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HomeMy WebLinkAboutAgenda Packet - October 18, 2010 - CCSCHEDULED ITEMS 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: �] f � 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. SCALIMPACT There is no negative fiscal impact to the City. Attachments : Draft Promissory Note and Deed of Trust This page is part of your document - DO NOT DISCARD - 20110204045 Recorded/Filed in Official Records Recorder's Office, Los Angeles County, California 02/07/11 AT 10:02AM LEADSHEET Pages:0016 FEES: 0.00 TAXES: 0.00 OTHER: 0.00 PAID: 0.00 11111111111111111111111111111111111111111111111111111111111111 201102070780074 00003708171 003140936 SEQ: 01 DAR - Mail (Hard Copy) IVIIIIIII�IUIIIIIIIIIMI�IIONlllllll111 C. Al THIS FORM IS NOT TO BE DUPLICATED E535755 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 0210712011 *,20110204045* SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE TITLES) DEED OF TRUST SECURING A PROMISSORY NOTE: Rosedale Land Partners II LLC. 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 RECORDERS 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 c/o CDG Development Group, Inc., 19 Corporate Plaza Drive, Newport Beach, CA 92660 ("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 Agreemerit. 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"). 916470.01 IOC 266643-00022/1-26-1 I/rmj /p a l 45635.08001\5832436.1 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. 3. 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: 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 Agreement; 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. 45635.08001\5832436.1 2 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 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 interests 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, subject to a ten (10) day notice and cure right 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; or (ii) the Promissory Note, subject 45635.0800115832436.1 3 to a ten (10) day notice and cure right. Furthermore, any event defined as a "Default" or "Event of Default" under the Promissory Note 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 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 45635.08001\5832436.1 4 (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. 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 order 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. 45635.08001\5832436.1 5 S 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 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. 45635.08001\5832436.1 6 (a) Notwithstanding the foregoing, Beneficiary hereby agrees to reconvey, without warranty, the Trust Estate subject to this Deed of Trust, on the following terms and conditions: (i) Trustor shall deliver a written request for such reconveyance to Beneficiary along with the delivery of a fully executed and acknowledged original of a Deed of Trust identical to the form of this Deed of Trust ("Replacement Deed of Trust") with unconditional instructions to record same in the Official Records of Los Angeles County, California, subject only to the reconveyance by Beneficiary of this Deed of Trust, the delivery by Trustor of the items described in (ii) below and Trustor's compliance with and/or payment of the items described in (iii) below; (ii) The real property described in the Replacement Deed of Trust (the "Replacement Collateral") shall: (A) be located within the "Rosedale" project area, subject to the Development Agreement; (B) shall constitute a residential building lot capable of being developed with a residential housing unit for sale to the general public as provided by the applicable zoning and land use regulations of Beneficiary and as provided by the terms of the Development Agreement; (C) shall be subject only to non -delinquent taxes and assessments and such other exceptions of record as would not prevent, impair or unreasonably delay the development of the Replacement Collateral as a residential housing unit for sale to a member of the general public; and (D) shall have an assessed value not less than the assessed value of the Land as evidenced by a current Notice of Assessment or tax bill issued by the Los Angeles County Tax Assessor's Office; (iii) Beneficiary hereby agrees to execute a Request for Full Reconveyance of this Deed of Trust and to deliver same to Trustee, with instructions to cause the lien of the Deed of Trust to be fully reconveyed within ten (10) business days following the delivery by Trustor to Beneficiary of the items described in (ii) above, subject only to: (A) the recordation of this Deed of Trust as a first lien Deed of Trust encumbering the Replacement Collateral; and (B) Trustor's delivery to Trustee of all costs and expenses associated with the reconveyance of the Deed of Trust and the recordation of the Replacement Deed of Trust. (b) Upon written request of Beneficiary and surrender of this Deed of Trust, the Promissory Note and the Agreement to Trustee for 45635.0800 1 158 32436. 1 i 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. (c) Beneficiary hereby agrees to subordinate the lien or charge of this Deed of Trust to (x) any covenants, conditions and restrictions for the establishment of a Homeowners Association recorded in connection with the issuance of one or more public reports by the California Department of Real Estate; or (y) any easements executed in favor of any public or private utility in connection with the improvement of the Land. 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. 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 or 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 Assi ns. 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. 45635.08001\5832436.1 8 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 Re nest 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\5832436.1 9 1� SIGNATURE PAGE TO DEED OF TRUST SECURING A PROMISSORY NOTE TRUSTOR ROSEDALE LAND PARTNERS II LLC, a Delaware limited liability company By: CDG Rosedale Investment, LLC, a Delaware limited liability company, its administrative member: By: 0624. - _ Name: Art'*�e'�—' ,ve'01 Title: Uµdegr- r-?^-4wL— Qirl4l c4vc-, 45635.0800115832436.1 10 NOTARY ACKNOWLEDGMENT (California All -Purpose Acknowledgment) STATE OF CALIFORNIA COUNTY OF ORANGE On,:J&. P1 , 2011 before me, 46L, o.,) , Notary Public, personally appeared e 1_ 6 .. who proved to me on the basis of satisfactory evidence to be the person(4whose name(&-) is/.ap,-subscribed to the within instrument and acknowledged to me that he/s/th" executed the same in his/her/their authorized capacity(4e&), and that by his/iter/their signature(-&)- 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. �� PATRICI ALE](i5 HAfd54N 030 WITNESS my hand and official seal. commission 1a iforni Notary Public - California Oanpa County M Comm. E a—M-1 v 2 2094 Signature: (seal) 45635.08001\5832436.1 11 Ik NOTARY ACKNOWLEDGMENT (California All -Purpose Acknowledgment) STATE OF CALIFORNIA COUNTY OF ORANGE On , 2011 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: (seal) 45635.08001\5832436.1 12 ly EXHIBIT A TO DEED OF TRUST SECURING A PROMISSORY NOTE Legal Description of the Land LOT 9 OF TRACT NO. 62150, IN THE CITY OF AZUSA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 1311, PAGES 28 THROUGH 50 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY 45635.0800115832436.1 -13- SCHEDULED ITEMS 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 ;//follows: 0 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 - This page is part of your document - DO NOT DISCARD A 20110204045 Recorded/Filed in Official Records Recorder's Office, Los Angeles County, California 02/07/11 AT 10:02AM P0016 FEES: 0.00 TAXES: 0.00 OTHER: 0.00 PAID: 0.00 VI�IIIIIIIIVIIIIIIIIIIIIIII�IIIIIIIIIIIIIIIIIII�IIIIIIIIIAIIIIIA�VIIIIINIIIIIIII LEADSHEET 111111111111111111111111111111111111111111111111111111111111 201102070780074 00003708171 IIIIIINIIIIII�IIN�IIIIIIIII 003140936 SEQ: 01 DAR - Mail (Hard Copy) THIS FORM IS NOT TO BE DUPLICATED E535753 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 -90110204045* SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE TITLES) DEED OF TRUST SECURING A PROMISSORY NOTE: Rosedale Land Partners II LLC. 3 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 RECORDERS 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 11 LLC, a Delaware limited liability company, whose address is c/o CDG Development Group, Inc., 19 Corporate Plaza Drive, Newport Beach, CA 92660 ("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 Awggrccinciit. 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"). 916470.01/0C 266643-00022/1-26-11 /rtnj/pal 45635.08001\5832436.1 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. 3. 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: 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 Agreement; 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. 45635.08001\5832436.1 2 s 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 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 interests 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, subject to a ten (10) day notice and cure right 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; or (ii) the Promissory Note, subject 45635.08001 \5832436.1 3 to a ten (10) day notice and cure right. Furthermore, any event defined as a "Default" or "Event of Default" under the Promissory Note 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 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 45635.0800115832436.1 4 (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. 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 order 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. 45635.08001\5832436.1 5 e 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 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. 45635.08001\5832436. 1 6 (a) Notwithstanding the foregoing, Beneficiary hereby agrees to reconvey, without warranty, the Trust Estate subject to this Deed of Trust, on the following terms and conditions: (i) Trustor shall deliver a written request for such reconveyance to Beneficiary along with the delivery of a fully executed and acknowledged original of a Deed of Trust identical to the form of this Deed of Trust ("Replacement Deed of Trust") with unconditional instructions to record same in the Official Records of Los Angeles County, California, subject only to the reconveyance by Beneficiary of this Deed of Trust, the delivery by Trustor of the items described in (ii) below and Trustor's compliance with and/or payment of the items described in (iii) below; (ii) The real property described in the Replacement Deed of Trust (the "Replacement Collateral") shall: (A) be located within the "Rosedale" project area, subject to the Development Agreement; (B) shall constitute a residential building lot capable of being developed with a residential housing unit for sale to the general public as provided by the applicable zoning and land use regulations of Beneficiary and as provided by the terms of the Development Agreement; (C) shall be subject only to non -delinquent taxes and assessments and such other exceptions of record as would not prevent, impair or unreasonably delay the development of the Replacement Collateral as a residential housing unit for sale to a member of the general public; and (D) shall have an assessed value not less than the assessed value of the Land as evidenced by a current Notice of Assessment or tax bill issued by the Los Angeles County Tax Assessor's Office; (iii) Beneficiary hereby agrees to execute a Request for Full Reconveyance of this Deed of Trust and to deliver same to Trustee, with instructions to cause the lien of the Deed of Trust to be fully reconveyed within ten (10) business days following the delivery by Trustor to Beneficiary of the items described in (ii) above, subject only to: (A) the recordation of this Deed of Trust as a first lien Deed of Trust encumbering the Replacement Collateral; and (B) Trustor's delivery to Trustee of all costs and expenses associated with the reconveyance of the Deed of Trust and the recordation of the Replacement Deed of Trust. (b) Upon written request of Beneficiary and surrender of this Deed of Trust, the Promissory Note and the Agreement to Trustee for 45635.08001\5832436.1 �o 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. (c) Beneficiary hereby agrees to subordinate the lien or charge of this Deed of Trust to (x) any covenants, conditions and restrictions for the establishment of a Homeowners Association recorded in connection with the issuance of one or more public reports by the California Department of Real Estate; or (y) any easements executed in favor of any public or private utility in connection with the improvement of the Land. 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. 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 or 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. 45635.08001\5832436.1 8 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 Re uest 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\5832436.1 9 1� SIGNATURE PAGE TO DEED OF TRUST SECURING A PROMISSORY NOTE TRUSTOR ROSEDALE LAND PARTNERS II LLC, a Delaware limited liability company By: CDG Rosedale Investment, LLC, a Delaware limited liability company, its administrative member: By: 114l� Name: ZNAwffL- o?$rh..Aro'! Title: GFtMevr- a�iea'C-- 45635.0800115832436.1 10 13 NOTARY ACKNOWLEDGMENT (California All -Purpose Acknowledgment) STATE OF CALIFORNIA COUNTY OF ORANGE On �e # , 2011 before me, 11 )J , Notary Public, personally D - appeared 4wi rr G- C)'. ]/�n/Nn . who proved to me on the basis of satisfactory evidence to be the person(4whose name(-&) is/am, subscribed to the within instrument and acknowledged to me that he/*Wtheyexecuted the same in his/her/thek- authorized capacity(is), and that by his/herk-heir signature(( on the instrument the person( -s}; or the entity upon behalf of which the person(&) -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. PATRICIA ALEXIS HANSON WITNESS my hand and official seal. Commission # 1888030 Notary Public - California OMYOrange a County Calnm. Ex I ee M 2 PQ14 Signature:L -Z ciPce.--,�. C�/Xrt/ �1��fi� (seal) 45635.08001\5832436.1 11 NOTARY ACKNOWLEDGMENT (California All -Purpose Acknowledgment) STATE OF CALIFORNIA ) COUNTY OF ORANGE ) On . 2011 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\5832436.1 12 (seal) EXHIBIT A TO DEED OF TRUST SECURING A PROMISSORY NOTE Legal Description of the Land LOT 9 OF TRACT NO. 62150, IN THE CITY OF AZUSA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 1311, PAGES 28 THROUGH 50 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY 45635.08001\5832436.1 -13- 1� Owy , ` - AZUSAk{ CONSENT CALENDAR TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: KERMIT FRANCIS, INTERIM DIRECTOR OF HUMAN RESOURCES/PERSONNEL OFFICER VIA: F.M. DELACH, CITY MANAGER/ 00 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. MERIT INCREASE AND/OR REGULAR APPOINTMENT: DEPARTMENT NAME CLASSIFICATION ACTION/EFF RANGE/STEP DATE BASE MO SALARY PD Stacy Gerszewski Police Dispatcher Merit Increase 9166/3 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 requested by department head(s)pursuant to the Rules of the Civil Service System. 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 C J / There is no fiscal impact, as positions listed are funded in approved department budgets. � (� /0Y/6 (59//7. � 57. id/iW io ZUS CONSENT ITEM TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: MARCENE HAMILTON, CITY TREASURER `/" p..,�_,_ ..,, 6.2.____„_._,/4 7 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. 1 n r ul.0 A .t ✓ i O ,l ', ,t 0I.l 1. 0 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 City 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 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 I 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 10-C61 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 City 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 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 18th day of October 2010. /;-4Lt-/A ,De-e/4 JOSEPH R. ROCHA,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 on the 18th day of October 2010 by the following vote of Council: AYES: CITY COUNCIL MEMBERS: GONZALES, CARRILLO,HANKS,MACIAS,ROCHA NOES: CITY COUNCIL MEMBERS: NONE ABSTAIN: CITY COUNCIL MEMBERS: NONE ABSENT: • CITY COUNCIL MEMBERS: NONE 40..---'4r- ,' A&': ,•: -.' VERA MENDOZA,CITY 'JERK 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. Safeguard 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 DOCUMENT$M D SETTINGSWZUSAUSE21UMY DOCUMENTSANVESTMENT POUCYVNVESTMENTPOUCY.CITYOFAZUSA 311111.FINALDOC 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 II 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$AN0 SETTINGS&ZUSAUSERIUIY DOCUMETTSUNVFSTMENT POLICYINVESTMENTPOIICY CITYOFAZUSA 2010-FINALDOC 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 portfolio 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 DOCUMETITZANfl SEFTINGSUZUSAUSERIUIY DOCUMENTSIINVESfMENT POLICYNINVESTMENTPOLIC1-CITYOFAZUSA 3010-FMN-WC 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 A1/P1 or the equivalent by two nationally recognized rating agencies with maturities not to exceed one hundred and eighty-one (181) 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:IDDCUMENTSgND SETTINGSAZUSAUSERI WIY DOCUMENTSVNVESTMENT POLICY VN VESTMENT?OUCY.CITYDFAZUSA 2010•FINALDOC • 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.DOCUMENTSAND SETTINGSAZUSAUSERIIMV DOCUMENTS1INVESTMENT POLICVVN VESTMENTPOLICV.CITVOFAZUSA-2010-FlNALDOC 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:,DOCUMENZAND SETTINGSAZUSAUSERI'MY DOCUMENTSINVFSTMENT POLICYJNVESTMENTIOLICY CITY0FAZUSA-3010-FINALDOC 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 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. C 0DOCUMENT SETTINGS AZUSAUSERMY DOCUMENTSIN VESTMENT ro1JCVONVESTMENTPoLICY CITYGFAZUSA-2010.FINALDOC 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. 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:\DOCUMENT$1WD SETTINGSWZUSAUSERIUIY DOCUMINTSINVESTMENT POLICMINVESTMENTIOUCY CITVOFAZUSA 2010-FINALDOC 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: CIDOCUMS2T 'D SETTINGSUZUSAUSERPMY DGCUMFNTSYNVETMQOT IOIJCYVNVESfMENTPOLICY.CITYOFAZUSA 2010.FINALDOC • 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\DOCUMENTS 9ND SETTINGSAZUSAUSERIOIY DOCUMENTSUNVESTMFNT POIICYINVESTMENTPOLICV-CITYOFAZUSA-2010-FINALDOC 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:\DOCUMENjS y`ID SETTINGSUZUSAUSFRIWIY DOCUMENTSSNVFSTMENT PoWCYVNVESTMENTPoWCY CITYOFAZUSA-20lo.FINALDOC EXHIBIT A EXHIBIT A DESCRIPTION OF INVESTMENTS 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 City 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("LA1F")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:\DOCUMEN7'S 9N 5 SETTINGS SZUSAUSERIIMY DOCUMENTSLLNVESTMENT POLICY5N VESTMENTPOUCY-CIIYOFAZUSA.20111-FINAL DOC 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 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:DOCUMEN]'S01JU SETTINOSWZUSAUSERIN/Y DOCUMFNTSSINVESTMFNT POLICYVNVESTMENTPOLICY CITYOFAZUSA-2010-FINALDOC 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 ("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 (Al/p1 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\DOCUMENjS q1:D SETTINGS AZUSAUSERIMY DOCUMFNTSINVFSTMENT FOLICYYNVESTMENTIOUCY LITYOFAZUSA-Solo-FINALDOC 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 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 LAW. 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 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'DOCUMFN}'S 9ND SETTINGSAZUSAUSERI MY DOCUMENTSUNVESTMFNT POUCYVN VESTMENTPOIJCY-CI1YOFAZUSA-2010.FINALDOC