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HomeMy WebLinkAbout2009-06-10 e-packet~TK 5qN c~Q :~~:,... ~,P ~ -~- U O ,._.r-:~ c9LIFOR~1~ AGENDA R~+~DEVELOPMENT AGENCY CITY OF SOUTH SAN FRANCISCO REGULAR 1VIEETING MUNICIPAL SERVICES BUILDING CCT ~iMUNITY RCCM WEDNESDAY, JUNE 10, 2009 6:30 P.M. PEOPLE OF SOUTH SAN FRANCISCO You. are invited to offer your suggestions. In order that you may kno :~ our r;,~ethod of conducting Agency business, we proceed as follows: The regular meeting of the Redev_hp~r_ent Agelscy is held on the second Wedr_Psday of each month ai 6:30 p.m. in the Municipal Services Building, Community Room, 33 Arroyo Drive, South San Francisco, California. Public Comment: For those wishing to address the Board on any Agenda or non-Agendized item, please complete a Speaker Card located at tl:~e entrance to the Community Room and s~Ibrrit it to the Cleric. Please be sure to indicate the Agenda :[tem # you wish to address or the topic of your public comment. California law prevents Redevelop~~~ent Agency from taking action ors an_y item riot on the Agenda (except in emergency circumstances). 'i~our question or problem niay be referred to staff for investigation and/or action where appropriate or the matter may be placed on a future Agenda for more comprehensive action or a report. «Ihen your name is called, please come to the podium, state your name -and address for the Minutes. COMMENTS ARE LIlVII'CED TO THREE (3) MEv`U T ES PER SPEAKER. Thank you for your cooperation. The Clerk will read successively the items of business appearing on the Agenda. As she completes reading an item, it will be ready for Boai-d action. KARYL MATSUMOTO Chair MARK N. ADDIEGO Vice Chair RICHARD A. GARBARINO Boardmember RICHARD BATTAGLLA Investment Officer BARRY M. NAGEL Executive Director PEDRO GONZALEZ Boardmember KEVIN MULLIN Boardmember KRISTA MARTINELLI-CARSON Clerk STEVEN T. MATTAS Counsel PLEASE SILENCE CELL PHONES AND PAGERS HEARING ASSISTANCE EQUIPMENT IS AVAILABLE FOR USE BY THE HEARING-IMPAIRED AT REDEVELOPMENT AGENCY MEETINGS In accordance with California Government Code Section 54957.5, any writing or document that is a public record, relates to an open session agenda item, and is distributed less than 7~! hours prior to a regular meeting will be made available for public inspection in the City Clerk's Office located at City Hall. If, however, the document or writing is not distributed until the regular meeting to which it relates, then the document or writing will be made available to the public at the location of the meeting, as listed on this agenda. The address of City Hall is 400 Grand Avenue, South San Francisco, California 94080. CALL TO ORDER ROLL CALL AGENDA REVIEW PUBLIC COMMENTS CONSENT CALENDAR Motior_ to approve tre minutes of April 15, ?009 and May 13, 2009. 2. Motion to conf~rni tine expense claims of June 1~, 2009. 3. Resonation apNroving a 'loan for the remodel and expansion of Di Napoli Pizzeria in an arr~ount not to exceeU ~n3~0,C)00 and autYiorizir~g tine Executive Director to execute tre loan documents. 4. Motion +.o accept the Lindenville Storm Drainage Construction Improvements project as complete in accordance wits, plans and specifications. CLOSED SESSION 5. Property Negotiations. (Pursuant to Government Code § 54956.8) Property: 938 Linder_ Avenue. Company Negotiator: 15SSF DEV, LLC. Agency Negotiator: Marty Van Duyn. 6. Property Negotiations. (Pursuant to Government Code § 54956.8) Property: 344 Grand Avenue. Company Negotiator: St. Vincent de Paul and SSF RDA. Agency Negotiator: Marty Van Duyn. ADJOURNMENT REGULAR REDEVELOPMENT AGENCY MEETING JUNE 10, 2009 AGENDA PAGE 2 MINUTE S ~o~~cx, s~v~, SPECIAL MEETING o -~ n ~, ~ REDEVELOPMENT AGENCY `' ° CITY OF SOUTH SAN FRANCISCO c'~LIFOR~~~ & CITY COUNCIL OF THE CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 CITY HALL LA]E~GE CONFERENCE ROOM 400 GRAND AVENUE SOUTl3 SAN FRANCISCO, CA 94080 WEDNESDAY, APRIL 15, 2009 Call to Order: 7:06 p.m. City Council and Redevelopment Agency Roll Call: RDA AGENDA ITEM # 1 Present: Councilmen/Boardmembers* Garbarino, Gonzalez and Mullin, Vice Mayor/Vice Chairman Addiego and Mayor/Chairwoman Matsumoto. Absent: None. *For reporting purposes, Participants are referred to by their titles affiliated with the City Council. Mayor Matsumoto announced an item that was proposed for emergency consideration - a resolution supporting AB 1358, Assemblyman Hill's Bill, which would ban food vendors from distributing Polystyrene and other non recyclable food packaging. The Mayor requested a roll call vote as to whether the item should be placed on the Agenda. Council voted to place the item on the Agenda by the following roll call vote: AYES: Councilmen Garbarino, Gonzalez and Mullin, Vice _Mayor Addiego, Mayor Matsumoto. NOES: None. ABSTAIN: None. ABSENT: None. 1. Public Comments -Comments were limited to items on the Special Meeting Agenda. Public comments were reserved. and addressed during the specific agenda items to which they pertained. 2. Caltrain Station discussion. Terry White, Director of Public Works :>tated that at the previous week's meeting, Council contemplated a resolution urging the Joint Powers Board (JPB) to continue the project and discussions with Union Pacific (UP). It was requested that a representative from the JPB be made available to Council, if possible. Ian McAvoy, Chief Development Officer from Caltrain was invited to attend and was present at the current meeting to answer questions and discuss reasons for project delay and funding. Mr. McAvoy stated that the JPB had been working diligently behind the scenes and had encountered two (2) major obstacles; First, with respect to ongoing UP negotiations, he framed the issue as being that UP owned property in the vicinity of the station location and trackage rights on the baseline Caltrain system. UP was negotiating on many different fronts in the Bay Area and it is clear that UP is more interested in what JPB calls a global deal on all rail issues. This has two impacts for South San Francisco: 1) UP has blocked JPB from touching any of its properties; 2) UP has denied JPB the opportunity to relocate tracks affecting the baseline project. A secondary issue was that the JPB met with Council approximately two (2) years ago to discuss a different project that included four (4) tracks with platforms on the outside. Subsequently, it was decided that the South San Francisco location did not call for four (4) tracks. A redesign was completed to include center boarding platforms, which worked better for Caltrain and still does; if High Speed Rail ("HSR") were not on the agenda. Caltrain believed that HSR was going to need more tracks to operate a joint use corridor. HSR was currently in a preliminary design and environmental. process which would determine HSR's locally preferred alternative on the alignment project. To operate on the levels of service that HSR and Caltrain were proposing, the station needed to be redesigned to be a four (4) track corridor, with the Caltrain tracks on the outside, similar to the Bayshore Station. Mr. McAvoy further stated he had recently attended a meeting with HSR at which he learned that practical constraints had arisen, but Caltrain still believed it had enough information to move forward with the underpass portion of the project. Barring any further UP or HSR issues, Mr. McAvoy was confident that Caltrain would be able to separate the two (2) projects out and proceed forward with the underpass. However, he noted that this would require two (2) separate contracts including a contract pertaining to the underpass and a future contract pertaining to a potential re-work that would come at an increased in cost. Mr. McAvoy next explained the length of the delay was unknown, but the HSR environmental document was expected to be complete by fall 2011. Potential lawsuits involving the particular environmental document might cause delay. UP's biggest issue was how to position itself to take advantage of one of the biggest Public Works projects in CA history, thus making the South San Francisco project inconsequential. In summary, Caltrain believed it was not prudent to continue with the project because of the two (2) issues, UP and HSR alignment. Mayor Matsumoto stated that Council lead hoped for the South San Francisco station to be a hub for transportation in the Downtown District. The understanding was that when electrification came, the South San Francisco Station would have the most stops. She questioned whether this was going be a holdout track for UP and whether South San Francisco had any leverage? Mr. McAvoy stated that this was one (:l) of the last remaining stations on the line that still had the holdout rule due to track configuration„ meaning only one (1) train could come into the station at a time while the other holds out. South San Francisco was also an expensive property to deal with because of the UP properties and storage tracks next to the station. Caltrain was committed to fixing this because of the operational constraint which impacts reliability. Caltrain was hoping to eventually have 100 SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING APRIL 15, 2009 MINUTES PAGE 2 trains running per day up from the current 98. In terms of the UP issues, Mr. McAvoy did not have an answer for that. UP was focused on its own objectives. In terms of the underpass issue, Caltrain and the Transit Authority (TA), had an obligation to work with cities to utilize the funds as best as possible and providing the underpass would not only give access to the Caltrain Station it would provide access to the Westside/Eastside section and serve as an economic development program to help the City. Mr. McAvoy further responded that Caltrain had plans to move up to eight (8) trains per hour. Trains would stop more regularly and each station would have a lot more stops due to the acceleration and deceleration times. He noted that Baby bullets are successful because they are competitive with the automobile. Councilman Mullin maintained the project was still key to Downtown revitalization and did not want to let it go, even with all the hurdles. HE; expressed concern, however, about building Phase One (1), a tunnel that has no pedestrian access to an existing platform in hopes of a global HSR deal, that would then trigger phases two (2), three (3) and beyond. He would not want to spend $21 million in tax payer money and have the rest of the deal implode. He expressed a desire to move forward and maintain momentum without risking tax payer money and questioned whether the funds could be placed in escrow or some other type of account until an agreement is reached between HSR and UP. Mr. McAvoy explained that he had talked with staff about doing designer risk, meaning to go forward with design for a future facility without having all of the inputs of criteria in your proposal, which would need to be tied into the HSR standard. He noted there currently was no HSR commitment to pay for a portion of the project, because it could not make the commitment until completion of the environmental document. Mr. McAvoy believed the TA has madE; a commitment over and above what it would normally do because it has committed to paying for the underpass, which is more than it has committed to on other locations. In terms of the escrow issue, Mr. McAvoy stated that the money was not going anywhere right now. Councilman Mullin questioned whether if Council were to take action and not move forward on the tunnel, would there be any assurance that the money for Phase One (1) would still be there when all of the issues were worked out. He felt as if the City was being faced with a Hobson's choice: if we move forward and the other phases don't happen we will have spent $20 million in tax payer money and have nothing like what was initially planned„ but if we don't move forward, the money goes away and we would have absolutely nothing. Mr. McAvoy explained the TA was the- origin of the funds. There was also money from the Caltrain Improvement line from a 2005 measurf;. There was a Capitol Program commitment to do the job even if the contract were suspended. The TA's commitment remains, and it would not take the money and spend it somewhere else. He stated thz~t the real issue seems to be either proceeding forward without all the data and details of what the station is going to look like or waiting to do the entire project together. However, a firm commitment on when the latter was going to happen could not be given. Councilman Mullin questioned the smart way to proceed. Mr. McAvoy responded that as a Railroad Executive his opinion was to wait until the station was fully designed, to have a completely compliant underpass with a station. His professional opinion was not to SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING APRIL 15, 2009 MINUTES PAGE 3 do the phases of the project separately. Councilman Mullin questioned the merit of the tunnel as the East/West connector in and of itself and the existence of East to West access that; gets pedestrians under the freeway or conceivably up to the existing platform. He believed a reconfiguration must be done that would enable access up to that existing platform. Terry White, Director of Public Works f;xplained the components to the station were the platform, the plaza, and the parking lot. Connecting these components together would be key and removing any one element would leave them dysfunctional. Having just a tunnel over to Comfort Suites, with no access to the existing station or parking lot net;> the City nothing except per annum a bill to pay, plus the maintenance. Mr. McAvoy concurred with Director V~Thite. Councilman Garbarino stated he didn't see this project as being one that could be piecemealed together. Mr. McAvoy stated that Caltrain was committed to fixing the station because the alternative was to close it, which would not happen. The 'TA continues to be committed to the project as well. Ultimately, if costs go up exponentially then we will have to revisit funding options. If the station itself had to be redesigned and ultimately re-planned and rebuilt with HSR playing a key role, Caltrain would request money from HSR. Mayor Matsumoto commented that Jack Meyers, who owned Centennial Towers, has had headhunters from Palo Alto and other areas that were looking to take up floors. However, the lack of public transportation was a real issue. Accordingly, she had provided Jack with some information on transportation scheduling, but ultimately, employees would be dropped off in Millbrae, not South San Francisco. She emphasized the importance of reliable access to public transportation in promoting growth East of 101. Councilman Gonzalez expressed concern about local businesses because the project was being sold as something they would benefit from. He also expressed concern about losing the funding if Council didn't act. He questioned how much oiF the money for the tunnel was connected with moving the station. He further questioned how Couuncil could be sure the money was safe if it chose to wait. Mr. McAvoy stated that approximately $18 million was dedicated to the tunnel, the rest of the $51 million project price tag was for the station. Regarding assurances pertaining to funding, Mr. McAvoy stated he could not give specific assurances because he reported to a Board of Directors, but in terms of a commitment towards Caltrain., it is prescribed by law. While there was no specific station commitment, there was a programmatic, commitment to get the job done. Councilman Gonzalez questioned if the funding being discussed also supported a part of the plaza entrance. Director White stated that the Plaza was property that needed to be purchased from Caltrans. The purchase price was currently being negotiated. The City had an agreement to pay for these additional features, which were not considered as part of the JPB's responsibility. SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING APRIL 15, 2009 MINUTES PAGE 4 Councilman Gonzalez stated that originally he thought that building the tunnel would, at the very least, benefit East of 101 companies, Grand Avenue shopping and promote walking, but he no longer saw that as being enough. Vice Mayor Addiego thanked Director `JVhite and Mr. McAvoy for their clarity and frankness. His inclination was to go with Mr. McAvoy's professional opinion so that all variables might be known before going ahead with the design. He had a difference of opinion about South San Francisco being a destination station not an origination station, meaning when my citizens go to work, they're not going to take the train elsewhere. He stated that commuters were going to East of 101, where tens of thousands of jobs exist. He feared that ithe station was in the wrong location, and believed it should be on the north end of town. Historically vvhen Oyster Point was Butler Road, that station handled the bulk of commuters into and out of South San Francisco. He didn't believe that having commuters coming into Downtown virtually under the freeway and then going to work was going to be the key element in the revitalization of the Downtown. Councilman Mullin stated if the location was the Downtown, it could it lead to a model T.O.D. corridor which would lead to people and market rate housing in the Downtown, and the potential to make South San Francisco more than a destination station. He agreed with the sentiments of Council to go with Mr. McAvoy's professional opinion and hold off until developments with UP and HSR progressed. Councilman Mullin expressed continued optimism for the eventual fruition of the project, just not in the original time frame. Mr. McAvoy offered to return in the future if Council or staff desired. City Manager Nagel stated that Council. must come to a consensus, and noted it was his understanding that Council would like to hold off on t'he tunnel at this time. Mayor Matsumoto confirmed that was lthe consensus of the Council. 3. Study Session: review and provision of direction related to proposed Five (5) year Sewer Rate Increase Plan. Director of Public Works White introduced the staff report including a Power Point presentation addressing Council's request to follow-up on discussions had at the City Council Meeting held March 25, 2009. At that meeting, Council asked Staff to rethink some projects and determine whether it could flatten out rate increases. Mayor Matsumoto stated that public comments would be taken after Director White's presentation. Director White presented and explained the options before Council. "Option II revised" detailed rate increases that consisted of a 10% increase for years 2009-2010 and 2010-2011, followed by an 8% increase for years 2011-2012 and 2012-2013 and ending with an increase of 7% for the year 2013- 2014. This was compared to the "original Option II," which had increases of 20% for the year of 2009- 2010, 10% for the year 2010-2011 and a 5% increase for the year 2011-2012. There were no further increases for the years 2012-2014 outlined in original Option II. Director White advised Council of sorrie of the issues that might occur when squeezing the increase SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING APRIL 15, 2009 MINUTES PAGE 5 down to 10%. Pursuant to this option, the debt would be stretched out over a 20 year period yielding an extra expense of roughly $3.5 million. Director White summarized vital improvement projects necessitating the rate increase as: outfall repair totaling $400,000, reliability improvements including items such as the replacement of three (3) digesters, retrofitting grit basins, and replacing the main emergency generators at a cost totaling $25 million and seismic upgrades for $400, 000. Projects of lesser priority but considered by Council to be good environmental investments include green technology upgrades such as installing new solar and wind energy, saving energy over time and reducing the City's carbon footprint. The cost of such upgrades was estimated at $5 million (net of grants and rebates). The City of South San Francisco also had a $5 million commitment to the recycled water facility with major partner contributions estimated at half or $20 million and additional corrtributions estimated at $13 million from CalWater and $1 million from the City of San Bruno. Staff also presented the potential environmental upgrades that could be mandated by the State Water Board, such as the removal of the threat of a near shore discharge and the elimination of blending (the mixing of a primarily treated affluent with fully or secondary treated affluent) products being pumped into the Bay. These mandates could occur within the current five (5) year National Pollution Discharge Elimination Systems (NPDES) permit. Mayor Matsumoto questioned the likelihood of the Board's Action in this regard on a scale of one (1) to ten (10). Director White estimated the number would be a four (4) based on the fact that the State Water Board did not like aspects of any plant discharging into the Bay. However, the City had a permit and the Board had so many other issues going on that by the time it got through reviews over the 5 year period, with all design, approvals and environmental aspects worked out, the City might be able to convince the Board it couldn't possibly start within the specified five (5) year period. Manager Nagel questioned the inevitability beyond the five (5) year window. Director White referred to a slide, reflecting the State's gradual increase of rates. The goal was to have South San Francisco send immaculate water to the Bay, which would come at a very high price. The City was running risks in adopting the proposed rate structure in that it was waiting one (1) year before starting on CIP projects. In preparing the proposal, staff looked at dynamic pricing as well as rates in other cities that typically charged a minimum base rate and then went by water consumption in previous years. Director White further explained that in order to charge individuals a rate based on their consumption, the City would have; to revisit the process next year, after the required noticing under Proposition 218 informed customers of the City's intentions. Furthermore, additional scenarios would have to be run to ensure that cash intake remained similar to what is presently received. Director White stated that Public Works was more than happy to run scenarios for detailed examples and advised that adoption of a plan would not prevent later revisions. Mayor Matsumoto questioned the probability of increases being passed on to tenants from landlords/owners through rent increases in areas such as Old Town, where there was a higher density in units, if rates were based on usage. SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING APRIL 15, 2009 MINUTES PAGE 6 Vice Mayor Addiego questioned whethE;r the percentages applied to commercial customers and whether they applied across the board. Director White stated that the proposed increases would affect everyone equally. Citizen Margarita Lee expressed concern about rate increases on elderly individuals with fixed incomes and questioned whether rate increases could be adjusted based on age. Director White responded that state law very specifically states that you cannot specify lower sewer rates for senior citizens. Vice Mayor Addiego stated that he believed singles of any age would benefit from a usage based increase. Ms. Lee questioned how usage would be determined. Vice Mayor Addiego explained that thi;> was being explored. He noted the City of San Mateo's rate structure as an example that South San :Francisco might emulate. Citizen Dennis Beedie stated that CaIW'ater probably had a system similar to that of PG &E in which it would hold information regarding water usage of individuals and companies for up to a year. That usage information would be important in making sure that rates were fair. He referred to the PG & E billing system and thought that South San Francisco should look at a similar type of system. He believed that those who have the most usage should bare the burden of higher rates. Director White explained that the rate ane paid depended on the type of discharger one was. Different tiers of rate formulas applied to different types of businesses based upon how much they loaded the plant. The skew was towards industrial) and commercial users so that they bore a bit more of the burden in favor of the residential customer. This was one of the reasons South San Francisco was on the lower end of San Mateo County for residential rates. Mr. Beedie questioned whether there might be an inadvertent omission of residents on the fringe of South San Francisco, such as Daly City, that might be using the City's facilities without paying. If this were the case, was it possible for the City to get an easement from such cities that have ocean discharge capabilities and discharge into the ocean to bypass dumping into the Bay altogether? Director White stated that at one point all sewage west of 280 went to the Daly City Plant and was discharged into the ocean. Given the logistics necessary to create a line to get over the hill now, astronomical prices laden with heavy debt would result. He noted that some of the increases being discussed stemmed from the debt incurred from. compliance with the Cease and Desist Order (CDO) received from the Board in 1997. Vice Mayor Addiego recounted the discussion of ocean discharge many years ago. He explained the City's system was a gravity system, and it would cause astronomical prices to pump up and over the hill. Citizen Gino Baldisseri stated he had recently heard that water consumption was a Catch 22, residents conserve water but then the water companies raise rates. SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING APRIL 15, 2009 MINUTES PAGE 7 Vice Mayor Addiego questioned whether the enterprise fund could be raided for general operating purposes. Assistant City Attorney Grossman responded that funds were deposited into a special account that must only be used for that purpose. Mr. Baldiserri questioned San Bruno's c;ontribution. Director White stated that complicated agreements with San Bruno existed. Different processes had different contributions, but the contribul:ion rate was approximately at 23.6%. San Bruno paid a higher cost for operations at the Shaw Road pumping station. Rates were broken out into various pieces for capacity rights, etc. Mr. Baldisseri questioned whether the increase option had already been decided on. Mayor Matsumoto explained the reason for the study session was for Council to provide direction to staff with respect to the preferred option. Mr. Baldisseri discussed the meeting of~March 25, 2009, where two (2) attendees from the community were present. He stated he only saw two (2) sentences in the Burlingame Journal regarding the present meeting. He believed that more should be done to notify the public of proposed sewer rate increases. Council explained the publication of the agenda and the various locations where meeting agendas were available, such as community postings at City Hall and in the libraries located at West Orange and Grand. They also noted that agendas were available on-line. Vice Mayor Addiego agreed with Mr. Baldisseri. about the community turn-out, and stated that when South San Francisco had a local working press, attendance was much greater. Director White stated that the meeting would set the path for what would be said on notices going out to all residents as part of Proposition 218. City Manager Nagel stated that all rate payers would be noticed and that mailings were expected to go out May 8th for a June 24th hearing date. Councilman Gonzalez agreed that while the meeting was well publicized, attendance was very low. Kate Rosenlieb, Finance Analyst II, clarified that usage cost rates were not in the model. Additional costs would be incurred to accommodate usage based rates, such as staffing, database creation, billing, etc. The soonest this structure could bE; implemented would be in one (1) year. Because the additional cost factors to accommodate usage based pricing were unknown, Finance Director Steele suggested that another 1 % be added to what was :>hown on the slides for the last four (4) of the five (5) years. Vice Mayor Addiego asked for clarification as to where that 1 % was being added; he estimated that in a dollar amount it would be roughly $5.00 Analyst Rosenlieb confirmed Vice Mayor Addiego's estimate. SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING APRIL 15, 2009 MINUTES PAGE 8 Vice Mayor Addiego questioned the number of households in the city. City Engineer Razavi stated there were approximately 40,000 households in the City. Vice Mayor Addiego requested clarification that roughly $200,000 was needed to implement the usage based rate structure. Analyst Rosenlieb concurred and reiterated that the maximum was being requested. Vice Mayor Addiego noted that while he appreciated the need to frontload everything, the issue was to confirm actual need as the figures represented real dollars to real people. Ms. Lee expressed her remaining conce:rn for the elderly, and questioned whether there was any way to come up with a rate break for them. Mayor Matsumoto stated that such a rate break was legally impossible. She further stated she believed many in the South San Francisco community were considered working poor and that age did not necessarily signify poverty. The law was designed to protect equality and the City of South San Francisco was trying to be as equitable .as possible to all people. Vice Mayor Addiego stated that a usage; based system would benefit users of all ages. Councilman Mullin questioned the time; horizon for the proposed additional $3.5 million in debt financing. Director White stated that it was complicated due to the element of cost being spread out amongst the years, selling of bonds, etc. and referred to Analyst Rosenlieb for further clarification. Analyst Rosenlieb explained there was an array of different financing, including $9.75 million needed this year. The following year the City would borrow nothing proceeded by $14 million in the third year and $9 million in the fourth and fifth ye;ars. These proposed loans permit a flattening of rate increases and delay costs for a few years. Councilman Mullin questioned how that was represented in the five (5) year payment schedule. He further questioned the benefit a of price; break given at the front end if the customer would be paying more over the entire five (5) year period and expressed a lack of support for the plan. City Manager Nagel clarified that original Option II had an increase of 35% compared to the 43 increase outlined in Option II revised. Councilman Mullin questioned the total amount paid by the customer during year one (1) based on the original Option II. Director White responded that year one; (1) would be $461.00. Councilman Mullin stated that a rate o:f $461.00 would rank South San Francisco at number 10 in 17 -- somewhere in the middle of the spread of rates for local cities. While he appreciated the need to SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING APRIL 15, 2009 MINUTES PAGE 9 alleviate the pain of an upfront rate increase, he expressed concern about the additional funds this would require over the next five (5) years. Director White stated that once the commitment was made and bonds were sold, they would go beyond five (5) years. Adopting the flattened rate structure option would commit the City and further Councils well into the future. Councilman Mullin referred to a slide in the presentation and questioned the location of the wind units. Director White responded they would likely be on the building itself and were really a minor player, for the purpose of adding power to the buildling. Vice Mayor Addiego clarified the buildings were along the canal. City Engineer Razavi stated there wouldl be a minimum of 32 architectural wind structures, each generating one (1) kilowatt, which might be expanded after further testing. Vice Mayor Addiego turned to the discussion of reclaimed or recycled water. Philosophically he felt we should be saving as much clean watE;r from the Hetch Hetchy. He questioned whether there was a better mechanism for funding the program given its lack of a connection to processing sewage. Councilman Garbarino stated his understanding was that there would be difficulty getting recycled water from point A to point B. While he agreed the City should pursue recycled water, he recalled it was an expensive proposition. Director White stated there were two (2) components to the recycled water program. One was the physical processing of recycled water at the at the plant to create the tertiary water. The second component involved pressurizing, pumping and getting it distributed out into the community. Mayor Matsumoto commented that the water transportation issue was being dealt with in conjunction with CalWater. Director White confirmed it was Public Work's desire to have CalWater as a player in the recycled water program, but ultimate agreements with CalWater on the issue were a long way off. Vice Mayor Addiego questioned the potential availability of grants or other funds to encourage communities like South San Francisco Ito reclaim water. Chief Engineer Razavi noted that half c-f the recycled water produced would go to National Cemeteries, which were a customer of the San Francisco Public Utilities Commission (SFPUC). Accordingly, SFPUC had verbally committed to paying at least half, or up to $20 million of the cost. The balance of the water would go into other usage, with .2 million for South San Francisco, and other allocations for San Bruno and the California Golf Club. He noted this was beneficial to both sewage and water users because pumping water out to the Bay would be reduced. Vice Mayor Addiego asked for clarification as to which portion of the system's capacity would increase due to the reclaimed water system. SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING APRIL 15, 2009 MINUTES PAGE 10 Chief Engineer Razavi responded that it would increase the capacity for sewage treatment indirectly. As a whole system, many things would c;ome together such as environmental improvements, etc., which would increase capacity. Vice Mayor Addiego questioned whether it was a good investment to contribute 12% or $5 million out of a $39 million project. He further questioned whether water would be delivered by CalWater indefinitely once the City entered into ari agreement pursuant to which CalWater would contribute $13 million. Chief Engineer Razavi affirmed his belief that it was a good investment and noted that water would only be delivered to South San Francisco. San Bruno had its own water company and the SFPUC would be delivering it to the National Cemeteries. What was not determined was who would deliver water to the California Golf Club. Mayor Matsumoto questioned whether the City or SFPUC was considering delivery to other cemeteries. Chief Engineer Razavi stated that the cemeteries in Colma were being looked at as a second phase in the project and it was still to be determined who would serve them -- South San Francisco or Daly City. Daly City was also looking to expand their capacity from 2.6 million to an additiona13.2 million gallons/day at a cost of approximately $18 million for processing. SFPUC had committed to pump a certain amount of recycled water by a cE;rtain date, which is why it was very anxious to participate with South San Francisco, Daly City and other entities. Vice Mayor Addiego turned to the topic of digesters. He questioned how many of the five (5) were online and if the City was not processing the City of San Mateo's sludge, would it have fewer online. Councilman Garbarino questioned how many out of the five (5) digesters needed repairing. Director White responded there were four (4) digesters, including three (3) in use and one (1) out of service, which was rotated for maintenance and cleaning. The City was helping the City of San Mateo with its sludge for a cost because it had additional capacity at the plant. If it weren't, typically the City would still have four (4), it just wouldn't be at full capacity. In response to Councilman Garbarino's question, three (3) digesters from the 1950s definitely needed repair, including replacing steel banding to protect against failure due to a strong; seismic event. Mr. Beedie questioned whether digesters would be built with increased height allowing them to remain on the same footprint. Director White explained that rebuilt digesters would have a slight increase in height as shown on the slide. This would increase capacity to allow cogeneration. Mayor Matsumoto questioned the potential to offset costs by entertaining other cities aside from San Mateo. Director White responded that yes, there was potential in that regard. Vice Mayor Addiego questioned CalWater's motivation for contributing one-third of the cost of the SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING APRIL 15, 2009 MINUTES PAGE 11 recycled water program. He wanted to know what rights they would acquire by contributing $13 million. Director White explained that while thet•e were no formal agreements solidified, CalWater desired the product to provide to potential customers, which would mean more Hetch Hetchy product to distribute to other users. Vice Mayor Addiego stated he understood the City was asking for the maximum numbers. He expressed a desire to take time to study the numbers and review the results at a future date. Chief Engineer Razavi commented that CalWater had quotas established with SFPUC in regard to how much recycled water they had to develop, because number one (1) was the Hetch Hetchy water that they used and number two (2) they were trying to get a lot of theses uses out of the well system. Mayor Matsumoto requested Council to provide direction to staff as to which option to pursue regarding sewer rates. Councilman Gonzalez requested clarification on what Council was going to approve, Option II from the first (1St) meeting or revised Option II. He expressed concern for those on a fixed income, but noted that the City had the obligation to maintain the water plant. Vice Mayor Addiego advised that finances were uncertain for all, including those on fixed incomes and those who work. He further commented that the timing of the rate increase was difficult. Councilman Garbarino agreed with the statement and added that if the May 19th bonds and propositions didn't pass, the government would be wanting even more from cities. He believed Option II revised was the more attractive option. He commented that rate increases, as unpopular as they were, had to happen. He noted that the rates for Option II revised were lower but more debt would accrue. Mayor Matsumoto questioned the debt amount again. Director White restated that the debt was $3.5 million spread over 20 years. He noted that Option II was based upon numbers calculated two (2) to three (3) months ago. He suggested that Council give direction to run further numbers in Option II for updated calculations. Vice Mayor Addiego stated Option II re;wised was more palatable. He saw it as the gentler option for the next year or two (2) and hoped residents would agree. Mr. Beedie concurred with Councilman Mullin about the cost of carrying $3.5 million in loans. He saw Option II original as the better option. Councilman Mullin stated his support for original Option II. Even though it maybe more painful in year one (1), he believed that it would I:eep rates lower in the long run not to carry the $3.5 million debt. He agreed with Vice Mayor Addiego about the recycled water element and felt it should be thought through a bit more. Councilman Gonzalez voiced his support for original Option II. SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING APRIL 15, 2009 MINUTES PAGE 12 Councilman Garbarino stated that he reversed his choice to the original Option II after taking into consideration carrying the costs of the $3.5 million. Vice Mayor Addiego stated he could go with the majority for original Option II. Mayor Matsumoto stated that Council h;ad reached a consensus for Option II original. Discussion Re ag, rdin~ Emergency Consideration ofAB 1358 Assistant City Attorney Grossman stated that the emergency clause of the Brown Act might not apply to Special Meeting Agendas. He therefore advised Council to avoid formal consideration of the issue through the emergency vote. As an alternative, Councilmembers could individually support AB 1386 through staff-drafted letters and/or the item could be placed on the Consent Calendar for the next City Council meeting. Council agreed. RECESS: 9:30 p.m. MEETING RESUMED: 9:44 p.m. 4. Closed Session: Conference with Real Property Negotiators (Pursuant to Government Code ?3 54956.8) Property under negotiation: City Owned Property at Oyster Point Marina (APN #'s 015-010-240, 015-010-260, 015-010-270, 015-010-500, 015-010-600, 015-010-630, 015-190-170, 015-190-190) Agency negotiator: Marty Van ~Duyn Negotiating Parties: City of South San Francisco, South San Francisco Redevelopment Agency, and Oyster Point Ventures, LLC. TIME ENTERED CLOSED SESSION: 9:45 p.m. OPEN SESSION RESUMED: 11:00 p.m. Report out of Closed Session: No Reportable Action. 5 . Adjournment. Being no further business, Mayor Matsuumoto adjourned the meeting at 11:00 p.m. Submitted by: Q.t~,-b..a~~ . Anna M. Hernandez, Deputy ty Clerlc City of South San Francisco Deputy Clerk, Redevelopment Agency Approved: Karyl Matsumoto, Mayor City of South San Francisco Chairwoman, Redevelopment Agency SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING APRIL 15, 2009 MINUTES PAGE 13 U~x SAN ~_ V 11~T T RDA AGENDA ITEM # 1 o ..,:,.,. ~ JL 1 ~I U 045 ~.~~ ~ ~ ,~, `~- ~ ~ :~ ~ REDEVELOPMENT AGENCY ~~~,~=r ~ ,`~°~' ~' U ~ O y ~,~„ CITY OF SOUTH SAN FRANCISCO CgLIFOR~IP REGULAR MEETING MUNICIPAL SERVICES BUILDING COMMUNITY ROOM `JVEDNESDAY, MAY 13, 2009 6:30 P.M. PEOPLE OF SOUTH SAN FRANCISCO You are invited to offer your suggestions. In order that you may know our method of conducting Agency business, we proceed as follows: The regular meeting of the Redevelopment Agency is held on the second Wednesday of each month at 6:30 p.m. in the Municipal Services Building, Community Room, 33 Arroyo Drive, South San Francisco, California. Public Comment: For those wishing to address the Board on any Agenda or non-Agendized item, please complete a Speaker Card located at the entrance to the Community Room and submit it to the Clerk. Please be sure to indicate the Agenda Item # you wish to address or the topic of your public comment. California law prevents Redevelopment Agency from taking action on any item not on the Agenda (except in emergency circumstances). Your question or problenn may be referred to staff for investigation and/or action where appropriate or the matter may be placed on a future Agenda for more comprehensive action or a report. When your name is called, please come to the podium, state your name and address for the Minutes. COMMENTS ARE LIMITED TO THREE (3) MINUTES :PER SPEAKER. Thank you for your cooperation. The Clerk will read successively the items of business appearing on the Agenda. As she completes reading an item, it will be ready for Board action. KAIZYL MATSUMOTO Chair MARK N. ADDIEGO Vice Chair PEDRO GONZALEZ Boardmember RICHARD A. GARBARINO Boardmember RICHARD BATTAGLIA Investment Officer BARRY M. NAGEL Executive Director KEVIN MULLIN Boardmember KRISTA MARTINELLI-CARSON Clerk STEVEN T. MATTAS Counsel PLEASE SILENCE CELL PHONES AND PAGERS HEARING ASSISTANCE EQUIPMENT IS AVAILABLE FOR 1JSE BY THE HEARING-IMPAIRED AT REDEVELOPMENT AGENCY MEETINGS In accordance with California Government Code Section 54957.5, any writing or document that is a public record, relates to an open session agenda item, and is distributed less than 72 hours prior to a regular meeting will be made available for public inspection in the City Clerk's Office located at City Hall. If, however, the document or writing is not distributed until the regular meeting to which it relates, then the document or writing will be made available to the public at the location of the meeting, as listed on this agenda. The address of City Hall is 400 Grand Avenue, Soccth San Francisco, California 94080. CALL TO ORDER: ROLL CALL: Present: Absent: AGENDA REVIEW 6:48 p.m. Boardmembers Garbarino, Gonzalez and Mullin, Vice Chairman Addiego and Chairwoman Matsumoto. None. Executive Director Nagel advised that Closed Session Item No. 8 be heard before action on Administrative Business Item No. 7 was taken. PUBLIC COMMENTS None CONSENT CALENDAR Motion to approve the minutes of April 8, 2009 and April 27, 2009. Motion -Vice Chairman Addiego/Secon.d Boardmember Garbarino: to approve Consent Calendar items no. 1 and 2. Unanimously approved by voice vote. 2. Motion to confirm the expense claims of May 13, 2009 in the amount of $1,770,588.77. Chairwoman Matsumoto requested staff define line items more clearly. Motion -Chairwoman Matsumoto/Second Boardmember Garbarino: To approve Consent Calendar item no. 2. Unanimously approved by voice vote. 3. Resolution adopting a Replacement Housing Plan for property located at 323 Miller Avenue. Director of Economic and Community Development Marty Van Duyn presented the Staff Report which detailed the history of the Project. The Redevelopment Agency ("Agency") intended to construct a parking garage on the property located at 323 Miller Avenue ("property"), which would provide significant benefit to downtown businesses ("Project"). However, the Project would result in the destruction or removal of two residential units on the Property formerly occupied by very low-income households. Director Van Duyn further stated that in accordance with Health and Safety Code Section 33413.5, the Agency had prepared a replacemer.~t housing plan for the Property (the "Replacement Housing Plan") and pursuant to the plan, the Maid Peninsula Housing Coalition will construct 106 very low- income replacement dwelling units at Ei36 El Camino Real; the Agency would impose affordability covenants on the replacement dwelling units to ensure they remained affordable to very low-income households for the length of time required by Health and Safety Code Section 33413. The replacement dwelling units would be completed within four (4) years of destruction or removal of the units on the Property; and the construction of the replacement dwelling units would be funded from the Agency's Low and Moderate Income Housing Fund and one or more of the following sources: City of South San Francisco Developer Housing Trust, S;an Mateo County Housing Endowment and Regional Trust, REGULAR REDEVELOPMENT AGENCY MEETING MAY 13, 2009 MINUTES PAGE 2 State of California Low-Income Housing Tax Credits or the State of California's HCD Infill Grant. Chairwoman Matsumoto questioned why it would take unti12011 for the replacements to be completed when the outcry for housing is needed to be considered. Director Van Duyn explained that tenants of said property were vacated and placed into other Agency property with moving expense paid and this plan was the permanent replacement for the two (2) destroyed units in the overall inventory, priced at the same income level. Chairwoman Matsumoto stated she understood the City was still down two (2) properties and questioned if the City could find replacements in the interim. Director Van Duyn explained the Agency would have to go out a buy other units and have tenants placed on a priority basis. Vice Chairman Addiego sought to clarify the Chairwoman's request and stated while the City's property holdings satisfied legal requirements, it currently had two (2) less units and that the Chairwoman was suggesting that better faith would be to purchase a duplex to make up for loss. Director Van Duyn expressed his understanding of the timing issue and the need for maintenance of inventory. Chairwoman Matsumoto suggested staff look into the issue and return to the Board with more information in its regards. Vice Chairman Addiego added the properties could be at any location within the City as not to cluster this type of project. Director Van Duyn stated the Agency would return to the Board with further information. Motion -Chairwoman Matsumoto/Second Boardmember Garbarino: to approve Resolution No. 10-2009. Unanimously approved by voice vote. ADMINISTRATIVE BUSINESS Resolution awarding the Construction Contract to C. Overaa & Co., of Richmond, California, for the Miller Avenue Parking Structure Project in an amount not to exceed $8,421,500, appropriating $1,670,080 from Redevelopment Agency Funds for the project, amending the 2008-2009 Capital Improvement Program Budget, and rejecting all bid protests and all bids for the bid alternatives. Director of Public Works Terry White presented the Staff Report which highlighted the particulars of the Construction Contract recommended to be awarded to C. Overaa and Co. and included background information pertaining to the contracted :project. City Engineer Ray Razavi and Chris Manning of C. Overaa and Co. were on hand to respond. to any questions from the Board. Boardmember Mullin questioned the photovoltaic element of the project and if waiting to bid that element would be more or less for the City expenditure. He wanted to be sure this aspect of the project was not eliminated. REGULAR REDEVELOPMENT AGENCY MEETING ,MAY 13, 2009 MINUTES PAGE 3 Director White advised the City may get ;grant money from the Department of Energy or Federal Stimulus Packages, which the City did not currently have. Public Works would continue to look into various funding sources for this portion of the project. Boardmember Gonzalez requested clarification as to the plans for the photovoltaic system, its planned location within the parking garage and when it would be added to the structure. City Engineer Ray Razavi explained it would be a shade structure set to go on the top level of the parking garage. That structure would be part of the photovoltaic package but separate from the construction package. The only items included in the original construction plan were the conduits as they were needed in order to run the wire to the converter(s). The converter(s) and the roof structure would be added at a later date. Engineer Razavi stated the package could go out to bid again soon. Boardmember Gonzalez questioned if thE; construction of the shade structure had to coincide with the photovoltaic system. He also questioned if there were any other "green" systems included in the project. Engineer Razavi stated the system was dc~signed as one package. In regards to other "green" systems, Engineer Razavi noted that the heating and cooling system used a heat sump, which went down into the ground and conditioned the air with t]he temperature of the ground, which is consistent throughout the year. This type of heat exchanger used energy from Earth to cool and heat the air in the commercial portion occupancies. Director White also noted there was a good deal of fly ash in the concrete of the project. Boardmember Gonzalez requested further details about the surveying done in the project. Engineer Razavi explained the surveying; issue would come before the Board in item No. 6 involving a company named Exponent Failure Analysis Associates, who had been hired by the City in the past. The company would be handling the pre, during and post construction surveying matters. Chairwoman Matsumoto questioned if C. Overaa and Co. had been interviewed. Engineer Razavi confirmed they had been interviewed. Chairwoman Matsumoto requested, for consistencies sake, the Board be informed of where future projects were advertised, if there were arty pre-proposal meetings, interview committee members, etc. She also questioned if there was a response letter from the City to Mr. Saunders' letter included with the Staff Report. Engineer Razavi reported he interacted v~rith Mr. Saunders via telephone and no other written correspondence was made and the issues at hand were resolved between the plumbing contractor, the Plumbers' Union and himself. Vice Chairman Addiego noted for the re~;,ord the need for garage went back to mid 1970's and he was proud to be a part of Council during the time of this project. The Vice Chairman expressed his gratitude to Director White and Engineers Razavi. and Bautista for bringing this resolution forward tonight. He stated his opinion this was exactly the type of infrastructure needed in South San Francisco and felt it was an historic event. REGULAR REDEVELOPMENT AGENCY MEETING MAY 13, 2009 MINUTES PAGE 4 Motion -Vice Chairman Addiego/Second Boardmember Gonzalez: to approve Resolution No.l 1- 2009. Unanimously approved by voice vote. Recess: 7:16 p.m. Meeting resumed: 8:21 p.m. 5. Resolution awarding a Construction Management Agreement for the Miller Avenue Parking Structure Project to Rudolph and Sletten, Inc. of Redwood City, CA in an amount not to exceed $280,000. Director of Public Works Terry White presented the Staff Report which highlighted the particulars of the Construction Management Agreement recommended to be awarded to Rudolph and Sletten, Inc. and included background information pertaining to the agreement. Director White explained the details of the agreement included management of the contractor/subcontractor activities, scheduling, change orders, progress reports, payments and compliance with plans and specifications. Furthermore, Director White explained Rudolph and Sletten, Inc. had extensive construction management experience with other public agencies such as the City of San Jose, the City of Mountain View and had previously worked closely with Watry Design, Inc., the architect for the Miller Avenue Parking Structure, on similar projects. Doug Collins of Rudolph and Sletten, Inc. was on hand to respond to questions from the Board. Director White also clarified the differences in the Staff Report requirements which pertained to Construction contracts and Professional Services contracts in order to address the Chairwoman's previously stated concern regarding Staff'Report consistency. Chairwoman Matsumoto thanked Director White for the clarification. Motion -Vice Chairman Addiego/Secon.d Boardmember Gonzalez: to approve Resolution No.12- 2009. Unanimously approved by voice vote. Resolution awarding a Consulting; Services Agreement to Exponent Failure Analysis Associates for the pre and post construction surveying for the Miller Avenue Parking Structure Project in an amount not to exceed $110,000. Director of Public Works Terry White presented the Staff Report which highlighted the particulars of the Consulting Services Agreement recommended to be awarded to Exponent Failure Analysis Associates and included background information pertaining to the agreement. Chairwoman Matsumoto requested staff post information and outreach which identified apoint/contact person to address concerns from the surrounding community. Motion -Boardmember Gonzalez/Secor-d Boardmember Garbarino: to approve Resolution No.13- 2009. Unanimously approved by voice vote. Recess: 8:30 p.m. Meeting resumed: 8:40 p.m. REGULAR REDEVELOPMENT AGENCY MEETING MAY 13, 2009 MINUTES PAGE 5 CLOSED SESSION 8. Property Negotiations. (Pursuant to Government Code § 54956.8) Property under negotiation: City Owned Property at Oyster Point Marina (APN #'s 015-010-240, 015-010-260, 015-010-270, 015-010-500, 015-010-600, 015-010-630, 015-190-170, 015-1.90-190) Agency Negotiator: Marty Van I)uyn Negotiating Parties: City of Souhr- San Francisco, South San Francisco Redevelopment Agency, and Oyster Point Ventures, LLC and Shorenstein/SKS. Under Negotiation: Price and ternns for conveyance of property. Closed Session Opened: 8:40 p.m. Open Session Resumed: 8:58 p.m. Report out of Closed Session: Direction given. No reportable action taken. 7. Resolution approving Memorandum of Understanding with Oyster Point Ventures LLC and Resolution approving MOU with the San Mateo County Harbor District related to potential development of Oyster Point Business Park and Oyster Point Marina. Economic and Community Development: Director, Marty Van Duyn presented the Staff Report and noted the presentation covered both Item No.7 of Redevelopment Agenda and Item No. 5 of the City Council Agenda. The items would be covered together but voted on as separate actions. Director Van Duyn gave a PowerPoint presentation which detailed the history and outline of the Oyster Point Marina Project plans (Project). Oyster Point Ventures LLC, a joint venture between Shorenstein Properties and SKS Investments LLC ("S/SKS"), had recently purchased the Oyster Point Business Park, which is adjacent to the Oyster Point Marina, for the purpose of developing the Oyster Point Business Park into a modern research and development life sciences campus. The concept plan also included a Ferry Village/Oyster Point Marina, recreations/open spaced areas, major landscaping improvements, commercial uses, a hotel and new street configuration. The Project would be built in phases and in order to initiate development of the Infrastructure improvements, and required an investment of $16,640,908 from the Redevelopment Agency. Director Van Duyn further explained City staff and S/SKS had since negotiated and developed non- binding Memorandums of Understandin;; that established a mutual understanding among the City, Agency and S/SKS regarding (1) a descr7ption of the Project to undertake the required analysis by the City and Agency pursuant to the California Environmental Quality Act ("CEQA"), (2) the feasibility of the project and allocation of estimated costs among the parties, and (3) the necessary planning activities, entitlements and agreements to implement the Project. The MOU's were preliminary, non- binding agreements that would not commit the City to a definite course of action or foreclose consideration of alternatives; and certification of environmental review pursuant to CEQA would be required prior approval of any land use entitlements for the Project; therefore, execution of the MOU's was not an "approval" of a "project," as those terms are defined in CEQA. REGULAR REDEVELOPMENT AGENCY MEETING MAY 13, 2009 MINUTES PAGE 6 Chairwoman Matsumoto requested clarification as to property ownership reflected in the report and if City owned property was the key to this project. She also questioned the occupancy and boat slips on S/SKS portions of property, the origin of the $16.64 million dollars, the debt involved, and whether or not the money could be used to fund other redevelopment projects. Director Van Duyn used an electronic hi€;hlighter in response to property ownership and activity for future development and concurred that Ciity owned property was a key element to the Project. He further stated that occupancy had an interesting mix of land use with unknown vacancies and boat slips. In response to the origin of the funds, Director Van Duyn explained funds were borrowed against existing bond funds from the four (4) merged redevelopment areas with a current debt of $24 million. Out of that, $19 million was committed to several projects including the parking garage, train station, downtown real estate acquisition and sewer fund loans. $5.1 million was uncommitted. He further explained that money could be used to fund any other Redevelopment projects which could include the El Camino Corridor and Downtown Central projects. The presentation continued with the review of the Ferry village plans, public portion of development locations, landscaping locations, and intended improvements of the bay trail. Director Van Duyn then reviewed the Land Exchange Agreement;, which included the conveyance of the King's leases to the city, valued at $7.5 million. It was noted that Shorenstein would undertake environmental remediation for the City with an estimated investment; of $17.8 million and pay the City $4.5 million. The exchange could not occur until S/SKS commenced construction. The Development Agreement and Owner Participation Agreement terms were also reviewed. Chairwoman Matsumoto questioned if the City could purchase the King leases if so desired. Director Van Duyn stated the City had the option but not the obligation to purchase the leases and the City retained certain rights, such as acquiring King's leases, if S/SKS does not perform within the 10 years and deliver a commitment to complete and construct Phase 1. A timeline for Project milestones was presented. Director Van Duyn then explained the Memorandum of Understanding (MOU) with the Harbor District. The purpose of the MOU was to establish anon-binding mutual understanding among the City, Redevelopment Agency and the Harbor District regarding: (1) potential and anticipated fiscal impacts of the Project to the Harbor Dist~~ict, (2) ongoing operations and management of the Marina, and (3) the necessary planning activities 'to implement the Project and redevelop and operate the Marina. A cap for the City's contributions to the District was reported to be an estimated $30 million. Should hotel or commercial space be developed at the site, the Harbor District would share in the financial participation along with the City. Transient Occupancy Tax (TOT) and sales tax would be revenue for the City, which it could choose to share with the District or, as in the previous hotel proposal, a gross revenue exaction amount would be targeted as revenue for the District. Chairwoman Matsumoto questioned whc- would be responsible for the development of a hotel at the site and if TOT had to be shared with they Harbor District. Director Van Duyn responded that the Redevelopment Agency would provide seed money and most likely take the lead in the development o:f a hotel, but consultations would be made with the District. However, unless the current agreement under the JPA was amended, the Harbor District retained the leasing authority for the properties. Under the agreement, TOT was merely given as a potential source REGULAR REDEVELOPMENT AGENCY MEETING MAY 13, 2009 MINUTES PAGE 7 of District revenue. It could be left untouched and revenues for the Harbor District could instead be provided from other areas such as tax increment funds or an adjustment of the gross rent. Chairwoman Matsumoto noted this was land owned by the City. She questioned the revenue generated for Harbor District since they took over the management. She also questioned if the City shared any of the boat slips/rentals with the District. Director Van Duyn stated prior to the area being a redevelopment area three (3) years ago, there were no funds that went directly to the city. Capitol borrowing was being paid back by the District through other agencies and had no relationship to paying the City. As an offshoot, the City received sales taxes for the general fund. However, due to the low occurrence of retail in the area, little sales tax was generated. Boat slips/rentals funds went directly to the Harbor District, which they used for maintenance operations. Vice Chairman Addiego explained prior 1:o the Harbor District's involvement with Oyster Point Marina, it was an expense to the City. Director Van Duyn continued the presentation and stated the next step would be for the City to consent to the assignment of the King leases to S/SKS. Future analysis and infrastructure cost studies would be done as currently viewed spreadsheets wc;re the best estimate available for review. These studies would take place before the City commitl:ed to any binding agreements. There were no foreseen major discrepancies between the numbers reported now and the numbers expected. Director Van Duyn stated S/SKS would undertake improvements to the King leaseholds, a major element of the negotiation as facilities had been unimproved upon for some time. S/SKS had assured the City it had planned to bring properties into better standards and $1.4 million dollars of improvements were to be immediate. Director Van Duyn ended the presentation and asked the Board if there were any further questions. Boardmember Garbarino questioned the status of the fitness center previously approved by the Board. Director Van Duyn responded it was still. a valid development, the lease existed, and the applicant had desired to proceed. He further explained that several years may go by before those buildings would be raised but the applicant understood. He did not feel the project was in jeopardy. Vice Chairman Addiego questioned if the $1.4 million in improvements was to be applied to the buildings clustered around the beach area, when the soonest opportunity for the buildings to come down would be and whether or not the ti~neframe would be determined by the Board. Director Van Duyn confirmed the referenced buildings would be affected, as well as, the fuel docking station, which was currently not in use. This could not happen until entitlements were completed, finances were assured and a construction. contract was initiated. After all these elements were completed, the time frame would be mutually agreed upon between the City and S/SKS. Boardmember Gonzalez requested clarifiication of the stated 2013 projected commencement date. Director Van Duyn clarified the 2013 date as the projected best effort schedule. REGULAR REDEVELOPMENT AGENCY MEETING MAY 13, 2009 MINUTES PAGE 8 City Attorney Steve Mattas made a point of clarification as to the projected date being an optimistic schedule. Director Van Duyn concurred with Attorney Mattas and further stated that it would be four to five years, optimistically. Chairwoman Matsumoto questioned if the concentration would be on the office buildings being the first project built and when the projected :ribbon cutting date would take place. Also questioned was the projected date of groundbreaking on the Ferry Village, retail spaces and hotel. Director Van Duyn responded the life science and office facilities would be the first to commence and the earliest for groundbreaking for just the infrastructure would be four (4) years out and six (6) years out to have the pads ready to begin to solicit the interest of retailers and hotels. Chairwoman Matsumoto expressed concE;rn over the setback in scheduling that has already occurred in regards to the Ferry Village and the Water Emergency Transportation Authority (WETA) contract and questioned WETA's contractual obligation if the ferry ridership was not there. Director Van Duyn clarified that the name "Ferry" was there to help stimulate the relationship between where the village, the activity and the fen-y might benefit. If the ferry were not there, he felt the attraction to that location, as far as hotels and retailers were concerned, would not be diminished and that financing was not tied to the performance of the ferry. Chairwoman Matsumoto questioned how much money the City had to borrow to meet its financial obligations. Director Van Duyn stated the City had the opportunity to sell over $50 million more in bonds. For this particular Project the amount would be $16.6 million, to be paid back out of the expected revenues generated out of the completed Project. Boardmember Gonzalez questioned when the The Board might receive more information pertaining to the Project and could the Board request more information from the Staff within the next six (6) months. Director Van Duyn responded that Staff intended to come back to the Board periodically with progress reports, which would not necessarily require any action. Also, the Board could request Staff to come back at anytime, within six (6) months if so desired. Attorney Mattas noted most likely, the Board would be seeing documents consenting to a joinder pertaining to the King leases. Formal documents would be presented for action at the next meeting. With a current shortfall of $2 million taken into consideration, Chairwoman Matsumoto expressed a concern over the potential of $3 million being needed from the general fund. She questioned if the fund was responsible for public safety anal grounds maintenance issues and if so, would the money not be better spent elsewhere, with a quicker return and not having to be shared with the Harbor District Director Van Duyn expressed his undersl;anding and noted the concern as a critical factor for reducing time frames of development in order to generate revenue needed for other redevelopment projects. However, he stated that the Project was along-term investment as compared to the other developments REGULAR REDEVELOPMENT AGENCY MEETING MAY 13, 2009 MINUTES PAGE 9 being mid-range and immediate investment areas and that he felt confidant in this type of staging. He further stated money would still be available for other projects throughout the City even though a substantial amount of Redevelopment money was being put up. It was further stated anticipated revenues of $1.6 million generated from property taxes, TOT, vehicle in lieu fees, and sales tax would go into the general fund. Director Van Duyn stated the Board had the right to decide if funding would be better used for Capital Improvement Projects elsewhere, but felt the purpose of Redevelopment was to reinvest money into development areas. He clarified funding for public safety and maintenance services would likely be out of the general fund and further details would need to be discussed with the Board at a future date as this issue may be a key in how terms were negotiated. Vice Chairman Addiego made a point of clarification as to how much effort would be needed to generate $1.6 million into the general operating fund and noted that $1 billion dollars in improvements to the property tax-rolls would be needed generate that type of money. He further stated though he sees the complexity of the project, he also sees the big picture of the re-creation of Oyster Point, which cannot happen without $16 million. Boardmember Garbarino concurred with the Vice Chairman and saw the Project as the next step. Furthermore, he felt the City could not afford to pass up this opportunity. Boardmember Mullin applauded staff for their many hours of work. He expressed he understood the uncertainties but felt the Project would solidify the City's position as a national leader in Life Sciences. Boardmember Mullin stated the City should seize the opportunity and show confidence in the community's ability to generate private investment. He further stated his confidence in the ability to balance the Project with other development projects on the West side. While he agreed there was a risk, he also felt it was a good investment:. Boardmember Gonzalez stated during his nine (9) years on the Board he had little expectations for Oyster Point, but with the current Project he had hope and this was why he was supporting the effort. In regards to the ferries, he felt they would come to fruition and the City had a responsibility to help the ferries succeed as they went hand in hand with the development. Boardmember Gonzalez offered his support for the Project. Chairwoman Matsumoto stated she felt tlae Project was too speculative and would prefer S/SKS develop their currently owned property and for the City to reap the benefits. For all of her previous stated reasons, she was not comfortable in giving her support to the Project. Motion - Boardmember Gonzalez/2nd Vice Chairman Addiego: to approve Resolution No. 14-2009 The motion was approved by the following roll call vote: AYES: Boardmembers Garbarino, Gonzalez and Mullin, Vice Chairman Addiego. NOES: Chairwoman Matsumoto. ABSTAIN: None. ABSENT: None. Motion - Boardmember Gonzalez/2nd Boardmember Garbarino: To approve Resolution No. 15-2009. The motion was approved by the following roll call vote: AYES: Boardmembers Garbarino, Gonzalez and Mullin, Vice Chairman Addiego. NOES: Chairwoman Matsumoto. ABSTAIN: None. ABSENT: None. REGULAR REDEVELOPMENT AGENCY MEETING MAY 13, 2009 MINUTES PAGE 10 CLOSED SESSION 9. Property Negotiations. (Pursuant to Government Code § 54956.8) Property: 415-417 Grand Avenue., Company Negotiator: Dalal Metvvalli, SSF RDA. Agency Negotiator: Marty Van Duyn. Closed Session Opened: 10:25 p.m. Open Session Resumed: 11:40 p.m. Report out of Closed Session: Direction given, no reportable action taken. 10. Property Negotiations. (Pursuant to Government Code § 54956.8) Property: 938 Linden Avenue. Company Negotiator: 15SSF DEV, LLC. Agency Negotiator: Marty Van Duyn. Not Heard. 11. Property Negotiations. (Pursuant to Government Code § 54956.8) Property: 344 Grand Avenue. Company Negotiator: St. Vincent de Paul and SSF RDA. Agency Negotiator: Marty Van Duyn. Not Heard. ADJOL:RNMENT Being no further business, Chairwoman lvlatsumoto adjourned the meeting at 11:40 p.m. Submitted by: ~_ Anna M. Hernandez, Deputy Cler City of South San Francisco Approved: Karyl Matsumoto, Chairwoman City of South San Francisco REGULAR REDEVELOPMENT AGENCY MI'sETING MINUTES MAY 13, 2009 PAGE 11 ~°`~~x"S~~' o ~. y J O c'~LIFOR~1~ RDA AGENDA ITEM # 2 I certify that the demands set forth on this payment register are accurate and funds are available fo:r payment.* DATED • ~ ~ ~ ~' ~. '4~ , ~~ •~'~r ' ~ ~' IF NANCE DIRECTOR *Note: Items below do not include payroll related payments Checks- Date Amount 05/13/09 56,206.58 05/20/09 32,700.82 05/27/09 22,088.95 06/03/09 23,456.19 Electronic Payments: Date Amount To Description 05/11/09 178,2c~1.58 Mid Peninsula Housing Loan Draw Down Total Payments $ 312,724.12 This is to certify that the above bills were confirmed at the regular meeting of the Redevelopment Agency of Sough San Francisco held June 10, 2009. DP_TED: CHAIR H w o z v o ~ a H w r-~ w w w z w ~ m ~ ~ O CG U) i/] H :~ Q H C"~ '--I N. :J ~ a ~, 0 M H 0 W I o 0 0 0 0 0 0 0 0 0 0 0 E-I I \ \ \ \ \ \ \ \ \ \ \ \ i M M M M M M M. 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Sta Re ort c~L ~1~. p IFOR RDA A GENDA ITEM # 3 DATE: June 10, 2009 TO: Redevelopment Agency Board FROM: Marty Van Duyn, Assistant Executive Director SUBJECT: A RESOLUTION APPROVING A LOAN FOR THE REMODEL AND EXPANSION OF DI NAPOLI PIZZERIA IN AN AMOUNT NOT TO EXCEED $350,000 AND AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE THF; LOAN DOCUMENTS RECOMII~NDATION It is recommended that the Redevelopment Agency Board adopt the attached Resolution approving a loan in an amount not to exceed $350,000 for the remodel and expansion of Di Napoli Pizzeria and authorizing the Executive Director to execute the loan documents. BACKGROUND/DISCUSSION Di Napoli Pizzeria, located at 202 Grand Avenue, opened for business in 1997. The restaurant combines casual on-site dining and a pizza delivery business. Located at the corner of Grand and Cypress Avenues, Di Napoli Pizzeria is at the center of an area undergoing major redevelopment. The recent additions of Peet's Coffee, Luminous Day Spa, Ben Tre, and Mom's Tofu House to an area of downtown that already had several well established businesses has the area buzzing with activity. Di Napoli Pizzeria's expansion will add to area's renaissance. The proposed project was made possible by the Di Napoli Pizzeria's owners recent leasing of the former States Tavern. Di Napoli Pizzeria's owners have approved plans to expand the existing restaurant into the new space which will double the restaurant's seating capacity from 30 to 65. In addition, a small banquet room, full bar and expanded kitchen will facilitate service for both the increased seating area and expansion of the catering and pizza delivery business. The restaurant's existing facade will be extended throughout the building's exterior creating a very attractive view for people entering the Downtown (see Exhibit 1). Di Napoli's owners are requesting a $350,000 loan to complete the restaurant renovation and expansion. The total project budget is $748,000 (see Exhibit 2). The loan would be structured as an amortized loan secured by the lease„ fixtures and leasehold improvements. The loan would bear a simple interest of four (4%) percent and have a term of fifteen (15) years. However, no payments will be due and no interest will accrue in the first year of the loan to give the owners time to complete the renovations and get back up to full capacity. Staff has reviewed Di Napoli Pizzeria's business plan and historical cash receipts and believes that based on past performance, the business will easily be able to handle the loan's monthly payment of $2,724. Staff Report Subject: Loan of $350,000 for Di Napoli Pizzeria & Ristorante Page 2 FUNDING Funds targeted specifically for improvements of this nature are available in the current Redevelopment Agency budget. The loan would have a simple interest of four (4%) percent, be amortized over a term of fifteen (15) years and be secured by the lease and leasehold improvements. CONCLUSION Staff recommends that the Agency Board adopt the attached Resolution approving a $350,000 loan for the remodel and expansion of Di Napoli Pizzeria and authorizing the Executive Director to execute the loan documents. Di Napoli Pizzeria has a long well established history in South San Francisco. Its expansion and exterior improvements to a prominent downtown building will be a welcome addition to an area that is thriving with new restaurants and businesses. ,, Marty Van Duyn r' Assistant Executive ' ector Approve ; ~~ M. Nagel Executive Director Attachment: Resolution Owner Participation Agreement Promissory Note Deed of Trust Exhibit 1 -Color Rendering Exhibit 2 -Project Budget BMN:MVD:AFS PESOLUTION NO REDEVELOPMENT ACIENCY, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA A RESOLUTION APPROVING THE EXECUTION' OF AN OWNER PARTICIPATION AND LOAN AGREEMENT WITH DI NAPGLI PIZZERIA ~ RISTORANTE, INC., APPROVING THE PROVISION OF A LOAN FOR THE REHABILITATION OF TIC PROPERTY LGCATED AT 200-202 GRAND AVENUE, AND AUTHORIZING THE EXECUTION OF DOCUMENTS ~T CGNNECTION .=.%iTH SUCH FINANCi ~'G WHEREAS, the Redevelopment Agency of the City of South San Francisco ("Agenc; ") is a redevelopment agency existing p»rsnurlt to the Comrr~unity Redevelopment Law, California Health and Safety Cede Section 33000, et seq_. (±he "CRL"), and pursuant to the authority granted thereunder, has the responsibility to carry out the Redevelopment Plan (the "Redevelopment Pian") for the Downtown/Cer~trai Redevelopment Project Area (the "Project Area"); WHEREAS, the Agency operates a commercial rehabilitation loan program pursuant to which the Agency provides financing for the rehabilitation of buildings located witr~in the Project Area; WHEREAS, Di Napoli Pizzeria & Ristorante, Inc. ("Harrower") leases the property located in the Project Ai-ea at 200-202 Grand Aver.~ae, and known as San Mateo County Assessor's Parcel No. O l 2-315-080 (the "Fr~perty"), and Borro giver has applied to Agency for financing in order to rehabilitate and improve the Property (the "Project"); WHEREAS, the Project will be of benefit to the Project Area because it will improve. the streetscape appearance of the Property, permit Borrower to expand Borrower's restaurant, and provide increased job and economic development opportunities; WHEREAS, the terms and conditions for the rehabilitation of the Property and the financing of the Project are more particularly described in a proposed Owner Participation and Loan Agreement (the "OPA"} between Agency and Borrower, copies of which have been provided to the Agency; WHEREAS, the proposed Agency financing for the Project includes a loan in the amount of Three Hundred Fifty Thousand Dollars ($350,000) (the "Loan"); WHEREAS, the Project would be infeasible without the Loan; and WHEREAS, Borrower and Agency staff have negotiated the terms and conditions of (i) a Secured Promissory Note (the "Note") that provides for repayment of the Loan 1246558-1 FP.1 over a fifteen (15) year term; and (ii) a Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the "Deed of Trust") pursuant to which the Agency o~vill be provided a security interest in Borrower's leasehold interest in the Property to secure repayment of the Loan. NOW, THEREFORE, BE IT RESOLVED by the Redevelopment Agency of the City of South San Francisco that it hereby: 1. Finds that the rehabilitation of the Property in accordance with the OPA and the provision of the Loan for the Project will be of benefit to the Project Area, will further the goals of the Redevelopment Plar., and will be consistent with the implementation plan adopted in connection therewith . 2. Approves the provision of the Loan pursuant to the terms and conditions set forth in the OPA. 3. Approves the OPA, the Note, a~~d tiie Deed of Trust; authorizes the Executive Director or his designee to execute and deli~jer the OPA and the Memorandum of the OPA substantially in the form on file with the Agency Secretary; and. autl^,orizes the recordation of a Memorandum of the OPA in the Official Records of San Mateo County. 4. Authorizes the Executive Director or his designee to execute and deliver such other instruments and to take such other actions as necessary to carry out the intent of this Resolution. * * * * ~ I hereby certify that the foregoing Resolution was regularly introduced a_n_d adopted by the Redevelopment Agency of the City of South San Francisco at a meeting held on the day of , 2009 by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: Agency Secretary 1246558-1 Ij~, 2 OWNER PARTICIPATION AND LOAN AGREEii~IENT (Commercial Rcbabilitation Loan Program) by and between TIDE REDEt.~~,OPii-iENT AGE'y CY OF TIIE CITY OF SOUTH. S~u'V FR:~,.NCISCO and DI NA,pOLI PIZZERIA & RISTOR.AlVTE, IlVC, A CALIFORNIA CORF ORATION 2009 PP. 3 Exhibits A Legal Description of Property B Financing Plan C Form of Merr~orandum of Owner Participation Agreement D Form of Certificate of Completion E Form of Promissory Note F Forrr~ of Deed of Trust 1246539-2 PI'. 4 THIS OWNER PARTICIPATION AND LOAN AGREEMENT (this "Agreement") is entered into effective as of , 2009 ("Effective Date") by and between the Redevelopment Agency of the City of South San Francisco, a public body, corporate, and politic ("Agency") and Di Napoli Pizzeria & Ristorante, a California corporation ("Borrower"). Agency and Borrower are hereinafter collectively referred to as the "Parties." RECITALS A. Borrower leases the real property located at 200-202 Grand Avenue in the City of South San Francisco ("City"), and known as San Mateo County Assessor's Parcel No. 012-315- 080 as more particularly described in Exhibit A attached 'Hereto (the "Propert_y") and the improvements thereon ("Improvements"). The Property is located within the Downtown Project. Area ("Project Area"} established pursuant to the redevelopment plan adopted in 1989 by tree City Council. of the City of San Francisco ("City Council") by Ordinance No. 1056-89 (as subsequently amended, the "Redevelopment Plan"). B. Agency operates a Commercial Rehabilita±ion Loan Progra~„ (the "Pr^gra>rn") pursuant to which the Agency provides loans for the rehabilitation of buildings located within the Project Area. C. Borrower has propos€:d to rehabilitate the Improvements in order to, among other improvements, rehabilitate the building exterior, add the existing adjacent retail space to the existing restaurant, make tenant improvements to the interior space, instal_1_ new furnishings and equipment, and make improvements to the building facade (aL of the foregoing, collectively, the "Project"~. D. The owner of the Prope>ifiy has consented to the Project and the improvement of the Property as set forth in this Agreement. E. Borrower has requested, and Agency leas agreed to provide, a loan (the "Loan") to Borrower pursuant to the terms and conditions set forth herein for the purpose of providing partial financing for the Project. F. The purpose of this Agreement is to effectuate the Redevelopment Plan by providing for the rehabilitation of the Property as more particularly set forth herein. The Agency has determined that (i) rehabilitation of the Property pursuant to this Agreement is consistent with the Redevelopment Plan and the Implementation Plan for the Project Area, will be of benefit to the Project Area, and will further the goals of the Redevelopment Plan by improving the streetscape appearance of the Improvements, and by providing increased job and economic development opportunities, and (ii) the Loan is necessary to make the Project economically feasible. G. A material inducement to the Agency to enter into this Agreement is the agreement by Borrower to rehabilitate the Property within the time periods specified herein and in accordance with the provisions hereof, and the Agency would be unwilling to enter into this Agreement in the absence of an enforceable commitment by Borrower to complete the Project in accordance with such provisions and within such time periods. 12A6539-2 3 lP. 5 H. In connection with this Agreement: (i) Borrower shall execute a secured promissory note (the "Note") in the amount of the Loan and a Leasehold Deed of Trust with Assignment of Rents, Security Agreement and Fixture Filing ("Deed of Trust") which shall provide Agency with a security interest in Borrower's leasehold interest in the Property and the Improvements. This Agreement, the Vote, and the Deed of Trust are collectively hereinafter referred to as the "Agency Documents." NOS}J, THEREFORE, in consideration of the mutual covenants contained herein and good and valuable consideration the :receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows. ARTICLE I DEFINI 1 IONS 1. De±initions. The following terns shall have the meanings set forth in the Sections referenced below whenever used in this Agreement and the Exhibits attached hereto. Addi±ional terms are defined in the Recitals and text of this Agreement. 1. i "agency Documents" is defined in Recital H. 1.2 "Certif Cate of Completion" is defined in Section 3. l 5. 1.3 "City" is defined in Recital A. 1.4 "City Council" is defined in Recital A. 1.5 "Claims" is defined in Section 3.17. 1.6 "Closing Date" is defined in Section 4.1. 1.7 "Conditions of Approval" is defined in Section 3.2. 1.8 "Construction Plans" is defined in Section 3.l 1. 1.9 "Deed of Trust" is defined in Recital H. 1.10 "Environmental Laws" is defined in Section 8.4. 1.11 "Financing Plan" is defined in Section 3.7. 1.12 "Hazardous Materials" is defined in Section 8.3. 1.13 "Improvements" is defined in Recital A. 1.14 "Indemnitees" is defined in Section 3.17. 1.15 "Loan" is defined in Section 4.1. 1246539-2 4 m. 6 1.16 "Note" is defined in Section 4.1. 1.17 "Official Records" means the Official Records of San Mateo County. 1.18 "Permitted Exceptions" is defined ir. Section 4.5. 1.19 "Project" is defined ire Recital C and further described in Section 3.2. 1.2U "Title Policy''' is defined in Section 4.5. 1.21 "Transfer" is defined in Section 4.7. ARTICLE II REFRESEN T ATIONS; .EFFECTIVE DATE AND TERIVI 2.1 Borrower's Representations. Borrotiver represents and warrants to Agency as follows, and Borrower ceven?nts that until the expiration or ParLe. te~-~rir~ation of this Agreement, upon learning of any fact or condition which would cause ar_~y of the warranties and representations in this Section 2.1 not to be true, Borrower shall imrnediateiy give written notice of such fact or condition to Agency. Borrower acknowledges that Agency shall rely upon Borrower's representations made hereir, notwithstand•;ng any investigation made by or on behalf of Agency. (i) Authority; General Partner. Borrower is a corporation, duly organized and in good standing under the laws of the State of California. Borrower has the full right, power and authority to undertake all obligatio~,s of Borrower as provided herein, and the execution, performance and delivery of this Agreement by Borrower has been duly authorized by all requisite actions. The persons executing this Agreement on behalf of Bo_rrovrer have been duly authorized to do so. This Agreement and the other Agency Documents constitute valid and binding obligations of Borrower, enfi~rceable in accordance-with their respective terms. (ii) No Conflict. Borrower's execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which Borrower is a party or by which it is bound. (iii) No Liti ation or Other Proceeding. No litigation or other proceeding (whether administrative or otherwise) is outstanding or has been threatened which would prevent, hinder or delay the ability of Borrower to perform its obligations under this Agreement. (iv) No Borrower Bankruptcy. Borrower is not the subject of a bankruptcy or insolvency proceeding. (v) Property Owner's Consent. The Property is owned by Tony Hui, an individual (the "Landlord"). Borro~~ver has obtained the consent of Landlord and all other parties whose consent is required for: (i) the construction of the Project, (ii) the recordation of the Deed of Trust and the Memorandum; and (iii) the execution and recordation of a memorandum of the Lease (defined below). ] 24b539-2. 5 IP. 7 (vi) Leasehold Interest; Borrower's Covenant to Extend Lease. Borrower has provided to Agency a correct and complete copy of Borrower's lease for the Property together with all amendments thereto (collectively, the "Lease"). The Lease is in full force and effect. The te~t-m of the Lease expires on June 3G, 2G12. Borrower has the right under the Lease to execute this Agreement and the Deed. of Trust. No default under the Lease remains uncured, nor has any event occurred which, with the passage of time or service of notice or both, would constitute s»ch a default. No circumstances exist which would permit the Landlord to terminate the Lease. Borrower has ti~ree options to extend the term of the Lease, each for a period of five (5) years (the "Options"). No circumstances exist that would cause any of the Options to expire or be terminated. Borrower covena~its that for so long as the Loan remains outstanding, Borrower will exercise each of the Options, and Borrower acknowledges that failure to do so or to otherv~ise extend the term of the Lease shall constitute a default hereunder, permitting Agency to accelerate the Note and exercise A,gency's remedies under this Agreement, the Note and the Deed of Trust. Borrower covenants to execute and to obtain Landlord's signature on a memorandum of the Lease that viii be recorded in the Official Records. Bol,ower agrees that for so long as the Loan remains outstanding, the fee title to the Property shall not merge with the leasehold interest in the Lease, notwithstanding any union ~f such estates in the Landlord, Borrower, or ?ny third party. Borrower agrees that if Borrower becomes the fee owner of the Property, the Deed of Trust shall automatically be a lien on such Property. 2.2 Ef active Date; ~~Iemorandum. The obligations of Borrower and Agency hereunder shall be effective a5 of the :Effective Date. Concurrently with the execution of this Agreement, the Farties shall execute a ivlemorandum of this Agreement substantially in the form attached hereto as Exhibit C which shall be recorded in the Official_ Records ("Memora?ad~m"). AnTICLF. III DEVELUPIV~NT OF THE PROJECT 3.1 The Property. Borrower represents- and warrants that as of the Effective Date: (i) Borrower possesses a leasehold interest in the Property and the Improvements, (ii) the owner of the Property has consented to the Project; and (iii) to Borrower's knowledge, the Property is subject to no covenant, condition, resl:riction or agreement that would prevent the development of the Project in accordance with this Agreement. If at any time the foregoing statements become untrue, the Agency shall have the right to terminate this Agreement upon written notice to Borrower. 3.2 Scope of Development. Borrower shall rehabilitate the Property in accordance with the terms and conditions of this Agreement and in compliance with the terms and conditions of all approvals, entitlements and permits that the City or any other governmental body or agency with jurisdiction over the Project or the Property has granted or issued as of the date hereof or may hereafter grant or issue in connection with the Project, including without limitation, all mitigation measures imposed in connection with environmental review of the Project (if any), all requirements related to preservation of historic resources (if applicable), and all conditions of approval imposed in connection with any entitlements, approvals or permits (all of the foregoing approvals, entitlements, permits, mitigation measures and conditions of approval are hereafter collectively referred to as the "Conditions of Approval"). 1246539-2 6 PP. 8 The Project will consist of the rehabilitation of the Property, including without limitation, the improvement of the exterior of the building, add the existing adjacent retail space to the existing restaurant, make tenant improvements to the interior space, install new furnishings and equipment, and make improvements to the building facade. 3.3 Reserved. 3.4 Project Approvals. Borrower acknowledges and agrees that execution of this Agreement by Agency does not constitute approval for the purpose of the issuance of building permits for the Project, does not limit in any manner the discretion of City in such approval process, and does rot relieve 3orrower from the obligation to apply for and obtain all necessary entitlements, approvals, and permits for the Project, including without lirnitatio;•~, the approval of architectural plans, the issuance of any certificates regarding historic resources required in connection with the Project (if any), and the completion of any required enviro urnental review. Borrower covenants that it shall- (i) obtain ail necessary~permits and approvals w hick may be required by Agency, City, or any other governmental agency having jurisdiction over the Project cr the Property, (ii) comply tivith ?11 Conditiens of Approval, (iii) comply with all mitigation mews=.ires imposed in co;~riection with any environmental review of the Project, and (iv) not cornsnence construction work on the Project prior to issuance of building permits required for such work. Agency staff shall work cooperatively with Borrower to assist in coordinating the expeditious processing and consideration of all permits, entitlements and approvals ,necessary for development of the Project. 3.5 Fees. Borrower shall be solely responsible for, and shall promptly pay when due, all customary and usual fees and charges of City in connection with obtaining building permits and other approvals for the Project, including ~~~ithout limitation, those related to the processing and consideration of amendments, if any, to the current entitlements, any related approvals and permits, environmental review, design review, architectural review, historic review, and any subsequent approvals for the Project or the development of the Property. 3.6 Cost of Construction. Except as expressly set forth herein, Borrower shall be solely responsible for all direct and indirect costs and expenses incurred in connection with the design, development and construction of the Project and compliance with the Conditions of Approval, including without limitation the installation and construction of all off-site or on-site improvements required by City in connection therewith, and none of such costs and expenses shall be the obligation of the Agency or the City. 3.7 Financin~Plan. Borrower has submitted to Agency, and Agency hereby approves a plan for financing the Project (hereinafter, "Financing Plan"), indicating all sources of funds necessary to pay, when due, the estimated costs of construction, including hard and soft construction costs. Borrower represents and warrants that all such funds have been firmly committed by Borrower, equity investors or ]ending institutions, subject only to commercially reasonable conditions. The Financing Plan is attached hereto as Exhibit B. 1246539-2 7 IP. 9 3.8 Development SchedulE;. Borrower shall commence and complete construction of the Project and shall satisfy all other obligations of Bon-ower under this Agreement within the time periods set forth herein, as such time periods may be extended upon the mutual written consent of the Parties. Subject to force majew-e, Borrower shall commence construction of the Project not later than one (1) month following the Effective Date, and Borrower shall diligently prosecute to completion the Project in order to allow City to issue a final certificate of occupancy within six (E) months following commencement of construction work. Subjec± to force majeu_re, Borrower's failure to commence or complete construction of the Project in accordance with the time periods specified iii this Section 3.8 foregoing shall be a Borrower Event of Default hereunder. ~.9 Rights of Access. For the purpose of ensuring that the Project is developed in compliance with this Agreement, B~::;.rower shall permit representatives of the Agency and the City to enter upon the Property to inspect the Project following 24 hours writte n notice (except in the case of emergency iii which case such r~ctice as may be practical under the circumstances shall be provided). 3.10 Age~~cr Disclaimer. Borrower acknowledges that the Ag=ncy and City are under no obligation, and neither Agency nor City underta.Kes or assumes any responsibility or duty to Bcrrosa~er or to any third party, tc in any manr.~r review, supervise, or inspect the progress of construction or the operation of the Project. Borrower and a_il third parties shall rely entirely upon its or their own supervision and inspection ir. deter-.mining the quality and suitability of the materials and work, the performance of architects, subcontractors, and material suppliers, and all other matters relating to the construction and operation of the Project. Any review or inspection undertaken by the Agency or the City is solely for the purpose of determining whether Borrower is properly discharging its obligations under this Agreement, and shall not be relied upa;, by Borrower or any third party as a warranty or representation by the Agency or the City as to the quality of the design or construction of the Improvements or otherwise. 3.11 Construction Plans. Borrower shall submit to City's Building Department detailed construction plans for the Project (the "Construction Plans"). As used herein "Construction Plans" means all construction documents upon which Borrower and Borrower's contractors shall rely in constructing the Project (including, as applicable, landscaping, parking, pedestrian access and common areas) and shall include, without limitation the following as applicable to the Project: the site development plan, final architectural drawings, landscaping, exterior lighting and signage plans and specifications, materials specifications, final elevations, and building plans and specifications. The Construction Plans shall be based upon the scope of development set forth herein and upon the approvals issued by the Agency and the City for the Project, and shall not materially deviate therefrom without the express written consent of Agency and City. Provided that the Construction Plans are consistent with the requirements of this Agreement, approval of the Construction Plans by City shall be deemed approval thereof by Agency. 3.12 Construction Pursuant to Plans. Borrower shall complete the Project in accordance with the approved Construction Plans, the Conditions of Approval, and all other permits and approvals granted by the City and/or the Agency pertaining to the Project. Borrower shall comply with all directions, rules and regulations of any fire marshal, health officer, building 1246539-2 8 IP.10 inspector or other officer of every governmental agency having jurisdiction over the Property or the Project. Each element of the work shall proceed only after procurement of each permit, license or other authorization that may be required for such element by any governmental agency having jurisdiction. All design and construction work on the Project shall be performed by licensed contractors, engineers or architects, as applicable. 3. ] 3 Change in Construction Plans. If Borrower desires to :rake any material change in the approved Construction Plans,l3orrawer shall submit the proposed change in writing to the Agency and City for their written approval, which approval shall not be unreasonably withheld or delayed if the Construction Plans, as modified by any proposed change, conform to the requirements of this Agreement and any approvals issued by Agency or City after the Effective Date. Ltnless a proposed change is approved by Agency within thirty (~~?) days, it shall be deemed rejected. If rejected, t;^ie previously approved Construction .Plans shall continue to remain in full force and effect. Any change in the Construction Plans required in order to compl}~ with applicable codes shall be deemed approved, so long as such change does not substantially nor materially change the architecture, design, function, »se, or amenities of the Project as shown on the latest pprove.d Construction Plans. Approval of changes to the Construction. Plans by City shall be deemed approval thereof by Agency. Nothing in this Section is intended to or shall be deemed to modify the City's standard plan review procedures. 3.14 Defects in Plans. Neither Agency nor City shall be responsible to Borrower or to any third party i~r any defect in the C'onstrliction Plans or for any structural or other defect in any work done pursuant to the Construction Plans. Borrower shall indemnify, defer.-d (with counsel approved by Agency) and hood harmless the Indemnitees from and against all Claims arising out of, or relating to, or alleged to arise from or relate to defects in the Construction Plans or defects in any work done pursuant to the Construction Plans whether or not any insurance policies shall have been deter_min.:d to be applicable to any such Claims. Borrower's indemnification obligations set forth in this Section shall survi :'e the expiration or earlier termination of this Agreement and thE: recordation of a Certificate of Completion. It is further agreed that Agency and City do not, and shall not, waive any rights against Borrower which they may have by reason of this indemnity and hold harmless agreement because of the acceptance by Agency, or Borrower's deposit with Agency of any of the insurance policies described in this Agreement. Borrower's indemnification obligations pursuant to this Section shall not extend to Claims arising due to the gross negligence or willful misconduct of the. Indemnitees. 3.15 Certificate of Completion for Project. Promptly after completion of the Project, issuance of a final Certificate of Occupancy by the City and the written request of Borrower, the Agency will provide an instrument ("Cert>ificate of Completion") so certifying, provided that at the time such certificate is requested all applicable components of the Project have been completed. The Certificate of Completion shall be conclusive evidence that Borrower has satisfied its obligations regarding the project. The Certificate of Completion shall be issued substantially in the form attached hereto as Exhibit D, and at Borrower's option, shall be recorded in the Official Records. The Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of Borrower to any holder of a deed ol'trust or ]rortgage securing money loaned to finance the Project or any part thereof and shall not be deemed a notice of completion under the California 1246539-2 9 IP.11 Civil Code, nor shall such Certificate provide evidence that Borrower has satisfied any obligation that survives the expiration of this Agreement. 3.lo Equal Opportunity During the construction of the Project, there shall be no discrimination on the basis of race, color, religion, creed, sex, sexual orientation, marital status, ancestry or national origin in the hiring, firing, promoting or demoting of any person engaged in construction of the Project, and Borrower shall direct its contractors and subcontractors to refrain from discrimination on such basis. 3.17 Prevailing Wage Requirements. To the fiiil extent required by all applicable state ar~d federal laws, rules and regulations, if any, Borrower and its contractors and agents shall comply with California Labor Code Section 1720 et seg. and the regulations adopted r~ursuant thereto ("?'reva:I:ng Wage Laws"), and shall be responsible for carrying out the requirements of such provisions. If applicable, Borrower shall subrr~it to Agency a plan for monitoring payment of prevailing wages and shall implement such plan at Borrower's expense. Borrower sha'•1 ~ndemmfy, defend (with counsel approved by Agency) and hold the Agency, the City, and their respectivE; elected and appointed officers, officials, employees, agents, consultants, and contractors (collectively, the "Indemnitees") harmless from and against all lia'c~ility, loss, cost, expense (including without limitation attorneys' fees and costs of litigation.), claim, demand, action, suit, judicial or admin istrative proceeding, penalty, dei;ciency, fine, order, and damage (all of the foregoing collectively "C~aims") which directly or indirectly, ir, whole or in part, are caused by, arise in connection with, result from, relate to, or are alleged to be caused by, arise in connection v~ith, or relate to, the payment. or requirement of payment of prevailing wages (including without limitation, ail claims that may be made by contractors, subcontractors br other third party claimants pursuant to Labor Code Sections 172b and i 78 ] 1 or the requirement of competitive bidding in the construction of the Project, the failure to co~,~ply with any slate or federal labor laws, regulations or standards in connection with this Agreement, including but not limited to the Prevailing Wage Laws, or any act or omission of Borrower related to this Agreement with respect to the payment or requirement of payment of prevailing wages or the requirement of competitive bidding, whether or not any insurance policies shall have been determined to be applicable to any such Claims. It is further agreed that Agency and City do not and shall not waive any rights against Borrower which they may have by reason of this indemnity and hold harmless agreement because of the acceptance by Agency, or Borrower's deposit with Agency of any of the insurance policies described in this Agreement. The provisions of this Section 3.17 s}-1a11 survive the expiration or earlier termination of this Agreement and the issuance of a Certificate of Completion for the Project. Borrower's indemnification obligations set forth in this Section shall not apply to Claims arising from the gross negligence or willful misconduct of the Indemnitees. 3.18 Compliance with Laws. Borrower shall carry out and shall cause its contractors to carry out the construction of the Project in conformity with all applicable federal, state and local laws, rules, ordinances and regulations, including without limitation, all applicable federal and state labor laws and standards, the City zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the City's Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation; the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seg., Government Code Section 1246539-2 1 1P.12 4450, et seg., Government Code Section 11135, et seg., and the Unruh Civil Rights Act, Civil Code Section 51; et seq.. Borrower shall indemnify, defend (with counsel approved by Agency) and hold harmless the Indemnitees from and against any and all Claims arising in connection with the breach of Borrower's obligations set forth in this Section whether or net any insurance policies shall have been determined to be applicable to any such Claims. It is further agreed that Agency and City do not and shall not waive any rights against Borrower ~.vhich they may have by reason of this inde,-nnity and hold harmless agreerrient because of the acceptance by Agency, oi- Borrower's deposit with Agency of any of the insurance policies described in this Agreement. Borrower's indemnification obligations set forth in this Section shall not apply to Claims arising from the gross negligence or willful :misconduct of the Indemnitees. Borrower's defense and indemnification obligations set forth in this Section 3.18 shall survive the expiration or earlier te,:nination of this Agree„~ent and the issuance of a Certificate of Completion for the Project. 3.19 Liens and Stop NoticF~s. Prior to the reconveyance of th e Deed of Trust, Borrower shall not allow any Lien or step notice on account of materials supplied to or labor rerforrrred or. behalf of Borrower to he recorded against Borrower's leasehold interest in the Property or any portion thereof. If a claim of a lien or stop notice is given or recorded affecting tiie Project, Borrower shall witi,in twer_ty (20) days of such recording or service. (a) pay and discharge (or cause to be paid and discharged) the same; or (b) effect the release thereof by recording and delivering (or causing to be recorded a_nd delivered) to the party entitled thereto a surety bond iii sufricient form and amount; or (c) provide other assurance satisfactory to Agency that the claim of lien or stop notice will be paid or discharged. 3.20 Right of Agenc t~Satisfv Liens on the Property. If Borrower fails to satisfi, or discharge any lien or stop notice on the Property pursuant to and within the time period set forth in Section 3.19 above, the Agency shall have the right, but not the obligation, to satisfy any such liens or stop notices at Borrower's e~:pense and without further notice to Borrower and all sums advanced by Agency for such purpose shall be part of the indebtedness secured by the Deed of Trust. In such event Borrower shall be liable for and shall immediately reimburse Agency for such paid lien or stop notice. Alternatively, the Agency may require Borrower to im~~nediate]y deposit with Agency the amount necessary to satisfy such lien or claim pending resolution thereof. The Agency may use such deposit to satisfy any claim or lien that is adversely determined against Borrower. Borrower shall file a valid notice of cessation or notice of completion upon cessation of constnlction of the Project for a continuous period of thirty (30) days or more, and shall. take all other reasonable steps to forestall the assertion of claims or liens against the Property or the Project. The Agency may (but has no obligation to) record any notices of completion or cessation of labor; or any other notice that the Agency deems necessary or desirable to protect its interest in the Property and the Project. 3.21 Performance and Payment Bonds. Prior to commencement of construction work on the Project, Borrower shall cause its general contractor to deliver to the Agency copies of payment bond(s) and performance bond(s) issued by a reputable insurance company licensed to do business in California, each in a penal sum of not less than one hundred percent (l 00%) of the scheduled cost of construction of the Project. The bonds shall name the Agency and the City as eo-obligees. In lieu of such performance and payment bonds, sul;!ject to Agency's approval of the form and substance 1246539-2 11 IP.13 thereof, Borrower may submit evidence satisfactory to the Agency of the contractor's ability to commence and complete constructior- of the Project in tl'ie form of an irrevocable letter of credit, pledge of cash deposit, certificate of deposit, or other marketable securities held by a broker or other financial institution, with signature authority of the Agency required for any withdrawal, or a completion guaranty in a form and from a guarantor acceptable to Agency. Such evidence must be submitted to Agency in approvable form in sufficient time to allow for Agency's review and approval prior to the scheduled construction start date. 3.22 Insurance Requirements. Borrower shall maintain and shall cause its contractors to maintain all applicable insurance coverage specified in Article X. 1246539-2 12 ~'P.14 ARTICLE IV AGENCY FINANCIAL ASSISTANCE 4..1 Loan and Note. Agency agrees to provide a loan to Borrower in the principal amount of Three Hundred Fifty Thousand Dollars ($350,000) (the "Loan") upon the terms and conditions and for the purposes set forth in this Agreement. The Loan shall be evidenced by a Secured Promissory Note in the amount of the Loan (the "Note") dated as of the date of closing (the "Closing Date") and executed by Borrower substantially in the form attached hereto as Exhibit E. The Note shall be secured by a Leasehold Deed of Trust with Assignment of kents, Security Agreement and Fixture Filing (the "Deed of Trust'') executed by Borrower as T'rustor for the benefit of Agency substantially in the form attached hereto as Exhibit F. 4.2 Interest hate; Payment Dates; Maturity Date. The outstanding principal balance of the Note will bear interest at four percent (4%) simple annual interest commencing T~aly 1, 2010. I~lo interest shall accrue prior 1:o July 1, 2010. Monthly payments shall be due and payable in acc~rdarce with the terms set forth in the Note. Commencing upc==: August 1, 2010 (the "First Payment Date" ), and on the f rst (1 S') day of each calendar month thereaf per, Barrowe_r shall make monthly paymer.±s of combined principal and interest until the entire indebtedness evidence hereby is fully paid, except that all remaining indebtedness, if not sooner paid, shall be due and payable upon the Maturity Date (defined- below). Tire entire outstanding principal balance of the Loan together with accrued interest and all other sums due under the Agency Documents shall be payable in full on the earlier of (i) the f fteenth (i ~''') anniversary cf the Effective Date, or (ii) the date upon vvhich the Lease terminates. Notwithstanding the foregoing, the Agency shall have the right to accelerate the maturity date and declare all sums payable under the Nete immediately due and :payable upon the occurrence of a Borrower Event of Default, including without limitation, Borrower's failure to commence or complete construction of the Project within the times periods specified in Section. 3.~. 4.3 Security. As security :for repayment of the Note, Borrower shall execute the Deed of Trust in favor of Agency as beneficiary pursuant to which Agency shall be provided a lien against Borrower's leasehold interest in the Property and the Improvements. The Deed of Trust shall be dated as of the Closing •Date, shall be substantially in the form attached hereto as Exhibit F, and shall be recorded in the Official Records on the Closing Date. The Deed of Trust may be subordinated only to the Permitted E~:ceptions and such liens anal encumbrances as Agency shall approve in writing. 4.4 Use and Disbursement of Proceeds. Borrower shall use the proceeds of the Loan (the "Loan Proceeds") solely and exclusively to pay for costs billed to Borrower by third parties in connection with the design and construction of the Project and such other costs related to the Project as Agency may approve in writing. Provided that Borrower has complied with all conditions precedent to disbursement of the Loan set forth in Section 4.5 and has provided Agency with a written requisition specifying the amount and use of the requested Loan Proceeds, accompanied by copies of evidence of payment of bills and invoices from third parties and such other documentation as Agency may reasonably require, the initial disbursement of Loan Proceeds shall be disbursed to Borrower. Subsequent disbursements shall be made no more than 1246539-2 13 1P.15 once per calendar month, upon Agency's receipt of written requisitions and supporting documentation. 4.5 Conditions to Disbursement of Loan Proceeds. Agency's obligation to fund the Loan and disburse the Loan Proceeds is conditioned upon the satisfaction (or Agency's w<~iver) of all of the following conditions: (i) Borrower's execution and delivery to Agency of this Agreement, the Note, the Deed of Trust, and the Memorancium. (ii} Recordation of the Memorandum and the Deed of Trust in the Off vial Records (iii) The issuance by an insurer satisfactory to Agency of an A.L.T.A. le;,der's policy of title insurance ~"'Title l~ailicy") for the benefit of Agency in the amount of the Loan, insuring that the lien of the Deed of Trust is subject only to exceptions number through identified in that certain Preliminary Report (Order No. ) isstaed by Title Company and dated , 2G09 (provided that taxes and assessments are paid current as of the closing date), and such other defects, liens, conditions, encumbrances, restrictions, easements and exceptions as Agency may approve in writing (collectively, the "?~e niat#ed E~eept:ons") and containing such endorsements as Agency may reasonably require, with the cost of such Title Policy to be paid by Borrower. The cost of the Title Policy shall be paid by Borrower. (iv) Borrower's delivery to Agency of each of the following: (i) cPrtit>cate of good standing, certified by the Secretary of State indicating that Borrower is properly organized and authorized to do business in the State of California, (ii) a certified resolution indicating that Borrower has authorized this transaction and that the persons- executing the Agency Documents on behalf of Borrower have been duly authorized to do so, and (iii) certified copy of Borrower's articles of incorporation and bylaws. (v) Borrower's delivery to the Agency of evidence of property and liability insurance coverage in accordance with the requirements set forth in Article X. (vi) Borrower's delivery to Agency of evidence reasonable satisfactory to Agency that there are no mechanics' liens or stop notices related to the Property or the Project, and Borrower's provision to Agency of full waivers or releases of lien clams if required by Agency. (vii) No material adverse change as determined by Agency in its reasonable judgment shall have occurred in the condition of the Property or in the financial or other condition of Borrower since the date of this Agreement. (viii) Borrower's delivery to Agency of evidence satisfactory to Agency that Borrower has obtained al] necessary entitlements, permits (including without limitation building permits), licenses, and approvals required to develop the Project, or that the receipt of such permits is subject only to such conditions as Agency shall reasonably approve. 1246539-2 14 m.16 (ix) Borrower's delivery to Agency and Agency approval of: (i) performance bonds or other assurance of completion reasonably acceptable to Agency pursuant to the requirements set forth in Section 3.2:t; and (iii) construction schedule for the Project. (x) Agency approval of the Project budget and Financing Plan. (xi) All other sources of financing for the Project shall have closed or shall close concurrently with Agency's initial disbursement of Loan Proceeds, and Borrower shall have delivered to Agency evidence reasonably satisfactory to Agency that Borrower has secured binding financing commitments for all Project costs. (xii) Agency's receipt of a written requisition from Borrower specifying th e amount and use of the requested funds, accompanied by copies of th ird-party irvoiees, evidence of Borrower's payment for services rendered in connection with the Project, and such other documentation as Agency shall reasonably require. d.b Nc Obiig~ation to Disburse ProcPe~~s 1/Tpon Default. Notwithstanding any other provision of this Agreer:~~ent, the Agency shall have no obligation to disburse or authorize the disbursement of any portion of the Loan Proceeds fo1.1_owing: (i) the failur e of any of Borrower's representations and warranties made in this Agreement. or i;i cor~r~ection with. the Loan to be true ar~d co;Tect ill all material_ respects; (ii) the termination of this Agreement by mutual agreement of the Parties; (iii) Transfer of Borrower's interest in the Property or Improvements without Agency consent pursuant to Section 4.7; (iv) the occurrence of a Borrower Event of Default under any Agency Document which remains uncured beyond any applicable cure period, or the existence of any condition, event or act which upon the giving of notice or the passage of time or both would constitute a Borrower Event of Default under any Agency Document. 4.7 Prepayment; Acceleration; Limitations on Assi ng ment. (a) Prepayment. Borrower shall have the right to prepay the Loan at any time and from time to time, without penally or premium, provided that any prepayment of principal must be accompanied by interest accrued but unpaid to the date of prepayment. Prepayments shall be applied first to accrued but unpaid interest and then to principal. In no event shall any amount due under the Note become subject to any rights of offset, deduction or counterclaim on the part of Borrower. (b) Due On Sale o:r Encumbrance. Unless Agency agrees otherwise in writing, the entire unpaid principal balance and all interest and other sums accrued under the Note shall be due and payable upon the Transfer, absent the prior written consent of Agency, of all or any part of Borrower's interest in the Property or Improvements except as otherwise permitted pursuant to this Agreement. "Transfer" shall include any assignment, hypothecation, 1246539-2 15 IP.17 mortgage, pledge, encumbrance or co:nveyance of Borrower's interest in the Property or the Improvements. (c) Limitations on Assignment. Borrower and its principals have represented that they possess the necessary expertise, skill and ability to carry out the Project pursuant to this Agreement. The qualifications, experience, financial capacity and expertise of Borrower and its principals are of particular concern to Agency. It is because of these qualifications, experience, financial capacity and expertise that the Agency has entered into this Agreement with Borrower. No voluntary or involuntary successor, assignee or transferee of Borrower shall acquire any rights under this Agreement absent the advance written consent of Agency, and Agency shall have no obligation to make disbursements of Loan Proceeds in the event of a Transfer absent such written consent. A1~tTICLE ~' US:E OP TIC PR(IPElZTY S.l jJse. Borrower covenants and agrees for itself and its suc:,essors and assigns that the Property shall be used for a retail establishment in compliar_ce with ali applicable City zoning and use restrictions. ~.~ iylainter_ance. Borrower shall at its ow•n expense, maintain the Property, the Improvements and. related iaiidscaping and common areas in good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting the foregoing, Borrower agrees to maintain the Property and the Irr,~,rovements (includi;,g without limitation, the residential units, cor,~mon areas, landscaping, driveways, parking areas, and walkways) in a condition free of ail waste, nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Property or the lmprcvements. Borrower shall prevent and/or rectify any physical deterioration of the Property and the Improvements and shall make all repairs, renewals and replacements necessary to keep the Property and Improvements in good condition and repair. Borrower shall provide adequate security services for occupants of the Project. 5.3 Taxes and Assessments. Borrower shall pay all real and personal property taxes, assessments and charges and all franchise, income, payroll, withholding, sales, anal other taxes assessed against the Property and payable by Borrower, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Property; provided, however, that Borrower shall have the right to contest in good faith, any such taxes, assessments, or charges. In the event the Borrower exercises its right to contest any tax, assessment, or charge, the Borrower, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest. 5.4 Obligation to Refrain from Discrimination. Borrower shall not restrict the rental, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any ] 246539-2 1C m. l s portion thereof, on the basis of race, color, religion, creed, sex, sexual orientation, disability, marital status, ancestry, or national origin of any person. Borrower covenants for itself and all persons claiming under or through it, and this Agreement is made and accepted upon and subject to the condition that there shall be nc- discrimination against or segregation of any person or group of persons on account of any >:,asis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases arf: defined in Sections 12926, 12926. l ,subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Goverrunent Code, in the sale, lease, sublease, transfer, use, occupancy, ±enure or enjoyment of the Property or part thereof, nor shall Borrower or any Pearson claiming under or through Borrower establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use cr occupancy of tenants, lessees, subtenants, sublessees or vendees in, of, or for the Prope ~y or part thereof. Borrower shall include such provision in all deeds, leases, contracts and other instruments executed by Borrower, and shall enforce the same diligently and in good faith. All deeds, 1Pases or contracts made or entered into 'ny Borrower, its successors or assigns, as to any portion of the Froperty or the Improvements shall contain the following language: (a) In Ueeds, the following language shall appear: "(1) Grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through it, that there shall be no discrimination against or segregation of a person or of a group of persons on account of any basis listed in subdivision (al or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. ] ,subdivision (m) and paragraph (1) of subdivision (n) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property herein conveyed nor shall the grantee or a„y person claiming under or through the grantee establish or permit any such practice or practices of discrimination or segr~egatien with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the property herein conveyed. The foregoing covenant shall run with the land. "(2) Notwithstanding paragraph (l ), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect. Sections 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1;)." (b) In Leases, the following language shall appear: "(l) The lessee herein. covenants by and for the lessee and lessee's heirs, personal representatives and assigns, and al] persons claiming under the lessee or through the lessee, that this lease is made subject to the condition that there shall be no 1246539-2 1 7 1P.19 discrimination against nor segregation of any person or of a group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin, ancestry or disability in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the property herein leased nor shall the lessee or any person claiming under or through the lessee establish or permit any such practice or practices of discrimination of segregation with reference to the selection, location, number, use or occupancy o_f tenants, lessees, sublessees, subtenants, or vendees in the property herein leased. "(2) Notwithstanding paragraph (1), with respect to familial status, paragraph (] ) snail not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 5 i .2, 51.3, 51.4, ~ 1.10, 51.11 and 799.5 of the Civil Code; relating to housing for senior citizens. Subdivision (d) of Section 51 and Section i350 of the Civil Code and subdivisions (n), (o), and (~,} of Section ]2955 of the Government Code shall apply to paragraph (1)." (c) In Contracts, the following language snail appear: "There shall be no discrimination against or segregation of any person or group of persons on account of any 'oasis listed in subdivision (a) ~~r (d) of Section i 2955 of the Government Code, as those bases are defined in Sections 1292b, 1292b.1; subdivision (m) and paragraph (I) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure: or enjoyment of the property nor shall the transferee or any person claiming under or through the transferee establish or permit any such practice or practices of discrimination or segregation ~Nith reference to selection, location, number, use or occupancy of tenants, lessee, subtenants, sublessees or vendees of tl-ie land." ARTICLE VI [Reserved.] ARTICLE VII [Reserved.] ARTICLE VIII ENVIRONMENTAL MATTERS 1246539-2 ] g ' m. 2 0 8.1 No Agency Liability; Borrower's Covenants. Neither Agency nor City shall be responsible for the cost of any soil, groundwater or other environmental remediation or other response activities for any Hazardous Materials existing or occurring en the Property or any portion thereof, and Borrower shall be solely responsible for all actions and costs associated with any such activities required for the development of the Project, the Property, or any portion thereof. Upon receipt of any notice regarding the presence, release or discharge of Hazardous Materials in, on or under the Property, or any portion thereof, Borrower (as long as Borrower owns the property which is the subje:ct of such notice) agrees to timely initiate and diligently pursue and complete all appropriate response, remediation and removal actions for the presence, release or discharge of s~.tch Hazardous Materials within such deadlines as specif ed by applicable Environmental Laws. Bo~rro•.ver hereby covenants and agrees that: (i) Borrower shall not knowingly permit the Property, the Improvements or any portion of either to be a site far the use, generation, treatment, manufacture, storage, disposal cr transportation of Hazardous Materials or otherwise knowingly permit the presence or release of Hazardous Materials i,~, on, under, about or from the Property or Improvements with the exception of cleaning s~applies and otter materials customarily used in constnzction, operation or maintenance of residential property .and any commercial uses developed as part- of the Project, and used, stored and disposed of in compliance ~.~ah Hazardous Materials Laws, and (ii) Borrower shawl keep and maintain the Property and Improvements and each portion thereof in compliance .with, and shall not cause or permit ±he Property or Improvements or any portion of either to be in violation of, any Hazardous Materials Laws. 8.2 Environmental Indernnificati_on. Borrower shall indemnify, defend (with counsel approved by Agency) and hold the I:rdemnitees harmless from and against any and all Claims including without limitation any expenses associated with the investigation, assessment, monitoring, response, removal, treatment, abatement or remediation of Hazardous Materials and administrative, enforcement or judicial proceedings resulting, arising, or based directly or indirectly in whole or in part, upon (i) the presence, release, use, generatior.•, discharge, storage or disposal or the alleged presence, release, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Property, or (ii) the failure of Borrower, Borrower's employees, agents, contractors, subcontractors, or any person acting on behalf of any of the foregoing to comply with Hazardous Materials Laws or the covenants set forth in Section 8.1. The foregoing indemnity shall further apply to any residual contamination in, on, under or about the Property or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the generation, use, handling, treatment, storage, transport or disposal of any such Hazardous Materials, and irrespective of whether any of such activities were or will be undertaken in accordance with Hazardous Materials Laws. The provisions of this Section 8.2 shall survive the issuance of a Certificate of Completion for the Project and the expiration or earlier termination of this Agreement. 8.2.1 No Limitatior~_ Borrower hereby acknowledges and agrees that Borrower's duties, obligations and liabilities under this Agreement, including, without limitation, under Section 8.2 above, are in no way limited or otherwise affected by any information the Agency or the City may have concerning the Property and/or the presence in, on, under or about )246539-2 19 ll'. 21 the Property of any Hazardous Materials, whether the Agency or the City obtained such information from the Borrower or frein its own investigations. It is further agreed that Agency and City do not and shall not waive arty rights against Borrower that they may have by reason of this indemnity and hold harmless agreement because of the acceptance by Agency, or the deposit with Agency by Borrower, of any of the insurance policies described in this Agreement. 8.3 Hazardous Materials. As used herein, the term "Hazardous Materials" means any substance, material or waste which is or becomes regulated by any federal, state or local governmental authority, and includes without limitation (i) petroleum or oil or gas or any direct or indirect product or by-product thereof; (ii) asbestos artd any material containing asbestos; (iii) any substance, material or waste regulated by or listed (directly or by reference) as a "hazardous «. substance'', "hazardous material", "hazardous waste , toxic waste , toxic pollutant", toxic substance", "solid waste" or "pollutant or contaminant" in or pursuant to, or similarly identified as hazardous to human health or the environment in or pursuant to, the Toxic Substances Control ' ~ c~ Tio 2601, et seq.];; t he Comprehensive Envirorvme;,tal Response, N~.;t [1~ L.S.C. ~,,c_ r~ Compensation and Liability Act [42 U.S.C. Section 9601, et seg.], the Hazardous ivlaterials Transportation Authorizatior, Act [49 U.S.C. Section 5101, et seg.], the F.esource Cc~~servation and Recovery Act [42 U.S.C. Section. 6901, et seg.], the Federal Water Pollution Control Act [33 TJ.S.C. Section 1.251], t;ie Clean Air Act [42 U.S.C. Section ?401, et seg.], the California Underground Storage of Hazardous Substances Act [Cali ~rnia Health aild Safety Code Section 25280, et seg.], the California Hazardous Substances Account Act [California Health and Safety Cade Section 25300, et seg.l ,the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act (California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne =~'Jater duality Control Act [California Water Code Section 13000, et seg.], as they now exist or are hereafter amended, together with any regulations promulgated thereunder; (iv) any substance, material or waste which is def nod as such or regulated by any "Superfund" or "Super]ien" law, or any Environmental Law; or (v) any other substance, material, chemical, waste or pollutant identified as hazardous or toxic and regulated under any other federal, state or local environmental law, includin g without limitation, asbestos, polychlorinated biphenyls, petroleum, natural gas and synthetic fuel products and by-products. 8.4 Environmental Laws. As used herein, the term "Environmental Laws" means all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions of permits, licenses and other operating authorizations regulating, or relating to; or imposing liability or standards of conduct concerning (i) pollution or protection of the environment, including natural resources; (ii) exposure of persons, including employees and agents, to Hazardous Materials (as defined above) or other products, raw materials, chemicals or other.substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commf:rcial activities; (iv) the manufacture, use or introduction into commerce of chemical substances, including without limitation, their manufacture, formulation, labeling, distribution, transportation;, handling, storage and disposal; or (iv) the use, release or disposal of toxic or hazardous substances or Hazardous Materials or the remediation of air, surface waters, groundwaters or soil, as now or may at any later time be in effect, including but not limited to the Toxic Substances Control Act [15 U.S.C. Section 260], et seg.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 1246539-2 20 lP. 2 2 9601, et seg.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seg.], the Resource Conservation and Recovery Act [42 U.S.C. Section 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251 ], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California lUnderground Storage of Hazardous Substances Act [California Health and Safety Code S•°ction 25280, et seq.], the California Hazardous Substances Account Act [California I-Iealth and Safety Code Section 25300, et seg.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seg.], as each of the foregoing no~~ exist or are hereafter amended, together with any regulations prorriul_gated thereunder. ARTICLE IX DEFAULTS, REIbIEDIES AND TER.~,.INATION 9.1 Borrower Eyeiit cf Befauit. The following events shall coi~st lute an event of default on the part of Borrower ("Borrower Event of Default"}: (a) Borrower fails to commence or complete constn-ction of the Project within the tiir~es set forth in Section 3.8, or subject to force n-~ajeure, abandons or suspends construction of the Project prior to co:mpietion for a period of sixty (60) days or more; (b) Borrower fails to pay when d~ae the principal and interest (if any) payable under the Note and sucri failure continues for ten (10) days after Agency notifies Borrower thereof in writing; (c) [Reserved.] (d) Borrower fails to maintain insurance on the Property and the Project as required pursuant to this Agreement, .and Borrower fails to cure such default within ten (10) days; (e) Subject to Borrower's right to contest the following charges pursuant to Section 5.3, if Borrower fails to pay prior to delinquency taxes or assessments due on the Property or the Improvements or fails. to pay when due any other charge that may result in a lien on the Property or the Improvements, and Borrower fails to cure such default within thirty (30) days of date of delinquency, but in all. events upon the imposition of any such tax or other lien; (f) A default arises under any loan secured by a mortgage, deed of trust or other security instrument recorded against Borrower's interest in the Property or the Improvements and remains uncured beyond any applicable cure period such that the holder of such security instrument has the right to accelerate repayment of such loan; (g) Any representation or warranty contained in this Agreement or in any application, financial statement, certil:icate or report submitted to the Agency or the City in connection with this Agreement or Borrower's request for the Loan proves to have been 1246539-2 21 pP. 2 3 incorrect in any material and adverse rf~spect when made and continues to be materially adverse to the Agency or the City; . (h) If, pursuant to o:r within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors ("Bankruptcy Law"), Borrower or any general partner thereof (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Borrower or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assjgnee, liquidator or similar official for Borrower or any general partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits ire writing its inability to pay its debts as they become due; (i) A court of competent jurisdiction shall have made or entered any decree or order (1) adjudging the Borrower to be bankrupt or insolvent, (2) approving as properly ~ led a petition seeking reorganization of the Borrower or seeking any arrangement for Borrower under bankruptcy law or any other applicable debtor's relief law or statute of the United States or any slate or ether jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of the Borrower ir1 bankruptcy or insolvency or for any of its properties, or (4) directing the winding up or liq»idation of the Borrower; ~~) Borrower shall have assigned its assets for the benefit of its creditors (other than pursuant to a mortgage Ivan) or suffered a sequestration. or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returnf;d or released within sixty (60) days after such event (unless a lesser time period is perxnitt~°d for cure under any other mortgage on the Property; m which event such lesser time period shall apply under this subsection as well) or prior to any sooner sale pursuant to such sequestration, attachment, or execution; (k) The Borrower shall have voluntarily suspended its business or Borrower shall have been dissolved or terminated; (]) An event of default arises under any Agency Document and remains uncured beyond any applicable cure period; (m) Borrower defaults in the performance of any term, provision, covenant or agreement contained in this Agreement other than an obligation enumerated in this Section 9.1 and unless a shorter cure period is specified for such default, the default continues for ten (10) days in the event of a monetary default or thirty (30) days in the event of a nonmonetary default after the date upon which Agency shall have given written notice of the default to Borrower; provided however, if the default is of a nature that it cannot be cured within thirty (30) days, a Borrower Event of Default shall not arise hereunder if Borrower commences to cure the default within thirty (30) days and thereafter prosecutes the curing of such default with due diligence and in good faith to completion and i~n no event later than ninety (90) days after receipt of nonce of the default; or (n) A default arisf:s under the Lease and remains uncured beyond any applicable cure period such that the Landlord has the right to terminate the Lease. 246539-2 22 m. 2 4 9.2 Agency Default. An event of default on the part of Agency ("Event of Ageney Default") shall arise hereunder if Agency fails to keep, observe, or perform any of its covenants, duties, or obligations under this AgrE:ement, and the default continues for a period of thirty (30) days after written. notice thereof froJYl Borrower to Agency, or in the case of a default which cannot with due diligence be cured within thirty (30) days, Agency fails to commence to cure the default within thirty (30) days of such notice and thereafter fails to prosecute the curing of such default with due diligence and in goad faith to completion. 9.3 Agcy's Remedies and Rights L'pon an Event of Borrower Default. Upon tl;e occurrence of a Borrower Event of Default ar~d the expiration of any applicable cure period, Agency shall have all remedies available to it under this Agreement or under law or equity, including, but not limited to the following, and Agency may, at its election, without notice to or demand upori Borrower, except for notices or demands required by la.v or expressly required pursuant to the Agency Documents, exercise one or more of the following remedies: (a) Accelerate and declare the balance of the N~±e and interest accrued thereon immediately due and payable; (b) Seek specific ;performance to enforce the terms of the Agency Documents; (c) Foreclose on the Property pursuant to the Deed of Trust; (d) Pursue ar~y and all other remedies available under this Agreement or under law or equity to enforce the terms of the Agency Documents and Agency's rights thereunder. 9.4 Borrower's Remedies Upon an Event of A ency Default. Upon the occurrence of an Agency Event of Default, in addition to pursuing any other remedy allov~ed at law or in equity or otherwise provided in this Agreement, Borrower may bring an action for equitable relief seeking the specific performance of 'the terms, and conditions of this Agreement, and/or enjoining, abating, or preventing any violation of such terms and conditions, and/or seeking to obtain any other remedy consistent with the purpose of this Agreement, and may pursue any and all other remedies available under this Agreement or under law or equity to enforce the terms of the Agency Documents and Borrowcr's rights thereunder. 9.5 Remedies Cumulative; No Consequential Damages. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different time, of any other rights or remedies for the same or any other default by the other Party. Notwithstanding anything to the contrary set forth herein, a Party's right to recover damages in the event of a default shall be limited to actual damages and shall exclude consequential damages. 9.6 Inaction Not a Waiver of Default. No failure or delay by either Party in asserting any of its rights and remedies as to any default shall operate as a waiver of such default or of any such rights or remedies, nor deprive either Party of its rights to institute and maintain any action or proceeding which it may deem necessary to protect; assert or enforce any such rights or remedies in the same or any subsequent default. J 246539-Z 23 1P. 2 5 ARTICLE ~ INDEMNITY AND INSURANCE. 10.1 Indemnity. Borrov:~er shall indemnify, defend (with counsel approved by Agency) and hold Indemnitees harmless from and against any and all Claims, including without limitation, Claims arising directly or indirectly, in whole or in part, as a result of or in connection, with Borrower's or Borrower's contractors, subcontractors, agents or employees development, construction, improvement, operation, o•:vnership or maintenance of the Property or the Improvements, or any part thereof or otherwise arising out of or m connection with Borrower's performance under this Agreement. Prerrower's indemr~if cation obligations under this Sect>!on ] 0.1 shall not extend to Claims resulting solely from the gross negligence or willful misconduct of Indemnitees. The provisions of this Section 10.1 shall sur.~ive the issuance of a Certificate of Completion for the Project and the expiration or earlier termination of this Agreement. It is further agreed that Agency and City do r~~t and shall not waive any rights against Borrower that they may have by reason of this indemnity and hold harmless agreement because of the acceptance by Agency, or the deposit with Agency by Borrower, of any of the insurance policies described in this Agreement. 10.2 Liability and Workers Compensation Insurance. (a) Borrower and all contractors working on behalf cf Borrower on the Project shall maintain a corru;ierciai general liability policy in the amount of One Million Dollars ($1,000,000) each occurrence, Two Million Dollars ($x,000,000) annual aggregate, together with Three Million Dollars ($3,000,000) excess liability coverage, or such other policy limits as Agency may require in its reasonable discretion, including coverage for bodily injury; property damage, products, completed operations and contractual liability coverage. Such policy or policies shall be written on an occurrence basis and shall name the Indemnitees as additional insureds. (b) Borrower and gall contractors working on behalf of Borrower shall maintain a comprehensive automobile liability coverage in the amount of One Million Dollars ($],000,000), combined single limit including coverage for owned and non-owned vehicles and shall furnish or cause to be furnished to Agency evidence satisfactory to Agency that Borrower and any contractor with whom Borrower has contracted for the performance of work on the Property or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. Automobile liability policies shall name the Indemnitees as additional insureds. (c) Upon commencement of construction work and continuing until issuance of a Certificate of Completion, Borrower and all contractors working on behalf of Borrower shall maintain a policy of builder's all-risk. insurance in an amount not less than the full insurable cost of the Project on a replacement cost 'basis naming Agency as loss payee. (d) Borrower shall maintain property insurance covering al] risks of loss (other than earthquake), including flood (if required) for 100% of the replacement value of the Project with deductible, if any, in an amount acceptable to Agency, naming Agency as loss payee. 1246539-2 24 lI'.26 (e) Companies writing the insurance required hereunder shall be licensed to do business in the State of California. Insurance shall be placed with insurers with a current A.M. Best's rating of no Iess than A: VII. The Commercial General Liability and comprehensive automobile policies required hereunder shall name the Indemnitees as additional insureds. Builder's Risk and property insurance shall name Agency and City as loss payees as their interests may appear. (f) Prior to commencement of construction work, Borrower shall furnish Agency with certificates of insurance: in form acceptable to Agency evidencing the required insurance coverage and duly executed endorsements evidencing such additional insured status. The certificates shall contain a statement of obligation on the part of the carrier to notify City and Agency of any material. adverse change, cancellation, termination or non-renewal of the coverage at least thirty (30) days in advance of the effective date of any such material adverse change, cancellation, ternination ornon-renewal. (g) If any insurance policy or coverage required hereunder i~ canceled or reduced, Borrower shall, within f ~cen (15) days after receipt of notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with Agency and City a certificate showing that the required insurance has been reinstated or provided th,~ough another insurance ~;ompany or companies. ? Tpon failure to so f le such certiucate, Agency or City may, without fui thPr notice and at its option, procure sucl', insurance coverage at Borrower's expense, and Borrower shall promptly reimburse .~ gency or City for such expense upon receipt of billing :from Agency or City. (h) Coverage provided by Borrower shall be primary insurance and shall not be contributing with any insurance, or self=insurance maintained by Agency or City, and the policies shall so provide. The insurance policies shall contain a waiver of subrogation for the benefit of the City and Agency. Borrower shall furnish the required certificates and endorsements to Agency prior to the commencement of construction of the Project, and shall provide Agency with certified copies of the required insurance policies upon request of Agency. ARTICLE XI NIISCELLANEOUS PROVISIONS 11.1 No Brokers. Each Palrty warrants and represents to the other that no person or entity can properly claim a right to a real estate conunission, brokerage fee, finder's fee, or other compensation with respect to the transactions contemplated by this Agreement. Each Party agrees to defend, indemnify and hold harmless the other Party from any claims, expenses, costs or liabilities arising in connection with a breach of this warranty and representation. The terms of this Section shall survive the expiration or earlier termination of this Agreement. 11.2 Enforced Delay Extension of Times of Performance. Subject to the limitations set forth below, performance by either Party shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended where delays are due to: war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, governmental 1246539-2 25 IP. 2 7 restrictions or priority, litigation, including court delays, unusually severe weather, acts or omissions of the other Party, acts or failures to act of the City or any other public or governmental agency or entity (other lrhan the acts or failures to act of Agency which shall not excuse performance by Agency), or any other cause beyond the affected Party's reasonable control. An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the Party claiming such extension is sent Ito the other Party within thirty (30) days of the commencement of the cause and such extension is not rejected in wr~ting by the other Party within ten (l 0) days of receipt of the notice. Neither Party shall unreasonably withhold ecnsent to ar, extension of time pursuant to this Section. Times of performance under this Agreement may also be extended in writing by the mutual agreement of Borrower and Agency (acting in the discretion of its Executive Director unless he or she- determines ire his or her discretion, to refer such matter to the governing board of the „gency). Agency and Borrower <<cknowiedge that adverse changes in economic conditions, either of the affected Party specifical]y .~r the economy generally, cha~~ges in market conditions or demand, ar.-d/or inability to obtain i~inancing to complete the work of Improvements shad not constitute grounds of enforced delay pursuant to this Section. Each Party expressly assumes the risk of such adverse economic or market changes and/or financial inability, whether ~r not foreseeable as of tl-ie Effectjve Date. 1 i.3 Notices. Except as otherwise specif ed in this Agreement, all notices to be sent pursuant to this Agreerrient shall be ]rude in writing, and sent to the Parties at their respective addresses specified below or to such other address. as a Party may designate by written notice delivered to the other Parties in accordance with this Section. All such notices shall be sent by: (i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt :if delivery is confirmed by a return receipt; (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender's account, in which case: notice is effective on delivery if delivery is confirmed by the delivery service; (iv) facsimile transmission, in which case notice shall be deemed delivered upon transmittal, provided that (a) a duplicate copy of the notice is promptly delivered by first- class or certified mail or by overnigh1t delivery, or (b) a transmission report is generated reflecting the accurate transmission thereof. Any notice given by facsimile shall be considered to have been received on the next bu:>iness day if it is received after 5:00 p.m. recipient's time or on a nonbusiness day. Agency: Redevelopment Agency of the City of South San Francisco 400 Grand Avenue South San Francisco, CA 94080 Attention:- Executive Director Facsimile: (65'0) 829-6623 1246539-2 26 IP. 2 8 Eorrower: Di Napoli Pizzeria & Ristorante, Inc. 202 Grand Avenue South San Francisco, CA 94080 Attention: Roberto C. Qliveira, President Email: dinho~)comcast.net 11.4 Attorneys' Fees. If either Party fails to perform any of its obligations under this Agreement, or if any dispute arises bF;tween the Parties concerning the meaning or interpretation of any provision hereof; then the prevailing Party in any proceeding in connection with such dispute shall be entitled to the costs and expenses it incurs on account thereof and in enforcing or cstablishing its rights hereunder, including, without limitation, court costs and reasonable attorneys' fees and disbursements. 11.5 ~~'aivers; Modification No waiver of a;,y breach of any covenant or prevision of this Agreement shall be deemed a ex~aiver of any other co»enant orprovision. hereof; and no evaiver shall be valid unless in writing a;,d executed by the waiving Party. ~~m extension of time for performance of any obligation or act shall not be deemed an extension of the time for performance of any other obligation or act, and no extension shall be valid unless in writing and executed by the Party granting the extension. This Agreement may be amended or modified only by a written instr~.zment executed by t;he Parties. 11.6 Binding on Successors= Subject to the limitations set forth in Section 4.7, this Agreement shall bind and inure to the; benefit of the Parties and their respective permitted successors and assigns. Any reference in this Agreement to a specifically named Party shall be deemed to apply to any permitted successor and assign of such Party who has acquired an interest in compliance with this Agreement or under law. 11.7 Survival. All representations made by Borrower hereunder and Borrower's obligations pursuant to Sections 3.14,. 3.17, 3.18, 8.2, 10.1, 11.1, and 11.18 shall survive the expiration or termination of this Agreement and the issuance and recordation of a Certificate of Completion. 11.8 Construction. The section headings and captions used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since both Parties Have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it. 11.9 Action or Approval. ~Nhenever action and/or approval by Agency is required under this Agreement, Agency's Executive Director or his or her designee may act on and/or approve such matter unless specifically provided otherwise, or unless the Executive Director determines in his or her discretion that such action or approval requires referral to Agency's Board for consideration. ]246539-2 27 IP. 2 9 11.10 Entire Agreement. This Agreement, including Exhibits A through F attached hereto and incorporated herein by this reference, together with the other Agency Documents contains the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior written or oral agreements, understandings, representations or statements between the Parties with respect to the- subject matter hereof. - 11.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original and all o:f «~hich taken together shall constitute one instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto having additional signature pages executed by the other Party. Any executed counterpart of this Agreement may be delivered to the other Party by facsirriile and mall be deemed as binding as if an originally signed counterpart was delivered. 11.12 Severability. If an;~ teim, provision, or condition of this A_greemont is held by a court of competent jurisdiction. to be invalid or unenforceable, the remainder of this Agreement shall continuo i7 gull force and effect unless an essential purpose of this Agreement is defeated by such invalidity or unei~forceability. 11.1 ~ No Third Party Benef curies. Nothing contained in this Agreement is intended to or shall be deemed to Confer upon a;,y person,. other t han the Parties and their respective successors and assigns, any rights or remedies hereunder. 11_.14 Parties Not Co-Venturers. Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another. i 1. i 5 Non-Liability of Officials, Employees and Agents. No officer, off vial, employee or agent of Agency or City shall be personally liable to Borrower or its successors in interest in the event of arly default or breach by Agency or for any amount whic;'~ may become due to Borrower or its successors in interest pursuant to this Agreement. 11.16 Time of the Essence; Calculation of Time Periods. Time is of the essence for each condition, term, obligation and provision of this Agreement. Unless otherwise specified, in computing any period of time descri~led in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is not a business day, in which event the period shall run until the next bu:>iness day. The final day of any such period shall be deemed to end at 5:00 p.m., local timie at the Property. For purposes of this Agreement, a "business day" means a day that is not a Saturday, Sunday, a federal holiday or a state holiday under the laws of California. 11.17 Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the Statf; of California without regard to principles of conflicts of laws. Any action to enforce or interpret this Agreement shall be filed in the Superior Court of San Mateo County, California or in the Federal District Court for the Northern District of California. 1246539-2 2 g IP. 3 0 11.18 General Indemnification. Borrower shall indemnify, defend (with counsel approved by Agency) and hold harml'~ess Indemnitees from all Claims (including without limitation, reasonable attorneys' fees) arising in connection with any claim, action or proceeding to attack, set aside, void, or annul an;~ approval by the City or the Agency or any of its agencies, departments, commissions, agents, officers, employees or legislative body concerning the Project or this Agreement. The Agency will promptly notify Borrower of any such claim, action or proceeding, and will cooperate fully in the defense. The Agency and City may, within the unlimited discretion of each, participate in the defense of any such claim, action. or proceeding, and if the Agency or City chooses to do so, Borrower shall reim'ourse Agency and City for reasonable attorneys' fees and expen:>es incurred. SIGNAL Z;~S ON FOLLOWITJG i~.4~G~ ] 246539-2 2(~ FP. 31 IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of the date first written above. AGENCY REDEVELOPMEI~TT AGENCY OF "1 HE CITY OF SOUTH SAN FRANCISCO, A PUBLIC BODY CORPORATE A]vD POLITIC By• I`: ame: Title: ATTEST: By: Agency Secreiary APPROVED AS TO FORlvi: By: Agency Counsel BORROWER DI NAPOLI PIZZERIA & RISTORANTE, INC., a California corporation By: Print Name: Title: 1246539-2 3 Q 1I'. 3 2 SECURED PROMISSORY NOTE $350,000 South San Francisco, California 2009 FGR VALUE RECEIVED, C)i Napoli Pizzeria & Ristorante, Inc., a California corporation ("Borrower") promises to pay to the Redevelopment Agency of the City of South San Francisco, a public body, corporate and politic ("Agency"), in lawfu! money of the United States of America, tl~e principal ~surri of Three I-lundred Fifty Thousand Dollars ($350,000), or so much thereof as may be advanced by Agency pursuant to the Owner Participation and Loan Agreement referred to below, together with interest on the outstanding principal balance in accordance with the terms and conditions described herein. This Secured Promissory i~Jote (this "Note") has been executed and delivered pursuant to an Qwner Participation and Loan Agreement dated as of the date hereof by and between Borrower and Agency (the "Loan Agreement"), and is subject to the terms and conditions of the Loan .Agreement, which are by this reference incorporated herein and- made a part hereof. C:apitalized terms used but not defined herein shall have the meani- g ascribed to such terms in the .Loan Agreement. This Note is secured by a t_easehold Deed of Trust, ,Sssignment of Rents, Security Agreement and Fixture Filing ("Deed of Trust") dated as of the date hereof, executed by BorroU-er for the benefit of Agency and encumbering Borrower's leasehold interest in the property described therein. Agency shall be entitled to the benefits of the security provided by the Deed of Trust and shall .have the. right to enforce the covenants and agreements contained herein, in the Deed of Trust, and the Loan Agreement. 1. INTEREST RATE; REPAYMENT. Interest shall accrue on the outstanding principal balance of this Note at the rate of four percent (4%) simple interest per annum, commencing upon July 1, 2010. 'Interest shall be calculated on the basis of a year of 365 days, and charged for the acl:ual number of days elapsed. No interest shall accrue prior to July 1, 2010.] 2. PAYMENT DATES; MATURITY DATE. Commencing upon August 1, 2010 (the "First Payment Date"), and on the first (1Sc) day of each calendar month thereafter, Borrower shall make monthly payments of combined principal and interest until the entire indebtedness evidenced hereby is fully paid, except that all remaining indebtedness, if not sooner paid, shall be due and payable upon the Maturity Date (defined below). The amount of the monthly payments to be paid beginning on the First Payment Date will be an amount equal to the payment necessary to fully amortize the principal amount of this Note, togeether with interest at the interest rate specified in Section 1 above over a 168 monthh period. The entire outstanding principal balance of this Note, together with accrued interest and all other sums accrued hereunder shall be IP. 3 3 payable in lull on the earlier of (i) the fifteenth (15th) anniversary of the date of this Note (the "Maturity Date"), or (ii) the date that the Lease terminates. Payments shall be credited first to any unpaid late charges and other costs and fees then due, then to accrued interest, and then to principal. in no event shall any amount due under this Note become subject to any rights, offset, deduction or counterclaim on the part of Borrower. 3. DUE ON TRANSFER OR DEFAULT. The entire unpaid principal balance and all sums accrued hereunder shall be immediately due and payable upon the Transfer (as defined in Section -.? of the Loan Agreement) absent Agency consent, of all or any part of Borrower's interest in the Property or the improvements, or any interest therein, or upon the occurrence of an Event of Default under the Lean Agreement, the Deed- of Trust or this Note, subject to the expiration of any applicable cure period. Without limiting. the generality of the foregoing, this Note shall not be assumable without Agency's prior written consent, which consent may be granted or denied in Agency's sole discretion. 4. PREPAYMENT. Borrower may, without premium or pen salty, at any time and from time to time, prepay all or any portion of the outstanding principal balance due under this Note. Prepay. ~ gents shall be applied first to any unpaid late charges and other costs and fees then due, then to accrued but unpaid interest; ai td then to principal. 5. Ri1ANNEf~ OF PAYMENT. Ali payments on this Note shall be made to Agency at 4CC Orand Avenue, South San Francisco, CA 94J80 or such other place as Agency shall-designate to Borrower in writing, or by wire transfer of immediately available funds to an account designated by Agency in writing. 6. EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an event of default hereunder ("Event of -Default"): (a) Borrower fails to pay when due the principal and interest payable hereunder and such failure continues for ten (10) days after Agency notifies Borrower thereof in writing. (b) Borrower fails to maintain insurance on the Property and the Project as required pursuant to the Agency C)ocuments and Borrower fails to cure such default within 10 days. (c) Pursuant to or within, the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors ("Bankruptcy Law ), Borrower or any general partner thereof (i) commences a voluntary case or roceeding; (ii) consents to the entry of an order for relief against Borrower or any P general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Borrower or any general l 246545-2 2 IP. 3 4 partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due. (d) A court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) 6s for relief against Borrower or any general partner thereof in an involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Borrower or any general partner thereof or substantially all of such entity's assets, (iii) orders the liquidation of Borrower or any general partner thereof, or (iv) issues or levies a judgment, writ, warrant oiF attachment or similar process against the Property or the Project, and in each case the order or decree is not released, vacated, dismissed or fully bonded within 60 days after its issuance. (e) Borrower shall haves assigned its assets for the benefit of its creditors (other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have. been returned or released within sixty (60) days after such event (unless a lesser time period is permitted for cure under any other mortgage on the Property, in which eves ~t such lesser time period. shall apply under this subsection as well) or prior to any sooner sale pursuant to such sequestration, attachment, or execution; (f) Borro~,ver shall have: voluntarily suspended its business or Borrower shall have been dissolved or terminated; (g) A defy-alt arises under any debt instrument secured by a mortgage or deed of trust on Borrower's leasehold interest in the Property and remains uncured beyond. any applicable cure period such that the holder of such instrument has the right to accelerate payment thereunder. (h) Subject to Borrower's rigrit to contest the following charges pursuant to the Agency Documents, if Borrower fails to pay prior to delinquency taxes or assessments due on the Property or the Project or fails to pay when due any other charge that may result in a lien on the Property or the Project, and Borrower fails to cure such default within thirty (30) days of date of delinquency, but in all events upon the imposition of any such tax or other lien. (i) Any representation or warranty contained in this Agreement or any application, financial statement, certificate or report furnished in connection with the Loan or in connection with any request for disbursement of Loan Proceeds proves to have been false or misleading in any material adverse respect when made. (j) Borrower defaults iin the performance of any term, provision, covenant or agreement (other than an obligation enumerated in this Section 6 contained in this Note, the Loan Agreement, or the Deed of Trust, and unless such document specifies a different cure period for such default, the default continues for ten (10) days in the 1246545-2 3 ]P. 3 5 event of a monetary default or thirty (30) days in the event of a nonmonetary default after the date upon which Agency shall have given written notice of the default to Borrower (or such longer time as Agency may agree upon in writing), provided that in each case Borrower commences, to cure the default within thirty (30) days and thereafter prosecutes the curing of such default with due diligence and in good faith. (k) A default arises under the Lease and remains uncured beyond any applicable cure period such that the Landlord has the right tc terminate the Lease. 7. REMEDIES. Upon the occurrence of an Event of Default hereunder, Agency may, at its option (i) by written notice to Borrower, declare the entire unpaid principal balance of this Note, together with all accrued interest thereon and all sums due hereunder, immediately due and payable regardless of any prior forbearance, (ii) exercise any and all rights and remedies available to it under applicable lavr, and (iii) exercise any and all rights and remedies available to Agency under this Nete and the ether Agency Documents, including without limitation the right to pursue fcreclosure under the Deed of Trust. Borre~ver shall pay all reasonable costs and expenses incurred by or on behalf of Agency includi~ g, without limitation, reasonable attorneys' fees, incurred in connection with Agency's enforcement of this Note and the exercise of any cr all of its rights and remedies hereunder and al! such sums shall be G part of the indebtedness secured by the Deed of Trust. 8. DEFAULT RATE. Upon the occurrence of an Event of Default, interest shall automatically be increased :~~ithout notice to the rate of ten percent (~0%) per annum (the "Default Rate"); provided however, if any payment due hereunder is not paid when due, the Default Rate steal! apply commencing upon the due date for such payment. When Borrower is no longer in dE~fauit, the Default Rate shall no longer apply; and the interest rate shall once again be the rate specified in the first paragraph of this Note. Notwithstanding the foregoing provisions, if the interest rate charged exceeds the maximum legal rate of interest, the rate shall be the maximum rate permitted by law. The imposition or acceptance of the Default Rate shall in no event constitute a waiver of a default under this Note or prevent Agency from exercising any of its other rights or remedies Reserved. 9. MISCELLANEOUS 9.1 WAIVER. The rights and remedies of Agency under this Note shall be cumulative and not alternative. Nlo waiver by Agency of any right or remedy under this Note shall be effective unless in a writing signed by Agency. Neither the failure nor any delay in exercising any right, power or privilege under this Note will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege by Agency will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by applicable law (a) no claim or right of Agency arising out of this Note can be discharged by Agency, in whole or in part, by a waiver or )246545-2 4 I~T'. 3 6 renunciation of the claim or right unless in a writing, signed by Agency; (b) no waiver that may be given by Agency will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on Borrower will be deemed to be a waiver of any obligation of Borrower or of i~he right of Agency to take further action without notice or demand as provided in this Note. Borrower hereby waives presentment, demand, protest, notices of dishonor and of protest and all defenses and pleas on the .grounds of any extension or extensions of the time of payment or of any due date under this Note, in whole or in part, ~~hether before or after maturity and with or without notice. S.~ NOTICES. Any notice required or permitted to be given hereunder shall be given in accordance with Secltion 11.3 of the Loan Agreement. 9.3 SEVERA~BILITY. if any provision in this Note is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Note will remain in full force and effect. Any provision of this Ncte held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or un~~ jforceable. 9.4 Gv~%FRNING LAW; VEN! E. This Note shat! be governed by the laws cf the State of California without regard to principles of conflicts of laws, All persons and entities in any manner obligated under this Note- consent to the jurisdiction of any federal or state court having in the jurisdiction in which the Property is located (the "rr~periy Jurisdi~iion"). Borrower agrees that any controversy arising under or in relation to the Note or any other Loan Document shall be litigated exclusively in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to the Note and any other Loan Document. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. 9.5 PARTIES IN INTEREST. This Note shall bind Borrower and its successors and assigns and shall! accrue to the benefit of Agency and its successors and assigns. 9.6 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this Note are provided for convenience only and will not affect its construction or interpretation. 9.7 RELATIONSHIP OF THE PARTIES. The relationship of Borrower and Agency under this Note is solely that of borrower and lender, and the loan evidenced by this Note and secured by the Deed of Trust will in no manner make Agency the partner or joint venturer of Borrower. 1246545-2 5 ll'. 3 7 9.8 TIME IS OF THE ESSENCE. Time is of the essence with respect to every provision of this Note. 9.9 JOINT AND SEVERAL OBLIGATION. If Borrower consists of tvvo or more individuals, the obligations of such individuals hereunder shall be joint and several. IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of the dote first written above. SGRROWFR Di Napoli Pi~~eria & Ristorante, line, a Caiifornia Corporation By~: Roberto C. Oliveira, President ]246545-2 m. 3 s RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of Sauth San Francisco 400 Grand Avenue south San Francisco, CA 94080 Altn: Executive Director EXEMPT FROM RECORDING FEES PER GOVE;~~dMENT CODE §§6103, 27383 Space above this line for Recorder's use. LEASEIIOLI; DE EI) OF TRUST , ASSIG .. ElV' T OF RENTS, SECURITY AGREEMENT AIYL FIXTURE FILING Ti-lIS LEASEHOLD DEED OF TRj~ST WITFI ASSIGNMENT OF RENTS, U.ECDRITY AGREEMENT ,hND FIXTURE FIL:-NG ("Deed of'I'rust") is made as of , 2009 by Di Napoli Pizzeria & Ristorante, a California corporation ("Trustor") to Title Company as. trustee ("Trustee'' j, for the benefit of the Redevelopment Agency of the City of South San Francisco, a p~?b1_ic body, corporate, and politic ("Beneficiary"). RECITALS A. Toni Hui ("Omer") owns fee simp?e title to the land descri'ned in EXiiibit A attached hereto and incorporated herein. by this reference (the "L and"). The Land is located within the Downtown Redevelopment Project Area ("Project Area"l. Owner and Trustor have entered into a lease dated as of July 1, 2007 (tile "Lease") pursuant to which Trustor leases the Land and the Improvements for the purposes of operating Trustor's business. B. Trustor intends to rehabilitate the improvements located on the Land (the "Project"). C. Beneficiary and Trustor have entered into an Owner Participation and Loan Agreement dated as of the date hereon (the "OPA") pursuant to which Beneficiary is providing a loan to Trustor in the amount of Three Hundred Fifty Thousand Dollars ($350,000) (the "Loan") for the purpose of partially financing the Project. Trustor has issued to Beneficiary a secured promissory note dated as of the date :h.ereof (the "Note") to evidence Trustor's obligation to repay the Loan. A Memorandum of tJhe OPA will be recorded in the Official Records of San Mateo County concurrently herewith.. C. As a condition precedent to the making of the Loan, Beneficiary has required that Trustor enter into this Deed of Trust and grant to Trustee for the benefit of Beneficiary, a lien and security interest in Trustor's leasehold interest in the Land and the Property (defined below) to secure repayment of the Note and performance of Trustor's obligations under the OPA. NOW THEREFORE, for good. and valuable consideration, the receipt and sufficiency of PP. 3 9 which are hereby acknowledged, it is agreed as follows. 1. Grant in Trust. In consideration of the foregoing and for the purpose of securing payment and performance of the Secured Obligations defined and described in Section 2, Trustor hereby irrevocably and unconditionally grants, conveys, transfers and assigns to Trustee, in trust for the benefit of Beneficiary, with power of :sale and right of entry and possession, all estate, right, title and interest which Trustor now has or may later acquire in and to the Land, and all of the following, whether presently owned nr hereafter acquired: a. All buildings, structures, and improvements, now or hereafter located or constructed on the Land ("improvements"); b. All appurtenances, easements, rights of way, pipes; transmission lines or wires and other rights used in connection with the Land or the Improvements or as a means of access thereto, whether no .v or hereafter owned or constructed or placed r~pon or in the Land or Improve~-~ents and all existing and future privileges, rights, franchises and tenements of the Land, including all minerals, oils, gas and other commercially valuauie substances which may be in, under or produced from ar~y part o:f the Land, and all water rights, rights of way, gores or strips of land, ar~d any land_lying in the streets, ways, and alleys, ope;, or proposed, in front of or adjoining the Land and Improvements (collec±ively, "Appurtenances"); c. All machinery, eq~~ipment, fixtures, goods and other personal property of the Trustor, wi~ether moveable or not, now owned or hereafter acquired by the Trustor an d now or hereafter located at or used in connection with the Land, the Improvements or Appurtenances, and all improvements, restorations, replacements, repairs, additions or substitutions thereto (collectively, "Equipment"); d. All existing and future leases, subleases, licenses, and other agreements relating to the use or occupancy of all or any portion of the Land or lmprovements (collectively, "Leases"), all amendments, extensions, renewals or modifications thereof, and all rent, royalties, or other payments which may now or hereafter accrue or otherwise become payable thereunder to or for the benefit of Trustor, including but not limited to security deposits (collectively, "Rents"); e. All insurance proceeds and any other proceeds from the Land, Improvements, Appurtenances, Equipment, Leases, and Rents, including without limitation, all deposits made with or other security deposits given 1:o utility companies, all claims or demands relating to insurance awards which the Trustor now has or may hereafter acquire, including all advance payments of insurance premiums made by Trustor, and all condemnation awards or payments now or later made in connection with any condemnation or eminent domain proceeding ("Proceeds"); f. All revenues, income, rents, royalties, payments and profits produced by the Land, Improvements, Appurtenances and Equipment, whether now owned or hereafter acquired by Trustor ("Gross Revenues"); g. All architectural, structural and mechanical plans, specifications, design documents and studies produced in connection with development of the Land and construction of 1246546-z lI'. 4 0 the Improvements (collectively, "Plans"); and h. All interests and righl:s in any private or governmental grants, subsidies, laa_ns or other financing provided in connection with development of the Land and construction of the Improvements (collectively, "Financing"). All of the above-referenced interests of Trustor in the Land, Improvements, Appurtenances, Equipment, Leases, Rents, Proceeds;, Gross Revenues, Plans and Financing as hereby conveyed to Trustee or made subject to the security interest herein described are collectively referred to herein as the "Property." 2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment Gild performance of the following (collectively, the "Seeure~ Obligations"): {i) all present and future indebtedness evidenced by the; Note and any amendment thereof, including principal, interest and all other amounts payable under the tPrnzs ~f the Note; (ii) all present and future obligations of Trustor to Beneficiary under the Doan Documents (defineu below); (iii) all additional present and future obligations of Trustor to Beneficiary under any other agr`ement or instnarnent acknowledged by Trustor (whether existing now or in the future) wl_-iich states that it is or such obligations are, secured by this Deed of Trust; (iv) all obligations of Truster to Beneficiary under all modifications, s~~pplements, amendments, renewals, or extensions of any of the foregoing, whether evider~ced_by new or additional documents; and (v) reimbursement of all amounts advanced by or on behalf of~ Benef ciary to protect Beneficiary's interests u;jcler this Deed of Trust or any otrier Lean Document as such may be modified, supplemented, amended,. renewed or extended. The No±e, the CPA, and this Deed of Trust are hereafter collectively referred to as the "Loan Documents.." 3. Assignment ofl~ents, Issues, and Profits. Trustor hereby irrevocably, absolutely, presently and unconditionally assigns to Beneficiary the Rents; royalties, issues, profits, revenue, income and proceeds of the Property. This is an absolute assign~rnent and not an assignment for security onl}~. Benef ciary hereby confers upon Trustor a license to collect and retain such Rents,_ royalties, issues, profits, revenue, income and proceeds as they become due and payable prior to any Event of Default hereunder. Upon the occurrence of any such Event of Default, Beneficiary may terminate such license without notice to or demand upon Trustor and without regard to the adequacy of any security for the indebtedness hereby secured, and may either in person, by agent, or by a receiver to be appointed by a court, enter upon and take possession of the Property or any part thereof, and sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same; less costs and expenses of operation and collection, including reasonable attorneys' fees, to any indebtedness secured hereby, and in such order as Beneficiary may determine. Beneficiary's right to the rents, royalties, issues, profits, revenue, income and proceeds of the Property does not depend upon whether or not Beneficiary takes possession of the Property. The: entering upon and taking possession of the Property, the collection of such rents, issues, and profits, and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. If an Event of Default occurs while Beneficiary is in possession of all or part of the Property and/or is collecting and applying Rents as permitted under this Deed of Trust, Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and invoke every right and remedy afforded any of there under this Deed of Trust and at law or in equity, 1246546-2 rP.41 including the right to exercise the power of sale granted hereunder. Regardless of whether or not Beneficiary, in person or by agent, takes actual possession of the Land or the Improvements, Beneficiary shall not be deemed to be a "mortgagee in possession," shall not be responsible for performing any obligation of Trustor under any Lease, shall not be liable in any manner for the Property, or the use, occupancy, enjoyment or operation of any part of it, and shall not be responsible for any waste committed by Trustor, lessees or any third parties, or for dangerous or defective condition of the Property or any negligence in the management, repair or control of the Froperty. Absent Benef ciary's writte.:n consent, Trustor shall not accept prepayment of rents for any rental period exceeding one month. 4. Security Agreement. The parti~°s intend for this Deed of Trust to create a lien on the Property, and an absolute assignment of the Rents aiid Leases, all in favor of Beneficiary. The parties acknowledge that some of the Property may be determined under applicable law to be personal property or fixtures. To the extent that any Property may be or be determined to be personal property, T rustoi as debtor hereby grants to Beneficiary as secured party a security interest in all such Property to sec»re spay ment and performance of the Secured Obligations. This geed of Trust constitutes a security a€;reement under the California Uniform_ Commercial Code, as amended or recodified from time to time (the "UCC"), covering all such Property. To the extent such Property is not real property encumbered by the lien g~-anted above, and is not absolutely assigned by the assignment: set forth above, it is the intention of talc parties that such Froperty shall constit»te "proceeds, p.~oducts; offspring, rents, or profits" (as defined in and for the purposes of Section 552(bl of the United States Bankruptcy Code, as such section may be modified or supplemented) of the Land and Improvements. 5. .Financing Statements. Pursuant to the UCC, Trustor, as debtor, hereby authorizes Beneficiary, as secured party, to file such financing statements and amendments thereof and such continuation statements with respect thereto as Beneficiary may deem appropriate to perfect and preserve Beneficiary's security interest in the Property and Rents, without requiring any signature or further authorization by Trustor. IiErequested by Beneficiary, Trustor shall pay all fees and costs that Beneficiary may incur in filing such .documents in public offices and in attaining such record searches as Beneficiary may rE;asonably require. If any financing statement or other document is filed in the records normally pertaining to personal property, that filing shall not be construed as in any way derogating f'r'om or impairing this Deed of Trust or the rights or obligations of the parties under it: Everything used in connection with t11e Property and/or adapted for use therein and/or which is described or reflected in this Deed of Trust is, and at all times and for all purposes and in all proceedings both legal or equitable shall be regarded as part of the estate encumbered by this Deed of Trust irrespective of whether (i) any such item is physically attached to the Improvements, (ii) serial numbers arE; used for the better identification of certain equipment items capable of being thus identifiecl in a recital contained herein or in any list filed with Beneficiary, or (iii) any such item is preferred to or reflected in any such financing statement so filed at any time. Similarly, the mention in any such financing statement of (l) rights in or to the proceeds of any fire and/or hazard insurance policy, or (2) any award in eminent domain proceedings for a taking or for lessening of value, or (3) Trustor's interest as lessor in any present or future lease or rights to income growing out of the use and/or occupancy of the property conveyed hereby, whether pursuant to lease or otherwise, shall not be construed as in any way 1246546-2 'P. 4 2 altering any of the rights of Beneficiary as determined by this instrument or impugning the priority of Beneficiary's lien granted hereby or by any other recorded document. Such mention in any financing statement is declared to be solely for the protection of Beneficiary in the event any court or judge shall at any time hold, with respect to the matters set forth in the foregoing clauses (1), (2), and (3), that notice of Beneficiary's priority of interest is required in order to be effective against a particular class of persons, including but not limited to the federal govern~rnent and any subdivisions or entity of the federal government. 6. Fixture Filing. This Deed ol~ Trust is intended to be and constitutes a fixture filing pursuant to the provisions of the UC(, with respect to all of the Property constituting fixtures, is being recorded as a fixture financing statement and filing under the UCC, and covers property, goods and equipment which are or are to becorrie fixt>>res related to the Land and the Improvements. Trustor covenants and agrees that this Deed of Trust is to be filed in the real estate records of San Tvlateo County and shall also operate from the date of such fi_]ing as a fixture filing in accordance with Sectlor, 9502 and other applicable provisions of the UCC. This Deed of T~ ast shall also be effective as a imancing state~rient covering minerals or the like (including oil and gas) and accounts subject to t he UCC, as amended_ Trustor shall be deemed to be the "debtor" and Beneficiary shall be deemed to be the "secured. party" for all purposes under the LTCC. 7. Tr~stor's Representations, j?Varranties and Ccverants; Rights and Duties of the Parties. 7.1 Representations and. V'Jarranties. Trustorrepresents and warrants that: (i} Trustor 1_awfully possesses and holds a leasehold interest in the Land and the Improvements, (ii) ~'rustor has a leasehold interest in all of the Property; (iii) other than as limited by the Loan Documents, Trustor has the full and unlimited power, right and authority to encumber Trustor's interests in the Property with this Deed of Trust and assign the Rents as contemplated herein; (iv) subject only to encumbrances of record and ~;enior liens permitted pursuant to the Loan Documents or otherwise approved in writing by Beneficiary ("permitted Encumbrances"), this Deed of Trust creates a valid lien on Trustor's entire interest in the Property; (v) except with respect to Permitted Encumbrances, Trustor holds a leasehold in the Land and the Improvements pursuant to the Lease free and clear of all deeds of trust, mortgages, security agreements, reservations of title or conditional sales contracts, (vii) there is no financing statement affecting the Property on file in any public office other than as disclosed in writing to Beneficiary; and (vii) the correct address of Trustor's chief executive c-ffice is specified in Section 10.2. 7.2 Condition of Property., Trustor represents and warrants that except as disclosed to Beneficiary in writing, as of the date :hereof: (i) Trustor has not received nor is Trustor aware that Owner has received any notice from any governmental authority of any threatened or pending zoning, building, fire, or health code. violation or violation of other governmental regulations concerning the Property thhat has not previously been corrected; (ii) to Trustor's knowledge, no condition on the Land violates any health, safety, fire, environmental, sewage, building, or other federal, state or local law, ordinance or regulation; (iii) to Trustor's knowledge, no contracts, licenses, leases or comrriitments regarding the maintenance or use of the Property or allowing any third party rights to use the Property are in force; (iv) to Trustor's knowledge, there are no threatened or pending actions, suits, or administrative proceedings against or affecting the Property or any portion thereof or the interest of Trustor in the Property; (v) to 1246546-2 IP. 4 3 Trustor's knowledge, there are no threatened or pending condemnation, eminent domain, or similar proceedings affecting the Property or any portion thereof; (vi) Trustor has not received any notice from any insurer of defects of the Property which have not been corrected; (vii) to Trustor's knowledge, there are no natural or artificial conditions upon the Land or any part thereof that could result in a material and adverse change in the condition of the Land; (viii) all information that Trustor has delivered to Beneficiary, either directly or tl',rough Trustor's agents, is accurate and complete; and (ix) Trustor or Trustor's agents have disclosed to Beneficiary all material facts concerning the Property; . 7.3 Authority. Trustor represents and warrants that this Deed of Trust and all ether documents delivered or to be delivered by Trustor in connection herewith: (a) have been duly authorized, executed, and delivered by 1 rustor; (b) are binding obligations of Truster; and (c) do not violate the provisions of any agreement to which Trustor is a party or which affects the Property. Trustor ~irther represents and v~arrants that there are no perd>ing, or to Trustor's knowledge, threatened actions or proceedings before any court or administrative agency which may adversely affect T:-ustor's o .~.~nership of the Property. 7.4 Payment and Performance of Secured Obli atg ions. Trustor shall promptly pay tixlhen due the principal and any interest due on the indebtedness evidenced by the Note, and shall promptly pay and perform all other obligations of Trustor arising in connection with the Secured t'ibligat1ons or the Loan Documents in accordance with the respective terms thereof 7.5 TJse of Loan Proceeds; Preservation and Maintenance of I'ropert~mpliance with Laws. Trustor covenants that it shall use the proceeds of the Loan ("fi..oan Proceeds") solelyfor purposes authorized by the Loan Documents. Trustor covenants that it shall keep the Land and Improvements in good repair and condition, and from time to time shall make necessary repairs, renewals and replacements thereto so that the Property shall be preserved and maintained. Trustor covenants that at shall comply with all federal, state and local laws, regulations, ordinances and rules applicable to the Property and the Project, including without limitation all applicable requirements, of state and local building codes and regulations, and all applicable statutes and regulations relating to accessibility for the disabled. Trustor shall not remove, demolish or materially alter any Improvement without Beneficiary's consent, shall complete or restore promptly and in good and workmanlike manner any building, fixture or other improvement which may be constructed, damaged, or destroyed thereon, and shall pay when due all claims for labor performed and materials furnished therefor. Trustor shall use the Land and the Improvements solely for purposes authorized by the Loan Documents, shall not commit or allow waste of the Property, and shall not commit or allow any act upon or use of the Property which would violate any applicable law or order of any governmental authority, nor shall Trustor bring on or keep any article on the Property or cause or allow any condition to exist thereon which could invalidate or which would be prohibited by any insurance coverage required to be maintained on the Property pursuant to the Loan Documents. 7.6 Reserved. 7.7 Inspections; Books and Records. Beneficiary and its agents and representatives shall have the right at any reasonable time upon reasonable notice to enter upon the Land and inspect the Property to ensure compliance with the Loan Documents. Trustor shall maintain 1246546-2 IP. 4 4 complete and accurate books of account and other records (including copies of supporting bills and invoices) adequate to document the use of the Loan Proceeds and the operation of the Property, together with copies of all written contracts, Leases and other instruments which affect the Property. The books, records, contracts, Leases and other instruments shall be subject to examination and inspection by Beneficiary at ary reasonable time following two business days prior notice. 7.8 Charges, Liens, Taxes and h.ssessments. Trustor shall pay before delinquency al] taxes, levies, assessments and other c:barges affecting the Property that are (or if not paid may become) a lien on all or part of the Property. Trustor may, at Trustor's expense, contest the validity nr application of any tax, levy, assessment or charge affecting the Property by appropriate legal proceedings promp1rly initiated and conducted in good faith and with due diligence, provided that (i) Beneficia:ry is reasonably satisfied that neither the Property nor any paw thereof or interest therein will be, in danger of being sold; forfeited, or lost as a result of such contest, and (ii) Trustor shall have posted a bond or tarnished other security as may reasonably be required from time to time by Beneficiary; and provided farther that Trustor shall timely make any payment necessary to prevent a lien fore; losure, sale, forfeiture or loss of the property , 7.~ Subro atio,~. Beneficiary shall be subrogated to the liens of all encumbrances, whether released of record or not, which are discharged i,, whole or in part by Beneficiary in accordance with this Deed of Trust. /.l 0 Hazard, L lability and -`JJorkers' Compensation Insurance. At all times during the term hereof, at Trustor's expense, Trustor shall keep the Improvements and personal property now existing or hereafter located on the Property insured against loss by fire, vandalism and malicious mischiefby a policy of standard fre and extended all-risk insurance. The policy shall be written on a full replacement valuf; basis and shall name Beneficiary as loss payee as its interest may appear. The full replacement value of the improvements to be insured shall be determined by the company issuing the policy at the time the policy is initially obtained. Not more frequently than once every two (2) years, either the Trustor or the Beneficiary shall have the right to notify the other party that it elects to have the replacement value redeternlined by the insurance company. Subject to the ri;~hts of any senior lienholder, the proceeds collected under any insurance policy maybe applied lby Beneficiary to any indebtedness secured hereby and in such order as Beneficiary may deters-line, or at the option of Beneficiary, the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of~ default hereunder or invalidate any act done pursuant to such notice. Notwithstanding anything to the contrary set forth herein, provided that Trustor is not in default under any Loan Document, Trustor shall be permitted to use the proceeds of insurance to rebuild the Improvements. 7.10.1 Trustor shall at all times during the term hereof, maintain a comprehensive general liability insurance policy in ail amount not less than One Million Dollars ($1,000,000) each occurrence, Two Million Dollar:> ($2,000,000) annual aggregate, together with Three Million Dollars ($3,000,000) excess ]:lability coverage or such other policy limits as Agency may require in its reasonable discretion, including coverage for bodily injury, property damage, products, completed operations and contractual liability coverage. Such policy or policies shall be written on an occurrence basis and shall name the Beneficiary as an additional insured. 1246546-2 pP. 4 5 Trustor shall maintain workers' compensation insurance as required by law. 7.10.2 Trustor shall fil''.e with Beneficiary prior to the commencement of the term hereof, certificates (or such other proof as Beneficiary may require, including without limitation, copies of the required insurance policies) evidencing each of the insurance policies and endorsements thereto as required by tlhis Section, and such certificates (or policies) shall provide that at least thirty (30) days' prior written notice shall be provided to Beneficiary prior to the expiration, cancellation or change in coverage under each such policy. 7.10.3 If any insurance policy required hereunder is canceled or the coverage provided thereunder is reduced, Trustor shall, witi~in fifteen (15) days after receipt of written notice of such cancellation or reduction in coverage, but in ne event later than the effectwe date of cancellation or reduction, file with Beneficiary a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certif cafe, Beneficiary may, without fi~rther notice and at its option, procure such insurance coverage at ~['rustor's expense, and Trustor shall promptly reimburse BcnLfi_ciary for such Expense upon receipt cf billing from Beneficiary. 7.10.4 The itis~arar~ce ;.;olicies required hereunder shall be issued by insurance companies authorzed to do business in the State of California L'~ith a financial rating of at least A VII status as rated in the mast recent edition of Best's Key Rating Guide. Each policy of insurance shail contain ar_ endorsement requiring the insurer to provide at least 30 days v~ritten notice to Beneficiary prior to change in coverage, cancellation or expiration thereof. If any insurance policy required pursuant to the Loan Bocuments is canceled or the coverage provided thereunder is reduced, Trustor shall, ~a~ithin ten (10) days after receipt of written notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with Beneficiary a certificate showing that the required insurance has been reinstated or provided through anothf;r insurance company or companies. Upon failure to so file such certificate, Beneficiary may, without further notice and at its option, procure such insurance coverage at Trustor's expense, and Trustor shall promptly reimburse Beneficiary for such expense upon receipt of billing from Beneficiary. 7.11 Hazardous Materials, Trustor represents and warrants that except as disclosed to Beneficiary in writing, as of the date hereof to the best knowledge of Trustor: (i) the Land is free and has always been free of Hazardous Materials (as defined below) and is not and has never been in violation of any Environmental Law (as defined below); (ii) there are no buried or partially buried storage tanks located on the Land; (iii) Trustor has received no notice, warning, notice of violation, administrative complaint, judicial complaint, or other formal or informal notice alleging that conditions on the; Land are or have ever been in violation of any Envirorunental Law or informing Trustor that the Land is subject to investigation or inquiry regarding Hazardous Materials on the Land or the potential violation of any Environmental Law; (iv) there is no monitoring program required by the Environmental Protection Agency or any other governmental agency concerning the Land; (v) no toxic or hazardous chemicals, waste, or substances of any kind have ever bef;n spilled, disposed of, or stored on, under or at the Land, whether by accident, burying, drainage, or storage in containers, tanks, holding areas, or any other means; (vi) the Land has never been used as a dump or landfill; and (vii) Trustor has disclosed to Beneficiary all information, records, and studies in Trustor's possession or 1246546-2 Q II'. 4 6 reasonably available to Trustor relating to the Land concerning Hazardous Materials. Trustor shall not cause or pe;;mit any Hazardous Material (as defined below) to be brought upon, kept, stored or used in, on, under, or about the Land by Trustor, its agents, employees, contractors or invitees except for incidental supplies ordinarily used in connection with the construction, rehabilitation, repair, and operation of commercial developments acrd in compliance with all applicable laws, and shall nct cause any release of Hazardous Materials into, onto, under or through the Lard. If any Hazardous Material is discharged, released, du.nped, or spilled in, on, under, or about the Land and results in any contamination of the Land or adjacent property, or otherwise results in the release or discharge of Hazardous Materials in, on, gander or from the Land, Trustor shall promptly take all actions at its sole expense as are necessary to comply with all Environmental Laws (as defined below). Trustor shall indemnify, defend (with counsel reasonably acceptable to Beneficiary), and hold Beneficiary and its elected and appoi_rrted off cials, officers, agents and employees (collectively, "Iudemnitees") harmlFSS from and against any and all loss, claim, liability, damage, demand, judgar~ent, order, penalty, fine, injunctive or other relief cost, expense (includi;,g reasonable fees and expenses of attorneys, expert witnesses, and other professionals advising or assisting Benet~ciary), action, or cause of action (all of the for?going, hereafter individually "Cla;m" and collectively "C;aims") arising in connection with the breach of Trustor's covenants and obligations set forth in this Section 7. i 1 or otherwise arising in connection with the presence or release of Hazardous Materials in, on, under, or from the Property. The foregoing indemnity. includes, without limitation; all costs of im~cstigation, assessniellt, containment, removal, remediation of any kind, and disposa:[ of Hazardous iufa±erials, a]] costs of determining whether the Land is in compliance with Environmental Laws, all costs associated with bringing the Land into compliance with all applicable- Environmental Laws, and all costs associated with claims for damages or injury to persons, property, or natural resources. Without limiting the generality of the foregoing, Trustor shall, at Trustor's own cyst and expense, do all of the following: a. pay or satisfy any jud€;ment or decree that may be entered against any Indemnitee or Indemnitees in any legal or administrative proceeding incident to any matters against which Indemnitees are entitled to be indemr.~ified under this Deed of Trust; b. reimburse Indemnitees for any expenses paid or incurred in connection with any matters against which Indemnitees are entitled to be indemnified under this Deed of Trust; and c. reimburse Indemnitee;> for any and all expenses, including without limitation out- of-pocket expenses and fees of attorneys and expert witnesses, paid or incurred in connection with the enforcement by Indemnitees of their rights under this Deed of Trust, or in monitoring and participating in any legal or administrative proceeding. Trustor's obligation to indemnify the Indemnitees shall not be limited or impaired by any of the following, or by any failure of 'Trustor to receive notice of or consideration for any of the following: (i) any amendment or modification of any Loan Document; (ii) any extensions of time for performance required by any Loan Document; (iii) any provision in any of the Loan 1246546-2 IP. 4 7 Documents limiting Beneficiary's recourse to property securing the Secured Obligations, or limiting the personal liability of Trustor, or any other party for payment of all or any part of the Secured Obligations; (iv) the accuracy or inaccuracy of any representation and warranty made by Trustor under this Deed of Trust or by Trustor or any other party under any Loan Document, (v) the release of Trustor or any other person, by Beneficiary or by operation of law, from performance of any obligation under any Loan Document; (vi) the release or substitution in whole or in part of any security for the: Secured Obligations; and (vii) Beneficiary's failure to properly perfect any lien or security interest given as security for the Secured Obligations. The provisions of this Section 7.11 shall be in addition to any ?nd all other obligations and liabilities that Tractor may have under applicable law, and each Indemnitee shall be entitled io indemnification under this Section without regard to whether Beneficiary or that Indemnitee has exercised any rights against the Property or airy other security, pursued any rights agai;~st any guarantor or other party, or pursued any other rights available under the Loan Documents or applicable la~~~. The obligations of Trustor to inde.~:Inify the Indei~~~;itees under this Section shall survive any repayment or discharge o:~the Secured Gbiigations, any foreciosure proceeuing, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and. any release of record of the lien of this Deed of Trust. `J~~ ithout limiting ar,}~ of the remedies provided in this Deed of Trust, Trustor acknowledges and agrees that each of'the provisions in this Section. 7.11 is an envirorLmental provision (as defined in Section 736(1}(2) of the California Code of Civil Procedure) made by Trustor relating to real property security (the "environmental Provisions"), and that Trustor's failure to comply with any of t he Environmental Provisions will be a breach of cant, act that will entitle Beneficiary to pursue the remedies provided by Section 736 of the California Code of Civil Procedure ("erection 736") for the recovery of damages and for the enforcement of the Environrr~ental Provisions. Pursuant Ito Section 736, Beneficiary's action for recovery of damages or enforcement of the Environmental Provisions shall not cons±itute an action within the meaning of Section 726(a) of the California Code of Civil Procedure or constitute a money judgment for a deficiency or a deficiency judgment within the meaning of Sections 580a, 580b, 580d, or 726(b) of the California Code of Civil Procedure. "Hazardous Materials" means any substance, material or waste which is or becomes regulated by any federal, state or local governmental authority, and includes without limitation (i) petroleum or oil or gas or any direct or indirect product or by-product thereof; (ii) asbestos and any material containing asbestos; .(iii) any substance, material or waste regulated by or listed (directly or by reference) as a "hazardous substance", "hazardous material", "hazardous waste", "toxic waste", "toxic pollutant", "toxiic substance", "solid waste" or "pollutant or contaminant" in or pursuant to, or similarly identified as hazardous to human health or the environment in or pursuant to, the Toxic Substances Control Act [IS U.S.C. Section 260], et seg.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seg.], the Resource Conservation and Recovery Act [42 U.S.C. Section 6901, et seg.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251 ], the Clean Air Act [42 U.S.C. Section 7401, et seg.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.]; the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seg.], the California 1246546-2 ]P. 4 8 Hazardous Waste Act [California Health and Safety Code Section 25100, et seg.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seg.], as they now exist or are hereafter amended, together with any regulations promulgated thereunder; (iv) any substance, material or waste which is defined as such or regulated by any "Superfund" or "Superlien" law, or any Environmental Law; or (v) any other substance, material, chemical, waste or pollutant identified as hazardous or toxic and regulated under any other federal, state or local. environmental law, including without limitation, asbestos, polychlorinated biphenyls, petroleurri, natural gas and synthetic fuel products and by-products. "Environmen'ual Ldp" means all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common lave doctrines, and provisions and conditions of permits, licei;ses and other operating authorizations regulating, or relating to, or imposing liability or standards of conduct concerning (i) pollution or protection of the environment, including natural resources; (ii) exposure of persons, including employees and agents, to any Hazardous Material (as defined above) or other products, raw materials, chemicals or other substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities; (ii%) the manufacture, use or introduction into .commerce of chemical s~abstarces, including v~ithout Lmitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal; or (iv) the ease, release or disp=osal of toxic or hazardous substances or Hazardous Materials or the remediation of air, surface waters, groundwaters or soil, as now or may at any later time be in effect, including but not 'limited to the Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental Response; Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101,. et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1.251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are hereafter amended, together with any regulations promulgated thereunder. . 7. l2 Notice of Claims; Defense of Security; Reimbursement of Costs. a. Notice of Claims. Tru~stor shall provide written notice to Beneficiary of any uninsured or partially uninsured loss affecting the Property through fire, theft, liability, or property damage in excess of an aggregate of Fifty Thousand Dollars ($50,000) within three business days of the occurrence of such loss. Trustor shall ensure that Beneficiary shall receive timely notice of, and shall have a right to cure, any default under any other financing document or other lien affecting the Property and shall use best efforts to ensure that provisions mandating such notice and allowing such right to cure shall be included in all such documents. Within three business days of Trustor's receipt thereof, Trustor shall provide Beneficiary with a copy of any notice of default Trustor receives in connection with any financing document secured by the 1246546-2 IP. 4 9 Property or any part thereof. b. Defense of Security. pit Tn~stor's sole expense, Trustor shall protect, preserve ar~d defend the Property and Trustor's interest in and right of possession of the Property, the security of this Deed of Trust and the rights anal powers of Beneficiary and Trustee created under it, against all adverse claims. c. Compensation; Reimbrarsement of Costs. Trustor agrees to pay all reasonable fees, costs and expenses charged by Beneficiary or `fnistee for any service that Beneficiary or Trustee may render in connection with this Deed of Trust, including without limitation, fees and expenses related to provision of a statement of obligations or related to a reconveyance. Trustor further agrees to pay or reirnburse Beneficiary for all costs, expenses and other advances which may be incurred or made by Beneficiary or Trustee in any efforts to enforce any terr„s of this Deed of Trust, including without limitation any rights or remedies afforded to Benef ciary or Trustee or both o_f them under Sections 7.18 and R2, whether or not any lawsuit is f led, or in defending any action or proceeding arising under or relating to this Deed of Trust, including reasonable attorneys' fees and other legal costs, costs of ai,y disposition of the Property under tl-ic Hower of sale granted hereunder or any judicial foreclosure, and any cost of evidence of tide. d. Notice of Changes. Trustor shall give Benef ciary prior written notice of any change in the address of Trustor and the location of any property, including books and records pertaining to the Property. 7.13 Indemnification. Truster shall indemnify, defend (with counsel reasonably acceptable to Beneficiary), and hold harmless the Trustee and the Inderr~nitees (as defined in Section 7.1 l) from and against all Claims arising directly or indirectly in any manner in connection with or as a result of (a) a:ny breach of Tr ustor's covenants under any Loan Document, (b) any representation by Trustor in any Loan Document which proves to be false or misleading in any material respect when made, (c) injury or death to persons or damage to property or other less occurring on the Land or in any improve~,lent located thereon, whether caused by the negligence or any other act or omission of Trustor or any other person or by negligent, faulty, inadequate or defective design, building, construction or maintenance or any other condition or otherwise, (d) any claim, demand or cause of action, or any action or other proceeding, whether meritorious or not, brought or asserted against any Indemnitee which relates to or arises out of the Property, or any Loan Document or any transaction contemplated thereby, or any failure of Trustor to comply with all applicable state, federal and local laws and regulations applicable to the Property, provided that no Indemnitee shall be entitled to indemnification under this Section for matters caused by such Indemnitee's gross negligence or willful misconduct. The obligations of Trustor under this. Section shall survive the repayment of the Loan and shall be secured by this Deed of Trust. Notwithstanding any contrary provision contained herein, the obligations of Trustor under this Section shall survive any foreclosure proceeding, any foreclosure sale, any delivery of a deed in lieu of foreclosure, and any release or reconveyance of this Deed of Trust. 7.14. Limitation of Liability. Beneficiary shall not be directly or indirectly liable to Trustor or any other person as a consequence of any of the following: (i) Beneficiary's exercise of or failure to exercise any rights, remedies or powers granted to Beneficiary in this Deed of X246546-2 FI'. 5 0 Trust; (ii) Beneficiary's failure or refiusal to perform or discharge any obligation or liability of Trustor under any agreement related to the Property or under this Deed of Trust; (iii) any waste committed by Trustor, the lessees of the Property or any third parties, or any dangerous or defective condition of the Property; o:r (iv) any loss sustained by Trustor or any third party resulting from any act or omission of Beneficiary in managing the Property after an Event of Default, unless the loss is caused by t:he willful misconduct, gross negligence, or bad faith of Beneficiary. Trustor hereby expressly waives and releases all Iiabi]ity of the types described in this Section 7.14 and agrees that Trus±or shall assei ~ no claim related to any of the foregoing against Beneficiary. 7.15 Insurance and Conderr~nation Proceeds. Subject to the rights of any senior lienholders, any award of damages in connection ~~:~ith any condemnation for public use or, or injury to the Property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply such moneys to any indebtedness secured hereby in such order as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such applicati+~n or release s hall not cure or waive any default or nofice of default hereunder or invalidate ar.}~ act done pursuant to such notice. Notwithstanding the foregoing, so long as the value of Benef ciary's lien is not impaired, insurance and/or condemnation proceeds may be used to repair andior restore the ImYrovements. 7:16 Release, Extension, Modification. At any time end from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Truce and the Note for endorsement, Trustee may release or reconvey all or any part of the Property, consent to the making of any map or plat of the Land or part thereof join in granting any easement or creating any restriction affecting the Property, or join in any extension agreement or other agreement affecting the lien or charge hereof. At any tjme and from time to time, without liability therefor and without notice, Beneficiary may (i) release any person liable for payment of any Secured Obligation, (ii) extend the time for payment or otherwise alter the terms of payment of any Secured Obligation; (iii) accept additional real or personal property of airy kind as security for any Secured Obligation, or (iv) substitute or release any property securing the Secured Obligations. 7.17 Reconveyance. Upon written request of Beneficiary stating that all of the Secured Obligations have been paid in full, anal upon surrender of this Deed of Trust, and the Note, Trustee shall reconvey, without warranty, the Property or so much of it as is then held under this Deed of Trust. The recitals in any rec;onveyance executed under this Deed of Trust of any matters or facts shall be conclusive pa-oof of the truthfulness thereof: Trustor shall pay al] fees of Trustee and all recordation fees related to such reconveyance. 7.18 Cure; Protection of Securit .Either Beneficiary or Trustee may cure any breach or default of Trustor, and if it chooses to do so in connection with any such cure, Beneficiary or Trustee may also enter the Property and/or do any and all other things which it may in its sole discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such other things may include: appearing i:n and/or defending any action or proceeding which purports to affect the security of, or the rights or powers of Beneficiary or Trustee under, this Deed of Trust; paying, purchasing, contesting or compromising any encumbrance; charge, lien or claim of lien which in Beneficiary's or Trustee's sole judgment is or may be senior in priority to this 1246546-2 "' lI'. 51 Deed of Trust, such judgment of Beneficiary or Trustee to be conclusive as among Beneficiary; Trustee and Trustor; obtaining insurance and/or paying any premiums or charges for insurance required to be carried hereunder; otherwise caring for and protecting any and all of the Property; andlor employing counsel, accountants, contractors and other appropriate persons to assist Beneficiary or Trustee. Beneficiary and Trustee may take any of the actions permitted under this Section 7.18 either with or without gi~~~irg notice, except for notices required under applicable law. Any amounts disbursed by Benef ciary pursuant to this paragraph shall become additional indebtedness secured by this Deed of Trust. 8. Default and Remedies. 8.1 Events of De uit. Trustor acknowledges and agrees that an Event of Default shall occur under this Deed of Trust upon the occurrence of any one or more of the follo~.ving events: a. Beneficiary's declaration of an Event of Default under any Loan Document, subject to the expiration of diiy applicable cure period set forth ire such document; b. Trustor fails to perform any monetary obligation which arises under this Deed of Trust, and does not cure that failure within ten (10) days following written notice from Beneficiary or Trustee; c. Reserved.] d. Trustor fails to maintain the insurance coverage required hereunder or otherwise fails to comply with the requirements of Section ?.10 hereof and Trustor fails to cure such default within the time specified in Section 7.10; e. Subject to Trustor's right to contest such charges as provided herein, Trustor fails to pay taxes or assessments due on the Land or the Improvements or fails to pay any other charge that may result in a lien ion the Land or the Improvements, and Trustor fails to cure such default within 10 days; f. Any representation or warranty of Trustor contained in or made in connection with the execution and delivery of this Deed of Trust or in any certificate or statement furnished pursuant hereto or in any other Loan Document proves to have been false or misleading in any material adverse respect when made; g. If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors ("Bankruptcy Law"), Trustor or any general partner thereof (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Trustor or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Trustor or any general partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits iin writing its inability to pay its debts as they become due; h. If a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Trustor or any general partner thereof in an 1246546-2 IT'. 5 2 involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Trustor or any general partner thereof or substantially all of such entity's assets, (iii) orders the liquidation of Trustor or any general partner thereof, or (iv) issues or levies a judgment, writ, warrant of attachment or similar process against the Property or the Project, and in each case the order or decree is not released, vacated, dismissed or fully bonded within 60 days after its issuance; i. The holder of any other debt instrument secured by a mortgage or deed of trust on the Property or part thereof declares an event of default thereunder and exercises a right to declare all amounts due under that debt instrument immediately due and payable, subject to the expiration of any applicable cure period set forth in such holder's documents; j. Trustor fails to perform any obligation arising under this Deed of Trust other than one enumerated in this Section 8. i , and does not cure that failure either within ten (10) days after written notice from Beneficiary or Trustee in the event of a monetary default, or within thirty (30) days after such written notice in the event of a nor~Yr:cnetary default, provided that in the case of a nonmonetary default that in Benef ciary's reasonable judgment cannot reasonably be cured within thirty (3C) days, an Event of Default shall not arise liereunder if Trustor com_Tnences to cure such default within thirty (30) days and thereafter prosecutes such care to completion with d~~e diligence: ar~d in good faith and in no event later than sixty (60) days following receipt ofnotice of default; or k. A default arises underti;e Lease and remains uncured beyond any applicable cure period such that the 1_?~ndlord has the right to terminate the Lease. 8.2 1~emedies. Subject to the applicable notice and cure provisions set forth herein, at any time after an Event of Default, Beneficiary and Trustee shall be entitled to invoke any and all of the rights and remedies described below, and may exercise ary one or more or all, of the remedies set forth in any Loan Document, and any other remedy existing at law or in equity or by statute. All of Beneficiary's rights and remedies shall be cumulative, and the exercise of any one or more of them shall not constitute an election of remedies. Beneficiary shall be entitled to collect all expenses incurred in pursuing the remedies provided hereunder, including without limitation reasonable attorneys' fees and costs. a. Acceleration. Beneficiary may declare any or all of the Secured Obligations, including without limitation all sums payable under the Note and this Deed of Trust, to be due and payable immediately. b. Receiver. Beneficiary may apply to any court of competent jurisdiction for, and obtain appointment of, a receiver for the Property. c. Entry. Beneficiary, in person, by agent or by court-appointed receiver, may enter, take possession of, manage and operate all or any part of the Property, and may also do any and all other things in connection with those actions that Beneficiary may in its sole discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such other things may include: taking and possessing copies of all of Trustor's or the then owner's books and records concerning the Property; entering into, enforcing, modifying, or canceling 1246546-2 IP. 5 3 Leases on such terms and conditions as Beneficiary may consider proper; obtaining and evicting tenants; fixing or modifying Rents; collecting and receiving any payment of money owing to Trustor; completing any unfinished construction; and/or contracting for and making repairs and alterations. If Beneficiary so requests;, Trustor shall assemble all of the Property that leas been removed from the Land and make all of it available to Beneficiary at the site of the Land. Trustor hereby irrevocably constitutes and ap~-oints Beneficiary as Trustor's attorney-in-fact to perform such acts and execute such documents as Beneficiary in its sole discretion may consider to be appropriate in cor~r;ection with taking these measures, including endorsement of Trustor's name on any instruments. d. UCC Remedies. Beneficiary may exercise any or all of the remedies granted to a secured party under the UCC. e. Judicial Action.: Beneficiary may bring an action in any court of competent;urisdiction to foreclose this Deed of Trust in the manner provided by law for foreclosure of mortgages on real property and/or to obtain specif c enforcement of any of the coverants or agreements of this Deed of Trust. f. Po~.~er of Sale. Under the power of sale hereby granted; Beneficiary shall have the discretionary right to cause some or all of the Property, including any Property which constitutes personal property, to be sold or other~.~ise disposed of in any combination and in any maru-~er permitted by applicable law. 8.3 Power of Sale. If Beneficiary elects to invoke the power of sale hereby granted, Beneficiary shall execute or cause the Trustee to execute a written notice of such default and of its election to cause the Property to be; sold to satisfy the obligations inereof, and shall cause such notice to be recorded in the office of the Recorder of each County wherein the Property or some part thereof is situated as required by law and this Deed of Trust. Prior to publication, of the notice of sale, Beneficiary shall deliver to Trustee this Deed of Trust and the Note or other evidence of indebtedness which is secured hereby, together with a written request for the Trustee to proceed with a sale of the Property, pursuant to the provisions of law and this Deed of Trust. Notice of sale having been given as then required. by law, and not less than the time then required by law having elapsed after recordation of such notice of default, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either as a whole or in separate parcells and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may, and at Beneficiary's request shall, postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time and place fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary, may purchase at such sale. 1246546-2 FP. 5 4 After deducting all costs, fees, and expenses of Trustee and of the trust hereby created, including reasonable attorneys' fees in connection with sale, Trustee shall apply the proceeds of sale to payment of all sums advanced or expended by Beneficiary or Trustee under the terms hereof and all outstanding sums then secured hereby, and the remainder, if any, to the person or persons legally entitled thereto. Without limiting the generality of the foregoing, Trustor acknowledges and agrees that regardless of whether or not a default has occurred hereunder, if an Event of Default has occurred under the Loan Documents, and if in connection with such Event of Default Beneficiary exercises its right to foreclose on the Property, then: (i) Beneficiary shall be entitled to declare all amounts due under the I'~1ote immediately due and payable, and (ii) the proceeds of any sale of the Property in connection with such foreclosure shall be used to pay all Secured Obligations, including withcut limitation, the outstanding principal balance and all other amounts due under the Note. At any foreclosure sale, any person, including Trustor, Trustee or Beneficiary, ;nay bid for and acquire the Property or any part of it to the extent permitted by then. applicable law. Instead of paying cash for such property, Beneficiary may settle for the purchase price by crediting the sales price of the properU:y against the following obligations: a. First; the portion of the Secured Obligations attributable to the expenses of sale, costs of any action and any other sums far which Trustor is obligated to pay or reimburse Beneficiary or Trustee under Section 7.12 c ;and b. Second, the rernaining balance of al] other Secured Obligations in any order and proportions as Beneficiary iin its sole discretion may choose. 8.4 Trustoe's Right ±o Reinstate. No±withstanding Beneficiary's acceleration of the sums secured by this Deed of Trust, Trustor shall have the right to have any proceedings begun by Beneficiary to enforce this Deed of Trust discontinued at any time prior to five days before sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing; this Deed of Trust if: (a} Trustor pays Beneficiary all sums which would be then due under the Loan Documents if the Secured Obligations had no acceleration provision; (b) Trustor cures all breaches of any other covenants or agreements of Trustor contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by Beneficiary and Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust, and in enforcing Bene~6ciary's and Trustee's remedies as provided herein, including, but not limited to, reasonable attorney's fees; and (d) Trustor takes such action as Beneficiary. may reasonably require to assure that the lien of this Deed of Trust, Beneficiary's interest in the Property and Trustor's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon suchh payment and cure by Trustor, this Deed of Trust and the obligations secured hereby shall remain in full force and effect as if no acceleration had occurred. 9. Trustor's Waivers. To the fullest extent permitted by law, Trustor waives: (a) all statutes of limitations as a defense to any action or proceeding brought against Trustor by Beneficiary; (b) the benefit of all law:; now existing or which may hereafter be enacted providing 1246546-2 rP. 5 5 for any appraisement, valuation, stay, extension, redemption or moratorium; (c) all rights of marshalling in the event of foreclosure; and (d) all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this Deed of Trust and of the existence, creation, or incurring of new or additional indebtedness, and demands and notices of every kind. ] 0. Miscellaneous Provisions. ] 0.1 Additional Provisions. The Loan Documents grant furtl-ier rights to Beneficiary a;~d contain further agreements and affirmative and negative covenants by Trustor which apply to this Deed of Trust and the Property. 10.2 Notices. Trustor requests that a copy of notice of default and notice of sale be mailed to Trustor at the address set forth below. That address is also the mailing address of Trustor as debtor under the j~CC. Beneficiary's address set forth below is the address for Beneficiary as secured party under the; UCC. Except for any notice required under applicable law to be given in another mannLr, all notices to be sent pursuant to this Deed of Trust shall be made ir. writing, and sent to the parties at their respective addresses specified below or to such other address as a party ::gay designatf; by ~T7ritten notice delivered to the other parties in accordance with this Section. All such notices shall be sent by: a. personal delivery, in ~~Thich case notice shall be deemed delivered upon receipt; b. certified or registered mail, return receipt requested, in which case notice shall be deemed delivered two (`Z) business days after deposit, postage prepaid in the 'united States mail; c. nationally recognized overnight courier, in which case notice stall be deemed delivered one (1) day after deposit with such courier; or d. facsimile transmission, in which case notice shall be deemed delivered on transmittal, provided that a transmission report is generated reflecting the accurate transmission thereof. Beneficiary: Redevelopment Agency of the City of South San Francisco 400 Grand Avf;nue South San Francisco, CA 94080 Attention: Exf;cutive Director Trustor: Di Napoli Piz;-,eria, Inc. 202 Grand Avenue South San Francisco, CA 94080 Attention: Rol:-erto C. Oliveira, President Trustee: Title Company . A 1246546-2 IP. 5 6 Attn: 10.3 Binding on Successors. The terms, covenants and conditions of this Deed of Trust shall be binding upon and inur~° to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of the Trustor, Benef ciary and Trustee; provided however this Section 10.3 does not waive any provision of the Loan Documents imposing restrictions on transfer. 10.%J Substitution of Trustee. Beneficiary may from time to time or at any time substitute a trustee or trustees to execute the trust hereby created, and when any such substitution has been filed for record in the officE: of the Recorder of San Mateo County, it shall 'oe conclusive evidersce of the appointment of such trustee or trus±ees, and such new trustee or trustees shall succeed to all of the powers and d~aties of the Trustee named herein. 10.E Attorneys' i ees and Costs. In any action or proceeding to foreclose this Deed of Trust or to enforce any right of Beneficiary or of Trustee, Trustor shall pay to Beneficiar;l ar:d Trustee all costs of such action or proceeding, including reasonable attorneys' fees. 1 O.o Governing Law; Seve:rabiiity; interpretation. This Deed of Trost shall be governed by the laws of the State of California without regard to principles of conflicts of laws. Trustor agrees that any controversy arising under or in relation to this Deed of Trust shall be litigated exclusively in the jurisdiction where the Land is located (the "Property Jurisdiction"). The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to the Loan DDocuments. Trustor irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation, and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. if any provision of this Deed of Trust is held unenforceable or void, that provision shall be deemed severable from the remaining provisions, and shall in no way affect the validity of this Deed of Trust. The captions used in this Deed of Trust are for convenience only and are not intended to affect the interpretation or construction of the provisions herein contained. In this Deed of Trust, whenever the context so requires, the singular number includes the plural. 10.7 Waiver, Modification and Amendment. Any waiver by Beneficiary of any obligation of Trustor hereunder must: be in writing, and no waiver shall be construed as a continuing waiver. No waiver shall ibe implied from any delay or failure by Beneficiary or Trustee to take action on account of .any default of Trustor. Consent by Beneficiary or Trustee to any act or omission by Trustor shall not be construed as a consent to any other or subsequent act or omission or to waive the requirement for Beneficiary's or Trustee's consent to be obtained in any future or other instance. No amendment to or modification of this Deed of Trust shall be effective unless and until such amendment or modification is in writing, executed by Trustor and Beneficiary. Without limiting the generality of the foregoing, Beneficiary's acceptance of payment of any sum secured hereby .after.its due date shall not constitute a waiver by Beneficiary of its right either to require prompt payment when due of all other sums so secured or to declare 1246546-2 1P. 5 7 default for failure so to pay. 10.8 Action by Beneficiary. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, or consent by the Beneficiary is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or taken by Beneficiary's Executive Director or by any person who shall have been designated by Beneficiary's Executive Diiector, without farther approval by the goven~ing board of Beneficiary. Beneficiary shall use reasonable best efforts to respond to requests for any such approval, notice, direction, or consent in a timely mar,~ner. In any approval, consent, or other determination by Beneficiary required) hereunder; Beneficiary shall act reasonably and in good faith. 10.9 .;ont and Several Liabi.l~. If Trustor consists of more than one person or entity, each shall be jointly and severally liable for the faithful performance of all of Trustor's obligations under this Deed of Trust. 1 O.l 0 Time is of the Essence. Time is of the essence fc' each provision of this Deed of Trust, 1 l . Leasehold Mortgagee Provisions. The provisions of this Section 11 shall apply in the event that, and so long as, any portion of the- Property consists of Trustor's interest as tenant under the Lease defined and described in Recital A. As used in this Sectio„ i 1, the term "Lease" means the Lease and any extension, renewal or replacement thereof. The lien of this Deed of Trust shall encumber all of T'rustor`s rights and interests under and in connection with the Lease, including without limitation renewal and extension rights, options to expand, and purchase options (all of which rights shall be collectively referred fo iierem as the "Lease'~oiu"). l l .l Trustor shall timely perform its obligations in connection with the Lease. Trustor specifically acknowledges Beneficiary's right, while any default by Trustor under the Lease remains uncured, to perform the defaulted obligations and take all oth er actions which Beneficiary reasonably deems necessary to protect its interests with respect thereto, and Trustor hereby irrevocably appoints Beneficiary its true and lawful attorney- in- fact in its name or otherwise to execute all documents, and perform all other acts, which Beneficiary reasonably deems necessary to preserve its or Trustor's rights with respect to the Leasehold. 11.2 Trustor shall not, without Beneficiary's prior written consent, modify, or cause or permit the termination of, the Lease, or waive or in any way release the landlord under the Lease of any obligation or condition. 11.3 Trustor shall notify B~°neficiary promptly in writing of (i) the occurrence of any material default by the landlord under the Lease and (ii) the receipt by Trustor of any notice claiming the occurrence of any default by Trustor under the Lease or the occurrence of any event which, with the passage of time or the giving of notice or both, would constitute a default by Trustor under the Lease (and Trustor shall also promptly deliver a copy of any such notice to Beneficiary). 1 ] .4 Unless Beneficiary otherwise consents in writing, so long as any Secured 1246546-2 1P. 5 8 Obligation remains outstanding, neither the fee title to, nor any other estate or interest in, the Property subject to the Lease shall mE:rge with any Leasehold, notwithstanding the union of such esta±es in the landlord or the tenant or' in a third party. Any acquisition of the landlord's interest in the Lease by Trustor or any affiliate of Trustor shall be accomplished in such a manner as to avoid a merger of the interests of landlord and tenant unless Beneficiary consents to such merger in writing. 11.5 If Trustor acquires fee title to any pertio;, of the real property subject to the Lease, this Deed of Trust shall automatically be a lien or, such fee title. 1 l .6 Trustor shall not subordinate the Lease or Leasehold to any deed of trust or other encumbrance of, or lien on, any interest in the real property subject to such Leasehold without the prior written consent of Beneficiary. Any such subordination without such consent shall, at Beneficiary's option, be void. 11.7 All subleases entered ilnto by Trustor with respect to ail or an~/ portion of the Property (and all existing subleases modil;ed by Trustor} shall- provide that such subleases are subordinate to the lien of this Deed o:f Trust and any modif cations of this Deed of Trust and the Secured Obligations and that, if Beneficiary forecloses under this Deed ~f T rust or enters into a new lease with the landlord under the; Lease pursuant to the provisions for a new lease, if any, contained in the applicable Lease or in any other document or agreement, the subtenant shall attorn to Beneficiary or its assignee and the sublease shall remain in full force and effect in accordance with its terms notwithstanding the termination of the Lease. 11.8 Trustor shall exercise any option or right to renew or extend the terrii of the Lease at least six months prior to the date of termination of any such option or right, shall give immediate written notice thereof to Beneficiary, and shall execute, deliver and record any documents req~.aested by Beneficiary to evidence the. lien of this Deed of Trust on such extended or renewed lease term. If Trustor fails to exercise any such option or right as required herein, Beneficiary may exercise the option or right as Trustor's agent and attorney-in- fact pursuant to this Deed of Trust, or in Beneficiary's own name or in the name of and on behalf of a nominee of Beneficiary, as Beneficiary chooses in its absolute discretion. 11.9 Trustor hereby specifically assigns to Beneficiary, as security for the Secured Obligations, all prepaid rents and security deposits and all other security which the landlord under the Lease holds for the performance of Trustor's obligations thereunder. 11.10 Reserved. 11.11 Promptly upon demand by Beneficiary, Trustor shall use reasonable efforts to obtain from the landlord under the Ground Lease and furnish to Beneficiary an estoppel certificate of such landlord stating the date through which rent has been paid, whether or not there are any defaults, and the specific nature of any claimed defaults. 11. ] 2 Trustor shall notify Beneficiary promptly in writing of any request by either party to the Lease for arbitration, appraisal or other proceedings relating to the Lease and of the 1246546-2 IP. 5 9 institution of any such proceeding, anal shall promptly deliver to Beneficiary a copy of all determinations in any such proceeding. Beneficiary shall have the right, following written notice to Trustor, to participate in any such proceeding in association with Trustor or on its own behalf as an interested party. Trustor shall notify Beneficiary promptly in writing of the institution of any legal proceeding involving obligations under the Lease, and Beneficiary may intervene in any such legal proceeding and be made a party. Trustor shall promptly provide Beneficiary with a copy of any decision rendered in connection with any such proceeding. i 1.13 To the extent permitted by law, the price payable by Trustor or any other party in the exercise of the rigr~t of redemption, if any, from any sale under, or decree of foreclosure of, this Deed of Trust shall include all rents and other amounts paid and other Burrs advanced by Beneficiary on behalf of Trustor as the tenant under the Ground Leases. 11.14 In addition to all other Events of Default described in this Deed of Trust, the occurrence of any of the following shall be an Event of Default hereunder: (a) A rr:ateria] breach or default by Trustor under the Lease, subject to any applicable cure period; or (b) The occurrence of any event or circumstance which gives the landlord under the Lease a right to terminate. tike Lease. 11.15 As used in this Deed ef~Trust, the "Bar~.ruptcy Code" shall mean 11 U.S.C. §§ i U 1, et seq., as modified and/or recodified from time to time. Not•,~~ithstanding anything to the contrary contained herein with respect to the Lease: (a) The lien of this Deed of Trust attaches to all of Trustor's rights under Subsection 365(h) of the Bankruptcy Code, including withcut limitation any and all elections to be made thereunder, any and all rights under the Lease which Trustor is entitled to retain pursuant to 11 U.S.C. § 365(h)(1)(A;I(ii) in the event of a rejection under the Bankruptcy Code of such Lease by the landlord thereunder (or any trustee thereof), and any and all rights of offset under or as described in 11 U.S.C. § 365(h)(1)(B). (b) Trustor acknowledges and agrees that, as the beneficiary under this Deed of Trust and by operation of 11 U.S.C. §365(h)(l)(D), Beneficiary has, and until this Deed of Trust has been fully reconveyed conl:inuously shall have, whether before or after any default under any of the Secured Obligations or the taking of any action to enforce any of Beneficiary's rights and remedies under this Deed of Trust or any foreclosure sale hereunder, the complete, unfettered and exclusive right, in its sole and absolute discretion, to elect (the "365(h) Election") whether (i) any Lease that has been rejected under the Bankruptcy Code by the landlord thereunder (or any trustee therefor) shall be treated as terminated under 1 l U.S.C. §365(h)(l)(A)(i), or (ii) the rights under such Lease that are in or appurtenant to the real property, as described in 11 U.S.C. ~~365(h)(l)(A)(ii), should be retained pursuant to that subsection. To the extent that, notwithstanding the preceding sentence and l l U.S.C. §365(h)(1)(D), Trustor now or at any time in the future has any right to make, or to participate in or otherwise in any manner affect thi° making of, the 365(h) election with respect to any Lease; 1246546-2 pP. 6 0 Trustor hereby absolutely assigns anti conveys to Beneficiary any and all such rights, and all of Trustor's right, title, and interest therein, which may be used and exercised by Beneficiary completely, exclusively, and without any restriction whatsoever, in Beneficiary's sole and absolute discretion, whether before or after any default upon any of the Secured Obligations, the taking of any action to enforce any o~F Beneficiary's rights and remedies under this Deed of Trust, or any foreclosure sale hereunder. Trustor hereby unconditionally and irrevocably appoints Beneficiary as its attorney- in- fact toy exercise Trustor's right, if any, to make, or participate in or otherwise in any matter affect the making of, the 365(h) Election with respect to any Lease. Trustor shall not in any manner impede or interfere with any action taken by Beneficiary and, at the request of Beneficiary, Tr»stor shall take or join in the taking of any action to make, or participate in or otherwise in any manner affect the making of, the 365(h) Election with respect to any Lease, in such mariner as Beneficiary determines in its sole and absolute discretion. Unless and until instructed to do so by Beneficiary (as determined by Beneficiary in its sole and absolute discretion), Trustor shall noi: lake any action to make, or participate in or otherwise in any r:~~anner affect the maki;,g o~ the 365(h) Election with respect to any Lease, including in particular, but without limitation, any election to treat any Lease as te--mi;~ated. Beneficiary shall have no obligation ~Yhatsoever to ~I ruistor or any other person or entity in connection with the making of the 365(h) Election with rf:spect to any Lease or any instruction by Beneficiary to Trustor given, withheld or delayed in respect thereof, ~~or shall Beneficiary have any liability to Trustor or a;,y other person or entity arising from any cf the same. (c) As security for the Secured Obligations, Trustor hereby irrevocably assigns to Beneficiary all of Trustor's. rights to damages arising from any rejection by an;~ landlord (or any trustee thereof) of airy Lease under the Bankruptcy Code. Beneficiary and Trustor shall proceed jointly or in the: name of Trustor in respect of any claim or proceeding reiatmg to the rejection of any Lease, including without limitation the right to file and prosecute any proofs of claim, complaints, motions and other documents in any case in respect of such landlord under the Bankruptcy Code. This assignment shall continue in effect until all of the Secured Obligations have been satisfied in full. Any amounts received by Beneficiary or Trustor as damages arising from the rejections of any Lease as aforesaid shall be applied first to all costs reasonably incurred by Beneficiary (including attorneys' fees) in connection with this subsection (c) and then in accordance with other applicable provisions of this Deed of Trust. (d) If, pursuant to the Bankruptcy Code, Trustor seeks to offset against the rent reserved in any Lease the amount of any damages caused by the nonperformance of the landlord's obligations after the rejection by the landlord (or any trustee thereof) of such Lease, Trustor shall, prior to effecting such offset, notify Beneficiary in writing of its intent to do so, setting forth the amounts proposed to be offset and, in the event that Beneficiary objects, Trustor shall not effect any offset of the amounts to which Beneficiary objects. If Beneficiary fails to object within 10 days following receipt of such notice, Trustor may offset the amounts set forth in Trustor's notice. (e) If any legal proceeding is commenced with respect to any Lease in connection with any case under the Bankruptcy Code, Beneficiary and Trustor shall cooperatively conduct any such proceeding with counsel reasonably agreed upon between Trustor and Beneficiary. Trustor shall, upon demand, pay to Beneficiary all costs (including 1246546-2 ]P. 61 attorneys' fees) reasonably incurred by Beneficiary in connection with any such proceeding. (f) Trustor shall irr~rnediately notify Beneficiary orally upon learning of any filing by or against any landlord under any Lease of a petition under the Bankruptcy Code. Trustor shall thereafter promptly give written notice of such filing to Beneficiary, setting forth any information available to Trustor vrith respect to the date of such filing, the court in which such petition was filed, and the relief sought therein. Trustor shall promptly deliver to Beneficiary all notices, pleadings and other documents received 'ny Trustor in connection with any such proceeding. 11. l 6 No maintenance, repair or other obligation of Trustor hereunder which relates to the "Property" shall apply to any Leasehold with respect to which the applicable Lease imposes such obligation on the landlord so lo_n_g as (a) Trustor does not own the landlord's interest; (b) such landlord is performing such obligation in accordance ~xrith the terms of such Lease; and (c) the Lease has not been rejected by the'. landlord (or any trustee thereof) under the Bankruptcy Code. 11.17 Trustor shall pro-rnptly notify the landlord in writing, in accordance :Arith Section 25359. % of the California Hea1_th and Safety Code and any successor and/ar similar statutes (and shall simultaneously notify Beneficiary in writing), in the event that Trustor knows or has cause ±o believe that any f?azardous Substance has come to be located on or beneath the property leased »nder the Lease. 11.18 The generality of the provisions cf this Deed of Trust shall not be limited by any prevision cf this Section 1 ]that sets i;orth particular obligations of Trustor as the tenant under the Ground Leases. 11.19 Trustor hereby represents and warrants to Beneficiary, with respect to the Lease described in Recital A above (the "C»rrent Lease"), as follows: (a) The Current Lease is in full force and effect; (b) Trustor owns the entire tenant's interest under the Current Lease and has the right under the Current Lease to execute this Deed of Trust; and (c) no default under the Current Lease remains uncured, nor has any event occurred which, with the passage of time or service of notice or both, would constitute such a default. SIGNATURE-S ON FOLLOWING PAGE. 1246546-2 ]P. 6 2 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written above.. TRUS T OR: Di Napoli Pizzeria t`~ Ristorante, a California Corporation 13y: Rcber~o C. Oliveira Its: President STrNATI!IRES MZIST BE N~JT.4RIZED= 1246546-z ]I'. 6 3 EXHIBIT A Approx. 20' K o _ :,s" > ~ ~~. N y N ~ O .. ~~_ ~ A ' ~ ~ ~ ~+C '~ :7 0 O p j. ~~i:~Lt '~ ro~~ {``!~~ i:k~ I J„~,~ K. i f' ;• ~. tir..:_.. f4 F z r ' i ~ I ."-, ~~ - j EST. . `fi l~ ~ i :~! ~'. 6 ~~''Ct.=1 ~.::.~' ~~~~ ~r ~- Erb ~-~ I ~, I ~~ ~~~ ~:. w. ,1 M1 fir. l { ~i.. ~ f' ~I c~ _ l F.. I ~~ T s. ~,~~ .c i.._ _ - I °f`` row=:::~~.::~~ _. E d 3 ~ ~ ~a s ,~~, ~ ~,k ~; z ~ ., ~~~~. x F .1 ... ~ ~ C 0 3 _ _ _' ' 3 ~- 11 - W ._...__..... _./ 4 ..-_. .._.._ ~ _ x _ i ___-____ .. i' ~ ._.. _. .. f m cn _. _ ._. _ .. _._.1 a n N H N a L'i i1 P` I r~7 :~ O ~-+ W Gr C /) H " ] ~, _ o. ~~• N Y ~. s ~J y1 V .._. O 'n' ~? N ~c~ c a w c c v. IP. 6 ._.... _..._. _._....__..-. approx. 20' ._ _._.._.._ . __._ ._. _...__..! EXHIBIT B D!i Napoli Ristorante Financing Plan Sources of Funds: Construction Loan (SSF City loan) $350,000.00 Liberty Bank Lire of Credit $150,000.00 Owner's Home Equity Line of Credit $198,000.00 Owner's Private Capital $50,000.00 Total Sources $748,000.00 Uses of Funds: Architect $26,036.50 ~Consu!ting $3;660.35 Permits $7,74.04 f Constructions $407,661.00 Engineering $26,857.80 Equipment $267,835.97 Contingency $8,774,24 Total Cost $748,00vA0 IP. 6 5 P. 6 6 o~~x~~SA`l'.~ o ~ -- ~ Redevelo ment A enc ~ g y ~. Sta f Re opt c J 'ELI R~14r F0 RDA AGENDA ITEM # 4 DATE: June 10, 2009 TO: Redevelopment Agency Board FROM: Terry White, Director of Public Works SUBJECT: MOTION TO ACCEPT THE LINDENVILLE STORM DRAINAGE CONSTRUCTION IMPROVEMENTS PROJECT AS COMPLETE IN ACCORDANCE WITH PLANS AND SPECIFICATIONS RECOMMENDATION It is recommended that the Redevelopment Agency Board, by motion, accept the Lindenville Storm Drainage Construction Improvements Project (Project No. 58-13231-0752) as complete in accordance with plans and specifications. BACKG ROUND/DISCUSSION The Lindenville Storm Drainage Construction Improvements Project consisted of new and enlarged storm drain lines and catch basins located on streets within the Lindenville area (Victory Avenue, South Maple Avenue, South Linden Avenue, South Canal Street, and Starlite Street) to feed the newly constructed large pump station at 27 S. Linden Avenue. That project was awarded to JMB Construction, Inc., of South San Francisco, California, and accepted as complete in accordance with plans and specifications on December 17, 2008. To compliment the station, an upgrade of existing catch basins, abandonment of the existing storm drain system, and the installation of a new 24-inch to 36-inch storm drain pipe in the Lindenville area was necessary as the existing pipelines were considered inadequate. The project was awarded to Precision Engineering, Inc., of San Francisco, California, and construction was completed Apri130, 2009. FUNDING The project is listed as the "Lindenville Storm Drainage Construction Improvements" in the City of South San Francisco's 2008-2009 Capital Improvement Program (CIP/58-13231-0752). Both the pump station (CIP/58-13231-0752) and t:he-storm drain project were originally one project, projected to cost $9,000,000 (2007-08 CIP). The pump station was completed at a cost of $5,226,964 leaving $3,773,036 to finish the stornl drain upgrade with the remaining Redevelopment Agency funds. Staff Report Subject: MOTION TO ACCEPT THE LINDENVILLE STORM DRAINAGE CONSTRUCTION IMPROVEMENT PROJECT AS COMPLETE IN ACCORDANCE WITH PLANS AND SPECIFICATIONS Page 2 The total cost incurred to-date for the Lindenville Storm Drainage Construction Improvements Project is $3,607,823 and summarized below: Design $ 290,000 Construction $ 2,446,780 Construction Change Orders $ 401,283 Construction Management $ 269,760 City Staff and other Costs $ 200,000 Total Project Cost $ 3,607,823 Major change orders included the removal and disposal of additional contaminated soil, the relocation of a sewer line, the removal of a buried roadway, and the adjustment of the storm drain lines to avoid major utility conflicts. O:F the $9,000,000 original budget to complete both projects $8,834,787 was consumed for all work. CONCLUSION The project was inspected by the City's construction management firm, Mendoza & Associates, and found to be complete in accordance with the plans and specifications. The project has a 1-year warranty period, which takes effect upon project final completion. Staff recommends acceptance of this project as complete. Staff will file a Notice of Completion and release the payment performance bond and retention funds at the end of the thirty-day lien period. By: ~./ Terry Whi Director of Public Works Approved: ~ ~ `~,-.~ rr M. Nagel Executive Director at/hUssb