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HomeMy WebLinkAboutAgenda Packet - August 1, 2005 - CCT)a:7 AGENDA ITEM TO: HONORABLE MAYOR AND MEMBERS OF AZUSA CITY COUNCIL FROM: F. M. DELACH, CITY MANAGER,4W DATE: AUGUST 1, 2005 SUBJECT: APPROVAL OF A FUNDING AND ACQUISITION AGREEMENT WITH RESPECT TO THE PROPOSED CITY OF AZUSA COMMUNITY FACILITIES DISTRICT NO. 2005-1 (ROSEDALE) RECOMMENDATION It is recommended that City Council approve the attached Funding and Acquisition Agreement with respect to the proposed City of Azusa Community Facilities District No. 2005-1 (Rosedale) by resolution. BACKGROUND The City of Azusa has previously entered into a Development Agreement, dated May 27, 2004, (the "Development Agreement") with respect to the developable land within the Monrovia Nursery. This property is currently owned by Azusa Land Partners, LLC (the "Developer"). The Developer intends to develop the property as a primarily residential project with some commercial and retail use. Under the Development Agreement, the City agreed to assist the Developer with the costs of construction of the public facilities by forming a community facilities district which would then be able to issue bonds to pay for the costs of the public facilities. The bonds would be repaid from special taxes to be levied on the taxable real property within the proposed Community Facilities District. At this time the developer intends to commerce construction of some of the public facilities. The staffs have negotiated a proposed Funding and Acquisition Agreement. Under this agreement, the Developer will construct public facilities for the City, or other participating public agencies, which will then be acquired by the City, or other public agency, from the proceeds of the Bonds. The only sources of funds from which the Developer can expect to be paid are the Community Facilities District bond Page 2: Approval of Funding and Acquisition Agreement f/1 ION &Ut�j k9ALy proceeds or any excess special taxes levied on the properties within the proposed Community Facilities District which are not needed for debt service on the bonds. The City's general fund or other funds are not liable for the costs of the public facilities. Presented for your approval is the Funding and Acquisition Agreement which provides for the requirements of the Developer to construct the public facilities, including a bidding process, and the provisions for acquisition of the public facilities by the City from the proceeds of bonds of the proposed Community Facilities District. The developer is required to work with the public works department so that the plans of the public facilities are approved by the City and the public facilities are properly inspected. Additionally, the Funding and Acquisition Agreement provides that public facilities which may be owned and maintained by other local agencies may be paid for from the proceeds of the bonds. At this time it is anticipated that such other local agencies may be the Azusa Unified School District, the Metropolitan Transit Authority, the Los Angeles County Sanitation District No. 22, and the City of Glendora. In order to have the respect facilities of each local agency funded from the proceeds of the bonds, the City and each other agency will need to enter into a joint community facilities agreement which set the terms of the construction, acceptance and payment for the public facilities of each respective local agency. The proposed joint community facilities agreements are each under negotiation and will be presented to the City Council for approval at subsequent meeting. FISCAL IMPACT No fiscal impact is anticipated from approving the attached agreement. Prepared by: Kim Byrens, Bond Counsel Joseph Hsu, Director of Utilities MEMORANDUM To: Honorable Mayor andMembers of the City Council of the City of Azusa FROM: Best Best & Krieger LLP, Bond Counsel DATE: August 1, 2005 RE: Approval of a Funding and Acquisition Agreement with respect to the proposed City of Azusa Community Facilities District No. 2005-1 (Rosedale) The City of Azusa has previously entered into a Development Agreement, dated May 27, 2004, (the "Development Agreement") with respect to the developable land within the Monrovia Nursery. This property is currently owned by Azusa Land Partners, LLC (the "Developer"). The Developer intends to develop the property as a primarily residential project with some commercial and retail use. Under the Development Agreement, the City agreed to assist the Developer with the costs of construction of the public facilities by forming a community facilities district which would then be able to issue bonds to pay for the costs of the public facilities. The bonds would be repaid from special taxes to be levied on the taxable real property within the proposed Community Facilities District. At this time the Developer intends to commence construction of some of the public facilities. The staff of the City have negotiated a proposed Funding and Acquisition Agreement. Under this agreement, the Developer will construct public facilities for the City, or other participating public agencies, which will then be acquired by the City, or other public agency, from the proceeds of the Bonds. The only sources of funds from which the Developer can expect to be paid are the Community Facilities District bond proceeds or any excess special taxes levied on the properties within the proposed Community Facilities District which are not needed for debt service on the bonds. The City's general fund or other funds are not liable for the costs of the public facilities. Presented for your approval is the Funding and Acquisition Agreement which provides for the requirements of the Developer to construct the public facilities, including a bidding process, and the provisions for acquisition of the public facilities by the City from the proceeds of bonds of the proposed Community Facilities District. The developer is required to work with the public works department so that the plans of the public facilities are approved by the City and the public facilities are properly inspected. Additionally, the Funding and Acquisition Agreement provides that public facilities which may be owned and maintained by other local agencies may be paid for from the proceeds of the bonds. At this time it is anticipated that such other local agencies may be the Azusa Unified School District, the Metropolitan Transit Authority, the Los Angeles County Sanitation District No. 22, and the City of Glendora. In order to have the respective facilities of each local agency funded from the proceeds of the bonds, the City and each other local agency will need to enter into a joint community facilities RVPUB\KAB\696748.1 agreement which set the terms of the construction, acceptance and payment for the public facilities of each respective local agency. The proposed joint community facilities agreements are each under negotiation and will be presented to the City Council for approval at a subsequent meeting. Should you have any questions regarding the Funding and Acquisition Agreement, someone from our office will be present to answer any questions. KIM A. BYRENS -2- RVPUB\KAB\696748.1 RESOLUTION NO. 05-C65 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, APPROVING AND AUTHORIZING EXECUTION OF DEVELOPER FUNDING AND ACQUISITION AGREEMENT RELATING TO PROPOSED COMMUNITY FACILITIES DISTRICT NO. 2005-1 (ROSEDALE) WHEREAS, there has been presented to the City Council (the "City Council") of the City of Azusa (the "City") an agreement entitled Funding and Acquisition Agreement Relating to City of Azusa Community Facilities District No. 2005-1 (Rosedale) (the "Funding Agreement") to be entered into between City, on behalf of and for the proposed Community Facilities District No. 2005-1 (Rosedale), and Azusa Land Partners, LLC (the "Developer") to be served by City of Azusa Community Facilities District No. 2005-1 (Rosedale) of the City (the "District"); and WHEREAS, pursuant to the Funding Agreement, the City will use its best efforts to form the District for the purpose of incurring bonded indebtedness to pay the costs of construction and acquisition of public facilities described in the Funding Agreement; and WHEREAS, the District will levy and collect special taxes on the taxable real property within the District to pay the principal and interest on the bonded indebtedness; and WHEREAS, the City Council has determined that the Funding Agreement should therefore be approved; NOW, THEREFORE, the City Council of the City of Azusa resolved that the Funding agreement is approved and the Mayor or the City Manager are each authorized to execute and deliver the Funding Agreement on behalf of the City in the form presented to the City Council at the meeting at which this resolution is adopted, with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof. ADOPTED this 1St day of August, 2005 Mayor �- ATTEST: City Clerk I, Vera Mendoza, City Clerk of the City of Azusa, California, do hereby certify that the foregoing Resolution No. 05-C65 was regularly introduced and adopted by the City Council of the City of Azusa, California, at a regular meeting thereof held on the 1St day of August, 2005, by the following vote of the City Council: AYES: COUNCILMEMBERS: HARDISON, CARRILLO, HANKS, ROCHA, CHAGNON NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: NONE IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Azusa, California this 1St day of August, 2005 City Clerk FUNDING AND ACQUISITION AGREEMENT Relating to CITY OF AZUSA COMMUNITY FACILITIES DISTRICT NO. 2005-1 (ROSEDALE) Between THE CITY OF AZUSA and AZUSA LAND PARTNERS, LLC August 1, 2005 FUNDING & ACQUISITION AGREEMENT COMMUNITY FACILITIES DISTRICT NO. 2005-1 (ROSEDALE) This FUNDING AND ACQUISITION AGREEMENT (the "Agreement") is entered into the I" day of August, 2005 by and between the CITY OF AZUSA, a municipal organization organized and operating under the laws of the State of California (the "City"), and AZUSA LAND PARTNERS, LLC, a Delaware limited liability company (the "Developer") RECITALS (A) Developer owns and is currently developing approximately 1,250 single- family residences on that certain real property located on approximately 317 acres of land commonly known as the "Rosedale Project" (the "Property") located in the City of Azusa. (B) The City, is in the process of establishing a community facilities district with two or more improvement areas (individually, an "Improvement Area" and, collectively, the "Improvement Areas") pursuant to the provisions of Chapter 2.5 (commencing with § 53311) of Part 1 of Division 2 of Title 5 of the Government Code, commonly known as the "Mello -Roos Community Facilities Act of 1982" (the "Act"), over and including .the Property for the purpose of selling bonds, in one or more series within each Improvement Area (the "Bonds), in an amount sufficient to finance the acquisition of land and improvements thereon for public use, and the design, planning, engineering, installation, and construction of those certain public facilities and improvements, including utilities, to be owned and maintained by (i) the City (the "City Facilities"), and (ii) Azusa Unified School District (the "School District"), the Metropolitan Transit Authority ("MTA"), the Los Angeles County Sanitation District No. 22 (the "Sanitation District"), the City of Glendora ("Glendora") and other local agencies, as reasonably approved by the City (the "JCFA Facilities" and together with the City Facilities, the "Public RVPUB\MUM\682865.1 I Facilities"). The Public Facilities are generally described in Exhibit "A" attached hereto, which Public Facilities are necessary to the development of the Property. Said community facilities district shall be known as, and each Improvement Area shall be a part of, the "City of Azusa Community Facilities District No. 2005-1 (Rosedale)" (the "District") (C) Section 53313.5 of the Act provides that a community facilities district may finance the purchase of facilities completed after the adoption of the resolution of formation establishing the community facilities district if the facilities have been constructed as if they had been constructed under the direction and supervision, or under the authority of, the local agency whose governing body is conducting proceedings for the establishment of the District. (D) The purpose of this Agreement is to provide for the maintenance, design and the construction of the City Facilities, and the issuance and sale of the Bonds of the District to finance the acquisition of public land and public improvements, and the design, planning, engineering, financing, installation, and construction of the Public Facilities and expenses incidental thereto. (E) Capitalized terms used herein and not otherwise defined shall have the meaning set forth in Exhibit E attached hereto and by this reference herein incorporated. AGREEMENTS NOW, THEREFORE, in consideration of the preceding recitals and the mutual covenants hereinafter contained, the parties agree as follows: Section 1. Establishment of District. The City has initiated proceedings pursuant to the Act for the establishment of the District. Such proceedings include elections within each Improvement Area pursuant to Sections 53326 and 53353.5 of the Act on (i) the question of the issuance of the Bonds for each Improvement Area of the District to finance the acquisition of RVPUB\MUM\682865.1 2 public land and public improvements, and the design, planning, engineering, construction management, and financing and the installation and construction or acquisition of the Public Facilities, (ii) the question of the annual levy of special taxes within each Improvement Area on those portions of the Property subject to the special taxes, for the payment of the principal of and interest on the Bonds of such Improvement Area and the annual administrative expenses of the City and the District in levying and collecting such special taxes, paying the principal and interest on such Bonds and providing for the registration, exchange and transfer of such bonds, including the fees of fiscal agents and paying agents, and any necessary replenishment of the reserve fund for such Bonds, together with paying the annual maintenance expenses financed by the District (if any), and (iii) the question of the establishment of an appropriations limit for each Improvement Area. From time to time prior to the issuance of the Bonds for an Improvement Area, at the written request of the Developer, and subject to the Developer advancing funds as determined by the City as necessary to pay all costs related thereto, the City shall use its best efforts to undertake proceedings which may be deemed necessary to amend the rate and method of apportionment applicable to such Improvement Area of the District or to amend the boundaries of such Improvement Area. Section 2. Sale of' Bonds. The City may proceed, using its reasonable best efforts, as hereinafter provided, with the sale of the Bonds, in one or more series, for each of the Improvement Areas of the District in an aggregate principal amount not to exceed $120,000,000 and with an escalating debt service amortization schedule for each series of Bonds not to exceed thirty-five (35) years, for the purpose of raising an amount sufficient to pay for the acquisition of public land and public improvements, and the design, planning, engineering, construction RVPUB\MUM\682865.1 3 management, and financing, and the installation and construction or acquisition of the Public Facilities. In connection with the issuance of the first series of Bonds, the City on behalf of itself and the District shall establish criteria for the issuance of Additional Bonds of the District which meet the criteria of the financing policies of the City. The timing of the issuance and sale of the first series of Bonds and any Additional Bonds, the aggregate principal amount thereof, and the terms and conditions upon which they shall be sold shall be as set forth in this Agreement and otherwise as determined by the City in its reasonable discretion after consultation with the Developer. Not by way of limitation of the foregoing, the timing of the issuance and sale of the first series of Bonds and any Additional Bonds shall be as soon as reasonably practicable, as determined by the City in consultation with its financial advisor, underwriter and other consultants and counsel. Section 3. Advance of Certain Expenses. Pursuant a Landowner Deposit Agreement, dated November 1, 2004 between the City and Developer (the "Deposit Agreement"), Developer shall pay and advance all of the costs reasonably associated with the establishment of the District and the sale of the Bonds. Such costs to be paid or advanced by the Developer shall include the City's reasonable out-of-pocket expenses, if any, associated with engineering services provided by outside engineering consultants in connection with the establishment of the District and the determination of the sizing of the Bonds and the method of apportioning and levying the special taxes on the Property to pay the principal of and interest on the Bonds, and reasonable travel expenses of the City relating to the sale of the Bonds ("Reimbursable Expenses"). All of the Reimbursable Expenses paid or advanced by the City shall be reimbursed to the Developer from the uncommitted and unexpended deposits made by the Developer and/or the proceeds of the sale of the Bonds, as soon after receipt of the proceeds of the Bonds as is reasonably possible. RVPUB\MUM\682865.1 4 The City shall keep records of all Reimbursable Expenses advanced by the City pursuant to this Section 3 which records shall be available for inspection by Developer during regular business hours. The sole source of funds for reimbursement of any advance expenditure made by the City or the Developer shall be the uncommitted and unexpended deposits made by the Developer and/or proceeds of the Bonds. Section 4. Tax Requirements. The timing of the sale of the Bonds of any series for the District or' any Improvement Area therein, the nature of the investments in which the proceeds of the Bonds shall be invested, the duration of such investments, and the timing of the expenditure of such proceeds shall be as set forth in the Fiscal Agent Agreement and otherwise as determined by the City in its reasonable discretion; provided, that in all such matters City shall comply with the requirements of and limitations prescribed by the provisions of Sections 103 and 141 through 150 of the Internal Revenue Code of 1986 (the "Code"), as amended, and the implementing regulations of the United States Department of the Treasury. The City shall not be required to take any such action which in the opinion of the City's bond counsel could result in the Bonds being classified by the United States Department of the Treasury as "arbitrage bonds" or which could otherwise result in the interest on the Bonds being included in gross income for purposes of Federal income taxation. Should any change in or regulatory interpretation of any such requirement or limitation which may occur after the date of this Agreement require or necessitate, in the reasonable opinion of such bond counsel, any action on the part of the City in order to avoid such a classification or loss of tax exemption, the City shall notwithstanding any provision of this Agreement, forthwith take such action. In the event the City fails to comply with requirements set forth above in this Section 4, the City's liability is RVPUB\MUM\682865.1 5 limited to the special tax revenues generated by an Improvement Area of the District, as applicable. During the construction phase of the Project, the City and Developer shall meet on a regular basis, as agreed upon by both parties, to review facilities being constructed and ascertain the City's compliance with the Code. If changes in the Code disqualify certain facilities constructed by the Developer from being funded by the District, the Developer shall be solely liable for the costs of construction or acquisition of such facilities. Section 5. Amounts to be Included in Bonds. The City shall be authorized to include in the aggregate principal amount of the Bonds within each Improvement Area an amount sufficient to fund (i) reserve fund which does not exceed the amount permitted under the Code, (ii) capitalized interest on the Bonds for such period, not in excess of twenty-four (24) months, as the City, in consultation with the Developer, may determine is appropriate, (iii) the amount of the discount of the underwriter who purchases the Bonds, (iv) the Reimbursable Expenses, and (v) other typical and reasonable out-of-pocket expenses incurred by the City or the Developer in connection with the issuance and sale of the Bonds, including bond counsel fees, disclosure counsel fees, legal fees, fees of the bank which will act as fiscal agent for the Bonds, special tax consultant fees, fees and other costs of the appraisal and other fees and costs normally incidental to the sale of Bonds. Subject to the City's right of review and approval of specific costs as set forth in the next succeeding paragraph of this Section 5, the City shall also include with the aggregate principal amount of the Bonds for those items which are public facilities owned and operated by a public agency and not inconsistent with Exhibit "G" to the Development Agreement, the following: (i) all City development and building permit, application, plan RVPUB\MUM\682865.1 6 checking, inspection and other fees and charges, by whatever name called, that are attributable to the design, planning, engineering, construction management, installation, and construction of the Public Facilities that are payable out of the proceeds of the Bonds; and (ii) all other Developer costs and expenses not included in clause (i) that are reasonably determined by the City to equitably pay or reimburse Developer for costs and expenses incurred by it which are related to the establishment of the District and the design, planning, engineering, financing, and installation and construction or acquisition of the Public Facilities, including the construction management fee described in the definition of Actual Costs and the costs and expenses of consultants (e.g., DPFG), attorneys (e.g., Pillsbury Winthrop Shaw Pittman) and engineers. The City Manager or his/her designee, shall have the right to approve all of Developer's costs and expenses to be paid or reimbursed from proceeds of the Bonds subject to the following: (i) to the extent that Developer incurs costs that are eligible for financing by the District together with other costs that are not eligible for inclusion in the principal amount of the Bonds, the City will approve a fair allocation of eligible versus non -eligible costs; (ii) the City Manager or his/her designee shall approve or disapprove Developer's submittals for cost approvals within thirty (30) calendar days after receipt and, if any submitted costs are disapproved, he/she shall specify in writing the reasons therefor; and (iii) approval of Developer's submittals shall not be unreasonably withheld or conditioned. Developer shall be entitled to submit written requests to the City Manager or his/her designee for approval of costs to be paid or reimbursed with proceeds of the Bond on a periodic basis, as costs are incurred but not more frequently than monthly. Each such submittal shall be supported by adequate written documentation to justify the submittal, including as applicable, copies of relevant contracts, RVPUB\MUM\682865.1 7 invoices, evidence of payment, and such other supporting information as the City may reasonably require consistent with the terms of this Agreement. Section 6. Construction of Facilities. (a) Plans. To the extent that it has not already done so, the Developer shall cause plans to be prepared for the City Facilities (the "Plans"). The Developer shall obtain the written approval of the Plans in accordance with applicable ordinances and regulations of the City and/or the City entity that will own and operate the City Facilities. Copies of all Plans shall be provided by the Developer to the City Manager, or designee thereof, upon request therefore, and, in any event, as built drawings and a written assignment of the Plans for any City Facility shall be provided to the City prior to its formal acceptance of the City Facility. (b) Duty of Developer to Construct. All City Facilities to be acquired hereunder specified in Exhibit B hereto, as amended from time to time, shall be constructed by or at the direction of the Developer in accordance with the approved Plans. The Developer shall perform all of its obligations hereunder and shall conduct all operations with respect to the construction of City Facilities in a good, workmanlike and commercially reasonable manner, with the standard of diligence and care normally employed by duly qualified persons utilizing their best efforts in the performance of ,comparable work and in accordance with generally accepted practices appropriate to the activities undertaken. The Developer shall employ at all times adequate staff or consultants with the requisite experience necessary to administer and coordinate all work related to the design, engineering, acquisition, construction and installation of the City Facilities to be acquired by the City from the Developer hereunder. The Developer shall be obligated (i) to construct and convey to the City (or other applicable governmental agency) all City Facilities and Discrete Components listed in Exhibit B RVPUB\MUVI\682865.1 8 hereto, and (ii) to use its own funds to pay all costs thereof in excess of the Purchase Prices thereof to be paid therefor hereunder. The Developer shall not be relieved of its obligation to construct each City Facility listed in Exhibit B hereto and Discrete Component and convey each such City Facility to the City (or other applicable governmental agency) in accordance with the terms hereof, even if, (i) because of the limitations imposed by Section 7(f) hereof, the Purchase Price for such City Facility is less than the Actual Cost, or cost to the Developer, of such City Facility, or (ii) there are insufficient funds in the Improvement Fund to pay the Purchase Price thereof, and, in any event, this Acquisition Agreement shall not affect any obligation of the Developer under any other agreement to which the Developer is a party or any governmental approval to which the Developer or any land within the District is subject, with respect to the City Facilities required in connection with the development of the land within the District. Such obligation of the Developer to construct and convey such City Facilities, and pay the costs thereof in excess of available monies in the Improvement Fund, shall be an obligation of the Developer as a party to this Acquisition Agreement and not an obligation of the Developer in its capacity as an owner of any portion of the lands within the District. (c) Relationship to Public Works. This Agreement is for the acquisition by the City of the Facilities and payment for the Discrete Components thereof listed in Exhibit B, as amended from time to time, from moneys in the Improvement Fund and is not intended to be a public works contract. The City and the Developer agree that the City Facilities are of local, and not state-wide concern, and that the provisions of the California Pubic Contract Code shall not apply to the construction of the City Facilities. The City and the Developer agree that the Developer shall award all contracts for the construction of the City Facilities listed in Exhibit B RVPUB\MUM\682865.1 9 hereto, and that this Agreement is necessary to assure the timely and satisfactory completion of the City Facilities and that compliance with the Public Contract Code with respect to the City Facilities would work an incongruity and would not produce an advantage to the City or the District. Notwithstanding the foregoing, the Developer shall award all contracts for construction of the City. Facilities listed in Exhibit B hereto, as amended from time to time, to the lowest responsible bidder as determined by the Developer. The Developer shall solicit at least three bids for the construction of each City Facility, and the Developer or his designee shall open the bids actually received and read them aloud immediately following the submittal deadline. The bids for general contractors shall require that general contractors provide reasonable opportunity for local contractors to participate as subcontractors. Upon written request of the City Manager or his designee, the Developer shall provide an analysis of bids for construction of the City Facilities, constructed or to be constructed by or under the supervision of the Developer. The costs of materials shall be part of the contractors' bids for constructing the City Facilities. Nothing in this Agreement shall (i) require the Developer to publicly or informally bid for materials, or (ii) prevent the supply or sale of materials by the Developer to the contractors constructing the City Facilities. If requested in writing by the City, the Developer shall demonstrate to the City that such materials were obtained at reasonable prices considering the terms of delivery and other factors and shall not charge the City a premium for supplying such materials (but shall be entitled to recover the costs of procuring such materials). The Developer shall develop or cause to be developed and shall maintain or cause to be maintained a cost -loaded project schedule, using the critical path method, providing for all major project elements included in the construction of any City Facility to be acquired hereunder, so RVPUB\MUM\682865.1 10 that the whole project is scheduled in the most efficient manner. The Developer shall provide the City Manager with complete copies of the schedule and each update to the schedule for the City Manager or his designee to review. From time to time (expected to be at least weekly) at the request of the City Manager or his designee, the Developer shall meet and confer with City staff, consultants and contractors regarding matters arising hereunder with respect to the City Facilities and the progress in constructing and acquiring the same, and as to any other matter related to the City Facilities or this Agreement. The Developer shall advise the City Manager or his designee in advance of any coordination and scheduling meetings to be held with contractors relating to the City Facilities, in the ordinary course of performance of an individual contract. The City Manager or his designee shall have the right to be present at such meetings, and to meet and confer with individual contractors if deemed advisable by the City Manager or his designee to resolve disputes and/or ensure the proper completion of the City Facilities. (d) independent Contractor. In performing this Agreement, the Developer is an independent contractor and not the agent or employee of the City or the District. Neither the City nor the District shall be responsible for making any payments to any contractor, subcontractor, agent, consultant, employee or supplier of the Developer. (e) Performance and Payment Bonds. The Developer agrees to comply with all applicable performance and payment bonding requirements of the City (and other applicable City entities and/or City utilities) with respect to the construction of the City Facilities. Performance and payment bonds shall not be required of the Developer to the extent moneys are available in the Improvement Fund to pay the Purchase Price, as defined in Section 7(c) below, of a City Facility provided that all contractors and/or subcontractors employed by the Developer in RVPUB\MUM\682865.1 11 connection with the construction of City Facilities shall provide a labor and materials and performance bonds which name the City as an additional insured. (f) Contracts and Change Orders. The Developer shall be responsible for entering into all contracts and any supplemental agreements (commonly referred to as "change orders") required for the construction of the City Facilities listed in Exhibit B hereto, as amended from time to time, and all such contracts and supplemental agreements shall be submitted to the City Manager or his designee. Prior approval of supplemental agreements by the City Manager shall only be required for such change orders which in any way materially alter the quality or character of the subject City Facilities, or which involve an amount equal to the greater of ten percent (10%) of the amount of the bid for the City Facility. The City expects that such contracts and supplemental agreements needing prior approval by the City Manager will be reasonably approved or denied (any such denial to be in writing, stating the reasons for denial and the actions, if any, that can be taken to obtain later approval) within ten (10) business days of receipt by the City Manager thereof. To the extent that a supplemental agreement, approved by the City Manager, or his designee, increases the Actual Cost of a City Facility, such increased cost may be payable as part of the Purchase Price of the related City Facility as provided in Section 7 hereof. (g) Time for Completion. The Developer agrees that this Agreement is for the benefit of the City and the Developer and, therefore, the Developer represents that it expects to complete the City Facilities and to have requested payment for the City Facilities under this Agreement within thirty-six (36) calendar months from the date of the closing of the series of Bonds the proceeds of which are to be used to finance the City Facilities. Any failure to complete the City RVPUB\MUM\682865.1 12 Facilities within said time period shall not, however, in itself, constitute a breach by the Developer of the terms of this Acquisition Agreement. The Developer agrees to use its good faith efforts to complete all City Facilities within thirty-six (36) calendar months from the date of closing of the series of the Bonds the proceeds of which are to be used to finance the City Facilities. Section 7. Acquisition and Payment of Facilities. (a) Inspection. No payment hereunder shall be made by the City to the Developer for a Public Facility or Discrete Component until the City Facility or Discrete Component has been inspected and found to be completed in accordance with the approved Plans by the City. Unless otherwise provided in a Supplement, the City shall make or cause to be made regular on-going site inspections of the City Facilities to be acquired hereunder. The Developer agrees to pay all inspection, permit and other similar fees of the City applicable to construction of the City Facilities. (b) Agreement to Sell and Purchase City Facilities. The Developer hereby agrees to sell the City Facilities listed in Exhibit B hereto, which may be amended from time to time by approval of the City Manager or his designee, to the City (or other applicable City agency that will own a City Facility), and the City hereby agrees to use amounts in the Improvement Fund to pay the Purchase Prices, as defined below, thereof to the Developer, subject to the terms and conditions hereof. The City shall not be obligated to finance the purchase of any City Facility until the City Facility is completed and the acceptance date for such City Facility has occurred; provided that the City has agreed to make payments to the Developer for certain Discrete Components shown on Exhibit B hereto, as such exhibit may be supplemented. The Developer acknowledges that the Discrete Components have been identified for payment purposes only, RVPUB\MUM\682865.1 13 and that the City (or other applicable public agency that will own a City Facility) shall not accept a City Facility of which a Discrete Component is a part until the entire City Facility has been completed. The City acknowledges that the Discrete Components do not have to be accepted by the City (or other applicable public agency that will own a City Facility) as a condition precedent to the payment of the Purchase Price therefor, but any such payment shall not be made until a Discrete Component has been completed in accordance with the plans therefor. The City shall not be obligated to pay the Purchase Price for any City Facility except from the moneys in the Improvement Fund. (c) Purchase Price. Purchase Price for each City Facility shall be equal to the Actual Cost of such City Facility, but subject to the limitations of this Section 7. Actual Cost means the substantiated cost of a City Facility, as defined in Exhibit E. (d) Payment Requests. In order to receive the Purchase Price for a completed City Facility or Discrete Component, inspection thereof under Section 7(a) shall have been made and the Developer shall deliver to the City Manager or his designee: (i) a Payment Request in the form of Exhibit D hereto for such City Facility or Discrete Component, together with all attachments and exhibits required by this Section 7(d) to be included therewith, and (ii) if payment is requested for a completed City Facility, (a) if the property on which the City Facility is located is not owned by the City (or other applicable public agency that will own such City Facility) at the time of the request, a copy of the recorded documents conveying to the City (or other applicable public agency that will own such City Facility) Acceptable Title to the real property on, in or over which such City Facility is located, as described in Section 8(a) hereof, (b) a copy of the recorded notice of completion of such City Facility filed, (e) to the extent paid for with the proceeds of the Bonds, an assignment to the District of any reimbursements that may RVPUB\MUM\682865. l 14 be payable with respect to the City Facility, such as City or private utility reimbursements, and (d) an assignment of the warranties and guaranties for such City Facility, as described in Section 8(e) hereof, in a form acceptable to the City. (e) Processing Payment Requests. Upon receipt of a Payment Request (and all accompanying documents), the City Manager or his designee shall conduct a review in order to confirm that such request is complete, that such City Facility or Discrete Component identified therein was constructed in accordance with the Plans therefore, and to verify and approve the Actual Cost of such City Facility or Discrete Component specified in such Payment Request. The City Manager or his designee shall also conduct such review as is required in his/her discretion to confirm the matters certified in the Payment Request. The Developer agrees to cooperate with the City Manager or his designee in conducting each such review and to provide the City Manager or his designee with such additional information and documentation as is reasonably necessary for the City Manager or his designee to conclude each such review. Within ten (10) business days of receipt of any Payment Request, the City Manager or his designee expects to review the request for completeness and notify the Developer whether such Payment Request is complete, and, if not, what additional documentation must be provided. If such Payment Request is complete, the City Manager or his designee expects to provide a written approval or denial (specifying the reason for any denial) of the request within 30 days of its submittal. If a Payment Request seeking reimbursement for more than one City Facility or Discrete Component is denied, the City Manager or his designee shall state whether the Payment Request is nevertheless approved and complete for any one or more City Facilities or Discrete Component and any such City Facilities or Discrete Component shall be processed for payment under Section 7(f) notwithstanding such partial denial. RVPUB\MUM\682865.1 15 (0 Payment. Upon approval of the Payment Request by the City Manager or his designee, the City Manager or his designee shall sign the Payment Request and forward the same to the Finance Director of the City. Upon receipt of the reviewed and fully signed Payment Request, the Finance Director of the City shall, within the then current City financial accounting payment cycle but in any event within fifteen (15) business days of receipt of the approved Payment Request, cause the same to be paid by the Fiscal Agent under the applicable provisions of the Fiscal Agent Agreement, to the extent of funds then on deposit in the Improvement Fund. Any approved Payment Request not paid due to an insufficiency of funds in the Improvement Fund shall be paid promptly from the Surplus Taxes Fund or from the Improvement Fund promptly following the deposit into the Improvement Fund of proceeds of any investment earnings, Additional Bonds, escrowed funds or other amounts transferred to the Improvement Fund under the terms of the Fiscal Agent Agreement. The Purchase Price paid hereunder for any City Facility or Discrete Component shall constitute payment in full for such City Facility or Discrete Component, including, without limitation, payment for all labor, materials, equipment, tools and services used or incorporated in the work, supervision, administration, overhead, expenses and any and all other things required, furnished or incurred for completion of such City Facility or Discrete Component as specified in the Plans. (g) Timing of Requisitions. The City and the Developer acknowledge that (i) to the extent the Developer has constructed and City or other Public Agency has accepted (for payment purposes) certain Public Facilities (including City Facilities) the Developer may submit Payment Requests and JCFA Facilities Payment Request for such Public Facilities for reimbursement for the proceeds from the initial series issuance of the Bonds; (ii) the Developer will be constructing RVPUB\MUM\682865.1 16 Public Facilities prior to the issuance of Additional Bonds the proceeds of which will be used to reimburse the Developer for those Public Facilities not funded from the initial series of the Bonds; (iii) the Developer may be submitting Payment Requests and JCFA Facilities Payment Requests to the City in advance of such an issuance of the Additional Bonds, with knowledge that there may be insufficient funds available in the Improvement Fund and the Surplus Taxes Fund for reimbursement; (iv) the Public Facilities that are the subject of the Payment Requests and the JCFA Facilities Payment Requests submitted when there are insufficient proceeds will be inspected and reviewed by the City as set forth in this Agreement and that such Payment Requests and the JCFA Facilities Payment Requests will be reviewed by the City and, if appropriate, approved for payment from the proceeds of the Bonds or the Surplus Taxes Fund; and (v) the payment for any Payment Requests and the JCFA Facilities Payment Requests approved in the preceding manner will be deferred until the date, if any, on which there are amounts in the Improvement Fund or the Surplus Taxes Fund to make all or part of such payment, at which time the City will direct the Fiscal Agent to wire transfer (or pay in another mutually acceptable manner) to the payee identified in such Payment Request or JCFA Facilities Payment Request. The Payment Requests and the JCFA Facilities Payment Requests may be (i) paid in increments as funds become available in the Improvement Fund or the Surplus Taxes Fund, and (ii) paid out of the proceeds of any series of Bonds or special taxes collected in any Improvement Area. The Developer may pay for the Public Facilities prior to the issuance of Bonds or when there are insufficient funds in the Improvement Fund to reimburse the Developer for such payment. Any Public Facilities paid by the Developer shall be made with the understanding that such Public Facilities shall be reimbursed from the proceeds of the Bonds if, and when, Bonds RVPUB\MUM\682865.1 17 are issued or there are otherwise sufficient funds in the applicable Improvement Fund or amounts in the Surplus Taxes Fund. The payment by the Developer of the costs of Public Facilities prior to the issuance of Bonds or when there are insufficient funds in the Improvement Fund or amounts in the Surplus Taxes Fund to reimburse the Developer for such payment, shall not be construed as a dedication or gift of the Public Facilities, or a waiver of reimbursement of such Public Facilities. (h) Restrictions on Payments. Notwithstanding any other provisions of this Agreement, the following restrictions shall apply to any payments made to the Developer under Sections 7(b) and 7(f) hereof: A. Amounts of Payments. Subject to the following paragraphs of this Section 7(h), payments for each City Facility or Discrete Component will be made only in the amount of the Purchase Price for the respective City Facility or Discrete Component. Nothing herein shall require the City in any event (i) to pay more than the Actual Cost of a City Facility or Discrete Component, or (ii) to make any payment beyond the available funds in the Improvement Fund or the Surplus Taxes Fund. The parties hereto acknowledge and agree that all payments to the Developer for the Purchase Prices of City Facilities or Discrete Component are intended to be reimbursements to the Developer for monies already expended or for immediate payment by the Developer (or directly by the City) to third parties in respect of such City Facilities or Discrete Component. .B. Joint or Third Party Payments. The City may make any payment jointly to the Developer and any mortgagee or trust deed beneficiary, contractor or supplier of materials, as their interests may appear, or solely to any such third party, if the Developer RVPUB\MUM\682865.1 18 so requests the same in writing or as the City otherwise determines such joint or third party payment is necessary to obtain lien releases. C. Wit}illolllisig Paynigits. The City shall be entitled, but shall not be required, to withhold any payment hereunder for a City Facility or Discrete Component if the Developer or any Affiliate is delinquent in the payment of ad valorem real property taxes, special assessments or taxes, or Special Taxes levied in the District. In the event of any such delinquency, the City shall only make payments hereunder directly to contractors or other third parties employed in connection with the construction of the City Facilities or Final Discrete Component or to any assignee of the Developer's interests in this Agreement (and not to the Developer or any Affiliate), until such time as the Developer provides the City Manager with evidence that all such delinquent taxes and assessments have been paid. The City shall withhold final payment for any City Facility or Final Discrete Component constructed on land, until Acceptable Title to such land is conveyed to the City or other Public entity that will own the respective City Facility or other Public Facility, as described in Section 8 hereof. The City shall be entitled to withhold payment for any City Facility or Discrete Component hereunder to be owned by the City until: (i) the City Manager or his designee determines that the City Facility is ready for its intended use, (ii) the Acceptance Date for the City Facility has occurred and to the requirements of Section 8, if applicable to such City Facility or Discrete Component, have been satisfied, (iii) a Notice of Completion executed by the Developer, in a form acceptable to the City Manager or his designee, has been recorded for the City Facility and general lien releases conditioned solely upon RVPUB\MUM\682865.1 19 payment from the proceeds of the Bonds to be used to acquire such City Facility have been submitted to the City Manager for the City Facility. The City hereby agrees that the Developer shall have the right to post or cause the appropriate contractor or subcontractor to post a bond with the City to indemnify it for any losses sustained by the City because of any liens that may exist at the time of acceptance of such a City Facility, so long as such bond is drawn on an obligor and is otherwise in a form acceptable to the City Manager or his designee. The City shall be entitled to withhold payment of a Public Facility (or the Final Discrete Component or such Public Facility) to be owned by other governmental entities, until the Developer provides the City Manager with evidence that the governmental entity has accepted dedication and/or title to the Public Facility, provided, however that any payment (including progress payments) to the Developer for a Public Facility shall � be governed by the JCFA between the Developer and the governmental entity. If the City Manager or his designee determines that a City Facility is not ready for intended use under (i) above, the City Manager or his designee shall so notify the Developer as soon as reasonably practicable in writing specifying the reason(s) therefor. Nothing in this Agreement shall be deemed to prohibit the Developer from contesting in good faith the validity or amount of any mechanics or materialmans lien nor limit the remedies available to the Developer with respect thereto so long as such delay in performance shall not subject the City Facilities or Discrete Component to foreclosure, forfeiture or sale. In the event that any such lien is contested, the Developer shall only be required to post or cause the delivery of a bond in an amount equal to the amount in RVPUB\MUM\682865.1 20 dispute with respect to any such contested lien, so long as such bond is drawn on an obligor and is otherwise in a form acceptable to the City Manager or his designee. Nothing in this Section 7(h) shall prevent the payment for Discrete Components as described in Section 7(b). D. Retention. The City shall withhold in the Improvement Fund an amount equal to ten percent (10%) of the Purchase Price of each City Facility or Discrete Component to be paid hereunder. Notwithstanding the foregoing, at such time as one- half of the respective work has been completed and progress on the City Facility or Discrete Component is satisfactory to the City Manager or his designee, no further retention will be made (so that it is expected that, upon completion of any City Facility, a total of ten percent (10%) will have been retained). Any such retention will be released to the Developer upon final completion and acceptance of the related City Facility (or Final Discrete Component thereof). Notwithstanding the foregoing, the Developer shall be entitled to payment of any such retention upon the completion and acceptance of a City Facility, if a maintenance or warranty bond is posted in accordance with Section 8 hereof. Payment of any retention shall also be contingent upon the availability of monies in the Improvement Fund therefore. No retention shall apply if the Developer proves to the City Manager or his designee's satisfaction that the Developer's contracts for the City Facilities or Discrete Component provide for the same retention as herein provided, so that the Purchase Price paid for the City Facility or Discrete Component is at all times net of the required retention. RVPUB\MUM\682865.1 21 E. 17i-ecluczlcy. Unless otherwise agreed to by the City Manager, no more than one Payment Request shall be submitted by the Developer in any calendar month. (i) Defective or Nonconforming; Work. If any of the work done or materials furnished for a City Facility are found by the City Manager or his designee to be defective or not in accordance with the applicable Plans: (i) and such finding is made prior to payment for the Purchase Price of such City Facility hereunder, the City may withhold payment therefore until such defect or nonconformance is corrected to the satisfaction of the City Manager or his designee, or (ii) and such finding is made after payment of the Purchase Price of such City Facility, the City and the Developer shall act in accordance with the City's standard specification for City works construction, which are available in the City's Public Works Department. 0) Modification of Discrete Coiliponcizts. The following provisions shall be applicable to each Improvement Area separately. Nothing in this section 0) shall prevent the qualified electors within an Improvement Area from modifying the Facilities and Discrete Components (or other aspects of the Improvement Area) pursuant to the resolution of consideration provisions of Article 3 of the Act. A. Prior to the Issuance of the First Scries of Bonds for an Improvement Area. The City and the Developer acknowledge that (i) the Developer will be constructing City Facilities in advance of the issuance of the first series of Bonds for an Improvement Area, and (ii) this Agreement will be approved and executed in advance of the issuance of the first series of Bonds for an Improvement Area so that the Developer understands how it is to construct the City Facilities to make them eligible for reimbursement from the proceeds of the Bonds. Because this Agreement will be executed prior to the date that the first series of Bonds for an Improvement Area are RVPUB\MUM\682865.1 22 issued, the amount of proceeds of the first series of Bonds cannot be known at this time with any certainty. Consequently, at this time, the description of the City Facilities listed in Exhibit B are preliminary in nature. The City and the Developer agree that Exhibit B may be modified at any time upon the written consent of each party. The City Manager or his designee is hereby delegated the authority to approve any revisions to Exhibit B attached hereto without requiring City Council action. Once such written approval is executed by the City and the Developer, the revised Exhibit B shall be deemed part of this Agreement and shall operate for all purposes thereafter. B. Subseauent to the Issuance of the First Series of Bonds for an Improvement Area. Following the issuance of the first series of Bonds for an Improvement Area, the description of the Discrete Components set forth in Exhibit B for an Improvement Area for which Bonds have been issued shall be modified only as set forth in this subparagraph (B). Upon written request of the Developer, the City Manager shall consider modification of the description of any Discrete Component listed 'in Exhibit B without further action by the City Council. Any such modification shall be subject to the written approval of the City Manager, and shall not diminish the overall City Facilities to be provided by the Developer hereunder (in a material way such that the change invalidates any of the assumptions used in the appraisal conducted to sell the Bonds). It is expected that any such modification will be solely for purposes of dividing up the work included in any Discrete Component for purposes of acceptance and payment, for example: (i) separation of irrigation and landscaping from other components of a Discrete Component, (ii) modifications to allow for payment for roadway improvements prior to completion of the top course of paving, or (iii) division of utility RVPUB\MUM\682865.1 23 construction by utility work order. In most instances, the City Manager will only approve modifications for payment purposes when there will be an unusual period of time between the completion and acceptance of such divided work or, to better implement the phasing of the overall construction of the City Facilities; but no such circumstances shall this subparagraph in any way obligate the City Manager to approve such modification. In addition to the foregoing, the description of the City Facilities and Discrete Components may be modified by adding additional City Facilities in connection with the issuance of any Additional Bonds. Section 8. Ownership and Transfer of Facilities. (a) Facilities to be Owned by the City — Conveyance of Land and Easements to City. Acceptable Title to all property on, in or over which each City Facility to be acquired by the City will be located, shall be deeded over to the City by way of grant deed, quitclaim, or dedication of such property, or easement thereon, if such conveyance of interest is approved by the City as being a sufficient interest therein to permit the City to properly own, operate and maintain such City Facility located therein, thereon or thereover, and to permit the Developer to perform its obligations as set forth in this Agreement. The Developer agrees to assist the City in obtaining such documents as are required to obtain Acceptable Title. Completion of the transfer of title to land shall be accomplished prior to the payment of the Purchase Price for a City Facility (or the Final Discrete Component thereof) and shall be evidenced by recordation of the acceptance thereof by the City Council or the designer thereof. (b) Facilities to be Owned by the City — Title Evidence. Upon the request of the City, the Developer shall furnish to the City a preliminary title report for land with respect to City Facilities to be acquired by the City and not previously dedicated or otherwise conveyed to the RVPUB\MUM\682865.1 24 City, for review and approval at least fifteen (15) calendar days prior to the transfer of Acceptable Title of a City Facility to the City. The City shall approve the preliminary title report unless it reveals a matter which, in the judgment of the City, could materially affect the City's use and enjoyment of any part of the property or easement covered by the preliminary title report. In the event the City does not approve the preliminary title report, the City shall not be obligated to accept title to such City Facility or pay the Purchase Price for such City Facility (or the Final Discrete Component thereof) until the Developer has cured such objections to title to the satisfaction of the City. (c) Facilities Constructed on Private Lands. If any City Facilities to be acquired are located on privately -owned land, the owner thereof shall retain title to the land and the completed City Facilities until acquisition of the City Facilities under Section 7 hereof. Pending the completion of such transfer, the Developer shall not be entitled to receive any payment for any such City Facility or the Final Discrete Component thereof. The Developer shall, however, be entitled to receive payment for the Discrete Components (other than the last Discrete Component) upon making an irrevocable offer of dedication of such land in form and substance acceptable to the City Manager. Notwithstanding the foregoing, upon written request of the City before payment for any Final Discrete Component of such City Facility, the Developer shall convey or cause to be conveyed Acceptable Title thereto in the manner described in Section 8(a) and 8(b) hereof. (d) Facilities Constructed on City Land. If the City Facilities to be acquired are on land owned by the City, the City hereby grants to the Developer a license to enter upon such land for purposes related to the construction (and maintenance pending acquisition) of the City RVPUB\MUM\682865.1 25 Facilities. The provisions for inspection and acceptance of such City Facilities otherwise provided herein shall apply. (e) Public Facilities to be Acquired by Other Public Agencies. The City has, or will, execute Joint Community Facilities Agreements with the School District, MTA, the Sanitation District, Glendora and other local public agencies (collectively the "JCFAs," each individually a "JCFA"). The JCFAs allow the financing of City Facilities. Accordingly, the proceeds of the Bonds in any Improvement Area may be used to pay such Public Facilities at any time, either directly to the applicable agency upon the direction of the Developer, or in reimbursement as discussed herein. Any Public Facilities paid by the Developer may be eligible for reimbursement from the proceeds of the Bonds. The Developer may request from the proceeds of Bonds for reimbursement or direct payment of Public Facilities that are the subject of the JCFAs by executing and submitting a payment request in the form of Exhibit D attached hereto (the "JCFA Facilities Payment Request"). In the case of a reimbursement for a Public Facility, the Developer shall submit proof of the payment of such Public Facilities, which may be a written confirmation from another agency that such Public Facility has been constructed in accordance with the local agency's policies and inspected by the local agency, and paid for by the Developer ("Proof of Completion and Payment"). Upon receipt of such JCFA Facilities Payment Request and Proof of Completion and Payment, the City shall review the request and if determined to be an item eligible to be paid from Bond Proceeds direct the Fiscal Agent to wire transfer (or pay in another mutually acceptable manner) to the payee identified in such JCFA Facilities Payment Request such requested funds to the extent of funds on deposit in the Improvement Fund designated by the Developer or the Surplus Taxes Fund. The provisions of Section 7(g) apply to the Public Facilities to be acquired by other local agencies pursuant to the JCFAs. RVPUB\MUM\682865.1 26 (f) Maintenance and Warranties. The Developer shall maintain each City Facility and Discrete Components thereof in good and safe condition until the Acceptance Date or until such other time as specified in the applicable JCFA. Prior to the Acceptance Date, the Developer shall be responsible for performing any required maintenance on any completed City Facility and Discrete Components thereof. On or before the Acceptance Date of the City Facility, the Developer shall assign to the City, or other public agency, as applicable, all of the Developer's rights in any warranties, guarantees, maintenance obligations or other evidence of contingent obligations of third persons with respect to such City Facility. The Developer shall provide a warranty bond reasonably acceptable in form and substance to the City Manager for one-year after the Acceptance Date, to insure that defects, which appear within said period will be repaired, replaced, or corrected by the Developer, at its own cost and expense, to the satisfaction of the City Manager. The Developer shall maintain or cause to be maintained each Public Facility and Discrete Components thereof to be owned by another public agency (including the repair and replacement thereof) for the period of time and in the form specified in the applicable JCFA. The Developer shall commence to repair, replace or correct any such defects within thirty (30) days after written notice thereof by the City to the Developer, and shall complete such repairs, replacement or correction as soon as practicable. After such one-year period, the warranty bond shall be released. From and after the Acceptance Date, the City shall be responsible for maintaining all City Facilities. Any warranties, guarantees or other evidences of contingent obligations of third persons with respect to the City Facilities to be acquired by the City shall be delivered to the City Manager as part of the transfer of title. (g) Discrete Compone�its. Nothing in this Section 8 shall prevent payment for Discrete Components as described in Section 7(b). RVPUB\MUM\682865.1 27 Section 9. Surplus Special Taxes. Pursuant to the Development Agreement dated May 27, 2004, by and between the City and the Developer (the "Development Agreement"), the City shall levy special taxes against developed property within each Improvement Area at 100% of the assigned special tax rate. In addition, the City shall establish in each Fiscal Agent Agreement governing the Bonds an interest-earning "Surplus Taxes Fund" and, in each Fiscal Year, all special tax revenues not needed to pay debt service on the applicable series of Bonds, replenish the reserve fund and pay administrative costs shall be deposited in the appropriate Surplus Taxes Fund. Amounts in each Surplus Taxes Fund shall be used to pay the costs of the construction and acquisition the Public Facilities to the extent that the proceeds of the Bonds are, for any reason, insufficient at the time that a request for payment is made. Section 10. Sugplus Hand Proceeds. In the event that any surplus proceeds of the Bonds remain in the Improvement Fund after all of the Public Facilities have been completed, and acquired pursuant to this Agreement, which shall be evidenced by a written notice from the Developer that no additional requisitions for payment will be submitted, said surplus shall be applied to debt service on the Bonds in the manner provided in the Fiscal Agent Agreement. Interest earnings on funds deposited in the Improvement Fund shall be retained therein and used for the purposes thereof. Section 11. indemnification; Insurance. Developer shall indemnify and hold harmless the City and the District from any and all claims, actions, liability, damages and costs arising out of Developer's performance of its duties and responsibilities as construction manager. To secure its indemnification obligation, Developer shall obtain and maintain throughout the period of its construction management services a broad form comprehensive liability policy of insurance in a form and with coverages acceptable to the City, having a single aggregate limit of liability as to RVPUB\MUM\682865.1 28 all coverages provided thereby in the amount of $4,000,000, and naming the City, the District and their officers, and employees as additional insureds. Developer shall provide to the City a certified copy of the policy for such insurance or a certificate of such insurance coverage in a form satisfactory to the City. Any such certificate of insurance shall include an endorsement providing that the City, the District., their officers and employees, and to the extent insurance coverage for such purpose is commercially available, their agents, are additional insureds under the comprehensive general liability policy, and shall provide that the .policy may only be canceled upon 30 days' advance written notice to the City. Developer shall also maintain throughout the period of its construction management services workers' compensation insurance as required by the laws of the State of California. Section 12. Representations, Covenants and Warraiitics of the Developer. The Developer represents and warrants for the benefit of the City as follows: A. Drganication. The Developer is a limited liability company duly organized and validly existing under the laws of the State of Delaware, is in good standing in the State, and has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated. B. ALItl101-ity. The Developer has the power and authority to enter into this Agreement, and has taken all action necessary to cause this Agreement to be executed and delivered, and this Agreement has been duly and validly executed and delivered by the Developer. RVPUB\MUM\682865.1 29 C. Binding Obligation. This Agreement is a legal, valid and binding obligation of the Developer, enforceable against the Developer in accordance with its terms, subject to bankruptcy and other equitable principles. D. Compliance with Laws. The Developer shall not with knowledge commit, suffer or permit any act to be done in, upon or to the lands of the Developer in the District or the City Facilities in violation of any law, ordinance, rule, regulation or order of any governmental authority or any covenant, condition or restriction now or hereafter affecting the lands in the District or the City Facilities. E. Requests for Pa anent. The Developer represents and warrants that (i) it will not request payment from the City for the acquisition of any improvements that are not part of the Public Facilities, and (ii) it will diligently follow all procedures set forth in this Agreement with respect to the Payment Requests and the JCFA Facilities Payment Requests. F. Financial Records. Until the final acceptance of the City Facilities, the Developer covenants to maintain proper books of record and account for the construction of the City Facilities and all costs related thereto. Such accounting books shall be maintained in accordance with generally accepted accounting principles, and shall be available for inspection by the City or its agents at any reasonable time during regular business hours on reasonable notice. G. Prevailing Woes. The Developer covenants that, with respect to any contracts or subcontracts for the construction of the City Facilities to be acquired from the Developer hereunder, it will assume complete compliance with any applicable law or regulation for the payment of prevailing wages for such construction. The Developer RVPUB\MUM\682865.1 30 shall be solely responsible for determining whether payment of prevailing wages and other federal and California laws, rules and regulations are applicable for any Public Facility. H. Plans. The Developer represents that it has obtained or will obtain approval of the Plans for the City Facilities to be acquired from the Developer hereunder from all appropriate departments of the City and from any other City entity or City utility from which such approval must be obtained. The Developer further agrees that the City Facilities to be acquired from the Developer hereunder have been or will be constructed in full compliance with such approved plans and specifications and any supplemental agreements (change orders) thereto, as approved in the same manner. I. La17d Sales. The Developer agrees that in the event that it sells any land owned by it within the boundaries of the District the Developer will (i) notify the purchaser in writing prior to the closing of any such sale of the existence of this Agreement and the Developer's rights and obligations hereunder with respect to the construction of and payment for the City Facilities, (ii) notify the purchaser in writing of the existence of the District and the special tax lien in connection therewith, and otherwise comply with any applicable provision of Section 53341.5 of the Act, and (iii) notify the City in writing of the sale, indicating the legal description (or County Assessor's parcel number) of the property sold and the purchaser of the property. J. Additional Information. The Developer agrees to cooperate with all reasonable written requests for nonproprietary information by the original purchasers of the Bonds or the City related to the status of construction of improvements within the RVPUB\MUM\682865.1 31 District, the anticipated completion dates for future improvements, and any other matter material to the investment quality of the Bonds. K. Continuing Disclosure. The Developer agrees to comply with all of its obligations under any continuing disclosure agreement executed by it in connection with the offering and sale of any of the Bonds. Section 13. Independent Contractor. In performing its construction management services, Developer shall be an independent contractor, and this Agreement shall not and does not create a joint venture or partnership between the City and Developer. The City shall have no responsibility or liability for the payment of any amount to any employee or subcontractor of Developer. Section 14. Special Taxes. The City shall annually thereafter, as'appropriate, levy and collect special taxes on that portion of the Property subject to the Special Taxes, in an amount sufficient to pay the principal and interest coming due on the Bonds in each year plus administrative expenses, together with an annual levy for the maintenance portion of the District, if any. For each Improvement Area, such special taxes shall be levied at the rate or rates and in accordance with the Rate and Method of Apportionment of Special Tax relating to the Improvement Area of the District. The City may include in the amount of the annual levy of special taxes on the Property in any year an amount sufficient to replenish the reserve fund for the Bonds of that Improvement Area, the fees associated with the administration of debt service on the Bonds of that Improvement Area, and to pay the City's reasonable administrative expenses in connection with the levy and collection of such Special Taxes within that Improvement Area. Notwithstanding the foregoing and in accordance with the RMA, the City agrees that special taxes shall be levied on Developed Property (as defined in the RMA) in each RVPUB\MUM\682865.1 32 Improvement Area to pay directly for Public Facilities if Bonds secured by such Special Taxes have not previously been issued. Such Special Taxes levied and collected by the City and any prepayment of Special Taxes collected prior to the issuance of Bonds of an Improvement Area shall be held by the City and disbursed to pay the Purchase Price of Public Facilities and, upon the issuance of Bonds, such Special Taxes still held by the City shall be deposited in the Improvement Fund. Section 15. Disclosure of Special Taxes. (a) From and after the date of this Agreement, Developer and its successors and assigns shall give a "Notice of Special Tax" (as defined in Section 15(b) below) to each prospective purchaser of a parcel in the District and shall deliver a fully executed copy of each notice to District. Developer and its successors and assigns shall (i) maintain records of each Notice of Special Tax for a period of five (5) years, and (ii) shall provide copies of each notice to District promptly following the giving of such notice. Developer and its successors and assigns shall include the Notice of Special Tax in all Developer's and its successors and assigns' applications for Final Subdivision Reports required by the Department of Real Estate ("DRE") which are filed after the effective date of this Agreement. Developer and its successors and assigns shall require, as a condition precedent to close an escrow for the sale of real property to a developer acquiring lots (a "Residential Developer"), that such Residential Developer shall (i) maintain records of each Notice of Special Tax for a period of five (5) years, (ii) provide copies of each notice to District promptly following the giving of such notice, and (iii) include the Notice of Special Tax in all of such Residential Developer's applications for Final Subdivision Reports required by DRE. RVPUB\MUM\682865.1 33 (b) With respect to any parcel, the term "Notice of Special Tax" means a notice in the form prescribed by California Government Code Section 53341.5 which is calculated to disclose to the purchaser thereof (i) that the property being purchased is subject to the special tax of the Improvement Area of the District; (ii) the land use classification of such property, (iii) the maximum annual amount of the special tax and the number of years for which it will be levied; (iv) if available at the time such notice is delivered, an indication of the amount of special tax to be levied on such property for the following fiscal year; and (v) the types of facilities or services to be paid or with the proceeds of the special tax. (c) District will file with the Los Angeles County Recorder a notice of special tax lien that gives notice of the existence of the District and the levy of the special tax on property within the Improvement Area of the District for the benefit of subsequent Developers, pursuant to requirements of Section 3114.5 of the Streets and Highways Code. (d) Information Sheet and Salii lc Property Tax Bill. Developer and its successors and assigns shall prepare, in a form reasonably acceptable for the City, and place in their sales office a sample property tax bill which shows (i) the special tax levied for public facilities subject to an annual escalator of 2% and (ii) the special tax levied for public services, subject to an annual escalator of 2%, in a form approved by District. Developer and its successors and assigns shall provide prospective purchasers of homes an information sheet in the sales office in the form set forth in Exhibit F, which is available for such purchasers to take with them. In addition, Developer shall prominently display a notification of Special Tax. Section 16. "Termination. If for any reason the City is unable to sell the first series of Bonds (regardless of which Improvement Area), by July 1, 2008, in accordance with this Agreement, this Agreement shall be terminated. RVPUB\MUM\682865.1 34 Section 17. Binding on Community Facilities District. The District shall automatically become a party to this Agreement, and all provisions hereof which apply to the City shall also apply to the District. The City Council of the City, acting as the legislative body of the District, shall perform all parts of this Agreement which require performance on the part of the District. Section 18. Assignment. Developer shall not assign this Agreement or any right or - obligations hereunder without the express prior written approval of the City. As a condition of such approval, the City may require proof of the financial responsibility and experience of a proposed assignee to undertake and perform the duties and responsibilities of Developer under this Agreement. The City's approval of an assignment of this Agreement and the rights and duties of Developer hereunder shall not be unreasonably withheld, delayed, or conditioned. Section 19. Prompt Action. All consents, approvals and determinations required of either the City or Developer pursuant to this Agreement shall be promptly given or made, and shall not be unreasonably withheld or conditioned. Section 20. General. This Agreement and the Deposit Agreement contain the entire agreement between the parties with respect to the matters herein provided for. This Agreement may only be amended by a subsequent written agreement signed on behalf of both parties. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. This Agreement shall be construed and governed by the Constitution and laws of the State of California. Should either party to this Agreement commence a court action or proceeding against the other party with respect to this Agreement or the design and acquisition or construction of the Public Facilities, the party prevailing in such action or proceeding shall be entitled to receive from the losing party its attorney's fees, expert witness fees, court costs and RVPUB\MUM\682865.1 35 other costs incurred by it in prosecuting or defending such action or proceeding. The captions of the sections of this Agreement are provided for convenience only, and shall not have any bearing on the interpretation of any section hereof. This Agreement may be executed in several counterparts, each of which shall be an original of the same agreement. RVPUB\MUM\682865.1 36 IN WITNESS WHEREOF, the parties have caused this agreement to be signed as of the date first above written. DEVELOPER AZUSA LAND PARTNERS, LLC, a Delaware limited liability company By: PLC Azusa Land Investment, LLC, a Delaware limited liability company Its: Administrative Member By: C G II%f, Chris Gibbs, President CITY OF AZUSA By:4ut.- At -�-'-- City Manager ATTEST. era Mendoza City Clerk RVPU1B\MUM\682865.1 37 EXHIBIT A DESCRIPTION OF PUBLIC FACILITIES The Public Facilities that are the subject of the Agreement include those facilities related to the development of the Rosedale Project including both those facilities to be owned, operated and maintained by the City of Azusa (the "City Facilities") and those to be owned, operated and maintained by other local agencies (the "JCFA Facilities"). City Facilities include(l): + Citywide Traffic Facilities in satisfaction of Traffic Mitigation Fee; • Excavation/Grading, Clearing/Grabbing, and Right of Way Acquisition Costs; • Backbone and In -tract Street, Traffic Signal and Bridge Improvements; + Backbone and In -tract Storm Drain, Sewer, and Water/Reservoir Improvements; • Backbone and In -tract Park & Landscaping Improvements; • Backbone and In -tract Dry Utilities JCFA Facilities include(l): I. Azusa Unified School District ("AUSD") Facilities: The fair market value of the School Site; costs to develop the School Site; K-8 School (i.e., a K-8 school to house at least 600 students), which shall include furniture, fixtures and equipment; the School portion of the Great Park, including the fair market value of the land, equipment, landscaping and development; High School facilities (e.g., portable classrooms); High School fees (estimated to be in the amount of $210,651); and any other facility with a useful life of 5 years or more and that will be owned, operated or maintained by the Azusa Unified School District. II. Metropolitan Transportation Authority Facilities: Palm Drive freight rail undercrossing; Citrus Avenue freight rail undercrossing; realignment of the freight rail tracks (including, but not limited to, the cost of the rail, rail hardware, ties, ballast, subballast, embankment fill, drainage leading up to and extending beyond the Palm Drive freight rail undercrossing and the Citrus Avenue freight rail undercrossing); real property costs (at fair market value) for land required to be purchased, conveyed, dedicated or otherwise transferred to the Metropolitan Transportation Authority for any of the foregoing purposes. (�) The costs associated with the Public Facilities, including: costs incurred by the Developer in preparing the Plans (as defined in Exhibit E) and the related costs of environmental evaluations; fees paid to governmental agencies for obtaining permits, licenses or other governmental approvals for the Public Facilities; a construction and project management fee of five percent (5%) for the construction of the Public Facilities; professional costs incurred by the Developer such as engineering, legal, accounting, inspection, construction staking, materials testing and similar professional services; costs directly related to the construction and/or acquisition of Public Facilities, such as costs of payment, performance and/or maintenance bonds, and insurance costs; and Developer accounting costs associated with the preparation and substantiation of requests for payment under this Agreement. RVPUB\MUM\682865.1 A- I III. Los Angeles County Sanitation District Facilities: County Sanitation District No. 22 Sanitation Facilities in satisfaction of Connection Fees. IV. City of Glendora Facilities: Citrus Avenue street, bridge, and traffic signal improvements; Sierra Madre water improvements; real property or right of way costs (at fair market value) for land required to be purchased, conveyed, dedicated or otherwise transferred to the City of Glendora for any of the foregoing purposes. Any other facility with a useful life of 5 years or more and that will be owned, operated or maintained by the City of Glendora. RVPUB\MUM\682865.1 A-2 EXHIBIT B DISCRETE COMPONENTS [TO BE PRESENTED BY SUBSEQUENT AMENDMENT TO EXHIBIT PURSUANT TO SECTION 6(C) OF THE FUNDING AND ACQUISITION AGREEMENT] RVPUB\MUM\682865.1 B-1 EXHIBIT C FORM OF PAYMENT REQUEST City of Azusa Community Facilities District No. 2005-1 (Rosedale) The undersigned, a duly authorized representative of the Developer, hereby requests payment of the Purchase Price of the City Facilities described in Attachment A attached hereto. Capitalized undefined terms shall have the meanings ascribed thereto in the Acquisition Agreement, dated as of August 1, 2005 (the "Acquisition Agreement"), by and between (i) the City of Azusa for the City of Azusa Community Facilities District No. 2005-1 (Rosedale) (the "CFD"), and (ii) Azusa Land Partners, LLC, a Delaware limited liability company (the "Developer"). In connection with this Payment Request, the undersigned hereby represents and warrants to the CFD and the City as follows: (1) He (she) is a duly authorized representative of the Developer, qualified to execute this request for payment on behalf of the Developer and knowledgeable as to the matters set forth herein. (2) Each of the City Facilities described in Attachment A has been completed in accordance with the Acquisition Agreement. (3) The true and correct Actual Cost of the City Facilities for which payment is requested is set forth in Attachment A. (4) Attached hereto are invoices, receipts, worksheets and other evidence of costs which are in sufficient detail to allow the City to verify the Actual Cost of the City Facilities for which payment is requested. (5) There has not been filed with or served upon the Developer notice of any lien, right to lien or attachment upon, or claim affecting the right to receive the payment requested herein which has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen's or mechanics' liens accruing by operation of law. Copies of lien releases for all work for which payment is requested hereunder are attached hereto. (6) The Developer is in compliance with the terms and provisions of the Acquisition Agreement. The Purchase Price for the City Facilities described in Exhibit B shall be payable as follows: out of the Improvement Fund created pursuant to the Fiscal Agent Agreement. RVPUB\MUM\682865.1 C-1 out of the Surplus Taxes Fund pursuant to the Fiscal Agent Agreement. RVPUB\MUM\682865.1 C-2 Dated: I hereby certify that the above representations and warranties are true and correct. AZUSA LAND PARTNERS, LLC a Delaware limited liability company By: PLC Azusa Land Investment, LLC, a Delaware limited liability company Its: Administrative Member By: Chris Gibbs, President By execution of this Payment Request, the City does hereby approve of the payment as described in this Payment Request and directs the Fiscal Agent to pay such amounts, first, from the Improvement Fund and, second from the Surplus Taxes Fund as applicable, to the payee listed above. CITY OF AZUSA for the City of Azusa Community Facilities District No. 2005-1 (Rosedale) City Manager RVPUB\MUM\682865.1 C-3 EXHIBIT D FORM OF JCFA FACILITIES PAYMENT REQUEST City of Azusa Community Facilities District No. 2005-1 (Rosedale) (1) City of Azusa Community Facilities District No. 2005-1 (Rosedale) ("CFD") is hereby requested to pay from the CFD bond proceeds to the payee listed below, as Payee, the sum set forth in (3) below: Payee: (2) The undersigned certifies that the amount requested is for the payment of, or reimbursement for, Public Facilities financed through a Joint Community Facilities Agreement, and that such amount has not formed the basis of prior request or payment, and is being made with respect to Public Facilities to be owned or operated by [name of JCFA participant]. (3) Amount requested: $. Description of Facilities: (4) Capitalized terms not defined herein shall have the meaning set forth in the Acquisition Agreement, dated as of August 1, 2005 (the "Acquisition Agreement"), by and between (i) the City of Azusa for the City of Azusa Community Facilities District No. 2005-1 (Rosedale) (the "CFD"), and (ii) Azusa Land Partners, LLC, a Delaware limited liability company (the "developer"). Dated: AZUSA LAND PARTNERS, LLC a Delaware limited liability company By: PLC Azusa Land Investment, LLC, a Delaware limited liability company Its: Administrative Member By: Chris Gibbs, President By execution of this JCFA Facilities Payment Request, the City does hereby approve of the payment as described in this JCFA Facilities Payment Request and directs the Fiscal Agent to pay such amounts, first, from the Improvement Fund and, second from the Surplus Taxes Fund as applicable, to the payee listed above. RVPUB\MUM\682865.1 CITY OF AZUSA for the City of Azusa Community Facilities District No. 2005-1 (Rosedale) By: City Manager D-1 EXHIBIT E DEFINITIONS The following terms shall have the meanings ascribed to them for purposes of this Agreement. Unless otherwise indicated, any other terms, capitalized or not, when used herein shall have the meanings ascribed to them in the Fiscal Agent Agreement (as hereinafter defined). "Acceptable Title" means title to land or interest therein, in form acceptable to the Public Works director, free and clear of all liens, taxes, assessments, leases, easements and encumbrances, whether or not recorded, but subject to any exceptions determined by the Public Works Director as not interfering with the actual or intended use of the land or interest therein. Notwithstanding the foregoing, an irrevocable offer of dedication may constitute land with an "Acceptable Title" if. (i) such offer is necessary to satisfy a condition to a tentative or final parcel map, (ii) such offer is in a form acceptable to the Public Works Director, (iii) the Public Works Director has no reason to believe that such offer of dedication will not be accepted by the applicable public agency, and (iv) the Developer commits in writing not to allow any liens to be imposed on such property prior to its acceptance. "Acceptance Date" means the date the City Council takes final action to accept dedication of or transfer of title to a Public Facility. "Additional Bonds" means any series of Bonds issued by or on behalf of the District after the first series of Bonds, in each case in compliance with and under supplements to the Fiscal Agent Agreement, which Additional Bonds shall be secured on a parity lien or subordinate lien position with other Bonds previously issued within any Improvement Area. "Agreement" means this Acquisition Agreement, together with any Supplement hereto. "Act" means the Mello -Roos Community Facilities Act of 1982, Sections 53311 et seq. of the California Government Code, as amended. "Actual Cost" means the substantiated cost of a City Facility, which costs may include: (i) the costs incurred by the Developer for the construction of such City Facility, (ii) the costs incurred by the Developer in preparing the Plans for such City Facility and the related costs of environmental evaluations of the City Facility, (iii) the fees paid to governmental agencies for obtaining permits, licenses or other governmental approvals for such City Facility, (iv) a construction and project management fee of five percent (5%) of the costs described in clause (i) above incurred for the construction of such City Facility, (v) professional costs incurred by the Developer or the City associated with such City Facility, such as engineering, legal, accounting, inspection, construction staking, materials testing and similar professional services; and (vi) costs directly related to the construction and/or acquisition of a City Facility, such as costs of payment, performance and/or maintenance bonds, and insurance costs (including costs of any title insurance required hereunder). Actual Cost shall not include any cost of carry or interest expense with respect to any construction loan obtained by the Developer with respect to the City Facilities. RVPUB\MUM\682865.1 E-1 "Affiliate" means any person or entity owning an interest of five percent (5%) or more in the Developer. "Discrete Component" means a component of a City Facility that the City Manager has agreed can be separately identified, inspected and completed, and be the subject of a Payment Request hereunder. The Discrete Components of the City Facilities are shown on Exhibit B hereto. The Discrete Components of City Facilities not shown in Exhibit B to be financed from the proceeds of Additional Bonds shall be determined by the City Manager following consultation with the Developer, and shall be identified in a Supplement executed by the parties hereto prior to the issuance of any such Additional Bonds. "Final Discrete Component" means the last Discrete Component of a City Facility to be financed after all other Discrete Components of that City Facility have been paid for from the proceeds of the Bonds. "Fiscal Agent Agreement" means, collectively, any agreement or agreements by that or similar name to be executed by the City, for and on behalf of any one or more of the Improvement Areas of the District, and the Fiscal Agent, which will provide for, among other matters, the issuance of the Bonds and the establishment of an Improvement Fund as originally executed by the City and the Fiscal Agent and as it may be amended from time to time. "Improvement Fund" means the Improvement Fund established by the Fiscal Agent Agreement for any series of Bonds issued on behalf of the District. "Parity Bonds" means additional series of Bonds issued by the City for the CFD in compliance with and under supplements to the Fiscal Agent Agreement, which Bonds shall be secured on a parity lien position with other Bonds previously issued. "Payment Request" means a document, substantially in the form of Exhibit D attached hereto, to be used by the Developer in requesting payment of a Purchase Price for a City Facility. "Plans" means the plans, specifications, schedules and related construction contracts for the City Facilities approved pursuant to the applicable standards of the City when completed and acquired. As of the date of this Acquisition Agreement, the City standards for construction incorporate those set forth in the Green Book, Standard Specifications for Public Works Construction (SSPWC), of the Southern California Chapter of the American Public Works Association. "Purchase Price" means the amount paid by the City for a City Facility determined in accordance with Section 7 hereof, being an amount equal to the Actual Cost of such City Facility, but subject to the limitations and reductions provided for in Section 7. "Supplement" means a written document amending, supplementing or otherwise modifying the Acquisition Agreement and any exhibit thereto, including any amendments to the list of Discrete Components in Exhibit B, and/or the addition to Exhibit B of additional Public Facilities (and Discrete Components) to be financed with proceeds of any Additional Bonds. RVPUB\MUM\682865.1 E-2 EXHIBIT F CITY OF AZUSA NOTICE OF SPECIAL TAX Community Facilities District No. 2005-1 (Rosedale) 1. WHAT IS COMMUNITY FACILITIES DISTRICT (CFD) No. 2005-1? CFD No. 2005-1 (Rosedale) was formed pursuant to the "Mello -Roos Community Facilities Act of 1982" to finance certain public facilities and services. 2. WHO IS RESPONSIBLE TO PAY THE SPECIAL TAX AND HOW IS IT BILLED? The property owner is responsible for paying the CFD No. 2005-1 (Rosedale) special tax, which will appear as a separate line item on your property tax bill along with your regular property taxes. 3. HOW MUCH WILL MY SPECIAL TAX BE? The special tax is based upon the size of the home. The assigned and maximum special taxes for CFD No. 2005-1 (Rosedale) for the 2005-06 Fiscal Year are summarized below. For Public Facilities (Special Tax A): RVPUB\MUM\682865.1 F-1 Assigned Maximum Classification Home Size Special Tax Special Tax 1 Residential Property $ /dwelling unit $ /dwelling unit Greater than _ sq. ft. 2 Residential Property $ /dwelling unit $ /dwelling unit . sq. ft. — sq. ft. 3 Residential Property $ /dwelling unit $ /dwelling unit sq. ft. — sq. ft. 4 Residential Property $ /dwelling unit $ /dwelling unit Less than or equal to sq. ft. RVPUB\MUM\682865.1 F-1 For Public Maintenance (Special Tax B): Special Tax A is subject to a 2% annual escalator. Special Tax B is subject to an annual escalator of 4. HOW LONG WILL I HAVE TO PAY THE CFD NO. 2005-1 SPECIAL TAX? The CFD No. 2005-1 collected for public facilities special tax will not be collected after calendar year 20 . The CFD No. 2005-1 special tax collected for public services will be collected in perpetuity or until the City Council determined that such tax is no longer needed. 5. CAN THE SPECIAL TAXES BE PREPAID? Homeowners have the option of prepaying their CFD No. 2005-1 (Rosedale) Special Tax anytime. Special Tax B cannot be prepaid. For prepayment information please contact the City of Azusa's CFD No. 2005-1 (Rosedale) administrator, David Taussig & Associates, Inc. at (800) 969-4382. 6. WHERE CAN I GET MORE INFORMATION? For more information in regards to CFD No. 2005-1, contact the City of Azusa's CFD No. 2005-1 (Rosedale) administrator, David Taussig & Associates, Inc. at (800) 969-4382. RVPUB\MUM\682865.1 F-2 Assigned Maximum Classification Home Size Special Tax Special Tax 1 Residential Property $ /dwelling unit $ /dwelling unit Greater than sq. ft. 2 Residential Property $ /dwelling unit $ /dwelling unit sq. ft. — sq. ft. 3 Residential Property $ /dwelling unit $ /dwelling unit sq. ft. — sq. ft. 4 Residential Property $ /dwelling unit $ /dwelling unit Less than or equal to sq. ft. Special Tax A is subject to a 2% annual escalator. Special Tax B is subject to an annual escalator of 4. HOW LONG WILL I HAVE TO PAY THE CFD NO. 2005-1 SPECIAL TAX? The CFD No. 2005-1 collected for public facilities special tax will not be collected after calendar year 20 . The CFD No. 2005-1 special tax collected for public services will be collected in perpetuity or until the City Council determined that such tax is no longer needed. 5. CAN THE SPECIAL TAXES BE PREPAID? Homeowners have the option of prepaying their CFD No. 2005-1 (Rosedale) Special Tax anytime. Special Tax B cannot be prepaid. For prepayment information please contact the City of Azusa's CFD No. 2005-1 (Rosedale) administrator, David Taussig & Associates, Inc. at (800) 969-4382. 6. WHERE CAN I GET MORE INFORMATION? For more information in regards to CFD No. 2005-1, contact the City of Azusa's CFD No. 2005-1 (Rosedale) administrator, David Taussig & Associates, Inc. at (800) 969-4382. RVPUB\MUM\682865.1 F-2 4-"D .0.5 4-,1777r, ,,,ViirtiNIA — Ib ,} F-- \,:::,,:t,,‘:,,,s,,,*., AZUSA CONSENT CALENDAR TO: THE HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: BILL NAKASONE, DIRECTOR OF PUBLIC WORKS VIA: F.M. DELACH, CITY MANAGER *Ain DATE: AUGUST 1 , 2005 SUBJECT: SENATE BILL 926, SEWAGE SLUDGE MANAGEMENT RECOMMENDATION It is recommended that City Council oppose Senate Bill 926 and notify the City's state representatives of such. BACKGROUND State Senate Bill 926 is a controversial bill that involves two significant issues. The first issue is the reduced capacity of the Landfills in the Los Angeles County. The second issue is the transport and use of Bio-solids or "Sludge" from the City of Los Angeles and County Sanitation District Treatment Plants for use as fertilizer in the agriculture industry. Currently, the County of Los Angeles is mandated by State Law to reduce by 50% the solid waste taken to Landfills. Almost all "treated" solid waste from L.A. County Waste Water Treatment Plants is transported to other counties for beneficial use. The current arrangement allows for a dramatically reduced amount of sludge being dumped into our landfills while simultaneously providing a nutrient resource to our agricultural communities. Senate Bill 926 would dramatically change this current mutually benefiting arrangement. Senate Bill 926 would grant authority to one County, Kern County, to prohibit the import of Bio-solids for use in agriculture. Support for the measure arises from groups concerned that treated sludge for fertilizer "may" contain levels of metals such as cadmium as well as other toxins. The federal Environmental Protection Agency has approved treated sludge for use as "compost". In fact, sludge has been successfully used in agriculture as an effective fertilizing agent for at least 30 years. The Los Angeles County Solid Waste Management Committee is an oversight organization comprised of representatives from the Board of Supervisors, local Cities, the County Sanitation Districts and League of California Cities. The Task Force of this Committee is vehemently opposed to this measure. Although the Bill has been recently amended by Senator Dean Florez to remove the provision that would have given any county the right to ban import of sludge from any other County, the Kern County exemption still has repercussions to Los Angeles County. The impact would be felt the most seriously by Los Angeles County. FISCAL IMPACT Increased charges to residents for trash pickup and Waste Water Fees charged by the Sanitation Districts of Los Angeles County and the City of Azusa. • • Pedestrian Breezeway: Remaining Section 108 Loan proceeds of $384,180 have been transferred from the Block 36 project, replacing redevelopment funds, in order to expedite expenditure of these federal funds, and increase the proposed project budget by $238,740. • La Tolteca: An additional $1,500 is proposed to pay for legal fees associated with the previously approved facade grant. • 100 W. Foothill Mixed Use: $13,000 is proposed to pay for miscellaneous legal and program expenses. • Azusa Commons (Foothill Shopping Center): The budget for this project has been adjusted to reflect more accurate estimates of financial assistance necessary for the development, and to change the funding source from capital project funds to redevelopment bond funds. A $60,000 reimbursement from the developer is anticipated. • 726, 728 Dalton and 303 E. Foothill Blvd. Acquisition: The proposed budget has been increased by $928,000 to include possible acquisition of 303 E. Foothill Blvd. • Block 36 Development: A $62,000 increase is proposed to fund outside project management services and legal fees. • 10"' Street Property Development: In this new project, the Agency would acquire the subject property from Light &Water and a enter into a development agreement to achieve a quality project. The proposed budget for acquisition and program expenses is $840,500, with a same year sale for $1,150,000 estimated. • Kincaid Pit: This new project would allow for the co-development of Kincaid Pit with the City of Irwindale. The proposed budget of $78,000 would fund legal fees and professional services; it is anticipated that the expenses would be reimbursed by the selected developer. FISCAL IMPACT: The appropriations recommended in the Redevelopment Agency's fiscal year 2006 Capital Improvement Program Budget total $4,634,740 from various funding sources - $438,770 from the Merged Project capital project funds, and $4,195,970 from the 2005 Tax Allocation Bond funds. Attached is a Summary of Changes to Fund Balances (Exhibit C) which includes the approved operating and proposed CIP budgets. This worksheet is cash-based, and indicates an unreserved ending balance at June 30, 2006, of $1,182,720 in the capital project funds, assuming that the short- term loan borrowed from Light and Water to purchase 100 W. Foothill Blvd. will be repaid with excess debt service funds. Should the 10`h Street project and sale of 237 S. Azusa not occur, year end unreserved available balances in the capital project funds would be reduced from $1.18M to $610,720. These unreserved funds are available for project overruns and new projects. There's an additional balance of $2.345M in Redevelopment Bond project funds, which are somewhat restricted, and there is also a $1.0M emergency reserve in the capital project funds. The emergency reserve is set aside for cash flow continuity, State-mandated payments (ERAF increases), unrealized revenues, etc. Prepared by Roseanna J. Jara. Attachments: Resolution Approving the Redevelopment Agency's Capital Improvement Program (CIP)Budget for fiscal years 2006-2010 Exhibit A: Project Summary Sheets Exhibit B: Recommended FY 2005/06 CIP Appropriations Exhibit C: Summary of Changes to Fund Balances: Fiscal Year 2005-06 RESOLUTION NO. A RESOLUTION OF THE MEMBERS OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA ADOPTING THE FY 2006-2010 CAPITAL IMPROVEMENT PROGRAM BUDGET AND APPROVING APPROPRIATIONS FOR THE REDEVELOPMENT AGENCY FOR THE FISCAL YEAR COMMENCING JULY 1, 2005 AND ENDING JUNE 30, 2006 THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA DOES RESOLVE AS FOLLOWS: SECTION 1. The FY 2006-2010 Capital Improvement Program (CIP) budget for the Redevelopment Agency of the City of Azusa with appropriations for the fiscal year commencing July 1, 2005 and ending June 30, 2006, as prepared and submitted by the Executive Director and as modified by the Redevelopment Agency, is hereby approved and adopted as the CIP budget of the Redevelopment Agency of the City of Azusa for said fiscal year in the amount of$4,634,740. A copy of said CIP budget is hereby ordered filed in the office of the Secretary and shall be certified by the Secretary as having been adopted by this resolution. SECTION 2. From the effective date of said CIP budget, the several amounts stated therein as proposed expenditures shall be and become appropriated to the respective objects and purposes therein set forth for the Agency subject to expenditure pursuant to the provisions of all applicable ordinances of the Agency and statutes of the State. Further, it is established that the Agency will not exceed its budget. SECTION 3. All appropriations in the 2004-2005 CIP budget of the Agency will be continued and carried forward ("rolled over") into the budget for 2005-2006, except for those appropriations expended, encumbered, or adjusted, or for projects terminated. SECTION 4. Pursuant to Government Code 37208,warrants drawn in payment certified or approved by the Secretary as conforming to a budget approved by ordinance or resolution of the Agency need not be audited by the Agency prior to payment. Budgeted demands paid by warrant prior to audit by the Agency shall be presented to the Agency for ratification and approval at the first meeting after delivery of the warrants. SECTION 5. The Secretary shall certify to the adoption of this resolution. ADOPTED AND APPROVED this day of August, 2005. CHAIRMAN I HEREBY CERTIFY that the foregoing Resolution No. was duly adopted by the Board of Directors of the Redevelopment Agency of the City of Azusa at a meeting thereof held on the day of August, 2005, by the following vote of the Agency: AYES: AGENCY MEMBERS: NOES: AGENCY MEMBERS: ABSTAIN: AGENCY MEMBERS: ABSENT: AGENCY MEMBERS: SECRETARY U:\W PRGC\CORRESPOW GENOA\REDEVCIPBUOGETRESO.DOG EXHIBIT A FY 2006-2010 Capital Improvement Program Redevelopment Project 613/615 North Azusa-Dr. Reyes Dental Office Total Appropriated FY 2007 Estimated Through Adopted Recommended To 2010 Priority • Description Cost FY 2004 FY 2005 FY 2006 Estimated Cost 1 613/615 North Azusa-Dr. Reyes Dental Office (505405) Merged (CBD) Capital Projects Fund 89,790 0 0 (Memo Only) Merged (CBD) Capital Projects Fund 438,420 125,420 313,000 TOTAL 528,210 125,420 313,000 DESCRIPTION: This project provides assistance for the private development of dental offices with 2°a floor loft apartments at 613/615 North Azusa Avenue. A not-to-exceed $300,000 market rate loan approved by Council is budgeted in FY 2006, when the expenditures will occur. JUSTIFICATION: This project revitalizes the Downtown area by replacing an obsolete building; allows a long-time Azusa-owned dental business to relocate, modernize, and expand; and attracts customer traffic to the area. SCHEDULING: A negotiated development and disposition agreement, sale of the Agency-owned property to Dr. Reyes, construction plans, and construction initiation were completed by FY 2005 end. The project will be completed in FY 2006. RELATIONSHIP TO GENERAL PLAN: This project supports economic development of the Downtown area by providing dental services in one of the key commerce corridors identified by the General Plan. It also provides quality housing for renters as identified in the Plan. SPECIAL CONSIDERATION: This project was previously funded in the Redevelopment operating budget (see Memo Only amount listed above). Funding for this project is now included in the CIP, beginning FY 2005. Unused appropriated funds from prior year will be rolled over. OPERATING BUDGET IMPACT: None. FY 2006-2010 Capital Improvement Program Redevelopment Project Talley Building Improvements/619-621 N. Azusa Avenue Total Appropriated FY 2007 Estimated Through Adopted Recommended To 2010 Priority Description Cost FY 2004 FY 2005 FY 2006 • Estimated Cost 2 Talley Building Improvement (650201) Merged (CBD) Capital Projects Fund 453,910 0 0 (Memo Only) Merged (CBD) Capital Projects Fund 591,160 441,160 150,000 Light &Water Fund i 150,000 150,000 0 TOTAL 1 1,195,070 591,160 150,000 DESCRIPTION: The historic Talley Building property, located at 619/621 North Azusa Avenue and acquired in 1989, will be historically preserved/rehabilitated by a private developer, and reconfigured to accommodate loft apartments, a restaurant, and a small retail space. JUSTIFICATION: This project revitalizes the Downtown area by upgrading a long-time vacant historic building with loft apartments and restaurant space. This will attract customer traffic to the area and provide additional housing. SCHEDULING: A negotiated development and disposition agreement and construction drawings were completed in FY 2005. Sale of the property and construction of the project will occur in FY 2006, with completion estimated at about January 2006. RELATIONSHIP TO GENERAL PLAN: This project supports economic development of the Downtown by providing retail and restaurant space in a key commerce corridor identified in the General Plan, and provides quality housing for renters. SPECIAL CONSIDERATION: This project was previously funded in the Redevelopment operating budget (see Memo Only amount listed above). Funding for this project is now in the CIP, beginning FY 2005. Unused appropriated funds from prior year will be rolled over. This project is a historic preservation project and requires a large financial assistance of$450,000, a land write-down, and $150,000 tenant assistance (budgeted in FY 2006) in order to proceed. OPERATING BUDGET IMPACT: None. FY 2006-2010 Capital Improvement Program Redevelopment Project Breezeway/617 N. Azusa Avenue FY 2007 Total Appropriated To 2010 • Estimated Through 'Adopted Recommended Estimated Priority Description Cost FY 2004 FY 2005 FY 2006 Cost 3 Breezeway(508800) Merged(CBD) Capital Project Funds (Memo Only) 92,000 0 0 0 _._ _._..__...._.Merged(CBD) Capital Project Funds _._.._._..............._......_103,000 0 248,440 (145,440) Light & Water Loan 40,000 40,000 0 Section 108 Loan Funds (D97049) 469,490 73,560 11,750 384,180 CDBG Funds (D60654) 96,000 0 96,000 0 TOTAL 800,490 73,560 396,190 238,740 DESCRIPTION: The Agency will acquire 617 N. Azusa Avenue from Azusa Light and Water, and construct a pedestrian breezeway, in conjunction with the Dr. Reyes dental office and Talley Building developments, allowing access from the Heritage Court Parking Lot to Azusa Avenue. JUSTIFICATION: This project will beautify and revitalize the Downtown area by allowing customers to park in the Parking Lot and easily walk to local shops on Azusa Avenue. There is currently no access from the parking area to Azusa Avenue. SCHEDULING: Architectural design, property demolition, construction drawings, and plan check were completed in FY 2005. Construction will begin in FY 2006 and be completed in Spring 2006. RELATIONSHIP TO GENERAL PLAN: The Breezeway will promote commerce in the Downtown area by increasing access to businesses located on Azusa Avenue. It will also increase mobility by encouraging parking once and walking to the various services and shops in the area. SPECIAL CONSIDERATION: This project was previously funded in the Redevelopment operating budget (see Memo Only amount listed above). Funding for this project is now in the CIP,beginning FY 2005. Unused appropriated funds from prior year will be rolled over. Funding sources have been adjusted to reflect additional Section 108 Loan fund proceeds to be used on this project, instead of redevelopment funds. OPERATING BUDGET IMPACT: Increase of future maintenance expense for the Downtown area. FY 2006-2010 Capital Improvement Program • Redevelopment Project La Tolteca FY 2007 •Total Appropriated To 2010 Estimated Through Adopted Recommended Estimated Priority Description Cost FY 2004 FY 2005 FY 2006 Cost 4 La Tolteca(502700) Merged (CBD) Capital Projects Fund (Memo Only) 19,600 0 0 Merged (CBD) Capital Projects Fund 31,200 29,700 1,500 TOTAL 50,800 29,700 1,500 DESCRIPTION: Provide façade rehabilitation assistance to La Tolteca Restaurant for their expansion and relocation to the corner of 5th Street and Azusa Avenue. An additional appropriation of$1,500 in FY 2006 will fund legal fees necessary to prepare the facade improvement agreements. JUSTIFICATION: This project revitalizes the Downtown area by beautifying a long-vacant key parcel; allows expansion of a long- time Azusa-owned business whose owners have strong ties to the community; and attracts customer traffic to the area. SCHEDULING: A development and disposition agreement, approval of an electric utility loan, the sale and landscaping of 428 N. San Gabriel Avenue, and initiation of construction were completed through FY 2005. In FY 2006, construction will be completed and will include redevelopment-funded facade improvements. RELATIONSHIP TO GENERAL PLAN: This project supports economic development of the Downtown area, and, in particular, provides a restaurant in one of the key commerce corridors identified by the General Plan. SPECIAL CONSIDERATION: This project was previously funded in the Redevelopment operating budget (see Memo Only amount listed above). Funding is now included in the CIP, beginning FY 2005. Unused appropriated funds from prior year will be rolled over. OPERATING BUDGET IMPACT: None. FY 2006-2010 Capital Improvement Program Redevelopment Project 100 W. Foothill Boulevard Mixed Use Project Total Appropriated FY 2007 Estimated Through Adopted Recommended To 2010 Priority Description Cost FY 2004 FY 2005 FY 2006 Estimated Cost 5 100 W. Foothill Mixed Use (505725) Merged(CBD) Capital Projects Fund 13,000 j 13,000 Light &Water Loan (Memo Only) { 1,579,720 0 1 i TOTAL 1,592,720 13,000 DESCRIPTION: This project, approved in FY 2005, provides a $1.0M land write-down to assist private development of a former furniture store located at 100 W. Foothill Boulevard. The project will be mixed-use, with possible tenants including a Starbuck's and a UPS mailing center. JUSTIFICATION: This project will revitalize and beautify the Downtown area with the remodel of an under-utilized building located at the key corner of Foothill Boulevard and Azusa Avenue. SCHEDULING: It is anticipated that construction on this project will begin in Fall 2005. RELATIONSHIP TO GENERAL PLAN: This project supports economic development of the Downtown by providing retail and restaurant space in a key commerce corridor identified in the General Plan. SPECIAL CONSIDERATION: None. OPERATING BUDGET IMPACT: A $1,579,720 short-term loan received from Light and Water will be repaid from capital project reserves and land sales proceeds in FY 2006. FY 2006-2010 Capital Improvement Program • Redevelopment Project Azusa Commons (Foothill Shopping Center) Improvements Total Appropriated FY 2007 • i Estimated ' Through Adopted Recommended To 2010 Priority Description Cost FY 2004 FY 2005 _ FY 2006 Estimated Cost 6 Azusa Commons (Foothill Shopping Center) Improvements (508000) Merged (CBD) Capital Projects Fund 97,680 0 0 (Memo Only) Merged(CBD) Capital Projects Fund 75,000 250,000 (175,000) Redevelopment Bond Funds 2,185,000 0 2,185,000 TOTAL 2,357,6801 250,000 2,010,000 DESCRIPTION: A private developer will rehabilitate and expand Azusa Commons (formerly Foothill Shopping Center). Improvements will include retail use expansion, rehabilitation of the existing buildings, tenant improvements, and addition of single family housing. Financial assistance to the developer will be necessary for a quality project. JUSTIFICATION: This project will modernize and beautify the shopping center at Citrus and Alosta, which is currently blighted and underutilized. The upgraded center will provide various services, shops, entertainment, and eating establishments that will promote Azusa's economy with increased sales and property tax. Additionally, this project will add to Azusa's housing stock. SCHEDULING: In FY 2005, community meetings were held and the environment impact report (EIR) was started. A negotiated owner participation agreement with the developer will begin in FY 2006, and the EIR will be completed. Construction is anticipated to begin in late FY 2006 or early FY 2007. RELATIONSHIP TO GENERAL PLAN: This key project will be the primary catalyst to economic development of the "University District" and will provide shopping, dining and entertainment opportunities to future residents of the Monrovia Nursery development and college students. SPECIAL CONSIDERATION: This project was previously funded in the Redevelopment operating budget (see Memo Only amount listed above). Funding for this project is now in the CIP, beginning FY 2005. Funding has been adjusted in FY 2006 to reflect available bond funds as the primary funding source, and to more accurately reflect the anticipated project cost. Unused appropriated funds from prior year will be rolled over. OPERATING BUDGET IMPACT: This project is an important revenue generator for both the City and Agency. Once completed, property tax increment to the Agency will increase, allowing for future bonding capacity, and sales tax revenues to the City will increase, depending on the types of retail instituted. FY 2006-2010 Capital Improvement Program Redevelopment Project 726, 728 Dalton and 303 E. Foothill Property Acquisition Total Appropriated FY 2007 Estimated Through • Adopted Recommended To 2010 • Priority Description Cost FY 2004 FY 2005 FY 2006 Estimated Cost 7 726, 728 Dalton & 303 E. Foothill Blvd —_— Acquisition(501500) Merged (CBD) Capital Projects Fund 1,957,976 1,029,976 928,000 TOTAL IL 1,957,976 1,029,976 928,000 DESCRIPTION: Acquire three properties on north Dalton Avenue and east Foothill Boulevard, relocate the occupants, and demolish the buildings as required. Properties will be used for a library or other future use. One property, 726 Dalton, was acquired in FY 2005, and 728 Dalton will be acquired shortly. The FY 2006 budget of$928,000 is for project planning costs and acquisition of the third property at 303 E. Foothill, pending Council approval, which was not previously budgeted. JUSTIFICATION: The City has negotiated a contract requiring it to purchase two properties on Dalton Avenue for a future Library site or other use, and may acquire a third property at the corner of Foothill and Dalton. Properties are located near the Downtown Azusa area, and acquisition benefits the Merged Redevelopment Project area. Properties are currently a health and safety hazard. SCHEDULING: Acquisition, relocation and demolition will be completed in FY 2006. RELATIONSHIP TO GENERAL PLAN: This project addresses lifelong learning in Azusa, a key element of which is expanding or building a new library, or library satellites. SPECIAL CONSIDERATION: Although acquired for use as a library site, these properties may be utilized for any other use as deemed necessary. Unused appropriated funds from prior year will be rolled over. OPERATING BUDGET IMPACT: Increased maintenance costs. FY 2006-2010 Capital Improvement Program • Redevelopment Project Block 36 Development(600 Even-Numbered Block of North Azusa) Total Appropriated FY 2007 • Estimated Through Adopted Recommended To 2010 Priority Description Cost FY 2004 FY 2005 FY 2006 Estimated Cost 8 Block 36 Development (505700) Prior Year Redevelopment Bond Funds 1,064,440 0 0 0 (Memo Only) Merged (CBD) Capital Projects Fund 353,680 0 0 0 (Memo Only) Merged(CBD) Capital Projects Fund 459,180 2,023,970 (1,564,790) Section 108 Loan Funds (D97049) I 100,820 485,000 0 (384,180) Redevelopment Bond Funds/Other 3,389,470 0 1,378,500 2,010,970 TOTAL 5,367,590 485,000 3,402,470 62,000 DESCRIPTION: This project provides a land write-down to assist private development of Block 36, an area comprised of the 600 even-numbered block of north Azusa and the 100 even-numbered block of east Foothill. Development will be mixed use commercial and retail with loft apartments. JUSTIFICATION: This project will be the focal point of the Downtown area and will provide service, shops, and eating establishments that will promote Azusa's economy with increased sales and property tax; and will replace obsolete, unsafe and blighted buildings. SCHEDULING: Property acquisitions began in 1994. Appraisals, relocation/goodwill estimates, environmental review and property line surveys will continue through FY 2006 as necessary. In FY 2006, a Request for Proposal for the site will be sent out in order to select a developer and ascertain project requirements. RELATIONSHIP TO GENERAL PLAN: This key project will be the primary catalyst to economic development of the Downtown area, one of the key commerce corridors identified by the General Plan. One-stop parking and shopping close to the proposed Gold Line Transit Station and within walking distance of nearby residential neighborhoods is a key element of the General Plan. It also provides quality housing for renters as identified in the Plan. SPECIAL CONSIDERATION: This project was previously funded in the Redevelopment operating budget (see Memo Only amount listed above). Funding for this project is now in the CIP, beginning FY 2005. Unused appropriated funds from prior year will be rolled over. Funding has been adjusted to reflect the 2005 Tax Allocation Bonds as the primary source of funds, and to delete the remaining Section 108 Loan funds from the project. The Section 108 Loan funds have been transferred to the Pedestrian Breezeway project in order to expedite their expenditure draw down rate. OPERATING BUDGET IMPACT: None. FY 2006-2010 Capital Improvement Program Redevelopment Project 10th Street Property Development Total Appropriated FY 2007 Estimated Through Adopted Recommended To 2010 Priority Description _ Cost FY 2004 FY 2005 FY 2006 Estimated Cost 9 10 Street Property Develop. (RD0003) Merged (WED) Capital Projects Fund 840,500 840,500 TOTAL i 840,500 840,500 DESCRIPTION: The Agency will purchase 850 North Tenth Street from Azusa Light and Water, and sell the property to a qualified developer. It is anticipated that property sales proceeds will offset project expenses. JUSTIFICATION: The transportation program, currently run from 850 North Tenth Street, has diminished in scope and no longer requires a 1.9 acre site. Building improvements occupy just 6% of the overall site, which could be better utilized for light industrial or business park uses. SCHEDULING: An appraisal was completed in FY 2005. Property acquisition and sale will likely occur concurrently in FY 2006. RELATIONSHIP TO GENERAL PLAN: This project will enhance the West End Industrial Technology District by providing additional employment opportunities, increased property tax revenues, and investment in the community. SPECIAL CONSIDERATION: None. OPERATING BUDGET IMPACT: None. FY 2006-2010 Capital Improvement Program Redevelopment Project Kincaid Pit Development • Total Appropriated FY 2007 Estimated Through Adopted Recommended To 2010 Priority Description Cost FY 2004 FY 2005 FY 2006 Estimated Cost 10 Kincaid Pit Development (RD0002) Merged(WED) Capital Projects Fund 78,000 78,000 TOTAL 78,000 78,000 DESCRIPTION: Co-develop the 15-acre Kincaid Pit site in partnership with the City of Irwindale to accommodate commercial/retail uses. FY 2006 recommended budget would fund preliminary planning and legal costs. This former quarry site is owned entirely by the Irwindale Community Redevelopment Agency. JUSTIFICATION: The Kincaid Pit is one of the last remaining areas in Azusa which can be developed with major sales tax producing retailers. SCHEDULING: An RFP process was initiated by City of Irwindale in FY 2005, with submission due in August 2005. It is anticipated that an Exclusive Right to Negotiate Agreement will be approved by both cities by February 2006. RELATIONSHIP TO GENERAL PLAN: This project promotes commerce, and markets one of the City's advantages-freeway proximity. This project is designed to attract first rate stores, high sales tax producers, and regional shoppers. SPECIAL CONSIDERATION: This is a joint cities project and will require approvals from both Cities/Agencies of Azusa and Irwindale. OPERATING BUDGET IMPACT: There will be future impacts created by heavier traffic volume and the increase in regional shoppers,which should be offset by increases in sales and property tax associated with the project. FY 2006-2010 Capital Improvement Program Redevelopment Project Heritage Court Parking Lot Expansion FY 2007 Total Appropriated To 2010 • Estimated Through Adopted Recommended Estimated • Priority Description Cost FY 2004 FY 2005 FY 2006 Cost 11 Heritage Court Parking Lot Expansion (505400) Prior Year Redevelopment Bond Funds (Memo Only) 128,640 0 0 . Merged (CBD) Capital Projects Fund (Memo Only) 141,900 0 0 Merged (CBD) Capital Projects Fund 47,500 47,500 0 Redevelopment Bond Funds/Other 2,500,000 0 2,500,000 TOTAL 2,818,040 47,500 2,500,000 DESCRIPTION: In FY 2005, a parking study was performed to identify Downtown parking needs and requirements necessary for the future Gold Line and various mixed-use developments. Implementation anticipates future construction of a Parking Structure. JUSTIFICATION: This project revitalizes the Downtown area by providing well-lit and secure parking to serve the Downtown area businesses, attracting customer traffic to the area and required for a future Gold Line stop. SCHEDULING: It is anticipated that a Parking Structure will need to be constructed to facilitate the Gold Line and Downtown development. Construction may occur in FY 2009 or later, depending upon availability of funding. RELATIONSHIP TO GENERAL PLAN: This project supports economic development of the Downtown area by providing parking access in one of the key commerce corridors identified by the General Plan. It also improves mobility as identified in the Plan,by creating a one-stop parking area accessible to the future Gold Line and nearby stores and services. SPECIAL CONSIDERATION: This project was previously funded in the Redevelopment operating budget (see Memo Only amounts above). Funding for this project is now in the CIP, beginning FY 2005. Unused appropriated funds from prior year will be rolled over. Parking structure construction may occur, pending issuance of bonds, parking district assessment fees, or other funding. OPERATING BUDGET IMPACT: Maintenance costs would be increased. EXHIBIT B Recommended FY 2007 to 2010 Category Description FY 2006 Estimated Cost 1 613/615 No. Azusa -Dr. Reyes Dental Office(505405) 313,000 2 Talley Building Improvements (650201) 150,000 3 Breezeway (508800) 238,740 4 La Tolteca (502700) 1,500 5 100 W. Foothill Mixed Use/Hennessey 13,000 6 Foothill Center Improvements (508000) 2,010,000 7 726/728 Dalton Acquisition (501500) 928,000 8 Block 36 Development (505700) 62,000 9 10th Street Property Acquisition/Development 840,500 10 Kincaid Pit Development 78,000 11 Heritage Court Parking Lot Expansion (505400) 2,500,000 TOTAL 4,634,740 2,500,000 s EXHIBIT C CITY OF AZUSA REDEVELOPMENT AGENCY SUMMARY OF CHANGES TO FUND BALANCES: FISCAL YEAR 2005-06 (Includes Proposed Capital Improvement Projects for FY 2005-06) ESTIMATED ESTIMATED ESTIMATED ESTIMATED ESTIMATED EXCESS ESTIMATED FUND/DIVISION BEGINNING ESTIMATED TRANSFERS TOTAL REQUESTED TRANSFERS TOTAL RESOURCES ENDING TITLE BALANCE REVENUE IN RESOURCES APPROPRIATIONS OUT USES (USES) BALANCE ADMINISTRATION FUND • • • Administrative Fund(80/110) Unreserved $0 $29,940 $910,150 $940,090 $940,090 $0 $940,090 $0 $0 SPECIAL REVENUE FUNDS Low-to-Moderate Income Hsg.Fund(81/145) Unreserved 0 0 0 0 0 0 0 0 0 Total Low-to-Mod.Income Hsg.Fund: 0 0 0 0 0 0 0 0 0 20%Set-Aside Low-to-Moderate Income Housing Fund(81/155) Unreserved-Designated 1,698,950 28,000 1,230,500 1,258,500 180,210 574,010 754,220 504,280 2,203,230 Total 20%Set-Aside Hsg.Fund: 1,698,950 28,000 1,230,500 1,258,500 180,210 574,010 754,220 504,280 2,203,230 TOTAL SPECIAL REVENUE FUNDS: 1,698,950 28,000 1,230,500 1,258,500 180,210 574,010 754,220 504,280 2,203,230 DEBT SERVICE FUNDS Central Bus.Dist.Debt Service Fund(82/125) Unreserved 0 2,223,780 1,250,230 3,474,010 1,840,830 1,633,180 3,474,010 0 0 Total Central Bus.Dist.Debt Service Fund: 0 2,223,780 1,250,230 3,474,010 1,840,830 1,633,180 3,474,010 0 0 West End Dist. Debt Service Fund(82/135) Unreserved 1,394,410 6,633,590 0 6,633,590 4,226,600 3,472,730 7,699,330 (1,065,740) 328,670 Total West End Dist.Debt Service Fund: 1,394,410 6,633,590 0 6,633,590 4,226,600 3,472,730 7,699,330 (1,065,740) 328,670 Ranch Center Debt Service Fund(82/185) Unreserved 1,000 347,550 0 347,550 332,050 16,500 348,550 (1,000) 0 Total Ranch Center Debt Service Fund: 1,000 347,550 0 347,550 332,050 16,500 348,550 (1,000) 0 1997 Merged Project T.A.Bonds(82/165/614)) Reserved 467,640 0 0 0 0 0 0 0 467,640 Unreserved 24,760 27,100 437,890 464,990 453,780 0 453,780 11,210 35,970 Total 1997 Merged Project T.A.Bonds: 492,400 27,100 437,890 464,990 453,780 0 453,780 11,210 503,610 2003 Merged Project T.A.Bonds(82/165/616) CITY OF AZUSA REDEVELOPMENT AGENCY SUMMARY OF CHANGES TO FUND BALANCES: FISCAL YEAR 2005-06 (Includes Proposed Capital Improvement Projects for FY 2005-06) ESTIMATED ESTIMATED ESTIMATED ESTIMATED ESTIMATED EXCESS ESTIMATED FUND/DIVISION BEGINNING ESTIMATED TRANSFERS TOTAL REQUESTED TRANSFERS TOTAL RESOURCES ENDING TITLE BALANCE REVENUE IN RESOURCES APPROPRIATIONS OUT USES (USES) BALANCE • Reserved 1,085,193 • 0 0 0 0 • 0 0 0 1,085,193 Unreserved 47,467 52,000 797,460 849,460 829,460 0 829,460 20,000 67,467 Total 2003 Merged Project T.A.Bonds: 1,132,660 52,000 797,460 849,460 829,460 0 829,460 20,000 1,152,660 2005 Merged Project T.A.Bonds(82/165/618) Reserved 869,710 0 0 0 0 0 0 0 869,710 Unreserved 42,710 41,440 306,380 347,820 327,100 0 327,100 20,720 63,430 Total 2005 Merged Project T.A.Bonds: 912,420 41,440 306,380 347,820 327,100 0 327,100 20,720 933,140 TOTAL DEBT SERVICE FUNDS: 3,932,890 9,325,460 2,791,960 12,117,420 8,009,820 5,122,410 13,132,230 (1,014,810) 2,918,080 CAPITAL PROJECT FUNDS Central Bus.Dist.Cap.Proj.Fund(80/125) Unreserved 1,878,140 1,187,600 3,488,660 4,676,260 5,158,770 _ 315,910 5,474,680 (798,420) 1,079,720 Total Central Bus.Dist.Cap.Proj.Fund: 1,878,140 1,187,600 3,488,660 4,676,260 5,158,770 315,910 5,474,680 (798,420) 1,079,720 West End Dist.Cap.Proj.Fund(80/135) Reserved(3) 1,000,000 0 0 0 0 0 0 0 1,000,000 Unreserved 83,620 1,248,000 0 1,248,000 946,500 282,120 1,228,620 19,380 103,000 Total West End Dist.Cap.Proj.Fund: 1,083,620 1,248,000 0 1,248,000 946,500 282,120 1,228,620 19,380 1,103,000 Ranch Center Capital Proj.Fund(80/185) Unreserved 67,190 1,000 0 1,000 0 0 0 1,000 68,190 Total Ranch Center Capital Proj.Fund: 67,190 1,000 0 1,000 0 0 0 1,000 68,190 2005 Merged Project T.A.Bonds(80/165/618) Unreserved-Designated 4,171,710 300,000 0 300,000 0 2,126,820 2,126,820 (1,826,820) 2,344,890 Total 2005 Merged Project T.A.Bonds: 4,171,710 300,000 0 300,000 0 2,126,820 2,126,820 (1,826,820) 2,344,890 TOTAL CAPITAL PROJECT FUNDS: 7,200,660 2,736,600 3,488,660 6,225,260 6,105,270 2,724,850 8,830,120 (2,604,860) 4,595,800 GRAND TOTAL FUND BALANCE: $12,832,500 $12,120,000 $8,421,270 $20,541,270 $15,235,390 $8,421,270 $23,656,660 ($3,115,390) $9,717,110 TOTAL BY DESIGNATION: Reserved Fund Balance: 3,422,543 0 0 0 0 0 0 0 3,422,543 CITY OF AZUSA REDEVELOPMENT AGENCY SUMMARY OF CHANGES TO FUND BALANCES: FISCAL YEAR 2005-06 • (Includes Proposed Capital Improvement Projects for FY 2005-06) ESTIMATED ESTIMATED ESTIMATED ESTIMATED ESTIMATED EXCESS ESTIMATED FUND/DIVISION BEGINNING ESTIMATED TRANSFERS TOTAL REQUESTED TRANSFERS TOTAL RESOURCES ENDING TITLE BALANCE REVENUE IN RESOURCES APPROPRIATIONS OUT USES (USES) BALANCE Unreserved-Designated Fund Bal: 5,870,660 328,000 1,230,500 15558,500 180,210 2,700,830 2,881,040 (1,322,540) 4,548,120 Unreserved Fund Balance: 3,539,297 11,792,000 7,190,770 18,982,770 15,055,180 5,720,440 20,775,620 (1,792,850) 1,746,447 GRAND TOTAL FUND BALANCE: $12,832,500 $12,120,000 $8,421,270 $20,541,270 $15,235,390 $8,421,270 $23,656,660 ($3,115,390) $9,717,110 • • EP 3 r 0F oit ;',1! 1 * � • * "a /Ery 7.USA <o 1 • REDEVELOPMENT AGENCY AGENDA ITEM TO: THE HONORABLE CHAIRPERSON AND AGENCY MEMBERS FROM: SHARON W. HIGHTOWER, ECONOMIC AND COMMUNITY DEVELOPMENT RE OR VIA: F. M. DELACH, EXECUTIVE DIRECTOR/PC • DATE: AUGUST 1, 2005 SUBJECT: CITY OF AZUSA REDEVELOPMENT AGENCY CAPITAL IMPROVEMENT PROGRAM (CIP) BUDGET FOR FY 2005/06 THROUGH 2010/11 RECOMMENDATION It is recommended that Agency Members adopt the Resolution approving the Redevelopment Agency's 2006-2010 Capital Improvement Program (CIP) Budget and appropriations for fiscal year 2005-06. This will increase appropriations for projects in the amount of $4,634,740 for fiscal year 2005-06 as identified in Exhibit B. BACKGROUND Effective with the 2004-05 CIP budget, the Redevelopment Agency projects are now included in the CIP. Because Agency projects are long-term and ongoing, it is necessary to expedite approval of the CIP in order to maintain project continuity. The Agency's CIP budget identifies funding for major capital improvement projects throughout the Redevelopment Merged Project Areas. Annually, staff reviews the current projects and determines if any projects should be deleted due to completion; modified due to a change in scope; or amended to include additional funding. Staff also identifies new projects that need to be added to the list of capital projects. This year modifications have been made to nine previously adopted projects and two new projects, Kincaid Pit and 10"' Street Property Acquisition, have been added. Individual project summary sheets are attached as Exhibit A, and a summary spreadsheet of recommended FY 2006 appropriations are attached as Exhibit B. Highlights of the Agency's proposed CIP budget are as follows: • 613/615 N. Azusa/Dr. Reyes: A not-to-exceed $300,000 loan approved by the Board at the end of FY 2004/05, and $13,000 for additional legal and professional services have been budgeted. • Talley Building Improvements: An additional $150,000 for possible restaurant tenant improvements has been proposed.