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HomeMy WebLinkAboutAuto Dealers Association Business Improvement District - BID - 2004-05-03SCSI n Z)ls� 81(,6 Council/Agency Meeting Held: ✓ 3 Deferred/Continued to: Approved ❑Conditionally Approved ❑Denied City CI k's ignat re Council Meeting Date: May 3, 2004 Deparfinen umber: D 0409 CITY OF HUNTINGTON BEACH REQUEST FOR REDEVELOPMENT AGENCY ACTION SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENCY -- MEMBERS ` SUBMITTED BY: RAY SILVER, Executive Director 62,42 PREPARED BY: DAVID C. BIGGS, Deputy Executive Director SUBJECT: Approve Loan to Upgrade Auto Dealers Reader Board Sign :.., (12 " Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachmeht(s) Statement of Issue: Recently the Huntington Beach Auto Dealers Association requested a loan from the Redevelopment Agency for the purpose of upgrading the reader board sign located along the 405 Freeway near Beach Boulevard and Edinger Avenue. A loan in the amount of $474,000 at a 6% interest rate for a period of 7 years is proposed. Funding Source: Redevelopment Agency's Projects Fund unappropriated, undesignated, redevelopment agency fund balance. Recommended Actions: 1. Approve Loan Agreement with the Auto Dealers Association Business Improvement District (BID) in the amount of $474,000 and authorize the Agency Chairperson and Agency Clerk to Sign the Agreement. 2. Approve an Amendment to the Lease Agreement with the Huntington Auto Dealers Association and Authorize the Chairman and the Agency Clerk to Sign the Lease Agreement. 3. Appropriate $ 474,000 from the Redevelopment Agency's Fund Balance. Alternative Action(s): 1. Do not approve the loan. 2. Modify the Loan Terms Analysis: In 1992 the Huntington Beach Auto Dealers Association requested assistance in the construction of electronic reader board sign along the 405 Freeway and adjacent Center Avenue. In an effort to assist the auto dealers increase their sales, the City's Redevelopment Agency provided the dealers with a $361,000 loan that was forgiven over c-'A REQUEST AJR REDEVELOPMENT .-j D- Or' „ AGENuY ACTION MEETING DATE: May 3, 2004 DEPARTMENT ID NUMBER: ED 04 09 time based on the increased sales taxes generated by the auto dealers. In addition, the Agency leased the land to the auto dealers for the location of the reader board sign. The Auto Dealers Association is now requesting a loan in the amount of $474,000 to upgrade the reader board sign to become a full color screen using LED technology. Interest on that loan will be at 6% and will be amortized over 7 years. The Auto Dealers Association will be paying the loan in monthly payments from assessments through the Auto Dealers Business Improvement District. The City collects these monthly assessments as a part of the Auto Dealers Business Improvement District (BID). All the auto dealers have agreed to be assessed for the cost of upgrading the reader board sign. A modification to the approved BID annual budget is being made under a separate Request For Council Action. This will increase the annual BID levy that the auto dealers will be obligated to pay in order to repay the loan to the Agency. Currently the BID provides funding for the operation and maintenance of the reader board sign and joint marketing efforts of the auto dealers. In addition, the lease for the property on which the reader board sign sits will be modified. The City's allowable usage of the reader board for public announcements will be reduced from a maximum 20% to a minimum of 5%. Currently, the City uses the reader board on a limited basis. With this loan the Redevelopment Agency has the opportunity to again assist the Huntington Beach Auto dealers to improve the marketing of Beach Boulevard auto row by improving the reader board that is more contemporary and more competitive with other freeway oriented reader boards. The auto dealers as an entity produce the highest source of sales tax revenues for the City. By virtue of the BID paying the proposed loan, the loan will be secured by the assessments paid by to the City by BID members. The interest rate that is proposed for the loan is a higher interest rate than the Agency would otherwise be able to receive on its fund balances. The Council's Economic Development Committee has reviewed and recommended approval of the proposed loan. Environmental Status: Upgrade of the sign has been deemed to be Categorically Exempt and a Negative Declaration has been recorded. Attachment(s): 1. Loan Agreement between the Redevelopment Agency of the City of Huntington Beach and the Huntington Beach Auto Dealers Association Business Improvement District. 2. Amended Lease Agreement between the Redevelopment Agency and the Huntington Beach Auto Dealers Association BID. 3. Fiscal Impact Statement RCA Author: Gus Duran x 1529 G:\Gus\BEACHB\Auto Dealers\RCAAutoDlrsLoan.doc -2- 4/20/2004 10:12 AM i 1 �. � • � • ¢ .� '� - �E fig � � f. �- � �" ti, a � ➢ ,, � : .. y y •' _ _ �. � � a ., e.. _ � ... � .,. , e , �..� �,�_, � a i PROMISSORY NOTE Principal Loan Amount: $474,000.00 Interest: 6% per annum Note Date: 044, / J j ' 200. FOR VALUE RECEIVED, the undersigned ("Maker") hereby promises to pay to the order of the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California ("Holder"), at a place designated by Holder, the principal sum of Four Hundred Seventy Four Thousand Dollars ($474,000.00) at the rate of six percent (6%) interest, pursuant to the Loan Agreement between the Redevelopment Agency of the City of Huntington Beach and the Huntington Beach Automobile Dealers Association, Inc. (the "Loan Agreement') dated as of 13 mft- , 2004 by and between Maker and Holder. The Loan Agreement is hereby incorporated by reference as though fully set forth herein. Any capitalized terms not defined herein shall have the meanings ascribed to them in the Loan Agreement. The obligation of the Maker to the Holder shall be satisfied by Maker in monthly installments of $ 4 9Z y 51 beginning on September 1, 2004 and continue thereafter until the entire amount is repaid. Payments to the Agency as required by the Loan Agreement and this Note shall be made by Maker by including the monthly installment due with the amount collected by the City of Huntington Beach pursuant to Chapter 3.52 of the Huntington Beach Municipal Code, as amended from time to time by the City Council of the City of Huntington Beach. In the event of default of the subsequent action to collect payment due under this note, the prevailing party in any such action shall be entitled to recover any attorney fees or costs in such action. Upon the forgiveness, waiver, and discharge of this Note as set forth above, Holder shall mark this Note "PAID IN FULL" and shall deliver this Note to Maker. 1. Severability. The unenforceability or invalidity of any provision or provisions of this Note as to any persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 2. Modifications. Neither this Note nor any term hereof may be waived, amended, discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by Maker and Holder; 3. Usu Z. Notwithstanding any provision in this Note, Deed of 'Trust or other document securing same, the total liability for payment in the nature of interest shall not exceed the limit now imposed by applicable laws of the State of California. 4. Governing Law. This Note has been executed and delivered by Maker in the State of California and is to be governed and construed in accordance with the laws thereof. Prepayment. Maker may prepay the principal on this Note without penalty or fee. IN WITNESS WHEREOF, Maker has executed this Note as of the date and year first above written. "MAKER" HUNTI GTON XBECH AUTO DEALERS ASSOCIATION, INC. p fint name ITS: (circle one) Chairman/ rem si a t/Vice President /7 AND By: �5 7' print name ITS: (circle one) Secreta Chief Financial Officer/ sst. Secretary - Treasurer g/mulvihill/misc/Promissory Note—2/4/6/04 LOAN AGREEMENT THIS LOAN AGREEMENT (the "Loan Agreement") is made by and between the HUNTINGTON BEACH AUTOMOBILE DEALERS ASSOCIATION, INCORPORATED (`Borrower") and the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency"). RECITALS A. Borrower is a corporation formed pursuant to the California Nonprofit Mutual Benefit Corporation Law as a mutual benefit corporation whose members include active dealers of automobiles and entities associated with the automobile industry. B. Borrower has previously requested that the City Council of the City of Huntington Beach establish an improvement area as authorized by the Parking and Business Improvement Law of 1989, codified at California Streets & Highways Code §36500 et seq. Pursuant to Borrower's request, on August 17, 1992, .the City Council adopted Resolution No. 6415 declaring its intention to establish a parking and business. improvement area to be known as the HuntingtonBeach Auto Dealers Business Improvement District ("District"). C. The City Council st+bsequently enacted Ordinance No. 3175, which added Chapter .3.52 to the Huntington Beach Municipal Code ("HBMC"). HBMC Chapter 3.52 authorizes the City to collect a monthly benefit assessment from all businesses within the District thatt are classified by the City as Class, A Retail Sales (At), Auto, New, t Tsed,, Parts businesses. D. Borrower's members are all businesses located within the. boundaries of the District and subject to the monthly assessment collected by the City pursuant to Chapter 3.52. Borrower's members also serve as an advisory body to the District (the Huntington Beach Auto Dealers Business Improvement District Advisory Group) and makes recommendations to the City Council on the expenditure of revenues derived from the assessments, on the classification of businesses, and on the method of levying the assessments. E. Borrower and the Redevelopment Agency of the City of Huntington Beach ("Agency") are parties to an agreement dated October 5, 1992 entitled "Disposition and Development Agreement" (the "DDA") the purpose of which was to effectuate the Redevelopment Plan for the Huntington Center Commercial District Project by providing for the building of an electronic freeway sign on property leased by the Agency and located adjacent to the 405 Freeway in the City of Huntington Beach (the "Readerboard"). F. Pursuant to the terms of the DDA, the Agency assisted Borrower in the construction of the Readerboard by providing Borrower with a construction -financing grant that was repaid by virtue of increased sales taxes generated by Borrower. Pursuant to the G:\AGREEMENT\2004\LOAN AGREEMENT Readerboard.doc terms of the DDA, the construction -financing grant for the Readerboard has now been forgiven. G. Borrower now desires to convert the existing electronic Readerboard to a double - face full color LED electronic display. H. The Agency wishes to lend, and Borrower wishes to borrow, Agency funds to assist Borrower to convert the existing Readerboard into double face full color screen that utilizes LED technology. I. Borrower intends to repay the Agency's loan in monthly installments by virtue of an increase in the monthly benefit assessment levied on its members and collected by the City pursuant to Chapter 3.52. Borrower desires that the City remit that portion of the monthly benefit assessment collected by the City from the District that is equivalent to the monthly installment due pursuant to this Loan Agreement to the Agency until the loan is repaid in full. NOW, THEREFORE, for good and valuable consideration the parties agree as follows: 1. PARTIES TO THE AGREEMENT The Agency. The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California. The principal office of the Agency is located at City Hall, 2000 Main Street, Huntington Beach, CA 92648. "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. . Borrower. Borrower is an incorporated non-profit mutual benefit corporation whose members include active new car franchise automobile dealers located in Huntington Beach, and other entities associated with the automobile industry. The principal office and mailing address of Borrower for the purposes of this Agreement is: Huntington Beach Automobile Dealers Association, Inc P.O. Box 2700 Huntington Beach, CA 92647 2. TERMS OF LOAN . Agency agrees to provide a loan to Borrower under the terms and conditions of this Loan Agreement. G:\AGREEMENT\2004\LOAN AGREEMENT Readerboard.doc 2. 3. AMOUNT OF LOAN On and subject to the terms and conditions of this Loan Agreement, Agency agrees to make, and Borrower agrees to accept, a loan in the amount of $474,000.00, which shall be evidenced by a promissory note. 4. INTEREST The note shall bear simple interest at the rate of 6% per annum on the principle amount outstanding from the date of the note until paid or forgiven. 5. REPAYMENT OF LOAN Borrower shall repay the loan in monthly installments of $6,924.45 beginning September 1, 2004 and continuing thereafter for seven (7) years until the entire amount is paid in full. City shall collect the monthly installment on behalf of Agency from Borrower by including the monthly installment due under this Loan Agreement in the amount billed to Borrower's members pursuant to HBMC Chapter 3.52, as amended. Borrower shall remit the monthly installment due under this Loan Agreement as part of, and together with, the monthly benefit assessment paid by Borrower's members pursuant to HBMC Chapter 3.52, as amended. The City shall remit the monthly installment due hereunder ($6,924.45 ) and collected each month from Borrower and/or Borrower's members pursuant to HBMC Chapter 3.52 to the Agency pursuant to the terms of this Loan Agreement. TERM OF THE LOAN The loan shall commence on the date set forth above and remain in full force and effect throughout the term of the loan. The Loan Agreement shall terminate upon termination of the loan. PREPAYMENT Borrower may prepay the principal amount without penalty or fee. 9. PENALTY FOR DELINQUENT PAYMENT Borrower and/or Borrower's members shall remit all amounts billed by the City pursuant to this Loan Agreement and/or HBMC Chapter 3.52 within thirty (30) days of receipt of the City's billing invoice. For failure to pay an amount billed when due, the City shall add a penalty of ten percent (10%) of the assessment amount on the last calendar day of each month after the date due thereof, providing that the penalty amount to be added shall in no event exceed one hundred percent (100%) of the assessment amount due. No City business license shall be knowingly issued or renewed to any business that, at the time of making application for any license or renewal thereto, is indebted to the City for any delinquent benefit assessment. 9. GOVERNING LAW The loan document shall be interpreted under and be governed by the laws of the State of California. G:\AGREEMEN'R2004\LOAN AGREEMENT Readerboard.doc 10. ATTORNEY FEES AND COSTS In the event of any default or any legal or administrative action is commenced to interpret or to enforce the terms of the loan documents, each party shall bear its own attorney fees and costs. The prevailing party in any such action shall not be entitled to recover any attorney fees or costs in such action. 11. TIME Time is of the essence as to this Loan Agreement and the Promissory Note loan documents. 12. REPRESENTATIONS Borrower represents to Agency that it has the requisite power and authority to execute and deliver this Loan Agreement, and to perform its obligations under this Loan Agreement. Borrower further represents that the Loan Agreement and the other documents either attached hereto or required herein have been duly authorized, approved and executed by and on behalf of Borrower, and that the Loan Agreement is a valid and binding obligation of Borrower in accordance with its terms. Borrower represents that the authorization, approval and execution of this Loan Agreement and all other proceedings of Borrower relating to the transaction herein contemplated, have been performed in accordance with all applicable federal, state, and local laws. Borrower further represents Borrower's members have authorized and approved to an increase in the monthly assessment levied on Borrower's members pursuant to HBMC Chapter 3.52 in furtherance of this agreement. Borrower hereby agrees to recommend to the City Council that City remit the revenues collected as of September 1, 2004 from Borrower's members to Agency in order to pay off the loan according to the terms of this Agreement. Any approval required under this Loan Agreement shall be in writing and executed by an authorized representative of the party granting the approval. Notice, demands and communications, formal notices, demands and communications between Borrower and Lender shall be sufficiently given, if, and shall not be deemed to be given unless, dispatched by registered or certified mail, postage prepaid, return receipt requested or delivered personally to the principal offices of Borrower and Agency as follows: Agency Borrower Redevelopment Agency Huntington Beach Automobile of the City of Huntington Beach Dealers Association, Inc. 2000 Main Street P. O. Box 2700 Huntington Beach, CA 92648 Huntington Beach, CA 92647 Attn: Executive Director G:\AGREEMENT\2004\LOAN AGREEMENT Readerboard.doc 4 13. CALIFORNIA PREVAILING WAGE LAW The City of Huntington Beach has ascertained from the Director of Industrial Relations of the State of California the general prevailing rate of per diem wages and the general prevailing rate for legal holiday and overtime work in the locality in which the work of converting the Readerboard as contemplated by this Loan Agreement will be performed, and the same has been set forth by resolution on file in the office of the City Clerk of the City of Huntington Beach. Borrower and any person or entity.hired by Borrower to complete the work financed by this Loan Agreement shall pay not less than said prevailing wage rates to all workers employed to convert the Readerboard as contemplated by this agreement, as required by California Labor Code Sections 1771 and 1774. 14. BINDING UPON SUCCESSORS All provisions of these loan documents shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors -in -interest, transferees and assigns of each of the parties provided however that this section does not waive the prohibition on assignment of this loan by Borrower without Agency's consent. 15. ASSIGNMENT AND ASSUMPTION Borrower shall not assign any of its interests under this Loan Agreement or the Promissory Note to any other party, without the prior written consent of Agency which consent may be withheld by Agency in its sole discretion. 16. WAIVER Any waiver by Agency of any obligation in this Loan Agreement or the Promissory Note must be in writing. No waiver will be implied from any delay or failure by Agency or the City of Huntington Beach to take action on any breach or default of Borrower onto pursue any remedy allowed under the Loan Agreement, Promissory Note, Loan Documents or applicable law. Any extension of time granted to Borrower to perform any obligation under this Loan Agreement or the Promissory Note shall not operate as a waiver or release from any of its obligations under this Loan Agreement or the Promissory Note. Consent by Agency to any act or omission by Borrower shall not be construed to be a consent' to any other or subsequent act or omission or to waive the requirement for Agency's written consent to future waivers. 17. INTEGRATION This Loan Agreement and the Promissory Note, including exhibits, executed by Borrower if any, contain the entire agreement of the parties relative to the conversion of the electronic Readerboard to a full color LED display and supersede any and all prior negotiations. 18. OTHER AGREEMENTS Borrower represents that it has not entered into any agreements that are inconsistent with the terms of this Loan Agreement. Borrower shall not enter into any agreements that are .inconsistent with the terms of this Loan Agreement without an express waiver by Agency in writing. G:\AGREEME.NT\2004\LOAN AGREEMENT Readerboard.doc 5 19. AMENDMENTS AND MODIFICATIONS Any amendments or modifications to this Loan Agreement must be in writing, and shall be made only if executed by both Borrower and Agency. 20. SEVERABILITY Every provision of this Loan Agreement is intended to be severable. If any provision of this Loan Agreement shall be held.invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized offices on the day of '4-1 , 20b� . HUNTINGTON BEACH AUTO DEALERS ASSOCIATION, INC. By:_-- - --- print name ITS: (circle one) Chairma /Vrr�es'en�JVice President AND REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH a public body Chairman ATTEST sl - gency Clerk print name ITS: (circle one) Secretary t hief Financial Officer Asst. APPROVED AS TO FORM: Secretary - Treasurer c. 1� Agen y Counsel�tl�+U� INITIATED AND APPPRROVED: AI Director of Economic bevelopmen't R REVIEWED AND APPROVED: Executive Director G:\AGREEMENT\2004\LOAN AGREEMENT Readerboard.doc 6 Amended Lease Agreement AMENDMENT NO. 1 TO LEASE AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND THE,HUNTINGTON BEACH AUTOMOBILE DEALERS ASSOCIATION FOR PROPERTY LOCATED ADJACENT TO THE 405 FREEWAY IN THE CITY OF HUNTINGTON BEACH THIS AMENDMENT is made and entered into this day of 200�by and between THE REDEVELOPMENT AGENCY OF THE GITY .OF HUNTINGTON BEACH, a public body corporate and politic (hereinafter "Lessor" or "Agency") and HUNTINGTON BEACH AUTO DEALERS ASSOCIATION, a nonprofit California corporation (hereinafter "Lessee"), WHEREAS, Agency and Lessee are parties to that certain agreement dated September 21, 1992, entitled "Lease Agreement Between the Redevelopment Agency of the ,City of Huntington Beach for Property Located Adjacent to the 405 Freeway in the City of Huntington Beach" which agreement shall hereinafter be referred to as the "Original Agreement"; and Pursuant to the terms of the Original Agreement, Agency leases certain real property from the City of Huntington Beach, which real property is referred to as the "Site in the Original Agreement; and The parties desire to modify the terms of the Original Agreement pursuant to the terms contained therein, NOW, THEREFORE, it is agreed by Agency and Lessee that Paragraphs 12 and 18 of the Original Agreement shall read as follows: SECTION 12. Rent. As compensation for the use of the Site, LESSEE will provide LESSOR and/or the City of Huntington Beach with not less than five (5%) of the use of the message sign for public notice and business announcements subject to the consultation with LESSOR. LESSEE shall select the time of day for LESSOR's use of the sign. SECTION 18. Entirety of Agreement. LESSOR and LESSEE agree that this Amendment and the Original Agreement constitutes the entire agreement between the parties. Except as specifically modified herein, all other terms and conditions of the Original Agreement remain in full force and effect. NOW, THEREFORE, it is further agreed by Agency and Lessee that Paragraph 19 shall be added to the Original Agreement and shall read as follows : G:\AGREEMT\2003\ReaderBoard-LeaseAmend#Ldoc 1 SECTION 19. Termination This Lease Agreement shall automatically terminate upon LESSEE's failure to timely pay the monthly installment due pursuant to the Loan Agreement between LESSEE and LESSOR dated /� 2004, a copy of which is attached hereto as Exhibit A. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized offices the day, month and year first above written. HUNTINGTON BEACH AUTO DEALERS REDEVELOPMENT AGENCY OF THE ASSOCIATION, INC. By:J� print name ITS: (circle one) Chairman/ resi,_ ides iVice President AND By: vV 71� &yy7, e . 4121 / 7 4?� print name CITY OF HUNTINGTON BEACH a public body CharrTarl ATTEST: .0-f-Ag ency Clerk -- ITS: (circle one) ` ecru etary/Chief Financial fficer/Asst. APPROVED AS TO FORM: Secretary - Treasurer r cy Counsel REVIEWED AND APPROVED: (:Age INITIATED AND APPROVED: Executive ViLctor Director of Economic Development REVIEWED AND APPROVED: 62 i�--= S' Executi4e Director of the Redevelopment Agency of the City of Huntington Beach G:\AGREEMT\2003\ReaderBoard-LeaseAmend#l.doe 2 I �. CITY OF HUNTINGTON BEACH INTERDEPARTMENTAL COMMUNICA TION To: Ray Silver, City Administrator From: Clay Martin, Director of Administrative Services Subject: FIS 2004-18 Loan to Upgrade Auto Dealer Reader Board Sign Date: April 7, 2004 As required by Resolution 4832, this Fiscal Impact Statement has been prepared for "Loan to Upgrade Auto Dealer Reader Board Sign." If the Redevelopment Agency approves this request (total year appropriation $474,000) the estimated unappropriated, undesignated Redevelopment Projects Fund balance at September 30, 2004 will be reduced to $1,498,000. L�qcSc_ Clay Ma in Director of Administrative Services 4'� M& 1: 1 ............. L -- INITIATING DEPARTMENT: ECONOMIC DEVELOPMENT SUBJECT: Loan to Upgrade Auto Dealer Reader Board Sign COUNCIL MEETING DATE: May 3, 2004 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Not Applicable Resolution (w/exhibits & legislative draft if applicable) Not Applicable Tract Map, Location Map and/or other Exhibits Not Applicable Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Attorney) Attached Subleases, Third Party Agreements, etc. (Approved as to form by City Attorney) Not Applicable Certificates of Insurance (Approved by the City Attorney) Not Applicable Financial Impact Statement (Unbudget, over $5,000) Attached Bonds (If applicable) Not Applicable Staff Report (If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Findings/Conditions for Approval and/or Denial Not Applicable EXPLANATION FOR MISSING ATTACHMENTS EXPLANATION ORETURN OF -- RCA Author: Gus Duran x 1529