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HomeMy WebLinkAboutAgenda Packet - October 18, 2009 - CCAGENDA REGULAR MEETING OF THE CITY COUNCIL, THE REDEVELOPMENT AGENCY, AND THE AZUSA PUBLIC FINANCING AUTHORITY AZUSA AUDITORIUM 213 EAST FOOTHILL BOULEVARD AZUSA CITY COUNCIL JOSEPH R. ROCHA MAYOR KEITH HANKS COUNCILMEMBER URIEL E. MACIAS COUNCILMEMBER' NOTICE TO THE PUBLIC MONDAY, OCTOBER 18, 2010 6:30 P.M. ANGEL CARRILLO COUNCILMEMBER ROBERT GONZALES MAYOR PRO -TEM Copies of staff reports or other written documentation relating to each item of business referred to on the Agenda are on file in the Office of the City Clerk and are available for public inspection at the City Library. Persons who wish to speak during the Public Participation portion of the Agenda, shall fill out a card requesting to speak and shall submit it to the City Clerk prior to the start of the City Council meeting. When called, each person may address any item on or off the agenda during the public participation. 6:30 P.M. CLOSED SESSION CONFERENCE WITH LABOR NEGOTIATOR (Gov. Code Sec. 54957.6) Agency Negotiators: Administrative Services Director -Chief Financial Officer Kreimeier and City Manager Delach Organizations AMMA, SEN, APOA, APMA and ACEA 10/18/10 - 1 - 2. LIABILITY CLAIMS PURSUANT TO GOVERNMENT CODE SECTION 54956.95 CLAIMANT: J. Stanton, Agency claimed against: City of Azusa 3. PUBLIC EMPLOYEE PERFORMANCE EVALUATION (Gov. Code Sec. 54957) Title: City Manager Any person wishing to comment on any of the Closed Session items listed above may do so now. 7:30 P.M. - REGULAR METING OF THE CITY COUNCIL. 1. Call to Order 2. Pledge to the Flag 3. Invocation — Pastor Ariel Verayo of Jesus Is Lord Church A. PUBLIC PARTICIPATION (Person/Group shall be allowed to speak without interruption up to five (S) minutes maximum time, subject to compliance with applicable meeting rules. Questions to the speaker or responses to the speaker's questions or comments shall be handled after the speaker has completed his/her comments. Public Participation will be limited to sixty (60) minutes time.) B. REPORTS, UPDATES, AND ANNOUNCEMENTS FROM STAFF/COUNCIL 1 Mayor Rocha — a. Request for sponsorship for $100 to Malia Cisneros of Hodge Elementary School for the fifth grade student trip to Washington D.C. 2. Report from Canyon City Foundation. C. SCHEDULED ITEM REFERENDUM PETITIONS CONCERNING ORDINANCE NO. 10-05, APPROVING A DEVELOPMENT AGREEMENT WITH VULCANMATERIALS. RECOMMENDED ACTION: 5 1 P Consider the legal alternatives discussed in this reportPtake az'Yt6 i tions necess m lement the chosen alternative. 2. APPROVAL OF ROSEDALE LAND PARTNERS II LLC FINANCING OF PARTIAL DEVELOPMENT AGREEMENT PAYMENT. RECOMMENDED ACTION: Approve the postponement of a portion of the $1.5 million Development Agreement payment by financing the balance and authorize the City Manager to complete the necessary promissory note and deed of trust, with any non -substantive revisions approved by the City Attorney. 10/18/10 - 2 - D. CONSENT CALENDAR The Consent Calendar adopting the printed recommended actions will be enacted with one vote. If Councilmembers or Staff wish to address any item on the Consent Calendar individually, it will be considered under SPECIAL CALL ITEMS. 1. APPROVAL OF THE MINUTES OF THE REGULAR MEETING OF OCTOBER 4, 2010 AND THE SPECIAL MEETING OF SEPTEMBER 13, 2010. 0 RtCOMMENDED ACTION: Approve Minutes as written. 2. HUMAN RESOURCES ACTION ITEMS. RECOMMENDED ACTION: Approve Personnel Action Requests in accordance with the City of Azusa Civil Service Rules and applicable Memorandum of Understanding(s). 3. INVESTMENT POLICY FOR THE CITY OF AZUSA. RECOMMENDED ACTION: Adopt Resolution No. 10-C61, approving and re -adopting the Investment Policy for the City of Azusa. 4. PURCHASE ADDITIONAL INTERNET BANDWIDTH FROM CHARTER COMMUNICATIONS 1332-10). RECOMMENDED ACTION: Waive formal sealed bids in accordance with Azusa Municipal Code Section 2-523 section D, no competitive market, approve the 2 year Charter Business Service Agreement, and Appropriate $11,500 from the Light and Water Consumer Services Fund. 5. RESOLUTIONS APPOINTING MEMBERS TO VARIOUS CITY BOARDS AND COMMISSIONS: RECOMMENDED ACTION: Adopt Resolution No. 10-C62 through 10-C73 as follows: a. Resolution appointing Stevie Heath to the Architectural Barriers Commission. b. Resolution re -appointing Jule Arevalo to the Cultural and Historic Preservation Commission. c. Resolution re -appointing Jeffrey Cornejo Jr. to the Cultural and Historic Preservation Commission d. Resolution re -appointing Edith Russek to the Cultural and Historic Preservation Commission. e. Resolution appointing Lil Sass to the Human Relations Commission. f. Resolution appointing Joanne Hinojosa to the Human Relations Commission. g. Resolution re -appointing Maria Pacino to the Library Commission. h. Resolution appointing James Sinnema to the Library Commission. i. Resolution re -appointing Rossana Helbert to the Park and Recreation Commission. j. Resolution appointing Fred A. Madjar to the Personnel Board. k. Resolution re -appointing Christopher Dodson to the Planning Commission. 1. Resolution re -appointing Shawn Millner to the Planning Commission. 10/18/10 -3 - 6. WARRANTS. RESOLUTION AUTHORIZING PAYMENT OF WARRANTS BY THE CITY. RECOMMENDED ACTION: Adopt Resolution No. 10-C74. E. JOINT CITY/AGENCY 4GENDA ITEM 1. CONTINUED JOINT PUBLIC HEARING - CONSIDERATION OF THE FIRST AMENDMENT TO THE STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT FOR THE CITRUS CROSSING PROJECT LOCATED AT THE SOUTHWEST CORNER OF ALOSTA AVENUE AND CITRUS AVENUE. RECOMMENDED ACTION: City Council and Agency Board take the following action: Receive testimony from staff and the applicant, conduct a joint public hearing and adopt a resolution and ordinance entitled: Waive further reading and adopt Resolution No. 10-R31, of the Governing Board of the Redevelopment Agency of the City of Azusa, California, Approving an Amendment to the Statutory Development Agreement and Owner Participation Agreement By and Between the Redevelopment Agency of the City of Azusa, the City of Azusa and JAR University Common, LLC, Governing Certain Real Property Located at the Southwest Corner of Alosta Avenue and Citrus Avenue, Azusa, California, Relating to the Citrus Crossing Shopping Center; and Waive further reading and introduce an Ordinance of the City Council of the City of Azusa, California Adopting and Approving an Amendment to the Statutory Development Agreement and Owner Participation Agreement Between the City of Azusa, the Azusa Redevelopment Agency and JAR University Common, LLC, Governing Certain Real Property Located at the Southwest Corner of Alosta Avenue and Citrus Avenue, Azusa, California, Relating to the Citrus Crossing Shopping Center F. AGENCY SCHEDULED ITEM 1. REDEVELOPMENT AGENCY OPERATING COVENANT FOR THE ESTABLISHMENT OF AN APPLEBEES RESTAURANT IN THE CITRUS CROSSING SHOPPING CENTER. RECOMMENDED ACTION Adopt Resolution No. 10-R32, approving the Operating Covenant Agreement with APPLE SOCAL, LLC, in substantially final form and authorize the Executive Director, with the concurrence of the Agency Counsel, to make any necessary modifications and execute the Agreement. 10/18/10 - 4 - G. AGENCY CONSENT CALENDAR The Consent Calendar adopting the printed recommended actions will be enacted with one vote. If Boardmembers or Staff wish to address any item on the Consent Calendar individually, it will be considered under SPECIAL CALL ITEMS. 1. APPROVAL OF THE MINUTES OF THE REGULAR MEETING OF OCTOBER 4, 2010. RECOMMENDED ACTION: Approve Minutes as written. 2. INVESTMENT POLICY FOR THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA. RECOMMENDED ACTION: Adopt Resolution No. 10-R33, approving and re -adopting the Investment Policy for the Redevelopment Agency of the City of Azusa. 3. WARRANTS. RESOLUTION AUTHORIZING PAYMENT OF WARRANTS BY THE AGENCY. RECOMMENDED ACTION: Adopt Resolution No. 10-R34. H. AZUSA PUBLIC FINANCING AUTHORITY The Consent Calendar adopting the printed recommended actions will be enacted with one vote. If Directors or Staff wish to address any item on the Consent Calendar individually, it will be considered under SPECIAL CALL ITEMS. 1. APPROVAL OF MINUTES OF THE REGULAR MEETING OF SEPTEMBER 7, 2010. RECOMMENDED ACTION: Approve Minutes as written. 2. INVESTMENT POLICY FOR THE AZUSA PUBLIC FINANCING AUTHORITY. RECOMMENDED ACTION: Adopt Resolution No. 10-P2, approving and re -adopting the Investment Policy for the Azusa Public Financing Authority. 10/18/10. - 5 - I. ADJOURNMENT 1. Adjourn UPCOMING MEETINGS: F October 25, 2010, Utility Board Meeting — 6:30 p.m. Azusa Light and Water Conference Room November 1, 2010, City Council Meeting — 6:30 p.m. Azusa Auditorium. November 15, 2010, City Council Meeting — 6:30 p.m. Azusa Auditorium. November 22, 2010, Utility Board Meeting — 6:30 p.m. Azusa Light and Water Conference Room In compliance with Government Code Section 54957.5, agenda materials are available for inspection by members of the public at the following locations: Azusa City Clerk's Office - 213 E. Foothill Boulevard, Azusa CityLibrary - 729 N. Dalton Avenue, and Azusa Police Department Lobby - 725 N. Alameda, Azusa, California. In compliance with the Americans with Disabilities Act, if you need special assistance to participate in a city meeting, please contact the City Clerk at 626-812-5229. Notification three (3) working daysprior to the meeting when special services are needed will assist staff in assuring that reasonable arrangements can be made to provide access to the meeting. 10/18/10 - 6 - SCHEDULED ITEM TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: VERA MENDOZA, CITY CLERK DATE: OCTOBER 18, 2010 SUBJECT: REFERENDUM PETITIONS CONCERNING ORDINANCE NO. 10-05, APPROVING A DEVELOPMENT AGREEMENT WITH VULCAN MATERIALS RECOMMENDATION: That the City Council consider the legal alternatives discussed in this report and take actions necessary to implement the chosen alternative. BACKGROUND: On April 19, 2010, the City Council held a noticed public hearing to consider the application for Azusa Rock Modification to Conditional Use Permit C-89-20, Revised Reclamation Plan, Development Agreement and Environmental Impact Report (EIR). Public testimony was received, the Public Hearing was closed and it was consensus of Council to adjourn deliberation to Monday, April 26, 2010; that meeting was subsequently canceled so the item was continued to the next meeting. At the next meting, on May 3, 2010 the application for Azusa Rock Modification to Conditional Use Permit C-89-20, Revised Reclamation Plan, Development Agreement and Environmental Impact Report (EIR), was placed on the agenda for review in order to provide direction to staff. Staff was directed to re - notice the public hearing for May 17, 2010. On May 17, 2010, the City Council held a noticed public hearing to consider the application for Azusa Rock Modification to Conditional Use Permit C-89-20, Revised Reclamation Plan, Development Agreement and Environmental Impact Report (EIR). Public testimony was received, the Public Hearing was closed and a resolution certifying he Environmental Impact Report was approved, but the resolution approving the modification to the conditional use permit and revised reclamation plan failed; no action was taken on the proposed ordinance approving the development agreement, as the conditional use permit was not approved. At the meeting of June 7, 2010, discussion was held regarding the Vulcan Project and the feasibility of reconsideration of the issue. The City Council agendized and took action to reconsider the previous actions and after being questioned about the reconsideration decided to suspend all Rules of Parliamentary Procedure, including all local rules. Staff advised that they would work with the City Manager to bring back a staff report on June 21, 2010, with a variety of options, alternatives and timelines, including new public hearing notices. A61/, 45635.02073\5584344.1 On June 21, 2010, reconsideration of the application for Azusa Rock Modification to Conditional Use Permit C-89-20, Revised Reclamation Plan, and Development Agreement was presented to Council to provide direction to staff. Staff was directed to address issues related to the proposed project and notice a new public hearing for July 6, 2010. On July 6, 2010, the City Council held a noticed public hearing to consider Application for Azusa Rock Modification to Conditional Use Permit C-89-20, Revised Reclamation Plan, and Development Agreement. Public testimony was received, the Public Hearing was closed, and resolution approving modification to the Conditional Use Permit CUP 89-20 and a Revised Reclamation Plan to modify the existing mining areas and reclamation approach at the Azusa Rock Quarry was approved. The proposed ordinance approving a Development Agreement with Vulcan Materials Company, for the Azusa Rock Quarry was introduced and placed upon first reading. On July 19, 2010, Ordinance No. 10-05 was adopted approving a Development Agreement with Vulcan Materials Company, for the Azusa Rock Quarry. On July 20, 2010, a representative of the proponents of a referendum requested a copy of the Ordinance thereby providing notice of its intent to circulate a referendum petition. On August 18, 2010, the proponents submitted referendum petitions to the City Clerk's office. October 4, 2010 the City Clerk was informed by the Los Angeles County Registrar Recorder that the minimum number of signatures of registered voters were obtained to certify the referendum petition. As required by the California Elections Code the City Clerk presents the City Council with this report, including alternatives to consider. ANALYSIS: A. Summary of Referendum Process The power of referendum is reserved for the people under the California Constitution. The referendum power is a unique power of the people to approve or reject statutes or other legislative actions taken by elected officials. The period between the adoption of an ordinance or resolution taking legislative action and its effective date is normally thirty days. During this thirty -day period proponents of a referendum may circulate a petition. The referendum petition must be in a form prescribed by statute and each section of the petition must have a declaration of the circulator attached. The declaration must include a statement that the circulator is a voter of the city. (California Elections Code § 9238.) Section 9238 provides, in part, that each petition must conform to the following format: (a) Across the top of each page of the referendum petition there shall be printed the following: "Referendum Against an Ordinance/Resolution Passed by the City Council" (b) Each section of the referendum petition shall contain both: (1) the identifying number or title; and (2) the text of the ordinance/resolution or the portion of the ordinance/resolution that is the subject of the referendum. The text of any ordinance or resolution for which a referendum is sought, must be attached to the petition. § 9238. Petitions must be filed during normal office hours as posted. § 9242. Petitions are filed with the city clerk, who must determine the number of signatures and certify the result. 45635.02073\5584344.1 If a valid petition containing the requisite number of signatures is timely submitted, the city council must either: (a) repeal the entire ordinance/resolution; or (b) submit the ordinance/resolution to a vote. The submission of such a petition suspends the effective date of the ordinance or resolution. If not repealed, the council must submit the ordinance or resolution to the voters at: (a) the next regular municipal election if it occurs within not fewer than 88 days; or (b) if there is no regular election within that time, at a special election. A special election may not occur within 88 days from the date the council directs action. Facially, the minimum number of signatures have been met. However, there are legal concerns as to whether this item is the proper subject of a referendum as stated below. B. Is the Referendum Petition Valid? The duty of the City Council to take action depends on whether the referendum petition is valid or not. Approval of a development agreement pursuant to Government Code sections 65864 et seq. is a legislative act subject to referendum. Section 65867.5(a) expressly provides: A development agreement is a legislative act that shall be approved by ordinance and is subject to referendum. The City Clerk has also found the referendum petitions to be free from substantial error and therefore, presents the petitions to the City Council for further action in accordance with the California Elections Code. OPTIONS: The City Council now has the following options to consider: 1. Rescind Ordinance No. 10-05. 2. Call for a special election, presenting the Ordinance to the voters for consideration. 3. Take No Action if the Council determines that there are substantial defects in the petitions. Rescind the Ordinance The City Council may vote to rescind Ordinance No. 10-05. If the Ordinance is rescinded the Development Agreement will not be approved. If the Ordinance is not approved the Amended Conditional Use Permit arguably remains a vested right. The Amended Conditional Use Permit creates a zoning right that vests after 90 days. The Amended CUP is a stand-alone development right. 45635.02073\5584344.1 Statues and Court of Appeal decisions confirm that after 90 days from adoption a conditional use permit becomes effective. For example, a court has concluded that the statutory limitations period that applies is Government Code section 65009(c)(1)(e), which set forth the limitations period. The court affirmed the lower court's grant of the motion to dismiss the petition, and held that the 90 -day limit on service found in § 65009 operated as an absolute cut-off, beyond which relief for failure to serve a petition could not be granted. Thus, Vulcan will be permitted to engage in mining activities under the amended conditional use permit even without the Development Agreement. However, the City will not receive certain reclamation benefits or any of the financial benefits provided for in the Development Agreement. Without the Development Agreement the City would receive the reclamation benefits provided for in the approved reclamation plan and the tax revenue based on the existing tax ordinance, which is currently at $.4879 per ton and is adjusted annually in accordance with changes in the CPI. Call for a Special Election The City Council may call for a special election to occur anytime after 88 days from the date of the adoption of the resolution calling for the election. If an election is called on October 18, 2010, in consultation with our election consultants we determined that a special election could be held on any of the following dates: January 25, 2011, February 1, 2011, February 8, 2011 or February 15, 2011.The City Clerk has prepared all of the resolutions necessary to call for an election. They are presented to the Council as attachments to this report. The Council should also be aware that the Elections Code provides that in the event that a referendum petition qualifies within 180 days before a regular state or municipal election the Council may combine the referendum election with the regular election, even if the election is postponed beyond the 133 days. Take No Action The Take No Action option is reserved for cases in which the proponents of a referendum have committed a substantial error in the preparation or circulation of petitions. Although the City Clerk has received complaints that the proponents of the referendum have told those who signed the petition that mining can be stopped in the City and at least one complaint about an underage circulator was received, none of these allegations have been supported with evidence sufficient to deem the petitions void. Thus, the City Clerk has certified the petitions. FISCAL IMPACT: The preparation of election materials, hiring of election consultant and administrative costs associated with an election is at least $60,000. The expenses are not budgeted and will come out of the General fund. Attachment: Ordinance No. 10-05 Special Election Resolutions 4563 5.02073\5584344.1 t RESOLUTION NO. 10-C A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, CALLING FOR THE HOLDING OF A SPECIAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, , FOR THE SUBMISSION TO THE QUALIFIED VOTERS AN ORDINANCE. WHEREAS, the City Council of the City of Azusa on July 19, 2010, adopted Ordinance No. 10-05 providing for the approval of a Development Agreement with Vulcan Materials Company; and WHEREAS, the ordinance was published as required by law; and WHEREAS, pursuant to the authority provided by Division 9, Chapter 3, Article 2 (commencing at § 923 5) of the Election Code of the State of California, a petition has been filed with the legislative body of the City of Azusa signed by more than ten per cent of the registered voters of the city to repeal the ordinance or submit it to a vote of the voters; and WHEREAS, the City clerk examined the records of registration and ascertained that the petition is signed by the requisite number of voters, and has so certified; and WHEREAS, the City Council has not voted in favor of the repeal of the ordinance; and WHEREAS, the City Council is authorized and directed by statue to submit the ordinance to the voters; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. That pursuant to the requirements of the laws of the State of California relating to General Law Cities, there is called and ordered to be held in the City of Azusa, California, on Tuesday, !. r ; `{ ' _ , a Special Municipal Election for the purpose of submitting the following ordinance: MEASURE A — Do the voters of the City of Azusa, I YES California, approve Ordinance No. 10-05, An Ordinance Of The City Council Of The City Of Azusa Approving A Development Agreement With Vulcan Materials Company. NO SECTION 2. That the text of the Ordinance submitted to the voters is attached as Exhibit A. SECTION 3. That the ballots to be used at the election shall be in form and content as required by law. SECTION 4. That the City Clerk is authorized, instructed and directed to procure and furnish any and all official ballots, notices, printed matter and all supplies, equipment and paraphernalia that may be necessary in order to properly and lawfully conduct the election. SECTION 5. That the polls shall be open at seven o'clock a.m. of the day of the election and shall remain open continuously from that time until seven o'clock p.m. of the same day when the polls shall be closed, pursuant to Election Code § 10242, except as provided in § 14401 of the Elections Code of the State of California. SECTION 6. That pursuant to Elections Code §12310, a stipend for services for the persons named as precinct board members is fixed at the sum of $100.00 for each Inspector and $80.00 for each Clerk for the election. In addition, the sum of $25 will be given to each precinct board member to attend a training class and the sum of $50 to be given to each inspector to pick up the precinct supplies. The rental for each polling place, where a charge is made, shall be the sum of $40.00 for the election. When required, the compensation -of -the Custodian of a building shall be $55.00 for the election. SECTION 7. That in all held and conducted as provided by law SECTION 8. That notice of th( the City Clerk is authorized, instructed and t election, in time, form and manner as required TI of recited in this resolution, the election shall be d place of holding the election is given and to give further or additional notice of the k shall certify to the passage and adoption of this Resolutions. ADOPTED on October , 2010. I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting held on the October , 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: F ATTEST: CITY CLERK RESOLUTION NO. 10-C A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, REQUESTING THE BOARD OF SUPERVISORS OF LOS ANGELES COUNTY TO RENDER SPECIFIED SERVICES TO THE CITY RELATING TO THE CONDUCT OF A SPECIAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, WHEREAS, a Special Municipal election is to be held in the City of Azusa, California, on , and WHEREAS, in the course of conduct of the election it is necessary for the City to request services of the County, and WHEREAS, all necessary expenses in performing these services shall be paid by the City of Azusa; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. That pursuant to the provisions of § 10002 of the Elections Code of the State of California, this City Council requests the Board of Supervisors of the County to permit the County Election Department to prepare and furnish the following for use in conducting the election: 1. A listing of county precincts with number of registered voters in each, so city may consolidate election precincts into city voting precincts, and maps of the voting precincts; 2. A list of polling places and poll workers the county uses for their elections; 3. The computer record of the names and address of all eligible registered voters in the City in order that the City's consultant may: a. Produce labels for vote -by -mail voters; b. Produce labels for sample ballot pamphlets; c. Print Rosters of Voters and Street Indexes; 4. Voter signature verification services as needed; 5. Make available to the City election equipment and assistance as needed according to state law. SECTION 2. That the City shall reimburse the County for services performed when the work is completed and upon presentation to the City of a properly approved bill. SECTION 3. That the City Clerk is directed to forward without delay to the Board of Supervisors and to the County Election Department, each, a certified copy of this resolution. SECTION 4. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original resolutions. PASSED, APPROVED AND ADOPTED on October , 2010. MAYOR I HEREBY CERTIFY that the foi Council of the City of Azusa at a regular meeting Council: 0 VRC• Or)T TNT(TT N/T'PX4PRR (Z - -esolution was duly adopted by the City ber , 2010, by the following vote of the V, RESOLUTION NO. 10-C A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, SETTING PRIORITIES FOR FILING (A) WRITTEN ARGUMENT (S) REGARDING A MEASURE AND DIRECTING THE CITY ATTORNEY TO PREPARE AN IMPARTIAL ANALYSIS WHEREAS, a Special Municipal election is to be held in the City of Azusa, California, on , at which there will be submitted to the voters the following measure: MEASURE A — Do the voters of the City of Azusa, YES California, approve Ordinance No. 10-05, An Ordinance Of The City Council Of The City Of Azusa Approving A Development Agreement With Vulcan Materials Company. NO NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. That the City Council authorizes Council Member In;-'avor/Against Council Member In Favor/Against Council Member In Favor/Against Council Member In Favor/Against Council Member In Favor/Against members of that body, to file (a) written argument (s) not exceeding 300 words regarding the City measure as specified above, accompanied by the printed names(s) and signature(s) of the author(s) submitting it, in accordance with Article 4, Chapter 3, Division 9 of the Elections Code of the State of California and to change the argument until and including the date fixed by the City Clerk after which no arguments for or against the City measure may be submitted to the City Clerk. The arguments shall be filed with the City Clerk, signed, with the printed name(s) and signature(s) of the author(s) submitting it, or if submitted on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers who is the author of the argument. The arguments shall be accompanied by the Form of Statement To Be Filed By Author(s) of Argument. SECTION 2. That the city council directs the City Clerk to transmit a copy of the measure to the city attorney, unless the organization or salaries of the office of the city attorney are affected. The city attorney shall prepare an impartial analysis of the measure not exceeding 500 words showing the effect of the measure on the existing law and the operation of the measure. If the measure affects the organization or salaries of the office of the city attorney, the city clerk shall prepare the impartial analysis. The impartial analysis shall be filed by the date set by the City Clerk for the filing of primary arguments. SECTION 3. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original resolutions. PASSED, APPROVED AND ADOPTED on October , 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting held on October , 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ATTEST: CITY CLERK RESOLUTION NO. 10-C A RESOLUTION 'OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, PROVIDING FOR THE FILING OF REBUTTAL ARGUMENTS FOR CITY MEASURES SUBMITTED AT A SPECIAL MUNICIPAL ELECTION TO BE HELD ON WHEREAS, § 9285 of the Elections Code of the State of California authorizes the City Council, by majority vote, to adopt provisions to provide for the filing of rebuttal arguments for city measures submitted at municipal elections; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. That pursuant to § 9285 of the Elections Code of the State of California, when the elections official has selected the arguments for and against the measure which will be printed and distributed to the voters, the elections official shall send copies of the arguments in favor of the measure to the authors of the argument against the measure and a copy of an argument against the measure to the authors of any argument in favor of the measure immediately upon receiving the argument. The authors or a majority of the authors of an argument relating to a city measure may prepare and submit a rebuttal argument not exceeding 250 words or may authorize in writing any other person or persons to prepare, submit, or sign the rebuttal argument. A rebuttal argument may not be, signed by m ore than five authors. The rebuttal argument shall be filed with the City Clerk, signed, with the printed name(s) and signature(s) of the author(s) submitting it, or is submitted on behalf of an organization, the name of the organization, and the printed name and signature of at lease one of its principal officers, not more than 10 days after the final date for filing direct arguments. The rebuttal arguments shall be accompanied by the Form of Statement To Be Filed By Author(s) of Argument. Rebuttal arguments shall be printed in the same manner as the direct argument. Each rebuttal argument shall immediately follow the direct argument which it seeks to rebut. SECTION 2. That all previous resolutions providing for the filing of rebuttal arguments for city measures are repealed. SECTION 3. That the provisions of Section I shall apply only to the election to be held on and shall then be repealed. SECTION 4. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. PASSED, APPROVED AND ADOPTED on October , 2010. F MAYOR , I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting of October , 2010, by the following vote of the Council: AYES: NOES: ABSENT: ATTEST: CITY CLERK COUNCILMEMBERS: COUNCILMEMBERS: COUNCILMEMBERS: 2 SCHEDULED ITEMS a TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: F.M. DELACH, CITY MANAGER* DATE: OCTOBER 18, 2010 SUBJECT: APPROVAL OF ROSEDALE LAND PARTNERS II LLC FINANCING OF PARTIAL DEVELOPMENT AGREEMENT PAYMENT RECOMMENDATION It is recommended that the City Council approve the postponement of a portion of the $1.5 million Development Agreement payment by financing the balance and authorize the City Manager to complete the necessary promissory note and deed of trust, with any non -substantive revisions approved by the City Attorney. BACKGROUND In 2004, the City and Monrovia Nursery Company (MNC) entered into a Development Agreement regarding the 520 acres of the Monrovia Nursery property, now known as Rosedale. MNC assigned its interest under the Development Agreement to Azusa Land Partners, LLC (ALP). Mr. Christopher Gibbs, a partner in ALP, assumed MNC's interest under the Development Agreement as "Master Developer" for the Development Agreement property. Recently the property was purchased by Rosedale Land Partners II LLC (RLP) with Mr. Christopher Gibbs remaining as an active partner. ALP sold several tracts of the Development Agreement property to various developers and approximately 125 units have been developed and sold. The Development Agreement requires a payment of $1,200 for each unit when a certificate of occupancy is issued. The Development Agreement also provided that if all of the units were not sold and the total development fee of $1.5 million was not received before January 1, 2011 then on February 1, 2011 the remaining balance would be due to the City. As RLP is preparing to get development going again it has requested a payment schedule as follows: On February 1, 2011 RLP will pay $225,000. It will execute a promissory note for the balance of $1,125,000 with one and one-half percent interest which is approximately one percent above the existing "Local Agency. Investment Fund" interest rate that the City receives on its investments. The note will be secured with a deed of trust on property within the project. The remaining payments with interest will be made on February 1, 2012 and February 2, 2013. FISCAL IMPACT There is no negative fiscal impact to the City. Attachments : Draft Promissory Note and Deed of Trust RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Azusa 213 East Foothill Boulevard Azusa, CA 91702 Attention: City Clerk EXEMPT FROM RECORDING FEE PER GOVERNMENT CODE SECTION 27383 ( SPACE ABOVE LINE FOR RECORDER'S USE ONLY) DEED OF TRUST SECURING A PROMISSORY NOTE This Deed of Trust Securing a Promissory Note ("Deed of Trust") is dated as of October 18, 2010, and made by ROSEDALE LAND PARTNERS II LLC, a Delaware limited liability company, whose address is 12865 Pointe Del Mar Way, Suite 200, Del Mar, CA 92014 ("Trustor"), to First American Title ("Trustee"), for the benefit of the City of Azusa, a California municipal corporation ("Beneficiary"), and is executed to secure (among other obligations more specifically described in this Deed of Trust) that certain Promissory Note, dated October 18, 2010, in the principal amount of One Million One Hundred and Twenty Five Thousand Dollars ($1,125,000), ("Promissory Note") executed by Trustor in favor of Beneficiary and obligations concerning that certain Development Agreement concerning the development of the Rosedale project, between the City of Azusa, and Azusa Land Partners LLP ("Agreement"). The provisions of the Promissory Note and Agreement are incorporated in this Deed of Trust by this reference. Unless otherwise defined in this Deed of Trust, all defined terms used in this Deed of Trust shall have the meaning set forth in the Agreement. 1. Grant in Trust and Security Agreement. For valuable consideration, Trustor irrevocably grants, transfers, and assigns to Trustee, in trust, with power of sale, for the benefit of Beneficiary, the following property ("Trust Estate"): 1.1 the real property described in Exhibit A attached to this Deed of Trust and incorporated in this Deed of Trust by reference ("Land"); 1.2 all buildings, structures and other improvements now or in the future located or to be constructed on the Land ("Improvements"); and 1.3 all tenements, hereditaments, appurtenances, privileges and other rights and interests now or in the future benefiting or otherwise relating to the Land or the Improvements, including easements, rights- of-way, development rights, mineral rights, water rights and water stock ("Appurtenances"). 45635.08001\2968772.2 2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment and performance of the following ("Secured Obligations"): 2.1 all present and future indebtedness evidenced by the Promissory Note and all other amounts payable under the terms of the Promissory Note; and 2.2, all present and future monetary and non -monetary obligations of Trustor to Beneficiary under this Deed of Trust. Trustor's Covenants. To protect the security of this Deed of Trust, Trustor agrees as follows: 3.1 Payment and Performance of Secured Obligations. Trustor shall pay and perform all Secured Obligations in accordance with the respective terms of such Secured Obligations. 3.2 Maintenance of Trust Estate. Unless Beneficiary otherwise consents in writing, Trustor shall: Agreement; 3.2.1 maintain the Trust Estate in accordance with Article 5 of the Agreement; 3.2.2 not remove, demolish or materially alter any improvements except as provided in the 3.2.3 not commit or permit any waste of any part of the Trust Estate; 3.2.4 comply in all material respects with all laws and other requirements, and not commit or permit any material violation of any laws or other requirements, which affect any part of the Trust Estate or require any alterations or improvements to be made to any part of the Trust Estate; 3.2.5 take such action from time to time as may be reasonably necessary or appropriate, or as Beneficiary may reasonably require, to protect the physical security of the Trust Estate; 3.2.6 except as otherwise permitted by the Agreement, not part with possession of or abandon any part of the Trust Estate or cause or permit any interest in any part of the Trust Estate to be sold, transferred, leased, encumbered, released, relinquished, terminated or otherwise disposed of (whether voluntarily, by operation of law, or otherwise); and 3.2.7 take all other action which may be reasonably necessary or appropriate to preserve, maintain and protect the Trust Estate, including the enforcement or performance of any rights or obligations of Trustor or any conditions with respect to any such rights. 3.3 Liens and Taxes. Subject to the right of Trustor to contest any such payments, Trustor shall: (i) pay, prior to delinquency, all taxes, if any, which are or may become a lien affecting any part of the Trust Estate (including assessments on appurtenant water stock); and (ii) pay and perform when due all other obligations secured by or constituting a lien affecting any part of the Trust Estate. 3.4 Prior Mortgages or Deeds of Trust. Trustor shall perform all of Trustor's obligations under any mortgage, deed of trust or other security agreement with a lien which has priority over this Deed of Trust, including Trustor's covenants to make payments when due. Trustor shall pay or cause to be paid, at 45635.08001\2968772.2 least 10 days before delinquency, all taxes, assessments and other charges, fines and impositions attributable to the Property which may attain a priority over this Deed of Trust, and leasehold payments or ground rents, if any. 3.5 Actions. Trustor shall appear in and defend any claim or any action or other proceeding purporting to affect title or other �iterests relating to any part of the Trust Estate, the security of this Deed of Trust or the rights or powers of Beneficiary or Trustee, and give Beneficiary prompt written notice of any such claim, action or proceeding. Beneficiary and Trustee may, at the expense of Trustor, appear in and defend any such claim, action or proceeding and any claim, action or other proceeding asserted or brought against Beneficiary or Trustee in connection with or relating to any part of the Trust Estate or this Deed of Trust. 3.6 Action by Beneficiary or Trustee. If Trustor fails to perform any of its obligations under this Deed of Trust, Beneficiary or Trustee may, but without any obligation to do so and without notice to or demand upon Trustor and without releasing Trustor from any obligations under this Deed of Trust, and at the expense of Trustor: (a) perform such obligations in such manner and to such extent and make such payments and take such other action as either may deem necessary in order to protect the security of this Deed of Trust, Beneficiary or Trustee being authorized to enter upon the Trust Estate for such purposes; (b) appear in and defend any claim or any action or other proceeding purporting to affect title or other interests relating to any part of the Trust Estate, the security of this Deed of Trust or the rights or powers of Beneficiary of Trustee; and (c) pay, purchase, contest or compromise any lien or right of others which in the reasonable judgment of either is or appears to be or may for any reason become prior or superior to this Deed of Trust, except for the lien of a purchase money loan used by Trustor to purchase the Trust Estate. If Beneficiary or Trustee shall elect to pay any such lien or right of others or any taxes which are or may become a lien affecting any part of the Trust Estate or make any other payments to protect the security of this Deed of Trust, Beneficiary or Trustee may do so without inquiring into the validity or enforce -ability of any apparent or threatened lien, right of others or taxes, and may pay any such taxes in reliance on information from the appropriate taxing authority or public office without further inquiry. 3.7 Obligations With Respect to Trust Estate. Neither Beneficiary nor Trustee shall be under any obligation to preserve, maintain or protect the Trust Estate or any of Trustor's rights or interests in the Trust Estate, or make or give any presentments, demands for performance, protests, notices of nonperformance, protest or dishonor or other notices of any kind in connection with any rights, or take any other action with respect to any other matters relating to the Trust Estate. Beneficiary and Trustee do not assume and shall have no liability for, and shall not be obligated to perform, any of Trustor's obligations with respect to any rights or any other matters relating to the Trust Estate, and nothing contained in this Deed of Trust shall release Trustor from any such obligations. 3.8 Default. An "Event of Default" shall be deemed to occur upon any material breach of an obligation under any of the following: (i) this Deed of Trust; (ii) the Promissory Note; or (iii) the Agreement. Furthermore, any event defined as a "Default" or "Event of Default" under the Promissory Note or the Agreement shall constitute an Event of Default under this Deed of Trust. Upon the occurrence of any Event of Default: (i) Trustor shall be in default under this Deed of Trust, and all monetary Secured Obligations shall immediately become due and payable without further notice to Trustor; (ii) upon demand by Beneficiary, Trustor shall pay to Beneficiary, in addition to all other payments specifically required under the Promissory Note, in monthly installments, at the times and in the 45635.08001\2968772.2 amounts required by Beneficiary from time to time, sums which when cumulated will be sufficient to pay one month prior to the time the same become delinquent, all taxes which are or may become a lien affecting the Trust Estate and the premiums for any policies of insurance to be obtained hereunder (all such payments to be held in a cash collateral account as additional security for the Secured Obligations over which Beneficiary shall have sole and exclusive control and right of withdrawal); and (iii) Beneficiary may, without notice to or demand upon Trustor, which are expressly waived by Trustor (except for notices or demands otherwise required by applicable laws to the extent not effectively waived by Trustor and any notices or demands specified below), and without releasing Trustor from any of its obligations, exercise any one or more of the following remedies as Beneficiary may determine: 3.8.1 Beneficiary may, either directly or through an agent or court-appointed receiver, and without regard to the adequacy of any security for the Secured Obligations: (a) enter, take possession of, manage, operate, protect, preserve and maintain, and exercise any other rights of an owner of the Trust Estate, and use any other properties or facilities of Trustor relating to the Trust Estate, all without payment of rent or other compensation to Trustor; (b) enter into such contracts and take such other action as Beneficiary deems appropriate to complete all or any part of any construction which may have commenced on the Land, subject to such modifications and other changes in the plan of development as Beneficiary may deem appropriate; (c) make, cancel, enforce or modify leases, obtain and evict tenants, fix or modify rents and, in its own name or in the name of Trustor, otherwise conduct any business of Trustor in relation to the Trust Estate and deal with Trustor's creditors, debtors, tenants, agents and employees and any other persons having any relationship with Trustor in relation to the Trust Estate, and amend any contracts between them, in any manner Beneficiary may determine; (d) endorse, in the name of Trustor, all checks, drafts and other evidences of payment relating to the Trust Estate, and receive, open and dispose of all mail addressed to Trustor and notify the postal authorities to change the address for delivery of such mail to such address as Beneficiary may designate; and (e) take such other action as Beneficiary deems appropriate to protect the security of this Deed of Trust. Beneficiary's agent or court-appointed receiver shall hold all monies and proceeds, including, without limitation, proceeds from the sale of the Trust Estate or any portion thereof, for the benefit of the Trustor and shall not disburse the monies or proceeds for the satisfaction of the Secured Obligations without the prior written consent of Beneficiary. The Beneficiary's agent or court-appointed receiver may, but without any obligation to do so and without notice to or demand upon Trustor and without releasing Trustor from any obligations under this Deed of Trust, and at the expense of Trustor, follow the written instruction of Beneficiary under subsection 3.8 of this Deed of Trust. 45635.08001\2968772.2 4 3.8.2 Beneficiary may execute and deliver to Trustee a written declaration of default and demand for sale and written notice of default and of election to cause all or any part of the Trust Estate to be sold, which notice Trustee shall cause to be filed for record; and after the lapse of such time as may then be required by law following the recordation of such notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell such Trust Estate at the time and place fixed by it in such notice of sale, either as a whole or in separate parcels and in such order as Beneficiary may direct (Trustor waiving any right to direct the 6rder of sale), at public auction to the highest bidder for cash in lawful money of the United States (or cash equivalents acceptable to Trustee to the extent permitted by applicable law), payable at the time of sale. Trustee may postpone the sale of all or any part of the Trust Estate by public announcement at such time and place of sale, and from time to time after any such postponement may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to the purchaser at such sale its deed conveying the Trust Estate so sold, but without any covenant or warranty, express or implied, and the recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustee or Beneficiary, may purchase at such sale, and any bid by Beneficiary may be, in whole or in part, in the form of cancellation of all or any part of the Secured Obligations. Any such sale shall be free and clear of any interest of Trustor and any lease, encumbrance or other matter affecting the Trust Estate so sold which is subject or subordinate to this Deed of Trust, except that any such sale shall not result in the termination of any such lease, (i) if and to the extent otherwise provided in any estoppel or other agreement executed by the tenant and Beneficiary (or executed by the tenant in favor of, and accepted by, Beneficiary), or (ii) if the purchaser at such sale gives written notice to the tenant, within thirty (30) business days after date of sale, that the lease will continue in effect. 3.8.3 Beneficiary may proceed to protect, exercise and enforce any and all other remedies provided under the Promissory Note, the Agreement, this Deed of Trust or by applicable laws. All proceeds of collection, sale or other liquidation of the Trust Estate shall be applied first to repay any purchase money loan to which this Deed of Trust is subordinate, next to repay all costs, fees, expenses and other amounts (including interest) payable by Trustor under this Deed of Trust and to all other Secured Obligations not otherwise repaid in such order and manner as Beneficiary may determine, and the remainder, if any, to the person or persons legally entitled thereto. Each of the remedies provided in this Deed of Trust is cumulative and not exclusive of, and shall not prejudice, any other remedy provided in this Deed of Trust or by applicable laws. Each remedy may be exercised from time to time as often as deemed necessary by Trustee and Beneficiary and in such order and manner as Beneficiary may determine. This Deed of Trust is independent of any other security for the Secured Obligations, and upon the occurrence of an Event of Default, Trustee or Beneficiary may proceed in the enforcement of this Deed of Trust independently of any other remedy that Trustee or Beneficiary may at any time hold with respect to the Trust Estate or the Secured Obligations or any other security. Trustor, for itself and for any other person claiming by or through Trustor, waives, to the fullest extent permitted by applicable laws, all rights to require a marshaling of assets by Trustee or Beneficiary or to require Trustee or Beneficiary to first resort to any particular portion of the Trust Estate or any other security (whether such portion shall have been retained or conveyed by Trustor) before resorting to any other portion, and all rights of redemption, stay and appraisal. 3.9 Costs, Fees and Expenses. Trustor shall pay, on demand, all costs, fees, expenses, advances, charges, losses and liabilities of Trustee and Beneficiary under or in connection with this Deed of Trust or 45635.08001\2968772.2 5 the enforcement of, or the exercise of any remedy or any other action taken by Trustee or Beneficiary under, this Deed of Trust or the collection of the Secured Obligations, in each case including: (a) reconveyance and foreclosure fees of Trustee; (b) costs and expenses of Beneficiary or Trustee or any receiver appointed under this Deed of Trust in connection with the operation, maintenance, management, protection, preservation, collection, sale or other liquidation of the Trust Estate or foreclosure of this Deed of Trust; (c) advances made by Beneficiary to complete or partially construct all or any part of any construction which may have commenced on the Land or otherwise to protect the security of this Deed of Trust; (d) cost of evidence of title; and (e) the reasonable fees and disbursements of Trustee's and Beneficiary's legal counsel and other out-of-pocket expenses, and the reasonable charges of Beneficiary's internal legal counsel. 3.10 Late Payments. By accepting payment of any part of any monetary Secured Obligation after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other Secured Obligations or to declare a default for failure to so pay. 3.11 Action by Trustee. At any time and from time to time upon written request of Beneficiary and presentation of this Deed of Trust for endorsement, and without affecting the personal liability of any person for payment of the Secured Obligations or the security of this Deed of Trust for the full amount of the Secured Obligations on all property remaining subject to this Deed of Trust, Trustee may, without notice and without liability for such action, and notwithstanding the absence of any payment on the Secured Obligations or any other consideration: (a) reconvey all or any part of the Trust Estate; (b) consent to the making and recording, or either, of any map or plat of the Land; (c) join in granting any easement affecting the Land; or (d) join in or consent to any extension agreement or any agreement subordinating the Lien of this Deed of Trust. Trustee is not obligated to notify Trustor or Beneficiary of any pending sale under any other deed of trust or of any action or other proceeding in which Trustor, Beneficiary or Trustee is a party unless brought by Trustee. 3.12 Reconveyance. Upon written request of Beneficiary and surrender of this Deed of Trust, the Promissory Note and the Agreement to Trustee for cancellation or endorsement, and upon payment of its fees and charges, Trustee shall reconvey, without warranty, all or any part of the property then subject to this Deed of Trust. Any reconveyance, whether full or partial, may be made in terms to "the person or persons legally entitled thereto," and the recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. Except as provided in the Agreement, Beneficiary shall not be required to cause any property to be released from this Deed of Trust until final payment and performance in full of all monetary and non -monetary Secured Obligations and termination of all obligations of Beneficiary under or in connection with either the Promissory Note or the Agreement, or until the Secured Obligations are forgiven. 3.13 Substitution of Trustee. Beneficiary may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named in or acting under this Deed of Trust, which instrument, when executed by Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where the Land is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees who shall, without conveyance from the predecessor Trustee, succeed to all of its title, estate, rights, powers and duties. Such instrument must contain the name of the original Trustor, Trustee and Beneficiary, the book and page where this Deed of Trust is recorded (or the date of recording and instrument number) and the name and address of the new Trustee. 45635.08001\2968772.2 3.14 Assignment. This Deed of Trust and the Promissory Note shall not be assigned without the prior written consent of Beneficiary. 3.15 Attorney -in -Fact. Trustor appoints Beneficiary as Trustor's attorney-in-fact, with full authority in the place of Trustor and in the name of Trustor or Beneficiary, to take such action and execute such documents as Beneficiary may reasonably deem necessary ox advisable in connection with the exercise of any remedies or any other action taken by Beneficiary or Trustee under this Deed of Trust. 3.16 Successors and Assigns. This Deed of Trust applies to and shall be binding on and inure to the benefit of all parties to this Deed of Trust and their respective successors and assigns. 3.17 Acceptance. Notice of acceptance of this Deed of Trust by Beneficiary or Trustee is waived by Trustor. Trustee accepts this Deed of Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. 3.18 Beneficiary's Statements. For any statement regarding the Secured Obligations, Beneficiary may charge the maximum amount permitted by law at the time of the request for such statement. 3.19 Governing Law. This Deed of Trust shall be governed by, and construed and enforced in accordance with, the laws of California, without regard to conflicts of laws principles. The parties agree that all actions or proceedings arising in connection with this Deed of Trust shall be tried and litigated only in the state courts located in the County of Los Angeles, State of California, or federal courts located in the Central District of California. Trustor waives any right Trustor may have to assert the doctrine of forum non conveniens or to object to such venue. 3.20 Request for Notice. Trustor requests that a copy of any notice of default and a copy of any notice of sale be mailed to Trustor at Trustor's address set forth above. 3.21 Forbearance Not a Waiver. Any forbearance by Beneficiary in exercising any right or remedy hereunder, or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any such right or remedy. The procurement of insurance or the payment of taxes or other liens or charges by Beneficiary shall not be a waiver of Beneficiary's right to accelerate the maturity of the indebtedness secured by this Deed of Trust. [Signatures on Following Page] 45635.08001\2968772.2 SIGNATURE PAGE TO DEED OF TRUST SECURING A PROMISSORY NOTE TRUSTOR ROSEDALE LAND PARTNERS II LLC, a Delaware limited liability company 45635.08001\2968772.2 NOTARY ACKNOWLEDGMENT (California All -Purpose Acknowledgment) STATE OF CALIFORNIA COUNTY OF ORANGE On , 2010 before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature: 45635.08001\2968772.2 9 (seal) NOTARY ACKNOWLEDGMENT (California All -Purpose Acknowledgment) STATE OF CALIFORNIA COUNTY OF ORANGE On , 2010 before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature: 45635.08001\2968772.2 10 (seal) EXHIBIT A TO DEED OF TRUST SECURING A PROMISSORY NOTE Legal Description of the Property [Insert Legal Description of Property Following this Page] 45635.08001\2968772.2 EXHIBIT A PROMISSORY NOTE SECURED BY DEED OF TRUST Principal Amount: Maker: Holder: Date of Promissory Note: Maturity Date of Promissory Note: Interest Rate: $1,125,000 — ONE MILLION ONE HUNDRED TWENTY FIVE THOUSAND DOLLARS ROSEDALE LAND PARTNERS II LLC THE CITY OF AZUSA October 18, 2010 January 15, 2013 One and one-half percent - 1.5% FOR VALUE RECEIVED, the undersigned, ROSEDALE LAND PARTNERS lI LLC, a Delaware limited liability company ("Maker"), promises to pay, at the times stated in this promissory note ("Promissory Note" or "Note"), to the order of THE CITY OF AZUSA, a California municipal corporation ("Holder"), the principal sum of ONE MILLION TWO HUNDRED SEVENTY FIVE THOUSAND DOLLARS $1,275,000, together with any interest as provided in this Promissory Note at 213 East Foothill Boulevard, Azusa, CA 91702, or at such other place as Holder may designate to Maker in writing. 1. Agreement. This Promissory Note is made with reference to that certain Development Agreement made by and between Maker's predecessor in interest, Azusa Land Partners LLC and Holder ("Agreement"). All terms indicated to be defined terms by initial capitalization in this Promissory Note that are not specifically defined in this Promissory Note shall have the meaning ascribed to any such term in the Agreement. The provisions of the Agreement are incorporated in this Promissory Note by this reference.' 2. Interest. Interest on the unpaid principal balance of this Promissory Note shall accrue from February 1, 2011 at a rate of one and one-half percent (1.5) per annum on outstanding balances. 3. Method of Calculating Interest. Interest shall be computed based on a three hundred sixty five (365) -day year and the actual number of days elapsed. 4. Payment. All sums due under this Promissory Note are payable in lawful money of the United States. The Maker shall have the right at any time and without penalty to prepay the whole or part of the principal balance of the Note. All payments received shall first be applied to accrued and unpaid interest and the balance shall be applied to the unpaid principal. Principal and interest shall be payable in full on the Maturity Date. Payment shall be made in two equal installments of $562,500 with interest on January 1, 2012 and January 1, 2013. 5. Secured By Deed of Trust. This Promissory Note is secured by that certain deed of trust ("Deed of Trust") of the same date made by Maker, as trustor, for the benefit of Holder, as beneficiary. 6. Default. On (a) Maker's failure to pay any sum due under this Promissory Note when due and payable (whether by extension, acceleration, or otherwise), or (b) any breach of any other promise or obligation in this Promissory Note, the Deed of Trust, the Agreement or in any other instrument now or hereafter evidencing and/or securing the indebtedness evidenced by this Promissory Note, then, and in any such event, Holder may, at its option, declare Maker to in default under this 4563 5.08001 \2968722.3 Promissory Note. Holder shall give Maker written notice of default, specifying the alleged default. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. However, Holder shall have no right to exercise any remedy for a default under this Promissory Note, without first delivering Maker written notice of the default. If Maker cures a default hereunder within fifteen (15) calendar days after receipt of written notice specifying such default, or for a default that cannot reasonably be cured within such fifteen (15) day period, commences to cure such default within such fifteen (15) day period, Maker shall not be in default under this Promissory Note. 7. Remedies. (a) Default Rate. Following the Maturity Date, or any uncured default ("Event of Default"), as set forth in Section 6, the Interest Rate shall be ten (10) percent or the maximum amount allowed by law, whichever is less. (b) Acceleration. Upon the occurrence of an Event of Default, the unpaid principal amount of the Note with accrued Interest and all other sums secured by the Deed of Trust shall become immediately due and payable at the option of Holder. In the event of such acceleration, Maker shall discharge its obligations to Holder by paying all sums due under the Agreement, this Promissory Note and the Deed of Trust, together with accrued Interest plus interest at the Default Rate accruing from the date of the occurrence of the Event of Default. Holder's failure to exercise its option to accelerate the Note as aforesaid upon the occurrence of an Event of Default shall not constitute a waiver of Holder's right to exercise such option at any later time with respect to such Event of Default or with respect to any other subsequently occurring Event of Default. (c) Nature of Remedies. During the pendency of an Event of Default under the Agreement or this Promissory Note, Holder may pursue foreclosure of the Deed of Trust and may exercise any and all remedies set forth in the Agreement. 8. Attorney Fees. Maker agrees to pay the following costs, expenses, and attorney fees paid or incurred by Holder, or adjudged by a court: (a) reasonable costs of collection and costs, expenses, and attorney fees paid or incurred in connection with the collection or enforcement of this Promissory Note, whether or not suit is filed; (b) reasonable costs, expenses, and attorney fees paid or incurred in connection with representing Holder in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors' rights and involving a claim under this Promissory Note; and (c) costs of suit and such sum as the court may adjudge as attorney fees in any action to enforce payment of this Promissory Note or any part of it. 9. Notice. Any notice required to be provided in this Promissory Note shall be given in writing and shall be sent (a) for personal delivery by a delivery service that provides a record of the date of delivery, the individual to whom delivery was made, and the address where delivery was made; (b) by first-class certified United States mail, postage prepaid, return receipt requested; or (c) by a nationally recognized overnight (one business day) courier service, marked for next day business delivery. All notices shall be addressed to the party to whom such notice is to be given at the property address stated in this Promissory Note or to such other address as a party may designate by written notice to the other. All notices shall be deemed effective on the earliest of (a) actual receipt; (b) rejection of delivery; (c) if sent by certified mail, the third day on which regular United States mail delivery service is provided after the day of mailing or, if sent by overnight delivery service, on the next day on which such service makes next -business -day deliveries after the day of sending. 10. Forbearance Not a Waiver. If Holder delays in exercising or fails to exercise any of its rights under this Promissory Note, that delay or failure shall not constitute a waiver of any of Holder's 4563 5.08001 \2968722.3 rights or of any breach, default, or failure of condition under this Promissory Note. No waiver by Holder of any of its rights or of any such breach, default, or failure of condition shall be effective, unless the waiver is expressly stated in a writing signed by Holder. 11. Governing Law. This Promissory Note shall be construed and enforceable according to the laws of the State of California, without regard to conflicts of laws principles. The parties agree that all actions or proceedings arising in connection with this Promissory Note shall be tried and litigated only in the state courts located in the County of Los Angeles, State of California, or federal courts located in the Central District of California. Maker waives any right Maker may have to assert the doctrine of forum non conveniens or to object to such venue. 12. Severability. If any provision of this Promissory Note, or the application of it to any party or circumstance, is held void, invalid, or unenforceable by a court of competent jurisdiction, the remainder of this Promissory Note, and the application of such provision to other parties or circumstances, shall not be affected thereby, the provisions of this Promissory Note being severable in any such instance. 13. Time Is of the Essence. Time is of the essence with respect to all obligations of Maker under this Promissory Note. 14. Usury. It is the intention of Maker and Holder to conform strictly to the usury laws now or hereafter enforced in the State of California, and any interest payable under this Note and/or any of the other documents to be executed by Maker in connection with the loan made or to be made hereunder, shall be subject to reduction to the amount not in excess of the maximum non -usurious amount allowed under the usury laws of California as now or hereafter construed by the courts having jurisdiction over such matters. In the event the maturity of this Note is accelerated by reason of any provision of this Note or by reason of an election by Holder resulting from any default (or an event permitting acceleration), under this Note or any other instrument given to secure the payment hereof, or otherwise, then earned interest may never include more than the maximum amount permitted by law, computed from the date hereof until payment, and any interest in excess of the maximum amount permitted by law shall be canceled automatically and, if theretofore paid, shall at the option of the Holder either be rebated to Maker or be credited on the principal amount of this Note or if all principal has been repaid then the excess shall be rebated to Maker. The aggregate of all interest (whether designated as interest, service charges, points, or otherwise) contracted for, chargeable, or receivable under this Note or any other document executed in connection herewith shall under no circumstances exceed the maximum legal rate upon the unpaid principal balance of this Note remaining unpaid from time to time. In the event such interest does exceed the maximum legal rate, such excess shall be canceled automatically and if theretofore paid, rebated to the undersigned or credited on the principal amount of this Note, or if the Note has been repaid, then such excess shall be rebated to Maker. 15. Loss, Theft, Destruction or Mutilation of this Promissory Note. Maker shall, if this Promissory Note is mutilated, destroyed, lost or stolen, promptly sign and deliver to Holder, in substitution for this Promissory Note and following request by Holder providing reasonable evidence of the basis for the request and the substitute promissory note, a substitute promissory note containing the identical terms and conditions as this Promissory Note, with a notation on such substitute promissory note of the unpaid principal and accrued and unpaid interest, which amounts shall be reasonable agreed upon between Maker and Holder. 16. Indemnification. Maker agrees to indemnify Holder and to hold Holder and Holder's successors and assigns harmless from and against any and all claims, demands, costs, liabilities and obligations of any kind or nature arising out of any default hereunder, including without limitation all 4563 5.08001 \2968722.3 costs of collection, including reasonable attorneys' fees and all costs of suit, in the event the unpaid principal sum of this Note and/or any interest thereon is not paid when due. 17. Joint and Several Obligations; Waiver. Maker hereby waives, to the maximum extent permitted by law, the provisions of California Civil Code Section 2954.5 regarding the notices prerequisite to the imposition of delinquent payment charges. Maker and all other persons liable or to become liable for all or part of this indebtedness, jointly arld severally waive demand, presentment for payment, notice of nonpayment, protest and notice of protest hereon, and agree to pay, in the Event of Default hereunder, all costs of collection, including reasonable attorneys' fees of Agency, whether or not suit is commenced. Maker hereby waives, to the fullest extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this instrument or any deed of trust, security agreement, guarantee or other agreement now or hereafter securing this Promissory Note. 18. Assignment. This Note shall bind Maker and its successors and assigns and the benefits hereof shall inure to Holder and Holder's successors and assigns. 19. Encumbrances. Other than as provided herein, Maker shall not further encumber, mortgage, or subject the Property or any interest therein to a deed of trust without the prior written consent of the Holder. This Promissory Note is executed by Maker in Azusa, California, on the 18th day of October, 2010. lu/.mi s ROSEDALE LAND PARTNERS II LLC go Its: ATTEST: am Its: 45635.08001\2968722.3 CITY OF AZUSA MINUTES OF THE CITY COUNCIL REGULAR MEETING MONDAY, OCTOBER 4, 2010 — 6:35 P.M. The City Council of the City of Azusa met in regular session at the above date and time in the Azusa Auditorium located at 213 E. Foothill Boulevard, Azusa, CA 91702. CEREMONIAL Ceremonial Certificates of Recognition were presented to hair cutters who donated their services to the children of Cert Kool Cuts Azusa in the Kool Cuts Program. Program Certificates of Appreciation were presented to the Sponsors of the 2010 Summer Reading Program. Cert Sum Rdg A Proclamation was presented to members of the Los Angeles County Fire Department proclaiming Proc Fire October as Fire Prevention Month. Prevention Mo CLOSED SESSION Closed Session The City Council recessed to Closed Session at 6:56 p.m. 1. CONFERENCE WITH LABOR NEGOTIATOR (Gov. Code Sec. 54957.6) Conf w/labor Agency Negotiators: Administrative Services Director -Chief Financial Officer Kreimeier Negotiators Organizations AMMA, SEIU, APOA, APMA and ACEA 2. EXISTING LITIGATION (Gov. Code Sec. 54956.9(a) Conf w/Legal City of Duarte v. City of Azusa LA Superior Court Case No. BSI 27709 Cnsl Duarte 3. POTENTIAL LITIGATION (Gov. Code Sec. 54956.9(b) Conf w/Legal Facts and Circumstances are such that a threat of litigation has been made against the City in relation to Cnsl Threat of the enforcement of an agreement. (One Case). Litigation 4. POTENTIAL LITIGATION (Gov. Code Sec. 54956.9(b) Conf w/Legal Facts and Circumstances are such that a threat of litigation has been made against the City with respect Cnsl Threat of to an employee claim. (One Case) Litigation The City Council reconvened at 7:40 p.m. The City Attorney Carvalho advised that there was no reportable No Reports action taken in Closed Session and that Conference with Labor Negotiator will be handled at the end of the Closed Session City Council Meeting. Mayor Rocha called the meeting to order. Call to Order Mr. Joe Guarrera led in the Flag Salute. Flag Salute Invocation was given by Reverend LeRoy of the First Assembly of God Church. Invocation ROLL CALL Roll Call PRESENT: COUNCILMEMBERS: GONZALES, CARRILLO, MACIAS, HANKS, ROCHA ABSENT: COUNCILMEMBERS: NONE ALSO PRESENT: Also Present City Attorney Carvalho, City Manager Delach, Assistant City Manager Makshanoff, Police Chief Garcia, Director of Public Works Haes, Economic and Community Development Director Christiansen, Administrative Services Director -Chief Financial Officer Kreimeier, Recreation Supervisor Gonzales, and Recreation Superintendent Gonzales, Library Director Johnson, Public Information Officer Quiroz, Assistant Director of Economic and Community Development McNamara, City Clerk Mendoza, Deputy City Clerk Toscano. PUBLIC PARTICIPATION Pub Part Mr. Mike Lee addressed Council regarding the following subjects: Happy Golden Days, welcome Target M. Lee Store, Arbys closure, and Vulcan Mining issue. Comments Mr. Jeffrey Cornejo addressed Council and wished all a Happy Golden Days Week, invited all to the events J. Cornejo and thanked Council and staff for support. Comments Mr. Joe Guarrera addressed Council stating that he hoped the MOU with Foothill Transit for the Park and J. Guarrera Ride Facility, has been changed as he sees a major park issue. Further, he noted that the designation has Comments been increased to south of ninth street instead of south of the rail road tracks. Cert of Appre Mr. Jorge Rosales addressed Council expressing his concerns regarding item D-5, MOU with Foothill J. Rosales Transit, stating that it gives more of an advantage to Foothill Transit in its name, its charging station and Comments bus spaces. He pointed out areas of the MOU that le questions and the costs to the City. Comments Mr. Lynn Eaton addressed Council expressing his opinion regarding Vulcan Mining and the asset it is to L. Eaton the City. Comments Ms. Sandra Rentschler addressed Council expressing her opinion in favor of the Vulcan Project and against S. Rentschler the referendum. She urged the residents to defeat the referendum when it goes to the ballot. Comments Ms. Valaria Vasquez, on behalf of Azusa High School JV and Varsity Tennis team addressed Council V. Vasquez requesting support to help the team purchase equipment, sweaters, etc. for the team. Comments Director of Public Works Haes responded to questions regarding the MOU with Foothill Transit for the Response to parking structure stating that the City received various grants totaling five and a half million dollars that Questions can only be used for a parking structure and there was no general fund money used. The estimated cost for Foothill Transit the structure is approximately nine million dollars and Foothill Transit will pay the remainder of the cost. MOU The MOU does not authorize the parking structure, it will have to go through the environmental review and Proc School CEQA. The MOU will only allow to go forward with the design and will come back to Council for review, Psychology Wk modification or approval. With regard to the number of spaces, both entities need to secure a number of Cert of Appre spaces and there is no number yet until the size is determined. CityLinks Staff was directed to provide scholarships in the amount of $200 each to the Azusa High School Tennis Sponsorship Team, Varsity and JV. Staff was also directed to provide Council with an updated amount of the To AHS Scholarship Fund. Tennis REPORTS, UPDATES COUNCIL BUSINESS AND ANNOUNCEMENTS -STAFF Rpts, Updates Moved by Mayor Pro -Tem Gonzales, seconded by Councilmember Hanks and unanimously carried to Proc School approve request for proclamation for School Psychology Week November 10-14. Psychology Wk Moved by Councilmember Carrillo, seconded by Mayor Pro -Tem Gonzales and unanimously carried to Cert of Appre approve request for certificates of appreciation for sponsors of the refreshments for the CityLinks Program. CityLinks Mayor Pro -Tem Gonzales wished all a Happy Golden Days, reminded all about the Target Ribbon Cutting Gonzales and asked that the meeting be adjourned in memory of Donny Ochoa and Louis Najera who passed away Comments 19 years ago in an accident on Alosta. Councilmember Hanks wished all a Happy Golden Days and thanked all who participate in the work that Hanks goes into the event. Comments City Manager Delach commended staff for the City being recognized by the Los Angeles Department of City Mgr Economic Development Corporation as one of the finalists as Most Business Friendly City. Comments Councilmember Macias thanked staff for the recognition by Los Angeles Department of Economic Macias Development Corporation. He stated that he will donate $84.00 to the Senior Center in honor of his Mom Comments as 84 people/kids came in ahead of him in the Golden Days 5K run. He asked that the meeting be adjourned in memory of Joe Alva Jr., who recently passed away. Councilmember Carrillo stated that he looks forward to the Golden Days Events all week, thanked staff for Carrillo being recognized as one of the finalists in as Most Business Friendly City and provided statistics of Comments Southern California Cities. He noted Target opening, and his support of Prop 22 on the November ballot which will institute Constitutional Amendment to prohibit the State from taking funding from cities. Mayor Rocha asked that the meeting be adjourned in memory of Robert Ramirez, Fred Fraijo, Joe Alva Jr., Rocha Donny Ochoa, Louis Najera and keep soldiers in memory and prayer. He thanked the Golden Days Comments Committee for their work and talked about his most memorable Golden Days. He announced the BMX Show on Saturday, October 16`h at 10:00 am. at the parking lot on Azusa and Foothill; Lions Club will be giving away free bicycle helmets. 10/04/10 PAGE TWO None. Sched Items None The CONSENT CALENDAR consisting of Items D -I through D-9 was approved by motion of Consent Calendar Councilmember Hanks, seconded by Mayor Pro --Tem Gonzales and unanimously carried with the Approved exception of items D-5, D-7, and D-8, which were be considered under the Special Call portion of the Agenda. 1. The minutes of the regular meeting of September 20, 2010, were approved as written. Min appvd 2. HUMAN RESOURCES ACTION ITEMS. HR Action Items Human Resources Action Items were approved as follows: Merit Increase and/or Regular Appointment: M. Bertelsen, Police Lieutenant and B. Parra, Police Officer. 3. The City Treasurer's Report as of August 31, 2010 was received and filed. City Treas Rpt 4. The extension of the Clinical Affiliation Agreement with Azusa Pacific University School of Clinical Agmt Nursing was approved and Staff was authorized to sign the agreement APU 5. SPECIAL CALL ITEM. Spec Call Item 6. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, Res. 10-059 ACCEPTING A GRANT OF EASEMENT FROM THE LOS ANGELES COUNTY FLOOD Grant Of Esmt CONTROL DISTRICT FOR PUBLIC ROAD AND HIGHWAY PURPOSES. 7. SPECIAL CALL ITEM. 8. SPECIAL CALL ITEM. 9. The following resolution was adopted and entitled: Spec Call Item Spec Call Item A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA ALLOWING CERTAIN Res. 10-C60 CLAIMS AND DEMANDS AND SPECIFYING THE FUNDS OUT OF WHICH THE SAME Warrants ARE TO BE PAID. SPECIAL CALL ITEMS Special Call Item Mayor Rocha addressed item regarding the MOU with Foothill Transit pointing out that in the staff report Rocha it says they are approving "design of a possible parking structure within the area north of Foothill Avenue, MOU w/Foothill between Alameda and Dalton Avenues, and south of 9`° Street". He asked additional questions. Transit Director of Public Works/Assistant City Manager Haes responded to questions posed regarding the four T. Haes story parking structure, the 250 parking spaces for Gold Line which will be within the structure, what Response would be allowed to Foothill Transit, by approving the item they are not approving a site for the parking structure and height will be about the same as the Target building. Mr. Jeffrey Comejo, Chair of the Cultural & Historic Preservation Commission and of the Azusa Historical J. Comejo Society, clarified and asked that the staff report be corrected as the entity that has concerns regarding the Comments placement of the parking structure in the park is the Azusa Historical Society, not the Historic Preservation Commission. Moved by Councilmember Carrillo, seconded by Councilmember Macias and carried to authorize the City MOU w/ Manager to enter into a Memorandum of Understanding (MOU) between the City of Azusa and Foothill Foothill Transit Transit to provide direction for the development of a park and ride facility between Alameda Avenue and Approved Dalton Avenue, north of Foothill Boulevard and south of 9`" Street. Councilmember Hanks abstained. Mayor Rocha addressed item regarding the Notice of Completion for the Reader Board and noted that it Rocha contains wording that is grammatically incorrect, it states: You Are Always Welcomed and should be NOC Reader Welcome. City Manager Delach responded that it would be corrected as soon as possible. Board Moved by Councilmember Carrillo, seconded by Councilmember Macias and unanimously carried to NOC approve the Notice of Completion for the Azusa I-210 Freeway Reader Board - $465,735.95 — Daktronics Daktronics Inc. and it was authorized to file same with the Los Angeles County Clerk. Approved Councilmember Macias addressed item regarding the Proposed Special Tax Bond Issuance to Refund Macias Special the Outstanding Community Facilities District No. 2002-1 (Mountain Cove) Special Tax Bonds, Tax Bond Issue 2002 Series A, asking what point would be triggered and what the interest rate would be. Mr. Mr. Bush Mike Bush responded stating that the target is $25,000 per year, the cost of issuance would be at a Response cost of 2% and there are 22 years left. 10/04/10 PAGE THREE Moved by Councilmember Carrillo, seconded by Councilmember Macias and unanimously carried that Special Tax Bond Staff be directed to hive Urban Futures, Inc (Financial Advisor), Nollenberger Capital (Bond Underwriter) Mountain Cove and Best Best and Krieger (Bond and Disclosure Counsel) to pursue bond refinancing for possible City Bond Cnsl, etc. Council approval at a later date, for the proposed Special Tax Bond Issuance to Refund the Outstanding Approved Community Facilities District No. 2002-1 (Mountain Cove) Special Tax Bonds, 2002 Series A. THE CITY COUNCIL AND THE REDEVELOPMENT AGENCY CONVENED JOINTLY AT 8:37 Cncl/CRA P.M. TO ADDRESS THE FOLLOWING ITEMS: Convene Jntly JOINT PUBLIC HEARING - CONSIDERATION OF THE FIRST AMENDMENT TO THE Joint Pub Hrg STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT FOR Continued THE CITRUS CROSSING PROJECT LOCATED AT THE SOUTHWEST CORNER OF ALOSTA To October 18, AVENUE AND CITRUS AVENUE. i 2010 meeting Moved by Councilmember/Director Hanks, seconded by Councilmember/Director Carrillo and unanimously carried to continue the Public Hearing to the meeting of October 18, 2010. THE CITY COUNCIL RECESSED AND THE REDEVELOPMENT AGENCY CONTINUED AT Cncl Recess 8:38 P.M. CITY COUNCIL RECONVENED AT 8:40 P.M. CRA Cont It was consensus of Councilmembers to recess back into Closed Session at 8:40 p.m. to discuss the Closed Session following CONFERENCE WITH LABOR NEGOTIATOR (Gov. Code Sec. 54957.6) Conf w/Legal Agency Negotiators: Administrative Services Director -Chief Financial Officer Kreimeier Cnsl Labor Organizations AMMA, SEIU, APOA, APMA and ACEA Negotiators The City Council reconvened at 9:39 p.m., there was no reportable action taken in Closed Session. Reconvened No Action It was consensus of Councilmembers to adjourn in memory of Donny Ochoa, Louis Najera, Robert Adjourn in Ramirez, Fred Fraijo, and Joe Alva Jr. Memory D. Ochoa, L. Najera, R. Ramirez, F. TIME OF ADJOURNMENT: 9:40 P.M. Fraijo, and J. Alva Jr. CITY CLERK NEXT RESOLUTION NO. 2010-C61 NEXT ORDINANCE NO. 2010-06. 10/04/10 PAGE FOUR CITY OF AZUSA MINUTES OF THE CITY COUNCIL SPECIAL MEETING MONDAY, SEPTEMBER 13, 2010 — 6:30 P.M. The City Council of the City of Azusa met in special session at the above date and time in the Emergency Operations Center located at 725 N. Alameda Avenue, Azusa. Mayor Pro -Tem Gonzales called the meeting to order. ROLL CALL PRESENT: COUNCILMEMBERS: GONZALES, CARRILLO, MACIAS, HANKS ABSENT: COUNCILMEMBERS: ROCHA ALSO PRESENT: Manager Delach and Assistant City Manager Makshanoff. PUBLIC PARTICIPATION None. Call to Order Roll Call Also Present Pub Part None. CLOSED SESSION ITEMS Closed Session It was consensus of Councilmembers to recess to Closed Session at 8:09 p.m. to discuss the following: Recess 1. PUBLIC EMPLOYEE PERFORMANCE EVALUATION (Gov. Code Sec. 54957) Pub Emp Per Eval Title: City Manager City Manager 2. CONFERENCE WITH LEGAL COUNSEL —EXISTING LITIGATION (Gov. Code Sec 54956.9 Exist Litigation (a) One Case: City of Duarte v. City of Azusa, Los Angeles Superior Court Case No. BS127709. City of Duarte 3. CONFERENCE WITH LEGAL COUNSEL — POTENTIAL LITIGATION (Gov. Code Sec. Potential 54956.9 (b). One Case: Facts and circumstances exist, which demonstrate that a threat of litigation has Litigation been made against the City. The City Council reconvened at 9:06 p.m. It was consensus* of Councilmembers to approve the Joint Reconvened Defense and Confidentiality Agreement. It was consensus* of Councilmembers to adjourn. TIME ADJOURNMENT: 9:07 P.M. CITY CLERK NEXT RESOLUTION NO. 10-054. *Indicates Rocha absent. Adjourn F TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL CONSENT CALENDAR FROM: KERMIT FRANCIS, INTERIM DIRECTOR OF HUMAN RESOURCES/PERSONNEL OFFICER VIA: F.M. DELACH, CITY MANAGER/* DATE: OCTOBER 18, 2010 SUBJECT: HUMAN RESOURCES ACTION ITEMS RECOMMENDATION It is recommended that the City Council approve the following Personnel Action Requests in accordance with the City of Azusa Civil Service Rules and applicable Memorandum of Understanding(s). BACKGROUND On October 12, 2010, the Personnel Board confirmed the following Department Head recommendations regarding the following Personnel Action requests. A w .rrA \TTI /(lD D T: (tT TT AT? A PPnTT�T'T X/1PNT- -1. 1Y 1L1 �l 1 DEPARTMENT NAME CLASSIFICATION ACTION/EFF RANGE/STEP FROM/TO DATE BASE MO SALARY PD Stacy Gerszewski Police Dispatcher Merit Increase 9166/3 To: Street Maint Wrk III 10/13/2010 $4329.49 UTL Paul Braconier Water Production Operator III Regular 5255/5 Appointment $5808.22 10/04/2010 PW Terry Tate Facilities Maintenance Merit Increase 4174/3 Worker III 07/27/2010 $4540.93 PW Roberto Nodarse Street Maintenance Worker I Merit Increase 8153/4 07/14/2010 $3900.70 B. FLEXIBLE STAFFING PROMOTION: The following flexible staffing promotional appointments have been L_. t, --A[,\ „f fn flip R„ Tac of flha Civil gPrViC P. RVCtf-M- DEPARTMENT NAME CLASSIFICATION EFFECTIVE RANGE/STEP FROM/TO DATE BASE MO. SALARY PW Vidal Villagomez From: Street Maint Wrk II 08/08/2010 8174/4 To: Street Maint Wrk III $4757.27 FISCAL IMPACT There is no fiscal impact, as positions listed are funded in approved department budgets. CONSENT ITEM TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: MARCENE HAMILTON, CITY TREASURER - DATE: OCTOBER 18, 2010 SUBJECT: INVESTMENT POLICY FOR THE CITY OF AZUSA RECOMMENDATION The City Treasurer recommends that the City Council approve the attached resolution re -adopting the Investment Policy for the City of Azusa. FISCAL IMPACT None BACKGROUND California Government Code Section 53646(a)(2) requires the City to adopt an Investment Policy every year. The City is also charged with changing the policy as necessary. The policy must be adopted or changed at a public meeting of the Council. The Council Members last adopted the Investment Policy on October 5, 2009. DISCUSSION In addition to the annual review of the City's Investment Policy, Government Code Section 53607 requires the City to reconfirm annually the delegation of investment authority to the City Treasurer. The Treasurer and the City Council are "fiduciaries" subject to the prudent investor standard. The Investment Policy is the outline from which the Treasurer operates to ensure that investments are safe, liquid and achieving returns. RESOLUTION NO RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA ADOPTING THE INVESTMENT POLICY WHEREAS, the Redevelopment Agency of the City of Azusa receives taxes and other revenues from a variety of sources and uses"the funds to pay its bills on a regular basis; and WHEREAS, the Agency Treasurer is charged with the duties of handling and maintaining the cash that is taken in or otherwise received by the Agency; and WHEREAS, the balance of these funds Fluctuates between $3,000,000 and $20,000,000or more; and WHEREAS, per Government code Sections 53607 and 53600.5 the Agency Treasurer is charged with investing idle public funds on the basis of protecting the safety of the funds, ensuring the liquidity of the investments, and maximizing earnings in that order of importance and based on the "Prudent Investor Standards" and WHEREAS, the State of California requires each City entity annually, including the Redevelopment Agency, to adopt an investment policy per Government Code Section 53646; and WHEREAS, the Board of Directors, with the aid of its staff has reviewed the Statement of Investment Policy and wishes to approve the same; NOW THEREFORE BE IT RESOLVED that the Board of Directors of the Redevelopment Agency of the City of Azusa does hereby adopt its Investment Policy attached hereto marked Exhibit A and instructs the Agency Treasurer to be guided by it in carrying out the duties of his office for the benefit of the Redevelopment Agency. ADOPTED AND APPROVED this day of October 2010. JOSEPH R. ROCHA, MAYOR 1 HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof on the day of October 2010 by the following vote of Council: AYES: CITY COUNCIL MEMBERS: NOES: CITY COUNCIL MEMBERS ABSTAIN: CITY COUNCIL MEMBERS ABSENT: CITY COUNCIL MEMBERS VERA MENDOZA, CITY CLERK RESOLUTION NO RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA ADOPTING THE INVESTMENT POLICY WHEREAS, the City of Azusa receives taxes and other revenues from a variety of sources and uses the funds to pay its bills on a regular basis; and WHEREAS, the City Treasurer is charged with the duties of handling and maintaining the cash that is taken in or otherwise received by the City; and WHEREAS, the balance of these funds fluctuates between $3,000,000 and $40,000,000 or more; and WHEREAS, per Government Code Sections 53607 and 53600.5 the CityTreasurer is charged with investing idle public funds on the basis of protecting the safety of the funds, ensuring the liquidity of the investments, and maximizing earnings in that order of importance and based on the "Prudent Investor Standards": and WHEREAS, the State of California requires each City annually to adopt an investment policy per Government Code Section 53646; and WHEREAS, the City Council, with the aid of its staff has reviewed the Statement of Investment Policy and wishes to approve the same; NOW THEREFORE BE IT RESOLVED that the City Council of the City of Azusa does hereby adopt its Investment Policy attached hereto marked Exhibit A and instructs the City Treasurer to be guided by it in carrying out the duties of his office for the benefit of the City of Azusa. ADOPTED AND APPROVED this day of October 2010. JOSEPH R. ROCHA, MAYOR 1 HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof on the day of October 2010 by the following vote of Council: AYES: CITY COUNCIL MEMBERS: NOES: CITY COUNCIL MEMBERS ABSTAIN: CITY COUNCIL MEMBERS ABSENT: CITY COUNCIL MEMBERS VERA MENDOZA, CITY CLERK City of Azusa, California INVESTMENT POLICY 1. POLICY STATEMENT All funds of the City of Azusa ("City") shall be invested in accordance with principles of sound treasury management and in accordance with the provisions of California Government Code Section 53600, et seq., and guidelines established by the California Municipal Treasurer's Association, the California Society of Municipal Finance Officers, and this Investment Policy ("Policy"). These funds are defined and detailed in the City's Comprehensive Annual Financial Report ("CAFR") and include any new funds created unless specifically excluded by the City Council. Specifically excluded funds are: Funds deposited with the State Public Employees' Retirement System; and Bond proceeds that are subject to covenants and restrictions as defined in the Bond's indenture are administered under the direct control of the Bond Trustee. 2. INVESTMENT POLICY OBJECTIVES A. Overall Risk Profile Pursuant to California Government Code Section 53600.5 the three (3) objectives of the City's Policy are, in order of priority: 1. Safeguard the principal of the funds; 2. Meet the liquidity needs of the City; and 3. Achieve a return on the funds. To achieve these objectives, the City shall consider the following when making an investment: 1. SafeLmard the Principal of the Funds The City shall mitigate the risk to the principal of invested funds by limiting credit and interest rate risks. Credit risk is the risk of loss due to the failure of the security issuer or backer. Interest rate risk is the risk that the market C:�T$ AND SETTINGSWZ USMJI DOCDMENTWNMTMFNT MUCYWYF4i TPMOCY-CITYOFA SA-2010-MADOC value of the City's portfolio will fall due to an increase in general interest rates. a) Credit risk will be mitigated by: (i) Limiting investments to the safest types of securities; (ii) By pre -qualifying the financial institutions with which it will do business; and (iii) By diversifying the investment portfolio so that the potential failure of any one issue or backer will not place an undue financial burden on the City. b) Interest rate risk will be mitigated by: (i) Structuring the City's portfolio so that securities mature to meet the City's cash requirements for ongoing obligations, thereby avoiding the possible need to sell securities on the open market at a loss prior to their maturity to meet those requirements; and (ii) Investing primarily in shorter -term securities. 2. Meet the Liquidity Needs of the City The City's investment portfolio shall be structured in a manner that ensures securities mature at the same time as cash is needed to meet anticipated demands (Static Liquidity). Additionally, since all possible cash demands cannot be anticipated, the portfolio should consist of securities with active secondary markets (Dynamic Liquidity). The maximum percentage of different investment instruments and maturities is detailed within Section H of this Policy. 3. Achieve a Return on the Funds Yield on the City's investment portfolio is of secondary importance compared to the safety and liquidity objectives described above. Investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. While it may occasionally be necessary or strategically prudent for the City to sell a security prior to maturity to either meet unanticipated cash needs or to restructure the portfolio, this Policy C^DOCUMENT$(+NOSMINGS SAUSERINtYp MEMNNVET TPOIJCYVNVEST TMUC - IWOFA A -2010 -FINAL specifically prohibits trading securities for the sole purpose of speculating on the future direction of interest rates. B. Basic Investment Strategy The City's investment pprtfolio shall be structured to provide sufficient funds from investments to meet the City's monthly anticipated cash needs. Subject to the objectives stated above, the choice in investment instruments and maturities shall be based upon an analysis of future anticipated cash needs, existing and anticipated revenues, interest rate trends and specific market opportunities. No investment may have a maturity of more than five (5) years from its date of purchase without receiving prior City Council approval. After approval by City Council, reserve funds associated with bond issues may have a maturity of more than five (5) years, up to the earliest date the bonds may be redeemed or mature. 3. INVESTMENTS This section of the Policy identifies the types of investments in which the City will invest its idle or surplus funds. A. Standard of Prudence The City operates its investment portfolio under the Prudent Investor Standard (California Government Code Section 53600.3) which states, in essence, "when investing, reinvesting, purchasing, acquiring, exchanging, selling or managing public funds, a trustee shall act with care, skill, prudence and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated need of the City, that a prudent person in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the City." This standard shall be applied in the context of managing the overall portfolio. Investment officers, acting in accordance with written procedures and this investment policy and exercising the above standard of diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. C:IDOCU TrD=INGSNZUSAUSFRIW DOCUMFNTSINV NffiNT MLIC NVFSfMFNTMUCY-CITYOFAZUSA-3010-FINA DO B. Eligible Securities The City is provided a broad spectrum of eligible investments under California Government Code Section 53600, et seq. The City may choose to restrict its permitted investments to a smaller list of securities that more closely fits the City's cash flow needs and requirements for liquidity. If a type of investment is added to California Government Code Section 53600 et seq., the new investment option will, not be added to the City's Authorized Investment List until this Policy is amended and approved by the City Council. If a type of investment permitted by the City should be removed from California Government Code 53600 et seq., the investment will be deemed concurrently removed from the City's Authorized Investment List. The City's Authorized Investment List Insured Certificates of Deposit (CD's) of California banks and/or savings and loan associations, and/or savings banks that mature in five (5) years or less, provided that the City's investments shall not exceed One Hundred Thousand Dollars ($100,000) per institution. If the investment exceeds the insured One Hundred Thousand Dollars ($100,000), the funds are to be collateralized at one hundred and ten percent (110%) of the deposit in government securities or one hundred and fifty percent (150%) in mortgages. • Local Agency Investment Fund (LAIF) Demand Deposits. • Securities of the U.S. Government, and securities of which the principal and interest is guaranteed by the full faith and credit of the U. S. Government. • Securities issued by agencies and instrumentalities of the U. S. Government or issued by a government-sponsored enterprise. • Commercial Paper (limited to 30% of the portfolio) rated Al/P 1 or the equivalent by two nationally recognized rating agencies with maturities not to exceed one hundred and eighty-one (18 1) days. • Medium -Term Corporate Notes (limited to 20% of the portfolio) that are rated "AA" or better by two (2) nationally recognized rating agencies. • Passbook Savings or Money Market Demand Deposits, subject to the restrictions and limitations set forth in California Government Code Section 53638. • Repurchase Agreements (limited to 30% of the portfolio) with approved banks and broker-dealers who have completed and signed a Master Repurchase Agreement with the City. C:­UMENT,TND SETTING�SAUSERIU DOCUMENTSVN=MENT PoUCYVNVFSTMENT UCY<ITYOFA USA-2-RNALDOC • Money Market Mutual Funds (with a stated objective of maintaining a $1.00 net asset value) that has been rated AAAm by Moody's or any two nationally recognized rating agencies. Please see Exhibit A for a more detailed description of the authorized investments listed above. A thorough investigation of any pool or fund is required prior to investing and on a continual basis. The investigation will, at a minimum, obtain the following information: • A description of eligible investment securities, and a written statement of investment policies and objectives; and • A description of interest calculations and how it is distributed, and how gains and losses are distributed; and • A description of how securities are safeguarded (including the settlement process) and how often the securities are marked to market and how often an audit is conducted; and • A description of who may invest in the program, how often, what size deposits and withdrawals are permitted; and • A schedule for receiving statements and portfolio listings; and • A determination as to whether the pool/fund maintain a reserve or retain earnings or is all income after expenses distributed to participants; and • A fee schedule that also discloses when and how fees are assessed; and • A determination as to whether the pool or fund is eligible for bond proceeds and/or will accept such proceeds. The purpose of this investigation is to determine the suitability of a pool or fund and evaluate the risk of placing funds with that pool or fund. One of the purposes of this Policy is to define what investments are permitted. If a type of security is not specifically authorized by this Policy, it is not a permitted investment. C. Qualification of Brokers, Dealers and Financial Institutions The City Treasurer or designees will establish and maintain a list of the financial institutions and broker/dealers authorized to provide investment and depository services to the City, will perform an annual review of the financial condition and registrations of the qualified bidders, and require annual audited financial statements to be on file for each approved company. The City shall annually send a copy of their current Policy to all financial institutions and broker/dealers approved to do business with the City. Receipt of the Policy and Enabling Resolution, including confirmation C:I CUME T.rD SETTINGS USAUSERIN DOCUME—NVUTMpTPoLICYVN TMEN—LICY CITYOFA USA-2010-FIN—C that it has been received and reviewed by the person(s) handling the City's account, shall be acknowledged in writing within thirty (30) days. All broker-dealers and financial institutions that desire to become qualified bidders for investment transactions must submit a "Broker -Dealer Application" and related documents relative to eligibility. This includes a current audited financial statement, proof of state registration, proof of NASD registration and a certification they have received and reviewed the City's Policy and agree to comply with the provisions outlined in the Investment Policy. The City Treasurer or designees may establish any additional criteria they deem appropriate to evaluate and approve any financial services provider. The selection process for broker-dealers shall be open to both "primary dealers" and "secondary/regional dealers" that qualify under Securities and Exchange Commission Rule 15c3-1 (Uniform Net Capital Rule). The provider must have an office in California and the provider's representative must be experienced in institutional trading practices and familiar with the California Government Code as it relates to investments by a City. D. Collateralization Requirements Uninsured Time Deposits with banks and savings and loans shall be collateralized in the manner prescribed by state law for depositories accepting municipal investment funds. Re -purchase Agreements shall be collateralized in accordance with terms specified in the Master Repurchase Agreement. The valuation of collateral securing a Re- purchase Agreement will be verified weekly to ensure a minimum of one hundred and two percent (102%) of the value of the transaction is held by the City's depository agent. E. Diversification The City will diversify its investments by security type and investment. With the exception of bond reserve funds, bond escrow funds, and any other specific funds approved by the Treasury Committee or the City Council, the City Treasurer or designee, and the City's Investment Committee will adopt a strategy that combines current market conditions with the City's cash needs to maintain the maximum degree of safety of principal and liquidity throughout market and budgetary cycles. This strategy will include diversification by investment type and maturity allocations and will be included in the regular quarterly reports to the City Council. This strategy will be reviewed quarterly and can be changed accordingly. C:�WND=WGSUZUSAGSFR­ D MENTSINVESTMENT MUNVESTMENTPoI - TVOFA SA-2010-RNAL F. Confirmations Receipts for confirmation of purchase of authorized securities should include at a minimum the following information: trade date, settlement date, description of the security, par value, interest rate, price, yield to maturity, agency's name, net amount due, and third party custodial information. G. GASB 3 The Governmental Accounting Standards Board ("GASB") issued GASB #3 in April 1986, and the local entity's investments must be categorized into three (3) levels of credit risk as follows: 1) Securities that are insured or registered, or for which the securities are held by public units or its agent in the units; 2) Securities that are uninsured and unregistered and are held by the broker's or dealer's trust department or agent in the unit's name; 3) Securities that are uninsured and unregistered and are held by the broker or dealer, or by its trust department or agent, but not in the unit's name. The carrying amount and market value of all types of investments must be disclosed in total and for each type of investment. GASB #3 exempts mutual funds and LAIF investments from the mandatory risk categorization. 4. SAFEKEEPING OF SECURITIES A. Safekeeping Agreement The City shall contract with a bank or banks for the safekeeping of securities that are owned by the City as a part of its investment portfolio or transferred to the City under the terms of a Re -purchase Agreement. All securities owned by the City shall be held in safekeeping by a third party bank trust department acting as agent for the City under the terms of a custody agreement executed by the bank and the City. All securities will be received and delivered using standard delivery versus payment (DVP) procedures. The third party bank trustee agreement must comply with California Government Code Section 53608. No outside broker/dealer or advisor may have access to City funds, accounts or investments, and any transfer of funds must be approved by the City Treasurer. ­CUMENTrD SETTINGSWZUSAUSERI DOCUMENTSNVMTMENT I LIMNVESTMENTMUL-CITYOFAZIISA2010-FINAL C B. Security Transfers The authorization to release City's securities or funds will be telephoned to the appropriate bank representative by a finance department member other than the person who initiated the transaction. A written confirmation outlining details for the transaction and confirming the telephoned instructions will be sent to the bank within five (5) working days. F C. Verification of Security Securities transferred to the City as collateral securing time deposits or repurchase agreements that are being held in safekeeping for the City will be verified in writing and examined on a random basis during the year by the City's independent auditors as part of the City's annual independent audit. 5. STRUCTURE AND RESPONSIBILITY This section of the Policy defines the overall structure and areas of responsibility within the investment management program. A. Responsibilities of the City Treasurer The City Treasurer is charged with responsibility for maintaining custody of all public funds and securities belonging to or under the control of the City, and for the deposit and investment of those funds in accordance with principles of sound treasury management applicable laws, ordinances, and this Policy. This includes establishing written procedures for the operation of the investment program consistent with this Policy. The procedures should include reference to safekeeping, master repurchase agreements, wire transfer agreements, banking services contracts and depository agreements. Such procedures shall also include explicit delegation of authority to persons responsible for investment transactions. No person may engage in any investment transaction except as provided under the terms of this Policy and the procedures established by the Treasurer and approved by the Investment Committee. Investment decisions that involve borrowing in the amount of One Hundred Thousand Dollars ($100,000) or more must be included as a separate discussion item on the City Council's agenda. Such items can no longer be included on the City Council's consent calendar. (California Government Code Section 53635.7) B. Responsibilities of the Director of Finance The Director of Finance is responsible for keeping the City Council fully advised as to the financial condition of the City. C:WCUMENTrD SETTINGSV.LUSAUSMI� WCUMF MNVMTMENT FOLICYVNVMMENTMUI-CITYOFA SA -20111 -FINAL C. Responsibilities of the City Council The City Council shall consider and adopt a written Investment Policy. As provided in that policy, the Council shall receive, review and accept monthly investment reports. D. Responsibilities of the Investment Committee There shall be an Investment Committee consisting of the Director of Finance, the City Manager, and City Treasurer and their designees. The Committee shall meet quarterly to discuss cash flow requirements, the monthly investment reports, investment strategies, investment and banking procedures and significant investment related work projects being undertaken in each department that will affect the cash flow management of the City Treasurer. This will require timely reports from the department heads to the City Treasurer concerning significant future cash flow requirements. The Committee's meetings will be summarized in minutes that are distributed to the City Council. The Investment Committee, with the approval of the City Council, may retain an external investment manager on behalf of the City. The investment manager will be required to act in accordance with this investment policy. E. Ethics and Conflicts of Interest All City officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution of the investment program, or that could impair their ability to make impartial investment decisions. Those employees and investment officials shall disclose to the appropriate City executive (City Manager, City Attorney, or the Director of Finance) any material financial interest in financial institutions that conduct business within the City, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the City's investments. 6. REPORTING The City Treasurer shall prepare a monthly investment report, including a succinct management summary that provides a clear picture of the status of the current investment portfolio and transactions made over the past month. This management summary shall be prepared in a manner that will allow the Director of Finance and the City Council to ascertain whether investment activities during the reporting period have deviated from the City's Investment Policy. The monthly report shall include all of the information required by California Government Section 53646, including the following: CADOCUAD]JT NDSEfTMGSWZUSpUSERIV.IY DOCU TSIIWV ME TMUCYVNVEST TMU1 CiWOFAZ M-3010-FINAI_DOC • A list of individual securities held at the end of the reporting month; and • Unrealized gain or loss resulting from amortization or accretion of principal versus market value changes by listing the cost and market value of securities owned by the City; and • A description of the current investment strategy and the assumptions upon which it is based; and • Dollar weighted yield to maturity of the City's investments; and • Maturity schedule by type of each of the City's investments; and • Statement as to compliance of the City's Investment Policy with Government Code Section 53601 et seq.; and • Statement as to ability to meet expenditure requirements for next six months; and • Market value, book value, par value and cost basis of all investments; and. • Investments "under the management of contracted parties, including lending programs" (i.e., investments held by deferred compensation administrators). 7. PERFORMANCE STANDARDS The investment portfolio will be managed in accordance with the standards established within this Policy and should obtain a market rate of return throughout budgetary and economic cycles. The Investment Committee will establish and periodically review the City's portfolio benchmarks and performance. A benchmark will be selected that compares with the portfolio composition, structure and investment strategy at that time. 8. REVIEW OF INVESTMENT POLICY A. Policy Review This Policy shall be reviewed annually by the City Council in accordance with State law to ensure its consistency with respect to the overall objectives of safety, liquidity and yield. Proposed amendments to the Policy shall be prepared by the Treasurer and reviewed by the Investment Committee and City Attorney and then be forwarded to the City Council for consideration. The Investment Committee shall annually review the Policy and any proposed amendments and forward to the City Council for its consideration and adoption at a public meeting. C:�f9ND SETTINGS SAUSMIU DOCUINENMNVE MENT POLICYVNVFSTMENTP UI CIWOF-A-2010-FINAL B. Internal Control and Review The external auditors shall annually review the investments and general activities associated with the investment program to ensure compliance with this Policy. This review will provi de internal control by assuring compliance with policies and procedures for the activities that are selected for testing. 9. ADOPTION OF POLICY This Policy was duly adopted by the City Council of the City of Azusa on October 18, 2010. CIDOCUMfrD SMMGSNZ SAUSFA-D MF TSINVMTM TPpUCYVNVFSTM TMUL �I-FA USA-2010-nNAL EXHIBIT A EXHIBIT A DESCRIPTION OF INVESTMENTS F The City of Azusa's ("City") investments may be placed in those securities as outlined below; the allocation between the various investment instruments may change in order to give the City the best combination of safety, liquidity and higher yield. Surplus funds of local agencies may only be invested in certain eligible securities. The City limits its investments to allowable securities under the State of California statutes (Government Code Section 53601, et. seq., Section 53356, et. seq., and Section 53595, et. seq.) and is further limited to those listed below. Certificates of Deposit Certificates of deposit allow the City to select the exact amount and day of maturity as well as the exact depository. Certificates of deposit are issued in any amount for periods of time as short as fourteen (14) days and as long as several years. At any given time, the City may have certificates of deposit in numerous financial institutions in the future. The City Treasurer may at his/her discretion waive security for that portion of a deposit, which is insured pursuant to federal law. Currently, the first One Hundred Thousand Dollars ($100,000) of a deposit is federally insured by FSLIC or FDIC. It may be to the City's advantage to waive this collateral requirement for the first One Hundred Thousand Dollars ($100,000) because the Citymay receive a higher interest rate. If funds are to be collateralized, the collateral will be one hundred and ten percent (110%) of the deposit in government securities or mortgages of one hundred and fifty percent (150%). At purchase, institutions must not show an operating loss. Banks must have an equity -to -asset ratio of at least six percent (6%). Savings and loan associations and savings banks must have an equity -to -asset ratio of a least three percent (3%). Local Agency Investment Fund The Local Agency Investment Fund ("LAIF") of the State of California offers high liquidity because deposits can be wired to the City checking account within twenty-four (24) hours. Interest is computed on a daily basis. This is a special fund in the State Treasury, which local agencies may use to deposit funds for investment. There is no minimum investment period and the minimum transaction is Five Thousand Dollars ($5,000) in multiples of One Thousand Dollars ($1,000) above that, with a maximum of Fifty Million Dollars ($50,000,000) for any city. It offers high liquidity because deposits can be converted to cash within twenty-four (24) hours and no interest is lost. All interest is distributed to those agencies participating on a proportionate share determined by the amounts deposited and the length of time they are deposited. Interest is paid quarterly by adding it to the principal. C:�CUMENjSOtJO SETTINGS SAUSERIU DO MENMNVMMENT POU NV TMENTP LICY LITYOFA S-2010 ,D C The State charges participants a small fee to cover reasonable costs associated with operating the investment pool, not to exceed one quarter of one percent (.25%) of the earnings. The interest rates received are fairly stable because of the pooling of the State's surplus cash with the surplus cash deposited by local governments. This creates a well -diversified multi -billion dollar money pool. U.S. Treasury Securities U.S. Treasury securities are highly liquid and considered the safest of all investments because they are backed by the full faith and credit of the United States Government. U.S. Treasury Bills are direct obligations of the United States Government. They are issued weekly with maturity dates up to six (6) months. They are issued and traded on a discount basis and the interest is figured on a three hundred and sixty (360) day basis using the actual number of days to maturity. They are issued in the minimum amount of Ten Thousand Dollars ($10,000) and in multiples of Five Thousand ($5,000) thereafter. U.S. Treasure Notes are direct obligations of the United States Government. They are issued throughout the year with maturities from two up to thirty (30) years. Notes are coupon securities paying a fixed amount every six (6) months. The City will not invest in notes having maturities longer then five (5) years. Federal ALency Securities Federal Agency securities are highly liquid and considered to be virtually without credit risk. Federal Agency issues are guaranteed indirectly by the United States Government. All Agency obligations that are fixed-rate and meet the maturity restrictions of the State Code and this Policy qualify as legal investments and are acceptable as security for public deposits. They usually provide higher yields than regular Treasury issues with all of the same advantages. Examples are: FNMA's (Federal National Mortgage Association) are used to assist the home mortgage market by purchasing mortgages insured by the Federal Housing Administration and the Farmers Home Administration, as well as those guaranteed by the Veterans Administration. FHLB's (Federal Home Loan Bank Notes and Bonds) are issued by the Federal Home Loan Bank System to help finance the housing industry. The notes and bonds provide liquidity and home mortgage credit to savings and loan associations, mutual savings banks, cooperative banks, insurance companies and mortgage -lending institutions. Other Federal Agency issues are Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Farm Credit Bank ("FFCB"), Small Business Administration Notes ("SBA's"), Government National Mortgage Association ("GNMA's"), Tennessee Valley Authority ("TVA's") and the Student Loan Marketing Association ("SLMA's") C.WCUMENf HYD SETTINGS SAUSERIN DOCUM1Q+IT.'TSNV TMENT RUC NVESTMENTWUCY CITYO USA3010- NA WC Negotiable Certificate of Deposit Negotiable certificates of deposit are high-grade instruments, paying a higher interest rate than regular certificates of deposit. They are liquid because they can be traded in the secondary market. F Negotiable Certificates of Deposit ("WD's") are unsecured obligations of the issuing financial institution, bank or savings and loan, bought at face value with a promise to pay face value plus accrued interest at maturity. The primary market issuance is in multiples of One Million Dollars ($1,000,000). The secondary market usually trades in denominations of Five Hundred Thousand Dollars ($500,000), although smaller denominations are occasionally available. Local agencies may not invest more than thirty percent (30%) of their surplus money in negotiable certificates of deposit. NCD's will only be placed with the largest and most financially sound institutions. Commercial Paper Commercial paper allows the investment of large amounts of money on a short-term basis at rates higher than passbook savings accounts. Commercial paper is a short-term unsecured promissory note issued by a corporation to raise working capital. These negotiable instruments are purchased at a discount to par value. As an example, corporations such as American Express, International Business Machines (IBM) and General Electric issue commercial paper. Local agencies are permitted by state law to invest in commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided by Moody's Investor's Service, Inc. or Standard and Poor's Corporation (Allpl or al+/pl). Purchases of eligible commercial paper may not exceed one hundred and eighty (180) days maturity nor exceed thirty percent (30%) of the City's surplus funds. Medium -Term Corporate Notes A city may invest in medium term corporate notes with a maximum maturity of five years issued by a corporation organized and operating within the United States, a depository institution licensed by the United States Government or any state government and operating within the United States. California Government Code Section 53601 et seq. permits cities to invest in corporations with a rating category of "A" or better, but the City will limit its investments in corporate medium term notes to those issued by corporations that have been rated "AA" or its equivalent by two (2) nationally recognized ratings agencies. Passbook Savings or Money Market Account Passbook savings account allows us to transfer money from checking to savings and earn interest on smaller amounts of money, which are not available for a longer-term investment. C:WCUM14D SETTINGSIAZL'S-ERIIMY DOCUMENMNV TMENT MLIMNVESTMENTWUCY �ITYOFA USA -200 -FINAL The passbook savings account is similar to a CD except not for a fixed term. The interest rate is much lower than CD's but the savings account provides daily liquidity and funds can be deposited and withdrawn according to our daily needs. Mutual Funds Mutual Funds allow the City to maintain liquidity and receive mpney market rates. Mutual Funds are referred to in the Government Code, Section 53601(1), as "shares ofbeneficial interests issued by diversified management companies". The Mutual Fund must be restricted by its prospectus to be a "Money Market" mutual fund and be limited to the same approved investments as LAIF. These investments include U.S. Treasury and Agency issues, Bankers Acceptances, Commercial Paper, Repurchase Agreements, Certificates of Deposit, and Negotiable Certificates of Deposit. The quality rating and percentage restrictions in each investment category applicable to LAIF also apply to any Mutual Fund. One of the stated objectives of the Mutual Fund must be to attempt to maintain a One Dollar ($1.00) Net Asset Value (NAV). A further restriction is that the purchase price of shares of any mutual fund shall not include any sales commission. Investments in mutual funds shall not exceed fifteen percent (15%) of the City's surplus money. Repurchase Agreements Repurchase Agreements are purchases of securities by the City under an agreement with a term of one (1) year or less whereby the seller will "repurchase" the same securities on or before a specified date or on demand of either party and for a specified amount. The underlying securities must be delivered to the City's custodial account by book entry, physical delivery or a third -party custodial agreement. C:�CUMEN$S9ND SETTMGS SAUSMIN DOCUML MNV TM TP LI NVESTMENTMLICV CIWOFA USA -2010-RNAL. CONSENT CALENDAR TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS FROM: ANN GRAF, DIRECTOR OF INFORMATION TECHNOLOGY VIA: F.M. DELACH, CITY MANAGER DATE: OCTOBER 18, 20 0 SUBJECT: PURCHASE ADDITIONAL INTERNET BANDWIDTH FROM CHARTER COMMUNICATIONS RECOMMENDATION 1. It is recommended that the City Council waive formal sealed bids in accordance with Azusa Municipal Code Section 2-523 section D, no competitive market. 2. It is recommended that the City Council approve the 2 year Charter Business Service Agreement. 3. Appropriate $11,500 from the Light and Water Consumer Services Fund. BACKGROUND Per the L&W Billing system contractor (S&S), the current internet bandwidth availability at Azusa is insufficient to allow them to perform upgrades and modifications to the enQuesta Utility Billing software remotely. This is directly impacting the Light and Water Utility Customer Service enQuesta upgrade project. There are many tasks that will need to be performed remotely over the internet using a connection to Azusa's server. S&S support of the current installation of enQuesta at Azusa has been very difficult because of slow connectivity. Many times the connection only lasts a few minutes before it is dropped. During the upgrade process, should a critical issue occur, either on the current enQuesta system or the new upgraded system, S&S will not be able to immediately analyze and resolve that issue which could significantly impact Azusa's business. A variety of options were considered. Among them S&S proposed having their staff travel to and from Azusa to upload and test the system upgrades at an estimated additional cost of $15,000. Other options researched by staff included: 1. Verizon T3 (6MB) service at a cost of $2K,634.00 monthly. 2. Charter Fiber (25MB) service at a cost of $1,440.00 monthly. After analysis staff believes the most cost effective would be to go with Charter. Charter provides the fiber backbone for the City and the City already has existing proprietary fiber installed and Charter can connect us to their system and provide a 25MB fiber link that is more than four times faster than Verizon's T3 service. It is recommended that we install this new service and use it for internet requirements from various systems including the enQuesta system, temporarily keeping our existing Verizon internet service for web services such as e-mail and Website services as we have a 1 year contract with Verizon that will end in June. If we chose to we can merge all our services onto the Charter install once the Verizon contract ends, therefore no long term ongoing increase in costs, other than the remainder of this fiscal year which is $11,600. If budgets allow and as best practices dictate we can keep the Verizon service, as back up and to keep our e-mail and web services separate. FISCAL IMPACT An appropriation of $11,500 from the Light and Water Consumer Services Fund is necessary to provide for the proposed Charter internet services for the remainder of the fiscal year (8 months). The monthly cost for the Charter service is $1,440.00 with a 2 year agreement. 4 � Charter Business `201009221437455 201009221437455 BUSINESS INTERNET ACCESS, VIDEO AND MUSIC SERVICE AGREEMENT This Service Agreement ("Agreement') is executed and effective upon the latest date of the signatures set forth in the signature block below ("Effective Date") by and between Charter Communications Entertainment Ii, LLC , ("Charter Business" or "Charter") with local offices at 4781 Irwindale Avenue, Irwindale, Ca 91706, City of Azusa, ("Customer") with offices located at 729 N AZUSA AVE, AZUSA, CA 91702-2528. Both parties desire to enter into this Agreement in order to set forth the general terms under which Charter is to provide Customer with Charters services ("Service" or "Services") to Customer site(s), the scope and description to be specified per site below and/or in a Service order(s) executed by both parties (each instance of site identification and order a "Service Order" or collectively the "Service Orders"), which shall be incorporated in this Agreement upon execution. This Agreement and each Service Order will be effective only after both parties have signed each document SERVICE ORDER Under the Business Internet Service Agreement CUSTOMER INFORMATION: Account Name: City of Azusa Invoicing Address: , Invoicing Special Instructions: 1. SITE-SPECIFIC INFORMATION: Order Type: New Service Proposed Installation Date: 11/12/2010 Service Location (Address): 729 N AZUSA AVE, AZUSA, CA 91702-2528 Service Location Name (for purposes of identification): Service Location Special Instructions: Charter Communications will complete installation and turn up of the 25 Meg OBI fiber internet circuit ordered here on or before Nov. 12t", 2010. 0 Non -Hospitality or Non -Video CBCR v2 :00600000008sad6 Customer Contact Information. To facilitate communication the following information is provided as a convenience and may be updated at any time without affecting the enforceability of the terms and conditions herein: MONTHLY SERVICE FEES: Data Services: Charter Business Bundle: No Bundle Base Service MEF Service Types (if applicable): Speed: CPE: Fiber 25 Mbps (Down/Up) $1,444.00 Static IP Package: 13 -Pack Static IP: Routed Subnet (128) $0.00 Static IP Addresses: (For Charter intemal purposes only - Campaign Source (if applicable): ) ` If Customer has selected the Charter Business Special Offers, the Section 2(k) of the Standard Terns of Service (for Charter Business Bundle) shall apply. ONE-TIME CHARGES: One -Time Standard Installation Fee: $0.00 ONE-TIME CHARGES $0.00 2. TOTAL FEES. Total Monthly Service Fees of $1,444.00 are due upon receipt of the monthly invoice. 3. SERVICE PERIOD. The initial Service Period of this Service Order shall begin on the date installation is completed and shall continue for a period of 24 months. Upon expiration of the initial term, this Service Order shall automatically renew for successive one-month terms at Charter's then current Monthly Service Fees unless either party terminates this Service Order by giving thirty (30) days prior written notice to the other party before the expiration of the current term. 4. TROUBLE REPORTS. Charter shall monitor its fiber optic -based Internet Services twenty-four (24) hours a day, seven (7) days a week. Charter shall provide Customer with a toll free telephone number the Customer may call to report service problems. Charter shall provide a telephone response to such calls within one (1) hour, and, if necessary, initiate a physical response within four (4) hours of receiving Customer's call reporting the problem. 5. NO UNTRUE STATEMENTS. Customer further represents and warrants to Charter that neither this Service Order, nor any other information, including without limitation, any schedules or drawings furnished to Charter contains any untrue or incorrect statement of material fact or omits or fails to state a material fact. CBCR v2 :00600000008sad6 Billing Contact Site Contact Technical Contact Name Maggie Perkins Ann Graf/ Mike Guadagnino Mike Guadagino Phone (626) 812-5188 (626) 812-51511(626) 812- 5024 (626) 812-5151 Fax Cell Pager Email Address I mguadagnino@ci.azusa.ca.us mguadagnino@ci.azusa.ca.us MONTHLY SERVICE FEES: Data Services: Charter Business Bundle: No Bundle Base Service MEF Service Types (if applicable): Speed: CPE: Fiber 25 Mbps (Down/Up) $1,444.00 Static IP Package: 13 -Pack Static IP: Routed Subnet (128) $0.00 Static IP Addresses: (For Charter intemal purposes only - Campaign Source (if applicable): ) ` If Customer has selected the Charter Business Special Offers, the Section 2(k) of the Standard Terns of Service (for Charter Business Bundle) shall apply. ONE-TIME CHARGES: One -Time Standard Installation Fee: $0.00 ONE-TIME CHARGES $0.00 2. TOTAL FEES. Total Monthly Service Fees of $1,444.00 are due upon receipt of the monthly invoice. 3. SERVICE PERIOD. The initial Service Period of this Service Order shall begin on the date installation is completed and shall continue for a period of 24 months. Upon expiration of the initial term, this Service Order shall automatically renew for successive one-month terms at Charter's then current Monthly Service Fees unless either party terminates this Service Order by giving thirty (30) days prior written notice to the other party before the expiration of the current term. 4. TROUBLE REPORTS. Charter shall monitor its fiber optic -based Internet Services twenty-four (24) hours a day, seven (7) days a week. Charter shall provide Customer with a toll free telephone number the Customer may call to report service problems. Charter shall provide a telephone response to such calls within one (1) hour, and, if necessary, initiate a physical response within four (4) hours of receiving Customer's call reporting the problem. 5. NO UNTRUE STATEMENTS. Customer further represents and warrants to Charter that neither this Service Order, nor any other information, including without limitation, any schedules or drawings furnished to Charter contains any untrue or incorrect statement of material fact or omits or fails to state a material fact. CBCR v2 :00600000008sad6 6. CONFIDENTIALITY. Customer hereby agrees to keep confidential and not to disclose directly or indirectly to any third party, the terms of this Service Order or any other related Service Orders, except as may be required by law. If any unauthorized disclosure is made by Customer and/or its agent or representative, Charter shall be entitled to, among other damages arising from such unauthorized disclosure, injunctive relief and a penalty payment in the amount of the total One -Time Charges associated with this Service Order, and Charter shall have the option of terminating this Service Order, other related Service Orders and/or the Service Agreement. 7. FACSIMILE. A facsimile of a duly executed Agreement and Service Order signed by both authorized parties shall be considered evidence of a valid order and Charter may rely on such facsimile copy of the Agreement and Service Order as if it were the original. NOW THEREFORE, Charter and Customer agree to the terms and conditions included within this Service Agreement, including the Standard Terms of Service which follow, and hereby execute this Service Agreement by their duly authorized representatives. Charter Communications Entertainment II, LLC By: By: Charter Communications, Inc., its Manager Signature: Printed NE City of Azusa Signature:_ Printed Name: Title: Title: Date: Date: Charter Business Account Executive: Name: Keena Hayward Telephone: (626) 430-3325 Fax: 626/529-1548 CBCR v2 :00600000008sad6 CONSENT CALENDAR TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS FROM: VERA MENDOZA, CITY CLERK VIA: F.M. DELACH, CITY MANAGER DATE: OCTOBER 18, 2010 RE: APPOINTMENTS TO CITY BOARDS AND COMMISSIONS RECOMMENDATION It is recommended that the City Council adopt resolutions appointing members to the City Boards and Commissions. BACKGROUND The City of Azusa has seven City Board and Commissions who act as advisory to the City Council in the areas of Architectural Barriers, Cultural and Historic Preservation, Human Relations, Library issues, Park & Recreations issues, Personnel matters and Planning Commission. Each year the City Council conducts interviews for vacancies that exist in City Boards and Commissions. The attached resolutions appoint members to several Commissions commencing October 2010. Please note that one of the appointees to the Architectural Barriers Commission has declined to accept the position, thus one vacancy still exists. FISCAL IMPACT: Stipend of $25.00 per meeting, not to exceed $50.00. RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPOINTING STEVIE HEATH TO THE ARCHITECTURAL BARRIERS COMMISSION THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. STEVIE HEATH having been appointed to the Architectural Barriers Commission by the City Council, said appointment is hereby approved and STEVIE HEATH is appointed to the Architectural Barriers Commission for the term expiring September 30, 2014. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall transmit a certified copy thereof to STEVIE HEATH. ADOPTED AND APPROVED this 18th day of October, 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof held on the 18th day of October, 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA RE -APPOINTING JULE AREVALO TO THE CULTURAL AND PRESERVATION COMMISSION THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. JULE AREVALO having been re -appointed to the Cultural and Historical Preservation Commission by the City Council, said re -appointment is hereby approved and JULE AREVALO is re -appointed to the Cultural and Preservation Landmark Commission for the term expiring September 30, 2014. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall transmit a certified copy thereof to JULE AREVALO. ADOPTED AND APPROVED this 18th day of October, 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the city of Azusa at a regular meeting thereof, held on the 18`h day of October 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA RE -APPOINTING JEFFREY L. CORNEJO JR. TO THE CULTURAL AND HISTORICAL PRESERVATION COMMISSION THE CITY COUNCIL OF THrCITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. JEFFREY L. CORNEJO JR. having been re -appointed to the Cultural and Historical Preservation Commission by the City Council, said re -appointment is hereby approved and JEFFREY L. CORNEJO JR. is re -appointed to the Cultural and Historical Preservation Commission for the term expiring September 30, 2014. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall transmit a certified copy thereof to JEFFREY L. CORNEJO JR. ADOPTED AND APPROVED this 18`h day of October 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the city of Azusa at a regular meeting thereof, held on the 18th day of October 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA RE -APPOINTING EDITH RUSSEK TO THE CULTURAL AND HISTORICAL PRESERVATION COMMISSION THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. EDITH RUSSEK having been re -appointed to the Cultural and Historical Preservation Commission bythe City Council, said re -appointment is hereby approved and EDITH RUSSEK is re -appointed to the Cultural and Historical Preservation Commission for the term expiring September 30, 2014. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall transmit a certified copy thereof to EDITH RUSSEK ADOPTED AND APPROVED this 18`h day of October, 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the city of Azusa at a regular meeting thereof, held on the 18th day of October 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPOINTING LIL SASS TO THE HUMAN RELATIONS COMMISSION F THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. LIL SASS having been appointed to the Human Relations Commission by the City Council, said appointment is hereby approved and LIL SASS is appointed to the Human Relations Commission for the term expiring September 30, 2013. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall transmit a certified copy thereof to LIL SASS. ADOPTED AND APPROVED this 18`h day of October, 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof held on the 181' day of October, 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPOINTING JOANNE HINOJOSA TO THE HUMAN RELATIONS COMMISSION THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. JOANNE HINOJOSA having been appointed to the Human Relations Commission by the City Council, said appointment is hereby approved and JOANNE HINOJOSA is appointed to the Human Relations Commission for the term expiring September 30, 2013. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall transmit a certified copy thereof to JOANNE HINOJOSA. ADOPTED AND APPROVED this 18'' day of October, 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof held on the 181' day of October, 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA RE -APPOINTING MARIA A. PACINO TO THE LIBRARY COMMISSION F THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. MARIA A. PACINO having been re -appointed to the Library Commission by the City Council, said re -appointment is hereby approved and MARIA A. PACINO is appointed to the Library Commission for the term expiring September 30, 2013. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall transmit a certified copy thereof to MARIA A. PACINO. ADOPTED AND APPROVED this 18`h day of October, 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof, held on the 180, day of October 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPOINTING JAMES SINNEMA TO THE LIBRARY COMMISSION THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. JAMES SINNEMA having been appointed to the Library Commission by the City Council, said appointment is hereby approved and JAMES SINNEMA is appointed to the Library Commission for the term expiring September 30, 2013. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall transmit a certified copy thereof to JAMES SINNEMA. ADOPTED AND APPROVED this 18th day of October, 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof, held on the 18ffi day of October 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA RE -APPOINTING ROSSANA HELBERT TO THE PARKS AND RECREATION COMMISSION THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. ROSSANA HELBERT having been re -appointed to the Parks and Recreation Commission by the City Council, said re -appointment is hereby approved and ROSSANA HELBERT is re -appointed to the Parks and Recreation Commission for the term expiring September 30, 2013. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall transmit a certified copy thereof to ROSSANA HELBERT. ADOPTED AND APPROVED this 18th day of October, 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof held on the 18th day of October 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPOINTING FRED A. MADJAR TO THE PERSONNEL BOARD THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. FRED A. MADJAR having been selected to the Personnel Board by the City Council, said appointment is hereby approved and FRED A. MADJAR is appointed to the Personnel Board for the term expiring September 30, 2013. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall transmit a certified copy thereof to FRED A. MADJAR. ADOPTED AND APPROVED this 18th day of October, 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof, held on the 18th day of October, 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA RE -APPOINTING CHRISTOPHER DODSON TO THE PLANNING COMMISSION THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. CHRISTOPHER DODSON having been appointed to the Planning Commission by the City Council, said appointment is hereby approved and CHRISTOPHER DODSON is appointed to the Planning Commission for the term expiring September 30, 2014. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall transmit a certified copy thereof to CHRISTOPHER DODSON. ADOPTED AND APPROVED this 18'h day of October 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof held on the 181' day of October 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA RE -APPOINTING SHAWN MILLNER TO THE PLANNING COMMISSION THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. CHRISTOPHER DODSON having been appointed to the Planning Commission by the City Council, said appointment is hereby approved and SHAWN MILLNER is appointed to the Planning Commission for the term expiring September 30, 2014. SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall transmit a certified copy thereof to SHAWN MILLNER. ADOPTED AND APPROVED this 18t' day of October 2010. MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof held on the 18th day of October 2010, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: ' COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK JOINT CITY/AGENCY PUBLIC HEARING ITEM TO: THE HONORABLE MAYOR/CHAIRPERSON AND COUNCIL/AGENCY MEMBERS v G FROM: KURT CHRISTIANSEN DIRECTOR OF ECONOMIC & COMMUNITY DEVELOPMENT VIA: F.M. DELACH, CITY MANAGER/EXECUTIVE DIRECTOR* DATE: OCTOBER 18, 2010 SUBJECT: CONSIDERATION OF THE FIRST AMENDMENT TO THE STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT FOR THE CITRUS CROSSING PROJECT LOCATED AT THE SOUTHWEST CORNER OF ALOSTA AVENUE AND CITRUS AVENUE RECOMMENDATION It is recommended that the City Council and Agency Board take the following action: Receive testimony from staff and the applicant, conduct a joint public hearing and adopt a resolution and ordinance entitled: 1) A Resolution of the Governing Board of the Redevelopment Agency of the City of Azusa, California, Approving an Amendment to the Statutory Development Agreement and Owner Participation Agreement By and Between the Redevelopment Agency of the City of Azusa, the City of Azusa and JAR University Common, LLC, Governing Certain Real Property Located at the Southwest Corner of Alosta Avenue and Citrus Avenue, Azusa, California, Relating to the Citrus Crossing Shopping Center; and 2) An Ordinance of the City Council of the City of Azusa, California Adopting and Approving an Amendment to the Statutory Development Agreement and Owner Participation Agreement Between the City of Azusa, the Azusa Redevelopment Agency and JAR University Common, LLC, Governing Certain Real Property Located at the Southwest Corner of Alosta Avenue and Citrus Avenue, Azusa, California, Relating to the Citrus Crossing Shopping Center. EXECUTIVE SUMMARY The Redevelopment Agency of the City of Azusa has been working for several years with JAR - University Commons LLC and Citrus Crossing Properties Fee LLC ("Developer"), the successor -in - interest to JAR, to redevelop and recruit a national restaurant anchor to the Citrus Crossing Center. In December 2006, the City Council and Agency Board adopted a Statutory Development Agreement and Owner Participation Agreement between the Redevelopment Agency, the City of Azusa and JAR—University Commons, LLC ("Agreement"), attached hereto. Pursuant to the Agreement, the developer agreed to pay annual developer payments in the amount of $40,000 associated with local sales tax fees in advance of each Sales Tax Year with subsequent annual developer payments to be paid within 90 days after commencement of each Sales Tax Year. The proposed amendment to the Agreement defers the annual developer payments for a period of 3 years to provide the Developer the opportunity to recruit and further incentivize a high quality, national chain restaurant to the center's remaining undeveloped building pad. The amendment will allow the developer to pay the annual developer payments in advance of each sales tax year within each sales tax term except for the first, second and third sales tax year. The developer shall make the first annual developer payment in the amount of Forty Thousand Dollars ($40,000) to the City within ninety (90) days of commencement of the fourth Sales Tax Year. The amendment provides for a sale tax term for a period of 23 years commencing on the first day of the first sales tax year and ending on the last day of the twenty third (23rd) Sales Tax Year. City staff is recommending that the City Council and Agency Board approve the attached Ordinance and Resolution recommending approval of the First Amendment to the Citrus Crossing Statutory Development Agreement and Owner Participation Agreement for the Citrus Crossing Project. CK60191WED The Citrus Crossing Center is located at the southwest corner of Alosta and Citrus Avenues. The center was originally built in the 1950's and was most commonly referred to as the Foothill Shopping Center. During that time, the center was considered a blighted and underutilized site with many second tier tenants and high vacancy rates. In order to create an attractive, high quality, revenue- producing center, the Foothill Shopping Center was included in the Redevelopment Merged Project Area in 2003. In December 2006, the City of Azusa and the Redevelopment Agency of the City of Azusa entered into the Agreement with JAR—University Commons, LLC to redevelop the Foothill Shopping Center, renamed the Citrus Crossing Center. JAR transferred its interests in the Agreement with respect to the shopping center property and project to the Developer, Citrus Crossing Properties Fee LLC. JAR transferred its interests in the Agreement with respect to the vacant property and residential project to CityView Citrus Crossing 102, LP. Since its re -opening and the Developer's most recent efforts to complete the renovation of the Citrus Crossing Center, the development became stalled due to the downturn in the economy. This development includes a 7,500 square foot undeveloped building pad fronting onto Citrus Avenue that is designated for restaurant use. In an effort to incentivize quality restaurants to locate to the center, the Developer has and continues to market the restaurant pad at annual events (e.g., International Council of Shopping Centers) to provide full-service, sit-down dining. Based on the Developer's recent efforts to recruit a restaurant to the center, it is clear to staff that current economic conditions continue to make it difficult for high quality restaurants to consider smaller markets like those found in Azusa. However, staff recently became aware that there may be an opportunity to assist the Developer to recruit a full-service restaurant to the undeveloped building pad located at the center. In June 2010, the City Manager met with the Developer and tentatively discussed whether or not the City/Agency might consider an amendment to the Agreement to defer the required annual developer payments in the amount of approximately $40,000 for a period of three years to provide the Developer the opportunity to recruit and further incentivize a high quality, national chain restaurant to the center's remaining undeveloped building pad. h The Developer is requesting that the City and Agency Board approve the proposed amendment to the Agreement to provide for the deferment of the required annual developer payments. The Agreement is a statutory development agreement, which may be amended in accordance with Government Code Section 65864 et seq. and Azusa Municipal Code Chapter 88.53. A development agreement may be amended following duly noticed public hearings conducted by the planning agency and legislative body, and if approved, must be approved by ordinance. A development agreement, or amendment to a development agreement, requires a finding that the provisions of the agreement, or amendment, and development are consistent with the general plan, any applicable specific plan, and Azusa Municipal Code Chapter 88.53. On July 28, 2010, the Planning Commission reviewed the proposed project and found that the Statutory Development Agreement and Owner Participation Agreement was consistent with the General Plan and Azusa Municipal Code Chapter 88.53 and also unanimously approved the attached Resolution recommending approval of an Ordinance approving the First Amendment to the Statutory Development Agreement and Owner Participation Agreement Between the City of Azusa, the Azusa Redevelopment Agency and JAR University Common, LLC, Governing Certain Real Property Located at the Southwest Corner of Alosta Avenue and Citrus Avenue, Azusa, California, Relating to the Citrus Crossing Shopping Center. The attached Resolution of the Agency Governing Board approves the amendment. The attached Ordinance approves and adopts the amendment and provides that the amendment promotes the public health, safety and welfare of the community because the amendment (i) will eliminate uncertainty in planning and promote orderly growth and quality development on the property; (ii) significant benefits will be created for City residents and the public generally from increased employment and the public gathering opportunities created by the project; (iii) the amendment will provide for the generation of local sales tax revenues at the property. Additionally, the attached Ordinance provides that the amendment is consistent with the City's General Plan and Azusa Municipal Code Chapter 88.53 because the amendment will allow the Developer to complete the project in a manner which the City Council previously found to be consistent with the City's General Plan. The Agreement, as amended by the amendment, is consistent with the objectives, policies, general land uses and programs specified in the General Plan and all applicable specific plans. CEQA Staff has determined that it can be seen with certainty that adoption of the Resolution and Ordinance approving and adopting the amendment will not have a significant adverse effect on the environment. Thus, the adoption of the Resolution and Ordinance are exempt from the requirements of the California Environmental Quality Act ("CEQA") pursuant to Sections 15061(b)(3) of the CEQA Guidelines. FISCAL IMPACT The amendment does not waive the required annual developer payments; rather, the amendment postpones the annual payments for a period of three years and extends the sales tax term by an additional three years (21St, 22nd, and 23`d year) in order to receive the payment. The fiscal impact for this action includes the cost of staff time and minimal legal fees to negotiate and prepare the required amendment and has been budgeted in the FY 2009/10 budget. ATTACHMENTS • Original Agreement • Resolution • Ordinance • Draft Amendment RESOLUTION NO. A RESOLUTION OF THE GOVERNING BOARD OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA, CALIFORNIA, APPROVING AN AMENDMENT TO THE STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA, THE CITY OF AZUSA AND JAR — UNIVERSITY COMMONS, LLC, GOVERNING CERTAIN REAL PROPERTY LOCATED AT THE SOUTHWEST CORNER OF ALOSTA AVENUE AND CITRUS AVENUE, AZUSA, CALIFORNIA, RELATING TO THE CITRUS CROSSING SHOPPING CENTER WHEREAS, pursuant to the California Community Redevelopment Law (Health and Safety Code Sections 33000, et seq.) ("CRL"), the City Council ("City Council") of the City of Azusa ("City") has approved and adopted a redevelopment plan ("Redevelopment Plan") for the Merged Central Business District Redevelopment Project Area ("Project Area"); and WHEREAS, the Governing Board ("Board") of the Redevelopment Agency of the City of Azusa ("Agency") has adopted an implementation plan for the Redevelopment Plan ("Implementation Plan") and is engaged in activities necessary to execute and implement the Redevelopment Plan pursuant to the CRL; and WHEREAS, the City and Agency entered into that certain Statutory Development Agreement and Owner Participation Agreement, dated December 4, 2006 for reference purposes and recorded as Document No. 20070410405 on February 26, 2007 in the Official Records of Los Angeles County, ("Agreement") with JAR- University Commons LLC, a California limited liability company ("JAR") to construct a mixed-use commercial and residential development ("Project") on that certain real property located at Southwest Corner of Alosta Avenue and Citrus Avenue ("Property"); and WHEREAS, Citrus Crossing Properties Fee LLC, a Delaware limited liability company ("Developer") acquired fee title to the Property from JAR on July 26, 2007 by recordation of that certain Grant Deed recorded as Document No. 20071767518 in the Official Records of Los Angeles County and became successor -in -interest to JAR; and WHEREAS, under the Agreement, Developer agreed to pay an Annual Developer Payment associated with Local Sales Tax Revenues in advance of each Sales Tax Year with subsequent annual developer payments to be paid within ninety (90) days after commencement of each Sales Tax Year; and WHEREAS, pursuant to the CRL and the Redevelopment Plan, the Agency and the Developer desire to amend the Agreement to defer the required Annual Developer Payment for a period of three (3) years, by extending the Sales Tax Term of the Agreement, to provide the Developer an opportunity to recruit, and further incentivize, a high quality, national chain restaurant to the Property's remaining undeveloped building pad; and WHEREAS, the development project described in the Agreement, as amended by the Amendment, will provide for the redevelopment of the Property and will be of benefit to the Project Area, all in conformance with the Redevelopment Plan and the Implementation Plan; and WHEREAS, all other legal prerequisites to the adoption of this Resolution have occurred. NOW, THEREFORE, THE GOVERNING BOARD OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA, CALIFORNIA, DOES RESOLVE AS FOLLOWS: Section 1. The recitals set forth above are true and correct and incorporated herein. The Board approves the Amendment attached hereto as Exhibit A and incorporated herein by reference. Section 2. The Board hereby finds and determines, that it can be seen with certainty that adoption of this Resolution and Amendment will not have a significant adverse effect on the environment. Thus, the adoption of this Resolution is exempt from the requirements of the California Environmental Quality Act ("CEQA") pursuant to Sections 15061(b)(3) of the CEQA Guidelines. Staff is directed to file a Notice of Exemption with the Los Angeles County Recorder's Office within five (5) working days of adoption of this Resolution. Section 3. The location and custodianship of the documents and any other material that constitutes the record of proceedings regarding the adoption of this Resolution by the Board is as follows: Secretary to the Board, Redevelopment Agency of the City of Azusa, 213 E. Foothill Blvd., Azusa, California, phone: (626) 812-5299. Section 4. This Resolution shall take effect immediately upon its adoption. Section 5. The Chairperson shall sign this Resolution and the Agency Secretary shall attest and certify to the passage and adoption of this Resolution. ADOPTED, SIGNED, AND APPROVED this the following vote: AYES: NAYS: ABSENT: ABSTAIN: ATTEST: Chairperson 2 day of , 2010, by Secretary APPROVED AS TO FORM: Agency Counsel EXHIBIT "A" AMENDMENT ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA ADOPTING AND APPROVING AN AMENDMENT TO THE STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT BETWEEN THE CITY OF AZUSA, THE AZUSA REDEVELOPMENT AGENCY AND JAR UNIVERSITY COMMONS, LLC, GOVERNING CERTAIN REAL PROPERTY LOCATED AT THE SOUTHWEST CORNER OF ALOSTA AVENUE AND CITRUS AVENUE IN AZUSA CALIFORNIA RELATING TO THE CITRUS CROSSING SHOPPING CENTER WHEREAS, the City of Azusa ("City") and City Redevelopment Agency ("Agency") entered into that certain Statutory Development Agreement and Owner Participation Agreement, dated December 4, 2006 for reference purposes and recorded as Document No. 20070410405 on February 26, 2007 in the Official Records of Los Angeles County, ("Agreement") with JAR - University Commons LLC, a California limited liability company ("JAR") to construct a mixed- use commercial and residential development ("Project") on that certain real property located at Southwest Corner of Alosta Avenue and Citrus Avenue ("Property"); and WHEREAS, Citrus Crossing Properties Fee LLC, a Delaware limited liability company ("Developer") acquired fee title to the Property from JAR on July 26, 2007 by recordation of that certain Grant Deed recorded as Document No. 20071767518 on the Official Records of Los Angeles County and became successor -in -interest to JAR; and WHEREAS, under the Agreement, Developer agreed to pay an Annual Developer Payment associated with Local Sales Tax Revenues in advance of each Sales Tax Year with subsequent annual developer payments to be paid within ninety (90) days after commencement of each Sales Tax Year; and WHEREAS, the parties desire to amend the Agreement to defer the required Annual Developer Payment for a period of three (3) years, by extending the Sales Tax Term of the Agreement, to provide the Developer an opportunity to recruit, and further incentivize, a high quality, national chain restaurant to the Property's remaining undeveloped building pad; and WHEREAS, the parties now desire to amend the Agreement, as more particularly set forth herein, ("Amendment") in accordance with Government Code Sections 65868 and 65867.5 and Azusa Municipal Code Chapter 88.53, which provide that a development agreement may be amended and must be approved by an ordinance. The Amendment is attached hereto and incorporated herein as Exhibit A; and WHEREAS, the development of the Property in accordance with the Agreement and this Amendment will provide substantial benefits to the City and will further important policies and goals of the City by: (i) eliminating uncertainty in planning; (ii) providing for the orderly development of the Property; and (iii) generating local sales tax revenues for the City; and 1 WHEREAS, the Amendment is consistent with the objectives, policies, general land uses and programs specified in the General Plan and Azusa Municipal Code Chapter 88.53; and WHEREAS, on July 14, 2010, the City Planning Commission of the City of Azusa conducted a duly noticed public hearing, recommended approval of the Amendment to the City Council and found the Amendment consistent with Azusa Municipal Code Chapter 88.53 and the City General Plan; and WHEREAS, on September 7, 2010, the City Council of the City of Azusa conducted a duly noticed public hearing concerning the Amendment, at which time all persons wishing to testify in connection with the Amendment were heard and the Amendment was comprehensively reviewed; and WHEREAS, all other legal prerequisites to the adoption of this Ordinance have occurred. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, DOES ORDAIN AS FOLLOWS: Section 1. The recitals are true and correct and incorporated herein. Based on the findings contained in this Ordinance, the City Council hereby adopts and approves the Amendment attached hereto and incorporated herein. Section 2. The City Council hereby finds and determines, that it can be seen with certainty that adoption of this Ordinance and Amendment will not have a significant adverse effect on the environment. Thus, the adoption of this Ordinance is exempt from the requirements of the California Environmental Quality Act ("CEQA") pursuant to Sections 15061(b)(3) of the CEQA Guidelines. Staff is directed to file a Notice of Exemption with the Los Angeles County Recorder's Office within five (5) working days of adoption of this Ordinance. Section 3. The location and custodianship of the documents and any other material that constitutes the record of proceedings regarding the adoption of this Ordinance by the City Council is as follows: City Clerk, City of Azusa, 213 E. Foothill Blvd., Azusa, California, phone: (626) 812-5238. Section 4. This Ordinance shall take effect 30 days after its final passage. Section 5. The City Clerk shall attest and certify to the passage and adoption of this Ordinance and cause the publication or posting of this Ordinance in accordance with California Government Code Section 36933. Section 6. The City Clerk shall file a certified copy of the Agreement with the Recorder of the County of Los Angeles, State of California, for recording in the official records of said county, no later than ten (10) days following the effective date of this Ordinance. 2 ADOPTED, SIGNED, AND APPROVED this day of , 2010, by the following vote: AYES: NAYS: ABSENT: ABSTAIN: Joseph R. Rocha, Mayor ATTEST: Vera Mendoza, City Clerk APPROVED AS TO FORM: BEST BEST & KRIEGER LLP City Attorney EXHIBIT "A" AMENDMENT Recorded at request of: City of Azusa When recorded return to: City of Azusa 213 East Foothill Boulevard Azusa, CA91702-1395 Attention: City Clerk Space Above for Use by Recorder Only Exempt from Recording Fees Per Gov't Code §27383 FIRST AMENDMENT TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT By and between THE CITY OF AZUSA, A California municipal corporation R THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA, A public body, corporate and politic And CITRUS CROSSING PROPERTIES FEE LLC, A Delaware limited liability company, successor -in -interest to JAR — UNIVERSITY COMMONS, LLC A California limited liability company This First Amendment to Statutory Development Agreement and Owner Participation Agreement ("Amendment") is entered into as of 2010, with respect to that certain Statutory Development Agreement and Owner Participation Agreement dated December 4, 2006 for reference purposes and recorded as Document No. 20070410405 on February 26, 2007 in the Official Records of Los Angeles County ("Agreement"), between the City of Azusa, a California municipal corporation ("City"), the Redevelopment Agency of the City of Azusa, a public body, corporate and politic ("Agency"), and Citrus Crossing Properties Fee LLC, a Delaware limited liability company ("Developer"), successor -in -interest to JAR- University Commons LLC, a California limited liability company ("JAR"). The Agreement concerns the real property described in Exhibit "A" attached hereto ("Shopping Center Property"). City, Agency and Developer may be referred to herein individually as "Party" and collectively as "Parties." RECITALS A. The Parties entered into the Agreement to: (i) establish specific development standards to govern the development of the Project on the Property by the Developer in accordance with California Government Code Section 65864 et seq.; (ii) ensure that the Street Improvements necessary for the development of the Shopping Center Project are completed by the Developer; (iii) provide for the Agency's reimbursement to the Developer of the costs and expenses actually incurred and paid by Developer in connection with the design and construction of the Street Improvements and the fair market value of the property interests underlying the Street Improvements; and (iv) provide for the generation of Local Sales Tax Revenues from the Shopping Center Property. B. CityView Citrus Crossing 102, LP, a Delaware limited partnership ("CityView") acquired fee title to all of the Vacant Property on August 14, 2007 by recordation of that certain Grant Deed recorded as Document No. 20071901831 in the Official Records of Los Angeles County, which transfer constituted a Permitted Transfer pursuant to the Agreement. C. Pursuant to the Agreement, Developer agreed to pay the Annual Developer Payment associated with Local Sales Tax Revenues in advance of each Sales Tax Year with subsequent annual developer payments to be paid within ninety (90) days after commencement of each Sales Tax Year. D. The Parties have been working together to recruit a national restaurant anchor to the Property. The Parties desire to amend the Agreement to defer the required Annual Developer Payment for a period of three (3) years, by extending the Sales Tax Term, to provide the Developer an opportunity to recruit, and further incentivize, a high quality, national chain restaurant to the Property's remaining undeveloped building pad. E. The Parties now desire to amend the Agreement, as more particularly set forth herein, in accordance with Government Code Section 65868. F. The City's Planning Commission held a duly noticed public hearing on to consider this Amendment. G. The City Council held a duly noticed public hearing on to consider this Amendment at which time the City Council found that the provisions of this Amendment are consistent with the general plan and any applicable specific plan. H. The development of the Project on the Property in accordance with the Agreement and this Amendment will provide substantial benefits to the City and Agency and will further important policies and goals of the City and Agency by: (i) eliminating uncertainty in planning, (ii) providing for the orderly development of the Property, (iii) providing for the development of the Street Improvements needed for the Shopping Center Project in conformance with the Redevelopment Plan and the Implementation Plan; and (iv) generating Local Sales Tax Revenues for the City. THEREFORE, pursuant to the authority contained in the Agreement, in consideration of the mutual promises and covenants contained in this Amendment, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, City, Agency and Developer agree as follows: 1. Assignment and Assumption. JAR- University Commons LLC, a California limited liability company (for purposes of this paragraph, "Assignor") does hereby acknowledge and agrees and reaffirms that effective July 25, 2007 ("Assignment and Assumption Date") it did sell, transfer, assign, convey and deliver to Citrus Crossing Properties Fee LLC, a Delaware limited liability company (for purposes of this paragraph, "Assignee") all of Assignor's rights, title and interests, to, in and under the Agreement with respect to the Shopping Center Property. Assignee does hereby acknowledge and agrees and reaffirms that, effective as of the Assignment and Assumption Date, it did assume all of Assignor's rights, title and interests to, in and under the Agreement with respect to the Shopping Center Property as well as all responsibilities, liabilities and obligations under the Agreement with respect to the Shopping Center Property. From and following the Assignment and Assumption Date, the term "Developer" as used in the Agreement with respect to the Shopping Center Property, shall mean Citrus Crossing Properties Fee LLC, a Delaware limited liability company. JAR- University Commons LLC, a California limited liability company, is, and from and after the Assignment and Assumption Date, released from all obligations under the Agreement with respect to the Shopping Center Property (the "Developer Release"). Assignor has, since the Assignment and Assumption Date and shall continue to cooperate with Assignee as reasonably necessary for Assignee to perform its obligations under the Agreement. By its execution of this Amendment, the City and Agency hereby agree that this paragraph satisfies the requirement for an express assumption of the duties and obligations of the Developer, under the Agreement in order for Developer to obtain the Developer Release. By its execution of this Amendment, the City and Agency hereby agree that this constitutes a Permitted Transfer and express assumption of the duties and obligations of the Developer with respect to the Shopping Center Property, under the Agreement. 2. Section 1. 1.3 of the Agreement shall be and is hereby amended to read as follows: ""Annual Developer Payment" shall mean the sum of Forty Thousand Dollars ($40,000) to be paid in advance of each Sales Tax Year, except as otherwise specifically set forth herein and subject to reduction by credit on a Sales Tax Year -to -Sales Tax Year basis as provided in Section 5.1." 3. Section 1.1.39 of the Agreement shall be deleted in its entirety and of no further force or effect, it being understood and acknowledged that Section 1.1.34 shall be the definition of "Sales Tax Year" for all purposes. R 4. Section 1.1.41 of the Agreement shall be and is hereby amended to read as follows: ""Sales Tax Term" shall mean the twenty three (23) Sales Tax Year period commencing on the first day of the First Sales Tax Year and ending on the last day of the twenty third (23rd) Sales Tax Year thereafter." 5. Section 5.1 of the Agreement shall be and is hereby amended to read as follows: "Annual Developer Payment. On behalf of itself, its successors and assigns to all or any part of the Shopping Center Property, the Developer covenants and agrees to pay the Annual Developer Payment in advance of each Sales Tax Year within the Sales Tax Term as provided in this Section 5.1, except for the first, second and third Sales Tax Year, and except as otherwise specifically set forth herein." 6. Section 5. 1.1 of the Agreement shall be and is hereby amended to read as follows: "First Annual Developer Payment. The Developer shall tender the first Annual Developer Payment in the amount of Forty Thousand Dollars ($40,000) to the City within ninety (90) says of commencement of the fourth Sales Tax Year. Subsequent Annual Developer Payments shall be paid as provided in Section 5.1.2." 7. Section 5.1.2 of the Agreement shall be and is hereby amended to read as follows: "Subsequent Sales Tax Years. The Annual Developer Payments for subsequent Sales Tax Years shall be determined and paid as provided in this Section 5.1.2. The Annual Developer Payments shall not be paid to the City during the first, second and third Sales Tax Year. Within ninety (90) days after commencement of each Sales Tax Year, the City shall provide the Developer in writing the City's determination of the total Local Sales Tax Revenues for the immediately preceding Sales Tax Year on a tenant -by -tenant basis, together with such supporting documentation as the City may legally be permitted to disclose. If the total Local Sales Tax Revenues for such immediately preceding Sales Tax Year commencing with the third Sales Tax Year exceeded the Minimum Annual Sales Tax Revenues applicable to such Sales Tax Year, the City shall reduce the Annual Developer Payment to be paid for the then -current Sales Tax Year by the amount by which the Local Sales Tax Revenue for the immediately prior Sales Tax Year exceeded the Minimum Annual Sales Tax Revenues applicable to such prior Sales Tax Year. The City shall then make written demand upon the Developer for the amount of the Annual Developer Payment for the then -current Sales Tax Year as it may be reduced by operation of the foregoing sentence. The Developer shall tender the amount so demanded within thirty (30) days. Except as otherwise specifically set forth herein, in no event shall the City be obligated to provide the Developer any other data, information or documentation related to the Local Sales Tax Revenues and all other data, information and documentation related to the Local Sales Tax Revenues shall by kept by the City in strict confidence and in compliance with all local, state and federal laws, rules and regulations. In no event shall the City be obligated to pay the Developer any sum if the Local Sales Tax Revenues for a particular Sales Tax Year exceeded the applicable Minimum Annual Sales Tax Revenues for such Sales Tax Year by an amount greater than the Annual Developer Payment; in such case, the Annual Developer payment for the then -current Sales Tax Year shall be reduced to zero but the Developer shall have no further right or claim with respect thereto." 8. All defined terms used in this Amendment shall have the same meanings set forth in the Agreement. Except as specifically modified by this Amendment, the Agreement shall remain in full force and effect. To the extent of any inconsistency between the terms and conditions of this Amendment and the Agreement, the terms and conditions of this Amendment shall control. 9. This Amendment may be executed in any number of identical counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument when each party has signed one such counterpart. 10. The Parties hereby consent to the recordation of the Amendment in the Official Records of Los Angeles County, California, by the City Clerk within ten (10) days of the effective date of the Amendment. [Signature pages follow] CITY OF AZUSA By: Joseph R. Rocha Dated Mayor Francis M. Delach City Manager ATTEST: By: City Clerk APPROVED AS TO FORM: Sonia Carvalho City Attorney REDEVELOPMENT AGENCY OF CITY OF AZUSA By: Joseph R. Rocha Chair Francis M. Delach Executive Director ATTEST: Agency Secretary Dated Dated Dated Dated Dated APPROVED AS TO FORM: Sonia Carvalho Agency Counsel JAR — UNIVERSITY COMMONS, LLC, California limited liability company M Dated Its: APPROVED AS TO FORM: General Counsel CITRUS CROSSING PROPERTIES FEE LLC, a Delaware limited liability company Dated Name: Andrew Trachman Its: Manager APPROVED AS TO FORM: General Counsel EXHIBIT "A" Shopping Center Property That certain real property situated in the City of Azusa, County of Los Angeles, State of California, described as follows: Dots 1 through 11, inclusive, of Tract No. 68355, in the City of Azusa, County of Los Angeles, State of California, as per map recorded in Book I354, Pages 37 through 41, inclusive, of Maps, in the Office of the County Recorder of said County. ORANGE\SKLEINBERG\69331.3 RECORDING REQUESTED BY WHEN RECORDED MAIL TO NAME Vera Mendoza City Clerk City of Azusa ADDRESS 213 E. Foothill Blvd. CITY, STATE Azusa, CA ZIP CODE 91702 02/26/07 20070410405 0 0 0 0 0 0 0'0 0 0 a a a a 0 0 i-0 1 0 a 0 a 0 a 0 0 a a a l 0 Has not been conVared with original. Original will be returned when processing has been completed. LOS ANGELES CWTY REGISTP,AR - RECORDER SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE TITLES) STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT. among the City of Azusa and The Redevelopment Agency of the City of Azusa and Jar -University Commons, LLC, dated December 4, 2006. R wehIr V ftIL e I btjftll Wei M Y 1' [ Y d f' R \- 4. a Y 3 213 Eag)` o©' Azus%, 0,4.17 Ir VVrX, Space Above for Use by Recorder Only Exempt from Recording Fees Per Gov't Code §27383 STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT by and among THE CITY OF AZUSA a California municipal corporation and THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA a public body, corporate and politic and JAR - UNIVERSITY COMMONS, LLC a California limited liability company [Dated as of December 4, 2006 for reference purposes only] R YPUBWVARNER 1 71628 7. 11 STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT This Statutory Development Agreement and Owner Participation Agreement ("Agreement's is entered into as of this 4`h day of December, 2006 by and among (i) the City of Azusa, a California municipal corporation ("City"), (ii) the Redevelopment Agency of the City of Azusa, a public body, corporate and politic ("Agency's, and (iii) JAR - University Commons, LLC, a California limited liability company ("Developer") with reference to the following recited facts (each, a "Recital"): RECITALS A. The city council of the City ("City Council') approved and adopted the redevelopment plan ("Redevelopment Plan") for the redevelopment project area known as the "Merged Central Business District Redevelopment Project Area" ("Project Area"). B. The governing board of the Agency ("Governing Board") has adopted an implementation plan ("Implementation Plan") for the Redevelopment Plan and is engaged in activities necessary to execute and implement the Redevelopment Plan pursuant to California Community Redevelopment Law (Health and Safety Code Section 33000 et seg.) ("CRL"). C. The Developer owns certain real property within the Project Area that is vacant ("Vacant Property") as more particularly described in Exhibit "A-1" and shown on Exhibit "B -l" attached to this Agreement and incorporated into this Agreement by this reference. The Developer anticipates developing the Vacant Property as a residential project ("Residential Project"). D. The Developer also owns certain real property located within the Project Area adjacent to the Vacant Property that is improved with a shopping center facility commonly known as the "Foothill Shopping Center" ("Shopping Center Property) as more particularly described in Exhibit "A-2" and shown on Exhibit `B-2" attached to this Agreement and incorporated into this Agreement by this reference. The Developer has agreed to rehabilitate the Shopping Center Property ("Shopping Center Project's consistent with the development plan ("Development Plan") attached to this Agreement as Exhibit "C-1'and incorporated into this Agreement by this reference. E. The Vacant Property and the Shopping Center Property are collectively referred to in this Agreement as the "Property." The Residential Project and the Shopping Center Project are collectively referred to in this Agreement as the "Project." F. As one of the regulatory conditions of approval for entitlements related to the Shopping Center Project, the City has required or will require the Developer to construct and dedicate to the City a public road and certain other related street improvements (collectively, "Street Improvements'. The Street Improvements are described in Exhibit "D-1" and shown on Exhibit "D-2" attached to this Agreement and incorporated into this Agreement by this reference. RFPVBU VARNER1716287.11 G. With the City Council's consent, the Agency is authorized under CRL Sections 33421.1 and 33445 to pay all or part of the cost of constructing the Street Improvements. H. In accordance with CRL Sections 33421.1 and 33445, the Agency desires to reimburse the Developer the sum of the: (i) the third party costs and expenses actually incurred and paid by the Developer in connection with the design and construction of the Street Improvements; and (ii) the fair market value of the property interests underlying the Street Improvements, (i) and (ii) not to exceed One Million Five Hundred Thousand Dollars ($1,500,000) in the aggregate. L The intent of the City, the Agency and the Developer in entering into this Agreement is to: (i) establish specific development standards to govern the development of the Project on the Property by the Developer in accordance with California Government Code Section 65864, et seM..; (ii) ensure that the Street Improvements necessary for the development of the Shopping Center Project are completed bythe Developer, (iii) provide for the Agency's reimbursement to the Developer of the costs and expenses actually incurred and paid by Developer in connection with the design and construction of the Street Improvements and the fair market value of the property interests underlying the Street Improvements pursuant to the limitations and conditions of this Agreement; and (iv) provide for the generation of Local Sales Tax Revenues (as defined below) from the Shopping Center Property, subject to the terms, conditions, covenants and restrictions set forth in this Agreement. 1. The development of the Project on the Property in accordance with this Agreement will provide substantial benefits to the City and the Agency and will further important policies and goals ofthe City and the Agency by. (i) eliminating uncertainty in planning, (ii) providing for the orderly development of the Property, (iii) providing for the development of the Street Improvements needed for the Shopping Center Project in conformance with the Redevelopment Plan and the Implementation Plan; and (iv) generating Local Sales Tax Revenues for the City. NOW, THEREFORE, IN VIEW OF THE GOALS AND OBJECTIVES OF THE CITY, THE AGENCY AND THE DEVELOPER SET FORTH IN THIS AGREEMENT, THE CITY, THE AGENCY AND THE DEVELOPER AGREE, AS FOLLOWS: ARTICLE I DEFINITIONS 1.1 Definitions. Unless the context otherwise rewires, the terms defined in this Section 1.1 shall, for all purposes of this Agreement, and of any opinion or report or other document mentioned in this Agreement, have the meanings defined in this Section 1.1. The following definitions are equally applicable to both the singular and plural forms of any of the terms defined in this Section 1.1. 1.1.1 "Agency" shall mean the Redevelopment Agency of the City of Azusa, a public body, corporate and politic, and shall include any nominee, assignee or successor to the Agency's rights, powers and responsibilities. 1.1.2 "Agreement" shall mean this Statutory Development Agreement and Owner Participation Agreement. RVPUBXYrSRNSR1716187.11 2 1.1.3 "Annual Developer Payment" shall mean the sum of Forty Thousand Dollars ($40,000) to be paid in advance of each Sales Tax Year, subject to reduction by credit on a Sales Tax Year -to - Sales Tax Year basis as provided in Section 5.1. F 1.1.4 "Approved Street Improvements Cost Estimate" shall mean an estimated statement of the Street Improvements Costs setting forth specific amounts for components ofthe Street Improvements that has been approved by the Agency and Developer in accordance with the provisions of Section 4.2.1. 1. 1.5 "City" shall mean the City of Azusa, a California municipal corporation, and shall include any nominee, assignee or successor to the City's rights, powers and responsibilities. 1.1.6 "City Council" shall mean the duly elected city council of the City. 1.1.7 "Complete" or "Completion" shall have the meaning set forth in Section 5.2. 1.1.8 "Core Buildings" shall have the meaning set forth in Section 4.1.1. 1.1.9 "CPI Adjustment Date" shall mean the first anniversary of the first day of the First Sales Tax Year, and each anniversary date thereafter during the Sales Tax Term. 1.1.10 "Developer" shall mean JAR - University Commons, LLC, a California limited liability company and any permitted nominee, assignee or successor to Developer's rights, powers, obligations and responsibilities under this Agreement. 1.1.11 "Development Approvals" shall mean all permits and other entitlements for use subject to approval or issuance by the City in connection with development of the Property including, but not limited to: (i) specific plans and specific plan amendments; (ii) tentative and final subdivision and'parcel maps; (iii) conditional use permits, public use permits and plot plans; (iv) zoning; and (v) grading and building permits. 1.1.12 "Development Exaction" shall mean any requirement of the City in connection with or pursuant to any Land Use Regulations or Development Approvals for the dedication of land, the construction of improvements or public facilities, or the payment of fees in order to lessen, offset, mitigate or compensate for the impacts of development on the environment, public facilities, or otherpublic interests. Without limiting the exclusivity of the foregoing, the term "Development Exactions" excludes fees charged by the City in connection with the issuance of building permits. 1.1.13 "Development Plan" shall mean the plan for development of the Project on the Property as set forth in Exhibit "C -I". 1.1.14 "Dispute Notice" shall have the meaning set forth in Section 9.19. 1.1.15 "Effective Date" shall mean the fust date on which all of the following are true: (i) this Agreement has been approved by the City Council following all legally required notices and hearings; (ii) this Agreement has been approved by the Agency Governing Board following all legally required notices and bearings; (iii) this Agreement has been executed by the appropriate authorities of the City, Agency and the Developer; (iv) the City ordinance approving and authorizing this Agreement becomes effective; and (v) the Residential Project Covenants Conditions and Restrictions are recorded against the Vacant Property in a RVPUB1KV.ARNER1716287.11 priority position senior to all other non -statutory liens and encumbrances against the Vacant Property and the Developer has provided documentation evidencing that fact reasonably acceptable to the City. 1.1.16 "Enforced Delays" shall have the meaning set forth in Section 9.10. 1.1.17 "Event of Default" shall have the meaning set forth in Section 6.1. 1.1.18 "Exhibits" shall mean the following documents that are attached to, and by this reference made a part of, this Agreement: Exhibit "A-1" Legal Description of the Vacant Property. Exhibit "A-2" Legal Description of the Shopping Center Property. Exhibit "B- I" Map of the Vacant Property. Exhibit "B-2" Map of the Shopping Center Property. Exhibit "C-1" Development Plan for Project Exhibit "C-2" Master Phasing Plan Exhibit "D-1" Description of Street Improvements Exhibit "D-2" Map Depicting the Location of Street Improvements Exhibit "E" Covenants, Conditions and Restrictions Related to the Residential Project Exhibit "F-1" Prohibited Land Uses Exhibit "F-2" Restricted Land Uses 1.1.19 "First Sales Tax Year" shall mean the Sales Tax Year commencing immediately fol l owing the earlier of (1) the second (2°d) anniversary of the Shopping Center Project Commencement Date, or (2) the third (P) anniversary of the Effective Date. 1.1 20 "Generator" shall mean any and all persons, entities or businesses generating Local Sales Tax Revenues at the Shopping Center Property in any Sales Tax Year during the Sales Tax Tenn. 1.1.21 "Goods" shall mean any and all tangible personal property offered for sale or lease at the Shopping Center Property that is subject to the Sales Tax Law during the Sales Tax Term. 1. 1.22 "Governing Board" shall mean the governing board of the Agency. I1.23 "Land Use Regulations" shall mean all ordinances, resolutions, codes, rules, regulations and official policies of the City governing the development and use of land, including, without limitation, the permitted use of land, the density or intensity of use, subdivision requirements, the maximum height and size of proposed buildings, the provisions for reservation or dedication of land for public purposes, and the design, improvement and construction standards and specifications applicable to the development of the Property. The term "Land Use Regulations" does not include any City ordinance, resolution, code, rule, regulation or official policy, governing: (i) the conduct ofbusinesses, professions, and occupations; (ii) taxes (special or general) and assessments; (iii) the control and abatement of nuisances; (iv) the granting of encroachment permits and the conveyance of rights and interests that provide for the use of or the entry upon public property, or (v) the exercise of the power of eminent domain. 1.1.24 "Local Sales Tax Revenues" means that portion of the Sales Tax, if any, originating RYPUB1&-K4RA'ER1716287.11 4 from Taxable Sales of Goods consummated by a Generator on the Shopping Center Property which is allocated and paid to City pursuant to the Sales Tax Law. Local Sales Tax Revenues shall not include: (i) Penalty Assessments, (ii) any Sales Tax levied by, collected for or allocated to the State of California, the County of Los Angeles, or a district or any entity (including an allocation to a statewide or countywide pool) other than City, (iii) any administrative fee charged bythe SBE, (iv) any Sales Tax subject to any sharing, rebate, offset or other charge imposed pursuant to any applicable provision of federal, state or local (except City's) law, rule or regulation, (v) any Sales Tax attributable to any transaction not consummated within the Sales Tax Term, or (vi) any Sales Tax (or other funds measured by Sales Tax) required by the State of California to be paid over to another public entity (including the State) or set aside and/or pledged to a specific use other than for deposit into or payment from the City's general fund 1.1.25 "Master Phasing Plan" shall mean the conceptual phasing plan for the future development of the Property in which the final phase meets the Urban Form goals and policies of the General Plan as set forth in Exhibit "C-2". 1.1.26 "Minimum Annual Local Sales Tax Revenue" shall mean Three Hundred Ninety Two Thousand Dollars ($392,000) for the First Sales Tax Year. On each CPI Adjustment Date, the Minimum Annual Sales Tax Revenues for the then -current Sales Tax Year shall be determined by increasing the Minimum Annual Local Sales Tax Revenue in effect for the immediately preceding Sales Tax Year by the lesser of (i) four percent (4%) of the amount of the Minimum Local Sales Tax Revenue which is applicable in the immediately preceding Sales Tax Year, or (ii) the percentage of increase, if any, shown by the Consumer Price index for All Urban Consumers (CPI U) (Los Angeles-Anabeim Riverside) (base years 1982-1984 = 100) (Index), published by the United States Department of Labor, Bureau of Labor Statistics, for the month immediately preceding the CPI Adjustment Date. 1.1.27 "Penalty Assessments" shall mean penalties, assessments, collection costs and other costs, fees or charges resulting from late or underpaid payments of Sales Tax and that are Ievied, assessed or otherwise collected from Developer. 1.1.28 "Permitted Transfer" means and refers to any ofthe following types of Transfers: (i) any Transfer to a person or entity reasonably approved by the City which expressly assumes the obligations of the Developer under this Agreement in a written instrument satisfactory to the Agency, (ii) any Transfer of the Vacant Property or the Residential Project or any part thereof and (iii) any Transfer of stock or equity of the Developer that does not change management or operational control of the Shopping Center Property or the Shopping Center Project, and (iii) any Transfer of any interest in the Developer irrespective of the percentage of ownership to either (a) any other owner of any interest in the Developer, (b) any affiliate of or other entity related to the Developer, or (c) to any other entity in which any holder of an interest (including any beneficial interest) in the Developer is a manager or in which any of the aforementioned is a shareholder or member of the Developer. 1.1.29 "Project" shall collectively mean the Shopping Center Project and the Residential Project. 1. 1.30 "Property" shall collectively mean the Shopping Center Property and the Vacant Property. 1.1.31 "Reservation of Rights" shall mean the rights and authority excepted from the assurances and rights provided to the Developer under this Agreement and reserved to the City under Section RYPUEXTARNERM6187.11 3.3 of this Agreement. 1.1.32 "Residential Project" shall mean the residential project to be constructed on the Vacant Property consistent with the Development Plan. 1.1.33 "Resolution Period" shall have the meaning set forth in Section 9.19 1.1.34 "Sales Tax Year" shall mean a period of twelve (12) consecutive calendar months commencing on the first day of a calendar quarter (i.e. January 1, April 1, July 1, or October 1, as applicable) and ending on the last day of the immediately following fourth (4") calendar quarter (i.e. March 31, June 30, September 30, or December 31, as applicable). 1.1.35 "Shopping Center Project Commencement Date" shall have the meaning set forth in Section 4.1.1. 1.1.36 "Shopping Center Project" shall mean the rehabilitation of the building and facilities located on the Shopping Center Property consistent with the Development Plan. 1.1.3 7 "Shopping Center Property" shall mean the real property described in Exhibit "A-2" and shown on Exhibit "B-2" attached to this Agreement 1.1.38 "Sales Tax" shall mean all sates and use taxes levied under the authority of the Sales Tax Law attributable to Taxable Sales occurring upon the Shopping Center Property, excluding Sales Tax that is to be refunded to Generator because of an overpayment of Sales Tax. 1. 1.39 "Sales Tax Year" shall mean the First Sales Tax Year and each of the immediately subsequent nineteen (19) Sales Tax Years. There shall be a total of twenty (20) Sales Tax Years during the Sales Tax Term, including the First Sales Tax Year. 1.1.40 "Sales Tax Law" shall mean (i) California Revenue and. Taxation Code Section 6001 et seq., and any successor haw thereto, (ii) any legislation allowing another public agency or entity with jurisdiction in the City to levy any form of Sales Tax on the operations of Developer, any Generator, the Shopping Center Project and/or the Shopping Center Property, and (iii) regulations of the SBE and other binding rulings and interpretations relating to (i) and (ii), above. 1.1.41 "Sales Tax Term" shall mean the twenty (20) Sales Tax Year period commencing on the first day of the First Sales Tax Year and ending on the last day of the twentieth (20`') Sales Tax Year thereafter. 1. 1.42 "SBE" means the California State Board of Equalization and any successor agency. 1.1.43 "Street Improvements" shall mean the public road, utilities and related public improvements that bisect the Shopping Center Property and are imposed bythe City upon the Shopping Center Project as a condition of the City's regulatory approval of the Shopping Center Project and which are to be designed and constructed by the Developer and dedicated to the City in accordance with the City's standard plans for public works construction concerning the same, as more particularly described in Exhibit "D-1" and shown on Exhibit "D-2" attached to this Agreement The Street Improvements shall comply with City RVPU.9XVARNER 1716287.11 Standard R-1, except as maybe modified and approved by the City Engineer in his or her reasonable discretion to ensure acceptable access. 1.1.44 "Street Improvements Costs" shall mean the sum of (i) those third party hard and soft costs and expenses actually incurred and paid by the Developer in connection with the design and construction of the Street Improvements (which shall include, but not be limited to, architectural, engineering, project management, legal, construction and permit and inspection costs); and (ii) an amount equal to One Million Three Hundred Thousand Dollars ($1,300,000) representing the fair market value of the publicly -owned property interests underlying the Street Improvements. 1. 1.45 "Street Improvements Reimbursement" shall mean the lesser of- (i) the total of the Street Improvements Costs, or (ii) One Million Five Hundred Thousand Dollars ($1,500,000). 1. 1.46 "Street Improvements Reimbursement Request" shall have the meaning set for in Section 4.2.3. 1.1.47 "Taxable Sales" shall mean all sales and leases of Goods by a Generator at the Shopping Center Property that are: (i) subject to the payment of Sales Tax pursuant to the Sales Tax Law and (ii) for which the "point of sale" reported to the SBE is the City. 1.1.48 "Term" shall mean the period of this Agreement commencing on the Effective Date and ending on the last day of the Sales Tax Term. 1.1.49 "Transfer" shall mean any of the following: (i) any total or partial sale, assignment, conveyance, trust, power, or transfer in any other mode or form, by the Developer of more than forty nine percent (49%) interest (or a series of such sales, assignments or the like that, in the aggregate, result in a disposition of more than a forty-nine percent (491/o) interest) in this Agreement, the Shopping Center Property, the Shopping Center Project or any part thereof; or (ii) any total or partial sale, assignment, conveyance, or transfer in any other mode or form, of or with respect to any interest in the Developer (or a series of such sales, assignments or the like that, in the aggregate, result in a disposition of more than a 49% interest); or (iii) any merger, consolidation, sale or lease of all or substantially all of the assets of the Developer (or a series of such sales, assignments or the like that, in the aggregate, result in a disposition of more than a forty nine (49%) interest). The term "Transfer" shall not include any total or partial sale, assignment, conveyance, trust, power, or transfer in any other mode or form, by the Developer of the Vacant Property, the Residential Project or any partthereof- 1.1.50 "Vacant Properly" shall mean the real property described in Exhibit "A-1" and shown on Exhibit `B-1" attached to this Agreement. RYPUBWVARNER1716287.11 7 ARTICLE 11 REPRESENTATIONS AND WARRANTIES; RESTRICTION ON TRANSFER; NOTICES 2.1 Representations and Warm ies. 2. 1.1 City Representations and Warranties. All representations and warranties contained in this Section 2. 1.1 shall be true and correct as of the Effective Date and the City's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement. The City herebymakes the following representations and warranties and acknowledges that the execution of this Agreement by the Agency and the Developer has been made in material reliance by the Agency and the Developer on such representations and warranties: 2.1.1.1 The City is a California municipal corporation. The City has the legal power, ight and authority to enter into this Agreement and to execute the instruments and documents referenced in this Agreement and to consummate the transactions contemplated in this Agreement. 2.1.1.2 The City acknowledges and agrees that the Agency's obligations with respect to this Agreement are limited to those obligations set forth in Article N of this Agreement pertaining to the Street Improvements Reimbursement. All representations and warranties made bythe City hereunder shall be limited to the actual current knowledge of F. M. Detach (City Manager) as of the Effective Date, without independent investigation and without any duty to do so. 2.12 Agency Representations and Warranties. All representations and warranties contained in this Section 2.12 shall be true and correct as of the Effective Date and the Agency's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement. The Agency hereby makes the following representations and warranties and aelmowledges that the execution of this Agreement by the City and the Developer has been made in material reliance by the City and the Developer on such representations and warranties: 2.1.2.1 The Agency is a public body, corporate and politic. The Agency has the legal power, right and authority to enter into this Agreement and to execute the instruments and documents referenced in this Agreement and to consummate the transactions contemplated in this Agreement. 2.1.2.2 The Agency acknowledges and agrees that the Agency's obligations with respect to this Agreement are limited to those obligations set forth in Article IV ofthis Agreement pertaining to the Street Improvements Reimbursement. All representations and warranties made by the Agency hereunder shall be limited to the actual current knowledge of F. M. Delach (Executive Director) as of the Effective Date, without independent investigation and without any duty to do so. 2.1.3 Developer's Representations and Warranties. All representations and warranties contained in this Section 2.1.3 shall be true and correct as of the Effective Date and the Developer's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, R VP UBW 17ARNER 1 16287.21 shall survive the execution and delivery of this Agreement. The Developer hereby males the following representations, covenants and warranties to the City and the Agency acknowledges that the execution of this Agreement by the City and the Agency has been made in material reliance by the City and the Agency on such. covenants, representations and warranties of the Developer. 2.1.3.1 The Developer is a California limited liability company lawfnliy authorized to do business in the State of California by and in good standing with the California Secretary of State. The Developer has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced in this Agreement and to consummate the transactions contemplated in this Agreement. The persons executing this Agreement and the instruments referenced in this Agreement on behalf of the Developer represent and warrant that they have the power, right and authority to bind the Developer to this Agreement. 2.1.3.2 Prior to commencing any work of development on the Shopping Center Project, the Developer will have taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced in this Agreement and the consummation of the transactions contemplated in this Agreement, and no consent of any other person is required for the Developer's authorization to enter into this Agreement. 2.1.3.3 The execution of this Agreement shall not result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which the Developer is a party or by which the Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Developer. 2.1.3.4 This Agreement is, and all agreements, instruments and documents to be executed by the Developer pursuant to this Agreement shall be duly executed by and shall be valid and legally binding upon the Developer and enforceable against the Developer in accordance with their respective terms. All representations and warranties made by the Developer hereunder shall be limited to the actual current knowledge of John R Francis as of the Effective Date, without independent investigation and without any duty to do so. 2.2 Restrictions on Change in Management or Control of the Developer and Assignment or Transfer. 2.2.1 The Developer acknowledges that the qualifications and identity of the Developer are of particular importance to the City and the Agency. The Developer further recognizes and acknowledges that the City and the Agency have and are relying on the specific qualifications and identity of the Developer in entering into this Agreement with the Developer and, as a consequence, Transfers are permitted only as expressly provided in this Agreement. 2.2.2 Except in the event of a Permitted Transfer, the Developer shall promptly notify the City and the Agency in writing of any and all changes whatsoever in the identity of the business entities or individuals either comprising or in control of the Developer, as well as any and all changes in the interest or the degree of control of the Developer by any such entities or individuals, of which information the Developer or any of its partners, members or officers have been notified or may otherwise have knowledge or information. RPPVBWVAP NEM716287.11 9 2.2.3 This Agreement may be terminated by the City and the Agency if there is any Transfer, whether voluntary or involuntary, in membership, ownership, management or control of the Developer (other than such changes occasioned by the death or incapacity of any individual) that has not been approved in writing by the City and the Agency prior to the time of such Transfer, or the City and the Agency may seek other appropriate relief; provided, however, that (i) the City and the Agency shall first notify the Developer in writing of its intention to terminate this Agreement or to exercise any other remedy, and (ii) the Developer shall have twenty (20) days following its receipt of such written notice to cure the default of the Developer and submit evidence of the initiation and satisfactory completion of such cure to the City and the Agency, in a form and substance reasonably satisfactory to the City and the Agency. 2.2.4 The City and the Agency may, in their reasonable discretion, approve in writing any Transfer requested by the Developer, provided the proposed transferee satisfactorily demonstrates successful experience in the development, ownership, operation, and management of Shopping Center developments of similar size and quality as the Shopping Center Protect and expressly assumes all of the obligations of the Developer under this Agreement, including the Developer's obligations set forth in Article V regarding Local Sales Tax Revenues. All instruments and other legal documents proposed to carry out any Transfer shall be submitted to the City and the Agency for review, prior to the Transfer, and the written approval or disapproval of the City and the Agency shall be provided to the Developer within twenty (20) days of the City's and the Agency's receipt of the Developer's request. 2.2.5 The prohibitions on Transfer shall expire and be of no force or effect upon Completion of the Shopping Center Project and the dedication of the Street Improvements to the City. 2.3 Notices. 2.3.1 As used in this Agreement, the term "notice" includes, but is not limited to, the communication of notice, request, demand, approval, statement, report, acceptance, consent, waiver, appointment or other communication required or permitted hereunder. 2.3.2 All notices shall be in writing and shall be considered given either•. (i) when delivered in person to the recipient named below; or (ii) on the date of delivery shown on the return receipt, after deposit in the United States mail in a sealed envelope as either registered or certified mail with return receipt requested, and postage and postal charges prepaid, and addressed to the recipient named below; or (iii) on the date of delivery shown in the records of a national postal service (Le., the United Postal Service or Federal Express) after delivery to the recipient named below. All notices shall be addressed as follows: If to the City. City of Azusa 21.3 East Foothill Boulevard Azusa, CA 91702 Attention: City Manager Telephone: (626) 812-5239 Facsimile: (626) 334-6358 RVPUBWVARNBR4716287.11 10 Copy to: Best Best & Krieger, LLP 5 Park Plaza, Suite 1500 Irvine, CA 92614 Attention: Azusa City Attorney Telephone: (949) 263-2600 Facsimile: (949) 260-0972 If to the Agency. Redevelopment Agency of the City of Azusa 213 East Foothill. Boulevard Azusa, CA 91702 Attention: Executive Director Telephone: (626) 812-5239 Facsimile: (626) 334-6358 Copy to: Best Best & Krieger, LLP 3750 University Avenue Riverside, CA 92501 Attention: Kevin K. Randolph Telephone: (951) 686-1450 Facsimile: (951) 686-3083 If to the Developer: JAR - University Commons, LLC c/o Trackman-Indevco, LLC 1801 Century Park East, Suite 1040 Los Angeles, CA 90067 Attention: Andrew Trachman, President Telephone: (310) 789-3888 Facsimile: (310) 789-3889 Copy to: Francis Property Management, Inc. 501 S. Beverly Drive, Suite 100 Beverly Hills, CA 90212 Attention: John Francis Telephone: (310) 556-2274 Facsimile: (310) 552-8485 RYPUBWYA.RNER1716287.11 11 Copy to: Friedman & Solomon LLP 9665 Wilshire Boulevard, Suite 810 Beverly Hills, CA 90212 Attention: Andy Friedman, Esq. Telephone: (310) 553-7265 Facsimile: (310) 553-7458 2.3.3 Any party may, by notice given at anytime, require subsequent notices to be given to another person or entity, whether a party or an officer or representative of a party, or to a different address, or both. Notices given before actual receipt of notice of change shall not be invalidated by the change. ARTICLE III DEVELOPMENT OF THE PROJECT 3.1 Rights to Develop. Subject to the terms of this Agreement, including the Reservation of Rights, the Developer shall have a vested right to develop the Project on the Property in accordance with, and to the extent of, this Agreement. Except as expressly provided otherwise herein, the Project shall remain subject to all Land Use Regulations and Development Approvals in effect on the Effective Date that are required to complete the Project on the Property as contemplated by the Development Plan. 3.2 Effect of Agreement on Land Use Regulations. Except as otherwise provided under the terms of this Agreement including the Reservation of Rights, the rules, regulations and official policies governing permitted uses of the Project on the Property, the density and intensity of use of the Project on the Property, the maximum height and size ofproposed buildings, and the design, improvement and construction standards and specifications applicable to development of the Project on the Property shall be the Land Use Regulations and Development Approvals in effect on the Effective Date. In connection with any subsequently imposed Development Approvals and except as specifically provided otherwise herein, the City may exercise its discretion in accordance with the Land Use Regulations then in effect, as provided by this Agreement, including, but not limited to, the Reservation of Rights. The City shall accept forprocessing, review and action all applications for subsequent development approvals, and such applications shall be processed in the same manner and the City shall exercise its discretion, when required or authorized to do so, to the same extent it would otherwise be entitled in the absence of this Agreement. 3.3 Reservation of Rights. 3.3.1 Limitations, Reservations and Exceptions. Notwithstanding any otherprovision ofthis Agreement, the following regulations shall apply to the development of the Project on the Property. 3.3.1.1 Processing fees and charges of every kind and nature imposed by the City to cover the estimated actual costs to the City of processing applications for Development Approvals or for monitoring compliance with any Development Approvals granted or issued, provided however that the such monitoring fees are limited to One Thousand Dollars ($1,000) per year. 3.3.1.2 Procedural regulations relating to hearing bodies, petitions, applications, notices, findings, records, hearings, reports, recommendations, appeals and any other matter of procedure. RVPUBU.'VAPJ SR 171628 7. 11 12 3.3.1.3 Regulations, policies and rules governing engineering and construction standards and specifications applicable to public and private improvements, including, without limitation, all uniform codes adopted by the City and any local amendments to those codes adopted by the City, including, without limitation, the City's building code, plumbing code, mechanical code, electrical code, fire code and grading code. 3.3.1.4 Regulations that may be in material conflict with this Agreement but that are reasonably necessary to protect the immediate community from a condition perilous to their health or safety. To the extent possible, any such regulations shall be applied and construed so as to provide the Developer with the rights and assurances provided under this Agreement. 3.3.1.5 Regulations that are not in material conflict with this Agreement or the Development Plan. Any regulation, whether adopted by initiative or otherwise, limiting the rate or timing of development of the Property shall be deemed to materially conflict with the Development Plan and.shall therefore not be applicable to the development of the Property. 3.3.1.6 Regulations that are in material conflict with the Development Plan; provided the Developer has given written consent to the application of such regulations to development of that Property in which the Developer has a legal or equitable interest. 3.3.1.7 Regulations that impose, levy, alter or amend fees, charges, or Land Use Regulations relating to consumers or end users, including, without limitation, trash can placement, and service charges. 3.3.1.8 Regulations of other public agencies, including development impact fees adopted or imposed by such other public agencies, although collected by the City. 3.3.1.9 Ordinances, resolutions, regulations or policies regarding the permitted uses of the Property, density and intensity of use, maximum height and size of proposed buildings, and provisions for reservation and dedication of land for public purposes. 3.3.1.10 Ordinances, resolutions, regulations or policies which become effective more than five (5) years after the Effective Date of this Agreement that impose, amend, or increase Development Exactions. 3.3.2 Subsequent Development Approvals. This Agreement shall not prevent the City, in acting on subsequent development approvals and to the same extent it would otherwise be authorized to do so absent this Agreement, from applying subsequently adopted or amended Land Use Regulations that do not materially conflict with this Agreement. 3.3.3 Modification or Suspension by State or Federal In,. In the event that State or Federal laws or regulations enacted after the Effective Date of this Agreement prevent or preclude compliance with one or more of the provisions of this Agreement, such provisions of this Agreement shall be modified or suspended as may be necessary to comply with such State or Federal laws or regulations; provided, however, that this Agreement shall remain in full force and effect to the extent it is not inconsistent with such laws or regulations and to the extent such laws or regulations do not render such remaining provisions impractical to enforce. RVPUB"ARNERl716287.11 13 3.3.4 Intent. The City and the Developer acknowledge and agree that the City is restricted in its authority to limit certain aspects of its police power by contract and that the foregoing limitations, reservations and exceptions are intended to reserve to the City all of its police power that cannot be or are not expressly so limited. This Agreement shall be construed, contrary to its stated terms if necessary, to reserve to the City all such power and authority that cannot be or is not by this Agreement's express terms so restricted. 3.4 Rezulation by Other Public Agencies. The City and the Developer acknowledge and agree that other public agencies not within the control of the City possess authority to regulate aspects of the development of the Property and/or Project separately from or jointly with the City and this Agreement does not limit the authority of such other public agencies. 3.5 Recordation of Residential Project CC&Rs. The Developer shall cause the recordation ofthe Residential Project Covenants, Conditions and Restrictions (in the form attached hereto as Exhibit "E") against the Vacant Property within thirty (30) days from the Effective Date, subject to approval of the leasing restrictions contained in the project CC&Rs bythe California Department of Real. Estate (the "DRE") or in the alternative, such other leasing restrictions as may be approved by the DRE in connection with its issuance of a Final Subdivision Public report in connection with the Residential Project. The Parties agree that the Vacant Property shall be subject to such Covenants, Conditions and Restrictions notwithstanding Developer's failure to cause recordation of the same. 3.6 Public Art Component. The Developer shall include a public art component within the Shopping Center Project. The form and substance of the public art component shall be as approved by the City Manager in his or her absolute discretion, and may include such items as public murals, items of extraordinary landscaping, public fountains and other gathering places, sculpture, and similar items. The Developer shall submit its proposed public art component to the City Manager for his/her review and approval no less than forty-five (45) days prior to the date that the Developer intends to seek the issuance of the first building permit for the Shopping Center Project. The City Manager shall review and either approve or disapprove the proposed public art component within thirty (30) days thereafter. If approved, the public art component shall be automatically deemed to be included within the Development Plan. If the City Manager disapproves the proposed public art component, or if the City Manager fails to act on the proposed public art component by the time that the Developer is prepared to apply for issuance of the first building permit for the Shopping Center Project, then, prior and as a condition to the issuance of such first building permit, the Developer shall pay to the City a public art in lieu fee in the amount of Ten Thousand Dollars ($10,000) which the City shall hold until a public art component acceptable to the City has been approved. 3.7 Marketing of Residential Project to Certain Groups. The Developer shall, for a period no less than forty-five (45) days prior to the marketing of the Residential Project to the general public, advertise and market the Residential Project exclusively to City of Azusa public employees, police officers, firefighters, and teachers in a credentialed school located within the geographical boundaries of the Azusa Unified School District. The Developer shall make the homes within the Residential Project available for purchase by such persons, provided that such persons are qualified (financially and otherwise) to purchase such homes, no less than forty-five (45) days prior to making such homes available for purchase by the general public. RYPUBWEARAER 1716287.11 14 ARTICLE IV STREET HvIPROVEMENTS RENIBURSEN= 4.1 Developer Covenant to Undertake Street improvements. The Developer covenants to and for the exclusive benefit ofthe City that, concurrently with the development of the Shopping Center Project on the Shopping Center Property, the Developer develop the Street Improvements and, once complete, shall dedicate the Street Improvements to the City. The Developer covenants and agrees for itself, its successors and assigns that the design, development and construction of the Street Improvements shall be undertaken and completed in conformity with this Agreement and all applicable laws, regulations, orders and conditions of any governmental agency with jurisdiction over the Street Improvements or the Shopping Center Property. 4.1.1 Shopping Center Proiect Commencement Date. The Developer shall commence construction of the Street Improvements within ninety (90) days after the date ("Shopping Center Project Commencement Date") on which the Developer obtains: (i) a binding unconditional commitment for construction financing for development of the Shopping Center Project, (ii) signed leases for at least seventy percent (70%) in the aggregate of the gross Ieaseable area of those buildings identified on Exhibit "B-2" as "A", "B", "99 ¢ Store", "CVS", "Shop I"," Shop 2% and the "Ross" buildings (all of the foregoing,collectively, the "Core Buildings"), and (iii) foundation permits sufficient to commence development of the Shopping Center Project Subject to Section 9.10, if the Shopping Center Project Commencement Date fails to occur on or before twelve (12) months following the Effective Date ofthis Agreement; then, subject to compliance with the provisions of Article VI, either the City or the Agency may terminate this Agreement in its entiretywithout cost or liability to either the City or the Agency. 4.2 Agency Obligations Regarding; Street Imorovements Reimbursement Agency agrees to payto the Developer the Street Improvements Reimbursement pursuant to this Section 41. The Street improvements Reimbursement shall be used for the sole purpose of reimbursing the Developer for the Developer's Street Improvements Costs. 4.2.1 Procedure for Approved Street Improvements Cost Estimate. The Developer shall have the right, but not the obligation, to obtain bids or other estimates for all or individual portions of the Street Improvements and submit the same to the Agency for approval prior to commencing the Street Improvements work. In the event the Developer submits such bids or estimates to the Agency, the Agency agrees to review and approve the same or notify the Developer of any objection to such bids or estimates within ten (10) business days after receipt thereof. The failure of the Agency to notify the Developer of any objection to the costs shown in the bids or estimates within such ten (10) business day period shall be deemed approval of the same. Upon the Agency's approval of such bids or estimates such amount shall become an Approved Street Improvements Cost Estimate for the work described therein. The Agency and the Developer each acknowledge that an Approved Street Improvements Cost Estimate is subject to subsequent adjustment for changes in the work, changes in the site conditions or subsequently discovered conditions, increases in costs of labor, material, and/or supplies, and other such matters; provided in no event shall such changes increase the Street Improvements Reimbursement amount The Agency agrees to review in good faith any requested changes to an Approved Street Improvements Cost Estimate. 4.2.2 Four Disbursements of Street hnprovements Reimbursement Subject to Conditions Precedent. The Street Improvements Reimbursement shall be disbursed to the Developer in four (4) disbursements as described in this Section 4.2.2 for purposes of reimbursing the Developer (i) the third party costs and expenses actually incurred and paid by the Developer in connection with the design and construction RVPUBWVAk?VER1716267.11 15 AtM of the Street Improvements; and (ii) the fair market value of the property interests underlying the Street Improvements, (i) and (ii) not to exceed One Million Five Hundred Thousand Dollars ($1,500,000) in the aggregate. 4.2.2.1 First Disbursement. At any time follow''rng the Shopping Center Project Commencement Date, and upon the Developer's satisfaction of the following conditions precedent and the Agency's approval of the Street Improvements Reimbursement Request as described in Section 4.2.3, the Agency shall disburse to the Developer the first (V) twenty five percent (25%) of the Street Improvements Reimbursement: 4.2.2.1.1 there shall exist no condition, event or act which would constitute a material breach or default under this Agreement or which, upon the giving of notice or the passage of time, or both, would constitute such a material breach or default; 42.2.1.2 all representations and warranties ofthe Developer contain in this Agreement shall be true and correct as of the date of any disbursements of the Street Improvement Reimbursement; 4.2.2.1.3 the Developer has submitted to the Agency and the City a complete design plan for the Street Improvements which describes and depicts: (1) the location and placement of the Street Improvements, and (2) the engineering of the Street Improvements; 4.2.2.1.4 the Developer has submitted to the Agency and the City a phased development schedule for the Street Improvements, including milestones and triggers for the development of the Street Improvements; and 4.2.2.1.5 the Developer has obtained a demolition permit in accordance with the City's Municipal Code providing for the demolition of Buildings "A" and "B". 4.2.2.2 Second Disbursement At any time following the Shopping Center Project Commencement Date, and upon the Developer's satisfaction of the following conditions precedent and the Agency's approval of the Street Improvements Reimbursement Request as described in Section 4.2.3, the Agency shall disburse to the Developer the second (2d) twenty five percent (25%) of the Street Improvements Reimbursement: 4.2.2.2.1 there shall exist no condition, event or act which would constitute a material breach or default under this Agreement or which, upon the giving ofnotice or the passage of time, or both, would constitute such a material breach or default; 4.2.2.2.2 all representations and warranties of the Developer contain in this Agreement shall be true and correct as of the date of any disbursements of the Street Improvement Reimbursement; 4.2.2.2.3 the Developer has submitted to the City applications for permits or any other discretionary or ministerial approvals required for the development of the Street Improvements; and RVPUJ?WVARNER 171628 7. 11 16 4.2.2.2.4 the Developer has obtained a building permit (or a series of building permits) for the shell and core improvements of no less than sixty-five percent (65%) of the gross leasable area of the Core Buildings. 4.2.2.3 Third Disbursement. At any time following the Shopping Center Project Commencement Date, and upon the Developer's satisfaction of the following conditions precedent and the Agency's approval of the Street Improvements Reimbursement Request as described in Section 4.2.3, the Agency shall disburse to the Developer the third (3`s) twenty five percent (2511/o) of the Street Improvements Reimbursement: 42.2.3.1 there shall exist no condition, event or act which would constitute a material breach or default under this Agreement or which, upon the giving of notice or the passage of time, or both, would constitute such a material breach or default; 4.2.2.3.2 all representations and warranties of the Develop= contain in this Agreement shall be true and correct as of the date of any disbursements of the Street Improvement Reimbursement; 4.2.2.3.3 the Developer has completed construction of the Street Improvements; and 42.2.3.4 the Developer has received final inspection and approval of the framing and roofing for no less than sixty-five percent (65%) of the gross leasable area of the Core Buildings. 4.2.2.4 Fourth Disbursement. At any time following the Shopping Center Project Commencement Date, and upon the Developer's satisfaction of the following conditions precedent and the Agency's approval of the Street Improvements Reimbursement Request as described in Section 4.2.3, the Agency shall disburse to the Developer the fourth (e) and final twenty five percent (25%) of the Street Improvements Reimbursement: 4.2.2.4.1 there shall exist no condition, event or act which would constitute a material breach or default under this Agreement or which, upon the giving of notice or the passage of time, or both, would constitute such a material breach or default; 4.2.2.4.2 all representations and warranties of the Developer contain in this Agreement shall be true and correct as of the date of any disbursements of the Street improvement Reimbursement; 4.2.2.4.3 the Developer has dedicated the Street Improvements to the City and the City has accepted such dedication in accordance with its standard practices for the acceptance of dedicated public improvements; and 4.2.2.4.4 the Developer has Completed the Shopping Center Project. 4.2.3 Street Improvements Reimbursement Request. At any time following the Shopping Center Project Commencement Date, and upon the satisfaction of the conditions precedent described in Section 4.22, the Developer may submit to the Agency a written request for any disbursement of the Street Improvements Reimbursement ("Street Improvements Reimbursement Request"). The Street Improvements Reimbursement Requests shall be approved and paid by the Agency as follows: RVPURXVARNERl716287.11 17 4.2.3.1 if the Street Improvements Reimbursement Request is for payment for work and amounts which are consistent with an Approved Street improvements Cost Estimate, then the Agency shall review and pay such Street Improvements Reimbursement Request within thirty (30) days after the receipt of the same provided that Developer has submitted the supporting documentation required by Section 4.2.3.3 below and that such Street Improvements Reimbursement Request is materially consistent with tate Approved Street Improvements Cost Estimate. 4.2.3.2 If the Street improvements Reimbursement Request includes work or amounts in addition to or not previously subject to an Approved Street Improvements Cost Estimate, the Agency shall review the Street Improvements Reimbursement Request and, if approved, the Agency shall pay such Street Improvements Reimbursement Request to Developer within thirty (30) days after receipt of the same. The Agency's approval shall be given if the Agency reasonably determines that the Street Improvements Costs set forth on the. Street Improvements Reimbursement Request are reasonable and customary. The Agency's failure to approve or disapprove a Street improvements Reimbursement Request within thirty (30) days from its receipt of such Street Improvements Reimbursement Request (including all reasonably required supporting documentation described in Section 4.22.3 below) shall constitute the Agency's approval thereof. 4.2.3.3 The Agency's obligation to approve a Street Improvements Reimbursement Request under either Section 4.2.3.1 or Section 4.2.32 shall be contingent upon the Agency's receipt and approval, which shall not be unreasonably withheld or delayed, of the following: 4.2.3.3.1 The Street Improvements Reimbursement Request, which shall include a description of the work performed, material supplied and cost incurred or due; 42.3.3.2 Bills, invoices, vouchers, statements and all other documents, which shall be attached to the Street Improvements Reimbursement Request, evidencing the amount paid to third parties, and a certificate from Developer certifying to Developer's compliance with applicable prevailing wage requirements; 4.2.3.3.3 Waivers and releases of mechanics' liens, stop notice claims or other lien claim rights; and 4.2.3.3.4 Any other document, requirement, evidence or information in the Developer's possession or under the Developer's control that Agency may reasonably request with regard to the Street Improvements or Street Improvements Reimbursement Request 4.2.3.4 The Developer shall submit accurate and complete Street Improvements Reimbursement Requests. Incomplete and/or inaccurate submittals will be returned to the Developer. The City shall have the same amount of time to review each revised Street Improvements Reimbursement Requests as allowed by this Agreement for the original submittal. For the second and succeeding re - submittals, the Developer shall reimburse the City its actual costs for processing and responding to such revised submittal. 4.3 Agency's Obligations Under Ageement. The Developer acknowledges and agrees that the Agency's obligations under this Agreement are limited to those obligations set forth in this Article N pertaining to the Street Improvements Reimbursement. R FPUBWTARNER 1716187.11 I ARTICLE V DEVELOPER COVENANTS 5.1 Annual DeveloverPavrnent. On behalf of itself its successors and assigns to all or any part of the Shopping Center Property, the Developer covenants and agrees to pay the Annual Developer Payment in advance of each Sales Tax Year within the Sales Tax Term as provided in this Section 5.1. 5.1.1 First Sales Tax Year. The Developer shall tender the first Annual Developer Payment in the amount of Forty Thousand Dollars ($40,000) to the City no less than fifteen (15) days following commencement of the First Sales Tax Year. Subsequent Annual Developer Payments shall be paid as provided in Section 5.1.2. 5.1.2 Subsequent Sales Tax Years. Annual Developer Payments for the second and subsequent Sales Tax Years shall be determined and paid as provided in this Section 5.1.2. Within ninety (90) days after commencement of each. Sales Tax Year other than the First Sales Tax Year, the City shall provide the Developer in writing the City's determination of the total Local Sales Tax Revenues for the immediately preceding Sales Tax Year on a tenant -by -tenant basis, together with such supporting documentation as the City may legally he permitted to disclose. If the total Local Sales Tax Revenues for such immediately preceding Sales Tax Year exceeded the Minimum Annual Sales Tax Revenues applicable to such Sales Tax Year, the City shall reduce the Annual Developer Payment to be paid for the then -current Sales Tax Year bythe amount by which the Local Sales Tax Revenue for the immediately prior Sales Tax Year exceeded the Minimum Annual Sales Tax Revenues applicable to such prior Sales Tax Year. The City shall then make written demand upon the Developer for the amount of the Annual Developer Payment for the then -current Sales Tax Year as it may be reduced by operation of the foregoing sentence. The Developer shall tender the amount so demanded within thirty (30) days following such demand. Except as otherwise specifically set forth herein, in no event shall the Citybe obligated to provide the Developer any other data, information or documentation relaxed to the Local Sales Tax Revenues and all other data, information and documentation related to the Local Sales Tax Revenues shall by kept by the City in strict confidence and in compliance with all local, state and federal laws, rules and regulations. In no event shall the City be obligated to pay the Developer any sum if the Local Sales Tax Revenues for a particular Sates Tax Year exceeded the applicable Minimum Annual Sales Tax Revenues for such Sales Tax Year by an amount greater than the Annual Developer Payment; in such case, the Annual Developer payment for the then -current Sales Tax Year shall be reduced to zero but the Developer shall have no further right or claim with respect thereto. 5.1.3 Reconciliation Following Final Sales Tax Year. Within ninety (90) days following the end of the last Sales Tax Year, the City shall provide the Developer in writing the City's determination of the total Local Sales Tax Revenues for the final Sales Tax Year on a tenant -by -tenant basis, together with such supporting documentation as the City may legally be permitted to disclose. If the total Local Sales Tax Revenues for such final Sales Tax Year exceeds the Minimum Annual Local Sales Tax Revenues applicable to the final Sales Tax Year, the City shall pay (without interest) to Developer an amount equal to the lesser of (1) the amount of the Annual Developer Payment paid by the Developer in advance at the beginning of the final Sales Tax Year, or (2) the amount by which the local Sales Tax Revenues for the final Sales Tax Year exceeded the Minimum Annual Sales Tax Revenues applicable to such final Sales Tax Year. Such payment shall be made concurrently with the City's written determination as described in the first sentence of this Section 5.1.3. RVPVBZVAPNER1716287.11 19 5.1.4 No Carry Forward or Back. Agency and Developer acknowledge and agree that the calculation and determination of all financial components of the City's and the Developer's right:-, and obligations under this Article 5 shall be computed on a Sales Tax Year -to -Sales Tax Year basis. Revenues generated in one Sales Tax Year may not be carried forward or back to any prior or future Sales Tax Year, it being the express agreement and understanding of the parties that for each Sales Tax Year the financial obligations of the parries and satisfaction of the conditions precedent to such obligations shall be determined and made independently of any other Sales Tax Year. 5.1.5 Term. The covenants of this Section 5.1 shall become effective upon the Effective Date of this Agreement and shall continue in effect thereafter for the entirety of the Sales Tax Term. 5.1.6 Covenants Run'With the Land. The covenants set forth in this Section 5.1 touch and concern the Shopping Center Property, and every part thereof, and constitute covenants running with the Shopping Center Property and every part thereof for the full term of each covenant as set forth in this Article V. They may be enforced by the City through all available legal or equitable means, including injunctive relief. 5.2. Completion Covenant On behalf of itself, its successors and assigns to all or anyportion of the Shopping Center Property, Developer covenants and agrees to commence the development of the Shopping Center Project within ninety (90) days of the Shopping Center Project Commencement Date and to Complete the Shopping Center Project within twenty four (24) months thereafter, subject to Section 9.10. For purposes of this Agreement, the term "Complete" or "Completion" means (1) as to the "Ross", "CVS", and "99¢ Store" Buildings, that a final certificate of occupancy (or City -designated equivalent) has been issued, and (2) as to "A" and "B" and "Shop V and "Shop 2" Buildings, the completion of all exterior improvements consistent with City requirements; the Developer shall not be required by this Agreement to obtain a certificate of occupancy with respect to any tenant improvements to be constructed within the Shopping Center Project 5.2.1 Term. The covenants of this Section 52 shall become effective upon the Effective Date and shall terminate upon the earlier of (i) the Completion of the Shopping Center Project, or (ii) the fifteenth (I5 b) anniversary of the Effective Date of this Agreement. 5.2.3 Covenants Run With the Land. The covenants set forth in Section 5.2 touch and concern the Shopping Center Property, and every part thereof, and constitute covenants running with the Shopping Center Property and every part thereof for the full term of each covenant as set forth in this Article V. They may be enforced by the City through all available legal or equitable means, including injunctive relief 5.3 Maintenance and Condition Covenant. The Developer, for itself, its successors and assigns, hereby covenants and agrees that the exterior areas of the Shopping Center Property which are subj ect to public view (e.g.: all improvements, paving walkways, landscaping, and ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. In the event that at any time during the term of this Section 5.3 there is an occurrence of an adverse condition on any area of the Shopping Center Property which is subject to public view in contravention of the general maintenance standard described above (a "Maintenance Deficiency"), then the Agency shall notify the Developer in writing ofthe Maintenance Deficiency and give the Developer, or the then -current owner of the applicable portion of the Shopping Center Property if the Developer is no longer the owner of that portion of the Shopping Center Property which contains the Maintenance Deficiency, thirty (30) days from the date of such notice to cure the Maintenance Deficiency as identified in the notice. The words "Maintenance Deficiency" include, without limitation, the following inadequate or non -confirming property maintenance conditions: RYPUBX ARNER1716287.11 20 (i) failure to properly maintain the windows, structural elements, and painted exterior surface areas of the commercial structures in a clean and presentable manner; (ii) failure to keep the front and side yard areas of the commercial elements of the Shopping Center Project free of accumulated debris, appliances, inoperable motor vehicles or motor vehicle parts, or free of storage of lumber, building materials or equipment not regularly in use on the Shopping Center Property; and (iii) failure to regularly mow lawn areas or permit grasses planted in lawn areas to exceed nine inches (9") in height, or failure to otherwise maintain the landscaping of the commercial elements of the Shopping Center Project in a.reasonable condition free of weeds and debris. In the event the responsible party fails to cure or commence to cure the Maintenance Deficiency within the time allowed, the Agency may thereafter conduct a public bearing following transmittal of written notice thereof to the Developer, or the then -current owner of the applicable portion of the Shopping Center Property if the Developer is no longer the owner of that portion of the Shopping Center Property which contains the Maintenance Deficiency, ten (10) days prior to the scheduled date of such public hearing in order to verify whether a Maintenance Deficiency exists and whether the Developer, or the then -current owner of the applicable portion of the Shopping Center Property if the Developer is no longer the owner of that portion of the Shopping Center Property which contains the Maintenance Deficiency, has failed to comply with the provision of this Section 5.3. Ii; upon the conclusion of a public hearing, the Agency males a finding that a Maintenance Deficiency exists and that there appears to be non-compliance with the general maintenance standard, as described above, thereafter the Agency shall have the right to enter the Shopping Center Property and perform all acts necessary to cure the Maintenance Deficiency, or to take other action at law or equity the Agency may then have to accomplish the abatement of the Maintenance Deficiency. Any sum emended by the Agency for the abatement of a Maintenance Deficiency as authorized by this Section 53 shall become a Gen on the Shopping Center Property if the Maintenance Deficiency exists on the Shopping Center Property. if the amount of the lien is not paid within thirty (30) days after written demand for payment by the Agency, the Agency shall have the right to enforce the lien in the manner as provided in Section 5.3.1 below. 5.3.1 Lien Rights. The parties hereto further mutually understand and agree that the rights conferred upon the Agency under this Section 5.3 expressly include the power to establish and enforce a Gen or other encumbrance against the Shopping Center Property in the manner provided under Civil Code Sections 2924,2924b and 2924c in the amount as reasonably necessary to cure the Maintenance Deficiency, including attorneys fees and costs of the Agency associated with the abatement of the Maintenance Deficiency or removal of graffiti and the collection of the costs of the Agency in connection with such action. In any legal proceeding for enforcing such a lien, the prevailing party shall be entitled to recover its attorneys' fees and costs of suit. The provisions of this Section 5.3 shall be enforceable by the Agency in its discretion, cumulative with any other rights or powers granted by the Agency under applicable law. Nothing in the foregoing provisions of this Section 5.3 shall be deemed to preclude any party from making any alterations, additions, or other changes to any structure or improvement or landscaping on the Shopping Center Property, provided that such changes comply with the zoning and development regulations of the City and other applicable law. 5.3.2 Term. The covenants of this Section 5.3 shall become effective upon the Effective Date of this Agreement and shall continue in full force and effect thereafter until the twentieth (201) anniversary of the Effective Date. R PP UB l K'YABNER 1716287.11 21 5.3.3 Covenants Run With the Land. The covenants set forth in this Section 5.3 touch and concern the Shopping Center Property, and every part thereof, and constitute covenants running with the Shopping Center Property and every part thereof for the full term of each covenant as set forth in this Article V. They may be enforced by the City through all available legal or equitable means, including injunctive relief. 5.4 Prohibited and Restricted Land Uses. 5.4.1 Prohibited Uses. On behalf of itself, its successors and assigns to all or anyportion of the Shopping Center Property, Developer covenants and agrees that no part or portion of the Shopping Center Project or Property shall be held, used, leased, sold, rented, assigned, transferred, or otherwise alienated to, for, or by any use identified on the attached Exhibit "F-1" (each such use, a "Prohibited Use"). 5.4.2 Non -Retail Restricted Uses. On behalf of itself, its successors and assigns to all or any portion of the Shopping Center Property, Developer covenants and agrees that no more than ten thousand square feet (10,000 sq. ft.) of the gross leaseable area of the Shopping Center Project or Property shall at any one point in time be used, leased, sold, rented, assigned, transferred or otherwise alienated to, for, or by any of the uses set forth on the attached Exhibit "F-2" (each such use, a "Restricted Use "). The foregoing notwithstanding, however, the foregoing limitation shall not apply to any vacant Ieasable space within the Shopping Center Project which satisfies all of the following conditions: (1) such space has been unoccupied for a continuous ninety (90) day period, (2) the proposed use of such space is consistent with all then -current City zoning and other land use requirements, (3) the proposed use is not a Prohibited Use, and (4) the Developer demonstrates to the City's reasonable satisfaction that the Developer has exercised commercially reasonable good faith efforts to lease such space to a use other than a Prohibited Use or a Restricted Use during such ninety (90) day vacancy period at a rental rate no more than the fair market rental rate for, and on terms no Iess favorable than, similar commercial space within the City. 5.4.3 Existing Leases. Nothing in this Section 5.4 shall require Developer to terminate the tenancy of any lessee of the Shopping Center Property which is (or which may become pursuant to such lessee's lease) a Prohibited Use or Restricted Use but which lawfully occupies its leasehold space pursuant to a written lease which became effective no later than thirty (30) days prior to the Effective Date of this Agreement. The Developer shall not extend any such leasehold term unless such extension may be unilaterally exercised by the lessee without Developer's approval or consent. 5.4.4 Term. The covenants of this Section 5.4 shall become effective upon the Effective Date and shall continue in effect thereafter for the entirety of the Sales Tax Term. 5.4.5 Covenants Run With the Land. The covenants set forth in this Section 5.4 touch and concern the Shopping Center Property, and every part thereof, and constitute covenants running with the Shopping Center Property and every part thereof for the full term of each covenant as set forth in this Article V. They may be enforced by the City through all available legal or equitable means, including injunctive relief. 5.5 Restaurant Completion Covenant. The Developer, for itself its successors and assigns, hereby covenants and agrees that that portion of the Shopping Center Property identified as "Citrus Pad No. 1" on the Development Plan, shall as part of the Shopping Center Project, be developed for no purpose other than a sit- down, full-service restaurant containing not less than four thousand (4,000) square feet of gross leasable area. As an example, but not in limitation, of the types of prohibited uses, in connection with the development of the Shopping Center Project, Citrus Pad No. 1 shall not be developed as a fast food restaurant (e.g., McDonalds, RVPUMVARAER1716287.11 22 Burger King) or a "quick serve/fast serve" restaurant (e.g., Farmer Boys). 5.5.1 Term. The covenants of this Section 5.5 shall become effective upon the Effective Date of this Agreement and shall continue in full force and effect thereafter until the twentieth (20'b) anniversary of the Effective Date. 5.5.2 Covenants Run With the Land. The covenants set forth in this Section 5.5 touch and concern the Shopping Center Property, and every part thereof; and constitute covenants running with the Shopping Center Property and every part thereof for the full term of each covenant as set forth in this Article V. They may be enforced by the City through all available legal or equitable means, including injunctive relief: ARTICLE VI DEFAULT AND REMEDIES 6.1 Event of Default. Each of the following shall constitute an "Event of Default": 6.1.1 Failure by a parry to comply with and observe any of the conditions, terms, or covenants set forth in this Agreement, if such failure remains uncured thirty (30) days after written notice of such failure from the non -defaulting party to the defaulting party with respect to a default that cannot be cured within thirty (30) days, if the defaulting parry fails to commence such cure within such thirty (30) day period or, thereafter, fails to diligently and continuously proceed with such cure to completion. However, if a different period, notice requirement, or remedy is specified under any other section of this Agreement, then the specific provision shall control. 6.1.2 Any representation or warranty contained in this Agreement or in any application, financial statement invoice, certificate, or report submitted pursuant to this Agreement proves to have been incorrect in any material respect when made. 6.2 Remedies as Between City and Developer. It is admowledged by the City and the Developer that the City would not have entered into this Agreement if it was to be liable in monetary damages under this Agreement, or with respect to this Agreement or the application thereof. In general, the City and the Developer may pursue any remedy at law or equity available for the breach of any provision of this Agreement, including consequential damages, except that the City shall not be liable in monetary damages to the Developer, or to any successor in interest of the Developer, or to any other person, and the Developer covenants not to sue for damages or claim any damages: 6.2.1 For any breach of this Agreement or for any cause of action that arises out of this Agreement; or 6.2.2 For the taking, impairment or restri ction of any right or interest conveyed or provided under or pursuant to this Agreement; or 6.2.3 Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement. RVPUBWVARNER1716257.11 0*1 6.3 Remedies as Between Asengy and Developer. The Agency and the Developer maypursue any remedy at law or equity available for the breach of any provision of this Agreement, excluding consequential damages. 6.4 Specific Performance as Between City and Developer. The City and the Developer acknowledge that money damages and remedies at law generally are inadequate and specific performance and other non -monetary relief are particularly appropriate remedies for the enforcement of the City's and the Developer's respective obligations under this Agreement and should be available to the City and the Developer for the following reasons: 6.4.1 Money damages are generally unavailable against the City. 6.42 Due to the size, nature and scope of the Shopping Center Project, it may not be practical or possible to restore the Shopping Center Property to its natural condition once implementation of this Agreement has begun. After such implementation, the Developer may be foreclosed from other choices it may have had to utilize the Shopping Center Property or portions thereof. The Developer has invested significant time and resources and performed extensive planning and processing of the Shopping Center Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Shopping Center Project in reliance upon the terms of this Agreement, and it is not possible to determine the sum of money that would adequately compensate the Developer for such efforts. 6.5 _Develoyer Right To Terminate Prior To Receipt of Street improvements Reimbursement. Prior to the Developer's receipt of any disbursement of the Street Improvements Reimbursement, the Developer shall have the right to terminate this Agreement for convenience without cost, expense or liability to any Party. 6.6 Rights and Remedies: Rights and Remedies Not Exclusive. Unless prohibited by law or otherwise provided by a specific term of this Agreement, the rights and remedies of the parties under this Agreement are nonexclusive and all remedies under this Agreement may be exercised individually or cumulatively. Upon any party's Event of Default, in addition to those remedies expressly granted in this Agreement, the parties shall also have the right to seek all other available legal and equitable remedies, including, without implied limitation, general and consequential damages. 6.7 No Cross -Defaults. The Developer's obligations arising out of the Covenants, Conditions and Restrictions are separate and distinct from the obligations arising out of this Agreement, and the Developer's breach of the Covenants, Conditions and Restrictions shall not be deemed a breach or default of this Agreement. ARTICLE VII LITIGATION 7.1 Third Party Litigation Concerning A eft ement Unless this Agreement is terminated as described below, the Developer shall defend, at its expense, including attorneys' fees, indemnify, and hold harmless the City and the Agency, their agents, officers and employees from any actual or alleged claim, action or proceeding against the City or the Agency, their agents, officers, or employees to attack, set aside, void, or annul the approval of this Agreement or the approval of any entitlement or permit granted pursuant to this Agreement. Within fifteen (15) days from its receipt of formal notice thereof; the City and/or the Agency shall promptly notify the Developer in writing of any such claim, action, or proceeding and the City and the Agency RYPUB"AANBR1716287.11 24 shall reasonably cooperate in the defense. The City and the Agency may in their discretion participate in the defense of any such claim, action, proceeding or determination. Within fifteen (15) days following its receipt of the above-described City's and/or Agency's notice, the Developer shall notify the City and Agency in writing, that the Developer has irrevocably elected to either. (i) undertake its defense and indemnity obligations as herein set forth, or (ii) terminate this Agreement without cost, expense or liability to any Party; provided, however, that if Developer has received any portion of the Street Improvements Reimbursement the Developer shall not have the right to terminate this Agreement. 7.2 Environmental Assurances. The Developer shall indemnify and hold the City, its officers, agents, and employees free and harmless from any liability, based or asserted, upon any act or omission of the Developer, its officers, agents, employees, subcontractors, predecessors in interest, successors, assigns and independent contractors for any violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene or to environmental conditions on, under or about the real property underlying the Street Improvements that existed as of the date of acceptance of the Street Improvements, including, but not limited to, soil and groundwater conditions, and the Developer shall defend, at its expense, including attorneys' fees, the City, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. The City may in its discretion participate in the defense of any such action. 7.3 Approval of Attorney. With respect to Sections 7.1 and 7.2 beret the City and the Agency reserve, the right to either. (i) approve the attorney(s) that the Developer selects, hires or otherwise engages to defend the indemnified the Agency and/or City bereunder, which approval shall not be unreasonably withheld, or (ii) conduct its own defense; provided, however, that the Developer shall reimburse the Agency and/or City forthwith for any and all reasonable expenses incurred for such defense, including attorneys' fees, upon billing and accounting therefor. 7.4 Survival- The provisions of Sections 7.1 through 7.3, inclusive, shall survive the termination of this Agreement ARTICLE VIII MORTGAGEE PROTECTION 8.1 The parties hereto agree that this Agreement shall not prevent or limit the Developer, in any manner, at the Developer's sole discretion, from encumbering the Shopping Center Property or any portion thereof or any improvement thereon by anymortgage, deed oftrust or other security device securing financing with respect to the Shopping Center Property that is junior to Developer's obligations under this Agreement. The City and the Agency acknowledge that the lenders providing such financing may require certain Agreement interpretations and modifications and agrees upon request, from time to time,'to meet with the Developer and representatives of such lenders to negotiate in good faith any such request for interpretation or modification. The City and the Agency will not unreasonably withhold their consent to any such requested interpretation or modification provided such interpretation or modification is consistent with the intent and purposes of this Agreement and provided further that no term, condition or covenant of this Agreement is made subordinate to the rights or interests of such lenders. Any mortgagee of the Shopping Center Property shall be entitled to the following rights and privileges: 8.1.1 Neither entering into this .Agreement nor a breacb of this Agreement shall defeat, render invalid, diminish or impair the lien of any mortgage on the Shopping Center Property made in good faith and for value, unless otherwise required by law. R YPUBWEARAEM 716287. 11 25 8.1.2 The mortgagee of any mortgage or deed of trust encumbering the Shopping Center Property, or any part thereof, which mortgagee, has submitted a request in writing to the City and the Agency in the manner specified herein for giving notices, shall be entitled to receive written notification from the City and the Agency of any default by the Developer in the performance of the Developer's obligations under this Agreement. 8.1.3 If the City or the Agency timely receives a request from a mortgagee requesting, a copy of any notice of default given to the Developer under the terms of this Agreement, the City or the Agency, as the case may be, shalI provide a copy of that notice to the mortgagee within ten (10) days of sending the notice of default to the Developer. The mortgagee shall have the right, but not the obligation, to cure the default during the remaining cure period allowed such party under this Agreement. 8.1.4 Any mortgagee who comes into possession of the Shopping Center Property, or any part thereof, pursuant to foreclosure of the mortgage or deed of trust, or deed in lieu of such foreclosure, shall take the Shopping Center Property, or part thereof, subject to the terms of this Agreement. 82 Estoppel Certificates. Within thirty (30) days following Developer's written request, the Agency shall execute, acknowledge and deliver to the Developer and/or to any mortgagee, its certificate certifying. (a) that this Agreement is unmodified and in full force and effect (or, if there have been modifications, that this Agreement is in full force and effect, as modified, and stating the modifications), and (b) whether, to the City's and Agency's actual current knowledge, there are then existing any defaults by the Developer in the performance or observance by the Developer of any agreement, covenant or condition hereof on the part of the Developer to be performed or observed and whether any notice has been given to the Developer of any default which has not been cured (and, if so, specifying the same). Any such certificate may be relied upon by a mortgagee or trustee under a deed of trust encumbering the Shopping Center Property or any part thereof. ARTICLE IX MISCELLANEOUS PROVISIONS 9.1 Recordation of Agreement. This Agreement and any amendment or cancellation thereof shall be recorded with the Los Angeles County Recorder by the Clerk of the City Council within ten (10) days after the Effective Date. If the parties to this Agreement or their successors in interest amend or cancel this Agreement, or if the City or the Agency terminates or modifies this Agreement as provided herein for failure of the Developer to comply in good faith with the terms and conditions of this Agreement, the City Clerk shall have notice of such action recorded with the Los Angeles County Recorder. 9.2 Entire Aereement. This Agreement sets forth and contains the entire understanding and agreement of the parties, and there are no oral or written representations, understandings or ancillar,, covenants, undertakings or agreements that are not contained or expressly referred to herein. No testimony or evidence of any such representations, understandings or covenants shall be admissible in any proceeding of any kind or nature to interpret or determine the terms or conditions of this Agreement. 9.3 Severability. If any term, provision, covenant or condition of this Agreement shall be determined invalid, void or unenforceable, the remainder of this Agreement shall not be affected thereby -to the extent such remaining provisions are not rendered impractical to perform taking into consideration the R VP UB l I.MARNER i 71626 7. 11 26 purposes of this Agreement. Notwithstanding the foregoing, the terms of this Agreement concerning of the Street Improvements and the Local Sales Tax Revenues are essential elements of this Agreement and neither the City or the Agency would not have entered into this Agreement but for such provisions, and therefore in the event such provisions are determined to be invalid, void or unenforceable, this entire Agreement shall be null and void and of no force and effect whatsoever. 9.4 Interpretation and Governing Law. This Agreement and any dispute arising hereunder shall be governed and interpreted in accordance with the procedural and substantive laws of the State of California, without regard for conflict of laws principles. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the parties hereto, and the rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement, all parties having been represented by counsel in the negotiation and preparation hereof. 9.5 Section Headines. All section headings and subheadings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement. 9.6 Singular and Plural. As used herein, the singular of any word includes the plural. 9.7 Incorporation of Recitals. The Recital set forth in this Agreement are incorporated into this Agreement. 9.8 Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other parry with the terms of this Agreement thereafter. 9.9 No Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit of the parties and their successors and assigns. No other person shall have any right of action based upon any provision of this Agreement. 9.14 Extensions and Delays; No Excuse Due to Economic Changes. Time is of the essence in the performance of the obligations of the City, the Agency and the Developer under this Agreement. In addition to specific provisions of this Agreement, providing for extensions of time, times for performance under this Agreement shall be extended where delays in performance are due to war, terrorism, insurrection; any form of labor dispute; lockouts; riots; floods; earthquakes; fires; acts of God or ofthird parties; third parry litigation or orders and judgments of courts of competent jurisdiction; acts of a public enemy, acts of governmental authorities; epidemics; quarantine restrictions; and freight embargoes (collectively, "Enforced Delays"); provided, however, that the party claiming the extension notify the other parties of the nature of the matter causing the default; and, provided further, that the extension of time shall be only for the period of the Enforced Delay. In no event shall any party to this Agreement be deemed to be in default under this Agreement because of an Enforced Delay. The Developer expressly acknowledges and agrees that changes in the general economic conditions or changes in its economic assumptions which may have provided a basis for its entering into this Agreement and undertaking the obligations under this Agreement described, or legislative changes of a similar or dissimilar type are not Enforced Delays and do not provide grounds for asserting the existence of an Enforced Delay. Developer expressly assumes the risk that changes in general economic conditions, in its economic assumptions relating to the terms and covenants of this Agreement, or of legislative R VPVB I KVAMER 1716287.11 27 �ff enactments, could impose an inconvenience or hardship on Developer's continued performance under this Agreement, but that such inconvenience or hardship is not an Enforced Delay and does not excuse Developer's performance under this Agreement. THE DEVELOPER EXPRESSLY AGREES THAT ADVERSE CHANGES IN ECONOMIC CONDITIONTS, EITHER OF THE DEVELOPER SPECIFICALLY OR THE ECONOMY GENERALLY, CHANGES IN MARKET CONDITIONS OR DEMANDS, OR ADVERSE LEGISLATIVE ENACTMENTS AFFECTING THE DISTRIBUTION OF SALES TAX REVENUES WITHOUT THE BENEFIT OF OFFSETTING REVENUES SHALL NOT BE AN ENFORCED DELAY OR OPERATE TO EXCUSE OR DELAY THE STRICT AND TIMELY PERFORMANCE OF EACH AND EVERY OBLIGATION AND COVENANT OF DEVELOPER ARISING UNDER THIS AGREEMENT. THE DEVELOPER EXPRESSLY ASSUMES THE RISK OF SUCH ADVERSE ECONOMIC, MARKET OR LEGISLATIVE CHANGES, WHETHER OR NOT IN EXISTENCE OR FORESEEABLE AS OF THE EXECUTION OF THIS AGREEMEN=T BY THE DEVELOPER. r' Developer's Initials 9.11 Mutual Cov, ants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the party benefited thereby of the covenants to be performed hereunder by such benefited party. 9.12 Successors in Interest. The burdens of this Agreement shall be binding upon, and the benefits of this Agreement shall inure to, all successors in interest to the parties to this Agreement. All provisions of this Agreement shall be enforceable as equitable servitudes and constitute covenants running with the land. Each covenant to do or refrain from doing some act hereunder with regard to development of the Shopping Center Property: (i) is for the benefit of and is a burden upon every portion of the Shopping Center Property-, (u) runs with the Shopping Center Property and each portion thereof; and (iii) is binding upon each party and each successor in interest during ownership of the Shopping Center Property or any portion thereof. 9.13 Execution in Count arts. Each person executing this Agreement on behalf of the Developer warrants and represents that he or she each have the authority to execute this Agreement on behalf of his or her corporation, partnership or business entity and warrants and represents that he or she has the authority to bind the Developer to the performance of its obligations hereunder. This Agreement may be executed in three (3) or more counterparts, each of which shall be deemed an original, and all of which shall constitute but one (1) and the same instrument. 9.14 ObEL-ations of the City and the Agency are Separate and Distinct. The City's obligations and the Agency's obligations under this Agreement are separate and distinct. 9.15 Shopping Center Project as a Private Undertaking. It is specifically understood and agreed by and between the parties hereto that the development of the Shopping Center Project is a private development, that no parry to this Agreement is acting as the agent of the other in any respect hereunder, and that each patty to this Agreement is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. No partnership, joint venture or other association of any hind is formed by this Agreement. The only relationship between the City and the Developer is that of a government entity regulating the development of private property and the owner of such property. RVPUBIPVARNERl71626711 28 9.16 Further Actions and Instruments. Each of the parties shall cooperate with and provide reasonable assistance to the other to the extent contemplated hereunder in the performance of all obligations under this Agreement and the satisfaction of the conditions of this Agreement. Upon the request of either party at any time, the other party shall promptly execute, with acknowledgment or affidavit if reasonably required, and file orrecord such required instruments and writings and take any actions as maybe reasonably necessary under the terms of this Agreement to carry out the intent and to fulfill the provisions of this Agreement or to evidence or consummate the transactions contemplated by this Agreement. 9.17 Eminent Domain. No provision of this Agreement shall be construed to limit or restrict the exercise by the City or the Agency of their respective powers of eminent domain with respect to the Shopping Center Property or Shopping Center Project or any other property owned by Developer. 9.18 AttomM' Fees. In the event ofthe bringing of an arbitration, action or suit bya party against another party by reason of any brea-;h of any of the covenants or agreements or any intentional inaccuracies in any of the representations and warranties on the part of the other party arising out of this Agreement or any other dispute between the parties concerning this Agreement then, in that event, the prevailing party in such action or dispute, whether by final judgment or arbitration award, shall be entitled to have and recover of and from the other party all costs and expenses of suit or claim, including reasonable attorneys' fees and expert witness fees. Any judgment, order or award entered in any final judgment or award shall contain a specific provision providing for the recovery of all costs and expenses of suit or claim, including reasonable attorneys' fees and expert witness fees (collectively, "Costs' incurred in enforcing, perfecting and executing such judgment or award. For the purposes of this Section 9.18, Costs shall include, without implied limitation, attorneys' and experts' fees, costs and expenses incurred in the following: (i) post judgment motions and appeals, (ii) contempt proceedings, (iii) garnishment, levy and debtor and third party examination; (iv) discovery, and (v) bankruptcy litigation. This Section 9.19 shall survive any termination of this Agreement. 9.19 Informal Dispute Resolution. The parties shall attempt in good faith to resolve any differences, controversy or claim arising out of or relating to this Agreement promptly bynegotiations between senior officials of the parties who have authority to settle the difference or controversy. The disputing parry may give the other Party written notice that a dispute exists between them so that the provision of Sections 9.19.1 and 9.19.2 shall apply ("Dispute Notice"). 9.19.1 Within twenty (20) days after receipt of a Dispute Notice, the receiving party shall submit to the disputing party a written response. The Dispute Notice and response shall include: (i) a statement of each Party's position and a summary of the evidence and arguments supporting its position, and (ii) the name and title of the official who shall represent that party. The senior officials shall meet at a mutually acceptable time and place or by telephone conference within thirty (30) days of time date of the Dispute Notice, and thereafter as often as they reasonably deem necessary to exchange relevant information and to attempt to resolve the dispute. In the event any party fails to provide a response to a Dispute Notice in accordance with this section or fails to cooperate in the scheduling of; or to attend, the meetings, described above, to resolve the dispute, then, with respect to that party, the Resolution Period shall be deemed to have run so that the dispute may immediately be subject to arbitration in accordance with Section 9.19.2. 9.19.2 If the matter has not been resolved pursuant to Section 9.19.1 within ninety (90) days of the date of the Dispute Notice ("Resolution Period"), (which period maybe extended bymutual agreement), or if anyparty will not participate in such procedure, the dispute shall be submitted to non-binding arbitration in Los Angeles County, California, in accordance with the AAA Rules. Each Party to such dispute shall RY PUBWFAR1ER1716287.11 29 appoint an arbitrator, and such arbitrators shall appoint an additional arbitrator. If, within thirty (30) days Mowing the expiration of the Resolution Period, anyparty has not appointed an arbitrator, the AAA shall, at the request of the other party, appoint an arbitrator on that party's behalf. IN WTI'NESS WHEREOF, the parties hereto have executed this Agreement on the last date set forth below. RYPUBi MARNER1716287.11 (Signatures on Following Pages) 30 SIGNATURE PAGE TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT "Landlord" JAR -University Commons LLC a California limited liability company By: Francis -University Commons LLC, Date: c,;1 -C1/-0_7 a California limited liability company, Manager By: Richard B. Francis LLC, A California limited liability company, Date: Mana*—awnaager BY: Namcis Its: R FPUBXT,ARNER 1716287.11 31 NOTARY ACKNOWLEDGMENT (California All -Purpose 4cknowledgment) STATE OF (a ix- ) ss. COUNTY OF S S ) On Ca A ) S� 2efore me, I!A)lI-7 I I`� / notary public, personally appeared > , personally known to me (er-pre v on o be the person(s) whose names) islafe subscribed to the within instrument and acknowledged to me that he/sl�ey executed the same in his/her authorized capacity(ies), and that by hisAieMheir signature(4}on the instrument the person(4 or the entity upon behalf of which the person(s� acte e the instrument. WITNESS my hand Signature ATTACHED TO: AW TRDA Nt _ CommWion #F 1641551 fVMmy Pt9ft - Cofffoelb Los Mpefn CaU* MYConm, S 1,1 1hd2„ RTT UBWVARNER 1716287.11 SIGNATURE PAGE TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT CITY: THE CITY OF AZUSA, a California municipal corporation Date: '4-o-7 BY- — -. � F. M. Delacl► City Manager ATTEST: By. CityClerk APPROVED AS TO LEGAL FORM: BEST BEST & KRIEGER LLP RVPUBXVARNER'1716287.11 32 NOTARY ACKNOWLEDGMENT (California All -Purpose Acknowledgment) STATE OF L i eD P, pi i a } ss. COUNTY OF -6I PS } On 14 P_U -ar- , 200 before me t,1 10GZ( til O , notarypublic, _ , �t��onaIly known to me (or proved personally appeared t, I to me on the basis of satisfactory evidence) to be the person whose name#Pare s, cnbed to the within instrument and acknowledged to me tha she/they executed the same in aer/their authorized capacity( and that by his/her/their signature on the instrument the perso}, or the entity upon behalf of which the person� acted, executed the instrument. VaTNESS my hand and official seal. Signature of Notary Public ATTACHED TO: �a�2 L/e14-5 { "D/71 /716AJs, CANDACETOSCANO COmmisston # 1417186 417t86 Notary Public - CaBlomio Los Angeles County �daMy Comm. Bq*es May 12, 2007 RTPUBWYARNER 171628 7. 11 SIGNATURE PAGE TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT AGENCY: THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA, a public body, corporate and politic Date: G ' � /` ? By: a-�---�---"` F. M. Delach Executive Director ATTEST: 9 By. -4 Agency Secretary APPROVED AS TO LEGAL FORM: BEST BEST & KRIEGER LLP By. 40w. U✓ 9' Loty� Agency Counsel Rl7PUBWVARAM1716287.7! 33 NOTARY ACKNOWLEDGMENT (California. All -Purpose AcImowledgment) STATE OF Oat f (-0 2 �j k �- ) ) ss. COUNTY OF L0S 7� On 1 9� 20OXbefJJore meo2 nC z,O � J 0�' Q, notarypublic, p��y appeared �`, ter ( Let IR personallyknown to me (orproved to me on the basis of satisfactory evidence) to be the persono whose nam**;' re subscribed to the within instnzment and acknowledged to me tha ti /she/they executed the same leer/their authorized capacity(, and that b&er/their signatareVon the instn,ment the person, or the entity upon behalf of which the person(} acted, executed the instrument. WITNESS my hand and official seal. Signature of Notary Public ATTACHED TO: 0��el'J (Lie/ CANDACETOSCAN Commission # 1417166 Ohiotary Pubflc - Caiifomia LC Angeles County' My Comm. Ej'hes May 12, 2007► AVPUB{KMAT--R1716297.11 EXHIBIT "A-1" TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT (Legal Description of the Vacant Property) M1.011 -M-119-96 R6PUBWVARNER1716287.11 PARCEL 2 CONIWJENCING AT THE NORTHWESTERLY CORNER. OF SAID PARCEL 1; THENCE ALONG THE WESTERLY LINE OF SAID PARCEL I SOUTH 46010'53" EAST A DISTANCE OF 173.26 FEET; THENCE SOUTH 00°00'56" EAST A DISTANCE OF 287.99 FEET TO THE TRUE POINT OF BEGINNING; THENCE LEAVING SAID WESTERLY LINE SOUTH 7105532" EAST A DISTANCE OF 176.87 FEET TO THE BEGINNING OF A 420.0.0 FOOT RADIUS NON -TANGENT CURVE, CONCAVE EASTERLY, A RADIAL TO SAID POINT BEARS NORTH 80°10'45" WEST; THENCE SOUTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL. ANGLE OF 09053'57", AN ARC LENGTH OF 72.56 FEET; THENCE SOUTH 00004'42" EAST A DISTANCE OF 100.10 FEET TO THE BEGINNING OF A 436.00 FOOT RADIUS CURVE, CONCAVE WESTERLY; THENCE SOUTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL, ANGLE OF 76035'22", AN ARC LENGTH OF 103.24 FEET, A RADIAL TO SAID POINT BEARS SOUTH 76°30'40" EAST; THENCE NORTH 89°58'40" EAST A DISTANCE OF 55.26 FEET; THENCE SOUTH 7I°51'20" EAST A DISTANCE OF 311.98 FEET; THENCE SOUTH 35°55'40" EAST A DISTANCE OF 69.85 FEET; THENCE SOUTH A DISTANCE OF 23.83 FEET; THENCE SOUTH 06039'32" EAST A DISTANCE OF 102.00 FEET; THENCE SOUTH 00°00' 10" WEST A DISTANCE OF 127.14 FEET TO A POINT ON THE SOUTHERLY LINE OF SAID PARCEL 1 OF PARCEL MAP 14845; THENCE ALONG SAID SOUTHERLY LINE NORTH 89058'36" WEST A DISTANCE OF 151.63 FEET TO THE SOUTHEASTERLY CORNER OF PARCEL 2 OF SAID PARCEL MAP 14845; THENCE CONTINUING ALONG THE SOUTHERLY LINE OF SAID PARCEL 2 NORTH 89058'36" WEST A DISTANCE OF 402.80 FEET TO THE SOUTHWESTERLY CORNER OF SAID PARCEL 2; THENCE ALONG THE WESTERLY LINE OF SAID PARCEL 2 NORTH 00000'56" WEST A DISTANCE OF 447.38 FEET TO THE NORTHWESTERLY CORNER OF SAID PARCEL 2; THENCE CONTINUING ALONG SAID WESTERLY LINE OF PARCEL I NORTH 00°00'56_'. WEST A DISTANCE OF 287.86 FEET TO THE TRUE POINT OF BEGINNING.:. =.:rte-.". CONTAINING 5.7773 ACRES GROSS. ,j_ EXHIBIT "A-2" . TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT (Legal Description of the Shopping Center Property) EXHIBrr "A-2" RVPUBXV RNBR1716287.11 PAGE I OF 2 PORTIONS OF PARCELS I AND 2 OF PARCEL MAP 14845 RECORDED iN BOOK 153, PAGES I THROUGH 5 OF PARCEL, MAPS, FILED IN THE OFFICES OF THE COUNTY RECORDER OF THE COUNTY OF LOS ANGLES, STATE OF CALIFORNIA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS AND ILLUSTRATED ON EXHIBIT B ATTACHED HERETO AND MADE A PART OF THIS DOCUMENT: PARCEL I BEGE9NING AT THE NORTHWESTERLY CORNER OF SAID PARCEL l; THENCE ALONG THE WESTERLY LINE OF SAID PARCEL 1 SOUTH 46010'53" EAST A DISTANCE OF 173.26 FEET; THENCE SOUTH 00°00'56" EAST A DISTANCE OF 287.99 FEET; THENCE LEAVING SAID WESTERLY LINE SOUTH 71°55'32" EAST A DISTANCE OF 176.87 FEET TO THE BEGINNING OF A 420.00 FOOT RADIUS NON -TANGENT CURVE, CONCAVE EASTERLY, A RADIAL TO SAID POINT BEARS NORTH 80°10'45" WEST; THENCE SOUTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 09°53'5T', AN ARC LENGTH OF 72.56 FEET; THENCE SOUTH 00°04'42" EAST A DISTANCE OF 100.10 FEET TO THE BEGINNING OF A 436.00 FOOT RADIUS CURVE, CONCAVE WESTERLY; THENCE SOUTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 76°3522", AN ARC LENGTH OF 103.24 FEET, A RADIAL TO SAID POINT BEARS SOUTH 76°30'40" EAST; THENCE NORTH 89058'40" EAST A DISTANCE OF 55.26 FEET; THENCE SOUTH 71051'20" EAST A DISTANCE OF 311.98 FEET, THENCE SOUTH 35°55'40" EAST A DISTANCE OF 69.85 FEET; THENCE SOUTH A DISTANCE OF 23.83 FEET; THENCE SOUTH 06039'32" EAST A DISTANCE OF 102.00 FEET; THENCE SOUTH 00"00"10" WEST A DISTANCE OF 127.14 FEET TO A POINT ON THE SOUTHERLY LINE OF SAID PARCEL 1 OF PARCEL MAP 14845; THENCE ALONG SAID SOUTHERLY LINE SOUTH 89059'36" EAST A DISTANCE OF 476.49 FEET TO THE SOUTHEASTERLY CORNER OF SAID PARCEL 1, SAID POINT LYING ON THE WESTERLY RIGHT-OF-WAY OF CITRUS AVENUE; THENCE ALONG SAID 'vMTERLY RIGHT-OF-WAY NORTH 00°01'24" EAST A DISTANCE OF 779.16 FEET TO TIM BEGINNING OF A 15.00 FOOT RADIUS CURVE, CONCAVE SOUTHWESTERLY; THENCE LEAVING SAID WESTERLY RIGHT-OF-WAY NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 81°14'47", AN ARC LENGTH OF 21.17 FEET TO A POINT ON THE SOUTHERLY RIGHT-OF-WAY OF ALOSTA AVENUE, SAID POINT LYING ON A 2300.00 FOOT RADIUS REVERSE CURVE, CONCAVE NORTHEASTERLY, A RADIAL TO SAID POINT BEARS SOUTH 08°46'3T' WEST; THENCE NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 24°21'56", AN ARC LENGTH OF 978.10 FEET TO THE BEGINNING OF A 15.00 FOOT RADIUS CURVE, CONCAVE SOUTHWESTERLY, 11, ! I Is f A RADIAL TO SAID POINT BEARS SOUTH 33°08'33" WEST; THENCE LEAVING SAID SOUTHERLY RIGHT-OF-WAY OF ALOSTA AVENUE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 33009'29", AN ARC LENGTH OF 8.68 FEET; THENCE SOUTH 89°59'04" WEST A DISTANCE OF 229.10 FEET TO TI•iE POINT OF BEGINNING. CONTAINING 16.9279 ACRES GROSS. -T.P.oB. - PGY f P.0 o - Pa- 2 S3.� YI�_33"fPRC� LEGA1 DESGR/PYLON CUP, 543Y NO. N0. D:2 TA RADIUS LENON C1 095357" 420.00' 7256' 02 76:3522" UF -00' 10,3.24' 03 2421:561" 2300 00' 978.10' C4 T.30929" 15.00' 6.68' 05 8174 ?7" 15.00' 2117' C6 2531;34" 2250.00' 1002.40' -T.P.oB. - PGY f P.0 o - Pa- 2 S3.� YI�_33"fPRC� LEGA1 DESGR/PYLON PARCELS 1 AND 2 AS SHOMV ON PARCEL MAf' /N BOOK 15J PAGES 1-5 RECORDED IN 1 -Hf COUNTY OF LOS AN012cS. MI !V � lUc7.y.7d 3b {Y IU3U. '!1 Nv^1/Y ZOW POR F7E CIT-' 0-1-,427/V 'S PLAWfAG O7ARTii0NT: ZOVIVS FOR THIS 517E IS IN TK` UNII/tRSITY OISTRICT (alb. h LEEGEN© ,000 POINT OF COMVENC3017- T.P. O.B. TP, UE P011V7 OF 6EGINNING — — — £X155NG PARCEL LINE PROPOSED P.4RCO2 LII SET Sy££T 2 FOR GENERAL NOTES, EASEMENT NOTES ANO L£G£NO 111VE TA91E � NO. SOAP,/NG LE"Nolw L1 N895840 £ 55.26' L2 N3555?0`JY 6995' L 3 NORTH 23.,43' L4 N46705,3'01 173.26' L5 N7155:32V 17887' L6 NOOp4 42"!x' 100.10' PARCELS 1 AND 2 AS SHOMV ON PARCEL MAf' /N BOOK 15J PAGES 1-5 RECORDED IN 1 -Hf COUNTY OF LOS AN012cS. MI !V � lUc7.y.7d 3b {Y IU3U. '!1 Nv^1/Y ZOW POR F7E CIT-' 0-1-,427/V 'S PLAWfAG O7ARTii0NT: ZOVIVS FOR THIS 517E IS IN TK` UNII/tRSITY OISTRICT (alb. h LEEGEN© ,000 POINT OF COMVENC3017- T.P. O.B. TP, UE P011V7 OF 6EGINNING — — — £X155NG PARCEL LINE PROPOSED P.4RCO2 LII SET Sy££T 2 FOR GENERAL NOTES, EASEMENT NOTES ANO L£G£NO oto � 5 Z LU 4f 00' 0 204 400 EXHIBIT "B-1" TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT (Map of the Vacant Property) ti• RYPUBWVARNER 1716287.11 • ��. Try. J. .� �r:r ` `.�! =-^• - - ... :~` �'Y.-_ rsaa+. e ` •,. ``' ..,w.. •.. � f sear `• I .. carr - - i.-' -. -+_"•... EXISTING ;,;�: ROSS EXISTING CVS I Amp y rf. EXISTING.. _ �._ THEATRE �''...., ,, —,f .....• PROPOSED� = f :w U ..1.�.!f.� .i BUILDING :', UA EXISTING rl AdamsENG,.EERING sszs aa�', a, . -sail 2ao• r e.s. cat—i. =W, -T701 no -also VACANT PROPERTY°I EXHIBIT i B-1 EXHIBIT `B-2" TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT (Map of the Shopping Center Property) t tt: R VPVB W VARNER 171628 7.11 EX HEAT "C-1" TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT (Development Plan for Shopping Center Project) Tentative Parcel Map No. 68355 Code Amendment ZCA-222 and Z-2006-01 Design Review No. DR 2006-02 and 2006-103 Minor Use No.(s) MUP 2006-27 (offsite We of liquor - Building "C) EXHIBIT "C-1" RVPUB1 MARlTER1716287.11 SCALE: hTfS Adams,NG,NEERING SL7L 7km krc. - Sulle 2N lerb0.4, uw—k I= • ru) r."I.ss DEVELOPMENT PLACE EXHIBIT C-1 ••�••• `,� �.� • -��•. ::. • .jos . ?%•• •.•• �.'.�.`,_ •�.'+'-. :,ter'••.' V- t-•."•. �`�`"s'."._... gym 4 . ...... ..� •�.7�- `y -� _ . ��` ."ti'..� �..� .`-: • - U EXISTING •.i.':I ROSS. ... EXISTWG -_ CVS ),I 4 ��•�` • ;". _ � _ - �,� �: .SIV I �; L1..ti EXISTING THEATRE_- . PROPOSED x`11 •_ BUILDIN T_�= �, 1'•.../.'...... •1�:_f��i - �•r �- )-: ', { ` 4.. �... _�... Ali - .7�r=•' r.nv —�- Q UJI __ :.. r - EXISTING SCALE: hTfS Adams,NG,NEERING SL7L 7km krc. - Sulle 2N lerb0.4, uw—k I= • ru) r."I.ss DEVELOPMENT PLACE EXHIBIT C-1 EXHIBIT "C-2" TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT (Master Phasing Pian) EXHIBIT "C-2" RYPUBIR' &AMR1716257.11 .,� r K- . _ - � a ti�� r f r Y _�/, EDIT "D-1" TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT (Description of Street Improvements) RVPUBYF>EARNERl716287.11 EMMIT D-1 DESCRIPTION OF STREET IMPROVEMENTS Roadway improvement shall consist of the Engineering, Construction Management and Construction of a dedicated roadway extension of Fenimore Ave. on the south, northerly to and including a join with Alosta Ave. Engineering and construction shall be performed and completed to the approval of the City Engineer. Work shall include but not be limited to the construction of the following: Curb, gutter, sidewalk, asphalt concrete pavement, base material, grading and excavation of the roadway, street lights, signage, pavement markings and signage, Sanitary Sewer, Water Distribution, Gas, Electrical, Cable TV, street trees , landscaping and other appurtenances for proper development of the Project.. Eneineerine and Construction Criteria: 1. Engineering and Construction shall be performed in accordance with the Standard Specifications for Public Works Construction, latest edition. 2. Standard Plans of the City of Azusa, including R-1, Street Sections. 3. The Standard Plans for Public Works Construction. 4. Roadway width shall he approved by the Los Angeles County Fire Department 5. Engineering shall include a smooth transition from existing Fenimore Ave. (48 feet wide curb to curb) on the south to an approved width (36 feet wide curb to curb or a width as approved by L.A.Co. Fire Department). 6. Roadway alignment shall provide for maneuverability and turning radii for trucks servicing the Foothill Center. 7. Signage and traffic striping shall be in accordance with the Manual on Uniform Traffic Control Devices. See attached Drawing D -IA. IWIM911-701IM RVPUBWE RNEKi716287.11 EX ISIT "D-2" TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT (Map Depicting Location of Street Improvements) E)aMrT "D-2" RVPUB1 VARNERi716287.11 f�J Cy z I' U RVPVBT VARNERV 16287.11 10,14:110y 1 u Z w F- Q F- ¢ Lj w w � � � � a w LD ¢ ) w w u . LD w i �C-) z w 0 �ry o z OL- U cn z L) L� z w Q a. Z LJ q LJ X Q O L _ L D z RLJ w r' Z a w p Q W "' Q w 0 = U C/? W( rO r o z U Q z Q w l L m U 0- LJ 2 S a a r LJ CQ z w � z > a z � a � �k k I SCALE NM roll, EXISTJ ;AG cz� Ade -I CLMSENGINEERING M,M 0—'-, A- - lmil 'U- 1a1d-ll.b DUM • rlrW, M-AISO F1 EXHIBIT D-2 EXIDBIT "E" TO STATUTORY DEVELOPMENT AGREEMENT AND OVY74ER PARTICIPATION AGREEMEA'T (Covenants, Conditions & Restrictions) RYPUBXFARNER1716287.11 Vl ��X::...• -----ter Recorded at request of: City of Azusa When recorded return to: City of Azusa 213 East Foothill Boulevard Azusa, CA 91702-1395 Attention: City Clerk Space Above for Use by Recorder Only Exempt from Recording Fees Per Gov't Code §27383 THE CITY OF AZUSA AND THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA DECLARATION OF OWNER OCCUPANCY COVENANTS, CONDITIONS AND RESTRICTIONS THIS DECLARATION OF OWNER OCCUPANCY COVENANTS, CONDITIONS, AND RESTRICTIONS (this "Declaration") is dated as of')r-ccmb r 4, 7-006, and entered into by and among JAR -UNIVERSITY COMMONS, LLC, a California limited liability company ("Developer"), the CITY OF AZUSA, a California municipal corporation ("City"} and the REDEVELOPMENT AGENCY OF THE CITY OF AZUSA, a public body corporate and politic ("Agency"), with reference to the following recited facts (each, a "Recital"): RECITALS A. The city council of the City ("City Council") approved and adopted the redevelopment plan ("Redevelopment Plan") for the redevelopment project area known as the "Merged Central Business District Redevelopment Project Area" ("Project Area"). B. The governing board of the Agency ("Governing Board") has adopted an implementationplan ("Implementation Plan") for the Redevelopment Plan and is engaged in activities necessary to execute and implement the Redevelopment Plan pursuant to California Community Redevelopment Law (Health and Safety Code Section 33000 et seq.) ("CRL"). C. The Developer owns certain real property within the boundaries of the City and within the Project Area that is vacant ("Vacant Property') as more particularly described in Exhibit "A -l" and shown on Exhibit "B-1" attached to this Declaration and incorporated into this Agreement by this reference. The Developer has proposed to develop the Vacant Property as a residential project ("Residential Project"). Et1.C1 I "Ell RVPUBWTIARNERV716,287.11 L D. The Developer, the City and the Agency agree that the Vacant Property shall be restricted as specifically provided in this Declaration for the benefit of the Project Area. NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION AND THE COVENANTS, CONDITIONS AND RESTRICTIONS SET FORTH IN THIS DECLARATION, THE DEVELOPER, THE CITY AND THE AGENCY AGREE, AS FOLLOWS: COVENANTS 1.1 Covenants to Run with the Land. The Developer, the City and the Agency declare their mutual, specific intent that this Declaration furthers the development of owner -occupied, single family, attached, residential housing within the Project Area The Developer, the City and the Agency also declare their mutual, specific intent that each and everyone of the provisions of this Declaration touch and concern the Vacant Property and shall be covenants running with the land of the Vacant Property that shall pass to and be binding upon the Vacant Property and each successive owner of the Vacant Property forthe benefit of the City and the Agency regardless of whether the City or Agency own or continue to own any property in the Project Area The Developer expressly assumes the duty and obligation to perform each of the covenants and to honor each of the agreements, reservations, restrictions and conditions set forth in this Declaration. If Developer transfers the Vacant Property, then Developer shall thereby be released from any further obligations hereunder arising from and after the date of transfer, provided that the transferee either agrees in writing to be bound, or is otherwise legally obligated to be so bound, bythe obligations of "Developer" hereunder arising from and after the transfer date. 1.2 Conditions. Restrictions and Requirements re: Leasing of Units: Parking Restrictions. An owner of a residential unit ("Unit") in the Residential Project who desires to lease his./her/its Unit shall be permitted to do so only upon compliance with all of the following:: 1.2.1 No Unit may be leased for transient, hotel, or dormitory purposes (i.e. for periods less than twelve (12) calendar months). 1.2.2 An owner may only lease its entire Unit and may not sub lease portions of the Unit to separate tenants. No more than two (2) private vehicles belonging to the owner and /or the tenant(s) under any such Iease can be parked at the Residential Proiect in owner designated garages. Parking on Fenimore Avenue, between Haltern Street and Alosta Avenue, shall be restricted to guest parking and subject to time limitations imposed by the City of Azusa from time to time. No parking on Fenimore Avenue, between Haltern Street and Alosta Avenue, shall be allowed between the hours of 2 a.m. and 6 a.m. Temporary overnight parking shall be allowed on Fenimore Avenue between Haltern Street and Alosta Avenue with a permit from the City of Azusa Police Department. Parking for long-term visitors and guests shall be subject to the same restrictions and requirements as owners'/tenants' parking. 13 Recordation of Declaration. The Developer shall or shall cause the recordation of this Declaration against the Vacant Property, which will be senior to all non -statutory liens and encumbrances against the Vacant Property. Each and every contract, deed or other instrument executed regarding the Vacant Property or any interest in the Vacant Property, following the date of recordation of this Declaration in the official records of the Recorder of the County ofLos Angeles, California, shall conclusively be deemed to have been executed, delivered and accepted subject to this Declaration, regardless of whether this Declaration is set forth in or referenced in such contract, deed or other instrument. EXHIBIT "E" R FT UB l KVARA'ER 1716287.11 1.4 Incorporation of Recitals. The Recitals of fact preceding this Declaration are true and correct and are incorporated into this Declaration in their entirety by this reference. 1.5 Notices, Demands and Communications Between the Parties. 15.1 Any and all notices, demands or communications submitted by any party to another party pursuant to or as required by this Declaration shall be proper, if in writing and dispatched by messenger for immediate personal delivery, by a nationally recognized overnight delivery service or by registered or certified United States Mail, postage prepaid, return receipt requested, to the address ofthe Developer, the City or the Agency, as applicable, as designated in Section 1.5.2. Such written notices, demands or communications maybe sent in the same manner to such other addresses as any party may from time to time designate. Any such notice, demand or communication shall be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is delivered by personal delivery, on the date of delivery by a nationally recognized overnight delivery service or four (4) business days after it is placed in the United States Mail, as provided in this Section 0. 15.2 The following are the authorized addresses for the submission of notices, demands or communications to the Parties: To Developer: JAR- University Commons, LLC c/o Trachman Indevco, LLC 1801 Century Park East, Suite 1040 Los Angeles, CA 90067 Attention: Andrew Trachman, President To City. The City of Azusa 213 East Foothill Boulevard Azusa, CA 91702-1395 Attention: City Manager To Agency: The Redevelopment Agency of The City of Azusa 213 East Foothill Boulevard Azusa, CA 91702-1395 Attention: Executive Director 1.6 No Intended Third Partv Beneficiaries. The Parties do not intended to create anyrights for, in favor of or on behalf of anyperson or entityby entering into this Declaration, other than the parties themselves. 1.7 Conflict of Interest. No member, official or employee of the Agency having any conflict of interest, direct or indirect, related to this Declaration shall participate in any decision relating to this Declaration. The parties represent and warrant that they do not have knowledge of any such conflict of interest, as of the date of this Declaration. 1.8 Warranty Against Payment of Consideration for Declaration. The Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Declaration. Third parties, for the purposes of this Section 1.8, shall not include persons to whom fees are paid for professional services, if rendered by attorneys, financial consultants, accountants, engineers, architects and the like when such fees are considered necessary by the Developer. EXHIBIT "E" R VP UB l KV. 4RNER l 71628 7.11 19 Governina Law. This Declaration shall be governed by the laws of the State of California applicable to contracts made by residents of the State of California and to be performed in the State of California, without application of such laws' conflicts oflaws principles. The parties acknowledge and agree that this Declaration has been entered into in the City of Azusa, County of Los Angeles, State of California, is to be performed in such city and relates to real property located in such city. f 1.10 Binding on Successors and Assigns. This Declaration shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. 1.11 Partial Invalidity; Severability. If all or any portion of any term or provision of this Declaration or the application of all or any portion of any term or provision of this Declaration to anyperson or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Declaration, or the application of all or any portion of such term or provision to persons or circumstances, other than those as to which it is held invalid or unenforceable, shall not be affected, and each such term and provision of this Declaration shall be valid and enforced to the fullest extent permitted by law. 1.12 Entire Agreement. This Declaration shall be executed in three (3) counterpart originals, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Declaration integrates all of the terms and conditions mentioned in this Declaration or incidental to this Declaration, and supersedes all negotiations or previous agreements between the parties with respect to the Vacant Property and the other subjects addressed in this Declaration. None of the terms, covenants, agreements or conditions set forth in this Declaration shall be deemed to be merged with any deed conveying title to the Vacant Property, and this Declaration shall continue in full force and effect before and after any such conveyances. All waivers of the provisions of this Declaration and all amendments to this Declaration which materially affect a party's rights or benefits must be in writing and signed by the party waiving or amending any right or benefit it has under this Declaration. 1.13 Time of the Essence. For each provision of this Declaration that states a specific amount of time within which the requirements of such provision are to be satisfied, time shall be deemed to be of the essence. THIS DECLARATION is executed by the Developer, the City and the Agency on the dates indicated next to the signature(of each of them or their authorized representative(s), below: DEVELOPER: Date: Date: CITY: Byr Date: 0-7'�- Diane Chagnon, Mayo AGENCY: EXHIBIT "E" RVPUBIMAJZXTR1716287.11 r -' Date: By [ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED] EXr.'HIBIT "E" REPUBWVARNER1716287.11 NOTARY ACKNOWLEDGN ENT (California All -Purpose AcImowledgment) STATE OF (6—�L 7U(4t } ss. COUNTY OF G S) On l 200 before me, AAkr( D@61 I/` notarypvhLic, personally appeared —I tj { V\ i personally lmown to me tvici=ee) to be the person(.s•}-whose name(s)4s' subscribed to the within instrument and acknowledged to me that he�� executed the same in his4+an46ei;� authorized capacity(je;s};-and that by hi&lcrh-heir sigaature(.e on the instrument the persoaf%�, or the entity upon behalf of which the WITNESS my h, ATTACHED TO: RVPUBET ARNEZ716287.11 a`s 4� :Mort # 116a1 No1ory " .' •�c - Los Arlq r 5 Otlrt� N�►CORY7t. Expires Feth 2b, 20 NOTARY ACKriTOWLEDCMENT (California All -Purpose AcImowledgment) STATE OF On/I J� ) ) ss. COUNTY OF Los (� A.*Ie, `� } On febe u a 20 before meati (� Z i7y ,notary public, personally appeared �i zt 1'i� %�� c,D1; , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose namo are subscribed to the within instrument and acknowledged to me that h sh ey executed the same -in hi�eir authorized capacity(ie�j, and that by, eir signature((4 on the instrument the person(�or the entity upon behalf of which the perso ) acted, executed the instrument. WITNESS my hand and official seal - Signature of Notary Public ATTACHED TO:'�(�J/'I.' r CANDACETOSCANO Commisslon # 1417186 z .d Notary Public . CoBtomia Los Angeles Cou12J007 9 �V�comm. Expires May RyPVBWY.4RAER1716287.11 NOTARY ACKNOWLEDGMENT (California AIl-Purpose Acknowledgment) STATE OF C'ZZLi rQeIJtZ( ) �,p ) ss. COUNTY OF LCS &e i -e S } Cfo— On W 20 hefbre me,(j i Tjq j -e (Occo- kt C� , notarypublic, personally appeared -Fl° AUCt S �A , —T)P l o k , personally known tome (or proved to me on the basis of satisfactory evidence) to be the person1Wwhose nam,0re subscnbed to the within instrument and acknowledged to me tbaf�sheithey executed the same'iza��erJtheir authorized capacity(i , and that byj�;er/their signat ure(_Von the instrument the person( } or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and ofzicial seal. Signature of Notary Public ATTACHED TO: CANDACE iOSCANO Commisslon # 1417186 1-0Notary Public - ponfomta Eos Angeles County - My Comm: ETkes May 12, 2007 RYPUBWYARNERl716297.11 E=IT A -I TO DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS (Legal. Description of Vacant Property) Exhibit A to Declaration of Covenants RVPUBXVARNdER1716287.11 PARCEL 2 COMMENCING AT THE NORTHWESTERLY CORNER OF SAID PARCEL l; THENCE ALONG THE WESTERLY LINE OF SAID PARCEL 1 SOUTH 46" 10'53" EAST A DISTANCE OF 173.26 FEET; THENCE SOUTH 00000'56" EAST A DISTANCE OF 287.99 FEET TO THE TRUE POINT OF BEGINNING; THENCE LEAVING SAID WESTERLY LINE SOUTH 71055'32" EAST A DISTANCE OF 176.87 FEET TO THE BEGINNING OF A 420.00 FOOT RADIUS NON -TANGENT CURVE, CONCAVE EASTERLY, A RADIAL TO SAID POINT BEARS NORTH 80°10'45" JEST; THENCE SOUTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 0905357", AN ARC LENGTH OF 7256 FEET; THENCE SOUTH 00004'42" EAST A DISTANCE OF 100.10 FEET TO THE BEGINNING OF A 436.00 FOOT RADIUS CURVE, CONCAVE WESTERLY;. THENCE SOUTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 76°35'22", AN ARC LENGTH OF 103.24 FEET, A RADIAL TO SAID POINT BEARS SOUTH 76°30'40" EAST; THENCE NORTH 89°58'40" EAST A DISTANCE OF 55.26 FEET; THENCE SOUTH 71151'20" EAST A DISTANCE OF 31198 FEET; THENCE SOUTH 35°55'40" EAST A DISTANCE OF 69.85 FEET; THENCE SOUTH A DISTANCE OF 23.83 FEET; THENCE SOUTH 06039'32" EAST A DISTANCE OF 102.00 FEET; THENCE SOUTH 00"00'10" WEST A DISTANCE OF 127.14 FEET TO A POINT ON THE SOUTHERLY LINE OF SAID PARCEL I OF PARCEL MAP 14845; THENCE ALONG SAID SOUTHERLY LINE NORTH 8905836" WEST A DISTANCE OF 151.63 FEET TO THE SOUTHEASTERLY CORNER OF PARCEL 2 OF SAID PARCEL MAP 14845; THENCE CONTINUING ALONG THE SOUTHERLY LINE OF SAID PARCEL 2 NORTH 89058'36" WEST A DISTANCE OF 402.80 FEET TO THE SOUTHWESTERLY CORNER OF SAID PARCEL 2; THENCE ALONG THE WESTERLY LINE OF SAM PARCEL 2 NORTH 00000'56" WEST A DISTANCE OF 447.38 FEET TO THE NORTHWESTERLY CORNER OF SAID PARCEL 2; THENCE CONTINUING ALONG SAID WESTERLY LINE OF PARCEL I NORTH 00'00'5c'- WEST 0'00'56'WEST A DISTANCE OF 287.86 FEET TO THE TR17E POINT OF CONTAIN NIG 5.7773 ACRES GROSS. ®Il EXHIBIT B -I TO DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS (Map of Vacant Properly) Exhibit B to Declaration of Covenants RVPUBWYAANER 1716287.11 {y SCALE: NTS AdamsENGINEERING 077 D.M" A�, - SOLO M. Cada'", C.diramm ff_'O+JA • (ma} .146-Mp _._._. VACANT PROPERTY EXHIBIT B-1 EI►MIT "F-1" TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT (Prohibited Land Uses) 1. Pawn Shops 2. Adult Businesses 3. Retail Sex Shops ("lotions and lace" types) 4. Flea Markets/Swap Meets 5. Laundromats 6. Dry Cleaning Plants 7. Retail Gun Shops 8. Tattoo Parlors 9. Churches and other non-profit organizations wholly or partially exempt from the payment of property taxes EX�BIT "F-1" RVPE&WVARNER1716287.11 EX MIT "F-2" TO STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT (Restricted Land Uses) Dental and Medical Doctors' Offices 2. All office uses except accessory office use Banks and all uses listed as personal services in the City of Azusa Development Code (barber and beauty shops; clothing rental; dry cleaning pick-up stores with limited equipment; home electronics/small appliance repair, locksmiths; licensed, therapeutic and non -sexual massage business; pet grooming with no boarding; shoe repair shops; tailors; spas; and tanning salons) EXHIBIT "F-2" R VPV B I KVARNER t 71628 7.11 AGENCY AGENDA ITEM TO: HONORABLE CHAIRPERSON AND AGENCY BOARD iLv FROM: KURT CHRISTIANSE , DEPUTY EXECUTIVE DIRECTOR VIA: F.M. DELACH, EXECUTIVE DIRECTOR DATE: OCTOBER 18, 2010 SUBJECT: REDEVELOPMENT AGENCY OPERATING COVENANT FOR THE ESTABLISHMENT OF AN APPLEBEE'S RESTAURANT IN THE CITRUS CROSSING SHOPPING CENTER RECOMMENDATION It is recommended that the Agency Board adopt the attached Resolution approving the Operating Covenant Agreement with APPLE SOCAL, LLC, as attached in substantially final form and authorize the Executive Director to, with the concurrence of the Agency Counsel, make any necessary modifications and execute the Agreement. BACKGROUND In December 2006, the City of Azusa and the Redevelopment Agency entered into an Agreement with JAR—University Commons, LLC to redevelop the Foothill Shopping Center, renamed the Citrus Crossing Center. JAR transferred its interests in the Agreement with respect to the shopping center property and project to Citrus Crossing Properties Fee LLC (the "Developer"). JAR transferred its interests in the Agreement with respect to the vacant property and residential project to CityView Citrus Crossing 102, LP. While the rehabilitation of Citrus Crossing has had an extremely positive effect in the community, certain aspects of the site's development have become stalled due to the downturn in the economy. This includes the recruitment of a restaurant operator for the 7,00 square foot building pad fronting onto Citrus Avenue. In an effort to identify quality restaurants to locate to the center, the Developer has continued to market the restaurant pad at annual sales and marketing events (e.g., International Council of Shopping Centers) with the goal of providing full-service, sit-down dining. Based on the Developer's recent efforts to recruit a restaurant to Citrus Crossing, it is clear to staff that current economic conditions continue to make it difficult for high quality restaurants to consider smaller markets like those found in Azusa. F However, staff recently became aware that there may be an opportunity to assist the Developer in bringing an Applebee's Restaurant to the undeveloped building pad. In June 2010, the City Manager met with the Developer and discussed ways in which the City/Agency could possibly defer the required annual developer payments in the amount of approximately $40,000 for a period of three years to provide the Developer the opportunity to recruit and further incentivize Applebee's. In addition, staff explored the extent to which additional Agency resources could be used to help recruit the restaurant. The amendments to the Citrus Crossing agreements that are required to facilitate the short-term deferral of Developer payments are being presented to the City Council and Agency Board under a separate report. The Objective: To join with the Developer of the Citrus Crossing Shopping Center to recruit a nationally -recognized, full service restaurant to the Center. OVERVIEW OF OPERATING COVENANTS Historically, the Agency has provided financial assistance to local restaurants in the form of a loan for the acquisition of certain furniture, fixtures and equipment. The provisions of these loans required the operators to remain in business for a specified period of time (varying between two and five years), after which the loan is forgiven. To date, these loans have been secured by a Promissory Note, a first trust deed on the operator's leasehold interest, and certain Uniform Commercial Code filings ("UCC") with the California Secretary of State. While exploring financial assistance options with the Developer and Applebee's, it became apparent that the Agency's usual process for making forgivable loans for the acquisition of furniture, fixtures and equipment would not work in this instance. Specifically, the Developer's bank would not agree to encumber the site with a first trust deed on the Applebee's lease and the restaurant itself was unwilling to subject its furniture, fixtures and equipment to a UCC filing. Consequently, Agency staff and the City Attorney began crafting an alternative plan utilizing operating covenants. Under the proposed Operating Covenant Agreement, the Agency would pay Applebee's $200,000 in exchange for which Applebee's would agree to certain covenants in order to insure long-term operation and maintenance of the restaurant. The essential provisions of the Agreement will include the following: • Agency: The City of Azusa Redevelopment Agency • Owner: Apple SoCal LLC, a subsidiary of Apple American Group LLC • Term: Five (5) years • Payment: $200,000 • Payment Due: Upon issuance of Certificate of Occupancy • Default Remedy: Recovery of entire payment • Indemnification: Standard Agency indemnities The Agreement would impose the following obligations (covenants) on Applebee's: • Use of the site restricted to a full service, dinner -house restaurant with the appropriate liquor license for on -sale beer, wine and distilled spirits. • Establishment of building maintenance standards. • Future building modifications subject to applicable codes and Azusa Redevelopment Plan. • Appropriate property taxes or Possessory Interest taxes will be paid. • The site will not be removed from the property tax roll. • The restaurant will remain in continuous operation for 5 years. • Applebee's accepts standard non-discrimination and non -segregation clauses. • Applebee's agrees to defend the Agreement against any third -party litigation. Drafts of the proposed Agreement incorporating the above provisions have been circulated to Applebee's and the Developer of Citrus Crossing for review and comment. Staff proposes that any final changes be reviewed and incorporated by the City Attorney and that the Executive Director be authorized to sign the final document on the Agency's behalf. CEQA The adoption of the Resolution approving the Operating Covenant Agreement with Apple SoCal LLC will not have a significant adverse effect on the environment. Thus, adoption of the Resolution is exempt from the requirements of the California Environmental Quality Act ("CEQA") pursuant to Sections 15061(b)(3) of the CEQA Guidelines. FISCAL IMPACT The Agency will make a $200,000 payment to Applebee's pursuant to this Agreement upon issuance of a Certificate of Occupancy. Applebee's officials estimate that this will occur in March 2011. Sufficient funds for restaurant financial assistance are available in the 2010-11 Agency budget. The Agency will also realize a $120,000 revenue loss over the next three years associated with the deferral of the Citrus Crossing Developer payment. Attarlhment- • Resolution Approving Operating Covenant Agreement with Apple SoCal LLC • Draft Operating Covenant Agreement with Apple SoCal LLC A RESOLUTION OF THE GOVERNING BOARD OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA, CALIFORNIA, APPROVING AN OPERATING COVENANT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA AND APPLE SOCAL, LLC FOR THE LONG TERM OPERATION OF A FAMILY STYLE RESTAURANT WHEREAS, the Redevelopment Agency of the City of Azusa ("Agency") is engaged in activities necessary to execute and implement the redevelopment plan ("Redevelopment Plan") for the Agency's Merged Central Business District Redevelopment Plan and Project Area ("Project Area") pursuant to the provisions of the California Community Redevelopment Law (Health & Safety Code Sections 33000 et seq.) ("CRL") and the Redevelopment Plan; and WHEREAS, APPLE SOCAL, LLC, a Delaware limited liability company ("Owner") entered into a lease with Citrus Crossing Properties Fee LLC, a Delaware limited liability company, dated July 16th, 2010, and plans to build and construct a one story Applebee's restaurant containing approximately five thousand seven hundred (5,700) square feet of floor area in a certain commercial development ("Project") constructed on real property located in the City and owned by Citrus Crossing Properties Fee LLC ("Property"); and WHEREAS, the Agency and Owner now desire to provide for the long-term operation and maintenance of the Project by the Owner in this Agreement; and WHEREAS, the Owner has requested financial assistance from the Agency in an amount of approximately Two Hundred Thousand Dollars ($200,000) ("Covenant Purchase Price"), and in consideration for the Covenant Purchase Price, the Owner has agreed to operate and maintain the Project within the City for a period of five (5) years; and WHEREAS, the Agency has determined that this Agreement will further the Agency's activities in redeveloping the Project Area by: 1. Assisting with business development and tourism in the redevelopment project area; and 2. Creating job opportunities for City residents; and 3. Generating tax revenue to the Agency that will assist the Agency in providing additional redevelopment in the Project Area; and 4. Preserving property within the Project Area; and 5. Providing for future improvements within the Project Area. NOW, THEREFORE, BE IT RESOLVED by the Governing Board of the Redevelopment Agency of the City of Azusa as follows: Section 1. The Board hereby approves the Operating Covenant Agreement (Apple Socal) in substantially final form, attached hereto and incorporated herein by reference, together with minor changes and amendments, which are consistent with the direction of the Board 45636.00000\5592083.1 and the intent of the Agreement as presented, as may be approved by the Executive Director and the Agency Attorney. Section 2. The Board hereby authorizes and directs the Executive Director and the Agency Attorney to take any action and execute any documents necessary to implement the Operating Covenant Agreement. Section 3. The Board hereby finds and determines that it can be seen with certainty that adoption of the Resolution approving the Operating Covenant Agreement with Apple SoCal LLC will not have a significant adverse effect on the environment. Thus, the adoption of this Resolution is exempt from the requirements of the California Environmental Quality Act ("CEQA") pursuant to Sections 15061(b)(3) of the CEQA Guidelines. Staff is directed to file a Notice of Exemption with the Los Angeles County Recorder's Office within five (5) working days of adoption of this Resolution. Section 4. The Agency Secretary shall certify to the passage and adoption of this resolution and the same shall thereupon take effect and be in force immediately upon its adoption. APPROVED AND ADOPTED this day of , 2010. Chairman Redevelopment Agency of the City of Azusa ATTEST: Redevelopment Secretary I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Redevelopment Agency of the City of Azusa at a regular meeting held on the day of , 2010. AYES: NOES: ABSTAIN: ABSENT: 45636.00000\5592083.1 OPERATING COVENANT AGREEMENT by and between the AZUSA REDEVELOPMENT AGENCY, a public body, corporate and politic, and APPLE SOCAL LLC, a Delaware limited liability company [Dated _, 2010 for reference purposes only] 45636.00000\5570219.3 AZUSA REDEVELOPMENT AGENCY OPERATING COVENANT AGREEMENT THIS OPERATING COVENANT AGREEMENT (this "Agreement") is dated as of [INSERT DATE], 2010, for reference purposes only, and is entered into by and between the AZUS�% REDEVELOPMENT AGENCY, ,a public body, corporate and politic ("Agency"), and APPLE SOCAL, LLC, a Delaware limited liability company ("Owner"). The Agency and Owner enter into this Agreement with reference to the following recited facts (each a "Recital"): RECITALS A. The Agency of the City of Azusa ("City") is engaged in activities necessary to execute and implement the redevelopment plan ("Redevelopment Plan") for the Agency's Merged Central Business District Redevelopment Plan and Project Area ("Project Area") pursuant to the provisions of the California Community Redevelopment Law (Health & Safety Code Sections 33000 et seq.) ("CRL") and the Redevelopment Plan; B. Owner entered into a lease with Citrus Crossing Properties Fee LLC, a Delaware limited liability company, dated July 16th, 2010, and plans to build and construct a one story Applebee's restaurant containing approximately five thousand seven hundred (5,700) square feet of floor area in a certain commercial development ("Project") constructed on real property located in the City and owned by Citrus Crossing Properties Fee LLC, which is depicted and described in Exhibit "A" attached hereto and incorporated herein by this reference ("Property"); and C. The Agency and Owner now desire to provide for the long-term operation and maintenance of the Project by the Owner in this Agreement; and D. The Owner has requested financial assistance from the Agency in an amount of approximately Two Hundred Thousand Dollars ($200,000) ("Covenant Purchase Price"), and in consideration for the Covenant Purchase Price, the Owner has agreed to operate and maintain the Project within the City for a period of five (5) years; and E. The Agency has determined that this Agreement will further the Agency's activities in redeveloping the Project Area by: Assisting with business development and tourism in the redevelopment project area; and 2. Creating job opportunities for City residents; and 3. Generating tax revenue to the Agency that will assist the Agency in providing additional redevelopment in the Project Area; and 4. Preserving property within the Project Area; and Providing for future improvements within the Project Area. -1- 4 563 6.00000\5 5 70219.3 TERMS NOW, THEREFORE, IN CONSIDERATION OF THE PROMISES AND COVENANTS SET FORTH IN THIS AGREEMENT, THE AGENCY AND OWNER AGREE, AS FOLLOWS: 1. Definitions. All initially capitalized terms used in this Agreen%nt shall have the meanings set forth in this Section 1 or, if not defined in this Section 1, where such term first appears in this Agreement, unless the context of usage clearly requires another meaning. 1.1 Agency. The Azusa Redevelopment Agency, a public body, corporate and politic. 1.2 Agency Operating Period. The time period beginning on the date the Certificate of Occupancy is issued by the City and ending on the fifth (5th) anniversary thereof, or the expiration date of the Redevelopment Plan, June 26, 2038, whichever is earlier. 1.3 Agency Parties. Collectively, the Agency, its elected officials, employees, attorneys and other agents. 1.4 Agency Party. Individually, the Agency, its elected officials, employees, attorneys or other agents. 1.5 Affiliate. In reference to any Person means any other Person Controlling or Controlled by or under common Control with the specified Person. "Affiliated" shall have the correlative meaning. 1.6 Approval. Any license, permit, approval, consent, certificate, ruling, variance, authorization, conditional use permit, or amendment to any of the foregoing, as shall be necessary or appropriate under any Law to develop or operate the Project. 1.7 City. The City of Azusa, a California municipal corporation and general law city. 1.8 Claim. Any claim, loss, cost, damage, expense, liability, lien, action, cause of action (whether in tort, contract, under statute, at law, in equity or otherwise), charge, award, assessment, fine or penalty of any kind (including consultant and expert fees and expenses and investigation costs of whatever kind or nature, challenge to the Agency's authority to enter into or perform this Agreement or approval of this Agreement in any form, if an Indemnitor improperly fails to provide a defense for an Indemnitee, then Legal Costs of counsel retained by the Indemnitee), and any judgment. 1.9 Control. The possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether by ownership of Equity Interests, by contract, or otherwise. 1.10 Controlling and Controlled. Exercising or having Control. 1.11 Covenant Payment. Two Hundred Thousand Dollars ($200,000). -2- 45636.00000\5570219.3 1. 12 Default. Defined in Section 9. 1.13 Default Interest. Interest at an annual rate equal to the lesser of. (a) eight percent (8%) per annum; or (b) the Usury Limit. 1.14 Effective Date. Defined in Section 2.1. 1.15 Equity Interest. All or any part of any direct or indirect equity or ownership interest(s) (whether stock, partnership interest, beneficial interest in a trust, membership interest in a limited liability company, or other interest of an ownership or equity nature) in any entity, at any tier of ownership, that directly or indirectly owns or holds any ownership or equity interest in a Person. 1.16 Executive Director. The Executive Director of the Agency or his or her designee or successor in function. 1.17 Federal. The federal government of the United States of America. 1.18 Five Year Implementation Plan. The implementation plan adopted for Redevelopment Plan pursuant to CRL Section 33490. 1.19 Government. Each and every governmental agency, authority, bureau, department, quasi -governmental body, or other entity or instrumentality having or claiming jurisdiction over the Property (or any activity this Agreement allows), including the government of the United States of America, the State, the County of Los Angeles and their subdivisions and municipalities, including the City and the Agency, and all other applicable governmental agencies, authorities, and subdivisions thereof. "Government" shall also include any planning commission, board of standards and appeals, department of buildings, city council, zoning board of appeals, design review board or committee or similar body having or claiming jurisdiction over the Property or any activities on or at the Property. 1.20 Hearing Officer. A Person hired by the City pursuant to City Municipal Code Chapter 1. 1.21 Indemnify. Where this Agreement states that any Indemnitor shall "indemnify" any Indemnitee from, against, or for a particular matter, that the Indemnitor shall indemnify the Indemnitee and defend and hold the Indemnitee harmless from and against any and all Claims: (a) from, as a result of, or on account of the particular matter; or (b) in enforcing the Indemnitor's indemnity obligation. 1.22 Indemnitee. Any Person entitled to be indemnified under this Agreement. 1.23 Indemnitor. A Party that agrees to indemnify any other Person pursuant to this Agreement. 1.24 Law. Every law, ordinance, requirement, order, proclamation, directive, rule, and regulation of any Government applicable to the Property or the Project, in any way, including any development, use, maintenance, taxation, operation, or occupancy of, or environmental conditions affecting the Property or the Project, or relating to any taxes, or -3- 45636.00000\55 70219.3 otherwise relating to this Agreement or any Party's rights, obligations or remedies under this Agreement, or any Transfer of any of the foregoing, whether in force on the Effective Date or passed, enacted, modified, amended or imposed at some later time, subject in all cases, however, to any applicable waiver, variance, or exemption. 1.25 Legal Costs. All reasonable costs and expenses such Person incurs in any legal proceeding (or other matter for which such Person is entitled to be reimbursed for its Legal Costs), including reasonable attorneys' fees, court costs and expenses and consultant and expert witness fees and expenses. 1.26 Maintenance Standards. (1) Regular and professional landscape maintenance, which shall include, without limitation: water/irrigation; fertilization, mowing, edging, trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and irrigation coverage; replacement as needed, of all plant materials; control of weeds in all planters, shrubs, lawns ground covers, or other planters areas, and staking for support of trees; and (2) Regular and professional clean-up maintenance, which shall include, without limitation: maintenance of all sidewalks, paths and other paved areas in clean and weed -free condition; maintenance of all such areas clear of dirt, mud, trash, debris, or other matter which is unsafe or unsightly; removal of all trash, litter, abandoned shopping carts, and other debris from improvements and landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cutting, weeds, leaves and other debris are properly disposed of by maintenance workers; and (3) Regular and professional building maintenance consistent with the municipal code, and the California Building Code, which shall include, without limitation; maintenance of exterior building, fagades, windows, and roof. 1.27 Notice. Any approval, consent, demand, designation, election, notice, or request relating to this Agreement, including any Notice of Default or termination of this Agreement. Notices shall be delivered, and shall become effective, only in accordance with Section 18. 1.28 Notice of Agreement. The notice, in substantially the form of Exhibit "C", to this Agreement to be recorded against the Property upon execution of this Agreement to provide constructive record notice of the existence and application of the restrictive covenants within this Agreement to the Property. 1.29 Notify. Give a Notice. 1.30 Operating Year. Each twelve (12) month period during the City Operating Period commencing on each January 1 and ending on each December 31 of the following calendar year, except that the first Operating Year shall commence on the Effective Date and end on December 31, 2010 and the last Operating Year shall end on the last day of the Agency Operating Period. The first Operating Year is sometimes referred to as "Operating Year 1," with each succeeding Operating Year, thereafter, being consecutively numbered. 1.31 Outside Effective Date. November 30, 2010. -4- 45636.00000\5570219.3 1.32 Owner. Apple SoCal, LLC, a Delaware limited liability company and subsidiary of Apple American Group, LLC, a 1.33 Owner Official Action. The official action of Owner authorizing Owner's entry into and performance of this Agreement, in substantially the form attached to this Agreement as Exhibit `B," signed by the authorized representative(s) of Owner. 1.34 Owner Parties. Collectively, Owner, its Affiliates, shareholders, members, partners, directors, officers, employees, attorneys or other agents. 1.35 Owner Party. Individually, Owner, its Affiliates, shareholders, members, partners, directors, officers, employees, attorneys or other agents. 1.36 Parties. Collectively, Owner and the Agency. 1.37 Party. Individually, Owner or the Agency, as applicable. 1.38 Person. Any association, corporation, governmental entity or agency, individual, joint venture, joint-stock company, limited liability company, partnership, trust, unincorporated organization or other entity of any kind. 1.39 Prevailing Wage Action. Any of the following: (a) any determination by the State Department of Industrial Relations that prevailing wage rates should have been paid, but were not, (b) any determination by the State Department of Industrial Relations that higher prevailing wage rates than those paid should have been paid, (c) any administrative or legal action or proceeding arising from any failure to comply with any of California Labor Code Sections 1720 through 1781, as amended from time to time, regarding prevailing wages, including maintaining certified payroll records pursuant to California Labor Code Section 1776, or (d) any administrative or legal action or proceeding to recover wage amounts at law or in equity, including pursuant to California Labor Code Section 1781. 1.40 Property. That certain real property commonly known as at 377 North Citrus Avenue, Azusa, CA 91702 and specifically described in Exhibit "A" attached to this Agreement. 1.41 State. The State of California. 1.42 Transfer. Any right, obligation or property means any of the following, whether by operation of law or otherwise, whether voluntary or involuntary, and whether direct or indirect: (a) any assignment, conveyance, grant, hypothecation, mortgage, pledge, sale, or other transfer, whether direct or indirect, of all or any part of such right, obligation or property, or of any legal, beneficial, or equitable interest or estate in such right, obligation or property or any part of it (including the grant of any easement, lien, or other encumbrance); (b) any conversion, exchange, issuance, modification, reallocation, sale, or other transfer of any direct or indirect Equity Interest(s) in the owner of such right, obligation or property by the holders of such Equity Interest(s); (c) any transaction described in "(b)" affecting any Equity Interest(s) or any other interest in such right, obligation or property or in any such owner (or in any other direct or indirect owner at any higher tier of ownership) through any manner or means whatsoever; or (d) any transaction that is in substance equivalent to any of the -5- 4563 6.00000\55 70219.3 foregoing. A transaction affecting Equity Interests in a Person, as referred to in clauses "(b)" through "(d)," shall be deemed a Transfer by such Person even though that Person is not technically the transferor. A "Transfer" shall not, however, include any of the foregoing (provided that the other Party to this Agreement has received Notice thereof) relating to any Equity Interest: (a) that constitutes a mere change in form of ownership with no material change in beneficial ownership and constitutes a tax-free transaction under Federal income tax law and the State real estate transfer tax; (b) to member(s) of the immediate family(ies) of the transferor(s) or trusts for their benefit; or (c) to any Person that, as of the Effective Date, holds an Equity Interest in the Person whose Equity Interest is being transferred. 1.43 Unavoidable Delay. Delay in either Party performing any obligation under this Agreement, except payment of money except when due to one of the causes described below that prevents or materially limits the ability to transfer funds by or between financial institutions, arising from or on account of any cause whatsoever beyond the Parry's reasonable control, including strikes, labor troubles or other union activities, casualty, war, acts of terrorism, riots, litigation, Government action or inaction, regional natural disasters, or inability to obtain materials. Unavoidable Delay shall not include delay caused by a Party's financial condition, illiquidity, or insolvency. 1.44 Usury Limit. The highest rate of interest, if any, that Law allows under the circumstances. 2. Effective Date. 2.1 Definition. This Agreement shall not become binding on either Party, unless and until the first date on which all of the following occur, if at all (the "Effective Date"): (a) Signature and Delivery of Agreement by Owner. Three (3) originals of this Agreement are signed by the authorized representative(s) of Owner and delivered to the Agency; and (b) Oficial Action. An original of the Owner Official Action is signed by the authorized representative(s) of Owner and delivered to Agency; and (c) Approval of Agreement by Agency Board. This Agreement is approved by the Agency Board at a public meeting of the Agency Board, following all legally required notices and hearings; and (d) Signature and Delivery of Agreement by Agency. One (1) original of this Agreement is signed by the authorized representative(s) of the Agency and delivered to Owner. 2.2 Failure of Conditions. If the Effective Date does not occur on or before the Outside Effective Date, then no part of this Agreement shall become binding on or enforceable against either Party and any prior signatures or approvals of this Agreement by either the Agency or Owner shall be void and of no further force or effect. 3. Operating Covenants. -6- 45636.00000\5570219.3 3.1 Use Restrictions. The Property shall be devoted to uses consistent with this Agreement and the Redevelopment Plan and shall not, in whole or in part, be devoted to any use inconsistent herewith or prohibited hereby. 3.1.1. Owner covenants to the Agency that the Property may only be operated as a full service, family style, sit down restaurant. All other uses shall be prohibited in the Project. 69 3.1.2 Owner covenants to Agency that 6wner shall obtain prior to receipt of a Certificate of Occupancy and maintain throughout the Agency Operating Period a Type 47 On - Sale General Liquor License for beer, wine and distilled spirits duly issued by the California Department of Alcohol Beverage Control. 3.2 Covenant to Maintain Project. Owner covenants to the Agency that the Owner shall maintain or cause to be maintained the Project and all improvements thereto in accordance with the Maintenance Standards. 3.2.1 Owner shall either staff or contract with and hire licensed and qualified personnel to perform all necessary maintenance, and shall provide all labor, equipment, materials, support facilities and all other items necessary to comply with the Maintenance Standards. 3.2.2 All maintenance work shall conform with all applicable federal and state Laws, including but not limited to Occupation Safety and Health Act standards and regulations, for the performance of maintenance. 3.2.3 Any and all chemicals, unhealthful substances, and pesticides used in and during maintenance shall be applied in strict accordance with all Laws. Precautionary measures shall be employed in all areas open to public access. 3.2.4 The Project and all subsequent improvements to the Project shall be maintained in conformance and in compliance with the approved Project construction and architectural plans, as the same may be amended from time to time with the approval of the City or Agency, as applicable. 3.2.5 The Project and all subsequent improvements to the Project shall be maintained in a manner comparable to the standard of maintenance followed in other first class commercial developments of comparable size and quality located within Los Angeles County, California. 3.2.6 Failure to Maintain the Project. In the event Agency believes Owner has failed to comply with the Maintenance Standards and such default continues beyond thirty (30) days, Agency shall send a notice to Owner demanding that Owner cure such alleged default ("Work Demand"), and Owner shall have sixty (60) days from receipt of the Work Demand to either complete the work or submit to the appeal procedure under City Municipal Code Chapter 1 to determine whether such Work Demand is justified. The non -prevailing parry of the appeal shall be required to pay the fee set forth in City Municipal Code Chapter 1. 3.2.6.1 If Owner does not complete the work within such sixty (60) day period and does not submit to the appeal procedure, Agency shall have the right to enter -7- 45 63 6.00000\5 5 70219.3 upon the Project and perform or cause to be performed all such acts and work necessary to cure the default. Owner shall be liable to reimburse Agency for its costs associated with the self help, including a fifteen percent (15%) administrative charge. Following its completion of the self help work, Agency shall submit an invoice for such cost, including administrative charge ("Payment Demand"), and Owner shall have thirty (30) days from receipt of the Payment Demand to pay the amount set forth in the Payment Demand. In the event Owner fails to Submit payment in the amount of the Payment Demand within such thirty (30) day period, Agency may attach a lien to the real property on which the Project is located. 3.2.6.2 If Owner submits to the appeal procedure and the Hearing Officer determines the Work Demand should be performed, Owner shall have thirty (30) days from the date of final ruling by the Hearing Officer to complete the work. If Owner fails to complete the work within such thirty (30) day period, Agency shall have the right to enter upon the Project and perform or cause to be performed all such acts and work necessary to cure the default. Owner shall be liable to reimburse Agency for its costs associated with the self help, including a fifteen percent (15%) administrative charge. Following its completion of the self help work, Agency shall submit a Payment Demand including the administrative charge, and Owner shall have thirty (30) days from receipt of the Payment Demand to pay the amount set forth in the Payment Demand. In the event Owner fails to submit payment in the amount of the Payment Demand within such thirty (30) day period, Agency may attach a lien to the real property on which the Project is located. 3.2.6.3 If Owner submits to the appeal procedure and prevails, Owner shall have no obligation with regard to the Work Demand. 3.2.6.4 The time periods set forth above may be extended in the event the Parties agree or the Hearing Officer determines such work cannot reasonably be completed during such time periods. 3.3 Project Modifications. Owner covenants to comply with all Laws and the Redevelopment Plan, as may be amended from time to time, in conducting any modification, reconstruction, remodel or improvement to the Project. Owner covenants that any modification, reconstruction, remodel or improvements to the landscaping shall comply with all Laws. 3.4 Property Taxes/Possessory Interest Taxes. Owner covenants to pay, prior to delinquency, all ad valorem real estate taxes and assessments or possessory interest taxes, as applicable, assessed by the Los Angeles County Treasurer -Tax Collector for the Project. 3.5 Covenant to Maintain Property on Tax Rolls. Owner shall not take any action that will result in the Property being removed from the County of Los Angeles, California secured real property tax rolls so long as the Agency is authorized to receive property taxes from the Project Area pursuant to CRL Section 33670(b). 3.6 Continuous Operation Covenant. Owner covenants to the Agency to continuously operate (no period of inoperation of more than thirty consecutive days) the Project on the Property throughout the entirety of the Agency Operating Period. Owner shall, for the entirety of the Agency Operating Period, at Owner's sole cost and expense, obtain and -8- 45636.00000\55 70219.3 maintain all franchises, permits, contractual arrangements, licenses, and registrations necessary for the continuous operation of the Project. 3.6.1 For the duration of the Agency Operating Period, Owner covenants to the Agency to operate the Project in accordance with reasonable and customary commercial development practices within Los Angeles County and in a commercially reasonable and prudent rhanner. 3.6.2 For the duration of the Agency Operating Period, Owner covenants to the Agency to purchase all required or desirable equipment and furnishings for the Project and hire all required or desirable personnel for operation of the Project, in accordance with applicable Laws. 4. Obligation to Refrain from Discrimination. The Owner covenants and agrees for itself, its successors, its assigns and every successor -in -interest to the Property or any portion thereof, that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Owner, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub -tenants, sub -lessees or vendees of the Property. The covenant of this Section 4 shall run with the land of the Property in perpetuity and be a covenant in the Notice of Agreement. 4.1 Form of Non -Discrimination and Non -Segregation Clauses. The Owner covenants and agrees for itself, its successors, its assigns, and every successor -in -interest to the Property, or any portion thereof, that the Owner, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person. All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non- discrimination or non -segregation covenants: (a) In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub -tenants, sub -lessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land. (b) In leases: "The Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, -9- 4563 6.00000\5 5 70219.3 occupancy,. tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants lessees, sub -lessee, sub -tenants, or vendees in the premises herein leased." (c) In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sub -lessees, sub -tenants, or vendees of the premises herein transferred." The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument. 4.2 The covenant of this Section 4 shall run with the land of the Property in perpetuity and shall be a covenant set forth in the Notice of Agreement. 5. Owner Covenant to Defend this Agreement. The Owner acknowledges that the Agency is a "public entity" and/or a "public agency" as defined under applicable California law. Therefore, the Agency must satisfy the requirements of certain California statutes relating to the actions of public entities and redevelopment agencies, including, without limitation, CEQA. Also, as a public body, the Agency's action in approving this Agreement may be subject to proceedings to invalidate this Agreement or mandamus. The Owner assumes the risk of delays and damages that may result to the Owner from any third -party legal actions related to the Agency's approval of this Agreement or the pursuit of the activities contemplated by this Agreement, even in the event that an error, omission or abuse of discretion by the Agency is determined to have occurred. If a third -party files a legal action regarding the Agency's approval of this Agreement or the pursuit of the activities contemplated by this Agreement, the Agency may terminate this Agreement on thirty (30) days written notice to the Owner of the Agency's intent to terminate this Agreement, referencing this Section 5, without any further obligation to perform the terms of this Agreement and without any liability to the Owner resulting from such termination, unless the Owner unconditionally agrees to indemnify and defend the Agency, with legal counsel acceptable to the Agency, against such third -party legal action, as provided in the next sentence. Within thirty (30) days of receipt of the Agency's notice of intent to terminate this Agreement, as provided in the preceding sentence, the Owner may offer to defend the Agency, with legal counsel acceptable to the Agency, in the third -party legal action and pay all of the court costs, attorney fees, monetary awards, sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of any and all financial or performance obligations resulting from the disposition of the legal action. Any such offer from the Owner must be in writing and reasonably acceptable to the Agency in both form and substance. Nothing contained in this Section 5 shall be deemed or construed to be an express or implied admission that the Agency is liable to the Owner or any other person or entity for damages alleged from any alleged or established failure of the Agency to comply with any statute, including, without limitation, CEQA. The defense of such third party actions as described in this Section 5 shall constitute an Unavoidable Delay. 6. Survival and Enforcement of Covenants. -10- 45636.00000\5570219.3 6.1 Survival. Each covenant set forth in Section 3 and 5 shall be a covenant running with the land of the Property and binding on Owner and all successors -in -interest to the Property for the City Operating Period. Each covenant set forth in Section 4 shall be a covenant running with the land of the Property and binding on Owner and all successors -in - interest to the Property as provided for in Section 4. Further, each covenant set forth in Section 3, 4, and 5 shall survive the execution, recordation or issuance of each and every document (i.e., certificate of completion, certificate of occupancy, etc.) related to the Property or the Project for the City Operating Period. 6.2 Enforcement. The covenants set forth in Section 3, 4 and 5 may be enforced by the Agency regardless of whether or not the Agency currently owns or continues to own an interest in any property benefited by any such covenants. Owner agrees that breach of any of the covenants set forth in Section 3, 4 and 5 will result in great and irreparable injury to the Agency, will violate the public policy and the purposes of this Agreement and will result in injury to the Agency that is not compensable by monetary damages. Accordingly, upon the breach of any of the covenants set forth in Section 3, 4 and 5 in addition to the provisions regarding Remedies, the Agency may institute an action for injunctive relief regarding and/or specific performance of any such covenant. 7. Covenant Payment. In consideration for Owner's performance of its covenants and other obligations pursuant to this Agreement, the Agency shall pay the Covenant Payment to Owner upon Owner's receipt of a certificate of occupancy for the Project. 8. Adequate Consideration. 8.1 Exchange of Consideration. The Parties determine and agree that: (1) the Covenant Payment represents fair consideration to Owner for entering into and performing its covenants and other obligations under this Agreement; and (2) Owner's performance of its covenants and other obligations under this Agreement represent fair consideration to the Agency for the Covenant Payment and performance of the Agency's other obligations under this Agreement. 8.2 No Unstated Consideration. Owner acknowledges and agrees that Owner will receive no compensation under this Agreement other than the Covenant Payment. Owner shall not be entitled to any reimbursement or other compensation from the Agency for any costs incurred by Owner in performing or preparing to perform its covenants or other obligations under this Agreement. 9. Defaults. Subject to any extensions of time provided for in this Agreement for Unavoidable Delay, and in addition to the terms and timeframes provided for in Section 3.2.6, the occurrence of any of the following events shall constitute a "Default": 9.1 Monetary Default. The failure by any Party to perform any obligation of such Party under this Agreement for the payment of money, if such failure is not cured within fifteen (15) days after the non-performing Party's receipt of Notice from the injured Party that such obligation was not performed, as and when due; or 9.2 Non -Monetary Default. Except as otherwise provide for in Section 3.2, the failure by any Party to perform any of its obligations set forth in this Agreement, other than -11- 45636.00000\5570219.3 obligations subject to Section 9.1, if such failure is not cured within thirty (30) days after the non-performing Party's receipt of Notice from the injured Party that such obligation was not performed, as and when due, or, if such failure is of a nature that cannot reasonably be cured within thirty (30) days, the failure by such Parry to commence such cure within thirty (30) days after receipt of such Notice and to, thereafter, diligently prosecute such cure to completion. 10. Agency's Remedies. 10.1 For any Default, pursue any available legal or equitable action or remedy to (1) recover damages to the Agency arising from such Default, including, without limitation, to collect any amount of money due to the Agency from Owner, or (2) preclude a breach of this Agreement or compel Owner to perform in accordance with the requirements of this Agreement, following the notice and opportunity to cure provided in Section 9; and 10.2 For any Default, off -set any amount of money due to the Agency from Owner, following the notice and opportunity to cure provided in Section 9, as applicable, against any Covenant Payment(s) due or becoming due to Owner; and 10.3 For any Default of an obligation arising under any of Section 3, suspend any Covenant Payments due hereunder during any period during which such a Default exists. Additionally, Agency may, at its option, elect to immediately terminate this Agreement and all of its obligations hereunder, including any obligations concerning unaccrued and suspended Covenant Payments, without cost, expense or liability; and 10.4 For any Default of an obligation arising under any of Section 3, recover the amount of the entire Covenant Payment in monetary damages. 10.5 For any Default which consists of the failure by Owner to complete all material elements of the Project, immediately terminate this Agreement and all of the Agency's obligations hereunder, including any obligations concerning unaccrued and suspended Covenant Payments, without cost, expense or liability. 10.6 Legal Actions. In addition to any other rights or remedies, any Party may institute legal action to cure, correct or remedy any default, to recover general or consequential damages for any Default, or to obtain any other remedy available to that Party under this Agreement or at law or in equity. 11. Owner's Remedy. 11.1 Payment of Any Unpaid Covenant Payment Amount. Subject to the Notice and opportunity to cure requirements of Section 9 and notwithstanding any other provision of this Agreement to the contrary, Owner's sole and exclusive remedy regarding a Default by the Agency shall be to seek the payment of any amount of the Covenant Payment remaining to be paid by Agency to Owner. 12. Indemnification. -12- 45636.00000\5570219.3 12.1 Owner Indemnity Obligations. In addition to any other specific indemnification or defense obligations of the Owner set forth in this Agreement, the Owner agrees to indemnify, defend (upon written request by the Agency and with counsel reasonably acceptable to the Agency) and hold harmless the Agency, its governing board, commissions, agents, officers, employees and attorneys from any and all losses, liabilities, charges, damages, claims, liens, causes of action, awards, judgments, costs and expenses, including, but not limited to reasonable attorney's fees of counsel retained by the Agency, expert fees, costs of staff time, and investigation costs, of whatever kind or nature, that are in any manner directly or indirectly caused, occasioned or contributed to in whole or in part, through any act, omission, fault or negligence, whether active or passive, of the Owner or the Owner's officers, agents, employees, independent contractors or subcontractors of any tier, relating in any manner to this Agreement, any work to be performed by the Owner related to this Agreement, the Property, or the Project, or any authority or obligation exercised or undertaken by the Owner under this Agreement. Without limiting the generality of the foregoing, the Owner's obligation to indemnify the Agency shall include injury or death to any person or persons, damage to any property, regardless of where located, including the property of the Agency, any workers' compensation or prevailing wage determination, claim or suit or any other matter arising from or connected with any goods or materials provided or services or labor performed regarding the Project on behalf of the Owner by any person or entity. 12.2 Owner Prevailing Wage Indemnity Obligations. Owner shall Indemnify the Agency Parties against any Prevailing Wage Action relating to this Agreement and all Claims to the extent such Claims arise from any wrongful intentional act or negligence of the Owner Parties. 12.3 Independent of Insurance Obligations. Neither Party's indemnification obligations under this Agreement shall be construed or interpreted as in any way being restricted, limited or modified by any insurance coverage carried by such Party. 12.4 Survival of Indemnification and Defense Obligations. The indemnity and defense obligations of the Parties under this Agreement shall survive the expiration or earlier termination of this Agreement, until any and all actual or prospective Claims regarding any matter subject to an indemnity obligation under this Agreement are fully, finally, absolutely and completely barred by applicable statutes of limitations. 12.5 Indemnification Procedures. Wherever this Agreement requires any Indemnitor to Indemnify any Indemnitee: (a) Prompt Notice. The Indemnitee shall promptly Notify the Indemnitor of any Claim. (b) Selection of Counsel. Indemnitor shall select counsel reasonably acceptable to Indemnitee. Counsel to Indemnitor's insurance carrier that is responding to such Claim shall be deemed satisfactory, except in the event of an actual or potential conflict of interest for such counsel regarding the representation of any Owner Party or any Agency Party or where such counsel proves to be incompetent regarding the representation. Even though Indemnitor shall defend the action, Indemnitee may engage separate counsel to advise it regarding the Claim and its defense, at Indemnitee's expense, unless Indemnitor has made a -13- 4563 6.00000\5 5 70219.3 reservation of rights with respect to the indemnity, in which case Indemnitor shall be responsible for Legal Costs for the separate counsel directly related to the matter. Such counsel may attend all proceedings and meetings. Indemnitor's counsel shall actively consult with Indemnitee's counsel. (c) Cooperation. The Indemnitee shall reasonably cooperate with the Indemnitor's defense of the Indemnitee. (d) Settlement. The Indemnitor may only settle a Claim with the Indemnitee's consent, not to be unreasonably withheld. 13. Agency Contract Administration. The Executive Director shall administer this Agreement on behalf of the Agency. The Executive Director may designate any member or members of the Agency staff to carry out such responsibilities. Except as otherwise expressly provided in this Agreement, the Executive Director has the authority to approve or consent to those matters in this Agreement requiring the Agency's approval or consent and to make all other decisions on behalf of the Agency, subject to the Executive Director's retained and reserved sole and absolute discretion to seek Agency Board approval of any such matter. 14. Governing Law. The substantive and procedural laws of the State shall govern the interpretation and enforcement of this Agreement, without application of conflicts or choice of laws principles. 15. Transfer. Owner may only Transfer its rights or obligations under this Agreement with the prior written consent of the Agency, which shall not be unreasonably withheld, delayed or conditioned. Any Transfer of any of Owner's rights or obligations under this Agreement shall not change or waive any conditions precedent to the Covenant Payment under this Agreement nor relieve Owner of any obligation under this Agreement. 16. No Effect on Agency's Authority. Nothing in this Agreement shall limit or restrict the authority of the Agency Board to take any other actions with respect to the Project or Property or Owner without notice to or consent from Owner, except as may otherwise be expressly provided by applicable Law. The approval of this Agreement by the Agency shall not be binding on the Agency Board, or any other commission, committee, board or body of the Agency regarding any Approvals regarding the Property or Project required by such bodies. No action by the Agency with reference to this Agreement or any related documents shall be deemed to constitute issuance or waiver of any required Agency Approval regarding the Property or Project. 17. Non -liability of Agency Officials and Employ. No elected official, officer, contractor, consultant, attorney, employee or agent of the Agency shall be personally liable to Owner, any voluntary or involuntary successor or assign of Owner, or any lender or other Person holding an interest in Owner, in the event of any Default or breach of this Agreement by the Agency, or for any amount that may be or become due to Owner or its successors or assigns under this Agreement, or on any obligations arising under this Agreement. No shareholder, member, partner, principal, officer, attorney, employee or agent of Owner shall be personally liable to the Agency, any voluntary or involuntary successor or assign of the Agency, in the event of any Default or breach of this Agreement by Owner, or for any amount that may be or become due to the Agency or its successors or assigns under this Agreement, or on any obligations arising under this Agreement. -14- 4 5 63 6.0000 0\5 5 70219.3 18. Notices. 18.1 Delivery. Any and all Notices submitted by either Party to the other Party pursuant to or as required by this Agreement shall be in writing and addressed to the Agency or Owner (and their designated copy recipients) as set forth in Section 18.2. Notices (including any required copies) shall be delivered personally, by Federal Express, United Parcel Service or other nationally recognized overnight (one-night) courier service or by registered or certified United States mail, return receipt requested and postage prepaid, to the addresses set forth in Section 18.2, in which case they shall be deemed delivered on the date of delivery (or when delivery has been attempted twice, as evidenced by the written report of the courier service) to such address(es) or on the fourth (4t') day following deposit with the United States Postal Service for delivery. Either Party may change its address for delivery of Notices by Notice in compliance with this Agreement. Notice of a change of address shall be effective only upon receipt. Any Party giving a Notice may request that the recipient acknowledge receipt of such Notice. The recipient shall promptly comply with any such request, but failure to do so shall not limit the effectiveness of any Notice. Any attorney may give any Notice on behalf of its client. 18.2 Addresses. The following are the authorized addresses for the submission of Notices, demands or communications to the Parties, under this Agreement, as of the Effective Date: To Agency: Azusa Redevelopment Agency 213 East Foothill Boulevard Azusa, California 91702 Attention: Executive Director With a copy to: Best Best & Krieger LLP 5 Park Plaza Suite, 1500 Irvine, CA 92615 Attention: Elizabeth Hull, Esq. To Owner: Apple SoCal, LLC 6200 Oak Tree Blvd., Suite 250 Independence, OH 44131 Attention: Patrick J. Eulberg With a copy to: Apple SoCal, LLC 6200 Oak Tree Blvd., Suite 250 Independence, OH 44131 Attention: Corporate Controller 19. Jurisdiction and Venue. The Parties each acknowledge and agree that this Agreement is entered into and is to be fully performed in the City of Azusa, County of Los Angeles, State of California, and that all legal actions arising from this Agreement shall be filed in the Superior Court of the State of California in and for the County of Los Angeles, California, or the United States District Court with jurisdiction in the County of Los Angeles, California. -15- 45636.00000\5570219.3 20. Tax Consequences. Owner acknowledges that it may experience tax consequences as a result of its receipt of the Covenant Payment provided for in this Agreement and agrees that it shall bear any and all responsibility, liability, costs, and expenses connected in any way therewith. 21. Incorporation of Recitals. The Recitals of fact set forth preceding this Agreement are true and correct and are incorporated into this Agreement, in their entirety, by this reference. 22. Principles of Interpretation. No inference in favor of or against any Party shall be drawn from the fact that such Party has drafted any part of this Agreement. The Parties have both participated substantially in the negotiation, drafting, and revision of this Agreement, with advice from legal counsel and other advisers of their own selection. A term defined in the singular in this Agreement may be used in the plural, and vice versa, all in accordance with ordinary principles of English grammar, which also govern all other language in this Agreement. The words "include" and "including" shall be construed to be followed by the words: "without limitation." Each collective noun shall be interpreted as if followed by the words "(or any part of it)," except where the context clearly requires otherwise. Every reference to any document, including this Agreement, refers to such document as modified from time to time (excepting any modification that violates this Agreement), and includes all exhibits, schedules, addenda and riders to such document. The word "or" includes the word "and." 23. Counterpart Originals; Integration. This Agreement may be executed in multiple counterpart originals, each of which is deemed to be an original, but all of which taken together shall constitute one and the same instrument. This Agreement and the exhibits attached to this Agreement represent the entire understanding of the Parties and supersede all previous negotiations, letters of intent, memoranda of understanding or agreements between the Parties with respect to all or any part of the subject matter of this Agreement. 24. Severability. If any term or provision of this Agreement or its application to any Person or circumstance shall to any extent be invalid or unenforceable, then the remainder of this Agreement or the application of such term or provision to Persons or circumstances, except those as to which it is invalid or unenforceable, shall not be affected by such invalidity. All remaining provisions of this Agreement shall be valid and be enforced to the fullest extent Law allows. 25. No Waiver. Failure by a Party to insist on any one occasion upon strict compliance with any of the terms, covenants or conditions of this Agreement shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any rights or powers under this Agreement at any one time or more times be deemed a waiver or relinquishment of such right or power at any other time or times. 26. Time is of the Essence. Time is of the essence in the performance of the Parties' obligations under this Agreement. 27. Unavoidable Delay; Extension of Time of Performance. 27.1 Notice. Performance by either Party under this Agreement shall not be deemed, or considered to be in Default, where any such Default is due to an Unavoidable Delay. Any Party claiming Unavoidable Delay shall Notify the other Party: (a) within ten (10) days after such Party knows of any such Unavoidable Delay; and (b) within five (5) days after such -16- 45636.00000\55 70219.3 Unavoidable Delay ceases to exist. To be effective, any Notice of an Unavoidable Delay must describe the Unavoidable Delay in reasonable detail. The extension of time for an Unavoidable Delay shall commence on the date of the occurrence of the Unavoidable Delay and shall continue until the end of the condition causing the Unavoidable Delay. The Party seeking to be excused from performance shall exercise its best efforts to cure the condition causing the Unavoidable Delay, within a reasonable time. 27.2 Assumption of Economic Risks. ANYTHING IN THIS AGREEMENT TO THE CONTRARY NOTWITHSTANDING, THE PARTIES EXPRESSLY ASSUME THE RISK OF UNFORESEEABLE CHANGES IN ECONOMIC CIRCUMSTANCES OR MARKET DEMAND/CONDITIONS AND WAIVE, TO THE GREATEST LEGAL EXTENT, ANY DEFENSE, CLAIM, OR CAUSE OF ACTION BASED IN WHOLE OR IN PART ON ECONOMIC NECESSITY, IMPRACTICABILITY, CHANGED ECONOMIC CIRCUMSTANCES, FRUSTRATION OF PURPOSE, OR SIMILAR THEORIES. EACH PARTY AGREES THAT ADVERSE CHANGES IN ECONOMIC CONDITIONS, EITHER OF SUCH PARTY SPECIFICALLY OR THE ECONOMY GENERALLY, OR CHANGES IN MARKET CONDITIONS OR DEMANDS, SHALL NOT OPERATE TO EXCUSE OR DELAY THE STRICT OBSERVANCE OF EACH AND EVERY OF THE OBLIGATIONS, COVENANTS, CONDITIONS AND REQUIREMENTS OF THIS AGREEMENT. THE PARTIES EXPRESSLY ASSUME THE RISK OF SUCH ADVERSE ECONOMIC OR MARKET CHANGES, WHETHER OR NOT FORESEEABLE AS OF THE REFERENCE DATE. INITIALS OF AUTHORIZED AGENCY INITIALS OF AUTHORIZED OWNER REPRESENTATIVE(S) _ REPRESENTATIVE(S) 28. No Third Party Beneficiaries. The performance of the Parties' respective obligations under this Agreement are not intended to benefit any Person other than the Agency and Owner, except as may be expressly provided otherwise in this Agreement. No Person not a signatory to this Agreement shall have any rights or causes of action against any Party to this Agreement as a result of that Party's performance or non-performance under this Agreement, except as otherwise expressly provided in this Agreement. 29. No Other Representations or Warranties. Except as expressly set forth in this Agreement, no Party makes any representation or warranty material to this Agreement to any other Party. 30. Warranty Against Payment of Consideration for Agreement. Owner represents and warrants to the Agency that: (a) it has not employed or retained any Person to solicit or secure this Agreement upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, exce pting bona fide employees of Owner and Third Persons to whom fees are paid for professional services related to documentation of this Agreement; and (b) no gratuities, in the form of entertainment, gifts or otherwise have been or will be given by Owner or any of its agents, employees or representatives to any elected or appointed official or employee of the Agency in an attempt to secure this Agreement or favorable terms or conditions for this Agreement. Breach of the representations or warranties of this Section 30 shall entitle the Agency to terminate this Agreement upon seven (7) days Notice to the Owner. Upon any such termination of this Agreement, Owner shall immediately refund any payments made to or on -17- 45636.00000\5570219.3 behalf of Owner by the Agency pursuant to this Agreement or otherwise related to the Property or the Project, prior to the date of any such termination. 31. Relationship of Parties. The Parties agree and intend that the Agency and Owner are independent contracting entities and do not intend by this Agreement to create any partnership, joint venture, or similar business arrangement, relationship or association between them. P 32. Survival of Agreement. All of the provisions of this Agreement shall be applicable to any dispute between the Parties arising from this Agreement, whether prior to or following expiration or termination of this Agreement, until any such dispute is finally and completely resolved between the Parties, either by written settlement, entry of a non -appealable judgment or expiration of all applicable limitations periods and all terms and conditions of this Agreement relating to dispute resolution and limitations on damages or remedies shall survive any expiration or termination of this Agreement. [Signatures on following page] -18- 45636.00000\5570219.3 SIGNATURE PAGE TO OPERATING COVENANT AGREEMENT R AGENCY: AZUSA REDEVELOPMENT AGENCY, a public body, corporate and politic Chair Azusa Redevelopment Agency Attest: Agency Secretary Approved as to form: Best Best & Krieger LLP Agency General Counsel -19- 45636.00000\5570219.3 OWNER: APPLE SOCAL, LLC, a Delaware limited liability company Patrick J. Eulberg, Vice President — Real Estate Secretary EXHIBIT "A" TO OPERATING COVENANT AGREEMENT Property Description Lot 5 of Tract No. 68355, in the City of Azusa, County of Los Angeles, State of California, as per map recorded in Book 1354, Pages 37 through 41 in the office of the recorder of the County of Los Angeles. Exhibit A 45636.00000\5570219.3 A--,,. c n., --.c I"— Exhibit Exhibit A 45636.00000\5570219.3 13-5-- �/ 7 Boa<S551 FA.GE:3h // LOTS ANO 2 CONDOR//N/U,f l LOTS 22.70 ACRES TRACT MAP NO. 68355 11V TAE COY OF ARISA COUNTY Of LOS AN6fLES, STAT£ OF CAUFORN/A OEC 2 4 7" RMY A MORMON OF PARCELS 1 AND 2 AS S1101YN ON PARCEL A14P N0. WS, � fj�yilflBpnpp AS PIR !/4P AUP IN OF TNT COUNTY ROM, TR Of S41,9 COl/NTY. fL AAPS, /N TNE �j ul�@I1�Lilil@UU LOTS 11 ANO 1,i ARE EOR CONOOARN111W PURPOSES EXCEL ENO/NEER/NC >9 A/1Cl R 0. 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CONDOA//N/UAl L0IS 2270,40fS TRACT MAP NO. 63355 /N THE Mr Of AMSA, COUNTY Of LOS ANGELES; STAT£ Of CAL/fORNA4 EXCEL EN0/NEER/N0 s MICHAEL 0. LIM L.S. 6896 .SHEET 4 a- 5 SHEE75 Snac f-100 1N!" A" b. 9JMfW fOGlx 11 W-MvS am: U w0/J7:tl'/ J/ 11 WWW, 7111 IS IWIX7 a.." 1J NISb17JT Ill, M' Ir W19f J11 Y.R' LJ N&W, Vr RJl . el" 'T R. [IS x/Jw71T Mm In AO W,-, I.R. Ill N/JJ.'!'Ilz L.11' LM NU:AVIT !I V' III xIJ'D"Tam US Im Y/'Mz XFJ• 116 Nll J/:M, 1Q!' Ill NMV5 M'ram' IN —M MT KY' QFAPNIC b'CtlS 0 /m ftV .XO 1141, ulr' rec (n.Nlwe/ A0. BiIP/r1(' (YCf/l t /S xIl vs'MT D m' ID Vl Nll'JI:1pV Rlr' (a WJm•roz um' UJ' NN bJ'R7 YJJ' D.0 Lm MSYI'RT R.' :J Wl'IISf7 RlJ' (a N/9wVT a%' 1.T I@ QW,tD NS;tl wllll SI% %m' IJI Mtlblbl11 a.m- fD Id'Js7/T M.m' lYM/ 97l7 R: .N w1:rl'I6T N lJl m lY xnbl toT R.%' lY Am JI:VT /5.m' IP AfS:if J/'/ D.m� Exhibit A 45636.00000\5570219.3 (GtF llnr rL(rt Nfplt6 ItaCM a Y'Mo• R.m• s.u' Q XW.. 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J y5 roi��r @7Af P =a- "A" OXAPBlC 9CALC r 5r 1.'0 ser 45636.00000\5570219.3 Lor to TI 1 I lOr lJ \� � �M61OiIRYrt10985(M, 31 g 4 JJI JOBS I 1�` A� — �iJi n 1 I apI t;t Qi V /LOb'Or `� � �'�� II.J!' j�-l.n ir—m r JAp IM fAAr l I 1 I/ry �^`1�A Lore NTA[ A' JLIL,�D J�JJS Wh 1 gg� MJ��D•c 41 L 41 I IOaL./ I 1 I apI Qi V /LOb'Or `� � �'�� II.J!' j�-l.n ir—m r JAp IM fAAr l I 1 I I 1 L 41 I IOaL./ I r I 1111 — 1 g —Yt A7 I Yl_N• i 8� `A-- IO Ir 'J)fI fwSwJ, LYru �gFOy, �� A�Te2a IDX 7079 JX Lt 19 _ �, J�LrDIn �= seers 7•.eo' �ret� ,ypr� Lf, XX 'W "Ar n Lc cU aq axn uAv, awlrJaos nroeS Am umaaAblrS Exhibit A 0 _. _---........... --- ._..... - ........_..._................ _..-...-.__......................................----------- ----------- __..__........ 8624 21 aaa:, ,moo � ta�vrmavow 4 5 63 6.00000\5 5 70219.3 Exhibit A EXHIBIT "B" TO OPERATING COVENANT AGREEMENT FORM OF OWNER OFFICIAL ACTION [Attached behind this cover page] 45636.00000\5570219.3 CERTIFICATION OF LLC AUTHORITY The undersigned members of APPLE SOCAL, LLC, a Delaware limited liability company (the "LLC"), do certify that we are all of the members of the LLC and that there are no other members. ® , We further certify that any one (1) of the following named persons: [Identify authorized signors] be, and they are, authorized and empowered for and on behalf of and in the name of the LLC to execute and deliver that certain Operating Covenant Agreement, dated (the "Agreement"), to operate and maintain certain property, generally, located at 377 North Citrus Avenue, Azusa, CA 91702, to perform the other obligations of the LLC set forth in the Agreement and all other documents to be executed in connection with the transactions contemplated in the Agreement, and to take all actions that may be considered necessary to conclude the transactions contemplated in the Agreement. The authority conferred shall be considered retroactively, and any and all acts authorized in this document that were performed before the execution of this certificate are approved and ratified. The authority conferred shall continue in full force and effect until the Redevelopment Agency of the City of Azusa shall have received notice in writing from the LLC of the revocation of this certificate. We further certify that the activities covered by the foregoing certifications constitute duly authorized activities of the LLC; that these certifications are now in full force and effect; and that there is no provision in any document under which the LLC is organized and/or that governs the LLC's continued existence limiting the power of the undersigned to make the certifications set forth in this certificate, and that the same are in conformity with the provisions of all such documents. LLC Members: 45636.00000\5 5 70219.3 EXHIBIT "C" TO OPERATING COVENANT AGREEMENT NOTICE OF AGREEMENT WITH RESTRICTIVE COVENANTS [Attached behind this cover page] 45636.00000\55 70219.3 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: 0Azusa Redevelopment Agency 213 East Foothill Boulevard Azusa, California 91702 Attn: Executive Director Space above line for Recorder's use only Exempt from Recording Fees pursuant to Govt. Code § 27383 REDEVELOPMENT AGENCY OF THE CITY OF AZUSA Notice of Agreement 2010 Operating Covenant Agreement (Applebees) TO ALL INTERESTED PERSONS PLEASE TAKE NOTICE that as of , 2010, APPLE SOCAL, LLC, a Delaware limited liability company (the "Owner") and the Redevelopment Agency of the City of Azusa a public body, corporate and politic (the "Agency"), entered into an agreement entitled "Operating Covenant Agreement" (the "Agreement"). A copy of the Agreement is on file with the Secretary of the Agency and is available for inspection and copying by interested persons as a public record of the Agency during the regular business hours of the Agency. The Agreement affects the real property (the "Property") described in Exhibit "A' attached to this Notice of Agreement. The meaning of defined terms used in this Notice of Agreement shall be the same as set forth in the Agreement. PLEASE TAKE FURTHER NOTICE that the Agreement contains certain community redevelopment covenants running with the land and other agreements of the parties affecting the Property, as set forth below: 443. Operating Covenants. Operating Covenants. 3.1 Use Restrictions. The Property shall be devoted to uses consistent with this Agreement and the Redevelopment Plan and shall not, in whole or in part, be devoted to any use inconsistent herewith or prohibited hereby. 45636.00000\5570219.3 3.1.1.Owner covenants to the Agency that the Property may only be operated as a full service, family style, sit down restaurant. All other uses shall be prohibited in the Project. 3.1.2 Owner covenants to Agency that Owner shall obtain prior to receipt of a Certificate of Occupancy and maintain throughout the Agency Operating Period a Type 47 On - Sale General Liquor License for beer, wine and distilled spirits duly issued by the California Department of Alcohol Beverage Control. 3.2 Covenant to Maintain Project. Owner covenants to the Agency that the Owner shall maintain or cause to be maintained the Project and all improvements thereto in accordance with the Maintenance Standards. 3.2.1 Owner shall either staff or contract with and hire licensed and qualified personnel to perform all necessary maintenance, and shall provide all labor, equipment, materials, support facilities and all other items necessary to comply with the Maintenance Standards. 3.2.2 All maintenance work shall conform with all applicable federal and state Laws, including but not limited to Occupation Safety and Health Act standards and regulations, for the performance of maintenance. 3.2.3 Any and all chemicals, unhealthful substances, and pesticides used in and during maintenance shall be applied in strict accordance with all Laws. Precautionary measures shall be employed in all areas open to public access. 3.2.4 The Project and all subsequent improvements to the Project shall be maintained in conformance and in compliance with the approved Project construction and architectural plans, as the same may be amended from time to time with the approval of the City or Agency, as applicable. 3.2.5 The Project and all subsequent improvements to the Project shall be maintained in a manner comparable to the standard of maintenance followed in other first class commercial developments of comparable size and quality located within Los Angeles County, California. 3.2.6 Failure to Maintain the Project. In the event Agency believes Owner has failed to comply with the Maintenance Standards and such default continues beyond thirty (30) days, Agency shall send a notice to Owner demanding that Owner cure such alleged default ("Work Demand"), and Owner shall have sixty (60) days from receipt of the Work Demand to either complete the work or submit to the appeal procedure under City Municipal Code Chapter 1 to determine whether such Work Demand is justified. The non -prevailing party of the appeal shall be required to pay the fee set forth in City Municipal Code Chapter 1. 3.2.6.1 If Owner does not complete the work within such sixty (60) day period and does not submit to the appeal procedure, Agency shall have the right to enter upon the Project and perform or cause to be performed all such acts and work necessary to cure the default. Owner shall be liable to reimburse Agency for its costs associated with the self help, including a fifteen percent (15%) administrative charge. Following its completion of the self help work, Agency shall submit an invoice for such cost, including administrative charge ("Payment Demand"), and Owner shall have thirty (30) days from receipt of the Payment 45636.00000\5570219.3 Demand to pay the amount set forth in the Payment Demand. In the event Owner fails to submit payment in the amount of the Payment Demand within such thirty (30) day period, Agency may attach a lien to the real property on which the Project is located. 3.2.6.2 If Owner submits to the appeal procedure and the Hearing Officer determines the Work Demand should be performed, Owner shall have thirty (30) days from the date of final ruling by the Hearing Officer to complete the work. If Owner fails to complete the work within such thirty (30) day period, Agency shall have the right to enter upon the Project and perform or cause to be performed all such acts and work necessary to cure the default. Owner shall be liable to reimburse Agency for its costs associated with the self help, including a fifteen percent (15%) administrative charge. Following its completion of the self help work, Agency shall submit a Payment Demand including the administrative charge, and Owner shall have thirty (30) days from receipt of the Payment Demand to pay the amount set forth in the Payment Demand. In the event Owner fails to submit payment in the amount of the Payment Demand within such thirty (30) day period, Agency may attach a lien to the real property on which the Project is located. 3.2.6.3 If Owner submits to the appeal procedure and prevails, Owner shall have no obligation with regard to the Work Demand. 3.2.6.4 The time periods set forth above may be extended in the event the Parties agree or the Hearing Officer determines such work cannot reasonably be completed during such time periods. 3.3 Project Modifications. Owner covenants to comply with all Laws and the Redevelopment Plan, as may be amended from time to time, in conducting any modification, reconstruction, remodel or improvement to the Project. Owner covenants that any modification, reconstruction, remodel or improvements to the landscaping shall comply with all Laws. 3.4 Property Taxes/Possessory Interest Taxes. Owner covenants to pay, prior to delinquency, all ad valorem real estate taxes and assessments or possessory interest taxes, as applicable, assessed by the Los Angeles County Treasurer -Tax Collector for the Project. 3.5 Covenant to Maintain Property on Tax Rolls. Owner shall not take any action that will result in the Property being removed from the County of Los Angeles, California secured real property tax rolls so long as the Agency is authorized to receive property taxes from the Project Area pursuant to CRL Section 33670(b). 3.6 Continuous Operation Covenant. Owner covenants to the Agency to continuously operate (no period of inoperation of more than thirty consecutive days) the Project on the Property throughout the entirety of the Agency Operating Period. Owner shall, for the entirety of the Agency Operating Period, at Owner's sole cost and expense, obtain and maintain all franchises, permits, contractual arrangements, licenses, and registrations necessary for the continuous operation of the Project. 3.6.1 For the duration of the Agency Operating Period, Owner covenants to the Agency to operate the Project in accordance with reasonable and customary commercial development practices within Los Angeles County and in a commercially reasonable and prudent manner. 45636.00000\55 70219.3 3.6.2 For the duration of the Agency Operating Period, Owner covenants to the Agency to purchase all required or desirable equipment and furnishings for the Project and hire all required or desirable personnel for operation of the Project, in accordance with applicable Laws. 4 Obligation to Refrain from Discrimination. The Owner covenants and agrees for itself, its successors, its assigns and every successor -in -interest to the Property or any portion thereof, that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Owner, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub -tenants, sub -lessees or vendees of the Property. The covenant of this Section 4 shall run with the land of the Property in perpetuity and be a covenant in the Notice of Agreement. 4.1 Form of Non -Discrimination and Non -Segregation Clauses. The Owner covenants and agrees for itself, its successors, its assigns, and every successor -in -interest to the Property, or any portion thereof, that the Owner, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person. All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non- discrimination or non -segregation covenants: (a) In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub -tenants, sub -lessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land. (b) In leases: "The Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants lessees, sub -lessee, sub -tenants, or vendees in the premises herein leased." (c) In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person 45636.00000\55 70219.3 claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sub -lessees, sub -tenants, or vendees of the premises herein transferred." The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument. 4.2 The covenant of this Section 4 shall run with the land of the Property in perpetuity and shall be a covenant set forth in the Notice of Agreement. 5. Owner Covenant to Defend this Agreement. The Owner acknowledges that the Agency is a "public entity" and/or a "public agency" as defined under applicable California law. Therefore, the Agency must satisfy the requirements of certain California statutes relating to the actions of public entities and redevelopment agencies, including, without limitation, CEQA. Also, as a public body, the Agency's action in approving this Agreement may be subject to proceedings to invalidate this Agreement or mandamus. The Owner assumes the risk of delays and damages that may result to the Owner from any third -party legal actions related to the Agency's approval of this Agreement or the pursuit of the activities contemplated by this Agreement, even in the event that an error, omission or abuse of discretion by the Agency is determined to have occurred. If a third -party files a legal action regarding the Agency's approval of this Agreement or the pursuit of the activities contemplated by this Agreement, the Agency may terminate this Agreement on thirty (30) days written notice to the Owner of the Agency's intent to terminate this Agreement, referencing this Section 5, without any further obligation to perform the terms of this Agreement and without any liability to the Owner resulting from such termination, unless the Owner unconditionally agrees to indemnify and defend the Agency, with legal counsel acceptable to the Agency, against such third -party legal action, as provided in the next sentence. Within thirty (30) days of receipt of the Agency's notice of intent to terminate this Agreement, as provided in the preceding sentence, the Owner may offer to defend the Agency, with legal counsel acceptable to the Agency, in the third -party legal action and pay all of the court costs, attorney fees, monetary awards, sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of any and all financial or performance obligations resulting from the disposition of the legal action. Any such offer from the Owner must be in writing and reasonably acceptable to the Agency in both form and substance. Nothing contained in this Section 5 shall be deemed or construed to be an express or implied admission that the Agency is liable to the Owner or any other person or entity for damages alleged from any alleged or established failure of the Agency to comply with any statute, including, without limitation, CEQA. The defense of such third parry actions as described in this Section 5 shall constitute an Unavoidable Delay. 6. Survival and Enforcement of Covenants. 6.1 Survival. Each covenant set forth in Section 3 and 5 shall be a covenant running with the land of the Property and binding on Owner and all successors -in -interest to the Property for the City Operating Period. Each covenant set forth in Section 4 shall be a covenant running with the land of the Property and binding on Owner and all successors -in - interest to the Property as provided for in Section 4. Further, each covenant set forth in 45636.00000\5570219.3 Section 3, 4, and 5 shall survive the execution, recordation or issuance of each and every document (i.e., certificate of completion, certificate of occupancy, etc.) related to the Property or the Project for the City Operating Period. 6.2 Enforcement. The covenants set forth in Section 3, 4 and 5 may be enforced by the Agency regardless of whether or not the Agency currently owns or continues to own an interest in any property benefited by any such covenants. Owner agrees that breach of any of the covenants set forth in Section 3, 4 and 5 will result in great and irreparable injury to the Agency, will violate the public policy and the purposes of this Agreement and will result in injury to the Agency that is not compensable by monetary damages. Accordingly, upon the breach of any of the covenants set forth in Section 3, 4 and 5 in addition to the provisions regarding Remedies, the Agency may institute an action for injunctive relief regarding and/or specific performance of any such covenant." THIS NOTICE OF AGREEMENT is dated as of , 20, and has been executed on behalf of the parties to the Agreement on the date indicated next to the signatures of their authorized officers. This Notice of Agreement may be executed in counterparts and when fully executed each counterpart shall be deemed to be one original instrument. AGENCY REDEVELOPMENT AGENCY OF THE CITY OF AZUSA Dated: LO -A Executive Director ATTEST: Agency Secretary APPROVED AS TO FORM: Agency Counsel 45636.00000\5570219.3 APPLE SOCAL, LLC, a Delaware limited liability company Dated: Patrick J. Eulberg, Vice President — Real Estate By: Secretary Consent to Recording of Notice of Agreement Citrus Crossing Properties Fee LLC, a Delaware limited liability company, hereby consents to the recording of this Notice of Agreement against the Property, for the term and on the conditions set forth in the Agreement. Citrus Crossing Properties Fee LLC, a Delaware limited liability company M. Its: [ALL SIGNATURES MUST BE NOTARIZED] 45636.00000\5570219.3 EXHIBIT "A" TO NOTICE OF AGREEMENT Property Description Lot 5 of Tract No. 68355, in the City of Azusa, County of Los Angeles, State of California, as per map recorded in Book 1354, Pages 37 through 41 in the office of the recorder of the County of Los Angeles. 45636.00000\55 70219.3 CITY OF AZUSA MINUTES OF THE REDEVELOPMENT AGENCY REGULAR MEETING MONDAY, OCTOBER 4, 2010 — 8:37 P.M. The Board of Directors of the Redevelopment Agency of the City of Azusa met in regular session at the above date and time in the Azusa Auditorium, 213 E. Foothill Blvd., Azusa CA. Chairman Rocha called the meeting to order. ROLL CALL PRESENT: DIRECTORS: GONZALES, CARRILLO, MACIAS, HANKS, ROCHA ABSENT: DIRECTORS: NONE ALSO PRESENT: General Counsel Carvalho, Executive Director Delach, Assistant Executive Director Makshanoff, Department Heads, Secretary Mendoza, Deputy Secretary Toscano. Call to Order Roll Call Also Present THE CITY COUNCIL AND THE REDEVELOPMENT AGENCY CONVENED JOINTLY AT CnCUCRA Convene 8:37 P.M. TO ADDRESS THE FOLLOWING ITEMS: Jntly JOINT PUBLIC HEARING - CONSIDERATION OF THE FIRST AMENDMENT TO THE Joint Pub Hrg STATUTORY DEVELOPMENT AGREEMENT AND OWNER PARTICIPATION AGREEMENT Continued FOR THE CITRUS CROSSING PROJECT LOCATED AT THE SOUTHWEST CORNER OF ALOSTA To 10/18/10 AVENUE AND CITRUS AVENUE. Moved by Councilmember/Director Hanks, seconded by Councilmember/Director Carrillo and unanimously carried to continue the Public Hearing to the meeting of October 18, 2010. The CONSENT CALENDAR consisting of items G-1 through G-3 was approved by motion of Director Consent Cal. Carrillo, seconded by Director Gonzales and unanimously carried. Approved 1. Minutes of the regular meeting of September 20, 2010, were approved as written. Min appvd 2. The City Treasurer's Report as of August 31, 2010. Treas Rpt 3. Resolution authorizing payment of warrants by the Agency was adopted and entitled: A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA Res. No. 10-R30 ALLOWING CERTAIN CLAIMS AND DEMANDS TO BE PAID OUT OF REDEVELOPMENT Warrants AGENCY FUNDS. SPECIAL CALL ITEMS Spec Call Items None. None It was consensus of the Redevelopment Agency Board Members to adjourn. Adjourn TIME OF ADJOURNMENT: 8:39 P.M. SECRETARY NEXT RESOLUTION NO. 10-R31. f CONSENT ITEM TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: MARCENE HAMILTON, CITY TREASURER DATE: OCTOBER 18, 2010 SUBJECT: INVESTMENT POLICY FOR THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA RECOMMENDATION The City Treasurer recommends that the City Council approve the attached resolution re -adopting the Investment Policy for the Redevelopment Agency of the City of Azusa. FISCAL IMPACT IWi2.. BACKGROUND California Government Code Section 53646(a)(2) requires the Agency to adopt an Investment Policy every year. The Agency is also charged with changing the policy as necessary. The policy must be adopted or changed at a public meeting of the Council. The Council Members last adopted the Investment Policy on October 5, 2009. DISCUSSION In addition to the annual review of the Agency's Investment Policy, Government Code Section 53607 requires the Agency to reconfirm annually the delegation of investment authority to the City Treasurer. The Treasurer and the City Council are "fiduciaries" subject to the prudent investor standard. The Investment Policy is the outline from which the Treasurer operates to ensure that investments are safe, liquid and achieving returns. RESOLUTION NO RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA ADOPTING THE INVESTMENT POLICY WHEREAS, the Redevelopment Agency of the City of Azusa receives taxes and other revenues from a variety of sources and uses the funds to pay its bills on a regular basis; and WHEREAS, the Agency Treasurer is charged with the duties of handling and maintaining the cash that is taken in or otherwise received by the Agency; and WHEREAS, the balance of these funds Fluctuates between $3,000,000 and $20,000,000 or more; and WHEREAS, per Government code Sections 53607 and 53600.5 the Agency Treasurer is charged with investing idle public funds on the basis of protecting the safety of the funds, ensuring the liquidity of the investments, and maximizing earnings in that order of importance and based on the "Prudent Investor Standards"; and WHEREAS, the State of California requires each City entity annually, including the Redevelopment Agency, to adopt an investment policy per Government Code Section 53646; and WHEREAS, the Board of Directors, with the aid of its staff has reviewed the Statement of Investment Policy and wishes to approve the same; NOW THEREFORE BE IT RESOLVED that the Board of Directors of the Redevelopment Agency of the City of Azusa does hereby adopt its Investment Policy attached hereto marked Exhibit A and instructs the Agency Treasurer to be guided by it in carrying out the duties of his office for the benefit of the Redevelopment Agency. ADOPTED AND APPROVED this day of October 2010. JOSEPH R. ROCHA, MAYOR 1 HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof on the day of October 2010 by the following vote of Council: AYES: CITY COUNCIL MEMBERS: NOES: CITY COUNCIL MEMBERS ABSTAIN: CITY COUNCIL MEMBERS ABSENT: CITY COUNCIL MEMBERS VERA MENDOZA, CITY CLERK Redevelopment Agency, City of Azusa INVESTMENT POLICY 1. POLICY STATEMENT All funds of the City of Azusa Redevelopment Agency ("Agency") shall be invested in accordance with principles of sound treasury management and in accordance with the provisions of California Government Code Section 53600 et seq., and guidelines established by the California Municipal Treasurer's Association, the California Society of Municipal Finance Officers, and this Investment Policy ("Policy"). These funds are defined and detailed in the City's Comprehensive Annual Financial Report ("CAFR") and include anynew funds created unless specifically excluded by the City Council. Specifically excluded funds are: Funds deposited with the State Public Employees' Retirement System; and Bond proceeds that are subject to covenants and restrictions as defined in the Bond's indenture are administered under the direct control of the Bond Trustee. 2. INVESTMENT POLICY OBJECTIVES A. Overall Risk Profile Pursuant to California Government Code Section 53600.5 the three (3) objectives of the RDA's Policy are, in order of priority: 1. Safeguard the principal of the funds; 2. Meet the liquidity needs of the City; and 3. Achieve a return of the funds. To achieve these objectives, the Agency shall consider the following when making an investment: 1. Safeguard the Principal of the Funds The Agency shall mitigate the risk to the principal of invested funds by limiting credit and interest rate risks. Credit risk is the risk of loss due to the failure of the security issuer or backer. Interest rate risk is the risk that the C:�MENTS AND SETTIN17USAUSERIUIY WCUMENTSWN TMENTP LIMNV TME MLICY- REDEWMPMENT AGENCY - 2010 - RNAL.WC market value of the Agency's portfolio will fall due to an increase in general interest rates. a) Credit risk will be mitigated by: (i) Limiting investments to the safest types of securities; (ii) By pre -qualifying the financial institutions with which it will do business; and (iii) By diversifying the investment portfolio so that the potential failure of any one issue or backer will not place an undue financial burden on the Agency. b) Interest rate risk will be mitigated by: (i) Structuring the Agency's portfolio so that securities mature to meet the Agency's cash requirements for ongoing obligations, thereby avoiding the possible need to sell securities on the open market at a loss prior to their maturity to meet those requirements; and (ii) Investing primarily in shorter -term securities. 2. Meet the Liquidity Needs of the City The Agency's investment portfolio shall be structured in a manner that ensures securities mature at the same time as cash is needed to meet anticipated demands (Static Liquidity). Additionally, since all possible cash demands cannot be anticipated, the portfolio should consist of securities with active secondary markets (Dynamic Liquidity). The maximum percentage of different investment instruments and maturities is detailed within Section H of this Policy. 3. Achieve a Return on the Funds Yield on the Agency's investment portfolio is of secondary importance compared to the safety and liquidity objectives described above. Investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. While it may occasionally be necessary or strategically prudent for the Agency to sell a security prior to maturity to either meet unanticipated cash needs or to restructure the C:WCUMENTSANDSETTINrUSAUSERIU DOCUME MNVFST TMLICY NVMMENTMUCY-R EVF PM TAGENCY-2010-FINAL I, portfolio, this Policy specifically prohibits trading securities for the sole purpose of speculating on the future direction of interest rates. B. Basic Investment Strate2y The Agency's investment portfolio shall be structured to provide sufficient funds from investments to meet the Agency's monthly anticipated cash needs. Subject to the objectives stated above, the choice in investment instruments and maturities shall be based upon an analysis of future anticipated cash needs, existing and anticipated revenues, interest rate trends and specific market opportunities. No investment may have a maturity of more than five (5) years from its date of purchase without receiving prior Council approval. After approval by the Council, reserve funds associated with bond issues may have a maturity of more than five (5) years, up to the earliest date the bonds may be redeemed or mature. 3. INVESTMENTS This section of the Policy identifies the types of investments in which the Agency will invest its idle or surplus funds. A. Standard of Prudence The Agency operates its investment portfolio under the Prudent Investor Standard (California Government Code Section 53600.3) which states, in essence, "when investing, reinvesting, purchasing, acquiring, exchanging, selling or managing public funds, a trustee shall act with care, skill, prudence and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated need of the Agency, that a prudent person in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the Agency." This standard shall be applied in the context of managing the overall portfolio. Investment officers, acting in accordance with written procedures and this investment policy and exercising the above standard of diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. C:IDDCUMENTS AND SETTINrUSAUSERIN DOCUMENT5l VUTMENT MUMNVMTMEFMLICY-REDEVEL Pp TAGL CY.2010-FINA WC B. Eligible Securities The Agency is provided a broad spectrum of eligible investments under California Government Code Section 53600, et seq. The Agency may choose to restrict its permitted investments to a smaller list of securities that more closely fits the Agency's cash flow needs and requirements for liquidity. If a type of investment is added to California Government Code 53600 et seq., the new investment option will not be added to the Agency's Authorized Investment List until this Policy is amended and approved by the Council. If a type of investment permitted by the Agency should be removed from California Government Code 53600 et seq., the investment will be deemed concurrently removed from the Agency's Authorized Investment List. The Agency's Authorized Investment List • Insured Certificates of Deposit ("CD's") of California banks and/or savings and loan associations, and/or savings banks that mature in five (5) years or less, provided that the Agency's investments shall not exceed One Hundred Thousand Dollars ($100,000) per institution. If the investment exceeds the insured One Hundred Thousand Dollars ($100,000), the funds are to be collateralized at one hundred and ten percent (110%) of the deposit in government securities or one hundred and fifty percent (150%) in mortgages. • Local Agency Investment Fund (LAIF) Demand Deposits. • Securities of the U.S. Government, and securities of which the principal and interest is guaranteed by the full faith and credit of the U. S. Government. • Securities issued by agencies and instrumentalities of the U. S. Government or issued by a government sponsored enterprise. • Commercial Paper (limited to 30% of the portfolio) rated Al/P 1 or the equivalent by two nationally recognized rating agencies with maturities not to exceed one hundred and eighty-one (18 1) days. • Medium -Term Corporate Notes (limited to 20% of the portfolio) that are rated "AA" or better by two (2) nationally recognized rating agencies. • Passbook Savings or Money Market Demand Deposits, subject to the restrictions and limitations set forth in California Government Code Section 53638. C:WMU TS ANDSETTING$UZUSAUSFRIUIY DOCU TSJNVF .t TMUCYVN TMQTP LICY -UDEV PM@TAGENCY-21110-FIN-C • Repurchase Agreements (limited to 30% of the portfolio) with approved banks and broker-dealers who have completed and signed a Master Repurchase Agreement with the Agency. • Money Market Mutual Funds (with a stated objective of maintaining a $1.00 net asset value) that has been rated AAAm by Moody's or any two (2) nationally recognized rating agencies. Please see Exhibit A for a more detailed description of the authorized investments listed above. A thorough investigation of any pool or fund is required prior to investing and on a continual basis. The investigation will, at a minimum, obtain the following information: • A description of eligible investment securities, and a written statement of investment policies and objectives; and • A description of interest calculations and how it is distributed, and how gains and losses are distributed; and • A description of how securities are safeguarded (including the settlement process) and how often the securities are marked to market and how often an audit is conducted; and • A description of who may invest in the program, how often, what size deposits and withdrawals are permitted; and • A schedule for receiving statements and portfolio listings; and • A determination as to whether the pool/fund maintain a reserve or retain earnings or is all income after expenses distributed to participants; and • A fee schedule which also discloses when and how fees are assessed; and • A determination as to whether the pool or fund is eligible for bond proceeds and/or will accept such proceeds. The purpose of this investigation is to determine the suitability of a pool or fund and evaluate the risk of placing funds with that pool or fund. One of the purposes of this Policy is to define what investments are permitted. If a type of security is not specifically authorized by this Policy, it is not a permitted investment. C. Qualification of Brokers, Dealers and Financial Institutions The Agency Treasurer or designees will establish and maintain a list of the financial institutions and broker/dealers authorized to provide investment and depository C: CUMENTS AND SETTINrSAUSERI WCUM­NVFSTMENT MUC NVUTMENTFVLICV- RED2VELOPMENT AGENCY-2010-FlNALDOC services to the Agency, will perform an annual review of the financial condition and registrations of the qualified bidders, and require annual audited financial statements to be on file for each approved company. The Agency shall annually send a copy of their current Policy to all financial institutions and broker/dealers approved to do business with the Agency. Receipt of the Policy and Enabling F Resolution, including confirmation that it has been received and reviewed'by the person(s) handling the Agency's account, shall be acknowledged in writing within thirty (30) days. All broker-dealers and financial institutions that desire to become qualified bidders for investment transactions must submit a "Broker -Dealer Application" and related documents relative to eligibility. This includes a current audited financial statement, proof of state registration, proof of NASD registration and a certification they have received and reviewed the Agency's Policy and agree to comply with the provisions outlined in the Investment Policy. The Agency Treasurer or designees may establish any additional criteria they deem appropriate to evaluate and approve any financial services provider. The selection process for broker-dealers shall be open to both "primary dealers" and "secondary/regional dealers" that qualify under Securities and Exchange Commission Rule 150-1 (Uniform Net Capital Rule). The provider must have an office in California and the provider's representative must be experienced in institutional trading practices and familiar with the California Government Code as it relates to investments by an Agency. D. Collateralization Requirements Uninsured Time Deposits with banks and savings and loans shall be collateralized in the manner prescribed by state law for depositories accepting municipal investment funds. Re -purchase Agreements shall be collateralized in accordance with terms specified in the Master Re -purchase Agreement. The valuation of collateral securing a Repurchase Agreement will be verified weekly to ensure a minimum of one hundred and two percent (102%) of the value of the transaction is held by the Agency's depository agent. E. Diversification The Agency will diversify its investments by security type and investment. With the exception of bond reserve funds, bond escrow funds, and any other specific funds approved by the Treasury Committee or the City Council, the Agency Treasurer or designee, and the Agency's Investment Committee will adopt a strategy that combines current market conditions with the Agency's cash needs to maintain the -C-ENTS AND SETTINCyt'WZUSAUSERIWY DO ME`JTSVNVFSTMENT POLICYVNVESTMENTPOIKY- REDFVELOPMENT AGENCY -2010-MNALGGC maximum degree of safety of principal and liquidity throughout market and budgetary cycles. This strategy will include diversification by investment type and maturity allocations and will be included in the regular quarterly reports to the Council. This strategy will be reviewed quarterly and can be changed accordingly. F. Confirmations Receipts for confirmation of purchase of authorized securities should include at a minimum the following information: trade date, settlement date, description of the security, par value, interest rate, price, yield to maturity, Agency's name, net amount due, and third party custodial information. G. GASB 3 The Governmental Accounting Standards Board ("GASB") issued GASB #3 in April 1986, and the local entity's investments must be categorized into three (3) levels of credit risk as follows: 1) Securities that are insured or registered, or for which the securities are held by public units or its agent in the units; 2) Securities that are uninsured and unregistered and are held by the broker's or dealer's trust department or agent in the unit's name; 3) Securities that are uninsured and unregistered and are held by the broker or dealer, or by its trust department or agent, but not in the unit's name. The carrying amount and market value of all types of investments must be disclosed in total and for each type of investment. GASB #3 exempts mutual funds and LAW investments from the mandatory risk categorization. 4. SAFEKEEPING OF SECURITIES A. Safekeeping Agreement The Agency shall contract with a bank or banks for the safekeeping of securities that are owned by the Agency as a part of its investment portfolio or transferred to the Agency under the terms of a Re -purchase Agreement. All securities owned by the Agency shall be held in safekeeping by a third party bank trust department acting as agent for the Agency under the terms of a custody agreement executed by the bank and the Agency. All securities will be received and delivered using standard delivery versus payment (DVP) procedures. The third party bank trustee agreement must comply with California Government Code Section C1WGUMENTS ANDS IN;rSAUSMIU DOCUMENTSUNVEtif TMIUC NYFSTMENTMUCY-RE EWPMENT AGENCY .2010-MNAL 53608. No outside broker/dealer or advisor may have access to Agency funds, accounts or investments, and any transfer of funds must be approved by the Agency Treasurer. B. Security Transfers The authorization to release Agency's securities or funds will be telephoned to the appropriate bank representative by a finance department member other than the person who initiated the transaction. A written confirmation outlining details for the transaction and confirming the telephoned instructions will be sent to the bank within five (5) working days. C. Verification of Security Securities transferred to the Agency as collateral securing time deposits or repurchase agreements that are being held in safekeeping for the Agency will be verified in writing and examined on a random basis during the year by the Agency's independent auditors as part of the Agency's annual independent audit. 5. STRUCTURE AND RESPONSIBILITY This section of the Policy defines the overall structure and areas of responsibility within the investment management program. A. Responsibilities of the Agency Treasurer The Agency Treasurer is charged with responsibility for maintaining custody of all public funds and securities belonging to or under the control of the Agency, and for the deposit and investment of those funds in accordance with principles of sound treasury management applicable laws, ordinances, and this Policy. This includes establishing written procedures for the operation of the investment program consistent with this Policy. The procedures should include reference to safekeeping, master repurchase agreements, wire transfer agreements, banking services contracts and depository agreements. Such procedures shall also include explicit delegation of authority to persons responsible for investment transactions. No person may engage in any investment transaction except as provided under the terms of this Policy and the procedures established by the Treasurer and approved by the Investment Committee. Investment decisions that involve borrowing in the amount of One Hundred Thousand Dollars ($100,000) or more must be included as a separate discussion item on the Council's agenda. Such items can no longer be included on the Council's consent calendar. (California Government Code Section 53635.7) C:�TS ANDSETTIM1Si$WZUSAUSUJWY DOCUM TS�NVE kT T MUCYVNVESTMQYTP UI -R EVELOP iT AG- -2010-FMALDOC B. Responsibilities of the Director of Finance The Director of Finance is responsible for keeping the Council fully advised as to the financial condition of the Agency. C. Responsibilities of the Board of Directors F The City Council shall consider and adopt a written Investment Policy. As provided in that policy, the Council shall receive, review and accept monthly investment reports. D. Responsibilities of the Investment Committee There shall be an Investment Committee consisting of the Director of Finance, the City Manager, and Agency Treasurer and their designees. The Committee shall meet quarterly to discuss cash flow requirements, the monthly investment reports, investment strategies, investment and banking procedures and significant investment related work projects being undertaken in each department that will affect the cash flow management of the Agency Treasurer. This will require timely reports from the department heads to the Agency Treasurer concerning significant future cash flow requirements. The Committee's meetings will be summarized in minutes that are distributed to the City Council. The Investment Committee, with the approval of the Council, may retain an external investment manager on behalf of the Agency. The investment manager will be required to act in accordance with this investment policy. E. Ethics and Conflicts of Interest All Agency officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution of the investment program, or that could impair their ability to make impartial investment decisions. Those employees and investment officials shall disclose to the appropriate City executive (City Manager, City Attorney, or the Director of Finance) any material financial interest in financial institutions that conduct business within the City, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the Agency's investments. 6. REPORTING The Agency Treasurer shall prepare a monthly investment report, including a succinct management summary that provides a clear picture of the status of the current investment portfolio and transactions made over the past month. This management summary shall be prepared in a manner that will allow the Director of Finance and the Council to ascertain whether investment activities during the reporting period have deviated from the Agency's Investment Policy. C DOCUMENTS AND SUTIND.SUZ MUSMIN DOCU TVNVFST TFOUCW VFST�MUI-REDtVF10PMp TAGENCY-2W-FlNAL The monthly report shall include all the information required by California Government Section 53646, including the following: • A list of individual securities held at the end of the reporting month; and • Unrealized gain or loss resulting from amortization or accretion of principal versus market value changes by listing the cost and market value of securities owned by the Agency; and • A description of the current investment strategy and the assumptions upon which it is based; and • Dollar weighted yield to maturity of the Agency's investments; and • Maturity schedule by type of each of the Agency's investments; and • Statement as to compliance of the Agency's Investment Policy with Government Code Section 53601 et seq.; and • Statement as to ability to meet expenditure requirements for next six (6) months; and • Market value, book value, par value and cost basis of all investments; and • Investments "under the management of contracted parties, including lending programs" (i.e. investments held by deferred compensation administrators). 7. PERFORMANCE STANDARDS The investment portfolio will be managed in accordance with the standards established within this Policy and should obtain a market rate of return throughout budgetary and economic cycles. The Investment Committee will establish and periodically review the Agency's portfolio benchmarks and performance. A benchmark will be selected that compares with the portfolio composition, structure and investment strategy at that time. 8. REVIEW OF INVESTMENT POLICY A. Poliev Review This Policy shall be reviewed annually by the City Council in accordance with State law to ensure its consistency with respect to the overall objectives of safety, liquidity and yield. Proposed amendments to the Policy shall be prepared by the Treasurer and reviewed by the Investment Committee and City Attorney and then be forwarded to the Council for consideration. The Investment Committee shall annually review the C:OOCUM SANDSEfTTy UZUSAUSMlI DGCUA¢NTSUNMTM TMLICYV MThffNTMLIC-RFDEVFIAPM TAGS- -3010-FlNAL Policy and any proposed amendments and forward to the Council for its consideration and adoption at a public meeting. B. Internal Control and Review The external auditors shall annually review the investments and general activities associated with the investment program to ensure compliance with this Policy. This review will provide internal control by assuring compliance with policies and procedures for the activities that are selected for testing. 9. ADOPTION OF POLICY This Policy was duly adopted by the City Council of the City of Azusa on October 18, 2010. C 1DOCUtQI:TS AND SEfT1yGyUZU5AU5E0.1N1Y DOCUAffNTSJNVESfMENT PO4CYV4VF.S1'Ap21THJIJCY - REDEVFIOPM£T:T AG@iCY-2U 10 - FlNALDOC EXHIBIT A EXHIBIT A DESCRIPTION OF INVESTMENTS The Redevelopment Agency's ("Agency") investments maybe placed in those securities as outlined below; the allocation between the various investment instruments may change in order to give the Agency the best combination of safety, liquidity and higher yield. Surplus funds of local agencies may only be invested in certain eligible securities. The Agency limits its investments to allowable securities under the State of California statutes (Government Code Section 53601, et. seq., Section 53356, et. seq., and Section 53595, et. seq.) and is further limited to those listed below. Certificates of Deposit Certificates of deposit allow the Agency to select the exact amount and day of maturity as well as the exact depository. Certificates of deposit are issued in any amount for periods of time as short as fourteen (14) days and as long as several years. At any given time, the Agency may have certificates of deposit in numerous financial institutions in the future. The Treasurer may at his/her discretion waive security for that portion of a deposit, which is insured pursuant to federal law. Currently, the first One Hundred Thousand Dollars ($100,000) of a deposit is federally insured by FSLIC or FDIC. It may be to the Agency's advantage to waive this collateral requirement for the first One Hundred Thousand Dollars ($100,000) because the Agency may receive a higher interest rate. If funds are to be collateralized, the collateral will be one hundred and ten percent (110%) of the deposit in government securities or mortgages of one hundred and fifty percent (150%). At purchase, institutions must not show an operating loss. Banks must have an equity -to - asset ratio of at least six (6%). Savings and loan associations and savings banks must have an equity -to -asset ratio of a least three percent (3%). Local Agency Investment Fund The Local Agency Investment Fund ("LAIF") of the State of California offers high liquidity because deposits can be wired to the Agency checking account within twenty-four (24) hours. Interest is computed on a daily basis. This is a special fund in the State Treasury, which local agencies may use to deposit funds for investment. There is no minimum investment period and the minimum transaction is Five Thousand Dollars ($5,000) in multiples of One Thousand Dollars ($1,000) above that, with a maximum of Fifty Million Dollars ($50,000,000) for any agency. It offers high liquidity because deposits can be converted to cash within twenty-four (24) hours and no interest is lost. All interest is distributed to those agencies participating on a proportionate share determined by the amounts deposited and the length of time they are deposited. Interest is paid quarterly by adding it to the principal. C:MMMENTSAND SETTIp'GrSAUSERI� DOCUMENTSI UTMENT FOUMNVMM-MUCY- REDEVELOPMENT AGENCY. 3010. FINAL , The State charges participants a small fee to cover reasonable costs associated with operating the investment pool, not to exceed one quarter of one percent (.25%) of the earnings. The interest rates received are fairly stable because of the pooling of the State's surplus cash with the surplus cash deposited by local governments. This creates a well -diversified multi -billion dollar money pool. U.S. Treasury Securities U.S. Treasury securities are highly liquid and considered the safest of all investments because they are backed by the full faith and credit of the United States Government. U.S. Treasury Bills are direct obligations of the United States Government. They are issued weekly with maturity dates up to six (6) months. They are issued and traded on a discount basis and the interest is figured on a three hundred and sixty (3 60) day basis using the actual number of days to maturity. They are issued in the minimum amount of Ten Thousand Dollars ($10,000) and in multiples of Five Thousand Dollars ($5,000) thereafter. U.S. Treasure Notes are direct obligations of the United States Government. They are issued throughout the year with maturities from two up to thirty (30) years. Notes are coupon securities paying a fixed amount every six (6) months. The Agency will not invest in notes having maturities longer then five (5) years. Federal Agency Securities Federal Agency securities are highly liquid and considered to be virtually without credit risk. Federal Agency issues are guaranteed indirectly by the United States Government. All Agency obligations that are fixed-rate and meet the maturity restrictions of the State Code and this Policy qualify as legal investments and are acceptable as security for public deposits. They usually provide higher yields than regular Treasury issues with all of the same advantages. Examples are: FNMA's (Federal National Mortgage Association) are used to assist the home mortgage market by purchasing mortgages insured by the Federal Housing Administration and the Farmers Home Administration, as well as those guaranteed by the Veterans Administration. FHLB's (Federal Home Loan Bank Notes and Bonds) are issued by the Federal Home Loan Bank System to help finance the housing industry. The notes and bonds provide liquidity and home mortgage credit to savings and loan associations, mutual savings banks, cooperative banks, insurance companies and mortgage -lending institutions. Other Federal Agency issues are Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Farm Credit Bank ("FFCB"), Small Business Administration Notes ("SBA's"), Government National Mortgage Association ("GNMA's"), Tennessee Valley Authority ("TVA's") and the Student Loan Marketing Association ("SLMA's"). C�TS AND SETTip'G9hZ USERIV DOCUMENTN MTMENT MU1 NV MENTMUI -R EVE MENT AGENCY -]1110 -FINAL Negotiable Certificate of Deposit Negotiable certificates of deposit are high-grade instruments, paying a higher interest rate than regular certificates of deposit. They are liquid because they can be traded in the secondary market. Negotiable Certificates of Deposit ("WD's") are unsecured obligations of the issuing financial institution, bank or savings and loan, bought at face value with a promise to pay face value plus accrued interest at maturity. The primary market issuance is in multiples of One Million Dollars ($1,000,000). The secondary market usually trades in denominations of Five Hundred Thousand Dollars ($500,000), although smaller denominations are occasionally available. Local agencies may not invest more than thirty percent (30%) of their surplus money in negotiable certificates of deposit. NCD's will only be placed with the largest and most financially sound institutions. Commercial Paper Commercial paper allows the investment of large amounts of money on a short-term basis at rates higher than passbook savings accounts. Commercial paper is a short-term unsecured promissory note issued by a corporation to raise working capital. These negotiable instruments are purchased at a discount to par value. As an example, corporations such as American Express, International Business Machines ("IBM") and General Electric issue commercial paper. Local agencies are permitted by state law to invest in commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided by Moody's Investor's Service, Inc. or Standard and Poor's Corporation (Allpl or al+/pl). Purchases of eligible commercial paper may not exceed one hundred and eighty (180) days maturity nor exceed 30% of the Agency's surplus funds. Medium -Term Corporate Notes An agency may invest in medium term corporate notes with a maximum maturity of five years (5) issued by a corporation organized and operating within the United States, a depository institution licensed by the United States Government or any state government and operating within the United States. California Government Code Section 53601 et seq., permits cities to invest in corporations with a rating category of "A" or better, but the Agency will limit its investments in corporate medium term notes to those issued by corporations that have been rated "AA" or its equivalent by two (2) nationally recognized ratings agencies. Passbook Savings or Money Market Account Passbook savings account allows us to transfer money from checking to savings and earn interest on smaller amounts of money, which are not available for a longer-term investment. C.MMMENTS ANDSETTIfSy1ZUSAU IN DOMU TSIP.`V MENT PGIICYVNVESTMENTPDIICY - R EVEWPMENT AGENCY -3010 -FINAL The passbook savings account is similar to a CD except not for a fixed term. The interest rate is much lower than CD's but the savings account provides daily liquidity and funds can be deposited and withdrawn according to our daily needs. Mutual Funds Mutual Funds allow the Agency to maintain liquidity and receive money market rates. Mutual Funds are referred to in the Government Code, Section 53601(1), as "shares of beneficial interests issued by diversified management companies". The Mutual Fund must be restricted by its prospectus to be a "Money Market" mutual fund and be limited to the same approved investments as LAIR These investments include U.S. Treasury and Agency issues, Bankers Acceptances, Commercial Paper, Repurchase Agreements, Certificates of Deposit, and Negotiable Certificates of Deposit. The quality rating and percentage restrictions in each investment category applicable to LAW also apply to any Mutual Fund. One of the stated objectives of the Mutual Fund must be to attempt to maintain a One Dollar ($1.00) Net Asset Value (NAV). A further restriction is that the purchase price of shares of any mutual fund shall not include any sales commission. Investments in mutual funds shall not exceed fifteen percent (15%) of the Agency's surplus money. Repurchase Agreements Repurchase Agreements are purchases of securities by the Agency under an agreement with a term of one (1) year or less whereby the seller will "repurchase" the same securities on or before a specified date or on demand of either party and for a specified amount. The underlying securities must be delivered to the Agency's custodial account by book entry, physical delivery or a third -party custodial agreement. C:�CUMENTSANDSETT[f.WUSAUSMIU D UMENTS VESTMENTMLIC"NVMTMENTPOLIC .REDEVELOPMENTAGENCY 20111 -FM MC WARRANT REGISTER NO. 1 FISCAL YEAR 2010-11 WARRANTS DATED 09/01/10 THROUGH 09/15/10 FOR REDEVELOPMENT AGENCY MEETING OF 10-18-10 RESOLUTION NO. A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA ALLOWING CERTAIN CLAIMS AND DEMANDS TO BE PAID OUT OF REDEVELOPMENT AGENCY FUNDS THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA DOES RESOLVE AS FOLLOWS: SECTION 1. That the following claims and demands have been audited as required by law and that the same are hereby allowed in the amounts and ordered paid out of the Redevelopment Agency Funds as hereinafter set forth: 80 -110 -REDEVELOPMENT ADMINISTRATION FUND 80 -125 -CBD CAPITAL PROJECTS FUND 80 -135 -WED CAPITAL PROJECTS FUND 80 -185 -RANCH CAPITAL PROJECTS FUND 80-165-624-2008A TAX ALLOCATION BONDS 81 -155 -TAX INCREMENT SET-ASIDE FUND 81 -165 -LM MRG TAB08B HS 82 -125 -CBD DEBT SERVICE FUND 82 -135 -WED DEBT SERVICE FUND 82 -165 -MERGED PROJECT TAX ALLOCATION BONDS 82 -185 -RANCH CENTER DEBT SERVICE FUND TOTAL ALL FUNDS: S 14,514.34 325.33 109,364.67 $ 124.204.34 SECTION 2. That the Secretary shall certify to the adoption of this resolution and shall deliver a certified copy thereof to the Agency Treasurer and shall retain a certified copy thereof in his own records. ADOPTED AND APPROVED THIS DAY OF Chairman 2010. I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Redevelopment Agency of the City of Azusa at a regular meeting there of, held on the day of 2010. AYES: AGENCY MEMBERS: NOES: AGENCY MEMBERS: ABSTAIN: AGENCY MEMBERS: ABSENT: AGENCY MEMBERS: Secretary City oofAzusa O 09005.48 10/12/10 OPEN HOLD D B LISTING By /Entity Imre Pam 1 ILS 1sq: RUBY ------- leg: GL JL --- loc: BI -TB I---jcb: 775415 W13034--pgm: CH400 <1.34> rpt id: Q�LIR02 SE= FUND Cbdes: 80-82 ; Check Issue rtes: 090110-091510 PE ID 75613 PE Nff a ACCCCNT NLM2ER / JCB NPBER A T & T 8010110000-6915 IrnoiO= Nubs DeS=ptian St Disc. Ant. 6263345464072410 626-3345464/0517 PD 0.00 Dist. Pit. 8.94 FEID d: Paid: 0.00 8.94 V11440 AUMM)M COUP, 8000000000-3042 Tbtal: 090910 MEDICAL REDUMS PD 0.00 8.94 50.00 PEID UW: PPaaii 0.00 50.00 V05935 ANTIIv= T Mv= 8010125000-6815 Total: 611128 #611128/PST MR PD 0.00 50.00 150.00 PEID UW FFaa d: 0.00 150.00 V00270 A2HM SERVICES 8010125000-6815/505800-6815 Total: 364722000073110 PTI;} SQL'/624N &aN PD � 0.00 150.00 175.33 PEID Laid: 0.00 Paid: 175.33 W0363 V00363 AZUSA CfPNffi2 CP 8010110000-6630 MMA CfFR OF 8010110000-6630 Total: 3038 FY 2010/2011 AZU PD 0.00 3039 FY 2010/2011 AZU PD 0.00 175.33 2,712.15 2,712.15 V01305 AZCSA CITY EMPLD 8000000000-3035 PEID id3�ai_d: Paid: Total: 2610/1001018 PY#18/10 PD 00.00 0.00 5,424.30 5,424.30 285.00 PEID Pala: 2850:000 V10604 AZLEA MII%AE MW 8000000000-3020 Total.: 2618/1001018 PY#18/10 PD . 0.00 285.00 35.00 PEID Umd: 0.00 Zbtal; 35.00 City of Azusa HP 9000 10/12/10 O P E N H O L D D B LISTING By /Ehti Natre Ppa�ge 2 , OCT 12, 2010, 5:48 ---req: RLISY-------leg: 6L JL---loc: BI-TD�-i---jab: 775415 #J13034--pgm: CH400 <11..34> rpt id: CHFL'TR02 SE= FUD Cbdes: 80-82 ; Check Issue Dates: 090110-091510 PE ID - PE Nage ACCCURr NCNEE2 / JOB NCNFEZ Invoice Nurber Lescriptim St Disc. Ant. Dist. Amt. V12477 C.T.& F. IlVC 8010165624-2745 50410 Ocutracts Pbl Cb PD 0.00 -12,151.63 V12477 C.T.& F. INC 8010165624-7170/661106-7170 50410 'TAF= INIERSECT PD 0.00 121,516.30 PEID LV' : 0.00 P�aa.d: 1091364.67 Total: 109,364.67 V06783 =SIREDr 8000000000-3010 1310/1001018PY 18/10 PD 0.00 267.00 V06783 =SII2EEr 8000000000-3010 2315/1001018 PY#18/10 PD 0.00 125.08 V06783 CTITSIRE Er 8000000000-3010 2310/1001018 PY 18/10 PD 0.00 720.92 PEID UlDaid: 0.00 Paid: 1,113.00 'Ibtal: 11113.00 V01646 BEL CORFN & 02E 8010110000-6493 0016747IN FY 10/11 PROPIY PD 0.00 2,056.77 V01646 HDL CDREN & 02E 8010110000-6493 00159801N FY 10/11 PROPIY PD 0.00 21700.00 V01646 HDL CIJREN & ME 8010110000-6493 0016171IN FY 10/11 PROPIY PD 0.00 963.46 PEID LUT:.,d: 0.00 PPaa�id: 51720.23 'Ibtal: 51720.23 V03126 LULN NATICML 8000000000-3010 2325/1001018 PY##18/10 PD 0.00 50.00 V03126 LRLN NATICNAL, 8000000000-3010 1320/1001018 PY#18/10 PD 0.00 45.00 PEID Llpaj : 0.00 Paid: 95.00 Total: 95.00 V10322 M & T BANK 8000000000-3010 083110 IGVA57 DEFERRED PD 0.00 369.17 V10322 M & T BANK 8000000000-3010 090910 IGNPA57 DEFERRED PD 0.00 489.77 V10322 M & T BANK 8000000000-3010 090910 401A CUgIRIBUFIO PD 0.00 673.00 PEID [lipid: 0.00 Paid: 11531.94 Total: 1,531.94 V00540 OFFICE EER7r IW 8010110000-6530 530259923001 FISRARS 8" SCTSS PD 0.00 5.79 PEID Upaid: 0.00 T City of Azusa HP 9000 10/12/10 O P E N H O L D , OCT 12, 2010, 5:48 RSI ---req: RUBY -------leg: GL JL --- loc: SELET FUND Codes: 80-82 ; Check Issue Lytes: 090110-091510 D B LISTING BI-TE�I-i--- jc�b: 775415 W13034-pgnP :�4 Ot<11.34> rpt id: CHFLTR02 PE ID PE Niirre AC OaM NUYEER / JCB MvEM Invoice Nur}erDescriptim St Disc. Art. Dist. Art. _ V02371 SPRINT 8010110000-6915 864888819032 Paid: Total: INV# 864888819-0 PD 0.00 5.79 5.79 10.00 PEID tVi. : 0.00 d: 10.00 V10053 STMARD INSURAN 8000000000-3044 1221/1001018 Total: PY418/10 PD 0.00 10.00 132.64 PEID Uipal : Paid: Tbtal: 0.00 132.64 132.64 V06107 U.S. BANK CERP P 8010110000-6625 082310 TAR=(BaN) PD 0.00 82.94 PEID LhTpai 0.00 Paid: 82.94 Tbtal: 82.94 V00876 V00876 MSEU43ICN MIli]A 8000000000-3010 WkgMgGILN MJILA 8000000000-3010 1330/1001018 2335/1001018 PY#18/10 PD 0.00 PY#18/10 PD 0.00 15.00 4.56 PEID ihiDaid: 0.00 Paid: 19.56 Total: 19.56 GRAND TOTAL U1 d: 0.00 Paid: Tbtal: 124,204.34 124,204.34 CITY OF AZUSA MINUTES OF THE AZUSA PUBLIC FINANCING AUTHORITY MONDAY, SEPTEMBER 7, 2010 —10:47 P.M. The Board Members of the Azusa Public Financing Authority of the City of Azusa met in regular session at the above date and time in the Azusa Auditorium located at 213 East Foothill Boulevard, Azusa. Chairman Rocha called the meeting to order. Call to Order ROLL CALL Roll Call PRESENT: BOARDMEMBERS: GONZALES, CARRILLO, MACIAS, HANKS, ROCHA ABSENT: BOARDMEMBERS: NONE ALSO PRESENT: Also Present General Counsel Carvalho, Executive Director Delach, Assistant Executive Director Makshanoff, City Department Heads, Secretary Mendoza, Deputy Secretary Toscano. The CONSENT CALENDAR consisting of item H-1 and H-2 was approved by motion of Board Member Consent Cal Carrillo, seconded by Board Member Gonzales and unanimously carried. Board Member Hanks abstained from approval of the minutes of May 3, 2010 as he was absent from that meeting. 1. Minutes of the regular meetings May 3`d, June ls`, and June 21", 2010, were approved as written. Min Appvd Board Member Hanks abstained from approval of May 3`d meeting. 2. The Authority Treasurer's report as of June 30, 2010 were received and filed. Treas Rpt It was consensus of the Board Members to adjourn. TIME ADJOURNMENT: 10:48 P.M. SECRETARY NEXT RESOLUTION NO. 10-P2. Adjourn CONSENT ITEM TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: MARCENE HAMILTON, CITY TREASURER DATE: OCTOBER 18, 2010 SUBJECT: INVESTMENT POLICY FOR THE AZUSA PUBLIC FINANCING AUTHORITY RECOMMENDATION The City Treasurer recommends that the City Council approve the attached resolution re -adopting the Investment Policy for the Azusa Public Financing Authority. FISCAL IMPACT None BACKGROUND California Government Code Section 53646(a)(2) requires the Public Financing Authority to adopt an Investment Policy every year. The Authority is also charged with changing the policy as necessary. The policy must be adopted or changed at a public meeting of the Council. The Council Members last adopted the Investment Policy on October 5, 2009. DISCUSSION In addition to the annual review of the Pubic Financing Authority's Investment Policy, Government Code Section 53607 requires the Authority to reconfirm annually the delegation of investment authority to the City Treasurer. The Treasurer and the City Council are "fiduciaries" subject to the prudent investor standard. The Investment Policy is the outline from which the Treasurer operates to ensure that investments are safe, liquid and achieving returns. RESOLUTION NO RESOLUTION OF THE BOARD OF DIRECTORS OF THE AZUSA PUBLIC FINANCING AUTHORITY OF THE CITY OF AZUSA ADOPTING THE INVESTMENT POLICY WHEREAS, the Public Financing Authority of the City of Azusa receives taxes and other revenues from a variety of sources and uses the funds to pay its bills on a regular basis; and WHEREAS, the APFA Treasurer is charged with the duties of handling and maintaining the cash that is taken in or otherwise received by the Authority; and WHEREAS, the balance of these funds Fluctuates between $3,000,000 and $20,000,000 or more; and WHEREAS, per Government Code Sections 53607 and 53600.5 the APFA Treasurer is charged with investing idle public funds on the basis of protecting the safety of the funds, ensuring the liquidity of the investments, and maximizing earnings in that order of importance and based on the "Prudent Investor Standards"; and WHEREAS, the State of California requires each City entity annually to adopt an investment policy per Government Code Section 53646; and WHEREAS, the Board of Directors, with the aid of its staff has reviewed the Statement of Investment Policy and wishes to approve the same; NOW THEREFORE BE IT RESOLVED that the Board of Directors of the Azusa Public Financing Authority of the City of Azusa does hereby adopt its Investment Policy attached hereto marked Exhibit A and instructs the Authority Treasurer to be guided by it in carrying out the duties of his office for the benefit of the Azusa Public Financing Authority. ADOPTED AND APPROVED this day of October 2010. JOSEPH R. ROCHA, CHAIRMAN 1 HEREBY CERTIFY that the foregoing resolution was duly adopted by the Board of Directors of the Azusa Public Financing Authority at a regular meeting thereof on the day of October 2010 by the following vote of Directors: AYES: BOARD OF DIRECTORS: NOES: BOARD OF DIRECTORS: ABSTAIN: BOARD OF DIRECTORS: ABSENT: BOARD OF DIRECTORS: VERA MENDOZA, SECRETARY Azusa Public Financing Authority (APFA) INVESTMENT POLICY 1. POLICY STATEMENT All funds of the APFA shall be invested in accordance with principles of sound treasury management and in accordance with the provisions of California Government Code Section 53600, et seq., and guidelines established by the California Municipal Treasurer's Association, the California Society of Municipal Finance Officers, and this Investment Policy ("Policy"). These funds are defined and detailed in the City's Comprehensive Annual Financial Report ("CAFR") and include any new funds created unless specifically excluded by the City Council. Specifically excluded funds are: Funds deposited with the State Public Employees' Retirement System; and Bond proceeds that are subject to covenants and restrictions as defined in the Bond's indenture are administered under the direct control of the Bond Trustee. 2. INVESTMENT POLICY OBJECTIVES A. Overall Risk Profile Pursuant to California Government Code Section 53600.5 the three (3) objectives of the APFA's Policy are, in order of priority: 1. Safeguard the principal of the funds; 2. Meet the liquidity needs of the City; and 3. Achieve a return on the funds. To achieve these objectives, the APFA shall consider the following when making an investment: 1. Safeguard the Principal of the Funds The APFA shall mitigate the risk to the principal of invested funds by limiting credit and interest rate risks. Credit risk is the risk of loss due to the failure of the security issuer or backer. Interest rate risk is the risk that the CV UMENTS AND SETTINGS USAUSpRIV.1Y DOCUMEI.TSVNVUTML T nLIMNVESTMENMLICY-A USAFUBUC FINANCMG AUTHOIUTY-3010-FINAL market value of the APFA's portfolio will fall due to an increase in general interest rates. a) Credit risk will be mitigated by: (i) Limiting investments to the safest types of securities; (ii) By pre -qualifying the financial institutions with which it will do business; and (iii) By diversifying the investment portfolio so that the potential failure of any one issue or backer will not place an undue financial burden on the APFA. b) Interest rate risk will be mitigated by: (i) Structuring the APFA's portfolio so that securities mature to meet the APFA's cash requirements for ongoing obligations, thereby avoiding the possible need to sell securities on the open market at a loss prior to their maturity to meet those requirements; and (ii) Investing primarily in shorter -term securities. 2. Meet the Liquidity Needs of the City The APFA's investment portfolio shall be structured in a manner that ensures securities mature at the same time as cash is needed to meet anticipated demands (Static Liquidity). Additionally, since all possible cash demands cannot be anticipated, the portfolio should consist of securities with active secondary markets (Dynamic Liquidity). The maximum percentage of different investment instruments and maturities is detailed within this Policy. 3. Achieve a Return on the Funds Yield on the APFA's investment portfolio is of secondary importance compared to the safety and liquidity objectives described above. Investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. While it may occasionally be necessary or strategically prudent for the APFA to sell a security prior to maturity to either meet unanticipated cash needs or to restructure the portfolio, this Policy specifically prohibits trading securities for the sole purpose of speculating on the future direction of interest rates. C.�-MF TS ANDSETTINGS USAU$ERIIMY DOCUMENTN VMTM TVaUI NV TMENTPoUJ -A USA PUBLIC FINANCING AUTHORITY.1010-FINAL C B. Basic Investment Strategy The APFA's investment portfolio shall be structured to provide sufficient funds from investments to meet the APFA's monthly anticipated cash needs. Subject to the objectives stated above, the choice in investment instruments and maturities shall be based upon an analysis of future anticipated cash needs, existing and anticipated revenues, interest rate trends and specific market opportunities. No investment may have a maturity of more than five (5) years from its date of purchase without receiving prior Board approval. After approval by the Board, reserve funds associated with bond issues may have a maturity of more than five (5) years, up to the earliest date the bonds may be redeemed or mature. 3. INVESTMENTS This section of the Policy identifies the types of investments in which the APFA will invest its idle or surplus funds. A. Standard of Prudence The APFA operates its investment portfolio under the Prudent Investor Standard (California Government Code Section 53600.3) which states, in essence, "when investing, reinvesting, purchasing, acquiring, exchanging, selling or managing public funds, a trustee shall act with care, skill, prudence and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated need of the APFA, that a prudent person in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the APFA." This standard shall be applied in the context of managing the overall portfolio. Investment officers, acting in accordance with written procedures and this investment policy and exercising the above standard of diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. B. Eligible Securities The APFA is provided a broad spectrum of eligible investments under California Government Code Section 53600, et seq. The APFA many choose to restrict its permitted investments to a smaller list of securities that more closely fits the APFA's cash flow needs and requirements for liquidity. If a type of investment is added to C:.DOC . TSANDSETTINGSUZ UTIU DOCU TVNVOTMENTPOUC NVF TMENTMUCV-A SAPUBLICFINANCINGAUTHORITY-2010-FINAL California Government Code 53600 et seq., the new investment option will not be added to the APFA's Authorized Investment List until this Policy is amended and approved by the Board. If a type of investment permitted by the APFA should be removed from California Government Code 53600 et seq., the investment will be deemed concurrently removed from the APFA's Authorized Investment List. The APFA's Authorized Investment List Insured Certificates of Deposit ("CD's") of California banks and/or savings and loan associations, and/or savings banks which mature in five (5) years or less, provided that the APFA's investments shall not exceed One Hundred Thousand Dollars ($100,000) per institution. If the investment exceeds the insured One Hundred Thousand ($100,000), the funds are to be collateralized at one hundred and ten percent (110%) of the deposit in government securities or one hundred and fifty percent (150%) in mortgages. • Local Agency Investment Fund ("LAIF") Demand Deposits. • Securities of the U.S. Government, and securities of which the principal and interest is guaranteed by the full faith and credit of the U. S. Government. • Securities issued by agencies and instrumentalities of the U. S. Government or issued by a government-sponsored enterprise. • Commercial Paper (limited to 30% of the portfolio) rated Al/P1 or the equivalent by two nationally recognized rating agencies with maturities not to exceed one hundred and eighty-one (18 1) days. • Medium -Term Corporate Notes (limited to 20% of the portfolio) that are rated "AA" or better by two nationally recognized rating agencies. • Passbook Savings or Money Market Demand Deposits, subject to the restrictions and limitations set forth in California Government Code Section 53638. • Repurchase Agreements (limited to 30% of the portfolio) with approved banks and broker-dealers who have completed and signed a Master Repurchase Agreement with the Agency. • Money Market Mutual Funds (with a stated objective of maintaining a $1.00 net asset value) that has been rated AAArn by Moody's or any two (2) nationally recognized rating agencies. Please see Exhibit A for a more detailed description of the authorized investments listed above. C:=D MENTS AND SETTINGS USAUSFJlI DOCUMWMNVESfM MLIC NVMMENTMUCV-A SA PUBLIC FINANCING AUTHORITY -2()111 -FINAL A thorough investigation of any pool or fund is required prior to investing and on a continual basis. The investigation will, at a minimum, obtain the following information: • A description of eligible investment securities, and a written statement of investment policies and objectives; and • A description of interest calculations and how it is distributed, and how gains and losses are distributed; and • A description of how securities are safeguarded (including the settlement process) and how often the securities are marked to market and how often an audit is conducted; and • A description of who may invest in the program, how often, what size deposits and withdrawals are permitted; and • A schedule for receiving statements and portfolio listings; and • A determination as to whether the pool/fund maintain a reserve or retain earnings or is all income after expenses distributed to participants; and • A fee schedule which also discloses when and how fees are assessed; and • A determination as to whether the pool or fund eligible for bond proceeds and/or will accept such proceeds. The purpose of this investigation is to determine the suitability of a pool or fund and evaluate the risk of placing funds with that pool or fund. One of the purposes of this Policy is to define what investments are permitted. If a type of security is not specifically authorized by this Policy, it is not a permitted investment. C. Qualification of Brokers, Dealers and Financial Institutions The Authority Treasurer or designees will establish and maintain a list of the financial institutions and broker/dealers authorized to provide investment and depository services to the APFA, will perform an annual review of the financial condition and registrations of the qualified bidders, and require annual audited financial statements to be on file for each approved company. The APFA shall annually send a copy of their current Policy to all financial institutions and broker/dealers approved to do business with the APFA. Receipt of the Policy and Enabling Resolution, including confirmation that it has been received and reviewed by the person(s) handling the APFA's account, shall be acknowledged in writing within thirty (30) days. All broker-dealers and financial institutions that desire to become qualified bidders for investment transactions must submit a "Broker -Dealer Application" and related C:IDOCU1.ffNTS ANDSETTINGSUZUSAUFI—MENTSIN—TMF TPoUCYVWFSTMQJTPoLICY AZUSA—C FINANCING AUTH0RITY-2010-FMAL documents relative to eligibility. This includes a current audited financial statement, proof of state registration, proof of NASD registration and a certification they have received and reviewed the APFA's Policy and agree to comply with the provisions outlined in the Investment Policy. The Authority Treasurer or designees may establish any additional criteria they deem appropriate to evaluate and approve any financial services provider. The selection process for broker-dealers shall be open to both "primary dealers" and "secondary/regional dealers" that qualify under Securities and Exchange Commission Rule 150-1 (Uniform Net Capital Rule). The provider must have an office in California and the provider's representative must be experienced in institutional trading practices and familiar with the California Government Code as it relates to investments by an Agency. D. Collateralization Requirements Uninsured Time Deposits with banks and savings and loans shall be collateralized in the manner prescribed by state law for depositories accepting municipal investment funds. Re -purchase Agreements shall be collateralized in accordance with terms specified in the Master Repurchase Agreement. The valuation of collateral securing a Re- purchase Agreement will be verified weekly to ensure a minimum of one hundred and two percent (102%) of the value of the transaction is held by the APFA's depository agent. E. Diversification The APFA will diversify its investments by security type and investment. With the exception of bond reserve funds, bond escrow funds, and any other specific funds approved by the Treasury Committee or the Board of Directors, the APFA Treasurer or designee and the APFA's Investment Committee will adopt a strategy that combines current market conditions with the APFA's cash needs to maintain the maximum degree of safety of principal and liquidity throughout market and budgetary cycles. This strategy will include diversification by investment type and maturity allocations and will be included in the regular quarterly reports to the Board. This strategy will be reviewed quarterly and can be changed accordingly. F. Confirmations Receipts for confirmation of purchase of authorized securities should include at a minimum the following information: trade date, settlement date, description of the security, par value, interest rate, price, yield to maturity, agency's name, net amount due, and third party custodial information. C1DOCUMENTSANDSETTINGS SAUS IV DOCUMFNTSl VFSTMFNTFOLIC VFSTMENTPOU-A MFUBUCFINANCINGAUTHOIt11Y-2010-FINAL G. GASB 3 The Governmental Accounting Standards Board ("GASB") issued GASB #3 in April 1986, and the local entity's investments must be categorized into three (3) levels of credit risk as follows: 1) Securities that are insured or registered, or for which the securities are held by public units or its agent in the units; 2) Securities that are uninsured and unregistered and are held by the broker's or dealer's trust department or agent in the unit's name; 3) Securities that are uninsured and unregistered and are held by the broker or dealer, or by its trust department or agent, but not in the unit's name. The carrying amount and market value of all types of investments must be disclosed in total and for each type of investment. GASB #3 exempts mutual funds and LAIF investments from the mandatory risk categorization. 4. SAFEKEEPING OF SECURITIES A. Safekeeping Agreement The APFA shall contract with a bank or banks for the safekeeping of securities that are owned by the APFA as a part of its investment portfolio or transferred to the APFA under the terms of a Re -purchase Agreement. All securities owned by the APFA shall be held in safekeeping by a third party bank trust department acting as agent for the APFA under the terms of a custody agreement executed by the bank and the APFA. All securities will be received and delivered using standard delivery versus payment ("DVP") procedures. The third party bank trustee agreement must comply with California Government Code Section 53608. No outside broker/dealer or advisor may have access to APFA funds, accounts or investments, and any transfer of funds must be approved by the Authority Treasurer. B. Security Transfers The authorization to release APFA's securities or funds will be telephoned to the appropriate bank representative by a finance department member other than the person who initiated the transaction. A written confirmation outlining details for the transaction and confirming the telephoned instructions will be sent to the bank within five (5) working days. C1 UMENTS AND SETTINGS USAU$[µt DO MENTSYNVESTMENT f LIC"NVMMEN -CY-A USA PUBLIC FINANCINGAUTHORITY.2010-FINA MC C. Verification of Security Securities transferred to the APFA as collateral securing time deposits or repurchase agreements that are being held in safekeeping for the APFA will be verified in writing and examined on a random basis during the year by the APFA's independent auditors as part of the APFA's annual independent audit. 5. STRUCTURE AND RESPONSIBILITY This section of the Policy defines the overall structure and areas of responsibility within the investment management program. A. Responsibilities of the Authority Treasurer The Authority Treasurer is charged with responsibility for maintaining custody of all public funds and securities belonging to or under the control of the APFA, and for the deposit and investment of those funds in accordance with principles of sound treasury management applicable laws, ordinances, and this Policy. This includes establishing written procedures for the operation of the investment program consistent with this Policy. The procedures should include reference to safekeeping, master repurchase agreements, wire transfer agreements, banking services contracts and depository agreements. Such procedures shall also include explicit delegation of authority to persons responsible for investment transactions. No person may engage in any investment transaction except as provided under the terms of this Policy and the procedures established by the Treasurer and approved by the Investment Committee. Investment decisions that involve borrowing in the amount of One Hundred Thousand Dollars ($100,000) or more must be included as a separate discussion item on the Board's agenda. Such items can no longer be included on the Board's consent calendar. (California Government Code Section 53635.7) B. Responsibilities of the Director of Finance The Director of Finance is responsible for keeping the Board of Directors fully advised as to the financial condition of the APFA. C. Responsibilities of the Board of Directors The Board of Directors shall consider and adopt a written Investment Policy. As provided in that policy, the Board shall receive, review and accept monthly investment reports. C. -D UMENTS MD SETTINGS USAURIVAY DGCUMBNTNNV TMF TF UC-VMTMFIJ UCY-N,USA PUBLIC FINANCING AUTHORITY-2GW-FLVALDOC D. Responsibilities of the Investment Committee There shall be an Investment Committee consisting of the Director of Finance, the City Manager, and APFA Treasurer and their designees. The Committee shall meet quarterly to discuss cash flow requirements, the monthly investment reports, investment strategies, investment and banking procedures and significant investment related work projects being undertaken in each department that will affect the cash flow management of the APFA Treasurer. This will require timely reports from the department heads to the APFA Treasurer concerning significant future cash flow requirements. The Committee's meetings will be summarized in minutes that are distributed to the Board of Directors. The Investment Committee, with the approval of the Board, may retain an external investment manager on behalf of the APFA. The investment manager will be required to act in accordance with this investment policy. E. Ethics and Conflicts of Interest All APFA officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution of the investment program, or that could impair their ability to make impartial investment decisions. Those employees and investment officials shall disclose to the appropriate City executive (City Manager, City Attorney, or the Director of Finance) any material financial interest in financial institutions that conduct business within the City, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the APFA's investments. 6. REPORTING The Authority Treasurer shall prepare a monthly investment report, including a succinct management summary that provides a clear picture of the status of the current investment portfolio and transactions made over the past month. This management summary shall be prepared in a manner that will allow the Director of Finance and the Board to ascertain whether investment activities during the reporting period have deviated from the APFA's Investment Policy. The monthly report shall include all of the information required by California Government Section 53646, including the following: • A list of individual securities held at the end of the reporting month; and • Unrealized gain or loss resulting from amortization or accretion of principal versus market value changes by listing the cost and market value of securities owned by the APFA; and C:�TSAND SET—GSAZUSAU$F.R— DOCGMFNTSINVFSTMFNT PoUCYO—TMFN UCY-AZUSA PUBLIC FlNA —G AUTHORITY-3010-FlNAL • A description of the current investment strategy and the assumptions upon which it is based; and • Dollar weighted yield to maturity of the APFA's investments; and • Maturity schedule by type of each of the APFA's investments; and • Statement as to compliance of the APFA's Investment Policy with Government Code Section 53601 et seq.; and • Statement as to ability to meet expenditure requirements for next six months; and • Market value, book value, par value and cost basis of all investments; and • Investments "under the management of contracted parties, including lending programs" (i.e., investments held by deferred compensation administrators). 7. PERFORMANCE STANDARDS The investment portfolio will be managed in accordance with the standards established within this Policy and should obtain a market rate of return throughout budgetary and economic cycles. The Investment Committee will establish and periodically review the APFA's portfolio benchmarks and performance. A benchmark will be selected that compares with the portfolio composition, structure and investment strategy at that time. 8. REVIEW OF INVESTMENT POLICY A. Policy Review This Policy shall be reviewed annually by the Board of Directors in accordance with State law to ensure its consistency with respect to the overall objectives of safety, liquidity and yield. Proposed amendments to the Policy shall be prepared by the Treasurer and reviewed by the Investment Committee and City Attorney and then be forwarded to the Board for consideration. The Investment Committee shall annually review the Policy and any proposed amendments and forward to the Board for its consideration and adoption at a public meeting. C:DOCUMENTS AND SMMGSWZUlEgIN1y DGCVM TSINVFST, TF UCMVFSTMFNTPOIICY-A 1 "11C 1INMCI10 AUTHORITY-1111-FlNA - B. Internal Control and Review The external auditors shall annually review the investments and general activities associated with the investment program to ensure compliance with this Policy. This review will provide internal control by assuring compliance with policies and procedures for the activities that are selected for testing. 9. ADOPTION OF POLICY This Policy was duly adopted by the Board of Directors of the Azusa Public Financing Authority on October 18, 2010. C:\DOCUMPNTS AND S=NOSUZIISAIJ$TOOCUMENTSiM'PSTI.4NT I UCYVNYPSTMk?ITPOUCY - A SA PUBLIC --G AUTHORITY-]a0-PMAL EXHIBIT A EXHIBIT A DESCRIPTION OF INVESTMENTS The APFA's investments may be placed in those securities as outlined below; the allocation between the various investment instruments may change in order to give the APFA the best combination of safety, liquidity and higher yield. Surplus funds of local agencies may only be invested in certain eligible securities. The APFA limits its investments to allowable securities under the State of California statutes (Government Code Section 53601, et. seq., Section 53356, et. seq., and Section 53595, et. seq.) and is further limited to those listed below. Certificates of Deposit Certificates of deposit allow the APFA to select the exact amount and day of maturity as well as the exact depository. Certificates of deposit are issued in any amount for periods of time as short as fourteen (14) days and as long as several years. At any given time, the APFA may have certificates of deposit in numerous financial institutions in the future. The Treasurer may at his/her discretion waive security for that portion of a deposit, which is insured pursuant to federal law. Currently, the first One Hundred Thousand Dollars ($100,000) of a deposit is federally insured by FSLIC or FDIC. It may be to the APFA's advantage to waive this collateral requirement for the first One Hundred Thousand Dollars ($100,000) because the APFA may receive a higher interest rate. If funds are to be collateralized, the collateral will be one hundred and ten percent (110%) of the deposit in government securities or mortgages of one hundred and fifty percent (150%). At purchase, institutions must not show an operating loss. Banks must have an equity -to - asset ratio of at least six percent (6%). Savings and loan associations and savings banks must have an equity -to -asset ratio of a least three percent (3%). Local Agency Investment Fund The Local Agency Investment Fund ("LAIF") of the State of California offers high liquidity because deposits can be wired to the APFA checking account within twenty-four (24) hours. Interest is computed on a daily basis. This is a special fund in the State Treasury which local agencies may use to deposit funds for investment. There is no minimum investment period and the minimum transaction is Five Thousand Dollars ($5,000) in multiples of One Thousand Dollars ($1,000) above that, with a maximum of Fifty Million Dollars ($50,000,000) for any agency. It offers high liquidity because deposits can be converted to cash within twenty-four (24) hours and no interest is lost. All interest is distributed to those agencies participating on a proportionate share determined by the amounts deposited and the length of time they are deposited. Interest is paid quarterly by adding it to the principal. C:IDOCV TS ANDSUf GS SAJF$IIMY DOCU TSIN TME VOUCriNVFti -TMUI -AZUSA MHUCFl MCWG AUTHORITY-2010-FINALDOC The State charges participants a small fee to cover reasonable costs associated with operating the investment pool, not to exceed one quarter of one percent (.25%) of the earnings. The interest rates received are fairly stable because of the pooling of the State's surplus cash with the surplus cash deposited by local governments. This creates a well -diversified multi -billion dollar money pool. U.S. Treasury Securities U.S. Treasury securities are highly liquid and considered the safest of all investments because they are backed by the full faith and credit of the United States Government. U.S. Treasury Bills are direct obligations of the United States Government. They are issued weekly with maturity dates up to six (6) months. They are issued and traded on a discount basis and the interest is figured on a three hundred and sixty (360) day basis using the actual number of days to maturity. They are issued in the minimum amount of Ten Thousand Dollars ($10,000) and in multiples of Five Thousand ($5,000) thereafter. U.S. Treasure Notes are direct obligations of the United States Government. They are issued throughout the year with maturities from two up to thirty 30 years. Notes are coupon securities paying a fixed amount every six (6) months. The APFA will not invest in notes having maturities longer then five (5) years. Federal Agency Securities Federal Agency securities are highly liquid and considered to be virtually without credit risk. Federal Agency issues are guaranteed indirectly by the United States Government. All Agency obligations that are fixed-rate and meet the maturity restrictions of the State Code and this Policy qualify as legal investments and are acceptable as security for public deposits. They usually provide higher yields than regular Treasury issues with all of the same advantages. Examples are: FNMA's (Federal National Mortgage Association) are used to assist the home mortgage market by purchasing mortgages insured by the Federal Housing Administration and the Farmers Home Administration, as well as those guaranteed by the Veterans Administration. FHLB's (Federal Home Loan Bank Notes and Bonds) are issued by the Federal Home Loan Bank System to help finance the housing industry. The notes and bonds provide liquidity and home mortgage credit to savings and loan associations, mutual savings banks, cooperative banks, insurance companies and mortgage -lending institutions. Other Federal Agency issues are Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Farm Credit Bank ("FFCB"), Small Business Administration Notes (SBA's), Government National Mortgage Association ("GNMA's"), Tennessee Valley Authority ("TVA's") and the Student Loan Marketing Association ("SLMA's") C(DOCUMENTS AND SETTINGS USAIJ$F$I DOCUM[N NV TMENT MLICYVNVFSTM-LICY- ANSA -LIC FINANCING AUTH0RITY.2010-FINAL NeLxotiable Certificate of Deposit Negotiable certificates of deposit are high-grade instruments, paying a higher interest rate than regular certificates of deposit. They are liquid because they can be traded in the secondary market. Negotiable Certificates of Deposit ("NCD's") are unsecured obligations of the issuing financial institution, bank or savings and loan, bought at face value with a promise to pay face value plus accrued interest at maturity. The primary market issuance is in multiples of One Million Dollars ($1,000,000). The secondary market usually trades in denominations of Five Hundred Thousand Dollars ($500,000), although smaller denominations are occasionally available. Local agencies may not invest more than thirty percent (30%) of their surplus money in negotiable certificates of deposit. NCD's will only be placed with the largest and most financially sound institutions. Commercial Paper Commercial paper allows the investment of large amounts of money on a short-term basis at rates higher than passbook savings accounts. Commercial paper is a short-term unsecured promissory note issued by a corporation to raise working capital. These negotiable instruments are purchased at a discount to par value. As an example, corporations such as American Express, International Business Machines (IBM) and General Electric issue commercial paper. Local agencies are permitted by state law to invest in commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided by Moody's Investor's Service, Inc. or Standard and Poor's Corporation (A1/p] or al+/pl). Purchases of eligible commercial paper may not exceed one hundred and eighty (180) days maturity nor exceed thirty percent (30%) of the APFA's surplus funds. Medium -Term Corporate Notes An agency may invest in medium term corporate notes with a maximum maturity of five years issued by a corporation organized and operating within the United States, a depository institution licensed by the United States Government or any state government and operating within the United States. California Government Code Section 53601 et seq. permits cities to invest in corporations with a rating category of "A" or better, but the APFA will limit its investments in corporate medium term notes to those issued by corporations that have been rated "AA" or its equivalent by two (2) nationally recognized ratings agencies. Passbook SavinLs or Money Market Account Passbook savings account allows us to transfer money from checking to savings and earn interest on smaller amounts of money, which are not available for a longer-term investment. C\DOCUMENTS AND SETTINGS USAJEyW UOCUMENTSIN TMENT IV(JCYVN TMENTMUC -A SAP BUC FINANCINGAUTHORITY- Nil) -FINAL.DOC The passbook savings account is similar to a CD except not for a fixed term. The interest rate is much lower than CD's but the savings account provides daily liquidity and funds can be deposited and withdrawn according to our daily needs. Mutual Funds Mutual Funds allow the APFA to maintain liquidity and receive money market rates. Mutual Funds are referred to in the Government Code, Section 53601(1), as "shares of beneficial interests issued by diversified management companies". The Mutual Fund must be restricted by its prospectus to be a "Money Market" mutual fund and be limited to the same approved investments as LAIF. These investments include U.S. Treasury and Agency issues, Bankers Acceptances, Commercial Paper, Repurchase Agreements, Certificates of Deposit, and Negotiable Certificates of Deposit. The quality rating and percentage restrictions in each investment category applicable to LAIF also apply to any Mutual Fund. One of the stated objectives of the Mutual Fund must be to attempt to maintain a One Dollar ($1.00) Net Asset Value (NAV). A further restriction is that the purchase price of shares of any mutual fund shall not include any sales commission. Investments in mutual funds shall not exceed fifteen percent (15%) of the APFA's surplus money. Repurchase Agreements Repurchase Agreements are purchases of securities by the APFA under an agreement with a term of one (1) year or less whereby the seller will "repurchase" the same securities on or before a specified date or on demand of either party and for a specified amount. The underlying securities must be delivered to the APFA's custodial account by book entry, physical delivery or a third -party custodial agreement. C: CUA TS AND SETTINGSUZUSAIJ3DOCUM TSINVFSTM PoUCYVN TA TMUCY-AZ RBUC FINANCING AUTHORITY-2010-FMAL