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HomeMy WebLinkAboutRobert L. Mayer Corp. Investment Letter and Agreement - 1988-11-07 Ak. �..: CITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION ru�rncrcN+euCu To Doug LaBelle From Connie Brockway Deputy City Administrator City Clerk Subject AGREEMENT WITH ROBERT L. MAYER CORP. Date March 28, 1989 This can no longer wait as we have had no response to several requests for status. Please note the needed items on this document and call us as to when you expect to complete them so we can remove this from our pending. Also attached is an agreement that is fourteen months old of which you have the original which was never signed by B. L. Evans. Please call us on this one also. CB:bt Enc. 1 � 0 TH EWATERFRONT August 22, 1989 Ms.Connie Brockway City Clerk City of Huntington Beach 2000 Main Street Huntington Beach,CA 92648 RE: The Waterfront Dear Ms.Brockway: Per your request, please find enclosed a copy of the Assignment and Assumption Agreement as recorded April 28, 1989 as document number 89-225548. As this document is recorded with the County,we do not need a certified copy from you. Also, Doug La Belle has informed me that you have also inquired regarding a�� document to be signed by Robert Mayer regarding the Council/Agency actions of November 7, 1988. We have previously returned an "Investment Letter" document that deals with the subject of the City's pledge of a portion of the Transient f Occupancy Tax. However, the ordinances themselves (Agency Ordinance #1 and + City Ordinance #2974) do not require Robert Mayer's signature. Therefore, I would appreciate your assistance in explaining what you need further from us and we will be happy to comply. Thank you for your assistance. Sincerely, Shawn K.Millbcrn Project Manager SKM/mb enclosures The Robert Mayer Corporation 660 Newport Center Drive,Suite 1050, P.O. Box 8680,Newport Beach,CA 92658-8680•Telephone(714)759-8091 n E TH E WATERFRONT August 1, 1989 VIA MESSENGER Mr. Douglas LaBelle R E C E, T l Deputy City Administrator H 1 D Cityty , Huntington Beach AUG 0 2060 Main Street 1989 Huntington Beach,CA 92648 ECON pM1CRpMENT OF RE: Investment Letter EVELCPAIENr Dear Doug: Please find enclosed two copies of the above agreement executed by Bob Mayer Per your request. We will appreciate receiving from you or Connie Brockway, an original or certified copy of same signed by all parties for our files. Sincerely, Sha%gym K Millbcrn Project Manager SnVclh encls. cc: Susan Hunt The Robert Mayer Corporation 660 Newport Center Drive,Suite 1050, PO. Box 8W,Newport Beach, CA 92658-8680•Telephone(714)759-8091 INVESTMENT LETTER AND AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND ROBERT L. lriAYER THIS INVESTMENT LETTER AND AGREEMENT is wade this _7th day of t1QyemEer , 198a between the REDEVELOPMENT AGENCY OF' THE CITY OF HUNTINGTON BEACH, a redevelopment agency formed and exercising governmental functions pursuant to the Community Redevelopment Law, Part 1 of Division 24 of the California Health and Safety Code (the "Act") and ROBERT L. MAYER, AS TRUSTEE OF THE ROBERT L. MAYER TRUST OF 1982, DATED JUNE 22 , 1982, AS AMENDED (the "Registered Owner") . W I T H E S 2 B T H WHEREAS, to effectuate the Redevelopment Plan for the Main-Pier Redevelopment Project of the Agency, the Agency and the Registered Owner have entered into a Disposition and Development Agreement dated as of August 15, 1988 (the "Agreement") ; and WHEREAS, pursuant to such Agreement, the Agency has issued its Taxable Tax Allocation Bond, Issue A of 1988 to evidence the obligation of the Agency to pay the amounts described in the Agreement; and WHEREAS, pursuant to the Act and Section 7280. 5 of the California Revenue and Taxation Code, the Agency has pledged certain transient occupancy taxes to be received pursuant to the Act to the repayment of its obligations under the Agreement; and WHEREAS, in consideration of the Agency's execution of the Agreement, the Registered Owner has hereby represented to the Agency the facts and circumstances surrounding its acceptance of the Bond; and WHEREAS, the Agency wishes to set forth certain requirements for the transfer of any interest in the Bond or the assignment by the Registered Owner of any interest in the payment obligations of the Agency pursuant to the Agreement or the Bond; NOW THEREFORE, the Agency and the Registered Owner hereby represent and agree as follows: section-Ls The Registered Owner makes the following representations to the Agency: A. The Registered Owner acknowledges that: (i) the Bond is not a general obligation of the Agency or of the State of California or any political subdivision thereof; (ii) the Bond constitutes 'a special and limited obligation of the Agency, payable solely from the sources described in the Agreement and the Bond; (fii) the Registered Owner has been furnished with 'copies of the Agreement and is fully aware of the terms and provisions thereof; (iv) the Bond does not constitute a debt or a pledge of the faith and credit or the revenues (except such revenues as are expressly pledged pursuant to the Agreement and the Bond) or the taxing power of the Agency, the State of California or any political subdivision thereof; and (v) the payment of any amounts owing under the Bond is limited to the sources of payment and security described in the Agreement. The Registered Owner acknowledges that the Agency makes no warranty regarding the adequacy of any such sources of payment or security. B. The Registered Owner acknowledges that no official statement, prospectus, offering circular or other comprehensive offering statement containing material information with respect to the Agency and the Bond or with respect to the development of the Site (as described in the Agreement) in accordance with the Agreement and financing thereby is being provided to the Registered Owner. C. The Registered Owner acknowledges that it has made, independently and without reliance on the Agency, it own inquiry and analysis with respect to the Agency to the extent it has deemed appropriate. The Registered Owner has sufficient knowledge and experience in financial business matters, including the financial and business matters - encompassed by the Agreement, to be able to evaluate the risks and merits of the execution of the Agreement and the acceptance of the Bond. D. The Registered Owner acknowledges that the Bond (i) is not registered under the Securities Act of 1933 , as amended, and is not registered or otherwise qualified for resale to any person under the "Blue Sky" laws and regulations of any state, (ii) is not listed on. any stock or securities exchange, and (iii) carries no rating from any" investment rating service. E. The Registered Owner represents that it has acquired the Bond for its own account, and not with a view to resale or other distribution thereof and that it does not currently contemplate the division of the Band, the sale or transfer of any interest in the Bond or the underlying obligations of the Agency set forth therein, nor the resale or other' disposition of the Bond, or part thereof, acquired by it. F. The Registered Owner acknowledges that the Agency has made no representation of any kind, by its issuance and delivery of the Bond to the Registered owner, that interest on the Bond is excluded or excludable from the gross income of the Registered Owner or any other holder of the Bond, whether now or hereafter, for federal income tax purposes. Section 2. The Registered Owner agrees that it shall not make any resale or other distribution of the Bond, . nor shall it make any sale or transfer of an interest in the Bond or assign any right or interest in any obligation of the Agency forming a part of or underlying the obligations of the bond unless it first (a) advises the Agency in writing of its intent to make such resale, transfer or disposition, (b) makes available to the Agency evidence of the registration or qualification of such sale, transfer or disposition under the applicable securities laws, and (c) obtains from the buyer, assignee or other person acquiring an interest in the Bond an investment letter and agreement substantially in the form hereof, to the reasonable satisfaction of the Agency. section �, The Registered Owner hereby agrees to indemnify and hold harmless the Agency and its officers and directors against any and all losses, claims and liabilities which may arise out of or are related to the sale, transfer, pledge or other disposition of this Bond not ' in compliance with the terms of this Agreement. The Registered Owner further agrees to defend the Agency and its officers and directors in any suit or action arising out of or related to any such loss liability or claim, including the payment of reasonable attorney's fees for such counsel as may be selected by the Agency. �egtjon 4. The Registered Owner acknowledges that the Bond is non-negotiable and that transfers of any - interest in the payments to be received by the Registered Owner in respect of the Bond nay be effected only by an- assignment complying with the provisions of the Agreement and the securities laws of the State of California and the United States, to the extent such laws may be applicable thereto. The Registered Owner agrees that it shall specifically advise any assignee or transferee of those provisions of the Agreement providing for forgiveness of amounts due by the Agency and the discharge and termination of the obligations of the Agency under the Agreement which could have the effect of terminating payments to the assignee or transferee. Section 5. The Agency and the Registered owner agree that the Bond, and any interest therein, may be transferred by the Registered Owner to any affiliate of the Registered Owner, but that the Agency shall still require the execution by such affiliate of an investment letter and agreement substantially in the form of this Agreement. Section 6. Notwithstanding the provisions of the conflicts laws of the State of California which may purport to be applicable to this • Agreement or any of the transactions contemplated hereby, this Agreement shall be governed solely by the laws of the State of California. Section 7 . This Agreement racy be executed in counterparts, each counterpart of which shall be deemed to constitute the complete agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. REDEVELOPMENT AGENCY OF 'THE CIT ING 1 BE C ir+$ • Executive Director ROBERT L. MAYER, as Trustee of the Robert L. Mayer Trust of 1982 , dated June 22, 1982, as amended By: Robert L. May ATTEST: s Agency Secretary �,s�9d _ Chairman/Mayor REVIEWED AND APPROVED AS TO FORM: Agenc Attorney/City Attorney 1-31-r7fl APPROVED AS TO FORM: Agency Special Counsel - C/e/ C UNITED STATES OF AMERICA STATE OF CALIFORNIA REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH MAIN-PIER REDEVELOPMENT PROJECT TAXABLE TAX ALLOCATION BOND, ISSUE A OF 1988 THIS BOND IS NON-NEGOTIABLE. TRANSFER OF ANY RIGHT OR INTEREST IN THIS BOND OR ANY AMOUNTS TO BE RECEIVED HEREUNDER IS SUBJECT TO COMPLIANCE WITH STATE AND FEDERAL SECURITIES LAWS AND WITH CERTAIN IMPORTANT RESTRICTIONS SET FORTH IN THE AGREEMENT HEREIN REFERENCED, NONCOMPLIANCE WITH THE TERMS OF WHICH WILL INVALIDATE ANY SUCH DISPOSITION. THIS BOND, AND THE OBLIGATION OF THE AGENCY TO MADE PAYMENTS HEREUNDER, ARE SUBJECT TO FORGIVENESS, CANCELLATION AND DISCHARGE WITHOUT NOTICE TO THE REGISTERED OWNER HEREOF. REGISTERED OWNER: Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as amended . PRINCIPAL AMOUNT: Not to Exceed The Amounts Set Forth Below DATED DATE: August 15, 1988 The REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (hereinafter sometimes called the "Agency") , ' a public body, corporate and politic, duly organized and existing under the laws of the State of California, for value received, hereby promises to pal, (but solely frozr. the funds hereinafter mentioned) to the Registered Owner specified above or registered assigns, herein sometimes referred to as the "Registered Owner" (subject to the right of prepayment hereinafter mentioned) , an amount not to exceed the principal sum specified above on the dates stated herein by check mailed by first class mail thereto, to his address as set forth in Section 701 of the Agreement hereinafter referenced. THIS BOND IS NOT A DEBT OF THE CITY OF HUNTINGTON BEACH, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER SAID CITY, SAID STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS IS LIABLE HEREON, NOR IN ANY EVENT SHALL THIS BOND OR ANY INTEREST PAYABLE HEREON BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THE FUNDS OF THE AGENCY HEREINAFTER MENTIONED. THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE MEMBERS OF THE AGENCY NOR ANY PERSONS EXECUTING THE BOND ARE LIABLE PERSONALLY ON THIS BOND BY REASON OF ITS ISSUANCE. This Bond is issued as a duly authorized single bond of the Agency designated "Redevelopment Agency of the City of Huntington Beach, Main-Pier Redevelopment Project, Taxable Tax Allocation Bond, Issue A of 1988" (hereinafter called the "Bond" ) which has been issued pursuant to and in full conformity with the Constitution and laws of the State of California and particularly the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State of California) and Section 7280.5 of the Revenue and Taxation Code of the State of California, for the purpose of evidencing the obligations of the Agency to the Registered Owner named herein set forth in that certain Disposition and Development Agreement dated as of August 15, 1988 between the Agency and the Registered Owner (the "Agreement" ) , and is authorized by and issued pursuant to a resolution adopted by the Agency (said resolution being hereinafter referred to as the "Resolution" ) and the Bond is secured in accordance with the terms of the Agreement, reference to which is hereby made for a specific description of the security therein provided for the obligations evidenced by this Bond, for the nature, extent and manner of enforcement of such security, for the covenants, and agreements made for the benefit of the Registered Owner, and for a statement of the rights of the owner, and by the acceptance of this Bond, the Registered Owner hereof assents to all of the terms, conditions and provisions of said Agreement. All capitalized terms used herein and not otherwise defined shall have the meanings given such term in the Agreements. The principal of this Bond and the interest hereon are secured by a pledge of, and are payable solely from, the TOT and Property Tax Increment (as such terms are defined in said Agreement) and certain other funds, but only in the amounts and to the extent set forth herein and as more particularly set forth in the Agreement. Said Agreement is governed by and this Bond is issued under and is to be construed in accordance with the laws of the State of California. (A) Agency Payment of Portion of Property Tax Increment and Transient Occu anc Tax. The amounts referenced in this paragraph (A) shall constitute an indebtedness of the Agency to the Developer to be repaid at the times, from the sources of funds, for the purposes, and subject to all of the other terms and conditions set forth herein. All terms not defined herein shall have the meanings given such terms in the Agreement. Page 2 of 15 (a) Payments. Commencing fifteen (15) days after the later of (i) the end of the first calendar quarter following the issuance of a final Certificate of Completion for the Developer Improvements on Separate Development Parcel No. 1, or (ii) the commencement of construction (pursuant to a valid building permit) of the hotel on Separate Development Parcel No. 3, and continuing thereafter on the fifteenth (15th) day following the end of each calendar quarter until all sums set forth below are paid in full, the Agency shall pay to the Developer the sum of: (i ) Fifty percent (50%) of the "TOT" as that term is defined below, paid with respect to the hotel on Separate Development Parcel No. l. in and for the ten (10) year period following the opening of such hotel for business, but in no event for any period after December 31, 2019; (ii) Thirty-eight and one-half percent (38-1/2%) of the "Property Tax Increment, " as that term is defined below, paid with respect to Separate Development Parcel No. 1 in and for the period commencing on the Disposition. Transfer for Separate Development Parcel No. 1 and terminating on the date that is ten (10) years following the issuance of a final Certificate of Completion for the Developer Improvements thereon, but in no event for any period after December 31, 2009; and (iii) The interest received by the City and/or Agency on the revenues referenced in subparagraphs (i) and (ii) immediately above from the date such revenues are received by the City and/or Agency through the date of payment to the Developer, which interest shall be conclusively assumed for purposes of this Bond to accrue at the "Apportionment Rate" calculated by the Controller of the State of California as the rate of earnings by the Surplus Money Investment Fund for each six-month period during the term of such payment obligation but in no event shall interest be paid to the Developer in an amount to exceed twelve percent (12%) true interest cost per annun. Page 3 of 15 Commencing fifteen (15) days after the later of (i) the end of the first calendar quarter following the issuance of a final Certificate of Completion for the Developer Improvements on Separate Development Parcel No. 3, or (ii) the commencement of construction (pursuant to a valid building permit) of the hotel on Separate Development Parcel No. 4, and continuing thereafter on the fifteenth (15th) day following the end of each calendar quarter until all sums set forth below are paid in full, the Agency shall pay to the Developer the sum of: (i) Fifty percent (50%) of the "TOT" as that term is defined below, paid with respect to the hotel on Separate Development Parcel No. 3 in and for the ten (10) year period following the opening of such hotel for business, but in no event for any period after December 31, 2019; (ii) Thirty-eight and one-half percent (38-1/2%) of the "Property Tax Increment, " as that term is defined below, paid with respect to Separate Development Parcel No. 3 in and for the period commencing on the Disposition Transfer for Separate Development Parcel No. 3 and terminating on the date that is ten (10) years following the issuance of a final Certificate of Completion for the Developer Improvements thereon, but in no event for any period after December 31, 2009; and (iii) The interest received by the City and/or Agency on the revenues referenced in subparagraphs (i) and (ii) immediately above from the date such revenues are received by their City and/or Agency through the date of payment to the Developer, which interest shall be conclusively assumed for purposes of this Bond to accrue at the "Apportionment Rate" calculated by the. Controller of the State of California as the rate of earnings by the Surplus Money Investment Fund for each six-month period during the term of such payment obligation but in no event shall interest be paid to the Developer in an amount to exceed twelve percent (12%) true interest cost per annum. Page 4 of 15 Commencing fifteen (15) days after the later of (i) the end of the first calendar quarter following the issuance of a final Certificate of Completion for the Developer Improvements on Separate Development Parcel No. 4, or (ii) the commencement of construction (pursuant to a valid building permit) of the hotel on Separate Development Parcel No. 6, and continuing thereafter on the fifteenth (15th) day following the end of each calendar quarter until all sums set forth below are paid in full, the Agency shall pay to the Developer the sum of: (i) Fifty percent (50% of the "TOT" as that term is defined below, paid with respect to the hotel on Separate Development Parcel No. 4 in and for the ten (10) year period following the opening of such hotel for business, but in no event for any period after December 31, 2019; (ii) Thirty-eight and one-half percent (38-1/2%) of the "Property Tax Increment, " as that term is defined below, paid with respect to Separate Development Parcel No. 4 in and for the period commencing on the Disposition Transfer for Separate Development Parcel No. 4 and terminating on the date that is ten (10) years following the issuance of a final Certificate of Completion for the Developer Improvements thereon, but in no event for any period after December 31, 2009; and (iii) The interest received by the City and/or Agency on the revenues referenced in subparagraphs (i) and (ii) immediately above fron the date such revenues are received by the City and/or Agency through the date of payment to the Developer, which interest shall be conclusively assumed for purposes of this Bond to accrue at the "Apportionment Rate" calculated by the Controller of the State of California as the rate of earnings by the Surplus Money Investment Fund for each six-month period during the term of such payment obligation but in no event shall interest be paid to the Developer in an amount to exceed twelve percent (12%) true interest cost per annum. Page 5 of 15 Commencing fifteen (15) days after the end of the first calendar quarter following the issuance of a final Certificate of Completion for the Developer Improvements on Separate Development Parcel Nos. 2, 5, 6, 7, 8, and 9, and continuing thereafter on the fifteenth (15) day following the end of each calendar quarter until all sums set forth below are paid in full, the Agency shall pay to the Developer the sum of: (1) As to Separate Development Parcel No. 6 only, fifty percent (50%) of the "TOT, " as that term is defined below, paid with respect to the hotel on such Separate Development Parcel in and for the ten (10) year period following the opening of such hotel for business, but in no event for a period after December 31, 2019; (ii) Thirty-eight and one-half percent (38-1/2%) of the "Property Tax Increment, " as that term is defined below, paid with respect to each such Separate Development Parcel in and for the period commencing on the Disposition Transfer for each such Separate Development Parcel and terminating on the date that is ten (10) years following the issuance of a final Certificate of Completion for the Developer Improvements thereon, but in no event for any period after December 31, 2009; and (iii) The interest received by the City and/or Agency on the revenues referenced in subparagraph (i) and (ii) immediately above from the date such revenues are received by the City and/or Agency through the date of payment to the Developer, which interest shall be conclusively assumed for purposes of this Agreement to accrue at the "Apportionment Rate" calculated by the Controller of the State of California at the rate of earnings by the Surplus Money Investment Fund for each six-month period during the term of such payment obligation. Each payment required to be made as provided in this subparagraph (a) shall be in the full amount accrued through the end of the preceding calendar quarter. In addition, each payment shall be accompanied by a written statement from the Agency certifying (i) the total amount of Page 6 of 15 "TOT" and "Property Tax Increment" received by the City and/or Agency during the preceding calendar quarter (or, with respect to the first payment due, since the Disposition Transfer) with respect to each Separate Development Parcel for which payment is being made, (ii) the date(s) on which such revenues were received, and (iii) the calculation of accrued interest on such amounts. (b) Definitions. As used herein, the following term shall have the meaning ascribed: (i) "TOT" shall mean transient occupancy taxes paid to the City or Agency with respect to a hotel or hotels to be constructed on the Site, pursuant to California Revenue and Taxation Code Section 7280 et seg. , or successor statute, kith such amounts determined on an accrual basis, based upon the City' s existing six percent (6%) TOT rate as of the Effective Date of the Agreement, with the understanding that if the City hereafter increases its TOT rate, the Developer' s fifth percent (506%) share shall continue to be calculated assuming the existing six percent (6%) rate; and (ii) "Property Tax Increment" shall mean the amount of property tax revenues paid with respect to each Separate Development Parcel on the Site and allocated to and received by the Agency pursuant to California Health and Safety Code Section 33670(b) or successor statute, plus an identifiable California state legislative subventions, supplements to, or substitutes for such revenues. Not by way of limitation of the foregoing, the term "Property Tax Increment" shall include (A) payments made to affected taxing agencies pursuant to California Health and Safety Code Section 33401, whether such payments are made by the Agency or directly by the County of Orange, (E) funds set aside or expended by the Agency pursuant to California Health and Safety Code Section 33334.2, and (C) the portion, if any, of the aforedescribed property tax revenues not available for payment to the Agency in a particular year because the Agency has not incurred indebtedness to collect such revenues. Page 7 of 15 (c) Source of Payment. On or before the date specified in Item 1.9 of the Schedule of Performance (Attachment No. 4 to the Agreement) , the Agency shall adopt an ordinance under California Revenue and Taxation Code Section 7280.5 which ordinance authorizes the Agency to levy and/or collect a sufficient amount of transient occupancy taxes generated from the hotels to be developed on the Site to enable the Agency to timely satisfy its payment obligations to the Developer in accordance with this Bond. Said ordinance shall provide that, in the event the Agency fails at any time to make payments to the Developer in the full amounts required to be paid hereunder, and such failure continues for a period of thirty (30) days after written notice from Developer to the Agency, such ordinance shall automatically become operative. The Agency agrees to take all actions necessary and appropriate to implement such ordinance in order to accomplish the parties' mutual objective of enabling the Agency to timely meet its financial obligations under this Bond. Until Developer has been paid or reimbursed all amounts due from the Agency hereunder (or, as to the payments to be made under this Paragraph (A) only, any unpaid balance is forgiven and discharged as provided herein) , the Agency shall not repeal, nodify, or amend its transient occupancy tax ordinance in a nanner that jeopardizes or impairs the Developer' s right to receive payments in the amounts, at the times, and subject to the conditions set forth herein. The Agency further agrees to perform all obligations on its part to be performed (including without limitation the obligations set forth in California Health and Safety Code Section 33675) which are a prerequisite to its right to collect and receive sufficient property tax revenues to enable Agency to timely perform its obligations to the Developer hereunder, and the Agency shall exercise reasonable diligence to timely enforce its rights to obtain such revenues for the benefit of the Developer. The sole source of payment of the indebtedness referenced in this paragraph (A) shall be (i) property tax revenues allocated and paid to the Agency for the Site, (ii) transient occupancy taxes paid (or eligible to be paid) to the Agency with respect to the Site pursuant to the Ordinance referenced above, and (iii ) any other revenues lawfully available to the Agency which the Agency determines in its sole discretion are available for payment hereunder. In this regard, throughout the term of the Agency' s payment obligation as described in this paragraph (A) , the Agency hereby pledges to the Developer all property tax revenues from the Site and all transient occupancy taxes paid (or eligible to be paid) to the Agency pursuant to the above-referenced Ordinance, as required to timely satisfy the Agency' s payment obligations hereunder. Notwithstanding the foregoing, it is understood that the obligation and pledge referenced in this paragraph (A) shall be junior and subordinate to any bonded indebtedness of Page 8 of 15 the Agency secured by property tax revenues, provided that the Agency hereby covenants that, in establishing the principal amount of any such indebtedness it will set aside and reserve for payment to the Developer one hundred percent (100%) of that portion of the tax increment attributable to the Site until the entire indebtedness referenced in this paragraph (A) is paid or the unpaid balance is forgiven and discharged as provided herein. The indebtedness referenced in this paragraph (A) shall not be an obligation or liability of the City. (d) Allocation of Payments. For purposes of this Agreement, the installment payments required to be made by this Agency pursuant to this paragraph (A) shall be allocated as follows: (i) The first installment payments made by the Agency to the Developer pursuant to this paragraph (A) shall be allocated to repayment of a loan from the Developer to the Agency for the Developer' s cost of planning, designing, engineering, construction, inspecting, and supervising the installation of those public improvements which are the Developer' s responsibility under the Scope of Development (Attachment No. 3 to the Agreement) for which the Developer is not to be reiabursed pursuant to paragraph B of this Bcnd, including interest on amounts expended by the Developer for this purpcse at the rate of seven percent (7%) per annum from the date costs are incurred until repaid in full. After the loan referenced in the preceding sentence has been paid in full, and after the close of escrow of each Separate Development Parcel in the Residential Portion, the installment payments received with respect to each such Separate Development Parcel shall be allocated first to repayment of a loan from the Developer to the Agency in the amount of Three Dollars and Seventy Cents ($3 .70) per square foot for each square foot of land area within each said Parcel (excluding dedicated streets and public rights-of-way) , including interest thereon at the rate of seven percent (7%) per annum from the close of escrow until principal and interest are paid in full. Page 9 of 15 (ii ) The balance of the installment payments shall be deemed to be allocated to a portion of the Developer' s rental obligations for the Separate Development Parcels in the Commercial Portion of the Site; Developer' s costs for demolishing and clearing existing improvements on the Site, and extraordinary costs to be incurred by the Developer for site preparation work due to factors such as the high water table, the load bearing capacity of the soil, the need for extra drainage improvements due to the low elevation of the Site, and the high corrosivity of the soils. (e) Payee in Event of Assignment. This Bond is non-negotiable. In the event the Developer hereafter assigns its interest in any of the Separate Development Parcels in the Site in accordance with the Agreement, the payments required to be made by the Agency with respect to such Separate Development Parcel(s) pursuant to this paragraph (A) shall continue to be made to the Developer unless the Agency receives written notice from the Developer directing that payments be made to the assignee. The Agency may continue to make payments to the Developer and shall not be required to recognize any the assignment unless and until the Developer and such assignee comply with the requirements of the Agency with respect to such assignment. (B) Agency Reimbursement for Certain Costs Advanced by the Developer. In addition to the indebtedness referenced in paragraph (A) above, the sum of the following amounts shall constitute an indebtedness of the Agency to the Developer: (i) all of the costs advanced, paid, and loaned by the Developer pursuant to Paragraph II . I of the Scope of Development (excepting only the amount of any optional additional advances made by the Developer to effectuate the earlier-than-required relocation of tenants from the Driftwood Mobilehome Park, as provided therein) , (ii) any "excess" costs advanced or paid by the Developer pursuant to Paragraph II .A(6) (a) and (b) of the Scope of Development (Attachment No. 3) . (iii) all costs incurred by Developer with respect to the required improvements in the "spur" street and Walnut Avenue rights-of-way pursuant to Paragraph II .A.5 of the Scope of Development (including all utilities to be located in the rights-of-way) , (iv) all costs incurred by the Developer with respect to the extension of the City domestic water line from its existing terminus at Olive and Third Streets to the Site pursuant to Paragraph II .A(6) (c) of the Scope of Development, Page 10 of 15 and (v) all of the costs advanced by the Developer pursuant to Paragraph II .A.6(d) of the Scope of Development for reabandonment of the existing oil wells on the Site. The unpaid principal on said sum shall bear interest at the Developer' s cost of funds (which shall be documented to the reasonable satisfaction of the Agency' s Executive Director) and which shall in no event exceed the rate of twelve percent (12%) true interest cost per annum, compounded annually commencing on the date the Developer advances, pays, or loans such costs, and continuing until principal and interest are paid in full. Payment shall be credited first to interest due and then to reduce any unpaid principal. The Agency shall pay the aforesaid indebtedness at the times, in the amounts, and subject to the other terms and conditions set forth below: (i) The amount of each installment payment to be made by the Agency hereunder shall be calculated as the sum of the following revenues received (or eligible to be received) by the City and Agency: (A) Fifty Percent (50%) of the "TOT, " as that term is defined in paragraph (A) (b) above, paid with respect to each hotel on the Site and received by the City or Agency following the opening of each such hotel for business; and (B) Thirty Eight and One-Half Percent (38-1/27.) of the "Property Tax Increment from the Site, " as that term is defined in paragraph A(b) above, paid with respect to each Separate Development Parcel on the Site and allocated to and received (or eligible to be received) by the Agency from and after the Disposition Transfer for such Separate Development Parcel. (ii) The sole source of payment of the indebtedness referenced in this paragraph (B) shall be (i) property tax revenues allocated and paid to the Agency from the Site, (ii) transient occupancy taxes paid (or eligible to be paid) to the Agency with respect to the Site pursuant to the transient occupancy tax Ordinance adopted by the Agency pursuant to paragraph (A) of this Bond; and (iii) any other revenues lawfully available to the Agency which the Agency determines in its sole Page 11 of 15 discretion are available for payment hereunder. In this regard, throughout the term of the Agency' s payment obligations under this paragraph (B) , the Agency hereby pledges to the Developer all property tax revenues from the Site and all transient occupancy taxes paid (or eligible to be paid) to the Agency pursuant to the above-referenced Ordinance, as required to timely satisfy the Agency' s payment obligations hereunder. The Agency agrees that until the indebtedness referenced in this paragraph (B) is paid in full, the Agency shall not amend, modify, or repeal the above-referenced transient occupancy tax ordinance, enter into any agreements, take any actions, or fail to take any actions which have the effect, directly or indirectly, of jeopardizing or impairing the Agency' s ability to pay the amounts referenced in this paragraph (B) at the times such payments are due. Notwithstanding the foregoing, it is understood that the obligation and pledge referenced in this paragraph (B) shall be junior and subordinate to any bonded indebtedness of the Agency secured by property tax revenues, provided that the Agency hereby covenants that, in establishing the principal amount of any such indebtedness it will set aside and reserve for payment to the Developer one hundred percent (1007.) of the tax increment attributable to the Site until the entire indebtedness referenced in this paragraph (B) is paid. The indebtedness referenced in this paragraph (B) shall not be an obligation or liability of the City. The first installment payment due under this paragraph (B) shall be made fifteen (15) days following the end of the first calendar quarter following the issuance of a final Certificate of Completion for the Developer Improvements on the Separate Development Parcel from which the and/or property tax revenues referenced in subparagraph (i) is being generated, and subsequent installment payments shall be made fifteen (15) days following the end of each calendar quarter of each year, with the amount of each payment equalling the amount of revenues received (or eligible to be received) by the City and Agency under subparagraphs (i) (A) and (B) during such preceding payment period, until all such amounts have been paid. Page 12 of 15 t, z (iv) In the event the Developer hereafter assigns its interest in any of the Separate Development Parcels in the Site, the payments required to be made by the Agency with respect to such Separate Development Parcel(s) pursuant to this paragraph (B) shall continue to be made to the Developer unless the Agency receives written notice from the Developer directing that payments be made to the assignee. (v) In the event that, for any reason, the Agency fails to timely make any of the installment payments required to be made with respect to any of the Separate Development Parcels within the Commercial ?ortion, the Developer (or, if the Developer has assigned its interest in such Parcel and in the payments to be received with respect to such Parcel, the assignee) , in addition to whatever other remedies it may have under its lease, shall be automatically entitled to a reduction or offset of rent equal to the amount so unpaid. (C) Conditions to Agency Payment Obligations. (a) Notwithstanding any other provision of this Bond to the contrary, the Agency' s obligation to contribute the funds referenced in paragraph (A) is conditioned and dependent upon the Developer' s performance of its obligations under the Agreement, and the Agency shall be entitled to withhold any of said funds between the time the Agency notifies the Developer that the Developer has committed a material default (assuming such a default in fact has occurred) , in accordance with Section 601 of the Agreement, and the time the Developer cures said default or commences and diligently proceeds to cure said default. Afterwards, however, assuming the Agreement has not been terminated, the Agency' s obligation to make such payments shall be reinstated and shall survive and any amounts withheld shall be paid. (b) The obligations of the Agency to make available those funds described in paragraphs (A) and (B) as to each Separate Development Parcel are conditioned and dependent upon the Developer' s completion of construction of the Developer Improvements on such Separate Development Parcel, (D) Prepayment. The Agency may prepay all or any portion of its obligation under paragraph (B) above at any time without penalty in accordance with the provisions of the Agreement. Page 13 of 15 (E) Additional Remedy for Default. In the event that, for any reason, except if prohibited by a court of competent jurisdiction, the Agency fails to timely make any of the installment payments required to be made to the Developer hereunder, in addition to whatever other remedies it may have, the Developer shall be automatically entitled to a reduction or offset of any payments otherwise required to be made by the Developer to the Agency, including without limitation (i ) rental payments under the amended Lease with the City referenced in Section 201.7 of the Agreement and attached to the Agreement as Attachment No. 6 (ii ) rental payments with respect to any Separate Development Parcel in the Commercial Portion after the date of the Disposition Transfer thereof, pursuant to the new Lease to be entered into between the Agency and Developer referenced in Section 301 of the Agreement, (iii) the purchase price for any of the Separate Development Parcels in the Residential Portion pursuant to paragraph 1 of Attachment No. 5 to the Agreement, and (iv) the loan to be made to the Agency pursuant to Paragraph II . I of the Scope of Development. The Developer shall notify the Agency in writing how it wishes any such permitted reduction or offset to be applied. The Developer shall further be entitled, upon written notice to the Agency, to assign its right to any such reduction or offset to any permitted assignee of Developer' s interest with respect to the Site or any Separate Development Parcel thereof. The Agency may continue to make payments to the Developer and shall not be required to recognize any the assignment unless and until the Developer and such assignee comply with the requirements of the Agency with respect to such assignment. Page 14 of 15 IN WITNESS WHEREOF, the Redevelopment Agency of the City of Huntington Beach has caused this Bond to be signed and authenticated on its behalf by its Chairman by his signature and by its Executive Director by his signature and the seal of said Agency to be imprinted hereon. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH 1988 By Clfairmajfof the Redevelopment A n of the City of Huntington Beach [SEAL] By Executive Director of the Redevelopment Agency of the City of Huntington Beach ATTEST: ?tGG Agency Secretary REVIEWED AND APPROVED AS TO FORM: Agency Attorney/Cityjd_2 plya City Administrator/Executive Attorney Director APPR ED AS A ency Special Coun 10/05/88 1404n/2460/14 Page 15 of 15 CITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION hv%T1VG1q)%ILKH TO Doug LaBelle From Connie Brockway Deputy City Administrator/Economic Dev. City Clerk Subject INVESTMENT ,LETTER & AGREEMENT Date August 16, 1989 BETWEEN AGENCY & R. L. MAYER I have attached a copy of the original documents as presented to Council with signatures and with a September, 1988 date. Also attached is a new original agreement prepared by R. L. Mayer with a July, 1989 date. Please put in the proper date before returning. Also, as R. L. Player prepared this document, - I think it should be changed to include a signature line for the Mayor/Chairman. The Investment Letter and Agreement cannot be executed until signed by the City Administrator/Chief Executive Officer and both legal counsels. It should also be signed by the Mayor/Chairman unless some- where in the backup the Clerk and Paul Cook are authorized to sign, rather than the Mayor/Chairman and Clerk. CB:bt CC: City Attorney 7 7777— INVESTMENT LETTER AND AGREEMENT a BETWEEt] THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND ROBERT L. MAYER THIS INVESTMENT LETTER AND AGREEMENT is made this day of SeP4embe-r7 19E8 between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a redevelopment agency formed and exercising governmental functions pursuant to the Community Redevelopment Law, Part 1 of Division 24 of the California Health and Safety Code (the "Act" ) and ROBERT L. MAYER, AS TRUSTEE OF THE ROBERT L. MAYER TRUST OF 1982, DATED JUNE 22 , 1982, AS AMENDED (the "Registered Owner" ) . W _. T F1 E 9 E E T H WHEREAS, to effectuate the Redevelopment Plan for the Main--Pier Redevelopment Project of the Agency, the Agency and the Registered Owner have entered into a Disposition and Development Agreement dated as of August 15, 1988 (the "Agreement") ; and WHEREAS, pursuant to such Agreement , the Agency has issued its Taxable Tax Allocation Bond, Issue A of 1988 to evidence the obligation of the Agency to pay the amounts described in the Agreement; and WHEREAS, pursuant to the Act and Section 7280 . 5 of the California Revenue and Taxation Code, the Agency has pledged certain transient occupancy taxes to be received pursuant to the Act to the repayment of its obligations under the Agreement ; and WHEREAS, in consideration of the Agency' s execution of the Agreement, the Registered Owner has hereby represented to the Agency the Facts and circumstances surrounding its acceptance of the Bond; and WHEREAS, the Agency wishes to set forth certain requirements for the transfer of any interest in the Bond or the assignment by the Registered Owner of any interest in the payment obligations of the Agency pursuant to the Agreement or the Band; NOW THEREFORE, the Agency and the Registered Owner hereby represent and agree as follows : EeQtion 1. The Registered Owner makes the following representations to the Agency: V A. The Registered Owner acknowledges that : (i) the Bond is not a general obligation of the Agency or of the State of California or any political subdivision thereof ; (ii) the Bond constitutes a special and limited obligation of the Agency, payable solely from the sources described in the Agreement and the Bond; (iii) the Registered Owner has been furnished with copies of thb Agreement and is fully aware of the terms and provisions thereof ; (iv) the Bond does not constitute a debt or a pledge of the faith and credit or the revenues (except such revenues as are expressly pledged pursuant to the Agreement and the Mond) or the taxing power of the Agency, the State of California or any political subdivision thereof ; and (v) the payment of any amounts owing under the Bond is limited to the sources of payment and security described in the Agreement . The Registered Owner acknowledges that the Agency makes no warranty regarding the adequacy of any such sources of payment or security. B. The Registered Owner acknowledges that no official statement, prospectus , offering circular or other comprehensive offering statement containing material information with respect to the Agency and the Bond or with respect to the development of the Site ( as described in the Agreement) in accordance with the Agreement and financing thereby is being provided to the Registered Owner . C. The Registered Owner acknowledges that it has made, independently and without reliance on the Agency, its own inquiry and analysis with respect to the Agency to the extent it has deemed appropriate . The Registered Owner has sufficient knowledge and experience in financial and business matters, including the financial and business matters encompassed by the Agreement , to be able to evaluate the risks and merits of the execution of the Agreement and the acceptance of the Bond . D. The Registered Owner acknowledges that the Bond ( i) is not registered under the Securities Act of 1933 , as amended, and is not registered or otherwise qualified for resale to any person under the "Blue Sky" laws and regulations of any state, (ii ) is not listed on any stock or securities exchange, and (iii) carries no rating from any investment rating service . E. The Registered Owner represents that it has acquired the Bond for its own account , and not with a view to resale or other distribition thereof and that it does not currently contemplate the division of the Bond, 1604n/2460/19 -2- the sale or transfer of any interest in the Bond or the underlying obligations of the Agency set forth therein, nor the resale or other disposition of the Bond, or part thereof , acquired by it . F. The Registered owner acknowledges that the Agency has made no representation of any kind, by its issuance and delivery of the Bond to the Registered Owner, that interest on the Bond is excluded or excludable from the gross income of the Registered Owner or any other holder of the Bond, whether now or hereafter, for federal income tax purposes . Section 2 . The Registered Owner agrees that it shall not make any resale or other distribution of the Bond, nor shall it make any sale or transfer of an interest in the Bond or assign any right or interest in any obligation of the Agency forming a part of or underlying the obligations of the Bond unless it first (a) advises the Agency in writing of its intent to make such resale, transfer or disposition, (b) makes available to the Agency evidence of the registration or qualification of such sale, transfer or disposition under the applicable securities laws, and (c) obtains from the buyer, assignee or other person acquiring an interest in the Bond an investment letter and agreement substantially in the form hereof , to the reasonable satisfaction of the Agency. Section 3 . The Registered Owner hereby agrees to indemnify and hold harmless the Agency and its officers and directors against any and all losses, claims and liabilities which may arise out of or are related to the sale, transfer, pledge or other disposition of this Bond not in compliance with the terms of this Agreement . The Registered Owner further agrees to defend the Agency and its officers and directors in any suit or action arising out of or related to any such loss , liability or claim, including the payment of reasonable attorney' s fees for such counsel as may be selected by the Agency. Section 4 . The Registered Owner acknowledges that the Bond is non--negotiable and that transfers of any interest in the payments to be received by the Registered Owner in respect of the Bond may be effected only by an assignment complying with the provisions of the Agreement and the securities laws of the State of California and the United States, to the extent such laws may be applicable thereto . The Registered Owner agrees that it shall specifically advise any assignee or transferee of those provisions of the Agreement providing for forgiveness of amounts due by the Agency and the discharge and termination of the obligations of the Agency under the Agreement which could have the effect of terminating payments to the assignee or transferee. 1604n/2460/14 -3- Sections . The Agency and the Registered owner agree that the Bond, and any interest therein, may be transferred by the Registered Owner to any affiliate •of the Registered Owner, but that the Agency shall still require the execution by such affiliate of an investment letter and agreement substantially in the form of this Agreement . Section 6 . Notwithstanding the provisions of the conflicts laws of the State of 'California which may purport to be applicable to this Agreement or any of the transactions contemplated hereby, this Agreement shall be governed solely by the laws of the State of California . Section 7 . This Agreement may be executed in counterparts , each counterpart of which shall be deemed to constitute the complete agreement . 1604n/2460/14 -4- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above . _ REDEVELOPMENT AGENCY OF THE CITY OF 1117 BE By . Z Lr-' Executive Director ROBERT L. MAYER, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982 , as amended By abort ATTEST: /--� Agency Secretary City Administrator/Executive Director REVIEWED ND APPROVED AS TO FORM: ��-- Agency Attorney /City Attorney APPRO AS !: Agency Special Coun&I 1604n/2460/14 -5- REQ[�:ST FOR CITY COU' IL/ _ REDEVELOP lENTGAGENCY ACTION RH 88-61 October 24, 1988 Date Submitted to: Hono able Mayor/C fly-Council/Redevelopment Agency Members Submitted by: Paul oo r--it ministrator/Executive Director Cam' Prepared by: Douglas La Belle, Deputy City Administrator/Economic Development Subject: TRANSFER OF OCCUPANCY TAX FROM THE CITY TO THE AGENCY - WATERFRONT PROJECT Consistent with Council Policy? [ ] Yes GAD• q7Y cy �}d New Policy or Exception cY ORD, Statement of Issue, Recommendation,Analysis, Funding Source,Alternative Actions,Attachments: STATEMENT OF ISSUE: A component of the Disposition and Development Agreement between the Redevelopment Agency of the City of Huntington Beach and Robert L. Mayer, as Trustee of the Robert L. Mayer Trust dated 1982, as amended, (the "DDA") includes a loan from the developer to the Agency for costs to be incurred by the Agency, including relocation and certain street improvement costs. As part of the DDA, this debt of the Agency is to be repaid in part by receipt of payments of transient occupancy tax in the amount of six percent (6%) of the transient occupancy tax generated from the hotels approved as part of the project. You have before you ordinances for the City and the Agency which provide for the transfer of occupancy tax from the City to the Agency in order to satisfy the Agency's debt obligations under the DDA. You also have before you a resolution approving the debt under the DDA as a bond of the Agency under Health and Safety Code Section 33640 et RECOMMENDATION: Approve the two transfer of occupancy tax ordinances, City Ordinance ? 7 and Agency Ordinance 2 and Agency Resolution / approving the bond for the Agency debt obligation to the developer. ANALYSIS: California Tax and Revenue Code Sections 7280 and 7280.5 provide for the ability of the City to transfer a percent of its transient occupancy tax collection to its Redevelopment Agency for purposes of effectuating a proposed redevelopment plan where those monies are used to pay a debt obligation of the Agency that has been incurred in the form of a bond. Therefore, in order to satisfy the conditions of the DDA, which was previously approved on August 15, 1988, it is necessary for the City and the Agency to approve their respective ordinances regarding the transfer of hotel tax and for the Agency to adopt its resolutions making the debt under the DDA constitute the bond. F_ f PIO 4/84 FUNDING SOURC There is no out-of-pocket cost to the Agency or the City in approving these actions. The initial money will be provided by the developer which creates the debt, and therefore, the bond. Ultimately, this bond will be repaid from both the hotel transient occupancy tax collections that these documents provide for, as well as a percent of the tax increment for the project area. ATTACHMENTS: 1) City Ordinance amending its transient occupancy tax. 2) Agency Ordinance levying a transient occupancy tax. 3) Agency Resolution issuing and selling bonds PECIDLB:lp 404Sh