are generated, or (Y) levied in a past year and not reimbursed to Developer by reason of the diversion of Available Site -Generated Tax Increment otherwise payable to Developer for special tax reimbursement for use by the Agency instead to repay senior Agency bonded indebtedness to which such tax increments were pledged; provided, however, that (i) the Agency's obligations under this paragraph (e) shall be subject to the conditions specified in paragraph (c) above and the Agency's right of setoff under paragraph (h) below; and (ii) the Agency's payments under this paragraph (e) shall not be pledged to payment of the bonds and the Agency shall have no obligation to the bondholders or any other third party. (f) The Agency's obligation to pay Available Site -Generated Tax Increment in accordance with this Attachment No. 8 shall be subordinate to the Agency's existing bonded indebtedness and bond issuance(s) and the refunding or refinancing thereof and any future bonds the Agency may issue and the bonded indebtedness incurred in connection therewith, provided that the Agency determines at the time of issuance of any such future bonds that such issuance and indebtedness will not materially adversely affect the Agency's ability to perform its obligations under this Attachment No. 8. Bonded indebtedness includes any indebtedness incurred by the Agency for bonds, notes, interim certificates, debentures, certificates of participation or other obligations issued by the Agency. The Agency's obligation to pay a portion of Available Site -Generated Property Tax Increment to Developer under this Attachment No. 8 is not and shall not be construed as a "pledge" of property tax revenues for purposes of Section 33671.5 of the Community Redevelopment Law. (g) This Attachment No. 8 is part of the Agreement and is subject to all of the terms and conditions thereof. (h) The Agency shall have the right at its option and as a non-exclusive remedy to set off amounts owed by Developer to the Agency, including without limitation amounts payable by Developer to the Agency pursuant to Section 701 of this Agreement, against amounts payable by the Agency under this Attachment No. 8; provided, however, that no amount shall be set off by Agency unless either (X) determined by final judgment to be owing to Agency, or (Y) in the case of amounts owed to Agency pursuant to Section 701 of this Agreement, such set off amount does not exceed the amount paid to Agency for the Operating Year which precedes the date of the set off. (i) The following definitions shall apply to this Attachment No. 8: (1) "Acquisition Costs" shall have the meaning ascribed to such term in Section 201.2 of this Agreement. (2) "Extraordinary Costs" means costs which exceed the following Developer's pro forma estimates for the following items: Site Preparation (hazardous ATTACHMENT NO.8 SCHEDULE OF FEASIBILITY GAP PAYMENTS -4- materials abatement, site remediation, utility relocation and connections, off -site public improvements, demolition and site preparation) costs in excess of $825,000; site enhancement and public art costs in excess of $750,000, and City permits and fees for private improvements in excess of $1,260,000; provided, however, that Extraordinary Costs shall be zero unless all items referred to in this definition of Extraordinary Costs cost in excess of an aggregate total of $2,835,000. (3) "Agreement" as used herein shall mean that certain Disposition and Development Agreement by and between Agency and Developer, of which this Attachment No. 8 is a part. (4) "Available Site -Generated Property Tax Increment" means the total ad valorem property tax increment revenue allocated to and received by Agency pursuant to Section 33670(b) of the California Health and Safety Code, as said statute may be amended from time to time, by application of the one percent (1 %) tax levied against real property as permitted by Article XIIIA of the California Constitution, in an amount attributable by the Orange County Assessor solely to the Site, but specifically excluding therefrom all of the following: (A) a portion of tax increment revenues from the Site equal to the percentage of such revenues from the redevelopment project area as a whole that is set aside pursuant to Sections 33334.2 at aeq. of the California Health and Safety Code or any successor law for low- and moderate -income housing purposes; and (B) a portion of tax increment revenues from the Site equal to the percentage of tax increment revenues from the redevelopment project area as a whole that the Agency is required to pay to any and all governmental entities pursuant to any provision of law, as amended from time to time, or pursuant to tax sharing/pass-through agreements (including any and all agreements entered into prior to this Agreement by and Agency and such governmental entities implementing the tax sharing/pass-through agreements); and (C) a portion of tax increment revenues from the Site equal to the percentage of such revenues in the redevelopment project area as a whole which the Agency may be required by the State of California to pay from time to time, including, for example, and without limiting the generality of the foregoing, any payments which the Agency may be required to pay to the Education Revenue Augmentation Fund pursuant to Section 33681 et seq. of the Community Redevelopment Law; and (D) the amount of any revenues received by the Agency which are attributable to any special taxes or assessments or voter -approved indebtedness; and (E) charges for County administrative charges, fees or costs equal to the percentage of such charges in the Project Area as a whole. (5) "Available Site -Generated Transient Occupancy Tax" as used herein shall mean transient occupancy tax revenue actually received by the City in any fiscal year following the Completion Date from the hotel to be constructed on the Site by Developer pursuant to and in accordance with the Agreement, a portion of which is paid to the Agency pursuant to Ordinance No. 2974 of the City of Huntington Beach. ATTACHMENT NO. 8 SCHEDULE OF FEASIBILITY GAP PAYMENTS -5- (6) "City" as used herein shall mean the City of Huntington Beach. (7) "Completion Date" as used herein shall mean the date on which the Release of Construction Covenants to be issued by Agency pursuant to the Agreement with respect to the improvements to be constructed by Developer on or in connection with the Site is recorded in the Official Records of Orange County. (8) "Project Costs" as used herein shall have the meaning ascribed to such term in Section 216 of this Agreement. (9) All capitalized terms not defined in this Attachment No. 8 shall have the meanings ascribed to such terms elsewhere in this Agreement. ATTACHMENT NO. 8 SCHEDULE OF FEASIBILITY GAP PAYMENTS -6- SCHEDULE OF PROJECTED PUBLIC PARKING FACILITY ANNUAL NET OPERATING REVENUES Exhibit 1 Parking Revenue f. 1 $ 185,000 2 $ 190,550 3 $ 196,267 4 $ 202,154 5 $ 208,219 6 $ 214,466 7 $ 220,900 8 $ 227,527 9 $ 234,352 10 $ 241,383 11 $ 248,625 12 $ 256,083 13 $ 263,766 14 $ 271,679 15 $ 279,829 16 $ 288,224 17 $ 296,871 18 $ 305,777 19 $ 314,950 20 $ 324,399 21 $ 334,131 22 $ 344,154 23 $ 354,479 24 $ 365,114 25 $ 376,067 ATTACHMENT NO. 8 SCHEDULE OF FEASIBILITY GAP PAYMENTS -7- ATTACHMENT NO. 9 FORM OF PRE -CONVEYANCE TERMINATION NOTE Subject to all of the terms and conditions of this Note, including without limitation provisions limiting the payment obligation hereunder to particular sources of funds and provisions establishing credits and offsets against amounts otherwise payable hereunder, THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency" or "Borrower"), hereby promises to pay to the order of CIM GROUP, LLC, a Delaware limited liability company ("Developer"), at the times hereinafter provided, a principal amount equal to the amount drawn by the Agency on that certain Letter of Credit [name of issuer, date of issuance and instrument number will be inserted when {mown] (the "Letter of Credit"). The Borrower shall pay interest at the rate, in the amount and at the times hereinafter provided. 1. The obligations of the Agency under this Note are secured by the Pre - Conveyance Termination Deed of Trust required by Section 201.4.2 of the Agreement. 2. The obligations of the Agency under this Note shall be special and limited obligations payable to Developer solely from the sources of funds expressly identified in this Note. The Agency shall have no obligation to pay any amounts to Developer pursuant to this Note except as follows: (a) The occurrence of the Termination Date shall be a condition precedent to each payment hereunder. (b) Subject to all of the terms and conditions of this Note, on or prior to September 30 of each year, beginning with the first September 30 which follows the Termination Date, and continuing until the earlier to occur of the Due Date or the date the principal amount specified in paragraph (a) above (and any accrued interest thereon) has been paid in full, the Agency shall pay to Developer an amount equal to one hundred percent (100%) of Available Site -Generated Property Tax Increment received by the Agency during the prior Agency fiscal year (July 1-June 30). (c) Subject to all of the terms and conditions of this Note, on or prior to September 30 of each year, beginning with the first September 30 which follows the Completion Date, and continuing until the earlier to occur of the Due Date or the date the principal amount specified in paragraph (a) above (and any accrued interest thereon) has been paid in full, the Agency shall pay to Developer an amount equal to fifty percent (50%) of the Available Site -Generated Transient Occupancy Tax received by City during the prior City fiscal year (July 1-June 30). ATTACHMENT NO. 9 FORM OF PRE -CONVEYANCE TERMINATION PROMISSORY NOTE -1- (d) Solely during any period or periods in which no Available Site -Generated Transient Occupancy Tax is being generated from the Site, and subject to all of the terms and conditions of this Note, on or prior to September 30 of each year, beginning with the first September 30 which follows the Completion Date, and continuing until the earlier to occur of the Due Date or the date the principal amount specified in paragraph (a) above (and any accrued interest thereon) has been paid in full, the Agency shall pay to Developer an amount equal to fifty percent (50%) of the sales taxes generated from the Site and received by City during the prior City fiscal year (July 1-June 30). (e) In the event the Agency in its sole discretion sells fee title to any portion of Parcel A or Parcel B to a third party, the Agency shall pay to Developer an amount equal to the Net Sales Proceeds of each such sale concurrently with the consummation of the sale; provided however Agency covenants and agrees that so long as any money is due to Developer under this Note, Agency shall not make any such sale for a purchase price which is less than (a) the fair market value of such portion of the Site being sold, payable in cash at conveyance, or (b) the fair reuse value thereof, subject to the consent of the Developer to the amount of such fair reuse value, which consent shall not be unreasonably withheld by Developer. (f) In the event the principal amount of this Note and accrued interest thereon have not been paid in full by the Due Date, the Agency at its option shall either (i) pay all amounts due under this Note in cash; or (ii) convey or tender conveyance of Parcel A, or any portion thereof designated by the Agency, and/or Parcel B, or any portion thereof designated by the Agency, and receive credit against its obligations hereunder in an amount equal to the Fair Market Value of the property so conveyed or tendered, determined in accordance with the procedure specified in paragraph 3 below; or (iii) discharge its obligations hereunder and pay all amounts due under this Note through any combination of the procedures specified in (i) and (ii) above. 3. (a) At any time after the Termination Date and prior to the payment in full of all amounts due under this Note, the Agency shall have the right, upon 30 days written notice to Developer, to convey to Developer Parcel A, or any portion thereof designated by the Agency, and/or Parcel B, or any portion thereof designated by the Agency. In the event of such a conveyance or tender of conveyance, the unpaid principal balance of this Note shall be reduced, as of the date of conveyance, by an amount equal to the Fair Market Value of the property so conveyed or tendered. (b) Immediately upon delivery by the Agency of a notice of intent to convey pursuant to paragraph (a) above, Developer and the Agency shall endeavor to agree upon the Fair Market Value. If Developer and the Agency are unable to agree upon such Fair Market Value during the period commencing with delivery of the notice of intent to convey and ending thirty (30) days thereafter (the "Negotiation Period"), then the Fair Market Value shall be established in accordance with the following procedure: ATTACHMENT NO. 9 FORM OF PRE -CONVEYANCE TERMINATION PROMISSORY NOTE -2- (i) Within fifteen (15) days after the expiration of the Negotiation Period specified above, Developer and the Agency shall jointly attempt to agree on the appointment of a real estate appraiser who is certified as an M.A.I. (or equivalent) by the Appraisal Institute or any successor thereto (or in the event the Appraisal Institute or any successor shall not then be in existence, a disinterested real estate appraiser having appropriate qualifications to appraise real estate) with at least ten (10) years' commercial real property appraisal experience in the coastal area of Orange County. All appraisers selected pursuant to the provisions hereof shall be impartial and unrelated, directly or indirectly, so far as employment of services is concerned, to any of the parties hereto, or their successors. The single appraiser jointly appointed by the parties shall determine the Fair Market Value in the manner herein specified and shall render his or her appraisal within sixty (60) days after said appraiser has been selected'. (ii) Failing the joint action within said fifteen- (15) day period, Developer and the Agency shall each within an additional fifteen (15) days, designate an appraiser meeting the qualifications stated in paragraph (i) above. If two appraisers are appointed and they concur on the Fair Market Value, the Fair Market Value determined by them shall be the Fair Market Value for purposes of this Note. If the appraisers do not concur, and the difference between the higher and lower appraisal is an amount equal to or less than ten percent (10%) of the amount of the higher appraisal, the difference shall be split and the average of the two appraisals shall be the Fair Market Value. The two appraisers shall render their respective appraisals within sixty (60) days after they have been selected. If the difference between the appraisals exceeds ten percent (10%) of the amount of the higher appraisal, the two appraisers shall jointly appoint a third appraiser meeting the qualifications set forth in paragraph (i) above, and if they are unable to agree on a third appraiser, either the Agency or Developer, by giving fifteen (15) days' notice to the other party, may apply to the presiding judge of the Superior Court of Orange County to select a third appraiser who meets the qualifications set forth in paragraph (i) above. The third appraiser, however selected, shall be a person who has not acted in any capacity for either party. Within fifteen (15) days from the date of the selection of the third appraiser, all three appraisers shall meet and they shall determine the Fair Market Value within sixty (60) days from the selection of the third appraiser. If the three appraisers are unable to agree within such time, the Fair Market Value shall be determined by a majority of the three appraisers, but if a majority cannot agree, then the arithmetic average of the two closest in amount of the three appraisals shall be deemed to be the Fair Market Value but in no event greater or less than the higher or lower, respectively, of the original two appraisals of the first two appraisers. (iii) Each appraiser shall certify that he or she has personally inspected the property to be conveyed and all properties used as comparisons, that he or she has no past, present or contemplated future interest in the property to be conveyed, or any part thereof, that the compensation to be received by him or her from any source for making the appraisal is solely in accordance with this Note, that he or she has followed ATTACHMENT NO. 9 FORM OF PRE -CONVEYANCE TERMINATION PROMISSORY NOTE -3- the instructions as set forth in this Note for valuing the Fair Market Value, that neither his or her employment to make the appraisal nor his or her compensation therefor is contingent upon reporting a predetermined value, or a value within a predetermined range of values, that he or she has had ten (10) years' professional experience as a commercial real estate appraiser in the coastal area of Orange County, that he or she is certified as an M.A.I. (or equivalent) by the Appraisal Institute or successor thereto and that his or her appraisal was prepared in conformity with the standards of professional practice of the Appraisal Institute or successor thereto. 4. In the event the Agency uses funds drawn from the Letter of Credit to make any deposits in connection with eminent domain proceedings for the acquisition of any portion of the Site, the Agency in its sole discretion may abandon any one or more of such proceedings and, to the extent permitted by law, withdraw amounts deposited in connection the abandoned proceeding(s) and pay the withdrawn amount to Developer, less abandonment costs and damages. The unpaid principal balance of this Note shall be reduced by the amount of any such payment. 5. The principal amount of this Note shall bear interest at the rate of 10% per annum from the Termination Date until the date of payment by Agency to Developer hereunder. 6. The Agency's obligations hereunder may be prepaid by the Agency, in whole or in part, at any time and from time to time without penalty; provided, however, that at the request of Developer, Agency shall cooperate with Developer so as to facilitate the sale of this Note by Developer at par, including reasonably considering the elimination of the Agency's right of prepayment and the conversion of this Note to an unsecured note. 7. The Agency's obligation to pay Available Site -Generated Tax Increment in accordance with this Note shall be subordinate to the Agency's existing bonded indebtedness and bond issuance(s) and the refunding or refinancing thereof and any future bonds the Agency may issue and the bonded indebtedness incurred in connection therewith, provided that the Agency determines at the time of issuance of any such future bonds that such issuance and indebtedness will not materially adversely affect the Agency's ability to perform its obligations under this Note. Bonded indebtedness includes any indebtedness incurred -by the Agency for bonds, notes, interim certificates, debentures, certificates of participation or other obligations issued by the Agency. The Agency's obligation to pay a portion of Available Site -Generated Property Tax Increment to Developer under this Note is not and shall not be construed as a "pledge" of property tax revenues for purposes of Section 33671.5 of the Community Redevelopment Law. 8. No member, official or employee of City or Agency shall have any personal liability for repayment of this Note. ATTACHMENT NO.9 FORM OF PRE -CONVEYANCE TERMINATION PROMISSORY NOTE -4- 9. The following definitions shall apply to this Note: (a) "Agreement" as used herein shall mean that certain Disposition and Development Agreement dated 1999 between the Agency and Developer. (b) "Available Site -Generated Property Tax Increment" as used herein shall mean the total ad valorem property tax increment revenue allocated to and received by Agency pursuant to Section 33670(b) of the California Health and Safety Code, as said statute may be amended from time to time, by application of the one percent (1 %) tax levied against real property as permitted by Article XIIIA of the California Constitution, in an amount attributable by the Orange County Assessor solely to the Site, but specifically excluding therefrom all of the following: (A) a portion of tax increment revenues from the Site equal to the percentage of such revenues from the redevelopment project area as a whole that is set aside pursuant to Sections 33334.2 -t =. of the California Health and Safety Code or any successor law for low- and moderate -income housing purposes; and (B) a portion of tax increment revenues from the Site equal to the percentage of tax increment revenues from the redevelopment project area as a whole that the Agency is required to pay to any and all governmental entities pursuant to any provision of law, as amended from time to time, or pursuant to tax sharing/pass-through agreements (including any and all agreements entered into prior to this Agreement by and Agency and such governmental entities implementing the tax sharing/pass-through agreements); and (C) a portion of tax increment revenues from the Site equal to the percentage of such revenues in the redevelopment project area as a whole which the Agency may be required by the State of California to pay from time to time, including, for example, and without limiting the generality of the foregoing, any payments which the Agency may be required to pay to the Education Revenue Augmentation Fund pursuant to Section 33681 et aaq. of the Community Redevelopment Law; and (D) the amount of any revenues received by the Agency which are attributable to any special taxes or assessments or voter -approved indebtedness; and (E) charges for County administrative charges, fees or costs equal to the percentage of such charges in the Project Area as a whole. (c) "Available Site -Generated Transient Occupancy Tax" as used herein shall mean transient occupancy tax revenue actually received by the City in any fiscal year following the Completion Date from any hotel which may be constructed on the Site pursuant to and in accordance with the Agreement, a portion of which is paid to the Agency pursuant to Ordinance No. 2974 of the City of Huntington Beach. (d) "City" as used herein shall mean the City of Huntington Beach. (e) "Deed of Trust" as used herein shall mean that certain deed of trust of even date herewith by the Agency as trustor in favor of Developer as beneficiary. ATTACHMENT NO. 9 FORM OF PRE -CONVEYANCE TERMINATION PROMISSORY NOTE -5- (f) "Fair Market Value" as used herein shall mean the fair market value of the fee interest in the real property which the Agency conveys or tenders to Developer, determined as of the date the Agency gives notice of intent to convey, based on the highest and best use permitted by applicable governmental laws and regulations, pursuant to the procedure specified in paragraph 3 of this Note. (g) "Net Sales Proceeds" as used herein shall mean (i) the gross sales price payable to the Agency in connection with a sale of Parcel A or Parcel B, or any portion thereof, to a third party pursuant to paragraph 2 of this Note, minus (ii) brokerage commissions, title insurance premiums, escrow fees, attorneys' fees and other costs incurred by the Agency in connection with the sales transaction, as reasonably determined by the Agency, in an aggregate amount not to exceed ten percent (10%) of the gross sales price. (h) "Parcel A" shall have the meaning ascribed to such term in Section 104 of the Agreement. (i) "Parcel B" shall have the meaning ascribed to such term in Section 104 of the Agreement. 0) "Site" shall have the meaning ascribed to such term in Section 104 of the Agreement. (k) "Termination Date" shall mean the date, if any, on which the Agreement is terminated. (1) "Due Date" as use herein shall mean a date which is one hundred twenty (120) months after the Termination Date. (m) All capitalized terms not defined in this Note shall have the meanings ascribed to such terms in the Agreement, even if the Agreement has theretofore terminated. 10. At any time after the Termination Date and prior to the payment in full of all amounts due by Agency under this Note, the Developer shall have the right to take any and all steps it may desire, at its expense and cost, to market for sale by the Agency to any third party developers or users any portion of the Site not yet subject to an exclusive negotiating agreement or disposition and development agreement between the Agency and any third party, or not yet conveyed to any third party by the Agency. Any such sale by the Agency which may arise from Developer's marketing efforts shall be subject to the prior approval of the Agency as to the identity and qualifications of the proposed developer or user, the proposed scope of development, and terms, including, subject to the provisions of Section 2 (e) above, purchase price, and shall be further subject to ATTACHMENT NO.9 FORM OF PRE -CONVEYANCE TERMINATION PROMISSORY NOTE -6- compliance by the Agency with all applicable legal requirements and procedures. 11. In the event the principal amount of this Note and accrued interest thereon have not been paid in full within five (5) years after the Termination Date, the Agency shall use its reasonable best efforts to issue a bond, note or other instrument of indebtedness, to be repaid solely from the sources of revenue payable by Agency to Developer under this Note, and subject to the same terms and conditions for repayment as set forth in this Note, so as to finance the repayment of all amounts then due to Developer by Agency under this Note; provided, however, that the issuance of such bond, note or other instrument of indebtedness shall not impair or interfere in any way with other Agency indebtedness, and shall not impair or interfere in any way with the ability of the Agency to carry out its other programs, projects and activities. 12. This Note shall be governed by and construed under the laws of the State of California. 13. Principal and interest are payable in lawful money of the United States. If action be instituted on this Note, the undersigned promises to pay in addition to the costs and disbursements allowed by law such sum as the Court might adjudge reasonable as attorney's fees in said action. Signed on the date set forth hereinbelow. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Agency) Date: May 14, 1999 ATTACHMENT NO. 9 FORM OF PRE -CONVEYANCE TERMINATION PROMISSORY NOTE -7- SUMMARY REPORT PURSUANT TO SECTION 33433 Of the CALIFORNIA COMMUNITY REDEVELOPMENT LAW On the DISPOSITION AND DEVELOPMENTAGREEMENT By and between the REDEVELOPMENT AGENCY Of the CITY OF HUNTINGTON BEACH And CIM GROUP LLC 1. INTRODUCTION The California Health and Safety Code, Section 33433, requires that if a redevelopment agency wishes to sell or lease property to which it holds title and if that property was acquired in whole or in part with property tax increment funds, the agency must first secure approval of the proposed sale or lease agreement from its local legislative body after a public hearing. A copy of the proposed sale or lease agreement and a summary report that describes and contains specific financing elements of the proposed transactions shall be available for public inspection prior to the public hearing. As contained in the Code, the following information shall be included in the summary report: 1. The cost of the agreement to the redevelopment agency, including land acquisition costs, clearance costs, relocation costs, the costs of any improvements to be provided by the agency, plus the expected interest on any loans or bonds to finance the agreement; 2. The estimated value of the interest to be conveyed or leased, determined at the highest and best use permitted under the redevelopment plan; 3. The estimated value of the interest to be conveyed in accordance with the uses, covenants, conditions and development costs required under the proposed agreement with the agency, i.e., the reuse value of the site; 4. An explanation of why the sale or lease of the property will assist in the elimination of blight; and 5. The purchase price or sum of the lease payments which the lessee will be required to make during the term of the lease. If the total sale proceeds and rental amount is less than the fair market value of the interest to be conveyed or leased, determined at the highest and best use consistent with the redevelopment plan, then the Agency shall provide as part of the summary an explanation of the reasons for the difference. 05/20/993:41 PM This report outlines the salient parts of the proposed Disposition and Development Agreement (DDA) by and between the Huntington Beach Redevelopment Agency (Agency) and CIM Group, LLC. (Developer), which requires the Developer to use the subject site (Site) in the Main -Pier Sub Area of the Merged Redevelopment Project in Huntington Beach for the design and construction of approximately 130 room hotel, approximately 135,000 sq. ft. of gross leasable area of new retail and restaurant improvements, a subterranean public parking facility, and other amenities. The purpose of this analysis is to determine the cost of the Agreement to the Agency. This report is based upon information in the proposed Agreement and is organized into the following seven sections: II. Summary of the Proposed Agreement: This Section includes a Description of the Site, the proposed development and the major responsibilities of the Agency and the Developer. III. Cost of the Agreement to the Agency: This section outlines the cost of the Agreement to the Agency. It presents the terms of the conveyance to the Developer by the Agency, and sets forth the net cost of the Agreement of the Agency. IV. Revenues received by the City: This section summarizes the sales tax and transient occupancy tax revenues received by the City. V. Estimated Value of the Interest to be Conveyed: This section summarizes the value of the interest to be conveyed to the Developer. VI. Consideration Received and Reasons Therefore: This section describes the purchase price to be paid by the Developer to the Agency. It also contains a comparison of the sale proceeds and the fair market value at the highest and best use consistent with the Main -Pier Sub Area for the interests conveyed. VII. Elimination of Blight: This section includes an explanation of why the sale of the property will assist in the elimination of blight and the supporting facts and materials. VIII. Conformance with AB 1290 Implementation Plan: This section describes how the DDA is in conformance with the Agency's Implementation Plan. 05/20/993:40 PM 2 Il. Summary of the Proposed Agreement A. Description of the Site and Proposed. Development 1. Site The Site is comprised of approximately three acres of land divided into two blocks, commonly known as Blocks 104 and 105. Block 104 has approximately 1.3 acres and Block 105 has approximately 1.7 acres. The project is located in the Main -Pier Sub Area of the Huntington Beach Redevelopment Project Area. The Site is bounded by Pacific Coast Highway on the south, Main Street on the east, Sixth Street on the west and Walnut Avenue on the north. The Redevelopment Agency owns several parcels on the Site encompassing 2.12 acres. 2. Developer The Developer of the Site is CIM Group, LLC. (Developer). 3. Project Description The Project will include a hotel with approximately 130 rooms, approximately 135,000 sq. ft. of gross leasable area of new retail and restaurant improvements, an underground public parking facility and surface parking with approximately 400 spaces, and other amenities. A. Summary of Proposed Business Terms 1. Land conveyed to Developer with Developer expenditures to complete site assembly or Developer Advance, and Agency Participation being the consideration. 2. Agency agrees to repay the Financial Gap or Developer Advance for the project which is defined as $900,000 plus any additional site assembly costs. The Gap can also increase if costs in certain categories exceed following defined thresholds: a. Site Preparation Costs exceed $825,000, b. City Fees/Extractions exceed $1,260,000, C. Site Enhancement and Public Art exceeds $750,000, And aggregate in total more than $2,835,000 for items a to c above or the amount by which project costs exceeds $45,800,000, whichever is less. 05/20/993:42 PM 3. Agency to repay Developer Advance over 25 years at 10% interest from project generated revenues, including: a. 100% of Property Tax Increment Revenues less the 20% Housing Set -Aside. b. 60% of Transient Occupancy Taxes for the first five years, 50% thereafter. C. 100% of Net Parking Revenues. d. Additional site generated revenues including the remaining Transient Occupancy Taxes and Sales Tax may be utilized through a Cooperation Agreement with the City if needed to amortize the Developer Advance if it exceeds $8 million. 4. Agency to Participate in Project Revenues a. The Redevelopment Agency will participate in the Gross Project Revenues at a rate of 30% of Adjusted Gross Project Revenues (80% of Gross) above the level which provides Developer a 12% return on project costs. Participation to be for a period of 40 years Project costs to include costs for initial tenancies after certificate of completion. For additional project costs after initial tenancies, the Agency will reasonably consider adding future costs. b. Participation buyout by Developer possible with a sale until Year 10, or after Year 3 without a sale if the Agency rejects proposed capital expenditures totaling more than $1.2 million in any three- year period. Participation buyout allowed after Year 10 for any reason. Buyout in Years 1 — 20 based on capitalized value of participation, using a 9.5% cap rate, for remainder of term, but not less than $2.4 million for the first 10 years. Buyout for Years 21-40 based on net present value of future participation with escalation and discounted by the appropriate T- bill rate plus 3%. 5. The Agency will be obligated to share not more than 50% of any parking revenues above an escalating base of $185,000 per year if the parking structure costs exceed $6 million and the Developer elects to proceed with the project. 05/20/993:40 PM 4 C. Developer Responsibilities 1. Developer to fund all offsite and onsite infrastructure and improvements, including site preparation and demolition, utility relocation costs, hazardous materials remediation, conditions of approval and mitigation measures related to approval of entitlements and infrastructure. 2. Developer will attempt to acquire properties or incorporate properties not already owned by the Redevelopment Agency during a 90-day period which can be extended to 150 days. 3. Developer to advance to Redevelopment Agency all costs in the areas of property acquisition, relocation, and demolition. 4. Developer to provide the Redevelopment Agency an irrevocable Letter of Credit, in an amount to be determined by the Redevelopment Agency, to cover any Acquisition Costs that will or may be incurred by the Agency. 5. Developer is to provide the Agency evidence of equity and firm and binding commitments of financing necessary for the acquisition of the Site and the construction and development of the improvements. 6. Developer to enter into hotel franchise agreement with a franchise and a hotel management agreement with an operator to be approved by the Agency. 7. Developer to provide a $150,000 Good Faith Deposit upon signing of Disposition and Development Agreement (DDA). 8. Developer to refrain from appealing property tax assessments below a minimum agreed value. 9. Developer has the Right to Terminate the DDA prior to the posting of acquisition letter of credit if geotechnical or soils considerations result in an estimated cost to construct parking structure in excess of $6 million. 10. Developer can terminate the DDA if the Financial Gap or Developer Advance for the project exceeds $10.5 million. 05/20/993:42 PM 5 D. Agency Responsibilities 1. Agency will use a good faith effort to acquire to properties which the Developer is unable to acquire within the project site and convey title to Developer. Developer to advance all of the Redevelopment Agency's Acquisition Costs. 2. Agency will repay the Financial Gap or Developer Advance from site generated revenues. 3. Agency agrees to use its best efforts to establish a Mello -Roos District or similar district or other financing facility to repay the Developer Advance with a lower cost of funds for the Agency. 4. Agency will execute a Promissory Note to be secured by a deed of trust against the properties owned by the Redevelopment Agency within the Site as a security for the funds advanced by the Developer. Agency commitment to repay Developer Advance within 10 years if DDA terminates prior to commencement of construction. a. Developer repayment to come from sales proceeds, site - generated revenues, or other Agency sources. b. Developer has right to market site until the Promissory Note is repaid period. C. Agency agrees to use its best efforts to issue a note or other financing instrument to repay Developer after the fifth year. d. Agency has right to prepay the Promissory Note, however, the Agency agrees to cooperate with the Developer at the Developer's request to sell the Agency note at par. 5. The Redevelopment Agency can terminate the DDA if the Financial Gap for the project exceeds $10.5 million. 05/20/993:43 PM 6 III. Cost of the Agreement to the Agency The development value of the project is estimated to be $ 47.4 million. Construction Value of Improvements Total Cost (Excluding Parking) $ 37,100,000 Developer Net Payment 4,700,000 Parking Costs 5,600,000 Total Development Costs $ 47,400,000 Estimated Cost to The Agency, For this DDA the costs that the Redevelopment Agency must incur are estimated to be: Total Cost Present Value- Previously Incurred Acquisition $ 7,800,000 $7,800,000 Site Costs 50,000 50,000 Repayment of Developer Advance (Est. Principal, Interest, & Cost of Issuance) 19,675,555 8,000,000 SUB TOTAL $27, 525, 555 $15, 850, 000 Less Value of Parking Facility $ 5,600,000 Less Minimum Participation Estimate Assuming Buy-out $ 2,400,000 NET COST $ 7,850,000 As shown above, the estimated total cost to the Agency is $ 27,525,555. On a present value basis, the cost to the Agency is $ 7,850,000 net of the value of the Public Parking Facility and the minimum Participation Payment expected. The present value estimate effectively discounts the interest on the Developer Reimbursement to net zero present value. The Developer reimbursement shall be amortized over 25 years from the Agency's project generated revenues. 05/20/993:40 PM B. Revenues to the Agency Through the generation of property tax increment and transient occupancy tax revenues, the Block 104/105 development is projected to generate significant revenues to the Agency. As shown in Attachment A and summarized below, over 25 years, the hotel and retail complex will generate $16,135,000 in Property Tax Increment (including the Housing Set Aside) and $6,234,743 in Transient Occupancy Taxes, and $6,744,964 in Parking, Revenues to the Redevelopment Agency. Revenues Property Tax Increment $16,135,000 Transient Occupancy Taxes 6,234,743 Parking Revenues 6,744,964 TOTAL $29,114,707 NET PRESENT VALUE $ 3,115,037 C. Net Benefit to the Agency The present value of the Agency revenues after repayment of the Developer Advance is estimated to be $ 3,115,037. Previously Incurred Acquisition and Site Costs of $7,850,000 are subtracted from $3,115,037 which results in a Net Benefit to the Agency on a Present Value basis of a negative $4,734,963. IV. CITY BENEFITS A. City Revenues In addition to the Agency revenues discussed above, Block 104/105 will generate significant revenues for the City of Huntington Beach. City revenues include 100% of the Sales Tax generated by the hotel and the restaurant/retail space and 40% of the Transient Occupancy Tax (TOT), plus other minor revenues including utility user taxes. Over 25 years, the City is estimated to receive $4,156,495 in TOT from the hotel. From the restaurant/retail space the City is projected to receive $9,689,183 in sales tax revenues. City revenues from these two sources total $13,845,678. In total, the City will receive $13,845,678 million in revenue from these two sources, having a present value of $ 5,691,870. 05/20/993:40 PM 8 B. Additional Considerations As discussed, the Redevelopment Agency and the City will receive sales tax, property tax and transient occupancy tax through the economic life of the , project. In addition, a number of other benefits will result from the successful completion of the Project. These are highlighted below: 1. The Project Implements the Redevelopment Plan by: removing blight; and improving land and installing required public improvements thereby encouraging new construction; ® mitigating development limitations which constitute a serious physical, social and economic burden on the community; ® providing adequate public improvements, public facilities, open spaces and utilities; and ® providing construction and long term employment opportunities, especially for low- and moderate -income individuals. 2. Implements the Downtown Specific Plan. 3. Adds a hotel to the Downtown core area and increases the attractiveness to the City's tourists and visitors. 4. Results in the construction of a significant amount of restaurant and quality retail space, which will enhance the opportunity to attract retailers to the area and serve to diversify the types and numbers of people attracted to the Downtown area. 5. Improves perceptions of the Downtown and beach as a destination for people from outside the area. Positions the city to serve a base for the expanding visitor attractions in the nearby communities, including the Aquarium of the Pacific in Long Beach and Disney's California Adventure now under construction in Anaheim. 6. Enhances the Downtown as a destination for quality retailers, restaurants and developers. 7. Contributes to efforts to create an 18-hour Downtown with visitors and residents remaining Downtown in the evening for shopping, dining and entertainment. 8. Provides for the highest and best use of previously under-utilized and currently unattractive properties. 05/20/993:40 PM 9 V. ESTIMATED VALUE OF INTEREST TO BE CONVEYED A. Reuse Value The reuse value for the Site is directly a function of the development economics for the specific development required to be constructed under the terms and conditions of the DDA. The covenants and conditions of the DDA require that the Developer to use the Site in the Project Area for the construction of a hotel, restaurants and retail space. In a reuse valuation report prepared by Sedway Group, it was concluded that the fair reuse value for the Site, taking into account the covenants and conditions contained in the DDA is $ 4.7 million which is what the Developer is paying for land and the rights to parking. B. Estimated Value at Highest and Best Use Sedway has also reviewed the value of the interests conveyed to the Developer if sold by the Redevelopment Agency in a cleared and developable state at its highest and best use allowed under the redevelopment plan. The subject site has the greatest development potential for commercial and/or /hotel development on the acreage fronting PCH and commerciallretail for the balance of Blocks 104/105. In the reuse valuation report prepared by Sedway, it is concluded that the estimated value at the highest and best use is $5.4 million. 05/20/993:40 PM 10 VI. CONSIDERATION RECEIVED AND THE REASONS Under the terms of the Agreement, the Agency will convey the Site to the Developer for no initial consideration-. Though, in effect, the Developer is paying $4.7 million for land and rights to parking. This is less than the Agency's costs and is less than the Fair Market Value. The Agency will ultimately receive additional consideration in the form of the ownership of the public parking facility and an anticipated minimum Participation Payment of $2.4 million. In addition, the Agency will receive both Property Tax Increment and Transient Occupancy Taxes, The City also benefits through the generation of Transient Occupancy Taxes and Sales Tax. The Developer is responsible for advancing all costs associated with the development of the project since the Agency does not have the resources to complete site assembly itself. This Developer Advance or Feasibility Gap will be repaid only out of project generated revenues. In order to ensure a self-financing project for the Agency and the best mix of uses, the project places the parking in a subterranean garage. This is an extraordinary development cost that does not generate commensurate revenues. In entering into the Agreement, the Agency has determined that a high quality retail, restaurant, and hotel complex, as required by the Agreement, represents the best complement of uses. The addition of high quality retail space which meets the current requirements of retailers and destination restaurateurs will enhance the desirability of Downtown Huntington Beach as a retail center. This is expected to facilitate the attraction of a more diverse base retail base with an ability to attract a wider range of customers and visitors. The project is also expected to better incorporate the remainder of Fifth Street in to the retail and commercial fabric of the Downtown core. The proposed hotel will be a welcome addition to the Downtown core and will complement the other hotel development taking place in the greater Downtown area. This product will be an alternative not currently found in the area, that being a limited service property. The project will eliminate under-utilized and blighted influences in the area. The project also provides for the implementation of public improvement and public facilities goals in the area. As a result, it will further the goals of the Main -Pier Sub Area. In conclusion, the Agency is entering into the Agreement for less than fair market value in - order to achieve the objectives set forth in the Redevelopment Plan for the Main -Pier Sub Area and the Downtown Specific Plan and to achieve the benefits which result to the Agency and City. 05/20/993:40 PM 11 VII. ELIMINATION OF BLIGHT The site consists of 3.0 acres of land located in the Main -Pier Sub Area in the area bounded by Pacific Coast Highway, Sixth Street, Walnut Avenue, and Main Street. The site excludes the already redeveloped Oceanview Promenade Building and the historic Worthy House property. The project site includes 13 parcels already owned by the Redevelopment Agency. These parcels are now vacant and once had a range of improvements which were demolished. These improvements were substandard and a number of the parcels had soils contamination which had to be remediated. The remaining seven parcels are improved with a mix of single and two-story structures in various states of repair and are considered to be an under utilization of the site. The structures are non -conforming and would require substantial modification to conform to the Downtown Specific Plan. The conveyance of the Agency parcels and the completion of site assembly will result in the removal of blight and the highest and best use of the consolidated parcels. This will enable the development of a critical mass of retail and restaurant under the control and operation of a single entity with substantial experience in the management of such properties. The proposed development will strengthen the competitiveness of the Downtown area and provide a catalyst for additional private investment in the Main -Pier Sub Area and the further elimination of blight. The project will increase employment, both in the construction phase and thereafter. Thus, the Agency is entering into an Agreement in order to achieve its objectives to stimulate further development in the Downtown area and to remove blight from the area. Vill. CONFORMANCE WITH AB 1290 IMPLEMENTATION PLAN The primary AB 1290 Implementation Plan program objective for the Main -Pier Sub Area is to eliminate conditions which negatively impact economic development of the community by acquiring, removing, consolidating, and rehabilitating substandard properties. Furthermore, the Implementation Plan also establishes a priority objective of increasing the community's economic base by encouraging investment in the redevelopment project area., The proposed project will provide new property tax increment, sales tax, transient occupancy taxes, business license taxes, and utility users taxes within the Main -Pier Sub Area, conforms to the Implementation Plan and will achieve the goals specifically defined in the Implementation Plan. 5/20/99 05/20/993:40 PM 12 AT TACHMENT A Exhibit 3 CIM Huntington Beach RetaiVHotel Project 25-Year Fiscal Revenue Summary ?t*1Fti Y.?jwY1 ;r1' xa h Lei 6p sr 1•"�.',y�f�t 2!y{. a,:; Fiscal and Parkin Revenue � �h�S aWYt'�I.1' �'r'K. "'vr.'::Y(. f•Api:rye: i�i:s:�i'';' ;.:r. �: ": G:.� Fyn, �r 5 �@ E : E�;'::` i�l1:-r 1 s1 �,jjll `;ki'ditiri�q',J:i�C::: ,7 3:A YJ;? !qI.Y •S^..ai...,:..,+�,'.Y},q;�.;yyY,F n� 1 r;' Ky� Ja:' 5��'56^hS"'?r::. ¢.r. ,::.a.., Y..!; r§{/�+}�:[��y ,il r y1,4�^. :.qF•d t J.: !:i:N55f': „[ :. ., Gi, .§•�'3i •IJ:� I I. :':�' II.rArvI"::f'S.!+'TiF•,•,''.�i.., 'ifsr•J;!:........^.0 i?«.......;..,.: .,a"a.., .i, !.:�.� +' z'� s,.:a.:•.;:4,i. ,: •::xnert. J ;r;:, :: ,yr.►.+;; ,, . 1:4.. ,; :` _:•:,a."�`r., .,,_ :,,:t k s 1 $402,988 $100,747 $367,920 $343,063 $185,000 $1,399,719 2 $411,048 $102,762 $371,599 $346,493 $190,550 $1,422,454 3 $419,269 $104,817 $375,315 $349,958 $196,267 $1,445,629 4 $427,654 $106,914 $379,068 $353,458 $202,154 $1,469,252 5 $436,207 $109,052 $382,859 $356,992 $208,219 $1,493,335 6 $444,932 $111,233 $386,688 $360,562 $214,466 $1,517,886 7 $453,830 $113,458 $390,554 $364,168 $220,900 $1,542,917 8 $462,907 $115,727 $394,460 $367,809 $227,527 $1,568,438 9 $472,165 $118,041 $398,405 $371,488 $234,352 $1,594,460 10 $481,608 $120,402 $402,389 $375,202 $241,383 $1,620,994 11 $491,240 $122,810 $406,413 $378,954 $248,625 $1,648,053 12 $501,065 $125,266 $410,477 $382,744 $256,083 $1,675,647 13 $511,086 $127,772 $414,581 $386,571 $263,766 $1,703,790 14 $521,308 $130,327 $418,727 $390,437 $271,679 $1,732,492 15 $531,734 $132,934 $422,915 $394,341 $279,829 $1,761,768 16 $542,369 $135,592 $427,144 $398,285 $288,224 $1,791,630 17 $553,216 $138,304 $431,415 $402,268 $296,871 $1,822,091 18 $564,2B1 $141,070 $435,729 $406,290 $305,777 $1,853,165 19 $575,566 $143,892 $440,087 $410,353 $314,950 $1,884,867 20 $587,078 $146,769 $444,487 $414,457 $324,399 $1,917,210 21 $598,819 $149,705 $448,932 $418,601 $334,131 $1,950,209 22 $610,796 $152,699 $453,422 $422,767 $344,154 $1,983,880 23 $623,012 $155,753 $457,956 $427,015 $354,479 $2,018,238 24 $635,472 $158,868 $462,535 $431,285 $365,114 $2,053,298 25 $648,181 $162,045 $467,161 $435,598 $376,067 $2,089,078 Total $12,907 833 $3,226,958 $10,391,238 $9,689,183 $6,744,964 $42,960 501 Notes: (1) Tax increment calculation is net of 20% housing set -aside. (2) Parking revenue is assumed to inflate at 3% annually. Sources: CIM Group; Sedway Group. DA199610369VHuntington Beach - Sedway Public Version 31699.xls]Ftscal Summary Exhibit 4 CIM Huntington Beach Retail/Hotel Project 25-Year Fiscal Revenue Summary wrath Split Between City and Agency Based on $8 Million Gap Financing •.I ' .+ i�!, Revenue Fiscal d Parking to e an PAgency 1 ti"I.,,•If•.;i; ''r; ,:i; ! .I. <'i'ti:. !l:' t:.itl' V riE. A e Re nue m Ited t Agency Revenue Co m oFunding 9 Y :l l:;l; `I'"'1 :' ;.f'.:i • � : I;�;i f,,,+'' „III„!i:,,.,i ; ; 1.,, ;-•11, ( , 1 'E, +''i'�i.'•: e!! :i.. .i. I. 'i., , �1: '•{ 4•. 1 S:+ „a.:' ,.,,; •,,1 •:rt ,a' i �'.. I'., .,!: ..I' r,'. i r + 'f!! •:i"+:1 .:'�'�!:;1; .S 1:; !�,� .t1.. .t 7'•I"f.1:' , .,. iii ;ljE Sil + 'E:. `�.. I''": , I 'a. ' _;,. I, •. 1 .. ' :• . • .,, I I . . .. : , .,l . I. •I•I !.:{: yl ',. I ; rl e; :;I�i '(;:: ,1.,•• I,.i,: :!1: i: r t:'*' R•. , 7 (^ia 3 7tira .. , I ' !�i L .I''' .rq . IT," f i 'h,.. 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I •�, 1 $402,988 $100,747 $220,752 $0 $185,000 $872,696. $787,022 90% 56% $122,466 $490,231 2 $411,048 $102,762 $22-2,960 $0 $190,550 $890,162 $787,022 88% 55% $140,299 $495,133 3 $419,269 $104,817 $225,189 $0 $196,267 $908,013 $787,022 87% 54% $158,523 $500,084 4 $427,654 $106,914 $227,441 $0 $202,154 $926,261 $787,022 85% 54% $177,145 $505,085 5 $436,207 $109,052 $229.715 $0 $208,219 $944,913 $787,022 83% 53% $196,177 $510,136 6 $444,932 $111,233 $232,013 $0 $214,466 $963,980 $787,022 82% 52% $215,626 $515,237 7 $453,830 $113,458 $234,333 $0 $220,900 $993,472 $787,022 80% 51% $235,505 $520,390 8 $462,907 $115,727 $236,676 $0 $227,527 $1,003,398 $787,022 78% 50% $255,822 $526,593 9 $472.165 $118,041 $239,043 $0 $234,352 $1,023,770 $787,02-2 77% 49% $276,588 $530,949 10 $481,608 $120,402 $241,433 $0 $241,383 $1,044,598 $787,022 75% 49% $297,814 $536,158 11 $491,240 $122,810 $243,848 $0 $248,625 $1,065,892 $787,022 74% 48% $319,511 $541,519 12 $501,065 $125,268 $246,286 $0 $256,083 $1,087,665 $787,022 72% 47% $341,691 $546,935 13 $511,086 $127,772 $248,749 $0 $263,766 $1,109,928 $787,022 71% 46% $364,364 $552,404 14 $521,308 $130,327 $251,236 $0 $271,679 $1,132,692 $787,022 69% 45% $387,542 $557,928 15 $531,734 $132,934 $253,749 $0 $279,829 $1,155,969 $787,022 68% 45% $411,239 $563,507 16 $542,369 $135,592 $256,286 $0 $288,224 $1,179,773 $787,022 67% 44% $435,465 $569,142 17 $553,216 $138.304 $258.849 $0 $296,871 $1,204,116 $787,022 65% 43% $460,235 $574,834 18 $564,281 $141,070 $261,438 $0 $305,777 $1,229,010 $787,022 64% 42% $485,561 $580,582 19 $575,566 $143,892 $264,052 $0 $314,950 $1,254,470 $787,022 63% 42% $511,457 $586,388 20 $587.078 $146,769 $266,692 $0 $324,399 $1,280,509 $787,022 61% 41% $537,936 $592,252 21 $598,819 $149,705 $269,359 $0 $334,131 $1,307,142 $787,02-2 60% 40% $565,013 $598,174 22 $610,796 $152,699 $272,053 $0 $344,154 $1,334,382 $787,022 59% 40% $5929702 $604,156 23 $623,012 $155,753 $274,774 $0 $354,479 $1,362,245 $787,022 58% 39% $621,018 $610,198 24 $635,472 $158,868 $277,521 $0 $365,114 $1,390,745 $787,02-2 57% 3B% $649,976 $616,300 25 $648,181 $162,045 $280,296 $0 $376,067 $1 419 899 $787,022 55% 38% $679 593 $622 463 Total $12 9070833 $3,228 958 $6 234,743 $0 $6,744,964 $28 075 699 1$19,67_5,555 $9,439 267 $13,845 678 Net Present Value at 8% Discount Rate $3115,037 J $5 B91 870 o es: (1) The Agency collects 100% of 71, 60% of TOT, 100% of parking revenues, and no sales taxes generated by the Project. Tax Increment projection is net of 20% housing set -aside. The housing set -aside Is calculated in the second column above. (2) For purposes of this analysis it is assumed that the Agency commits 100% of TI, 50% of total TOT, and 100% of parking revenues to the Project. (3) Payment calculated based on Indicated gap at 6.5% interest, 20% issuance cost, 25 year amortization. Percent of total revenue includes housing set -aside. (4) Comprised of Agency revenue commited to the project less debt service, plus the remaining 10% of TOT. (5) City share of fiscal revenues is comprised of 100% of the sales tax and 40% of the TOT, See Exhibit 3. Sourw& ClM Group; Sedway Group. D:11996W389NHuuhtlVon Beach - Sadway Public Version 31899.xis]City Split Fiscal Summery 20'MaY •99 SEDWAV GROUP Real Estate and Urban Economics San Francisco Los Angeles Principals: Alan C. Billingsley, CRE Carol A. Fredholm May 20, 1999 Amy L. Herman, AICP Kathryn Welch Howe Terry R. Margerum Elizabeth A. Puccinelli Mr. David C. Biggs Roy J. Schneiderman Director of Economic Development Lynn M. Sedway, CREMary City of Huntington Beach A. Smitheram-Sheldon P.O. Box 190 Naomi E. Porat, Project Advisor Huntington Beach, CA 92648 Dear Mr. Biggs: The attached report addressed the valuation requirements of Section 33433 of the California Health and Safety Code. Due to the complex nature of the Disposition and Development Agreement (DDA) between the Redevelopment Agency of the City of Huntington Beach and CIM Group, LLC, it is appropriate to analyze the developer contribution to the project in terms of its contribution to land and parking together, rather than analyzing a land payment independent of a contribution to parking. The conclusions of our analysis are (1) the economics of the development proposed in the DDA support a payment from the developer of approximately $4.7 million; and (2) the value of the development opportunity based upon the property's highest and best use is approximately $5.4 million. The development program proposed in the DDA is a high -amenity, intensive commercial project that has been designed to maximize the redevelopment objectives for the site and which requires expensive subterranean parking. Less intensive development with lower parking costs are allowed under the redevelopment plan. Thus, the project proposed in the DDA does not represent the site's highest and best use. The highest and best use value represents the value for a less intensive commercial development. The analysis and data that support these conclusions are presented in the accompanying report. The report constitutes a summary report of a limited appraisal as those terms are defined in the Uniform Standards of Professional Appraisal Practice. Addendum A at the end of this report addresses the technical requirements of such a report. We appreciate this opportunity to assist you with this interesting project. Sincerely, Tc - Marg m urt W. Fuchs P cipal Manager TRM:KWF/nam Enclosure D:\WPDOCS\PROJECTS\03696\03696 R01 May 99.wpd Three Embarcadero Center, Suite 1150 1 San Francisco, CA 94111 1415.781.8900 1 Fax 415.781.8118 1 sedway@sedway.com SEDWAY GROUP Real Estate and Urban Economics TABLE OF CONTENTS I. INTRODUCTION........................................................ 1 H. DESCRIPTION OF THE PROPERTY AND DISPOSITION AND DEVELOPMENT AGREEMENT .......................................... 2 Site and Area Description................................................... 2 Proposed Improvements.................................................... 3 III. SUMMARY OF BUSINESS TERMS ........................................ 5 Land Assembly Costs ...................................................... 5 Parking Structure......................................................... 5 Agency Repayment to Developer ............................................. 7 Net Developer Payment .................................................... 7 City Participation......................................................... 8 IV. VALUE BASED UPON DDA.............................................. 9 Development Costs ........................................................ 9 Project Operations....................................................... I V. VALUE AT THE HIGHEST AND BEST USE UNDER THE REDEVELOPMENT PLAN................................................................. 17 ADDENDA: A: UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE COMPLIANCE B: ASSUMPTIONS AND LIMITING CONDITIONS C: CERTIFICATION OF THE APPRAISER SE®WAY GROUP Real Estate and Urban Economics I. INTRODUCTION This report has been prepared to fulfill the valuation requirements of Section 33433 of the California Health and Safety Code with respect to the disposition of Blocks 104/105 in Huntington Beach. These requirements apply to sites that are transferred from a Redevelopment Agency to a private entity via a development agreement. The Code specifically calls for the following determinations: Value of the property based upon its highest and best use under the Redevelopment Plan; and Value of the property based upon the terms and conditions of the Development Agreement. Throughout this report, all references to the Disposition and Development Agreement (DDA) refer to the May 19, 1999, draft document entitled "Disposition and Development Agreement by and between the Redevelopment Agency of the City of Huntington Beach, Agency, and CIM Group, LLC, Developer." It is an explicit assumption of this report that the final DDA incorporate substantially similar business terms as the May 19, 1999, draft DDA. Throughout this report, "Agency" refers to the Redevelopment Agency of the City of Huntington Beach and "developer" refers to CIM Group, LLC. This report is divided into four sections following this Introduction: ® Description of the property ® Summary of business terms Valuation based upon the DDA ® Valuation at the highest and best use This report constitutes a summary report of a limited appraisal as those terms are defined in the Uniform Standards of Professional Appraisal Practice. Attachment A at the end of this report addressed the technical requirements of such a report. BLOCK 104/105 33433 REUSE VALUATION REPORT 1 MAY 1999 SEDWAV GROUP Real Estate and Urban Economics II. DESCRIPTION OF THE PROPERTY AND DISPOSITION AND DEVELOPMENT AGREEMENT SITE AND AREA DESCRIPTION The subject property, commonly referred to as Blocks 104 and 105, consists of 20 separate parcels and is primarily bounded by 6th Street to the north, Pacific Coast Highway to the west, Main Street to the south, and Walnut Avenue to the east, in the City of Huntington Beach. The subject property excludes the northeast and southwest corner parcels of this two -block area. The subject property is approximately 127,400 square feet. Although the property is currently improved with a variety of uses, the intention under the Disposition and Development Agreement is for the Huntington Beach Redevelopment Agency (Agency) to (1) assemble the site into a single ownership, (2) relocate the existing uses, and (3) demolish the existing improvements. The site will then be transferred pursuant to the terms of the DDA. At the time of the anticipated transfer of the property, the site will be generally flat and ready for development. Of the 20 parcels comprising the subject property, 13 are currently under control by the Agency. From 1988 through 1994, the RDA purchased these parcels for a total of $7.8 million. Under the terms of the DDA, these parcels will be deeded to the developer. The remaining seven parcels, totaling 27,311 square feet, require acquisition to complete the land assembly of Blocks 104 and 105. The acquisition price for these remaining parcels will be determined by an independent appraiser. Current use of the site is commercial in nature, and non-residential uses predominate in the immediate vicinity of the property. The property is located along the Main Street commercial corridor within the Huntington Beach downtown district, proximate to the Huntington BeachMumcipal Pier and the Pacific Ocean. The Main Street corridor comprises primarily pedestrian -oriented retail establishments. Existing developments in the vicinity of the subject include new mixed -use commercial projects, older single - tenant commercial buildings, and relatively new high -density multifamily residential developments. The Pierside Pavilion, a redevelopment project consisting of retail, office, and theater uses, is located across Main Street from the subject property at the corner of Pacific Coast Highway and Main Street. Secondary streets within the immediate area are primarily developed with single-family residences. The site is located within District 3 (visitor -serving commercial) of the Downtown Specific Plan. Allowed uses of the site include commercial retail uses. Uses requiring a conditional use permit include health and sports clubs, hotels, restaurants, residential uses, outdoor retail sales, and theaters. The height restriction in this district for projects encompassing one or more blocks is four stories, or 45 feet, while the maximum floor area ratio allowed is 3.0. The Downtown Specific Plan carries specific design criteria, which stipulate that new buildings employ "Mediterranean" architecture elements, such as tile roofs and arches. A legal description of the property can be found in Attachment 1 of the DDA. A map is included as Attachment 2 of the DDA. BLOCK 104/105 33433 REUSE VALUATION REPORT 2 MAY 1999 SEDWAY GROUP Real Estate and Urban Economics PROPOSED IMPROVEMENTS The Disposition and Development Agreement allows for a development that includes the following elements: ® Retail/restaurant uses of approximately 135,000 square feet; ® Hotel of 115 to 130 rooms; and ® 400 parking spaces including 380 in an underground structure that will be a public facility operated under contract by the Developer and 20 surface spaces. It is anticipated that a conditional use permit could be obtained to allow for the development of the hotel and restaurant uses proposed under the DDA. The development concept combines street retail with destination restaurant, cafe dining, upscale . specialty grocery, and lodging uses. To increase the building density and provide for a more aesthetic project, the parking structure will be subterranean. A more complete description of the proposed improvements can be found in Attachment 4 of the DDA. Exhibit 1 summarizes the proposed development program for the subject property. BLOCK 104/105 33433 REUSE VALUATION REPORT 3 MAY 1999 SE®WAY GROUP Real Estate and Urban Economics Exhibit 1 Development Program Huntington Beach Retail/Hotel Project - Blocks 104 and 105 Gross Leasable Retai VRestau rant Square Feet 104-Main Street - 1st Level 8,650 Restaurant 104-Main Street - 2nd Level 7,550 104-Fifth Street Stores 5,670 104-Bookstore - 1st Level 14,800 104-Bookstore - 2nd Level 9,000 104-PCH - 1 st Level 6,840 Restaurant 104-PCH - 2nd Level 6,590 105-Walnut Street Stores 11,600 105-Specialty Food 32,775 105-PCH - 1st Level 14,525 Restaurant 105-PCH - 2nd Level, 9,613 Restaurant 105-PCH - 2nd Level 9,613 Sub -Total - Retail/Restaurant 137,225 Hotel - Building Area 65,000 Square Feet Hotel - Rooms 130 Rooms Total Gross Leasable Area (excluding parking) 202,225 Square Feet Parking - Structured 380 Spaces Parking - Surface 20 Spaces Total Parking 400 Sources: CIM Group; Sedway Group. DA1996\03696gHuntington Beach - Sedway Public Version 31699.xls]Dynamic 33433 19-May-99 4 SE®WAY GROUP Real Estate and Urban Economics III. SUMMARY OF BUSINESS TERMS The business terms relating to the development of Block 104/105 are quite complex and involve a complicated series of actions and responsibilities on the part of both the Agency and the Developer. These relationships are documented in the body of the DDA as well as Attachment 8 of the DDA. This section of our report summarizes those aspects of the business terms that are directly related to the Section 33433 analysis. LAND ASSEMBLY COSTS The land assemblage process for this project involves acquiring from numerous owners 20 parcels totaling 127,400 square feet. The Agency began this process in 1988, and has already acquired 13 properties, totaling 92,600 square feet. Agency costs to date are approximately $7.8 million. The remainder of the site will be acquired either directly by the Developer or by the Agency. There are seven properties that remain to be acquired, representing 27,300 square feet of land. In addition, approximately 7,500 square feet of city -owned alleyways will be transferred to the developer. All of these properties are improved. Regardless of whether the remaining properties are acquired by the Developer or the Agency, the Developer will fund the acquisition, subject to the reimbursement mechanism discussed later in this section. The acquisition price for these remaining parcels will be estimated by an independent appraiser. PARKING STRUCTURE The project will include an approximately 380-car underground parking structure. The structure will be constructed by the Developer. Upon completion, the parking garage will be deeded to the Agency. Thus, the operation of the parking structure will be the responsibility of the Agency, and the Agency will receive any net operating income generated by the parking garage. The Redevelopment Plan does not stipulate that the parking structure be located underground. However, to increase the density (i.e., allow the hotel component), provide view corridors, and for aesthetic reasons, the Developer and the Agency have agreed that parking will be provided in a subterranean structure. As shown in Exhibit 2, total parking costs are estimated to be $5.6 million or approximately $13,900 per space. This cost estimate includes direct and indirect construction costs for both the 380-space parking structure and the 20 surface spaces. The cost estimate excludes interest carry during the construction period under the assumption that bond proceeds will pay for the construction of the garage. The cost estimate was provided by the Developer and checked for reasonableness by Sedway Group. BLOCK 104/105 33433 REUSE VALUATION REPORT 5 MAY 1999 IR SEDWAY GROUP Real Estate and Urban Economics Exhibit 2 Development Cost Summary Huntington Beach Retail/Hotel Project - Blocks 1.04 and 105 Parking Garage Component 1999 Dollars Direct Costs Structured Parking Surface Parking Direct Cost Contingency Total Direct Costs Indirect Costs Permits Design and Engineering Project Development Fee Contingency on Indirects Total Parking Cost Total Cost Measure $4,725,000 $ 35 per Sq. Ft. $28,800 $ 4 per Sq. Ft. $237,690 5.0% $4,991,490 $249,575 $149,745 $149,745 $27,453 $5,568,007 $13,920 Sources: CIM Group; Sedway Group. D:\1996\03696\ 1-luntington Beach - Sedway Public Version 31699.xls]Dynamic 33433 5.0% of direct costs 3.0% of direct costs 3.0% of direct costs 5.0% of direct costs perspace 19-May-99 SE®WAY GROUP Real Estate and Urban Economics AGENCY REPAYMENT T® DEVELOPER The economic terms in the DDA provide for the Agency to reimburse the Developer for a portion of the costs of the project.' The amount of Agency reimbursement is $900,000 plus additional remaining site assembly cost. As previously discussed, the remaining site assembly cost is yet to be determined. The DDA calls for annual payments from the Agency to the Developer to pay interest and principal on the loan. The source of these payments will be net parking revenue, a portion of project -generated tax increment, and a portion of project -generated transient occupancy tax. The Agency has indicated that it will commit 100 percent of the net property tax increment (after the 20 percent housing set -aside), 50 percent of the total transient occupancy tax, and 100 percent of the parking revenues generated by the project to repay the loan over a 25-year period. However, the DDA also allows for the Agency to pay off the Developer advance in full, at any time. In fact, the intention of all parties is to issue Mello -Roos bonds as soon as is practicable with which to pay-off the Developer advance. The Agency anticipates using Mello -Roos bonds due to the favorable terms afforded by this financing mechanism compared with conventional financing options. The bonds will be identified with a set of public improvements, including the parking garage, which will conform to the legal requirements for a community facilities district (CFD). These bonds could be issued even before the completion of the construction of the project. The remainder of our analysis is based upon the issuance of the Mello -Roos bonds as soon as practicable and the repayment of the Developer advance from net bond proceeds during the construction period. NET DEVELOPER PAYMENT Combining all of the elements summarized above, the net payment by the Developer for the right to develop the project on Block 104/105 is $4.7 million as shown below: cast Component Cost Remaining Land Assembly To be determined Parking Garage $5.6 million Less Agency Repayment of Land Acquisition To be determined Less Agency Subsidy ($900,000) Net Payment by Developer $4.7 million `The economics of this project are such that, without some Agency assistance, private development would not occur on the site. That is, the value of the completed project is not sufficient to justify its development costs, including remaining site assembly. Without Agency assistance, there is a "gap," which is defined as the difference between total development costs (including land, parking, and developer profit) and the value of the completed project. BLOCK 104/105 33433 REUSE VALUATION REPORT 7 MAY 1999 SEDWAY GROUP Real Estate and Urban Economics Because the remaining land assembly cost is unknown at this time, "To be determined" is shown in the above table. Similarly, the Agency repayment of land acquisition will be determined at a later date when the acquisition cost is known. The remaining land assembly cost incurred by the Developer will be offset by an equal payment by the Agency, as indicated in the above table. CITY PARTICIPATION For its role in providing financial assistance to the Developer, the Agency will participate in future cash flows generated by the Project above a minimum threshold return to the Developer. The terms of the DDA stipulate that the Developer will receive a minimum annual return equivalent to 12 percent of development cost, plus any accumulated shortfall in the years when the minimum return threshold is not meta For its part, the Agency will receive 30 percent of "stipulated NOI" above the Developer's minimum return 3 The Developer may buyout the Agency for a minimum of $2.4 million before the end of the tenth year of operations in conjunction with a sale of the property or after the third year if the Agency rejects additional proposed capital expenditures above a minimum threshold. After the tenth year of operations, the buyout is calculated based on the capitalization of the current year's Agency participation.' In the following section, Agency participation is subtracted from the Developer's net operating income when determining the project's value under the terms of the DDA. The DDA provided as an attachment to this report presents details of the participation agreement between the Developer and the Agency. 'The "accumulated shortfall" is defined as NOI less preferred return, which will be capitalized and added to the Developer's cost basis for purposes of calculating the preferred return. Through this capitalization of accumulated shortfall, the Agency is in effect guaranteeing the Developer its minimum 12 percent return on cost. '"Stipulated NOV is defined as 80 percent of effective gross income (including expense recoveries). 'The following analysis presents a ten-year discounted cash flow. Although the terms of the DDA stipulate a more complex buyout calculation after year 20, it is immaterial to this analysis because it is beyond the ten-year projection period. BLOCK 104/105 33433 REUSE VALUATION REPORT 8 MAY 1999 SE®WAX GROUP Real Estate and Urban Economics IV. VALUE BASED UPON DDA This section of the report presents a pro forma for the project from the standpoint of the Developer. This is the analysis required under Section 33433 calling for a determination of value based upon the terms and conditions of the DDA. Thus, this section of the report considered the development costs incurred by the Developer and compares these costs to the present value of the cash flows that the project is likely to produce for the Developer. As described earlier in this report, the project planned for Block 104/105 has three major elements: retail, hotel, and parking. Component Building Area/Units Retail 135,000 square feet Hotel 65,000 square feet/130 Rooms Parking - Structured Parking - Surface 380 spaces 20 spaces Total Building Area 340,000 square feet (including parking) DEVELOPMENT COSTS Due to the integrated nature of the proposed development, the project cost estimate prepared combines both the retail and the hotel component. Although independent estimates of development costs for each component are provided as Exhibit 3, these estimates include a somewhat arbitrary allocation of certain costs to each component based on the relative building area. Therefore, the relevant column in Exhibit 3 is the integrated cost column showing total development costs. Excluding the parking structure (which is discussed in the previous section of this report), the total development costs for the project are approximately $33.1 million, as shown in Exhibit 3. These costs do not include developer profit, but do include $2.2 million for construction interest, $1.1 million for leasing commissions, and $500,000 for project development fee. Developer profit is calculated as 12.0 percent of total development costs, or $4.0 million. Thus, total development costs (excluding parking), including developer profit, are estimated at $37.1 million, as indicated in Exhibit 3. It is anticipated that the project will be built in a 20-month construction period. For purposes of this analysis, costs shown in Exhibit 3 are shown in 1999 dollars. The development costs are based upon cost estimates prepared by the development team as well as independent investigation by Sedway Group. BLOCK 104/105 33433 REUSE VALUATION REPORT 9 MAY 1999 CD Exhibit 3 Development Cost Summary Huntington Beach Retail/Hotel Project - Blocks 104 and 105 1999 Dollars Direct Development Costs Site Preparation Costs Shell/Core Construction: Retail/Restaurant - Block 104 Shell/Core Construction: Replace Bagsted - Block 104 Shell/Core Construction: Retail/Restaurant - Block 105 Shell/Core Construction: Retail/Market - Block 105 Shell/Core Construction: Hotel Site Enhancements Contingency on Direct Costs Sub -Total Building and Site Tenant Improvements - Retail Tenant Improvements - Restaurants Hotel FF&E Sub -Total - Tis and FF&E Total Direct Development Costs Indirect Development Costs Permits and Associated Fees Traffic Mitigation Fee Architecture and Engineering Project Development Fee EIR Deposit and Other Reimbursements Planning, Entitlement & Fee Studies, Base Map Civil (Surveys, Topo, etc.) Concept Design and Feasibility Studies Schematic Design & Planning Approvals Design Consultants Landscape Architect Market Research/Leasing Plan Marketing Consultants Non Recoverables Legal Contingency Leasing Commissions (6% of five year gross income) Construction Interest Sub -Total - Select Indirect Development Costs Percent of Building and Site Direct Costs (excl.Tls) TOTAL DEVELOPMENT COSTS Developer Profit TOTAL DEVELOPMENT COSTS (including profit) TOTAL RETAIL HOTEL $825,000 $559,825 $265,175 $4,137,000 $4,137,000 $0 $214,200 $214,200 $0 $2,362,500 $2,362,500 $0 $3,106,250 $3,106,250 $0 $5,525,000 $0 $5,525,000 $750,000 $508,932 $241,068 $845,998 $544,435 $301,562 $17,765,948 $11,433,142 $6,332,805 MEASURE Developer Estimate 70 per Sq. Ft. 70 per Sq. Ft. 70 per Sq. Ft. 70 per Sq. Ft. 85 per Sq. Ft. Developer Estimate 5.0% of direct costs $2,439,938 $2,439,938 $0 $ 25 per Sq. Ft. $3,962,750 $3,962,750 $0 $ 100 per Sq. Ft. $1,800,000 $0 $1,800,000 $ 15,000 per Room $8,202,688 $6,402,688 $1,800,000 $25,968,635 $17,835,830 _$8,132,805 $888,297 $571,657 $316,640 $350,000 $237,502 $112,498 $1,065,957 $685,989 $379,968 $508,228 $326,200 $182,029 $75,000 $50,893 $24,107 $40,000 $27,143 $12,857 $12,000 $8,143 $3,857 $20,000 $13,572 $6,428 $25,000 $16,964 $8,036 $30,000 $20,357 $9,643 $20,000 $13,572 $6,428 $52,500 $35,625 $16,875 $15,000 $10,179 $4,821 $50,000 $33,929 $16,071 $150,000 $101,786 $48,214 $150,000 $101,786 $48,214 $200,000 $135,715 $64,285 $182,599 $119,551 $63,049 $1,131,014 $1,131,014 $0 $2,191,876 $1,487,354 $704,522 $7,157,472 $5,128,930 $2,028,542 28 % 29 % 25 % $33,126,107 $22,964,759 $10,161,347 $3,975,133 $2,755,771 $1,219,362_ Sources: CIM Group; Sedway Group. D:\1996\03696\[Huntington Beach - Sedway Public Version 31699.xislDynamic 33433 $37,101,239 $25,720,530 $11,380,709 5.0% of Direct Costs, excluding Tls Developer Estimate 6.0% of Direct Costs, excluding Tis 3.0% of Direct Costs, excl. Tis and Site Prep. Developer Estimate Developer Estimate Developer Estimate Developer Estimate Developer Estimate Developer Estimate Developer Estimate 7.0% of Site Development Costs Developer Estimate Developer Estimate Developer Estimate Developer Estimate Developer Estimate 5.0% of Total Indirect Costs Based on 6%of Gross Income (5yr) Based on 70% LTC, 8% interest, 20 month period, 60% balance outstanding 12.0% of Total Costs 19-May-99 SEDWAY GROUP Real Estate and Urban Economics Key inputs related to development costs are shown below (in 1999 dollars) and provided in detail in Exhibits 2 and 3: Building Component RetaiU Hotel Parking Restaurant Direct Construction $70/per sq.ft. $85/per sq.ft. $45/per sq.ft. Costs (shell/core) (structure) $4/per sq.ft. (surface) Tenant $25/persq.ft. $15,000/per room NA Improvements/ (retail) FF&E $100/per sq.ft. (restaurant) Construction Loan 8% 8% 0% Interest Rate (assumes bond issue finances construction) PROJECT OPERATIONS Retail Assumptions and Static Analysis The retail portion of the project consists of approximately 135,000 square feet of space for retail and restaurant uses. Approximately 30 percent of the space, or 40,000 square feet, will comprise restaurant uses, while about 33,000 square feet is assumed to be occupied by a specialty grocery store, such as Whole Foods. In addition, approximately 24,000 square feet will be tenanted by a national bookstore such as Barnes & Noble or Borders, while the remaining 40,000 square feet will be occupied by smaller specialty shops. Lease rates projected for the retail component of the project are projected to range from $20 per square foot per year for the specialty food store to $42 per square foot for prime first -floor restaurant space on Main Street. These lease rates were projected by the developer and take into account the level of tenant improvement provided in the construction costs. Sedway Group independently verified these lease rates for reasonableness based on a review of market data and discussions with local real estate brokers and Agency staff. Leases are assumed to be true net -net -net (NNN) with most operating costs (with the exception of non- recoverable expenses) passed through to individual tenants. Common area maintenance (CAM) and insurance charges are estimated at $3.00 per square foot per year, while management fees are estimated at 3.5 percent of retail and expense recovery income. Property taxes are estimated based upon the total development cost of the project including land and the parking garage, but excluding the hotel component. It is assumed that all CAM, insurance and property tax expenses, and management fees are BLOCK 104/105 33433 REUSE VALUATION REPORT 11 MAY 1999 SEDWAV GROUP Real Estate and Urban Economics recovered from individual tenants, as is customary in this market. This analysis assumes a vacancy rate of 6 percent and a collection loss rate of 2 percent, applied to retail and expense reimbursement income. Expense ratios, vacancy and collection loss rates, and recoveries are based on review of market trends. All operating assumptions with projected lease rates are presented in Exhibit 4. In addition, stabilized net operating income (NOI) in 1999 dollars based upon a static analysis is calculated. As shown, the retail component of the project is anticipated to generate a NOI of $3.2 million upon stabilization, Motel Assumptions and Static Analysis The hotel component of the project will comprise approximately 130 rooms. According to the terms of the DDA, the hotel developed will "be of first quality and have an overall standard of quality equal to or better than a limited service hotel such as a Marriott Courtyard Hotel or Marriott Residence Inn." The Developer's intention is to build the hotel and lease the completed project to an operator under an arrangement similar to a ground lease, wherein the operator would pay the Developer 90 percent of the hotel's NOI. The Developer reportedly has interest from several operators under these terms. In fact, the Developer has a draft Letter of Intent from a hotel operator under these terms. Therefore, this analysis calculates the hotel ground lease income under these terms. Exhibit 5 highlights the operating assumptions for the hotel component. As indicated, the 130 rooms are anticipated to have an average daily rate (ADR) of $120 per night and a 70 percent occupancy rate, generating an estimated $3.9 million in potential gross room revenue. The ADR and occupancy rates were provided by the Developer and checked for reasonableness by Sedway Group. Because the hotel will be limited service in nature, it is anticipated that 95 percent of total revenues will be attributed to the rooms, with 5 percent from other sources (i.e., phone charges). An operating expense ratio of 68 percent is assumed, implying that NOI is 32 percent of total hotel revenue. As indicated, these assumptions produce an NOI of $1.3 million. Annual ground lease income at 90 percent of NOI generates $1.2 million per year. This net ground rent income is added to the retail NOI in the discounted cash flow analysis later in this section. Parking Although the Developer will be paying for the development costs associated with the parking structure, the parking facility itself will be owned by the Agency. The Agency will be responsible for all operating expenses and the Agency will retain any net income from the garage. Thus, parking revenue and expenses are not included in this analysis of the project from the Developer's perspective. Combined Project Discounted Cash Flow Exhibit 6 presents a 10-year discounted cash flow analysis of the combined retail and hotel components of the project. The major operating assumptions in the discounted cash flow analysis were discussed in the previous section. The revenue inflation assumptions for the dynamic model include a retail rent inflation rate of 9 percent applied every fourth year, and a hotel ground lease income inflation rate of 3 percent annually, BLOCK 104/105 33433 REUSE VALUATION REPORT 12 MAY 1999 Exhibit 4 Operating Assumptions Huntington Beach Retail/Hotel Project - Blocks 104 and 105 Retail Component 1999 Dollars TOTAL Measure Potential Gross Retail Income 104-Main Street - 1st Level (Restaurant) 8,650 Sq. Ft. $363,300 $42.00 per sq.ft. per year 104-Main Street - 2nd Level 7,550 Sq. Ft. $181,200 $24.00 104-Fifth Street Stores 5,670 Sq. Ft. $124,740 $22.00 104-Bookstore - 1st Level 14,800 Sq. Ft. $444,000 $30.00 104-Bookstore - 2nd Level 9,000 Sq. Ft. $180,000 $20.00 104-PCH - 1st Level (Restaurant) 6,840 Sq. Ft. $246,240 $36.00 104-PCH - 2nd Level 6,590 Sq. Ft. $158,160 $24.00 105-Walnut Street Stores 11,600 Sq. Ft. $301,600 $26.00 105-Specialty Food 32,775 Sq. Ft. $655,500 $20.00 105-PCH - 1st Level (Restaurant) 14,525 Sq. Ft. $522,900 $36.00 105-PCH - 2nd Level (Restaurant) 9,613 Sq. Ft. $230,700 $24.00 105-PCH - 2nd Level 9,613 Sq. Ft. $230,700 $24.00 TOTAL RETAIL INCOME $3,639,040 Expense Reimbursements (CAM, Ins.,etc.) $411,675 100% Recovery Expense Reimbursements (Management Fee only) $151,136 100% Recovery Expense Reimbursements (Property Taxes only) $391,960 100% Recovery Less Vacancy Loss ($275,629) 6% of Above Revenue EFFECTIVE GROSS INCOME AND EXPENSE RECOVERY $4,31:8,183 Less Expenses (CAM and Insurance) ($411,675) $3.00 per Sq. Ft. Less Management Fee (excluding parking) ($151,136) 3.5% of EGI and Expense Revovery Less Property Taxes (incl.Parking; excl.Hotel) ($391,960) Based on total construction cost,exc.hotel Less Collection Loss ($86,364) 2.0% of EGband Expense Revovery Other Non -Recoverable Expenses ($34,306) $0.25 per Sq. Ft. Total Expenses ($1,075,442) NET OPERATING INCOME $3,242,741 Sources: CIM Group; Sedway Group. D:\1996\03696\[Huntington Beach - Sedway Public Version 31699.xls]Dynamic 33433 SE®WAV GROUP Real Estate and Urban Economics Exhibit 5 Operating Assumptions Huntington Beach Retail/Hotel Project - Blocks 104 and 105 Hotel Component 1999 Dollars Hotel Operatina Assumptions Hotel Average Daily Rate (ADR) Number of Hotel Rooms Occupancy Rate Potential Gross Room Revenue Room Revenue as % of Total Revenue Total Hotel Revenue Operating Expense Ratio Indicated NOI Hotel Ground Lease Terms Annual Hotel Ground Lease Income to Developer $ 120.00 .130 70% $ 3,985,800 95% $ 4,195,579 68% $ 1,353,074 90% of Hotel NOI (per developer) $ 1,217,767 Sources: CIM Group; Sedway Group. DA1996\03696\ Huntington Beach - Sedway Public Version 31699.xIs]Dynamic 33433 Exhibit 6 Dynamic Cash Flow and Value Calculation Huntington Beach Retail/Hotel Project - Blocks 104 and 105 Factor Factor Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 101 I. Operating Statement Retail Income 9.0%every 4th\ $3,639,040 3,639,040 3,639,040 3,966,554 3,966,554 3,966,554 4,323,543 4,323,543 4,323,543 4,712,662 Expense Reimbursements (CAM, Ins.,etc.) $411,675 424,025 436,746 449,848 463,344 477,244 491,561 506,308 521,498 537,143 Expense Reimbursements (Management Fee) $144,496 151,823 152,528 164,393 165,135 147,713 178,823 179,625 180,448 194,530 Expense Reimbursements (Property Taxes only) $391,960 399,800 407,796 415,952 424,271 432,756 441,411 450,239 459,244 468,429 Less Vacancy Loss - Rate 10.0% 6.0% 6.0% 6.0% 6.0% 16.0% 6.0% 6.0% 6.0% 6.0% Less Vacancy Loss ($458 717) ($276 881) ($278 167) ($299 805) ($301,158) ($803,883) ($326 120) ($327,583) ($329,084) ($354,766) GROSS RETAIL INCOME AND EXPENSE RECOVERY $4,128,454 4,337.807 4,357,943 4,696,942 4,718,145 4,220,385 5,109,218 5,132,133 51155,649 5,557,998 Expenses (CAM and Insurance) 3.0% ($411,675) (424,025) (436,746) (449,848) (463,344) (477,244) (491,561) (506,308) (521,498) (537,143) Management Fee 3.5% NA (144,496) (151,823) (152,528) (164,393) (165,135) (147,713) (178,823) (179,625) (180,448) (194,530) Property Taxes (including Parking Excl. Hotel) 2.0% ($391,960) (399,800) (407,796) (415,952) (424,271) (432,756) (441,411) (450,239) (459,244) (468,429) Collection Loss 2.0`/o NA ($91,743) (92,294) (92,722) (99,935) (100,386) (100,485) (108,707) (109,194) (109,695) (118,255) Other Non -Recoverable Expenses 3.0% ($34 306) (35,335) (36,396) (37,487) (38,612) (39,770) (40,963) (42,192) (43,458) (44,762) TOTAL EXPENSES ($1,074,181) (1,103,277) (1,126,187) (1,167,615) (1,191,748) (1,197,969) (1,261,465) (1,287,659) (1,314,342) (1,363,119) NET OPERATING INCOME - Retail $3,054,273 $3,234,530 $3,231,756 $3,529,327 $3,526,397 $3,022,415 $3,847,753 $3,844,574 $3,841,307 $4,194,879 Hotel Net Ground Lease Income 3.0% $1,217,767 1,254,300 1,291,929 1,330,687 1,370,607 1,411,725 1,454,077 1,497,700 1,542,631 1,588,909 NET OPERATING INCOME - Retail and Hotel $4,272,040 $4,488,829 $4,523,685 $4,860,013 $4,897,005 $4,434,141 $5,301,830 $5,342,273 $5,383,937 $5,783,789 Less Agency Participation (1) $0 $0 $0 ($73,756) ($88,425) $0 ($202,316) ($218,285) ($234,712) ($342,383) Plus Reversion (2) $ 55,152,831 Less Agency Participation in Reversion (1) ($2,400,000) Net Operating Income After Agency Participation $4,272,040 $4,488,829 $4,523,685 $4,786,258 $4,808,579 $4,434,141 $5,099,514 $5,123,989 $5,149,225 $52,410,448 II. Project Valuation Under Terms of the DDA (2,470,651) Discount Rate 12.00% Net Present Value (rounded) $41,740,000 Notes: (1) The DDA stipulates that the Agency will receive 30% of stipulated NOI (80% of EGI) above minimum return of 12% of cumulative development cost to the Developer. Upon sale before Year 11, the Developer shall pay the Agency a minimum of $2.4 million. (2) Reversion Calculation Year 11 NOI (excl. participation) $5,828,005 Cap Rate 10.25% Indicated Value $ 56,858,588 Less Selling Expenses $ (1,705,758) 3.0% Net Proceeds $ 55,152,831 Sources: CIM Group; Sedway Group. D:\1996\03696UHuntington Beach • Sedway Public Version 31699.xls]Dynamic 33433 6/19/99 6:41 PM SEDWAY GROUP Real Estate and Urban Economics consistent with projected inflation. CAM and non -recoverable expenses are anticipated to grow at the annual 3 percent projected inflation rate. Property taxes are forecasted to grow at 2 percent per annum, consistent with Proposition 13. A vacancy loss of 10 percent is projected in Year 1 to account for down time during initial project lease up, under the assumption that much of the space will be pre -leased. To account for vacancy loss and associated costs when a portion of the leases rollover, a vacancy factor of 16 percent is projected in Year 6. A sale of the property is assumed in Year 10, based on Year 11 projected NOI. Year 11 NOI (excluding City participation) is capitalized to derive a sale value in Year 10.' A cap rate of 10.25 percent was deemed appropriate to derive the reversionary value, based on a review of local and national market data. As previously discussed, the Developer is required under terms of the DDA to buyout the Agency's participation for a minimum of $2.4 million upon sale prior to the I Ith year. Thus, $2.4 million is subtracted from the reversionary value As previously discussed, the Agency will participate in the cash flow of the project above a minimum 12 percent return on cost to the Developer. Hence, Agency participation is subtracted from NOI to derive the Developer's net operating income. The Developer's NOI line is then discounted back to give an indication of the project value under terms of the DDA. Value Analysis As shown at the bottom of Exhibit 6, the present value of the cash flow from the project that will accrue to the Developer is approximately $41.8 million. This value was derived by discounting the NOI after Agency participation at a 12.0 percent discount rate. This discount rate is based on a review of national investor criteria, and reflects the somewhat lower risk associated with this project due to the Agency guarantee of a minimum return to the Developer. From this amount, the non -parking development costs of the project of approximately $37.1 are deducted in order to arrive at a residual value supported by the project of approximately $4.7 million. Thus, the net present value to the Developer ($4.7 million) derived in this section of the report is roughly equivalent to the net payment by the Developer ($4.7 million) derived in the previous section.' 'Because the participation agreement with the City stipulates a cash buyout upon sale, the NOI without participation is the relevant figure to capitalize to determine value. 'Again, the effective payment by the developer is the $5.6 million for parking plus the $7.1 million for land assemblage, minus the $8.0 million that represents a loan to the Agency and will be repaid from bond proceeds. BLOCK 104/105 33433 REUSE VALUATION REPORT 16 MAY 1999 SE®WAV GROUP Real Estate and Urban Economics V. VALUE AT THE HIGHEST AND PEST USE UNDER THE REDEVELOPMENT PLAN DISCUSSION OF HIGHEST AND BEST USE The highest and best use of a property is commonly considered to be that use which meets the following criteria: • Physically possible • Legally permissible © Financially feasible • Maximally productive The Block 104/105 property is an approximately 2.9-acre site, fully serviced by municipal infra- structure, and will be flat and ready for development when it is transferred pursuant to the Disposition and Development Agreement. Physically, the site would support any development that might reasonably be proposed in downtown Huntington Beach. The relevant zoning and redevelopment plan requirements were summarized in Section II of this report. These requirements would allow for most commercial uses on the site that are consistent with the uses already located in downtown Huntington Beach. The property is located in the core of the Main Street commercial corridor, and surrounding uses are predominantly commercial in nature. Further, the Downtown Specific Plan stipulates that uses on the subject property be visitor -serving commercial. Therefore, the highest and best use of the Block 104/105 property is considered to be commercial development. The redevelopment plan would allow for many forms of commercial development on Block 104/105. The project proposed in the DDA is a high -amenity, intensive commercial project that has been designed to maximize the redevelopment objectives for the site. This project will require expensive subterranean parking. Substantially less intensive development is allowed under the redevelopment plan, and the parking costs for such uses would be correspondingly lower. Therefore, the project proposed in the DDA, although it maximizes the Agency's objectives for the site, does not represent the property's highest and best use. Sedway Group has analyzed several alternative forms of commercial development for the property, and the highest and best use is the development of the property as a single -story retail center with surface parking. A summary analysis of the economics of such a project follows and is summarized in Exhibit 7. For this analysis, we have assumed that the 127,400-square-foot parcel would be developed at a 0.30 coverage ratio, yielding a 38,220-square-foot retail project. This coverage ratio is consistent with other comparable retail projects in Huntington Beach. Based on review of market conditions, a NNN lease rate of $2.25 per square foot per month, or $27.00 per year, is assumed. After subtracting 8.0 percent BLOCK 104/105 33433 REUSE VALUATION REPORT 17 MAY 1999 SEDWAV GROUP Real Estate and Urban Economics Exhibit 7 Valuation Analysis Huntington Beach - Blocks 104 and 105 Highest and Best Use Value 1999 Dollars I. Development Program Land Area 127,400 sq.ft. Coverage Ratio 0.30 Retail Building Area 38,220 sq.ft. II. Operations Retail Rent (annual) TOTAL RETAIL INCOME $27.00 per Sq.Ft. $1,031,940 Less Vacancy/Collection Loss 8% ($82,555) NET OPERATING INCOME $949,385 Ill. Valuation Cap Rate Indicated Building Value IV. Residual Value Building Value Less Development Costs at Indicated Residual Land Value Per Square Foot 10.25% $9,262,291 $9,262,291 $100 /sq.ft. ($3,822,000). $5,440,291 $43 Sources: CIM Group; Sedway Group. DA1996\03696gHuntington Beach - Sedway Public Version 31699.xis]Dynamic 33433 SE®WAY GROUP Real Estate and Urban Economics of gross income for vacancy/collection loss, a net operating income of approximately $950,000 is indicated. To derive a value of the project upon completion, the net operating income is capitalized at 10.25 percent. This yields an estimated $9.3 million value for the project as complete. This cap rate is based on a review of regional and national market data. To estimate development costs, Sedway Group assumed an all -encompassing cost of $100 per square foot. This cost estimate includes all direct costs (including shell and core construction, tenant improvements, surface parking, landscaping, and site work), indirect costs (including A&E, legal, financing, permits, fees, leasing commissions, marketing, contingency, etc.), and developer profit. As indicated in Exhibit 7, total development costs under this scenario are estimated at $3.8 million. This development cost of $3.8 million is subtracted from the estimated completed building value of $9.3 million to derive the estimated residual land value of $5.4 million, or $43 per square foot of land area, as indicated in Exhibit 7. DAWPDOCS\PROJECTS\03696\03696 ROI May99.wpd BLOCK 104/105 33433 REUSE VALUATION REPORT 19 MAY 1999 SEDWAV GROUP Real Estate and Urban Economics ADDENDUM A USPAP COMPLIANCE INFORMATION The accompanying report constitutes a summary report of a limited appraisal as those terms are defined in the Uniform Standards of Professional Appraisal Practice (USPAP). Departure was made from selected non -binding portions ofUSPAP. These departures were made primarily because Section 33433 of the California Health and Safety Code specifically calls for a limited analysis, as well as the fact that the intended audience of this report is very familiar with the site appraised and the Huntington Beach market area. Specific requirements from which departures were made include 1-4(b),1-4 (f), and 14(h). The appraisal utilizes only the income approach since (1) this is the most appropriate approach to determine the value of the rights to develop a redevelopment property and (2) data for the sales comparison and cost approaches would not be as meaningful for a subsidized redevelopment project. SUMMARY DESCRIPTION OF THE DEAL ESTATE The subject property, commonly referred to as Blocks 104 and 105, consists of 20 separate parcels and is primarily bounded by 6th Street to the north, Pacific Coast Highway to the west, Main Street to the south, and Walnut Avenue to the east, in the City of Huntington Beach. The subject property excludes the northeast and southwest corner parcels of this two -block area. The subject property is approximately 127,400 square feet. INTENDED CLIENT, PURPOSE AND USE OF THE APPRAISAL The client is the Huntington Beach Redevelopment Agency. The purpose and intended use of this appraisal is to provide certain valuations that are required by Section 33433 of the California Health and Safety Code. It is intended to be used by the Huntington Beach Redevelopment Agency to assist in making the findings that are required by this Section of the Code. REAL PROPERTY INTEREST APPRAISED The fee simple interest in the property is appraised. In Sections IV and V, this interest is subordinated to the intentions of the Redevelopment Agency. In Section IV, the fee simple interest is further subordinated to the terms of the DDA. TYPE OF VALUE ESTIMATED This report estimates the market value of the subject property utilizing the definition of market value as presented in USPAP as follows: BLOCK 104/105 33433 REUSE VALUATION REPORT 20 MAY 1999 SE®WAY GROUP Real Estate and Urban Economics The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: buyer and seller are typically motivated; • both parties are well informed or well advised, and acting in what they consider their best interests; • a reasonable time is allowed for exposure in the open market; • payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and © the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. EFFECTIVE DATE OF THE APPRAISAL AND THE REPORT The effective date of the appraisal and the date of this report is May 19, 1999. However, as described above, the appraisal is based upon the future condition (assembled, vacant, and ready for development) of the property. It is reasonably probable that these conditions will be met. SUMMARY OF THE DATA COLLECTION PROCESS The site was inspected by Terry Margerum. Various documents were reviewed including the following: • Draft Disposition and Development Agreement by and between Redevelopment Agency of the City of Huntington Beach and CIM Group; draft dated April 17, 1999; • Proposed revisions to the DDA; • Market Assessment of Supportable Retail Space Downtown Huntington Beach; Sedway Group; April 1998; and • Various analyses prepared by CIM Group. In addition, conversations were held with various real estate professionals familiar with the Huntington Beach real estate market, and relevant data were also utilized from the Sedway Group library and files. BLOCK 104/105 33433 REUSE VALUATION REPORT 21 MAY 1999 SE®WAY GROUP Real Estate and Urban Economics SALES HISTORY OF THE PROPERTY As the Block 104/105 site is currently being assembled by the Huntington Beach Redevelopment Agency and the developer, various portions of the site have been sold in the past three years. However, for a variety of reasons, these sales, options, and negotiations are not considered to be relevant in determining the value of the site that will be conveyed to the developer through the DDA. Although none of these sales have been condemnations; all of the sellers have been aware of the Agency's desire to assemble the site and willingness to utilize eminent domain powers, if necessary. All of the sales have been for improved parcels: there have been no pure land sales. ® The properties that have been sold (acquired by the Agency) were not subject to the terms and conditions of the DDA at the time they were purchased. BLOCK 104/105 33433 REUSE VALUATION REPORT 22 MAY 1999 SEDWAV GROUP Real Estate and Urban Economics ADDENDUM B ASSUMPTIONS AND LIMITING CONDITIONS SPECIAL ASSUMPTION AND LIMITING CONDITIONS This analysis assumes that the final DDA is consistent with the Draft DDA, dated April 17, 1999, upon which this analysis is based. The value of the hotel component is based upon a ground lease arrangement between the developer and a hotel operator. The developer has a draft Letter of Intent from a hotel operator under terms which stipulate that ground rent be based upon 90 percent of the hotel's net operating income. Sedway Group has not reviewed this LOI. The terms of the LOI were given to Sedway Group verbally. 3. Construction costs and lease rates and terms were provided by CIM Group. Sedway Group checked these figures for reasonableness, but did not obtain independent cost estimates. STANDARD ASSUMPTION AND LIMITING CONDITIONS The title to the subject property is assumed to be marketable and the property is free and clear of all liens and encumbrances, except as noted. 2. No liability is assumed for matters that are legal or environmental in nature. Ownership and management are assumed to be in competent and responsible hands. 4. No architectural or engineering study, property survey, soil study or environmental investigation has been made, and no liability is assumed in connection with such matters. The described physical condition of the property is based on visual inspection only, and it is assumed that there are no hidden or unapparent physical conditions affecting value. Dimensions and areas are as supplied by others or based upon field measurements and are subject to survey by qualified professional surveyors or architects. The valuation will be prepared for the specific objective stated and shall not be used for any other purpose without the written permission of Sedway Group. 6. The signatories shall not be required to give further consultation or testimony, or appear in court or at any public hearing with reference to the property appraised, unless prior arrangements have been made with the client. 7. This report is intended to be read and used as a whole and not in parts. Separation of any section or page from the main body of the report is expressly forbidden and invalidates the report. BLOCK 104/105 33433 REUSE VALUATION REPORT 23 MAY 1999 SE®WAY GROUP Real Estate and Urban Economics 8. Any estimates of future rents, expenses, net operating income, mortgage debt service, capital outlays, cash flows, inflation, capitalization rates, yield rates or interest rates are intended solely for analytical purposes and are not to be construed as predictions of the appraisers. They represent only the judgment of the authors as to the assumptions likely to be used by purchasers and sellers active in the market place as of the date of value, and their accuracy is in no way guaranteed. 9. It is assumed that all necessary licenses, agreements, franchises, etc., remain in full force and effect in order to continue the operations of the property as a going concern throughout the financial analysis period of this appraisal, unless otherwise noted. 10. Possession of this report does not carry with it the right of publication. It shall be used for its intended purpose only and by the parties to whom it is addressed. Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales, or other media without the written consent or approval of the author. This applies particularly to value conclusions and the identity of the appraiser or firm with which it is connected. 11. Property values are influenced by a large number of external factors. The information contained in the report comprises the pertinent data considered necessary to support the value estimate. No pertinent fact has been knowingly withheld, but we do not guarantee that we have knowledge of all factors that might influence the value of the subject property. Due to the rapid changes in the external factors, the value estimate is considered reliable only as of the effective date of the appraisal. 12. The appraisers reserve the right to make such adjustments to the analyses, opinions, and conclusions set forth in this report as may be required by consideration of additional data or more reliable data that may become available. 13. The date of value to which the conclusions and opinions expressed in this report apply is set forth in the letter of transmittal and the appraisal document. The dollar amount of any value opinion rendered in this report is based upon the purchase power of the U.S. dollar existing on that date. 14. If this report is placed in the hands of anyone other than the Client, the Client shall make such party aware of all limiting conditions and assumptions of the assignment and related discussions. The Appraiser is in no way to be responsible for any cost incurred to discover or correct any deficiencies of any type present in the property, physically, financially and/or legally. The Client also agrees that, in case of lawsuit (brought by lender, partner or part owner in any form of ownership, tenancy or any other part), Client will hold appraisers completely harmless from and against any liability, loss, cost or expense incurred or suffered by appraiser in such action, regardless of its outcome. BLOCK 104/105 33433 REUSE VALUATION REPORT 24 MAY 1999 SE®WAV GROUP Real Estate and Urban Economics ADDENDUM C CERTIFICATION OF THE APPRAISER The undersigned hereby certify that to the best of our knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal unbiased professional analyses, opinions, and conclusions. We have no present or prospective interest in the property that is the subject of this report, and have no personal interest or bias with respect to the parties involved. Our compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. Our analyses, opinions and conclusions were developed, and this report has been prepared, in conformance with the requirements of the Uniform Standards of Professional Appraisal Practice. Terry Margerum made a personal inspection of the property that is the subject of this appraisal report. Kurt Fuchs did not inspect the property. Roy Schneiderman provided professional assistance to the persons signing this report. Te . Margerum Principal, Sedway Group Kurt W. Fuchs Manager, Sedway Group BLOCK 104/105 33433 REUSE VALUATION REPORT 25 MAY 1999 '9/6l5- ,Ee "�& V ,L0'641✓- Ee- 6eV, Council/Agency Meeting Held: Deferred/Continued to: � 'Approved ❑Conditionally Approved ❑Denied al-y f Jerk's Signature Council Meeting Date: June 7, 1999 Department ID Number: ED 99-33 CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION_' w SUBMITTED TO: HONORABLE MAYOR/CHAIRMAN AND CITY COUNCIL MEMBERS/REDEVELOPMENT AGENCY MEMBERS "' r SUBMITTED BY: RAY SILVER, City Administrator/Executive Director'Wo—P PREPARED BY: DAVID C. BIGGS, Economic Development Director SUBJECT: Approve the Disposition and Development Agreement folr;the;,' Redevelooment of Blocks 104 and 105 c Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: A Disposition and Development Agreement (DDA) has been negotiated between the Redevelopment Agency (Agency) and CIM Group, LLC for the redevelopment of Blocks 104 and 105. The project will include a hotel of approximately 130 rooms, approximately 135,00 sq. ft. of retail and restaurant space, and a subterranean parking garage and surface parking area. The approval of the DDA will occur after a joint public hearing of the City Council and the Redevelopment Agency. Funding Source: Developer will advance funds to the Redevelopment Agency to be repaid by revenues generated by the project. Agency Recommended Action: Motion to: 1. Adopt Resolution No. making certain environmental findings related to the Redevelopment of Blocks 104-105. 2. Adopt a Resolution No. 5 00 approving the Disposition and Development Agreement between the Redevelopment Agency and CIM Group, LLC. 3. Approve the Cooperation Agreement between the Redevelopment Agency and the City. 41&eoD zo 7 D Council Recommended Action: Motion to: 1. Adopt Resolution No. 9 `1-1/0 making certain environmental findings related to the Redevelopment of Blocks 104-105. 2. Adopt a Resolution No. g 9- q/ approving the Disposition and Development Agreement between the Redevelopment Agency and CIM Group, LLC. REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION MEETING DATE: June 7, 1999 DEPARTMENT ID NUMBER: ED 99-33 3. Approve the Cooperation Agreement between the Redevelopment Agency and the City. /W"10 - 7-0 . Alternative Action(s): Do not approve the Disposition and Development Agreement and refer back to staff for changes. Analysis: In 1998, the Agency solicited qualifications from potential owner - participants for redevelopment of the two -block area known as Blocks 104 and 105. On April 6, 1998, the Agency Board directed staff to prepare a 120-day Exclusive Right to Negotiate Agreement (ENA) between the Agency and CIM Group, LLC. On June 11, 1998, the Agency entered into the ENA with the Developer. On October 10, 1998, the Agency approved the extension of the ENA for a period of 180 days. The Developer submitted a DDA acceptable to the Developer on April 19th, which triggered an automatic extension of the Exclusive to allow for the noticing of this joint public hearing. The project site is comprised of approximately three acres of land divided into two blocks, commonly known as Blocks 104 and 105. Block 104 has approximately 1.3 acres and Block 105 has approximately 1.7 acres. The project is located in the Main -Pier Sub Area of the Huntington Beach Redevelopment Project Area. The Site is bounded by Pacific Coast Highway on the south, Main Street on the east, Sixth Street on the west and Walnut Avenue on the north. The Redevelopment Agency owns a majority of the Site encompassing or approximately 2.12 acres. The DDA envisions a project with a hotel of approximately 130 rooms, approximately 135,000-sq. ft. of gross leasable area of new retail and restaurant improvements, an underground public parking facility and surface parking area and other amenities. A summary of the proposed business terms is attached in the form the Section 33433 Report required under the State Health & Safety Code (Attachment 5). Public benefits of the Block 104-105 project include the following: • This project will add a hotel to the Downtown core -area and will increase the attractiveness of the area to the City's tourists, visitors, and residents. • The project will encourage further redevelopment of blighted and underutilized properties within the Downtown area. • The project will bring a quality retail and restaurant environment (135,000-sq. ft.) to a section of Downtown that is underutilized. • The project will generate substantial public revenues including property tax increment, transient occupancy taxes, and sales tax, a portion of which will be used to facilitate redevelopment of the site. The Disposition and Development Agreement is the first step in the redevelopment process for Blocks 104-105. The Developers will be pursuing the purchase of properties not already owned by the Agency and will be seeking the participation of some of those RCADDA.DOC -2- 06/01/99 10:27 AM REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION MEETING DATE: June 7, 1999 DEPARTMENT ID NUMBER: ED 99-33 property owners. A Conditional Use Permit (CUP) and other entitlements will be sought from the City in the near future to allow the project to proceed. The Disposition and Development Agreement contemplates a Cooperation Agreement between the Redevelopment Agency and the City in order to effectuate the DDA. The Cooperation Agreement is presented for approval with the DDA. Environmental Status: The Project has been deemed to be Exempt under Environmental Quality Act Section 15168 C, Public Resources Code 21083.3 as evaluated in Environmental Assessment 99-9 (Attachment 6). Previous environmental documentation covering the project are Environmental Impact Report (EIR) No. 96-2 for the Huntington Beach Redevelopment Project and EIR No. 89-6 Main -Pier Phase II and Main Street 100 Block. Attachment(s): 1. Disposition and Development Agreement. 2. Redevelopment Agency Resolution No. _ environmental findings. 3. Redevelopment Agency Resolution No. _ Disposition and Development Agreement. making certain approving the 4. City Council Resolution No. making certain environmental findings. 5. City Council Resolution No. approving the Disposition and Development Agreement. 6. Section 33433 Summary Report and Re -Use Appraisal. 7. 1 Environmental Assessment 99-9. 8. 1 Cooperation Aqreement. RCA Author: Gus Duran, ext. 1529 RCADDA.DOC -3- 06/01/99 10:27 AM ®.#&CITY OF HUNTINGTON k-j 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY -CLERIC CONNIE BROCKWAY CITY CLERK LETTER OF TRANSMITTAL OF ITEM APPROVED BY THE CITY COUNCIL/ REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH DATE. TO: dlz n &z)10 UZ me St eet GZ5A7,!P�eSi City, State p See Attached Action Agenda Item ATTENTION: �AVAO X MMI DEPARTMENT: REGARDING: D 51W O W /dt�Id �7 e �3/0 5 l0� 05 Date of Approval _ Enclosed For Your Records Is An Executed Copy Of The Above Referenced Agenda Item. RPmnrks- �;'i Connie Brockway City Clerk • v ec-e--)eLorncc Attachments: Action Agenda Page Agreement Bonds RCA CC: �d,ekma yrJ _ De artment RCA Name FORL Dep ent RCA Name Department RCA Name Department Risk Management Dept. Deed Agreement Agreement J&ne- pei- �j.v pa r rma ,%-t Insurance Other p�� inA-v oast Insurance e� Insurance e Agreement Insurance Insurance Other RCA Agreement Insurance Other Insurance Received by Name - Company Name - Date G:Followup/coverltr ( Telephone: 714-536-5227 ) -'iPU) "Agency," as used in this Agreement, includes the Redevelopment Agency of the City of Huntington Beach, and any assignee of or successor to its rights, powers and responsibilities. [§ 1071 Develops Developer is a Delaware limited liability company. The principals of CIM Group, LLC are Shaul Kuba and Avraham Shemesh. Within ninety (90) days of the date of approval of this Agreement by Agency, Developer shall assign all of its rights and delegate all of its duties under this Agreement to a new entity owned and controlled by (1) CIM Group, LLC, a Delaware limited liability company, and (2) one of the following: (a) Federal Realty Investment Trust; or (b) Street Retail West G. P., Inc., a wholly owned subsidiary of Federal Realty Investment Trust; or (c) subject to the approval of the Agency's Executive Director, another wholly owned subsidiary of Federal Realty Investment Trust through which Federal Realty Investment Trust typically invests in retail projects such as the subject development; or (d) another equity partner first approved in writing by the Agency pursuant to the immediately following paragraph. Such assignment shall be pursuant to an assignment and assumption agreement approved as to form and content by the Agency's Executive Director and legal counsel under which the new entity shall expressly assume and be bound by the duty to perform all of Developer's obligations hereunder. Within thirty (30) days of the date of approval of this Agreement by Agency, Developer may request that the Agency approve a financial coventurer other than Federal Realty Investment Trust. Such approval by Agency of a substitute financial coventurer shall be at the discretion of the Agency and shall only be granted if the Agency determines, based upon evidence and documentation satisfactory to Agency, that such substitute financial coventurer possesses at least the same financial strength, ability to attract tenants and ability to assure the success of the subject development as Federal Realty Investment Trust. The principal office of Developer is located at 10960 Wilshire Boulevard, Suite 500, Los Angeles, California 90024. Wherever the term "Developers' is used herein, such term shall also include any permitted assignee or successor in interest as herein provided. (a) Concurrently with the execution by Developer of this Agreement, Developer shall deliver to the Agency a security deposit (the "Developer's Deposit") in the amount of one hundred and fifty thousand dollars ($150,000), of which $40,000 has already been deposited by Developer pursuant to the Exclusive Negotiating Agreement. Agency and --5 3 �1M -1112- /4 / (t U-/� 1 (g) If this Agreement has not been terminated and the Developer's Deposit has not been previously disposed of as set forth in this Agreement, the Developer's Deposit (plus, if the Developer's Deposit was made in cash and invested, interest accrued thereon, if any, as provided in paragraph (e), above) shall be returned to the Developer upon the timely posting by Developer of the Original Letter of Credit in the amount and form required by Sections 201 to 201.4, inclusive, of this Agreement. Upon such return of Developer's Deposit to Developer, the liquidated damages provisions of this Section 108 shall no longer be in effect, and the rights and remedies of the parties hereto with respect to damages shall be as referred to in Section 504 hereinbelow. (h) BY SIGNING THEIR INITIALS IN THE SPACE BELOW, THE DEVELOPER AND THE AGENCY ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND ALL OF THE PROVISIONS OF THIS SECTION 108 AND HAVE VOLUNTARILY AGREED TO ALL SUCH PROVISIONS. Developer: Agency: (a) Developer and the Agency acknowledge and agree that due to substantial project costs in the areas of property acquisition, relocation, demolition, clearance, public improvements and site preparation, the development of the Site as contemplated under this Agreement would not be feasible in the -absence of Developer's agreement to initially pay such costs and the Agency's conditional agreement to reimburse a portion of such costs. (b) The Agency shall make the payments required in and shall otherwise comply with the Schedule of Feasibility Gap Payments appended to this Agreement as Attachment No. 8 and incorporated herein by this reference. (c) Without limiting either party's rights or remedies in the event of the other party's default, the Agency shall have no obligation to reimburse Developer for any costs paid or amounts advanced by Developer pursuant to this Agreement except as specified in the Schedule of Feasibility Gap Payments (Attachment No. 8) and, subject to the provisions of Section 201.4 of this Agreement, the Pre -Conveyance Termination Note and the Pre -Conveyance Termination Deed of Trust. ARTICLE 2. ACQUISITION AND DISPOSITION OF THE SITE In accordance with, subject to, and conditioned on all the terms, covenants, and conditions of this Agreement, including but not limited to Section 505.2(b), and in consideration of the performance by each party of all of its obligations under this S A a 1Zrt i REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Agency) Date: Chairman ATTEST: Agency Clerk REVIEWED AND APPROVED AS TO FORM: Agency General Counsel B: y �r �/ APPROVED AS TO FORM: 6l 4 - KANE, BALLMER & BERKMAN 54 In a r [Signature page continued from page 541 Date A,W Y�w DEVELOPER C1M GROUP, LLC, a Delaware limited liability company By: Its Manager, ORCHARD CAPITAL CORPORATION, zi -By: ichard S. Ressler, President 55 q IN WITNESS WHEREOF, the parties have executed this Agreement as of the date` t� first set forth above. CITY OF HUNTINGTON BEACH Dated: , 1999 By: Mayor ATTEST: By: City Clerk APPROVED AS TO FORM: By_ L/'7f leckbiAttorney e/ REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH Dated: , 1999 By: ATTEST: -SeeTatw FJE44 C(F'� K' APPROVED AS TO FORM: KANE, BALLMER & BERKMAN In Agency,pounsel ST�,cia L Chairman May 13, 1999 3 0 A Cl_M CROUP LLC A4> Real Estate Services G R O U P ECENED June 2, 1999 U N 0 4 1999 DEPARTMENT OF Mr. David Biggs, Director of Economic Development EC0 0MiC DEVE OPMEWr City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Re: Disposition and Development Agreement Signature Page Dear Mr. Biggs: Attached is a signed signature page for the Disposition and Development Agreement by and between the Redevelopment Agency of the City of Huntington Beach and CIM Group, LLC dated May 20, 1999. This supersedes the previous document, which was signed on April 19, 1999. Should you have any questions regarding this matter, you my contact me at (310) 966-1734. Sincerely, David Martin Project Manager Attachment 10960 Wilshire Blvd. Suite 500 Los Angeles; California 90024 Tel (310) 966-1700 Fax (310) 966-1701 1 t9 111 �� 1 Redevelopment Agency Resolution No. d299 making certain environmental findings RESOLUTION NO. 299 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH APPROVING ENVIRONMENTAL FINDINGS WHEREAS, the Redevelopment Agency of the City of Huntington Beach (the "Agency") has certified the Final Environmental Impact Report for the Merged Redevelopment Project of the City of Huntington Beach; and On July 18, 1983, the City Council of the City of Huntington Beach (the "City Council") certified the Final Environmental Impact Report 82-2 for the Downtown Specific Plan; and On January 6, 1992, the City Council certified the Final Environmental Impact Report 89-6 and the Addendum with a Statement of Overriding Considerations for the Main -Pier Phase Two Project Area; and On May 13, 1996, the City Council certified the Final Environmental Impact Report No. 94- for the City of Huntington Beach General Plan; and On October 7, 1996 the City Council certified the Final Environmental Impact Report No. 96-2 for the merger of the five previously adopted Redevelopment Plans/Projects within the City of Huntington Beach; and The Agency and CIM Group, LLC a California Limited Liability Corporation ("Developer") have conducted negotiations for a Disposition and Development Agreement (the "DDA") which provides for the general development of Blocks 104/105 ("Site"), although the DDA does not approve of the granting of any entitlements to the Developer for the development of the Site; and It is necessary to adopt a DDA at this time, prior to defining the specific development of the Site; and The Agency has reviewed the above -mentioned Environmental Impact Reports and Addenda, the proposed Development Agreement, and other reports and information relevant to the findings made herein (`Environmental Documents"); and The general development proposed for the Site ("Project") are contemplated in the above - mentioned Environmental Documents. NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH DOES RESOLVE AS FOLLOWS: SECTION 1. The Agency finds that the Project as set forth in the proposed DDA is consistent with the City's General Plan and with the Environmental Documents. It is not anticipated that the Project will have significant effects on the environment which are peculiar to the Site or to SF-Meso1 utions: Agen-EF RLS 99-361 05/27/99 - # 1 the Project other than those identified in the Environmental Documents, nor is there substantial new information that such effects will be more significant than those described in said Documents. SECTION 2. The Agency finds that it will be necessary to further review the Environmental Documents upon the preparation of a more specific plan for the development of the Site and that the approval of the DDA at this time is consistent with the provisions of Public Resources Code Section 21083.3 and Section 15168 of the CEQA Guidelines. SECTION 3. The significant effects on the environment caused by the Project may be mitigated by implementation of the measures contained in the Environmental Documents. SECTION 4. No revision of the Environmental Documents are required at this time. SECTION 5. No subsequent Environmental Impact Report or supplement to the previously prepared and certified Environmental Documents is necessary or required in connection with the approval, execution and implementation of the proposed DDA. Upon development of a more specific plan, a new Initial Study will be undertaken for a determination of the adequacy of the previously approved Environmental Documents. PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at a regular meeting thereof held on the 7th day of June, ATTEST: Agency Clerk APPROVED AS TO FORM: KANE, BALLMER & BERKMAN Special Counsel 2 SF-99Resolutions: Agen-EF RLS 99-361 05/27/99 - # 1 Chairman APPROVED AS TO FORM: 14 ZL;� 4 A�en,v�yy Counsel ri Iq f jo �17 -49 `ti REVIEWED AND APPROVED: <21a� 14� City Adi mistrator INIT TED AND APPROVED: 44 Director of Economic Development Res. No. 299 STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF HUNTINGTON BEACH I, CONNIE BROCKWAY, Clerk of the Redevelopment Agency of the City of Huntington Beach, California, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Redevelopment Agency of the City of Huntington Beach at a regular meeting of said Redevelopment Agency held on the 7th day of June,1999 and that it was so adopted by the following vote: AYES: Julien, Bauer, Garofalo, Green, Dettloff, Harman, Sullivan NOES: None ABSENT: None ABSTAIN: None Clerk of the Redevelopme t Agency of the City of Huntington Beach, Ca. approvingRedevelopment Agency Resolution No. 3o 0, Disposition andDevelopmentAgreement RESOLUTION NO. 300 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT WITH CIM GROUP, LLC., FOR THE FUTURE DEVELOPMENT OF BLOCKS 104/105. WHEREAS, the Redevelopment Agency of the City of Huntington Beach (the "Agency") is engaged in activities necessary to carry out and implement the Redevelopment Plan for the Merged Redevelopment Project Areas of the City of Huntington Beach (collectively the "Redevelopment Plan"); and In order to carry out and implement the Redevelopment Plan, the Agency proposes to enter into a Disposition and Development Agreement (the "Agreement") with CIM Group, LLC., (the "Developer"), which establishes terms and conditions for the sale of certain properties and the general development of Blocks 104/105 (the "Project") by the Developer within the boundaries of the area set forth with particularity in the Agreement (the "Site"); and The Developer has submitted to the Agency and the City Council copies of said proposed Agreement in a form desired by Developer; and Pursuant to the California Community Redevelopment Law (California Health and Safety Code, Section 33000 et seq.) the Agency and the City Council held a joint public hearing on the Agreement, having duly published notice of such public hearing and having made copies of the proposed Agreement and other reports and documents (including the summary referred to in Section 33433) available for public inspection and copying; and The Agency has duly considered all terms and conditions of the proposed transaction, and believes that it is in the best interests of the Project area and the City and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable State and local law and requirements; NOW, THEREFORE, BE IT RESOLVED by the Redevelopment Agency of the City of Huntington Beach as follows: SECTION 1. The Agency hereby finds and determines that the consideration to be paid by Developer for the purchase of the Site conveyed to it by the Agency is not less than the fair reuse value at the uses and with the covenants and conditions and development costs authorized by the sale. SECTION 2. The Agency hereby finds and determines that the sale of the Site within the Project area pursuant to the Agreement will assist in the elimination of blight. SF-99Resol utions:104-5 RLS 99-361 5/27/99 - # 1 SECTION 3. The Agency hereby finds and determines that the sale of the Site pursuant to the Agreement is consistent with the implementation plan adopted pursuant to Section 33490 of the Health and Safety Code. SECTION 4. The Agency hereby finds and determines that the Agency's use of its authority under Health and Safety Code Section 33421 in carrying out the provisions of the Agreement is necessary to effectuate the purposes of the Redevelopment Plan. SECTION 5. The proposed Agreement is hereby approved in substantially the form presented at this meeting, with such minor changes as may be approved by the Executive Director of the Agency with the approval as to form by the Agency General Counsel. SECTION 6. The Chairman of the Agency and Clerk of the Agency are hereby authorized to execute and alter the Agreement on behalf of the Agency. A copy of the Agreement when executed by the Agency shall be placed on file in the office of the Agency Clerk as Document No. 600.30 . SECTION 7. The Executive Director of the Agency (or his designee) is hereby authorized, on behalf of the Agency, to sign all documents (including but not limited to grant deeds) necessary and appropriate to carry out and implement the Agreement, and to administer the Agency's obligations, responsibilities and duties to be performed thereunder. PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at a regular meeting thereof held on the 7th day of June, 1999. ATTEST: e�� 4yf,� Agency Clerk APPROVED AS TO FORM: Kane, Ballmer & Berkman Special Counsel for the Agency 2 SF-99Resolutions:104-5 RLS 99-361 5/27/99 - #1 Chairman APPROVED AS TO FORM: Ag=General Counsel ; PP 3ry REVIEWED AND APPROVED: City A inistrator INITIATED AND APPROVED: 60d e-Ar Director of Economic Development Ices. No. 300 STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF HUNTINGTON BEACH I, CONNIE BROCKWAY, Clerk of the Redevelopment Agency of the City of Huntington Beach, California, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Redevelopment Agency of the City of Huntington Beach at an adjourned regular meeting of said Redevelopment Agency held on the 7th day of .tune, 1999 and that it was so adopted by the following vote: AYES: Julien, Bauer, Garofalo, Green, Dettloff, Harman, Sullivan NOES: None ABSENT: None ABSTAIN: None Clerk of the Redevelopmen Agency of the City of Huntington Beach, Ca. City Council Resolution No. making certain environmental findings RESOLUTION NO. 99-40 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH APPROVING ENVIRONMENTAL FINDINGS WHEREAS, the Redevelopment Agency of the City of Huntington Beach (the "Agency") has certified the Final Environmental Impact Report for the Merged Redevelopment Project of the City of Huntington Beach; and On July 18, 1983, the City Council of the City of Huntington Beach (the "City Council") certified the Final Environmental Impact Report 82-2 for the Downtown Specific Plan; and On January 6, 1992, the City Council certified the Final Environmental Impact Report 89-6 and the Addendum with a Statement of Overriding Considerations for the Main -Pier Phase Two Project Area; and On May 13, 1996, the City Council certified the Final Environmental Impact Report No. 94- 1 for the City of Huntington Beach General Plan; and On October 7, 1996 the City Council certified the Final Environmental Impact Report No. 96-2 for the merger of the five previously adopted Redevelopment Plans/Projects within the City of Huntington Beach; and The Agency and CIM Group, LLC a California Limited Liability Corporation ("Developer") have conducted negotiations for a Disposition and Development Agreement (the "DDA") which provides for the general development of Blocks 104/105 ("Site"), although the DDA does not approve of the granting of any entitlements to the Developer for the development of the Site; and It is necessary to adopt a DDA at this time, prior to defining the specific development of the Site; and The City Council has reviewed the above -mentioned Environmental Impact Reports and Addenda, the proposed Development Agreement, and other reports and information relevant to the findings made herein ("Environmental Documents"); and The general development proposed for the Site ("Project") are contemplated in the above - mentioned Environmental Documents. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DOES RESOLVE AS FOLLOWS: SECTION 1. The City Council finds that the Project as set forth in the proposed DDA is consistent with the City's General Plan and with the Environmental Documents. It is not anticipated that the Project will have significant effects on the environment which are peculiar to the Site or to 1 SF-99Resolutions: CC-EF RLS 99-361 05/27/99 - rl the Project other than those identified in the Environmental Documents, nor is there substantial new information that such effects will be more significant than those described in said Documents. SECTION 2. The City Council finds that it will be necessary to further review the Environmental Documents upon the preparation of a more specific plan for the development of the Site and that the approval of the DDA at this time is consistent with the provisions of Public Resources Code Section 21083.3 and Section 15168 of the CEQA Guidelines. SECTION 3. The significant effects on the environment caused by the Project may be mitigated by implementation of the measures contained in the Environmental Documents. SECTION 4. No revision of the Environmental Documents are required at this time. SECTION 5. No subsequent Environmental Impact Report or supplement to the previously prepared and certified Environmental Documents is necessary or required in connection with the approval, execution and implementation of the proposed DDA. Upon development of a more specific plan, a new Initial Study will be undertaken for a determination of the adequacy of the previously approved Environmental Documents. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 7th day of June, 1999. Mayor ATTEST: City Clerk APPROVED AS TO FORM: KANE, BALLMER & BERKMAN Special Counsel By: C0 . ��----� 2 SF-99Resolutions: CC-EF RLS 99-361 05/27/99 - #i APPROVED AS TO FORM: City Attorney �� �� qy S2-7 ff �� Z REVIEWED AND APPROVED: City Ad inistrator INI IATED AND APPROVED: Director of Econo is Development Res. No. 99-40 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at a regular meeting thereof held on the 7th day of June, 1999 by the following vote: AYES: Julien, Bauer, Garofalo, Green, Dettloff, Harman, Sullivan NOES: None ABSENT: None ABSTAIN: None City Clerk and ex-officio Clerk of the City Council of the City of Huntington Beach, California City Council Resolution No. approving the Disposition and Development Agreement c RESOLUTION NO. 99-41 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT WITH CIM GROUP,,LLC., FOR THE SALE AND DEVELOPMENT OF LAND WHEREAS, the Redevelopment Agency of the City of Huntington Beach (the "Agency") is engaged in activities necessary to carry out and implement the Redevelopment Plan for the Merged Redevelopment Project Areas of the City of Huntington Beach (collectively the "Redevelopment Plan"); and In order to carry out and implement the Redevelopment Plan, the Agency proposes to enter into a Disposition and Development Agreement (the "Agreement") with CIM GROUP, LLC., (the "Developer"), which establishes terms and conditions for the Agency to sell to Developer certain real property referred to in the Agreement and hereinafter as "the Site" and for Developer to construct thereon improvements as specified in the Agreement; and The Developer has submitted to the Agency and the City Council copies of said proposed Agreement in a form desired by Developer; and Pursuant to the California Community Redevelopment Law (California Health and Safety Code, Section 33000 et seq.) the Agency and the City Council held a joint public hearing on the Agreement, having duly published notice of such public hearing and having made copies of the proposed Agreement and other reports and documents (including the summary referred to in Section 33433) available for public inspection and copying; and The City Council has duly considered all terms and conditions of the proposed transaction, and believes that it is in the best interests of the Project area and the City and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable State and local law and requirements; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: SECTION 1. The City Council hereby finds and determines that the consideration to be paid by Developer for the purchase of the Site is not less than the fair reuse value at the uses and with the covenants and conditions and development costs authorized by the sale. SECTION 2. The City Council hereby finds and determines that the sale of the Site pursuant to the Agreement will assist in the elimination of blight. SF-99Resolutions:DDA-CIM RLS 99-361 05/27i99 - #1 SECTION 3. The City Council hereby finds and determines that the sale of the Site pursuant to the Agreement is consistent with the implementation plan adopted pursuant to Section 33490 of the Health and Safety Code. SECTION 4. The City Council hereby consents to the Agency's use of its authority under Health and Safety Code Section 33421 in carrying out the provisions of the Agreement and finds and determines that such use by the Agency of its authority under Section 33421 is necessary to effectuate the purposes of the Redevelopment Plan. SECTION 5. The proposed Agreement is hereby approved in substantially the form presented at this meeting, with such minor changes as may be approved by the Executive Director of the Agency with approval as to form by the Agency Legal Counsel. SECTION 6. The City Council hereby authorizes the City Clerk to deliver a copy of this Resolution to the Executive Director and members of the Agency. A copy of the Agreement when executed by the Agency shall be placed on file in the office of the City Clerk as Document No. 600.30• PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 7th day of June, 1999. ATTEST: City Clerk APPROVED AS TO FORM: Kane, Ballmer & Berkman Special Counsel Pj S F-Mesolutions: DDA-CIM RLS 99-361 05/27/99 - # l Mayor APPROVED AS TO FORM: ity Attorney REVIEWED AND APPROVED: 1 621-1 City Ad mistrator INIT TED AND APPROVED: Director of Economic Development Ices. No. 99-41 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at a regular meeting thereof held on the 7th day of June, 1999 by the following vote: AYES: Julien, Bauer, Garofalo, Green, Dettloff, Harman, Sullivan NOES: None ABSENT: None ABSTAIN: None City Clerk and ex-officio Clerk of the City Council of the City of Huntington Beach, California ----- - - ------------ I:iR A - -- --- ------ - 3. MA 11 `. -ti-.•c s, x 4. .F S- Id y ' - ,= z br: ,. , .,. ,, . .., y,...�x - : ..�`r .: Vie.,, .. , .�� .. •.,':. �F. 3 i r A <�s YTY <F°"HNrI` \ B j " LIN I1`C1TC�N ""°��'• dE ,' , } :'� - E1T .:"1W�:. r' , ;. P�,ANNIND�P NIRROIVINL ASSSS N 9 9 NJ `y .a. a fir: s.. ....:..' .�� ,.:. ..�..a.. .... ;a ...�«', .max 1. PROJECT TITLE: Disposition and Development Agreement between the Redevelopment Agency of the City of Huntington Beach and CIM Group, LLC. Concurrent Entitlements: None 2. LEAD AGENCY: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Contact: Herb Fauland, Senior Planner Phone: (714) 536-5271 3. PROJECT LOCATION: Blocks 104/105 - bounded by Pacific Coast Highway, Walnut Avenue, Sixth Street, and Main Street (Huntington Beach Redevelopment Plan/ Main -Pier Redevelopment Sub - Area) 4. PROJECT PROPONENT: Redevelopment Agency of the City of Huntington Beach Contact Person: David C. Biggs, Economic Development Director Phone: (714) 536-5582 5. GENERAL PLAN DESIGNATION: Various 6. ZONING: Downtown Specific Plan 7. PROJECT DESCRIPTION: Disposition and Development Agreement between the Redevelopment Agency of the City of Huntington Beach and CIM Group, LLC for the future development of Blocks 104/105. 8. OTHER PREVIOUS RELATED ENVIRONMENTAL DOCUMENTATION: Environmental Impact Report (EIR) No. 96-2 for the Huntington Beach Redevelopment Project and EIR No. 89-6 Main -Pier Phase II and Main Street 100 Block. 9. OTHER AGENCIES WHOSE APPROVAL IS REQUIRED (AND PERMITS NEEDED): None Page I 7 ENVIRONMENTAL FACTORS POTENTIALLY AFFECTED: The environmental factors checked below would be potentially affected by this project, involving at least one impact that is a "Potentially Significant Impact" or is "Potentially Significant Unless Mitigated," as indicated by the checklist on the following pages. ❑ Land Use / Planning ❑ Population / Housing ❑ Geology / Soils ❑ Hydrology / Water Quality ❑ Air Quality ❑ Agriculture Resources ❑ Transportation / Traffic ❑ Biological Resources ❑ Mineral Resources ❑ Hazards and Hazardous Materials ❑ Noise ❑ Mandatory Findings of Significance DETERMINATION (To be completed by the Lead Agency) On the basis of this initial evaluation: ❑ Public Services ❑ Utilities / Service Systems ❑ Aesthetics ❑ Cultural Resources ❑ Recreation I find that the proposed project COULD NOT have a significant effect on the environment, and the project is found to be EXEMPT. I find that although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because the mitigation measures described on an attached sheet have been added to the project. A MITIGATED NEGATIVE DECLARATION will be prepared. I find that the proposed project MAY have a significant effect on the environment, and an ENVIRONMENTAL IMPACT REPORT is required. I find that the proposed project MAY have a potentially significant effect(s) on the environment, but at least one effect (1) has been adequately analyzed in an earlier document pursuant to applicable legal standards, and (2) has been addressed by mitigation measures based on the earlier analysis as described on attached sheets. An ENVIRONMENTAL IMPACT REPOR'f is required, but it must analyze only the effects that remain to be addressed. I find that although the proposed project could have a significant effect on the environment, because all potentially significant effects (a) have been analyzed adequately in an earlier EIR or NEGATIVE DECLARATION pursuant to applicable standards, and (b) have been avoided or mitigated pursuant to that earlier EIR or NEGATIVE DECLARATION, including revisions or mitigation measures that are imposed upon the proposed project, nothing further is required. I addition, the proposed project is found to be exempt (CEQA Section 15168 C, Publi Re ou s CV2117.3). Signature Date Herb Fauland Printed Name Senior Planner Title ❑� ❑K n Page 2 EVALUATION OF ENVIRONMENTAL IMPACTS: A brief explanation is required for all answers except "No Impact" answers that are adequately supported by the information sources a lead agency cites in the parentheses following each question. A "No Impact" answer is adequately supported if the referenced information sources show that the impact simply does not apply to the project. A "No Impact" answer should be explained where it is based on project -specific factors as well as general standards. All answers must take account of the whole action involved. Answers should address off -site as well as on - site, cumulative as well as project -level, indirect as well as direct, and construction as well as operational impacts. 3. "Potentially Significant Impact" is appropriate, if an effect is significant or potentially significant, or if the lead agency lacks information to make a finding of insignificance. If there are one or more "Potentially Significant Impact" entries when the determination is made, preparation of an Environmental Impact Report is warranted. 4. Potentially Significant Impact Unless Mitigated" applies where the incorporation of mitigation measures has reduced an effect from "Potentially Significant Impact" to a "Less than Significant Impact." The lead agency must describe the mitigation measures, and briefly explain how they reduce the effect to a less than significant level (mitigation measures from Section XVIII, "Earlier Analyses," may be cross-referenced). 5. Earlier analyses may be used where, pursuant to the tiering, program EIR, or other CEQA process, an effect has been adequately analyzed in an earlier EIR or negative declaration. Section 15063(c)(3)(D). Earlier analyses are discussed in Section XVIII at the end of the checklist. 6. References to information sources for potential impacts (e.g., general plans, zoning ordinances) have been incorporated into the checklist. A source list has been provided in Section XVIII. Other sources used or individuals contacted have been cited in the respective discussions. 7. The following checklist has been formatted after Appendix G of Chapter 3, Title 14, California Code of Regulations, but has been augmented to reflect the City of Huntington Beach's requirements. (Note: Standard Conditions of Approval - The City imposes standard conditions of approval on projects which are considered to be components of or modifications to the project, some of these standard conditions also result in reducing or minimizing environmental impacts to a level of insignificance. However, because they are considered part of the project, they have not been identified as mitigation measures). SAMPLE QUESTION: Potentially Potentially Less Than No ISSUES (and Supporting Information Sources): Significant Significant Unless Significan Impact Impact Mitigation t Impact Incorporated Would the proposal result in or expose people to potential impacts involving: Landslides? (Sources: 1, 6) 0 0 n Z Discussion: The attached source list explains that 1 is the Huntington Beach General Plan and 6 is a topographical map of the area which show that the area is located in a flat area. (Note: This response probably would not require further explanation). Page 3 Potentially Significant ISSUES (and Supporting Information Sources): Impact I. LAND USE AND PLANNING. Would the project: a) Conflict with any applicable land use plan, policy, or ❑ regulation of an agency with jurisdiction over the project (including, but not limited to the general plan, specific plan, local coastal program, or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect? (Sources: 1-8) Potentially Significant Unless Less Than Mitigation Significant Incorporated Impact No Impact b) Conflict with any applicable habitat conservation plan or ❑ ❑ ❑ natural community conservation plan? (Sources: 1, 6) c) Physically divide an established community? (Sources: 1, 3, ❑ ❑ 4) Discussion: There is no impact on or conflict with the General Plan or other policy documents adopted for the purpose of mitigating an environmental effect. The Disposition and Development Agreement (DDA) is not changing any land use, zoning, or conservation plans and will not physically divide an established community. The DDA may result in the acquisition of land and site consolidation. Any potential impacts were already analyzed in EIR No. 96-2 and the project does not result in anything significant beyond that which was already analyzed. II. POPULATION AND HOUSING. Would the project: a) Induce substantial population growth in an area, either directly ❑ ❑ ❑ (e.g., by proposing new homes and businesses)or indirectly (e.g., through extensions of roads or other infrastructure)? (Sources: 1, 8) b) Displace substantial numbers of existing housing, necessitating ❑ ❑ ® ❑ the construction of replacement housing elsewhere? (Sources: 8) c) Displace substantial numbers of people, necessitating the ❑ ❑ ® ❑ construction of replacement housing elsewhere? (Sources: 8) Discussion: Nine or fewer housing units will be potentially affected by the project contemplated by the Disposition and Development Agreement. Due to the nature and location of the subject units, it is assumed that there is one person per unit, and approximately 9 persons would potentially be displaced. If the average household size of 2.65 for the City of Huntington Beach is used to calculate a potential maximum number of persons that may be displaced, the resulting figure is 24. Thus, it is reasonable to expect that the potential number of persons that may be displaced will be between 9 and 24. However, all information so far uncovered reveals that the majority of households are one person households. Displacees are eligible for relocation benefits as defined in Redevelopment Law. Further, Redevelopment Law requires that units removed be replaced. Replacement units can be located anywhere in the City and do not have to be newly constructed. The Redevelopment Agency of the City of Huntington Beach will be responsible for assisting and/overseeing displacees and replacement of units. Potential impacts resulting from the projected contemplated by this DDA are considered less than significant. Any potential impacts were already analyzed in EIR No. 96-2 and the project does not result in anything significant beyond that which has already been analyzed. Page 4 ISSUES (and Supporting Information Sources): III. GEOLOGY AND SOILS. Would the project: a) Expose people or structures to potential substantial adverse effects, including the risk of loss, injury, or death involving: i) Rupture of a known earthquake fault, as delineated on the most recent Alquist-Priolo Earthquake Fault Zoning Map issued by the State Geologist for the area or based on other substantial evidence of a known fault ? (Sources: 8) ii) Strong seismic ground shaking? (Sources: 8) iii) Seismic -related ground failure, including liquefaction? (Sources: 8) iv) Landslides? (Sources: 8) b) Result in substantial soil erosion, loss of topsoil, or changes in topography or unstable soil conditions from excavation, grading, or fill? (Sources: 8) c) Be located on a geologic unit or soil that is unstable, or that would become unstable as a result of the project, and potentially result in on or off -site landslide, lateral spreading, subsidence, liquefaction or collapse? (Sources: 8) Potentially Significant Potentially Unless Less Than Significant Mitigation Significant Impact Incorporated Impact No Impact ❑ ❑ ❑ 19 ❑ ❑ ❑ ❑ ❑ ❑ z ❑ ❑ ❑ 19 ❑ ❑ ❑ ❑ ❑ ❑ d) Be located on expansive soil, as defined in Table 18-1-B of the ❑ ❑ ❑ Uniform Building Code (1994), creating substantial risks to life or property? (Sources: 8) Discussion: The proposed project is a legal agreement (DDA) between the Redevelopment Agency and CIM Group, LLC. The proposed DDA does not provide entitlements for development, even though a development project may ensue from the proposed agreement. Potential geology or soils impacts will be evaluated from an environmental perspective at the time of that action, as appropriate. No geology or soils impacts are anticipated as a result of the proposed project. IV. HYDROLOGY AND WAFER QUALTI'Y. Would the project: a) Violate any water quality standards or waste discharge ❑ ❑ ❑ ❑X requirements? (Sources: 1, 8) b) Substantially deplete groundwater supplies or interfere Page 5 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant ISSUES (and Supporting Information Sources): Impact Incorporated Impact No Impact substantially with groundwater recharge such that there would be a net deficit in aquifer volume or a lowering of the local groundwater table level (e.g., the production rate of pre- existing nearby wells would drop to a level which would not support existing land uses or planned uses for which permits have been granted? (Sources: 8) c) Substantially alter the existing drainage pattern of the site or El EJ El 9 area, including through the alteration of the course of a stream or river, in a manner which would result in substantial erosion or siltation on or off -site? (Sources: 8) d) Substantially alter the existing drainage pattern of the site or El El Z area, including through the alteration of the course of a stream or river, or substantially increase the rate or amount or surface runoff in a manner which would result in flooding on or off - site? (Sources: 8) e) Create or contribute runoff water which would exceed the El El EJ capacity of existing or planned stormwater drainage systems or provide substantial additional sources of polluted runoff? (Sources: 8) f) Otherwise substantially degrade water quality? (Sources: 8) g) Place housing within a 100-year flood hazard area as mapped EJ El El Z on a federal Flood Hazard Boundary or Flood Insurance Rate Map or other flood hazard delineation map? (Sources: 8) h) Place within a 100-year flood hazard area structures which would impede or redirect flood flows? (Sources: 8) i) Expose people or structures to a significant risk of loss, injury El or death involving flooding, including flooding as a result of the failure of a levee or dam? (Sources: 8) j) Inundation by seiche, tsunami, or mudflow? (Sources: 8) Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue from the proposed agreement. Potential hydrology impacts will be evaluated from an environmental perspective at the time of that action, as appropriate. No hydrology impacts are anticipated as a result of the proposed project. Page 6 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant ISSUES (and Supporting Information Sources): Impact Incorporated Impact No Impact V. AIR QUALITY. Where available, the significance criteria established by the applicable air quality management or air pollution control district may be relied upon to make the following determinations. Would the project: a) Violate any air quality standard or contribute to an existing or projected air quality violation? (Sources: 1, 8) b) Expose sensitive receptors to substantial pollutant concentrations? (Sources: 8) c) Create objectionable odors affecting a substantial number of people? (Sources: 8) d) Conflict with or obstruct implementation of the applicable air quality plan? (Sources: 1, 8) e) Result in a cumulatively considerable net increase of any criteria pollutant for which the project region is non -attainment under an applicable federal or state ambient air quality standard (including releasing emissions which exceed quantitative thresholds for ozone precursors)? (Sources: 8) Discussion: The proposed DDA does not provide entitlements for development, even though a development project may ensue as a result of this agreement. Potential air quality impacts will be evaluated from an environmental perspective at the time of that action, as appropriate. No air quality impacts are anticipated as a result of the proposed project. Any potential impacts were already analyzed in EIR 96-2 and the project does not result in anything significant beyond that which has already been analyzed. VI. TRANSPQRTATIQN/TRAFFIC. Would the project: a) Cause an increase in traffic which is substantial in relation to El 19 the existing traffic load and capacity of the street system (e.g., result in a substantial increase in either the number of vehicle trips, the volume to capacity ratio on roads, or congestion at intersections? (Sources: 1, 8) b) Exceed, either individually or cumulatively, a level of service standard established by the county congestion management agency for designated roads or highways? (Sources: 1, 8) c) Result in a change in air traffic patterns, including either an increase in traffic levels or a change in location that results in substantial safety risks? (Sources: 8) Page 7 ISSUES (and Supporting Information Sources): d) Substantially increase hazards due to a design feature (e.g., sharp curves or dangerous intersections) or incompatible uses? (Sources: 8) e) Result in inadequate emergency access? (Sources: 8) f) Result in inadequate parking capacity? (Sources: 8) g) Conflict with adopted policies supporting alternative transportation (e.g., bus turnouts, bicycle racks)? (Sources: 8) Potentially Significant Potentially Unless Less Than Significant Mitigation Significant Impact Incorporated Impact ❑ ❑ ❑ ❑ ❑ ❑ ❑ IN No Impact EN Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue as a result of this agreement. Potential transportation impacts will be evaluated from an environmental perspective at the time of that action, as appropriate. No transportation or traffic impacts are anticipated as a result of the proposed project. Any potential impacts were already analyzed in EIR No. 96-2 and the project does not result in anything significant beyond that which has already been analyzed. VII. BIOLOGICAL RESOURCES. Would the project: a) Have a substantial adverse effect, either directly or through ❑ ❑ ❑ 19 habitat modifications, on any species identified as a candidate, sensitive, or special status species in local or regional plans, policies, or regulations, or by the California Department of Fish and Game or U.S, Fish and Wildlife Service? (Sources: 8) b) Have a substantial adverse effect on any riparian habitat or El ❑ El sensitive natural community identified in local or regional plans, policies, regulations, or by the California Department of Fish and Game or US Fish and Wildlife Service? (Sources: 8) c) Have a substantial adverse effect on federally protected El ❑ ❑ wetlands as defined by Section 404 of the Clean Water Act (including, but not limited to, marsh, vernal pool, coastal, etc.) through direct removal, filling, hydrological interruption, or other means? (Sources: 8) d) Interfere substantially with the movement of any native ❑ ❑ ❑ resident or migratory fish or wildlife species or with established native resident or migratory wildlife corridors or impede the use of native wildlife nursery sites? (Sources: 8) Page 8 ISSUES (and Supporting Information Sources): e) Conflict with any local policies or ordinances protecting biological resources, such as a tree preservation policy or ordinance? (Sources: 1, 8) f) Conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional, or state habitat conservation plan? (Sources: 1, 8) Potentially Significant Potentially Unless Less Than Significant Mitigation Significant Impact Incorporated Impact ❑ ❑ ❑ ❑ ❑ ❑ No Impact FEE Discussion: The proposed project would not conflict with any adopted habitat conservation plans or affect biological resources. The proposed DDA does not provide any entitlements for development. The area is already developed with urban uses, and no development is proposed in conjunction with the request. No biological impacts are anticipated as a result of the proposed project. VIII. MINERAL, RESOURCES. Would the project: a) Result in the loss of availability of a known mineral resource ❑ ❑ ❑ Z that would be of value to the region and the residents of the state? (Sources: 1, 8) b) Result in the loss of availability of a locally -important mineral ❑ ❑ ❑ Z resource recovery site delineated on a local general plan, specific plan, or other land use plan? (Sources: 1, 8) Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue as a result of this agreement. The proposed project would not result in the loss of mineral resources or mineral resource sites. Potential mineral resources impacts will be evaluated at the time of that action. No mineral resources impacts are anticipated as a result of the proposed project. IX. HAZARDS AND HAZARDOUS MATERIALS. Would the project: a) Create a significant hazard to the public or the environment ❑ ❑ ❑ 0 through the routine transport, use, or disposal of hazardous materials? (Sources: 8) b) Create a significant hazard to the public or the environment ❑ ❑ El FRI through reasonably foreseeable upset and accident conditions involving the release of hazardous materials into the environment? (Sources: 8) c) Emit hazardous emissions or handle hazardous or acutely ❑ ❑ ❑ Z hazardous material, substances, or waste within one -quarter mile of an existing or proposed school? (Sources: 8) Page 9 Potentially Significant ISSUES (and Supporting Information Sources): Impact d) Be located on a site which is included on a list of hazardous ❑ materials sites compiled pursuant to Government Code Section 65962.5 and, as a result, would it create a significant hazard to the public or the environment? (Sources: 1) e) For a project located within an airport land use plan or, where ❑ such a plan has not been adopted, within two miles of a public airport or pubic use airport, would the project result in a safety hazard for people residing or working in the project area? (Sources: 3, 4, 8) Potentially Significant Unless Less Than Mitigation Significant Incorporated Impact ❑ ❑ ❑ ❑ f) For a project within the vicinity of a private airstrip, would the ❑ ❑ ❑ project result in a safety hazard for people residing or working in the project area? (Sources: 3, 4) g) Impair implementation of or physically interfere with an ❑ ❑ ❑ adopted emergency response plan or emergency evacuation plan? (Sources: 8) h) Expose people or structures to a significant risk of loss, injury, ❑ ❑ ❑ or death involving wildland fires, including where wildlands are adjacent to urbanized areas or where residences are intermixed with wildlands? (Sources: 3, 4, 8) nX No Impact 19 Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue as a result of this agreement. The proposed project would not conflict with any adopted or proposed activities that would expose persons to hazards or hazardous materials. Potential hazard impacts will be evaluated at the time of future development. No hazard impacts are anticipated as a result of the proposed project. X. NOISE. Would the project result in: a) Exposure of persons to or generation of noise levels in excess ❑ ❑ ❑ of standards established in the local general plan or noise HIN ordinance, or applicable standards of other agencies? (Sources: 8) b) Exposure of persons to or generation of excessive groundborne ❑ ❑ ❑ vibration or groundborne noise levels? (Sources: 8) c) A substantial permanent increase in ambient noise levels in the ❑ ❑ ❑ project vicinity above levels existing without the project? (Sources: 8) d) A substantial temporary or periodic increase in ambient noise ❑ ❑ levels in the project vicinity above levels existing without the project? (Sources: 8) Page 10 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant ISSUES (and Supporting Information Sources): Impact Incorporated Impact No Impact e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project expose people residing or working in the project area to excessive noise levels? (Sources: 3, 4, 8) f) For a project within the vicinity of a private airstrip, would the project expose people residing or working in the project area to excessive noise levels? (Sources: 3, 4, 8) Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue as a result of this agreement. Potential noise impacts that may result from future development will be evaluated at the time of that action. No noise impacts are anticipated as a result of the proposed project. XI. PUBLIC SERVICES. Would the project result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, need for new or physically altered governmental facilities, the construction of which could cause significant environmental impacts, in order to maintain acceptable service ratios, response times or other performance objectives for any of the public services: a) Fire protection? (Sources: 8) b) Police Protection? (Sources: 8) El c) Schools? (Sources: 8) El El El 19 d) Parks? (Sources: 8) e) Other public facilities or governmental services? (Sources: 8) El n ❑ Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue as a result of this agreement. The project will not result in the need for additional or create impacts to public services. Potential impacts to public services will be evaluated at the time of future development. No public services impacts are anticipated as a result of the proposed project. Page 11 ISSUES (and Supporting Information Sources): XII. UTILITIES AND SERVICE SYSTEMS. Would the project: a) Exceed wastewater treatment requirements of the applicable Regional Water Quality Control Board? (Sources: 8) b) Require or result in the construction of new water or wastewater treatment facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? (Sources: 8) c) Require or result in the construction of new storm water drainage facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? (Sources: 8) d) Have sufficient water supplies available to serve the project from existing entitlements and resources, or are new or expanded entitlements needed? (Sources: 8) e) Result in a determination by the wastewater treatment provider which serves or may serve the project that it has adequate capacity to serve the project's projected demand in addition to the provider's existing commitments? (Sources: 8) f) Be served by a landfill with sufficient permitted capacity to accommodate the project's solid waste disposal needs? (Sources: 8) Potentially Significant Potentially Unless Less Than Significant Mitigation Significant Impact Incorporated Impact No Impact ❑ ❑ ❑ ❑ ❑ ❑ ❑X ❑ ❑ ❑ a ❑ ❑ ❑ z ❑ ❑ ❑ z ❑ ❑ ❑ g) Comply with federal, state, and local statutes and regulations ❑ ❑ ❑ 19 related to solid waste? (Sources: 8) Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue as a result of this agreement. Potential impacts to utilities or service systems will be evaluated at the time of future development. No utilities or service system impacts are anticipated as a result of the proposed project. XIII. AESTHETICS. Would the project: a) Have a substantial adverse effect on a scenic vista? (Sources: ❑ ❑ ❑ 19 8) b) Substantially damage scenic resources, including, but not Page 12 ISSUES (and Supporting Information Sources): limited to, trees, rock outcroppings, and historic buildings within a state scenic highway? (Sources: 8) c) Substantially degrade the existing visual character or quality of the site and its surroundings? (Sources: 8) d) Create a new source of substantial light or glare which would adversely affect day or nighttime views in the area? (Sources: 8) Potentially Significant Potentially Unless Less Than Significant Mitigation Significant Impact Incorporated Impact ❑ ❑ ❑ ❑ ❑ ❑ ❑ II L No Impact 0 Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue as a result of this agreement Potential aesthetics impacts will be evaluated from an environmental perspective at the time of that action, as appropriate. No aesthetics impacts are anticipated as a result of the proposed project. XIV. CULTURAL RESOURCES. Would the project: a) Cause a substantial adverse change in the significance of a ❑ ❑ ❑ historical resource as defined in 515064.5? (Sources: 8) b) Cause a substantial adverse change in the significance of an archaeological resource pursuant to 515064.5? (Sources: 1, 3, ❑ ❑ ❑ n 4,8) c) Directly or indirectly destroy a unique paleontological ❑ ❑ ❑ resource or site unique geologic feature? (Sources: 1, 3, 4, 8) d) Disturb any human remains, including those interred outside of ❑ ❑ ❑ formal cemeteries? (Sources: 1, 3, 4, 8) Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue as a result of this agreement The proposed project area is already developed with urban uses, and no development is proposed in conjunction with the request. Potential cultural resources impacts will be evaluated from an environmental perspective at the time of that action, as appropriate. No cultural resources impacts are anticipated as a result of the proposed project. XV. RECREATION. Would the project: a) Would the project increase the use of existing neighborhood, community and regional parks or other recreational facilities such that substantial physical deterioration of the facility would occur or be accelerated? (Sources: 8) ❑ ❑ ❑ 9 Page 13 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant ISSUES (and Supporting Information Sources): Impact Incorporated Impact No Impact b) Does the project include recreational facilities or require the ❑ ❑ ❑ Z construction or expansion of recreational facilities which might have an adverse physical effect on the environment? (Sources: 8) c) Affect existing recreational opportunities? (Sources: 8) ❑ ❑ ❑ Z Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue as a result of this agreement Potential recreation impacts will be evaluated from an environmental perspective at the time of that action, as appropriate. No recreation impacts are anticipated as a result of the proposed project. AGRICULTURE RESOURCES. In determining whether impacts to agricultural resources are significant environmental effects, lead agencies may refer to the California Agricultural Land Evaluation and Site Assessment Model (1997) prepared by the California Dept. of Conservation as an optional model to use in assessing impacts on agriculture and farmland. Would the project: a) Convert Prime Farmland, Unique Farmland, or Farmland of Statewide Importance (Farmland), as shown on the maps prepared pursuant to the Farmland Mapping and Monitoring Program of the California Resources Agency, to non- agricultural use? (Sources: 1, 3, 4, 8) b) Conflict with existing zoning for agricultural use, or a Williamson Act contract? (Sources: 2) c) Involve other changes in the existing environment which, due to their location or nature, could result in conversion of Farmland, to non-agricultural use? (Sources: 8) ❑ ❑ ❑ 0 ❑ ❑ ❑ 0 ❑ ❑ ❑ Z Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue as a result of this agreement Potential agricultural impacts will be evaluated from an environmental perspective at the time of that action, as appropriate. No agricultural impacts are anticipated as a result of the proposed project. XVII. MANDATORY FINDINGS OF SIGNIFICANCE. a) Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or ❑ ❑ ❑ Z wildlife species, cause a fish or wildlife population to drop below self-sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal or eliminate important examples of the major periods of California history or prehistory? (Sources: 8) Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue from the proposed agreement. The project will not affect the quality of the environment or reduce habitat areas or plant or animals. Page 14 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant ISSUES (and Supporting Information Sources): Impact Incorporated Impact No Impact b) Does the project have impacts that are individually limited, but cumulatively considerable? ("Cumulatively considerable" ❑ ❑ ® ❑ means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects.) (Sources: 8) Discussion: The proposed DDA does not provide any entitlements for development, even though a development project may ensue from the proposed project. The 1996 Redevelopment Plan contains provisions that may have the effect of encouraging growth in the Project Area through redevelopment of underutilized properties, development of vacant properties and through improvements to infrastructure. These improvements may make areas more desirable and -or feasible for development. The proposed project would assist in implementing the 1996 Redevelopment Plan. Any development that may occur would be consistent with the City's General Plan and Zoning Code. c) Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? (Sources: 8) Discussion: See discussion of Section I-XVI above. ❑ El� ❑ Page 15 XVIII. EARLIER ANALYSIS. Earlier analyses may be used where, pursuant to tiering, program EIR, or other CEQA process, one or more effects have been adequately analyzed in an earlier EIR or negative declaration. Section 15063 (c)(3)(D). Earlier Documents Prepared and Utilized in this Analysis: Reference 4 Document Title . Available for Review at: 1 City of Huntington Beach General Plan City of Huntington Beach Planning Dept.; Planning/Zoning Information Counter, 3rd Floor 2000 Main St. Huntington Beach 2 City of Huntington Beach Zoning and Subdivision " Ordinance 3 Project Vicinity Map See Attachment #1 4 1996 Redevelopment Plan Amendment EIR No.96- City of Huntington Beach 2 Economic Development Dept., (State Clearinghouse No. 96041075) 5th Floor 2000 Main St. Huntington Beach 5 California Health & Safety Code (Redevelopment Law) Section 33000 et. Seq. 6 Main -Pier Phase II and Main Street 100 Block City of Huntington Beach Planning Dept.,Planning/Zoning Environmental Impact Report (EIR) No. 89-6 Information Counter, 3rd Floor 2000 Main St. Huntington Beach 7 - 1999 Huntington Beach Redevelopment Plan Amendment 8 Project Narrative See Attachment #2 Page 16 PROJECT NARRATIVE 1999 REDEVELOPMENT PROJECT AREA AMENDMENT BACKGROUND: The Redevelopment Agency has been active since 1976, and has processed various Redevelopment Plan Adoptions and Amendments since its inception. These actions have resulted in today's single redevelopment project area composed of five non-contiguous subareas: Main -Pier, Yorktown -Lake, Talbert -Beach, Oakview and Huntington Center. These subareas total 661 acres in size and represent about three percent of the city's land area. A Project Area Map is attached. Land uses within the area include single- and multi -family residential, commercial and industrial uses and a small amount of vacant land. Factors contributing to the area's designation as "blighted" include: the age and configuration of existing structures, inadequate transportation and other infrastructure, building and safety code violations, the presence of soils contamination, a lack of public services and facilities and inadequate housing available at affordable cost to low- and moderate -income households. THE DISPOSITION AND DEVELOPMENT AGREEMENT: The Disposition and Development Agreement (DDA) between the Redevelopment Agency of the City of Huntington Beach and CIM Group, LLC proposes a financial agreement for the future redevelopment of Blocks 104/105 in the City of Huntington Beach. The agreement is a legal document that provides the developer the opportunity to seek financing, to design a proposed mixed use and visitor -serving commercial project to be located between Pacific Coast Highway, Walnut Avenue, Main Street, and Sixth Street. The developer will still need to seek entitlement approvals through the City's planning process. It is at that time that the project will undergo the formal scrutiny of the environmental review process that is normally accorded every project seeking planning entitlements. The project envisioned by the Disposition and Development Agreement could lead to the potential displacement of some low and moderate -income households. These households will be provided relocation assistance in conformance with State Relocation Law. All will be financially assisted in finding affordable, comparable housing. They will also be assisted in meeting their new rental obligation should it be different than that of their former location within the project boundaries. The Disposition and Development Agreement contemplated by this Environmental Assessment is an administrative action and will not, of itself, make any physical changes to the environment. Further, any physical changes that do occur, subsequent to the approval of the Disposition and Development Agreement by the Redevelopment Agency Board will be subject to independent environmental review. Attachment No. 2 - Page I PRIOR ENVIRONMENTAL REVIEW: Environmental Impact Report (EIR) No. 89-6 was prepared in October, 1989, to assess the impacts of the Main -Pier Phase II and Main Street 100 Block project area. In April 1990, the City placed the project on hold. Subsequently modified plans were submitted representing a less intense scope of development. At that time the City prepared an Addendum pursuant to CEQA Guidelines Section 15164 (a)(2)(3) to address the modified project description. On January 6, 1992, the City Council certified EIR No. 89-6 and the Addendum with a Statement of Overriding Considerations to address the unavoidable adverse impacts created by light and glare and impacts to historic resources. The other impacts of land use compatibility, aesthetics, earth resources, and parking were determined to be mitigable to a level of insignificance. The certified EIR and Addendum analyzed the first phase (Abdelmuti Project - Oceanview Promenade) of the overall Main -Pier Phase Two project area. The appropriate mitigation measures were incorporated into project conditions of approval. The project was constructed in 1993-94. On July 18, 1983, the City Council certified EIR No. 82-2, which addressed the preparation of the Downtown Specific Plan. The 336 acre project area analyzed a maximum development potential of up to one million square feet of commercial/office space and approximately 6,575 dwelling units. On May 13, 1996, the City Council certified EIR No. 94-1. The program EIR analyzed the update of the City's General Plan. The EIR identified that the General Plan would result in significant unavoidable adverse impacts for three environmental issue areas, regardless of the proposed policies and/or mitigation measures. These environmental issue areas are: Transportation/Circulation, Air Quality, and Noise. The City adopted a Statement of Overriding Considerations in order to adopt the General Plan. On October 7, 1996, the City Council certified EIR No. 96-2. The program EIR addressed the proposed amendment and merger of the five previously adopted Redevelopment Plans/Projects within the city. The amendment/merger would combine the five project areas into one called the Huntington Beach Redevelopment Project. The amendment/merger was initiated to provide the City's Redevelopment Agency the ability to expand the Agency's financial and statutory authority and be consistent with the City's General Plan update. With the implementation of the mitigation measures contained in the EIR, their are no significant unavoidable adverse impacts of the amendment/merger beyond those set forth in the EIR on the General Plan Update. A Statement of Overriding Considerations was adopted for the significant unavoidable adverse impacts in the areas of short-term construction air quality and cultural resources. Attachment No. 2 - Page 2 ANE ATTACHMENT #8 LA COOPERATION AGREEMENT THIS COOPERATION AGREEMENT (this "Agreement") is entered into this day of , 1999, by and between the CITY OF HUNTINGTON BEACH (the "City") and the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (the "Agency"), with reference to the following facts: A. Concurrently with the approval and execution of this Agreement, the Agency is entering into that certain Disposition and Development Agreement (the "DDA") with CIM GROUP, LLC, a California limited liability company ("Developer"). The DDA provides for the disposition of the Site (as defined in the DDA) and the development and operation on the Site by Developer of improvements described in the Scope of Development appended to the DDA as Attachment No. 4, including, without limitation, improvements for hotel, retail and other uses. Except as otherwise provided in this Agreement, all capitalized terms in this Agreement shall have the meanings ascribed to such terms in the DDA. B. The Schedule of Feasibility Gap Payments appended to the DDA as Attachment No. 8 conditionally obligates the Agency to apply certain funds to reimburse Developer for specified costs. Paragraph (c)(v) of the Schedule of Feasibility Gap Payments provides that under specified circumstances, the Agency may be obligated to pay to Developer (i) Available Site -Generated Transient Occupancy Tax (as defined in the Schedule of Feasibility Gap Payments) received by the City and (ii) sales taxes received by the City generated from the Improvements developed on the Site by Developer. C. The City and the Agency intend by this Agreement for the City to advance funds to the Agency if and to the extent necessary to enable the Agency to perform its obligations under paragraph (c)(v) of the Schedule of Feasibility Gap Payments. NOW, THEREFORE, the City and the Agency do mutually agree as follows: [§ 1001 ADVANCE OF FUNDS On or prior to each date the Agency is required to make a payment to Developer pursuant to paragraph (c)(v) of the Schedule of Feasibility Gap Payments, -City shall advance to Agency an amount equal to the amount required to be paid by the Agency to Developer pursuant to said paragraph (c)(v), as reasonably determined by the Agency. The City's advance shall bear interest at a variable rate equal to the rate earned from time to time on the City's investments with the Local Agency Investment Fund administered by the State of California, from the date on which such funds are advanced until the date of repayment. The City shall only use the following sources of funds for the advance: (i) Available Site -Generated Transient Occupancy Tax (as defined in the Schedule of Feasibility Gap Payments) received by the City and (ii) sales taxes received by the City generated from the Improvements developed on the Site by Developer. May 13. 1999 I II. [§ 200] REPAYMENT A. [§ 201] Source of Funds Consistent with and subject to the proper and orderly implementation of the Redevelopment Plan for the Huntington Beach Redevelopment Project, the Agency shall use lawfully available funds for the purpose of repaying to City the principal amount advanced by City pursuant to this Agreement and any accrued interest thereon. The indebtedness of the Agency to the City created by this Agreement is subordinate to any pledge of tax increments to the bondholders of any tax allocation bonds which are or may be issued by the Agency and to any other indebtedness incurred by the Agency as reasonably necessary for the proper and orderly implementation of the Redevelopment Plan for the Huntington Beach Redevelopment Project. III. [§300] LIABILITY AND INDEMNIFICATION In contemplation of the provisions of California Government Code Section 895.2 imposing certain tort liability jointly upon public entities solely by reason of such entities' being parties to an agreement as defined by Govemment Code Section 895, the parties hereto, as between themselves, pursuant to the authorization contained in Government Code Sections 895.4 and 895.6, shall each assume the full liability imposed upon it, or any of its officers, agents or employees, by law for injury caused by negligent or wrongful acts or omissions occurring in the performance of this Agreement to the same extent that such liability would be imposed in the absence of Government Code Section 895.2. To achieve the above -stated purpose, each party indemnifies, defends and holds harmless the other party for any liability, losses, costs or expenses that may be incurred by such other party solely by reason of Government Code Section 895.2. IV. [§ 400] ENTIRE AGREEMENT; WAIVERS AND AMENDMENTS (a) This Agreement shall be executed in three (3) duplicate originals, each of which is deemed to be a original. This Agreement consists of three (3) pages and constitutes the entire understanding and agreement of the parties. (b) This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to the subject matter of this Agreement. (c) All waivers of the provisions of this Agreement and all amendments to this Agreement must be in writing and signed by the authorized representatives of the parties. May 13, 1999 2 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. CITY OF HUNTINGTON BEACH Dated: q- 9 '1999 By: AT TEST: By: City Clerk APPROVED AS TO FORM: 7�ail Vutton, City Attorney cc Dated: -7-5 '1999 Mayor REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH By: Chairman ATTEST: By: Ag6ncy Clerk ur✓7 APPROVED AS TO FORM: Gail H.ufLon, Agency General Counsel C- By. .. J. Ve —, 7-7 cl� "'11 f-IL001 J, May 13,1999 3 0 KANE, BALLMER & BERKMAN Agency Special Counsel By: Murray O. Kane May 13,1999 ff"A.AvinffeCITY OF HUNTINGTON BEACH Inter -Office Communication Economic Development Department TO: Mayor and City Council/Chairman and Agency Board VIA: Ray Silver, Executive Director aezd FROM: David C. Biggs, Director of Economic Development DATE: June 4, 1999 SUBJECT: Disposition and Development Agreement Blocks 104/105 (Item D-2) Attached please find Attachment No. 1 and Attachment No. 2, as well as Exhibit B and Exhibit A to the Disposition and Development Agreement (DDA) between CIM Group, LLC and the Redevelopment Agency. As you will note, these items are the Map of Site and the Map of Property, as well as the Legal Description. These attachments and exhibits are to replace those included with your Council packet. If you have any questions, please feel free to call me or Gus Duran of our office. 6/3/99:104/105MapLegal.Doc WALNUT 14 n 7y. 13 s 7 � 17 8 9 ti y L.___ u7e• � 2�1 t f06 i i by 5s• 75- ST PARCEL A PARCEL B 16 6.49 AC. a• R. S 35— J t7E' WWT)wrm BEACH M.M. 3-36 TRACT NO. 13722 U.M. 636-38 TO 41 INC. ATTACHMENT No. 1 MAP OF SITE a AVENUE § r'• — .� — — v — 1B e•• ror TRACT 26 W i •f03v zz 3 20 ,21 79' Y ~ 18 f6 a• t.SO' L07 17 1 u7 ro• 3 1760 AC. 79 a 2 Q lH j �,. N0. 13722 tom. • we• �o. aa• HIGHWAY -- O PIER NOTE — ASSESSORS BLOCK 6 PARCtL NUMBERS SHOWN IN CIRCLES Wl ASSESSORS MAP BOOK 24 PAGE 15 COUNTY OF ORANGE Ilk u Parcels A PARCEL B ATTACHMENT NO. 2 LEGAL DESCRIPTION OF THE SITE 24-152-02 24-152-03 24-152-04 24-152-05 24-152-11 24-152-12 24-152-13 24-152-14 24-152-10 24-153-4 24-153-5 24-153-7 24-153-11 24-153-17 24-152-18 24-153-01 24-153-02 24-153-03 24-153-10 24-153-11 24-153-16 24-153-21 As per Preliminary Title Reports Issued by First American Title on July 21, 1998 through July 29, 1998 6/ 1 /99:104/ 105: LEGADES 2. Doc Parcels A PARCEL B EXHIBIT A LEGAL DESCRIPTION OF THE SITE 24-152-02 24-152-03 24-152-04 24-152-05 24-152-11 24-152-12 24-152-13 24-152-14 24-152-10 24-153-4 24-153-5 24-153-7 24-153-11 24-153-17 24-152-18 24-153-01 24-153-02 24-153-03 24-153-10 24-153-11 24-153-16 24-153-21 As per Preliminary Title Reports Issued by First American Title on July 21, 1998 through July 29, 1998 6/1 /99:104/105:LEGALDES.Doc EXHIBIT B MAP OF PROPERTY WALNUT 14 6 7 /7 8 (9 ti y �J me• 7: e sl el JI 2 1 I 1061 I I I n• n• ST s AVENUES n i ». � � _ — — r Y6 ,,. uo m• TRACT 16 <n 101 2s 3 20 21 _ _ 4.30 Or 17 t 1 u. ro• 1760 AC. d Fcs I 1 a 154 Q 1H �• ,,, N0. f3722 e H{CHWAY -- PARCEL A PARCEL B is 6.49 AC. 28 PIER S 65 R. S JS- J \ NOTE — ASSESSOU BLOCK 6 tXIlVT&YGTON BEACH M.M. 3-36 PARCI't NUMBERS TRACT NO. 13722 • M.M. 636-38 TO 41 INC. SHOWN IN CIRCLES u/L ASSESSORS MAP BOOK 24 PAGE 15 COUNTY OF ORANGE JUN-07-99 05:02 PM B E ASSOCIATES 7143746717 P.01 `14 June 7, 1999 Via Fax to the City Clerk (714) 374-1557 Honorable Chairwoman and Redevelopment Agency Members City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 f `-f Subject: Public Hearing for Approval DDA between Agency and CIM Group; LLC (Agenda Item D-2) Dear Chairman Green and Agency Members: N On behalf of Block 104 Main Street property owners Mr. Gary Mulligan (117 Main Street), Mr. Frank Alfonso (119 Main Street),Mr. George Draper (121 Main Street) and Mr. & Mrs. Ron Mase (123 Main Street) and Mr. & Mrs. Jim Lane (125 Main Street) it is respectfully requests that the Redevelopment Agency deny the recommended approval of the CIM Group, LLC DDA. We believe the subject action should be denied for the following reasons: 1. After stating it was desirous to work with any and all of the existing property owners CIM has not made a credible effort to work with the Block 104 property owners: a. CIM had only one (1) meeting with said property owners in mid June of 1998 and have not even had the professional courtesy to return several follow-up phone calls. CIM did recently have their broker Pat Hurst call all of the property owners last week, for the first time in one year, undoubtedly so they could say they have been in recent contact, but the effort was minimal and disingenuous at best. b. CIM has not made any legally binding offers to purchase property from the above described owners. c. The remaining five Main Street property owners have worked with the City/Agency and each developer the Agency brought on board over the past 15 years and deserves the opportunity to either participate in this development or to be allowed to proceed with the development of their properties on their own. 2. CIM/Federal did not close escrow on the Mr. Frank Alfonso (119 Main Street) property that they entered into escrow for more than one year ago to qualify to respond to the "Request for Owner Participant Development Qualifications" issued by the Agency in August of 1997. Hence, CIM does not own any property within the Block 104/ 105 development site and does not qualify as an "Owner Participant." c-; JUN-07-99 05:02 PM B E ASSOCIATES 7143746717 P•02 $IVIENI)I) AILI')EATIVIE AGENCY ACTION: Should the Redevelopment Agency decide to approve the subject action, we are requesting that the Agency amend the action to allow for CIM to develop all properties within, Block 104 & 105 with the exception of those located on Main Street. These property owners have proceeded as promised and have filed for a Conditional Use Permit No. 98-37, that if approved as submitted conforms to all Downtown Specific Plan code requirements and would allow for the development of these properties in last quarter of 1999. Further, we believe it would be a matter of fair and due diligence for the Agency to require CIM/Federal to present to the Agency for public review, updated documentation demonstrating their current financial ability to perform. 1. How will they provide the necessary capital to finance the proposed project given the current lack of funding from Wall Street for REIT's7 2. It would also be encouraging to sec strong letters of interest from the proposed tenants (e.g. Large Book Store and Specialty Market) stating they would locate within the proposed project with only subterranean parking on -site. We thank you in advance for your consideration of our request(s). We also thank David Biggs and his staff for their always kind and professional assistance. If the Agency or staff have any questions, please do not hesitate to contact me at (714) 960-7286. Sincerely, eith B, Bohr Property Owner Representative Xc: Ray Silver, Executive Director David Biggs, Director of Economic Development JUN 00 '99 10:09 HD CHAMBER OF COMM. 714 960-7654 HUNTINGTON BEAM ,,CAB !' C(JM[�tE i' .rune 4, 1999 Mayor Peter Green and Members of the City Council City 1 lail Huntington Beach, Ca. 92649 Dear Mayor Green, P.2 The Huntington Beach Chamber of Commerce representing 800 businesses wishes to state our conceptual support of the plans for the 3-5 acre site identify as Blocks 104 and 105 in downtown Huntington Beach - The $45 million project as proposed by the CIM Group will add the finishing touch to our Main Street with €he addition of 95,000 sf.. of retail, 40,000 sf. of restaurants and a 120- room courtyard hotel. With these additional amenities, our downtown will be able to provide activities attractive to residents and visitors alike - We compliment the City for attracting a developer with such an outstanding track record as the C1M Group who has worked on successful projects such as Third St. Ptomenade in San Monica; Old Town Historic District, Pasadena-, GasLamp Historic District, San Diego; Birch St. Promenade, Brea; Hollywood Boulevard and "A" Street in Oxnard. With the recent approval of the Hilton Ocean Grand Hotel and Conference Center, which will be completed in 2001, it is of utmost importance to complete the rest of ouT downtown area. This project will be one of the final steps in reaching the long-awaited goal. We urge your favorable support of the plans for Blocks 104 and 105 as proposed by the CIM Group. cerely, y e Riddell, ,CCE resident CC. Silver Biggs .' c-� _0 2100 Main Street, Suite 200 / Huntington Beach, CA 92648 714/536.8888 ACCRIDIT�AD (FAX) 7141960-7654 �� JUN 08 '99 10:00 HB CHAMBER OF COMM Xl& A 7 0 VV A 0.v'Z?4e. a e, 4 Date: Total Pages: A=NTTON: 714 960-7654 Company: Subject: �17 From:— , r, 4 '/ ( kew If you did not receive all the pages to this fax, please contact me at the Chamber office, (714) 536-8888. (714) 960-7654 FAX 2100 Main Street Suite 200 Huntington 8ea0N CA 92648 714/536-8888 (FAX) 714/960-7654 P. 1 V JAMES R MOORE' PAUL FREDERIC MAR) RICHARD A CURNUTT LEONARO A HAMPEL JOHN B HURLBUT. JI MILFORD W. DAHL, JR THEODOREI WALLACE GILBERT N. KRUGER JOSEPH D CARRUTH JAMES B. O'NEAL ROBERT C BRAUN THOMAS S SALINGER' DAVID C LARSEN' C LIFFORD E. FRIEDEN MICHAEL D RU BIN A G. RIVIN' JEFFREY M ODERMAN STAN WO LCOTT' ROBERT 5 BOWER MARC IA A. FORSYTH WILLIAM M. MARTICORENA JAMES L MORRIS WILLIAM J CAPLAN MICHAEL T HDRNAK PHILIP D KOHN JOEL D KUPERBERG STEVEN A NICHOLS THOMAS G BROCKINGTON WILLIAM W WYNDER EVRIDIKI (VICKI) DALLAS RANDALL M DA88USH GREGG AMBER MICHAEL F SITZER THOMAS J CRANE M KATHERINE JEN50N DUKE F WAHLOUIST RICHARD G MONTEVIDEO LORI SARNER SMITH ERNEST W KLATTE III THO JEFFREY WERTHEIMER ROBERT O. OWEN RUTAN & TUCKER, LLP ATTORNEYS AT LAW A PARTNERSHI P I NCLUDING PROFESSIONAL CORPORATIONS 611 ANTON BOULEVARD, SUITE 1400 COSTP. MESA, CALWORNIA 92626-1998 DIRECT ALL MAIL TO: P. O. BOX 1950 COSTA MESA, CALIFORNIA 92628-1950 TELEPHONE (714) 641-5100 FACSIMILE (714) 546-9035 INTERNET www.rutan.com A W RUTAN (1880.1972) JAMES B TUCKER, SR (1888-1950) MILFORD W DAHL, SR (1919-1988) H ROD ER HOWELL (1925 1983) June 7, 1999 Mayor Peter Green and Members of the City Council City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Chairman Peter Green and Members of the Board of Directors Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 DAM N VOLKERT JEFFREY A GOLDFARB F KEVIN BRAZIL A YNE H. MELZER LSKI HARRISON LISE K TRAYNUM LARRY A CERUTTI CAROL D CARTY PATRICK D MCCALLA RICHARD K HOWELL JAMES 5 WEISZ' DAVID H HOCH NER A- PATRICK MUNOZ 5 DANIEL HARSOTTLE PAUL J SIEVERS MICHAEL K. SLATTERY DEBRA DUNN STEEL DAN SLATER KE NT M CLAYTON MARK SUDENSIEK JOSEPH L MAGA III K RAIG C. KILGER JE NNIFER WHITE-SPERLING STEVEN J GOON OOUGLA5 J DENNINGTON REG A JULANDER TOOD O LITFIN KARA 5 CARLSON ERIC L DUNN FRED GALAN- CRISTY G LOMENZO JEFFREY T MELCHING SEAN P FARRELL MARLENE POSE KAREN ELIZABETH WALT NATALIE SIBBALD DUND ALISON M. BARBAROSH JOHN W. HAMILTON, JR. LYNN L05CH IN PHI LIP J BLANCHARD TERENCE J. GALLAGHER ROB EFIT E KING JULIE K. WHANG DEN13E M LOHMANN ALISON L TSAO CHARLES A DAVENPORT DANIEL L GEBERT RICHARD D. A - MARK M MALOV05 C EDWARD DSYBESMA, J. DAVID J GARIBALDI, III Re: Disposition and Development Agreement Between the Redevelopment Agency and CIN1 Group LLC for Property Located Within Blocks 104 and 105 Dear Members of the City Council and Redevelopment Agency: The law firm of Rutan & Tucker, LLP, represents Abdelmuti Development Company ("ADC"), owner of Lot 23 in Block 104 (the "ADC Property"), Ann and Ron Mase ("Mase"), owners of Lot 5 in Block 104 (the "Mase Property"), and the Eldon and Barbara Bagstad Living Trust ("Bagstad"), owner of Lot 11 in Block 104 (the "Bagstad Property"). On behalf of ADC, Mase, and Bagstad, I am submitting this letter in opposition to the City/Agency approval of the proposed Disposition and Development Agreement ("DDA") between the Agency and CIM Group LLC ("CIM") for certain properties located within Blocks 104 and 105. I respectfully request that a copy of this letter be entered into the record and considered at your June 7, 1999, joint public hearing on the DDA. At the outset, my clients object to the hearing proceeding this evening on the basis of inadequate notice and opportunity to prepare for the hearing. Notwithstanding that CIM's initial development proposal was made to the Agency all the way back in April of 1998 and your staff has been negotiating in private with CIM for the past several months, it was not until last Friday, one business day prior to the hearing,; that my office first received notice of this 1121014820-0001/3269049. a06/07/99 �«� .�• �,.�`.�,�:'i��.��.. (�' ass RUTAN & TUCKER, LLP ATTORNEYS AT LAW A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Mayor Peter Green and Members of the City Council Chairman Peter Green and Members of the Board of Directors June 7, 1999 Page 2 proposed action. Given the decades -long efforts by Mase, Bagstad, and the other remaining private owners in Blocks 104 and 105 to redevelop their own properties and the critically important impact that approval of the DDA would have on ADC's previously approved Owner Participation Agreement, my clients and I need at least 2-4 weeks additional time to review the available information so that we can submit adequate and complete comments to the City Council and Agency Board of Directors. If the City Council and Redevelopment Agency Board of Directors do not agree to continue this hearing for a short time to allow more adequate review, we must object to your approval of the DDA for the reasons set forth hereinbelow: 1. The Redevelopment Agency's Failure to Fully Address the Environmental Impacts of the Project in Conjunction with Approval of the DDA Violates the California Environmental Ouality Act "CEOA"l. Your staff's position is that approval of the DDA is somehow "exempt" from environ- mental review under Public Resources Code § 21083.3 and Section 15168(c) of the State CEQA Guidelines. (Staff report at p. 3.) The staff position is incorrect for a number of reasons. First of all, even assuming that Public Resources Code § 21083.3 applied, which is not the case, all it provides is that CEQA review of the specific development project proposed in the DDA can be limited to "effects on the environment which are peculiar to the ... project and which were not addressed as significant effects in the prior environmental impact report, or which substantial new information shows will be more significant than described in the prior environmental impact report." (Id, subds. (a) and (b).) In this case, however, the 1996 EIR for the Merged Redevelopment Project Area and the 1989 EIR (now 10 years out of date) for an entirely different development proposal for Main -Pier Phase II did not and do not address any of the potentially significant environmental impacts of this proposed project, including potentially significant impacts in the areas of traffic and circulation, parking, land use, and air quality. Your staff implicitly acknowledges as much by stating repeatedly in the Environmental Assess- ment that was prepared for the DDA that potential environmental impacts "will be evaluated at the time of future development." (Emphasis added.) With due respect, it is entirely inconsistent for the Agency to claim in one breath that the DDA is exempt from CEQA review because the review was previously completed, while in the next breath admitting that CEQA review for the project will be done at some unspecified time in the future. Approval of a contract such as the DDA constitutes "approval" of a discretionary "project" for CEQA purposes, triggering the obligation to complete a full environmental review of the project now. See, e.g., Citizens for Responsible Government v. City of Albany (1997) 112/014820-000113269049. a06/07/99 RUTAN & TUCKER, LLR ATTORNEYS AT LAW A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Mayor Peter Green and Members of the City Council Chairman Peter Green and Members of the Board of Directors June 7, 1999 Page 3 56 Cal.AppAth 1199 (held: city violated CEQA by failing to conduct environmental review prior to approving statutory development agreement and submitting it to the voters). Cf. City of Vernon v. Board of Harbor Commissioners (1998) 63 Cal.AppAth 677, 688-691(non-binding statement of intent was not binding and therefore did not constitute "approval" for CEQA purposes). Once CEQA review is required, as it is here, the public agency cannot refuse to analyze potentially significant environmental impacts simply by deferring consideration to a later date. See, e.g., Gentry v. City of Murrieta (1995) 36 Cal.App.4th 1359. Public Resources Code § 21083.3 is not applicable for a number of reasons. First of all, by its terms that statute applies only if the previous EIR was certified for a previous City zoning action, community plan designation, or general plan designation. Both of the previous EIRs referred to in your staff report were certified for a different purpose (redevelopment actions) by a different lead agency (the Redevelopment Agency, not the City). In addition, § 21083.3 applies only in the limited circumstance where the subsequent project approval is consistent with the previously approved plan, whereas in this case the CIM plan is inconsistent with and violates the City's Downtown Specific Plan and certified Local Coastal Plan in at least two important respects in the areas of floor area ratio and parking. (See Is 3 and 4 below.) Moreover, in order for Public Resources Code § 21083.3 to apply to a subsequent approval, any agency with authority to mitigate significant environmental impacts of the project by undertaking or imposing mitigation measures specified in the previous EIR must do so and the lead agency is required to make a finding at the public hearing that the mitigation measures were adopted. (Id, § 21083.3(c).) My understanding is that this is not being done in conjunction with the DDA, since apparently all consideration of environmental issues, including mitigation measures, is (wrongfully) being deferred until a later date. 2. Proper Notice Has Not Been Provided for the Joint Public Hearing on the DDA. In the one day since I received notice of this hearing, I have not had an opportunity to review the public hearing notices. Based upon the limited information provided to me, however, I believe that the City/Agency has failed to comply with noticing requirements in at least two respects. First of all, under CEQA, in order for the City/Agency to determine that use of a prior EIR or EIRs is appropriate, the lead agency must provide public notice in a specified manner at least 30 days prior to the hearing/action. See State CEQA Guidelines, §§ 15153(b) and 15087. Given the fact that Environmental Assessment 'No. 99-9 prepared for this project was not even signed by your staff until May 21, 1999, just a little over two weeks ago, it does not appear possible to me that the City/Agency could have complied with the mandatory CEQA noticing requirements. 112/014820-0001/3269049. a06/07/99 RUTAN & TUCKER, LLP ATTORNEYS AT LAW A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Mayor Peter Green and Members of the City Council Chairman Peter Green and Members of the Board ' of Directors June 7, 1999 Page 4 Moreover, the DDA contemplates the ultimate acquisition of a number of privately -owned parcels within Blocks 104 and 105, including the Mase Property and the Bagstad Property, by use of the Agency's power of eminent domain. In this circumstance, due process of law requires that the City/Agency provide adequate prior notice to the affected property owners in the same manner that would be required for an eminent domain hearing. See Conejo Recreation and Park District v. Armstrong (1981) 114 Cal.App.3d 1016 (held: due process rights of condemnee violated and eminent domain proceeding dismissed because condemnor park district had failed to give the condemnee notice of a pre -condemnation hearing before the Board of Supervisors at which the condemnor sought approval for the project). 3. The CIM Project Does Not Have Sufficient Parking. The DDA and the back-up reports submitted to the Council and Agency make clear that the CIM project will include no more than 400 parking spaces, approximately 380 spaces to be included in a "public" parking structure and 20 surface spaces. (Although the DDA acknowledges that CIM still has to obtain approval of a CUP/Coastal Development Permit, the economics of the transaction have been premised upon a total of 400 parking spaces and either the Agency or Developer is entitled to terminate the DDA if the City were to attempt to impose a higher parking obligation. See DDA, Section 505.3.) Four hundred (400) parking spaces is grossly inadequate to accommodate even the Developer's proposed new uses on the Site, much less the Agency's ongoing obligation to provide parking for ADC's commercial uses pursuant to the Owner Participation Agreement and the CUP/CDP approved for the ADC project. The Downtown Specific Plan requires all developments to meet the off-street parking standards of the Municipal Code and/or the Downtown Parking Master Plan and no special permits are authorized for deviations from these standards. (See DSP §§ 4.2.13 and 4.1.02.) The DDA and back-up reports state that the CIM project will include approximately 97,598 square feet of retail uses, 39,628 square feet of restaurant uses, and a 130-room hotel. Based upon the parking standards in the Downtown Specific Plan (see Figure 4.2) and the Municipal Code (see Section 231.04 with regard to hotel parking requirements, which are not separately set forth in the Downtown Specific Plan), the minimum parking requirement for the CIM project would be 800 parking spaces, exactly twice the maximum number of spaces that is being provided. The project has a parking deficiency of 400 spaces. In addition, the CIM project will eliminate a considerable number of surface parking spaces within Block 104 that the City/Agency committed to ADC as part of ADC's Owner Participation Agreement and CUP/CDP. (In the short time prior to tonight's hearing, I was unable to verify exactly how many spaces will be eliminated.) Thus, the net result of 112/014820-0001/3269049. a06/07/99 RUTAN & TUCKER, LLP ATTORNEYS AT LAW A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Mayor Peter Green and Members of the City Council Chairman Peter Green and Members of the Board of Directors June 7, 1999 Page 5 implementation of the CIM project would be to create a gigantic parking deficiency for Blocks 104 and 105. The Downtown Master Parking Plan projected that existing parking in the area "will continue to be adequate provided the total square footage of uses do not exceed the Master Plan projections." (Id, at p. 19.) In fact, however, the total square footage of uses now proposed for the CIM project greatly exceeds what was contemplated back in 1993, when the Downtown Parking Master Plan was formulated and the City/Agency contemplated that the Coultrup project would entail only 12,000 square feet of retail uses, 20,000 square feet of restaurant uses, 10,000 square feet of office space, and 80 residential units. (Id, Attachment No. 1.C.) The Coultrup project was proposed to be entirely "self -parked," and in no event would it have generated the huge additional burden on Downtown parking needs that would be imposed by the CIM project. The CIM project will also significantly burden ADC's development by making much more inaccessible the limited public parking that will remain in the Downtown area. Your Municipal Code recognizes that the utility of public parking depends upon its proximity to the private uses the parking is supposed to serve and the Code requires that joint use parking be located no more than 250 feet away from the building. (Municipal Code Section 231.06.) Although ADC has not had an opportunity to review the design and location of the proposed subterranean parking structure, it is necessarily the case that it will be much more inaccessible to tenants and visitors to ADC's building than the currently available surface parking lot within Block 104. Office space users are reluctant to rent space in a building without convenient, adequate, and dedicated on -site parking. The CIM project will further impair ADC's efforts to lease upper -floor office space and depress the rents that ADC is able to achieve. Since the Agency is obligated to guarantee ADC's rents for the second and third -floor office space within its building, the effect of the City/Agency approval of the DDA almost certainly will be to increase the Agency's costs to ADC and depress the value of the ADC property. 4. The CIM Project Violates the Maximum Floor Area Ratio Standard in the Downtown Specific Plan and LCP. The Sedway Group re -use appraisal (at p. 9) states that the CIM project includes 340,000 square feet of total building area (including the structured parking). Once the required dedications are made along the Main Street, PCH, and Sixth Street frontages of the Site, I estimate that the "net site area" of CIM's project will be approximately 118,800 square feet (127,400 square feet of gross site area minus an estimated 8,600 square foot dedication requirement). This yields a total floor area ratio for the project of 2.86. 112/014820-0001/3269049. a06/07/99 RUTAN & TUCKER, LLP ATTORNEYS AT LAW A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Mayor Peter Green and Members of the City Council Chairman Peter Green and Members of the Board of Directors June 7, 1999 Page 6 The CIM project does not qualify as either a "full block" development or a "half block" development within the meaning of the Downtown Specific Plan. (Id, Section 4.0.04.) Accordingly, the maximum permitted floor area ratio for the CIM project is 2.0 (id, Section 4.5.03(a)), not the 3.0 FAR assumed by the Sedway Group (at p. 2), and the maximum square footage for the structures in the project (including the parking structure) is approximately 237,600 square feet. The CIM project is over 100,000 square feet in excess of the maximum size allowable under the Downtown Specific Plan and the City's certified LCP. 5. The City/Agency Cooperation Agreement Violates the California Constitution. One of the key provisions in the DDA requires the City and Agency to enter into a Cooperation Agreement pursuant to which the City agrees to pay to the Agency certain transient occupancy tax and sales tax revenues received by the City from the completed CIM project. (See DDA, Sections 201.4(3), 505.1, and Attachment No. 8.) The Cooperation Agreement purports to obligate the City to pay general fund revenues to the Agency for many years, most likely for approximately the 30-year term of a proposed Community Facilities District bond to be sold at some uncertain future date. (Id, Attachment No. 8, is (c), (v), and (e).) The City's agreement to pay City general fund revenues in future years, without two-thirds voter approval, is a clear violation of the "constitutional debt limit" provision set forth in Article XVI, Section 18 of the California Constitution. See, e.g., Starr v. City and County of San Francisco (1977) 72 Cal.App.3d 164 (held: city's long-term guarantee of redevelopment agency's contractual obligation violated constitutional debt limit) and City of Palm Springs v. Ringwald (1959) 52 Ca1.2d 620, 623-624 (held: city's proposed pledge of sales taxes to secure payment of long-term bonds violated debt limit). 6. Approval of the DDA Would Constitute an Abuse of Discretion by the Cif and Redevelopment Agency by Committing Them to or Prejudging Them Regarding Future Legisla- tive Actions. Implementation of the DDA would necessitate the City's vacation of all of the public alleys within the Site and conveyance of the alleys to CIM (at no cost). If the City did not "follow through" on those actions, CIM would have default remedies against the Agency under the DDA. To my knowledge, however, the City has not even initiated the mandatory procedures under the Streets and Highways Code for determining whether or not the alleys are needed for public use and whether the alleys should be vacated, much less whether a conveyance of the alleys to CIM for free would constitute an unlawful gift of public funds. See Streets and High- ways Code § 8300 et seq. and Harman v. City and County of San Francisco (1972) 7 Cal.3d 150 (held: taxpayer stated valid cause of action for gift of public funds/property when city was alleged to have arbitrarily agreed to sell vacated streets for 50% of their fair market value). 112/014920-0001/3269049. a06/07/99 RUTAN & TUCKER, LLP ATTORNEYS AT LAW A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Mayor Peter Green and Members of the City Council Chairman Peter Green and Members of the Board of Directors June 7, 1999 Page 7 In order to implement the CIM project, the Agency also will have to exercise its power of eminent domain. Numerous provisions in the DDA allude to that well-known fact. While the DDA does not expressly commit the Agency to agree to use its eminent domain power, the consequences of the Agency's failure to do so are, at a minimum, that the Agency must return CIM's entire $150,000 deposit (including the $40,000 portion of the deposit that was previously made pursuant to the Exclusive Negotiation Agreement) and the Agency must absorb all of its costs of performance prior to the date the DDA is terminated. (See, e.g., DDA, Sections 108, 505.1, and 505.2.) In this regard, the Agency has not initiated the eminent domain process as to any of the privately -owned parcels within the Site and the Agency does not even currently have the authority to condemn the Bagstad Property or the property owned by Mr. Cracchiolo in Block 105. Given the precommitment and prejudgment of the CIM project and approval of the DDA prior to going through the necessary street vacation and eminent domain procedures, and in light of the adverse consequences to the Agency if those subsequent actions are not taken, my clients respectfully submit that approval of the DDA at this time would constitute a wrongful abuse of discretion. See, e.g., Redevelopment Agency v. Norm's Slauson (1985) 173 Cal.App.3d 1121 (held: redevelopment agency abused its discretion by contracting to sell the defendant's property to a third party developer and to issue bonds to finance a redevelopment project when no notice was provided to the landowner and the agency had not taken the rqeuired steps to condemn the property; subsequent adoption of the resolution of necessity was a sham and the agency thus had no right to take the property). 7. The Agency's Section 33433 Report is Inadequate and There is no Substantial Evidence to Support the Agency's Huge Financial Commitment to the Project. In the extremely limited time that my clients have had to review the DDA, the "Section 33433 report," and the Sedway Group re -use appraisal, our conclusion is that the DDA represents an exceedingly bad business deal for the Agency. Indeed, the Agency's true costs for this project are significantly understated and the "benefits" are significantly overstated. As an introductory matter, there is no substantial evidence in either the Section 33433 report or the re -use appraisal upon which the Agency could base a conclusion regarding the "fair value" findings that must be made under Section 33433 and to prevent this transaction from becoming an unlawful gift/waste of public funds/property. Neither report even bothers to state the basic assumptions underlying important projections of Project costs or revenues. For example, at page 7 of the Section 33433 report, it is stated that the Developer Advance, which is primarily for acquisition of the privately -held parcels within the Site), is $8 million, but the Sedway Group re -use appraisal openly acknowledges (at pp. 5, 7, and 8) that the acquisition 112/014820-0001/3269049. a06/07/99 RUTAN & TUCKER, LLR ATTORNEYS AT LAW A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Mayor Peter Green and Members of the City Council Chairman Peter Green and Members of the Board of Directors June 7, 1999 Page 8 costs are "unknown" and "to be determined." Without some adequate explanation of how these numbers were calculated or estimated, the decision -makers and the public are left totally in the dark on what is by far the largest additional Agency cost to be incurred under the DDA. A great many other defects in the Section 33433 report are obvious. Nowhere does the report explain, what the Agency's estimated $50,000 in "Site Costs" are (id, at p. 7) or how those costs were calculated. The Section 33433 report purports to calculate a "net present value" cost to the Agency, but provides a grossly misleading and inaccurate summary by not adding any imputed interest cost to the $7,800,000 of "Previously Incurred Acquisition" expenses from the dates incurred (which the re -use appraisal acknowledges commenced 11 years ago in 1988) and by failing to reduce the present value of the assumed $2,400,000 "Participation Buy -Out" payment to the Agency, which the DDA does not require to be made until up to 10 years after the project is completed. Nowhere does the Section 33433 report or the re -use appraisal justify the assumed $5,600,000 value of the "public" parking facility or set forth the assumptions and analysis (if any even has been done) to substantiate what the actual net operating income of the parking structure may be. Another defect in the Section 33433 report is that it totally fails to address the CIM project's impact in reducing City/Agency sales taxes and TOT from other nearby properties. The proposed hotel, retail stores, and restaurants will be at least partially competitive with other nearby uses in the Downtown; even if the loss to nearby businesses were only a small percentage (say, 25 %) of the revenues generated by CIM's project, the net result would be to make the project even less favorable to the City/Agency from a revenue generation standpoint. In addition, the Section 33433 report does not take into consideration the loss of sales tax revenues and property tax increment attributable to the several, existing businesses that would be eliminated. Once again, even though these figures would probably be a relatively small fraction of the estimated CIM tax revenue generation figures, the Section 33433 report overstates the project benefits. Finally, the Section 33433 report fails to address the additional costs that the Agency will be required to pay to ADC as a result of the loss of parking for the ADC Property and the resulting decline in office space occupancy and rents that ADC likely will be able to achieve for upper -floor office uses over the remaining term of the "rent guarantee" provision of ADC's Owner Participation Agreement. Going beyond the defects in the Section 33433 report, the potential understatement of City/Agency costs, and the overstatement of City/Agency revenues, the "bottom line" is that the DDA is a horrible business deal and would commit the Agency to sell the Site to CIM for far less than the fair market value or fair re -use value. A quick summary of the business terms of the deal is as follows: (1) the Agency is conveying land to CIM for free that the Agency has spent $7,800,000 to assemble over the past 11 years, plus (2) the Agency is signing a "blank 112/014820-0001/3269049. a06/07/99 RUTAN & TUCKER, LLR ATTORNEYS AT LAW A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Mayor Peter Green and Members of the City Council Chairman Peter Green and Members of the Board of Directors June 7, 1999 Page 9 check" to reimburse CIM for 100 % of the costs to assemble the remaining privately -held parcels within the Site (at an estimated cost of $8 million?), plus (3) the Agency is agreeing to make a fixed payment of $900,000 to CIM, plus (4) the Agency is in effect committing that CIM's advance for property acquisition costs will not exceed $10,500,000 and that its development costs will not exceed specified maximum amounts. (See Attachment No. 8.) In exchange for this huge, open-ended, and unknown public expense, what does the Agency get in return? First of all, the Agency supposedly gets a "public" parking structure worth $5,600,000. The fact of the matter, however, is that the "public" parking structure will address only half of the parking needs of CIM's own project, will not address the City/Agency's existing parking commitments to ADC, and is of only speculative benefit as an income -producer to help offset the Agency's costs of maintenance and repair. The only other consideration the Agency will receive is an uncertain participation in what amount to "excess" profits anyway, which payment may not be received by the Agency until 10 years or longer after the project is completed. The properties within Block 104 and 105 are extremely valuable. The Agency could achieve its redevelopment objectives at a far lower cost by dealing with the existing property owners. Mase and Bagstad, for example, have repeatedly urged that the Agency allow them to redevelop their properties consistent with the very same proposal that the City and Agency approved years ago. There is no justification for incurring a huge public expenditure in order to obtain a "public" parking structure that will end up serving only a fraction of the private needs of the project developer. In Duskin v. San Francisco Redevelopment Agency (1973) 31 Cal'. App. 3d 769, the court held that a taxpayer could properly sue the San Francisco Redevelopment Agency based upon allegations that the agency had improperly disposed of property at a price below the "fair value" requirement in Health and Safety Code Section 33433. If the Agency moves ahead with the CIM proposal based upon the economics in the DDA to be presented at tonight's meeting, my clients reserve their right to claim that the fair reuse value requirements of the law have not been met. 8. Selecting CIM as the Project Developer Violates the Owner Participation Rights of the Existing Property Owners. My clients already have advised the Agency that they believe the Agency's selection of CIM as the project developer for Blocks 104 and 105 violates their owner participation rights under the Community Redevelopment Law, the Agency's Redevelopment Plan, and the Agency's adopted owner participation rules. My clients have repeatedly expressed their willingness to redevelop their own properties consistent with the City/Agency's own previous requirements, and they have been prevented from accomplishing this redevelopment at an earlier date due only 112/014820-0001/3269049. a06/07/99 RUTAN & TUCKER, LLP ATTORNEYS AT LAW A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Mayor Peter Green and Members of the City Council Chairman Peter Green and Members of the Board of Directors June 7, 1999 Page 10 to circumstances beyond their control (primarily the Agency's insistence that they join with developers who have not performed their obligations and that they redevelop their properties in conjunction with a "master" development of both blocks). It is ironic that the Agency selected CIM as an "owner participant" with which to work since CIM owns no property in Blocks 104 and 105 at all. (Last year, I was advised that CIM had the Alfonso property in escrow for a time, but for whatever reason that escrow did not close. Even when CIM had the property in escrow, if it did, it did not qualify as an owner participant, and it certainly does not so qualify at this time.) The Agency is putting the cart before the horse. It should not be considering the CIM DDA at the same time it is processing a Redevelopment Plan Amendment to extend its eminent domain powers to acquire properties within these same two blocks. The Agency has repeatedly stated over the past several months that eminent domain will only be used as "a last resort." It is hard to accept the validity of such statements when the Agency refuses to deal with the existing property owners and selects an "owner participant" proposal from a non -owner. Because of the limited time available to prepare for this hearing, my clients reserve their right to rely on any additional grounds for challenging the DDA that may be discovered after the date of your joint public hearing. Based upon the foregoing, I again request on behalf of my clients that the City Council and Agency Board of Directors take the following actions: 1. Disapprove the DDA with CIM and direct the Agency staff to finalize appropriate Owner Participation Agreements with the property owners within Blocks 104 and 105 for the redevelopment of their properties; and 2. Direct the Agency staff to preserve ADC's existing parking (or provide similar parking rights no less convenient and beneficial) in any redevelopment proposal for Blocks 104 and 105; or 3. At a minimum, continue the public hearing in this matter until the minimum legal noticing requirements are satisfied and my clients have an adequate opportunity to address their concerns to the City/Agency. 112/014820-0001/3269049. a06/07/99 RUTAN & TUCKER, LLP ATTORNEYS AT LAW A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Mayor Peter Green and Members of the City Council Chairman Peter Green and Members of the Board of Directors June 7, 1999 Page 11 Thank you for your attention and consideration of this matter. Very truly yours, RUTAjN� & TUCKER, LLP Jeffrey M. derman JMO:jh cc: Mike Abdelmuti Ron and Ann Mase Eldon Bagstad Ray Silver, City Administrator/Executive Director David C. Biggs, Economic Development Director Gail C. Hutton, Esq., City Attorney Murray O. Kane, Esq., Redevelopment Agency Special Counsel 112/014820-0001/3269049. a06/07/99 PROOF OF PUBLICATION -- i NOTICE OF JOINT 1. Theproposed sale or' real property by the PUBLIC HEARING BY Agency to tfie developer. THE CITY COUNCIL 2. The proposed terms STATE OF CALIFORNIA) -THE CITY 1OFHUNTINGTON .. HUNTINGTON BEACH CH and conditions . such sale of real property. AND THE R E - 3. The proposed Dispos'i- tion and Development SS. DEVELOPMENT AGENCY OF THE CITY Agreement. . 4. All evidence and testi- County of Orange OF• HUNTINGTON mony for and against the ) BEACH ON A PROPOSED DISPOSI- approval of the Disposition and Development Agree- I am a Citizen of the United States TION AND DEVELOP- MENT AGREEMENT PROVIDING FOR THE ment and the sale of real property and the terms and conditions therefor. and a resident of the County aforesaid' I am SALE OF REAL PROP- ! ERTY WITHIN THE The Agency h a s port neonnectionwihRt the over the age of eighteen 'M E R G E D R E •:: 'DEVELOPMENT Agreement that describes years, and not a the specifies: party to or interested in the below PROJECT AREA OF THE CITY_ OF HUNT- a. The cost of the DDA to the Agency entitled matter. I am a principal clerk of TO INGTON BEACHTO LLC b. The estimated vatue of theinterests(1) obesold,de- the HUNTINGTON BEACH INDEPENDENT, CIM GROUP, - BLOCKS 104-105 ted be (I) e the highest under Redevelopmentt a newspa :(PCH/MAIN/WALNUT/ SIXTH) at euseand er of general circulation, printed NOTICE IS HEREBY withcondtions,c with conditions, covenants, and pu lished in the City of Huntington GIVEN THAT THE City , Council of the City of Hunt- and development costs re - quired by the sale. Beach Coup ty of Orange, State of ington Beach, California (the "Call and the Re- Thepurchasepriceof the properties California, and that attached Notice development Agency of the City of Huntington Beach cluded in Blocks 104/105. d. An explanation of why' i$ a true and complete copy as was printed (the "Agency") will hold -a ,joint public hearing on June � the sale will assist in the elimination of blight. 9 e. Other pertinent; and published in the Huntington Beach 7,1999,atthehourof7:00 soon thereafter as analysis. The environmental im- and Fountain Valley issues the matter can be heard, at i the a City Hall, �000 Main Street, pacts of, the .proposed ; Project have. already been of said Huntingt6n,B6ach, Califor- newspaper to wit the issue(s) of: nia, pursuant to California i Community Redevelop- �, analyzed in previous environmental impact re-; ment- Law (Health and Safety Code Section ; ports and documents, and: '-the project is therefore ex- 1 33000, et seq.) for the i , e m P t from further purpose of considering the environmental review.. approval of proposed Dis- I. position and Development At the above stated day, hour, and place, any and May 20, 1999 Agreement ("the DDA') all persons- having objec-I between the Agency and tions to or wishing to ex - May 27, 1999 CIM Group, LLC., (the "De- veloper"). press support of the proposed Disposition and The Disposition and De- velopment Agreement (the Development Agreement, I, the proposed sale, of, real "DDA") ' with the CIM property or the proposed t I declare, under penalty p }„ of that Group, LLC, Developer, concerning the disposition terms and conditions' _thereof may appear and be' Agency `1 perjury, the foregoing is true and correct. of the properties which In been or may be ac- heard before the and the City Council on the Disposition and quired by the Redevelop ment Agency oftheCity of proposed Development Agreement. Any desiring to be i Executed Huntington Beach and sold' to the 'CIM Group, LLC, The DDA provides for the - person heard at the hearing will be afforded an opportunity to, be heard. I on may 1 999 y 27 sale of approximately 3.0 acres of parcels within The documents referred at Costa Mesa, California. commonly known as ' " to above are available for public inspection and copy - I: Blocks 104 and 105, ing during regular office hours at the office of the bounded by Pacific Coast I Highway 'on the South,' City Clerk and Clerk of the .Redevelopment., Agency,, Main Street on the east, 1 Walnut Avenue on, the 1 City Hall, 2000 Main Street, Huntington Beach, CA. north, and 6th Street on the -west., The DDA includes 1 Dated: May 17, 1999 CONNIE BROCKWAY the terms for development City Clerk of the City of of a mixed -use. develop- Huntington Beach And, 1-2 ment encompassing ap- Clerk of the Redevelop - proximately a 130 room ho- ment Agency of the City , Signature tel, approximately 135,000 sq. ft. of retail and restau- of Huntington Beach Published •Huntington rant space, and 400 park- Beach -Fountain Valley In- ing spaces to be located on . a portion of two -block area. dependent May 20, 27, 1999 053-945 The purpose of the joint public hearing is to con- side_r._ - — - - -- - - NOTICE OF JOINT PUBLIC HEARING BY. THE CITY COUNCIL OF THE CLY_QF.,,,HUNTIN_ TON BEACH AND THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ON A PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT PROVIDING FOR THE SALE OF REAL PROPERTY WITHIN THE MERGED REDEVELOPMENT PROJECT AREA OF THE CITY OF HUNTINGTON BEACH TO CIM GROUP, LLC. — 131 ocKS 1 o y _ I o ff C � `� � IN�I Nv�ls, tti NOTICE IS HEREBY GIVEN THAT THE City Council of the City of Huntington Beach, California (the "City") and the Redevelopment Agency of the City of Huntington Beach (the "Agency") will hold a joint public hearing on June 7, 1999, at the hour of 7:00 PM, or soon thereafter as the matter can be heard, at City Hall, 2000 Main Street, Huntington Feach, California, pursuant to California Community Redevelopment Law (Health and Safety Code Section 33000, et sew.) for the purpose of considering the approval of proposed Disposition and Development Agreement ("the DDA") between the Agency and CIM Group, LLC., (the "Developer"). The Disposition and Development Agreement (the "DDA") with the CIM Group, LLC, Developer, concerning the disposition of the properties which have been or may be acquired by the Redevelopment Agency of the City of Huntington Beach and sold to the CIM Group, LLC. The DDA provides for the sale of approximately 3.0 acres of parcels within commonly known as Blocks 104 and 105, bounded by Pacific Coast Highway on the south, Main Street on the east, Walnut Avenue on the north, and 6th Street on the west. The DDA includes the terms for development of a mixed -use development encompassing approximately a 130 room hotel, approximately 135,000 sq. ft. of retail and restaurant space, and 400 parking spaces to be located on a portion of two -block area. The purpose of the joint public hearing is to consider: 1. The proposed sale or real property by the Agency to the developer. 2. The proposed terms and conditions of such sale of real property. 3. The proposed Disposition and Development Agreement. 4. All evidence and testimony for and against the approval of the Disposition and Development Agreement and the sale of real property and the terms and conditions therefor. The Agency has prepared a Summary Report in connection with the Agreement that describes the specifies: a. The cost of the DDA to the Agency. b. The estimated value of the interests to be sold, determined (1) at the highest and best uses permitted under Redevelopment Plan, and (ii) at the use and with conditions, covenants, and development costs required by the sale. c. The purchase price of the properties to be included in Blocks 104/105. d. An explanation of why the sale will assist in the elimination of blight. e. Other pertinent analysis. At the above stated day, hour, and place, any and all persons having objections to or wishing to express support of the proposed Disposition and Development Agreement, the proposed sale of real property or the proposed terms and conditions thereof may appear and be heard before the Agency and the City Council on the proposed Disposition and Development Agreement . Any person desiring to be heard at the hearing will be afforded an opportunity to be heard. The documents referred to above are available for public inspection and copying during regular office hours at the offices of the City Clerk and Clerk of the Redevelopment Agency, City Hall, 2000 Main Street, Huntington Beach, CA. Dated: May , 1999 Publish: May 20, 1999 May 27, 1999 City Clerk of the City of Huntington Beach And Clerk of the Redevelopment Agency of the City of Huntington Beach [ Two publication dates required] �l "/zo 01,9-re •' S11 NOTICE OF JOINT PUBLIC HEARING BY THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AND THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ON A PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT PROVIDING FOR THE SALE OF REAL PROPERTY WITHIN THE MERGED REDEVELOPMENT PROJECT AREA OF THE CITY OF HUNTINGTON EA H, TO CIM GROUP, LLC. —BLOCKS io4- 105 (PcHlrrn�'NltJALNuTl-lllFt) NOTICE IS HEREBY GIVEN THAT THE City Council of the City of Huntington Beach, California (the "City") and the Redevelopment Agency of the City of Huntington Beach (the "Agency") will hold a joint public hearing on June 7, 1999, at the hour of 7:00 PM, or soon thereafter as the matter can be heard, at City Hall, 2000 Main Street, Huntington beach, California, pursuant to California Community Redevelopment Law (Health and Safety Code Section 33000, et sec,.) for the purpose of considering the approval of proposed Disposition and Development Agreement ("the DDA") between the Agency and CIM Group, LLC., (the "Developer"). The Disposition and Development Agreement (the "DDA") with the CIM Group, LLC, Developer, concerning the disposition of the properties which have been or may be acquired by the Redevelopment Agency of the City of Huntington Beach and sold to the CIM Group, LLC. The DDA provides for the sale of approximately 3.0 acres of parcels within commonly known as Blocks 104 and 105, bounded by Pacific Coast Highway on the south, Main Street on the east, Walnut Avenue on the north, and 6th Street on the west. The DDA includes the terms for development of a mixed -use development encompassing approximately a 130 room hotel, approximately 135,000 sq. ft. of retail and restaurant space, and 400 parking spaces to be located on a portion of two -block area. The purpose of the joint public hearing is to consider: 1. The proposed sale or real property by the Agency to the developer. 2. The proposed terms and conditions of such sale of real property. 3. The proposed Disposition and Development Agreement. 4. All evidence and testimony for and against the approval of the Disposition and Development Agreement and the sale of real property and the terms and conditions therefor. The Agency has prepared a Summary Report in connection with the Agreement that describes the specifies: a. The cost of the DDA to the Agency. b. The estimated value of the interests to be sold, determined (1) at the highest and best uses permitted under Redevelopment Plan, and (ii) at the use and with conditions, covenants, and development costs required by the sale. c. The purchase price of the properties to be included in Blocks 104/105. d. An explanation of why the sale will assist in the elimination of blight. e. Other pertinent analysis. The environmental impacts of the proposed project have already been analyzed in previous environmental impact reports and documents, and the project is therefore exempt from further environmental review. At the above stated day, hour, and place, any and all persons having objections to or wishing to express support of the proposed Disposition and Development Agreement, the proposed sale of real property or the proposed terms and conditions thereof may appear and be heard before the Agency and the City Council on the proposed Disposition and Development Agreement. Any person desiring to be heard at the hearing will be afforded an opportunity to be heard. The documents referred to above are available for public inspection and copying during regular office hours at the offices of the City Clerk and Clerk of the Redevelopment Agency, City Hall, 2000 Main Street, Huntington Beach, CA. Dated: May_ / Z , 1999 Publish: May 20, 1999 May 27, 1999 ed ?), �e Yoe u�a City Clerk of the City of HuntingtoK Beach And Clerk of the Redevelopment Agency of the City of Huntington Beach [ Two publication dates required] TRANSMISSION VERIFICATION REFORT TIME . 05/17/1999 08:12 DATEJIME 05/17 08:11 FAX NO./N41E 919496465008 DURATION 00:00:56 PAGE(S) 03 RESULT OK MODE STANDARD ECM CITY COUNCIL/REDEVELOPMENT AGENCY PUBLIC HEARING REQUEST SUBJECT: C) A4 W DEPARTMENT: &p, /fy t C MEETING DATE: % g/ CONTACT: :�'V / two PHONE: Q t7 N/A YES NO ( ) Is the notice attached? ( Was the notice prepared by the City Attorney's Office?,, 4 ' J " . cy ( ) Do the Heading and Closing of Notice reflect City Council (and/or Redevelopment Agency )hearing? ( ) Are the date, day and time of the public hearing correct? ( ) If an appeal, is the appellant's name included in the notice? ( ) If Coastal Development Permit, does the notice include appeal language? Is there an Environmental Status to be approved by Council? Is a map attached for publication? Is a larger ad required? Size Is the verification statement attached indicating the source and accuracy of the mailing list? ( ) ( ) Are the applicant's name and address part of the mailing labels? ( ) ( ) Are the appellant's name and address part of the mailing labels? ( ) ( ) If Coastal Development Permit, is the Coastal Commission part of the mailing labels? If Coastal Development Permit, are the resident labels attached? QZmq A-VR4144 Is the Report 33433 attached? (Economic Development Dept. items only) AkW6 f i�aL� Please complete the following: � � � �. 1q,I , l . Minimum days from publication to hearing date 2. Number of times to be published '2" 3. Number of days between publications N I N For Administration and City Clerk use only Approved for public hearing Date notice to newspaper Date published Date notices mailed 16 DTICE OFFg�JOINT RELIC -G BY COUNCIL F THE CITY OF UNTINGTON BEACH ' ,ND THE RE 1EVELOPMENT LGENCY OF THE CITY )F HUNTINGTON 3EACH ON .A )ROPOSED DISPOSI- THE NEWPORT' . .+ vcYCLUP- MENT" AGREEMENT PROVIDING FOR THr SALE OF REAL PROP- ERTY WITHIN THEE. MERGED RE DEVELOPMENT PROJECT AREA OF THE CITY OF HUNT- INGTON BEACH TO CIM GROUP, LLC - BLOCKS 104-105 (PCH/MAIN/WALNUT/ SIXTH) NOTICE IS HEREBY GIVEN THAT THE City Council of the City of Hunt- ington Beach, California, (the "City") and the Re- development Agency of the City of Huntington Beach (the "Agency") will hold a joint public hearing on June 7, 1999, at the hour of 7:00 PM, or. soon thereafter as the matter can be heard, at City Hall, 2000 Main Street, Huntington Beach, Califor- nia, pursuant to California Community Redevelop- ment - Law (Health and Safety Code Section 33000, et seq.)--for- the -purpose of considering -the approval of'proposed Dis- position and Development Agreement ("the DDA") between the Agency and CIM Group, LLC., (the "De- veloper"). The Disposition and•De- velopment Agreement (the D "DDA") with the CIM Group, LLC, Developer, concerning the disposition of the properties which have been or may be act quired by the Redevelop- ment Agency of the City of Huntington Beach and sold to the CIM Group, LLC, The DDA provides for the sale of approximately 3.0 acres of parcels within commonly known - as Blocks 104 and 105, bounded_ by. Pacific Coast Highway on the South, Main Street on the east, Walnut Avenue on the rnorth, and 61h Street on the (( west. The DDA includes i the terms for development 11 of a mixed -use develop- ment encompassing ap- proximately a 130 room ho- tel, approximately 135,000 sq. ft. of retail and restau- rant space, and 400 park- ing spaces to be located on j a portion of two -block area. The purpose: of the joint - public hearing is to con - I sider: 1. The proposed sale or real property by the j Agency to the developer. 2. The proposed terms and conditions of such sale of real property. 3. The proposed Disposi- tion and Development Agreement. 4. All evidence and testi- mony for and against the approval of the Disposition and Development Agree- ment and the sale of real property and the terms and conditions therefor. The Agency has prepared a Summary Re- port in connection with the Agreement that describes the specifies: a. The cost of the DDA to the Agency b. The estimated value of the interests to be sold, de- termined (1) at the highest and best uses permitted 18682 under Redevelopment Plan, and (ii) at the use and Huntii with conditions, covenants, (714) 1 and development costs re- quired by the sale. - (714) { c. The purchase price of the properties to be in- �cluded in Blocks 1041105.. At the above stated day, hour; and place, any and moons having objec- tions to c wishing to ex- Nnass 't upon of the ,proposed'MDisposition and Development Agreement, the proposed sale of real property or .the proposed terms and conditions thereof may appear and be heard before the Agency and the City Council on the proposed Disposition and Development Agreement. Any person desiring to be _I heard at the hearing will be afforded an opportunity to be heard. The documents referred to above are available for public inspection and copy- ing during regularoffice office hours at the office of the City Clerk and Clerk of the Redevelopment Agency, City Hall, 2000 Main Street, Huntington each, CA. Dated: May 17, 1999 CONNIE BROCKWAY City Clerk of the City of Huntington Beach And Clerk of the Redevelop- ment Agency of the -City of Huntington Beach Published Huntington , Beach -Fountain Valley In- dependent May 20, 27, 1999 053-945 Client Reference # Independent Reference # in of your ad from the please find clipp J .ion, beginning ,ed to make any changes or corrections, at your earliest convenience- j ill be $ of this publication w r your cooperation and patronage. 160 sincerely j;�dy O'�_-tting ( ► Manager �J Department Legal Advertising RECEIVED FROM AND MADE A PART OF THF�RECRRD,Aq THE COUNCIL MEETING OF OFFICE OF THE CITY CLERK CONNIE BROCKWAY, CITY CLERK Disposition and 'i'levelopment Agreement b 0020 11 Projected Agency Revenues Over 25 Years 27 14 111 :� �� .:gyp 31 ml Key Reasons For Project 33 17 CITY