AGENDA
ITEM
12 IB8B CITY COUNCIL
CALENICO
AGENDA STAFF REPORT
DATE: February 16, 2022
TO: Mayor and City Council
APPROVED BY: Miguel Figueroa, City Manager
PREPARED BY: City Attorney, Best, Best and Krieger
SUBJECT: Approve and Authorize City Manager to Enter Into a Private Investment, Revitalization, Job Creation and Tax Sharing Agreement with R.H.
Properties, LLC
Recommendation
Approve and authorize City Manager to enter into a Private Investment, Revitalization, Job Creation and Tax Sharing Agreement ("Agreement") with R.H. PROPERTIES, LLC, a California limited liability company ("Company"). This relates to the reuse of the existing former Mervyn's/Forever 21 building and that certain developable vacant land generally located on a portion of the Crossroads Plaza Shopping Center, more particularly identified as APN 058-120-042-000-01 subject to changes as may be approved by the City Manager and City Attorney and execute any other document reasonably necessary as determined by the City Manager and City Attorney to be necessary or desirable in connection therewith Background/ Discussion:
Company to construct a minimum of one (1) new retail store on site. Uses should be congruent with the approved covenants, conditions, and restrictions for Crossroads Plaza Shopping Center. Existing store is 78,781 square feet; floor area for replacement uses could range from 2,500 square feet to 50,000 square feet to 78,781 square feet and up to 110,000 square feet.
Company's project budget outline is approximately 75% acquisition and development loan for $15,959,319 that would require equity investment of around $2,319,773. There is a gap of at least $3 million. Expected total project cost is around $21,279,092.
AGENDA
Some key provisions of the Agreement: ITEM
Company Commitments: Initial investment of $9.5 million for land, 12 infrastructure, buildings, landscape, soft costs, etc.
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Employee Count: Retail approximately 45 full time equivalent jobs once project is fully occupied and operating
Ongoing Operating Covenant: 10-year duration; quarterly certification of employee count; construct all improvements; No City Code Violations; operate at least one sales tax producing retail store
Community Benefits: New full time or full-time equivalent jobs created; New tax generation business sources created; at least one retail store constructed and in operation City Responsibilities: Planning and Building Services Director will provide initial site plan review within 30 business days of complete submission; allow project to proceed with "At Risk" concurrent plan check after Planning and Business Services Director reviews with standard City agreement letter.
Required Approvals: CEQA clearance; All entitlements for a remodeled and/or expanded building; City Council approval of assistance agreement.
Economic Incentive Terms: In consideration for Company's use of site, commitments and community benefits outlined above, City is to make economic incentive disbursements to Company on a portion of the sales and use tax revenue generated on the primary tax generator at this site.
Incentive: The incentive in the amount of 100% of the actual Bradley-Burns sales and use tax revenue it receives solely on sales from the Site up to $3,000,000, then 50% after that up to the expiration of the 10-year term of this Agreement. There will be no split of sales or use tax from any other improvement on the site.
Incentive Term: 10 years (120 months) from Certificate of Occupancy of the improvements and first tenant's opening for business to the general public.
Environmental Review: Not applicable for agreement, however, environmental review will be conducted once an official development application is submitted to the City of Calexico.
Fiscal Impact: Agreement stipulates incentive term.
Coordinated With:
City Attorney's Office.
Planning and Building Services Department.
Finance Department.
Attachments:
1. Private Investment, Revitalization, Job Creation and Tax Sharing Agreement
2. AB 562 Report
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PRIVATE INVESTMENT, REVITALIZATION, JOB CREATION
AND TAX SHARING AGREEMENT
This PRIVATE INVESTMENT, REVITALIZATION, JOB CREATION AND TAX SHARING AGREEMENT (the "Agreement") is entered into this 2022, by and between the CITY OF CALEXICO, a California city and municipal corporation ("City"), and R.H. PROPERTIES I, LLC, a California limited liability company ("RHPI") (individually a "Party" and collectively the "Parties").
RECITALS
A. RHPI intends to acquire the fee of an existing building and that certain developable vacant land generally located on a portion of the Crossroads Plaza Shopping Center, more particularly identified as APN 058-120-042-000-01 on the map attached hereto as Exhibit "A" and incorporated herein by reference (the "Site"). Based on communications received by the City, RHPI has initiated and will process documentation for the development of the Site to obtain the necessary governmental permits and approvals from all governmental agencies with jurisdiction, including the City.
B. RHPI, as owner or representative of the acquiring owner, has requested economic development assistance from the City. This funding would be used to make certain improvements to the Site that will assist RHPI in the ability to attract new and maintain existing retail businesses and jobs and will assist RHPI with the commercially-zoned space at the Site, all as more particularly set forth in this Revitalization Agreement.
C. In consideration of RHPI's encumbrance of the Site by the Covenant (as defined herein below) and RHPI's performance (or a permitted assignee's or successor in interest's performance) of its obligations thereunder, the City has agreed to enter into the Covenant for the purpose of making certain periodic payments to RHPI in an amount equal to a portion of the Sales Tax (as defined in the Covenant described below) generated by the Site, subject to and in accordance with the Covenants, Conditions, and Restrictions Affecting Interests in Real Property attached hereto as Exhibit "B" (the "Covenant"). The Covenant shall become effective only if the terms and conditions set forth herein as a condition to its effectiveness are satisfied. The Parties acknowledge and agree that the City's obligations to make periodic payments equal to a portion of Sales Tax under the Covenant are to be calculated by reference only to the Sales Tax generated by the Site and shall not include the Sales Tax from any other use or property located on the Site or elsewhere in the City.
D. By its approval of this Agreement, the City Council of City has found and determined as follows: (i) that, notwithstanding any other provision set forth in this Agreement or the Covenant which may appear to be to the contrary, the City's approval and execution of this Agreement shall not constitute a prejudgment or pre-commitment by the City with respect to any of the discretionary City permits and approvals that may be required for the Improvements at the Site, including without limitation any zoning approvals required, any demolition, grading, building, or use and occupancy permit, and the environmental reviews and approvals in conjunction with the foregoing that may be required to accommodate the proposed uses on and -1-
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occupancy of the Site, and the City reserves its full and unfettered discretion with respect thereto to the same extent it would have such discretion in the absence of this Agreement; (ii) subject to the foregoing, the City recognizes that the City payments provided for in the Covenant are necessary in order to make the improvement of the Site and contemplated improvements to the Site, as more particularly described in this Agreement, financially feasible; (iii) the value to the City of RHPI's performance of its obligations set forth in the Covenant in each fiscal year during • which City payments are to be made (in terms of economic revitalization, generation of additional local tax revenues that will help to fund vital public services, provision of expanded and more accessible retail and shopping opportunities for the residents of the City, and job growth and retention) are expected to be not less than the amount of such payments; and (iv) that the imposition of the covenants and use restrictions upon the Site pursuant to the Covenant in exchange for the payments to be made by the City constitutes a valid public purpose, including but not limited to furtherance of economic development as expressly permitted by state law.
COVENANTS
Based upon the foregoing Recitals, which are incorporated herein by this reference, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged by both Parties, the City and RHPI hereby agree as follows:
1. Defined Terms. Any capitalized terms contained in this Agreement, which are not defined in this Agreement, shall have the meanings ascribed to such terms in the Covenant.
2. Representations. RHPI represents the following: (a) RHPI has entered into negotiations with a prospective tenants) for an agreement for the construction and use of the Site by a new store and is not a store relocated from another city or unincorporated territory, (b) RHPI is not relocating, and shall not relocate, a big box retailer or vehicle dealer to the Site, within the meaning of California Government Code section 53084, (c) RHPI shall identify the Site as the point-of-sale for any and all sales and use tax generated from the Site in compliance with all applicable state laws, including Government Code section 53084.5, and (d) the individual executing this Agreement and Covenant on behalf of RHPI has the authority to enter into this Agreement and create a binding and enforceable obligation of RHPI, and said individual has obtained any and all necessary authorizations and approvals from the company's for RHPI to be bound under the terms and conditions in this Agreement.
3. Execution and Recordation of Covenant. Within ten (10) days after the later to occur of the following events (collectively, the "Covenant Conditions"), the City and RHPI shall fill in the blanks, date, and execute the Covenant in recordable form and RHPI shall record in the Official Records for Imperial County, California ("Recorder's Office"), the Covenant against the Site and provide a copy of the recorded Covenant to the City: (i) the date on which the City and any other applicable government agency issues all use and occupancy permits necessary for RHPI to use and operate the Site for the Improvements, excluding those permits which by their nature cannot be issued without the progress or completion of construction including, without limitation, any demolition permit, grading permit, encroachment permit for work or improvements to occur within public rights-of-way, foundation permit, building permit, and similar ministerial or administrative permits; or (i) the expiration of any periods for challenge -2-
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of, or appeal from, all of the foregoing and the absence of any such challenge, appeal or the successful resolution thereof in favor of the City and RHPI. These Covenant Conditions are for the benefit of both the City and RHPI. The City agrees to cooperate in the recordation of the Covenant against the Site at no cost to City, and the City Manager or his designee is hereby authorized on behalf of City to execute all documents and take all actions necessary or appropriate to implement this Agreement; provided, however, that in no event shall such date of recordation be later than the date the final certificate of occupancy is issued for the Improvements.
4. Termination of Agreement. If the Covenant Conditions are not satisfied on or before January 16, 2023, or such later deadline as may be mutually approved by City and RHPI in writing prior to that date by City and RHPI, this Agreement shall automatically terminate and be of no further force or effect at such time without the requirement of any further notice or action by either Party, and thereafter neither Party shall have any further rights or obligations hereunder. Notwithstanding the foregoing expiration date, provided that RHPI is making substantial progress in attracting tenants) to the Site, as evidenced by a signed letter of intent, the aforementioned date shall automatically be extended for an additional eighteen (18) months.
5. Covenant. Upon recordation in the Recorder's Office of the Covenant, the rights and obligations of the Parties shall be as set forth in the Covenant, and the Covenant shall supersede this Agreement.
Assignment. The rights and benefits of this Agreement and Covenant are personal to RHPI and its Corporate Successors (as defined below), which shall be the only permitted RHPI assignees and successors-in-interest of this Agreement. RHPI shall not assign, hypothecate, encumber, or otherwise transfer, voluntarily, involuntarily or by operation of law, its rights and obligations set forth in this Agreement to any other person or entity other than to a Corporate Successor without the City's prior written consent, which consent the City may grant or withhold in its sole and absolute discretion. The term "Corporate Successor" shall have the same meaning set forth in the Covenant.
7. Cooperation in the Event of Legal Challenge: Validation Action. In the event that any third party files an action seeking to invalidate this Agreement or the Covenant or seeking any equitable remedy that would prevent the full performance hereof or thereof, the City and RHPI agree to cooperate in the defense of such action. RHPI shall pay all of the City's costs and expenses (including attorney's fees), shall indemnify the City as provided in Section 8, and the City shall have the sole right to select its legal counsel; provided, however, that such obligation to indemnify and pay costs and expenses shall terminate if RHPI elects in a written notice delivered to the City to terminate the Covenant rather than to oppose such challenge. Such cooperation shall include, without limitation: (i) an agreement by each Party not to default or allow a compromise of said action without the prior written consent of the other Party; (ii) an agreement by each Party to make available to the other Party all non-privileged information necessary or appropriate to conduct the defense of the action; and (iii) an agreement by each Party to make available to the other Party, without charge, any witnesses within the control of the first Party upon reasonable notice who may be called upon to execute declarations or testify in said action.
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In addition to the foregoing, if RHPI delivers a written request for such action to City (c/o the City Attorney's Office) not later than five (5) days after the date the City Council of City receives a legal challenge and notifies RHPI, City shall file an action in Imperial County Superior Court pursuant to California Code of Civil Procedure Section 860 et seq. to validate this Agreement and the Covenant and each and every one of its and their provisions, including reimbursement of the costs and expenses of the legal challenge. In such event, City and RHPI shall reasonably cooperate in drafting the complaint, briefs, the proposed judgment of validation, and such other pleadings, documents, and filings as may be required or desirable in connection with the validation action. City and its legal counsel shall file and prosecute the validation action, but shall reasonably coordinate and cooperate with RHPI concerning the drafting of pleadings and other documents and with regard to the litigation strategy to be employed. RHPI shall deposit with City within fifteen (15) days after written demand therefor for all costs ("Costs") of the validation action. Costs include without limitation, attorney's fees, filing fees and court reporter fees (if any), costs of publication and to effectuate service of process, reasonable photocopying and other reproduction charges, travel time and mileage expenses, and other costs and expenses reasonably incurred by City. In the event of an appeal of such action, the Parties shall cooperate with respect to the appeal to the same extent as at the Superior Court level of the proceedings.
Upon the entry of a final non-appealable judgment of any court with jurisdiction invalidating or enjoining the performance of any material covenant set forth in this Agreement or the Covenant, this Agreement and the Covenant shall automatically terminate without the need of further notice or action by either Party.
Indemnification of City. RHPI shall defend, indemnify, assume all responsibility for, and hold the City, and the City's representatives, volunteers, officers, employees and agents, harmless from any and all claims, demands, damages, defense costs or liability of any kind (including attorney's fees and costs), that arise from this Agreement (other than those damages caused by the breach of the Agreement by City or by the gross negligence or willful misconduct of the City's representatives, officers, employees and agents) including, but not limited to, RHPI's failure to pay, if required, prevailing wages on the construction and development of the Site; provided, however, that such obligation shall lapse as provided in Section 7 above if RHPI elects not to oppose a challenge to the Covenant. RHPI shall be solely responsible for determining and effectuating compliance with prevailing wage laws, and the City makes no representation as to the applicability or non-applicability of any of such laws to the development and construction of the Site or any part thereof. RHPI hereby expressly acknowledges and agrees that the City has not previously affirmatively represented to RHPI or its contractors), in writing or otherwise, in a call for bids or otherwise, that the development or construction of the Site is not a "public work," as defined in Section 1720 of the Labor Code.
Integration and Amendment. This Agreement and the Covenant attached hereto constitute the entire Agreement by and between the Parties pertaining to the subject matter hereof, and supersede all prior agreements and understandings of the Parties with respect thereto.
This Agreement may not be modified, amended, or otherwise changed except by a writing executed by the Parties.
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10. Notices. Notices to be given by City or RHPI hereunder may be delivered personally or may be delivered by certified mail or by reputable overnight delivery service providing a delivery confirmation receipt, with mailed notices to be addressed to the appropriate addresses) hereinafter set forth or to such other addresses) that a Party may hereafter designate by written notice. If served by overnight delivery service or certified mail, service will be considered completed and binding on the Party served on the date set forth in the confirmation or certification receipt.
If notice to RHPI Ronald Holley
RHPI
c/o 1151 Dove Street, Suite 175
Newport Beach, CA 92660
John Von Helms, Esq.
with a copy to:
505 N. Tustin Avenue, Suite 116
Santa Ana, CA 92705
If notice is to City: City of Calexico
608 Heber Avenue
Calexico, CA 92231
Attention: City Manager
with a copy to: Best Best & Krieger, LLP
74-760 Highway 111, Suite 200
Indian Wells, CA 92210
Attention: Carlos Campos, Esq.
Counterparts. This Agreement may be executed in two or more counterparts, each of which when so executed and delivered shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the date first set forth above.
City"
CITY OF CALEXICO, a California
municipal corporation
By:
Name:
Title:
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ATTEST:
City Clerk
APPROVED AS TO FORM:
By:
Name:
Title: City Attorney
R.H. PROPERTIES I, LLC, a California
limited liability company
By:
Name:
Title:
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EXHIBIT "A"
TO AGREEMENT
DESCRIPTION OF SITE
PAR 12A PER LLA 5.76 AC CITY OF CALEXICO
Hacienda Dr Hacienda Dr
Hacienda Dr
Ollie Ave Imperial Ave
01F002 10S1
Imperial WAve
Ollie Ave
11 Imperial WAve
Imperial WAve
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EXHIBIT "B"
TO AGREEMENT
FORM OF COVENANT
[Attached]
81211.00115134738209.1
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Calexico
608 Heber Avenue
Calexico, CA 92231
Attention: City Manager
Note; This document is subject to RHI's acquisition of the Site. [Space above for recorder.]
(Exempt from Recordation Fee per Gov. Code § 27383)
COVENANTS, CONDITIONS, AND RESTRICTIONS
AFFECTING INTERESTS IN REAL PROPERTY
This COVENANTS, CONDITIONS, AND RESTRICTIONS AFFECTING INTERESTS IN REAL PROPERTY (the "Covenant") is entered into as of this day of _ 20_ by and between the CITY OF CALEXICO, a California city and municipal corporation ("City"), and R.H. Properties I, LLC, a California limited liability company ("RHPI") (individually a "Party" and collectively the "Parties").
RECITALS
A. RHPI is the owner in fee of that certain land generally located on a portion of the Crossroad Plaza Shopping Center (APN 058-120-042-000-01), more particularly identified in Exhibit "A" attached hereto as and incorporated herein by reference (the "Site"). Based on communications received by the City, RHPI owner, developer and operator of the uses of the Site for the "Improvements" (as defined below), provided RHPI (or a permitted assignee or successor in interest) obtains the necessary governmental permits and approvals from all governmental agencies with jurisdiction, including the City.
On or about February 16, 2022, the City and RHPI entered into that certain unrecorded agreement captioned "Private Investment, Revitalization, Job Generation and Tax Sharing Agreement (the "Agreement") authorizing the recordation of this Covenant against the Site upon the timely satisfaction of the "Covenant Conditions" identified therein.
As set forth in the Agreement, RHPI requested economic development assistance from the City. This funding would be used to make certain improvements to the Site that will assist in the ability to attract new and maintain existing retail businesses and that will assist RHPI to improve and use currently vacant commercial space at the Site, all as more particularly set forth in this Covenant and the Agreement.
D. Subject to the terms and conditions hereof and of the Entitlements (defined below), RHPI agrees to develop the Site and operate the Site for the Improvements, as more particularly set forth in this Covenant.
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E. In consideration for RHPI's encumbrance of the Site by this Covenant and RHPT's performance of its obligations hereunder, the City has agreed to make certain payments to RHPI, the amount of which is measured by the Sales Tax generated by operating tenant businesses on the Site. The City and RHPI have agreed that the amounts required to be paid by the City to RHPI hereunder during each year of the Operating Period provided for herein is a fair exchange for the consideration to be furnished by RHPI to City in that year.
F. RHPI represents and warrants that (i) the stores to be constructed and used on the Site is/are a new store(s) and are not a store(s) relocated from another city or unincorporated territory, (ii) RHPI is not relocating, and shall not relocate, a big box retailer or vehicle dealer to the Site, within the meaning of California Government Code section 53084, (iii) RHPI shall identify the Site as the point-of-sale for any and all Sales Tax generated from the Site in compliance with all applicable state laws, including Government Code section 53084.5, and (iv) the individual executing this Covenant on behalf of RHPI has the authority to enter into this Covenant and create a binding and enforceable obligation of RHPI, and said individual has obtained any and all necessary authorizations and approvals from the company's governing board for the RHPI to be bound under the terms and conditions in this Covenant.
COVENANTS
Based upon the foregoing Recitals, which are incorporated herein by this reference and are acknowledged by the Parties as true and correct, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged by both Parties, the City and RHPI hereby agree as follows:
DEFINED TERMS.
The following terms when used in this Covenant shall have the meanings set forth below:
The term "Agreement" shall have the meaning ascribed in Recital B of this Covenant.
The term "Commencement Date" shall have the meaning ascribed in Section 2 of this Covenant.
The term "Corporate Successor" shall mean any single purpose entity (such as limited liability company or corporation authorized to conduct business in the State of California) that assumes the interest of RHPI and agrees to be bound by the terms and provisions of this Covenant..
The term "Covenant Payments" shall mean the amounts to be paid by the City to RHPI with respect to each Calendar Year of the Operating Period. The payments by City to RHPI shall be paid to RHPI on a quarterly basis throughout the Calendar Year subject to the City's receipt from RHPI or its tenants) of the required documentation with such payments processed by the City within ten (10) days of receipt of the sales tax revenue from the State of California.
The term "Default" shall have the meaning ascribed in Section 5.1 of this Covenant.
The term "Effective Date" shall mean the date this Covenant is executed by the latter of the two Parties to sign, which date shall be inserted in the preamble to this Covenant. -10-
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The term "Entitlements" shall mean those discretionary City land use permits and approvals (including all conditions of approval therein) required to authorize construction, use, and operation of the Site, as the same may be amended from time to time.
The term "Calendar Year" shall mean January 1 through December 31.
The term "Force Majeure" is defined in Section 6.6 below.
The term "Holder" shall have the meaning ascribed in Section 5.1(b) of this Covenant.
The term "Improvements" shall mean the use and operation on the Site.
The term "Operating Period" refers to the period between the Commencement Date and the Termination Date.
The term "Permitted Assigns" shall mean a "Corporate Successor" to Owner.
The term "Permitted Closure" shall mean periods of "Force Majeure" (as such term is defined in Section 6.6) and such period or periods aggregating up to not more than one (1) year associated with RHPI's performance in a commercially reasonable manner as to any renovation of the Site.
The term "Quarter" shall mean (i) any of the three (3) month periods during a Calendar Year commencing on April 1, July 1, October 1, and January 1.
The term "Request for Notice" shall have the meaning ascribed in Section 5.1(b) of this Covenant.
The term "Sales Tax" shall mean, for a given Calendar Year, or part thereof, during the Operating Period, that portion of sales and use taxes allocated, paid to, and received by City from the imposition of the Bradley-Burns Uniform Sales and Use Tax Law (commencing with Section 7200 of the California Revenue and Taxation Code) and the Sales and Use Tax Law (commencing with Section 6000 of the California Revenue and Taxation Code), or any successor law or amendments thereto, that arises from taxable sales and lease transactions generated by the Site. Notwithstanding the foregoing, the term "Sales Tax" shall not include (i) the portion of sales or use taxes attributable to the Improvements on the Site that are retained by the CDTFA as an administrative, processing, or handling charge (calculated at the same percentage of gross revenues as is applicable City-wide); (ii) the portion of such revenues which in future years may be allocated and paid to City but which is restricted by law (but not contract) by an entity other than City (and binding upon City) to be used for specific uses (other than the uses provided for in this Covenant including without limitation disaster relief, transportation improvements, or otherwise); or (iii) any Sales Tax that may be generated from other retail sources at the Site other than a sale generated from the Site. In addition, the term "Sales Tax" for a given Calendar Year shall also include any sums allocated, paid to and received by the City in substitution for Sales Taxes or otherwise by reference to taxable sales generated by the Site (and not excluded under classes (i) through (iii) above) including without limitation other funds actually received by the City pursuant to legislation such as, but not limited to, Revenue and Taxation Code section -11-
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97.68, enacted expressly as a substitute for sales tax revenues in order to reimburse the City for sales tax revenues losses resulting from decreases in the 1% rate of sales tax.
The term "Sales Tax Statement" refers to each Calendar Yearly statement to be prepared by RHPI or caused to be prepared at the direction of RHPI by the tenants) and submitted by the tenant(s) to the SBE and City identifying the portion of Sales Tax generated by the Site during the previous Calendar Year as a result of taxable sales transactions, as provided in Section 4.3 of this Covenant.
The term "CDTFA" shall mean the California Department of Tax and Fee Administration ("CDTFA") or successor agency with the responsibility of collecting and administering the distribution and payment to the City of Sales Tax.
The term "Site" shall have the meaning ascribed in Recital A of this Covenant.
The term "Termination Date" shall mean the date that is the earliest of (i) the date that is ten (10) years following the Commencement Date, (i) the date on which this Covenant is terminated pursuant to Sections 5.2 or 5.3, as applicable.
CONDITION TO RHPI'S RIGHT TO RECEIVE PAYMENTS.
Opening Date; Commencement Date. As a condition precedent to RHPI's right to receive the Covenant Payments, RHPI tenant (s) shall open for business to the public (excluding any special "pre-opening" periods) the Improvements, all in compliance with the Entitlements.
The term "the public" includes, in addition to all members of the general public and RHPI's members (if any). The day on which the aforesaid condition is satisfied shall constitute the "Commencement Date," at which time RHPI's obligations pursuant to Section 3 of this Covenant and City's obligations pursuant to Section 4 of this Covenant shall commence.
2.2 Outside Date. Notwithstanding any other provision set forth in this Covenant to the contrary, and subject to extension for events of force majeure as provided in Section 6.6, if the condition set forth in the first sentence of the preceding paragraph is not satisfied on or before the date that is twelve (12) months after the issuance of the first building permit for the project, either RHPI or City may terminate this Covenant by delivery of written notice of termination to the other Party and, in such event, neither Party shall have any further rights against or obligations to the other Party arising out of this Covenant.
2.3 RHPI'S OBLIGATIONS.
Continuous Operation; Site As Point of Sale. If the Improvements are completed pursuant to Sections 2.1 and 2.2 of this Covenant, then, from and after the Commencement Date, RHPI shall use commercially reasonable efforts to cause and allow for the continuous use and operation by the tenants) of, the Site for the Improvements during normal business hours (except for Permitted Closures) during the entire Operating Period. RHPI shall cause and allow for the Site to operate with inventory and sales personnel sufficient to satisfy and respond to customer demand. To the maximum extent permitted by law, and in compliance with -12-
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Government Code section 53084.5, RHPI shall designate or shall cause RHPI to designate the Site on its Sales Tax Statements as the point-of-sale for all sales transactions arising out of or generated from the business conducted on the Site. In addition, Owner shall exercise commercially reasonable diligence in an effort to cause financing companies to designate the Site (and the City of Calexico) on reports they are required to file with the SBE as the situs of the financing of any goods where the transaction is generated from the Site.
3.2 Use Restriction. RHPI shall ensure that the Site shall not be put to any use other than uses commonly associated with a shopping center including but not limited to retail, including some non-retail uses such as fitness centers, theaters, medical centers, and the like, commonly associated with shopping centers the intended and approved use and operation as the Site in furtherance of the Improvements.
3.3 Maintenance and Repair of Site; Landscaping. During the entire Operating Period, RHPI at its sole cost and expense shall maintain, or shall cause the maintenance of, the Site and the improvements thereon and all facilities appurtenant thereto in first class condition (as judged by other developments of similar quality located in Calexico and repair and free from accumulations of debris, weeds, graffiti, and waste materials, with landscaping in a healthy condition, and shall otherwise fully comply with the Site's maintenance standards established in the Entitlements and applicable provisions in the City's Municipal Code. During such period, RHPI shall not act or fail to act in such a way as to result in the risk of any damage to the Site or of any other impairment of City's interest set forth in this Covenant. During the entire Operating Period, RHPI at its sole cost and expense shall maintain, or cause to be maintained, the landscaping on the Site in compliance with the approved landscape plans and applicable provisions in the City's Municipal Code.
Compliance with Laws. During the entire Operating Period, RHPI shall construct, use and operate, or shall cause and allow for the construction, use, and operation of Improvements on the Site in conformity with all applicable federal, state (including without limitation the California Civil Code, the California Government Code, the California Health and Safety Code, the California Labor Code, the California Public Resources Code, and the California Revenue and Taxation Code), and local laws, ordinances, and regulations (including without limitation City standards relating to the placement of storage containers); provided, however, that RHPI does not waive its right to challenge the validity or applicability thereof to validiy or ap, RHPI or the Site; provided further, however, that nothing in the preceding clause (sentence) does or shall be deemed to relieve or release RHPI of its obligations set forth in this Covenant by RHPI delegating any obligation to RHPI or any other third party, by written or oral agreement or otherwise, to which the City is not a party or to which the City has not expressly agreed to such assignment of RHPI's obligation pursuant to the terms and conditions in this Covenant.
3.5 Non-Discrimination. RHPI agrees in its ownership and development of the Site not to violate applicable laws that prohibit discrimination against any person or class of persons by reason of gender, marital status, race, color, creed, mental or physical disability, religion, age, ancestry, or national origin.
3.6 Indemnification of City. RHPI shall defend, indemnify, and hold the City, and the City's representatives, volunteers, officers, employees and agents, harmless from any and all -13-
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claims, demands, damages, defense costs or liability of any kind (including attorney's fees and costs), that arise from RHPI's ownership of the Site, or from the allowance for the use and operation of the Site, or which may be caused by any acts or omissions of the RHPI under this Covenant, whether such activities or performance thereof be by RHPI or by anyone directly or indirectly employed or contracted with by RHPI, and whether such damage shall accrue or be discovered before or after termination of this Covenant, including, but not limited to, RHPI's failure to pay, if required, prevailing wages on the construction and development of the Site.
RHPI shall be solely responsible for determining and effectuating compliance by RHPI or its tenants) with prevailing wage laws, and the City makes no representation as to the applicability or non-applicability of any of such laws to the development and construction of the Site or any part thereof. Owner hereby expressly acknowledges and agrees that the City has not previously affirmatively represented to RHPI or its contractor(s), in writing or otherwise, in a call for bids or otherwise, that the development or construction of the Site is not a "public work," as defined in Section 1720 of the Labor Code.
3.7 Semi-Annual Jobs Certification. After completion of the construction of Improvements on the Site RHPI shall provide City with a verification and certification of the jobs on the Site that relate to the Improvements on a semi-annual basis. The IRS Form DE-941, or its equivalent, shall be provided to the City to confirm not less than 45 full-time jobs created by its tenants) twice per year.
4. OBLIGATIONS OF CITY.
4.1 Covenant Payments to RHPI.
4.1.1 Amount of Covenant Payments. In consideration for RHPI's undertakings pursuant to this Covenant and the encumbrance of RHPI's interest in the Site pursuant to this Covenant, City shall make the following Covenant Payments to Owner after the end of each Calendar Year (or part thereof) during the Operating Period:
(a) Subject to Section 4.1.3 below, the Covenant Payments with respect to each Calendar Year shall be in an amount equal to one hundred percent (100%) of the Sales Tax for that Calendar Year generated on the Site, except that after $3,000,000 generated in Sales Tax then only fifty percent (50%).
(b) Following ten (10 years following the Commencement Date and provided that this Covenant has not been otherwise terminated and provided further that the RHPI is not in default under this Covenant, then this Covenant (and the Parties obligations hereunder) shall cease.
4.1.2 Source of Payments. The Covenant Payments shall be payable from any source of funds legally available to City, including City's general fund. In this regard, it is understood and agreed that the Sales Tax that is generated from the Site is being used merely as a measure of the amount of the Covenant Payments that are periodically owing by City to RHPI, and that City is not pledging any portion of the Sales Tax generated from the Site to RHPI.
4.1.3 Payment Procedure. Subject to the terms and conditions of this Covenant, not later than thirty (30) days after the Sales Tax for the Site is received from the City -14-
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by the CDTFA for a Calendar Year during the Operating Period, the City shall pay the Covenant Payment for said Calendar Year, or portion thereof, to RHPI. Each such payment shall be accompanied by a statement identifying (i) the amount of Sales Tax upon which the Covenant Payment amount was calculated, and (ii) a cumulative total comparing the amount of a Covenant Payment being paid, together with all prior Covenant Payments.
The amount of the City's Calendar Yearly Covenant Payments to Owner shall be based upon the amount of Sales Tax that the City actually received from the CDTFA within fifteen (15) days prior to the applicable payment date.
If, after any such Calendar Yearly payment is made, either the City or RHPI obtains information that the amount of City's payment was in error, the Party obtaining such information shall promptly notify the other Party and shall provide such detailed information as may be necessary to explain the discrepancy. The discrepancy shall be accounted for by means of an adjustment to the next Calendar Yearly payment to be made by the City (either an additional payment in the event City has underpaid a prior Covenant Payment that is due, or a credit against the subsequent Covenant Payment in the event City has overpaid); provided, however, that in the event an adjustment needs to be made in excess of Ten Thousand Dollars ($10,000), the Party entitled to said sum shall be entitled to deliver a written notice to the other Party requesting an immediate adjustment and in such event the other Party shall make an appropriate payment within fifteen (15) days from receipt of said notice. Notwithstanding anything in this Agreement to the contrary, City shall provide RHPI with all documentation that it receives regarding the Sales Tax generated from the Site.
4.1.4 other Party shall make available for inspection (at City Hall in the event of a review of City records and at Owner's place of business in Newport Beach in the event of a review of Owner's records) its books and records as the requesting Party may reasonably determine must be reviewed in order determine whether the correct amount of Covenant Payments have been made or are being made hereunder. Notwithstanding the foregoing, the City shall not be required to produce any books or records that, by applicable law, the City is prohibited from producing, and Owner shall not be required to produce information that violates the statutorily prescribed privacy rights of individual customers.
4.1.5 4.2 Additional Condition Precedent to City's Obligations. In addition to the provisions set forth in Section 2 of this Covenant, City's obligation to make the Covenant Payments pursuant to Section 4.1 of this Covenant for any Calendar Year during the Operating Period shall be contingent and conditional upon Owner's performance of its obligations set forth in Section 3 of this Covenant during such Calendar Year.
4.3 Provision of Sales Tax Statements to City. Upon the written request of City, RHPI shall use commercially reasonable efforts to deliver to City true and correct copies of all reports that RHPI and the operators of businesses on the Site file with the CDTFA with regard to taxable sales transactions occurring on, generated from and with respect to the Improvements and the Site (the "Sales Tax Statements"). Such reports shall be delivered to City within ten (10) -15-
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days of the City's request. In the event that there is any private business or customer information on the Sales Tax Statement that is not reasonably necessary to enable City to verify the accuracy thereof for purposes of performing its obligations and enforcing its rights set forth in this Covenant, Owner shall be permitted to redact such information from the copy of the document provided to City.
5. DEFAULTS AND REMEDIES.
5.1 Defaults.
(a) Subject to Force Majeure (Section 6.6), the occurrence of any of the following shall constitute a Default:
(i) Subject to permitted delays for nonpayment set forth in this Covenant, the failure by either Party to perform any obligation of such Party for the payment of money under this Covenant if such failure is not cured within fifteen (15) calendar days after the nonperforming Party's receipt of written notice from the other Party that such obligation was not performed when due; or
(ii) The failure by either Party to perform any of its obligations (other than obligations described in clause (i) of this Section 5.1) set forth in this Covenant, if such failure is not cured within thirty (30) days after the nonperforming Party's receipt of written notice from the other Party or, if such failure is of a nature that cannot reasonably be cured within thirty (30) days, the failure by such Party to commence such cure within thirty (30) days and thereafter diligently and continuously prosecutes such cure to completion, with said completion of cure not to exceed ninety (90) days after the commencement date for the cure of the Default; or
(Ill) Any representation or warranty by a Party set forth in this Covenant proves to have been incorrect in any material respect when made; or (iv) The Site is materially damaged or destroyed by fire or other casualty during the Operating Period and RHPI fails to commence restoration, or fails to cause and allow for the commencement of the improvements on the Site that are partially damaged or destroyed within a six (6) months after receipt of permits for such restoration and thereafter fails to diligently and continuously proceed to complete such restoration in accordance with this Covenant; or
RHPI is enjoined or otherwise prohibited by any governmental agency from occupying the Site during the Operating Period and such injunction or prohibition continues without stay for ninety (90) days or more for any reason; or (vi) RHPI defaults on, and fails to timely cure, any mortgage, deed of trust, or other security interest recorded against the Site; or (vii) The voluntary or involuntary suspension or termination of the Improvements on the Site that is not a Permitted Closure; or -16-
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(viii) A court having jurisdiction shall have made or entered any decree or order (A) adjudging RHPI to be bankrupt or insolvent, (B) approving as properly filed a petition seeking reorganization of either RHPI, or seeking any arrangement for either RHPI under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (C) appointing a receiver, trustee, liquidator, or assignee of either RHPI in bankruptcy or insolvency or for any of their properties or business operations, or (D) directing the winding up or liquidation of RHPI, if any such decree or order described in subclauses (A) to (D), inclusive, shall have continued without stay or without being discharged for a period of sixty (60) days, unless a lesser time period is permitted for cure under any other mortgage or deed of trust held by any Holder and recorded against the Site, in which event such lesser time period will apply under this clause (vili) as well; or either RHPI shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or inclus perition sceking any decree or order of the nature described in clauses (A) to (1D), (b) For each mortgage, deed of trust, or other security interest recorded against the Site, RHPI shall record for the benefit of the City, a Request for Notice under Civil Code Section 2924b in a form substantially similar to Exhibit "B" attached hereto and incorporated by reference (the "Request for Notice"), with RHPI to cause each recorded Request for Notice to be delivered to the City by the Holder of any mortgage, deed of trust, or other security interest recorded against the Site to secure any payment and/or performance obligation of either RHPI. In the event RHPI fails to perform any of its obligations under this Covenant and City sends a notice of such failure to RHPI, concurrently therewith City shall send a copy of such notice to any mortgagee or deed of trust holder with respect to the Site (herein the "Holder") (the name and address of which Holder shall be furnished by RHPI or such Holder to City and the Holder shall have the same period of time as is available to RHPI to remedy such breach or failure under this Covenant. City shall accept any proper cure of a breach or failure tendered by the Holder. In the event the Site is subject to foreclosure or a deed in lieu of foreclosure, this Covenant shall automatically terminate, if not previously terminated pursuant to Section 5.1(a)(vi), and shall be of no further force and effect immediately upon the commencement of any proceeding to foreclose on the Site or process a deed in lieu thereof, and RHPI shall not be entitled to any unpaid Covenant Payments from and after the date of foreclosure or process a deed in lieu thereof.
5.2 City's Remedies Upon Default by Owner: Upon the occurrence of any Default by RHPI, and after RHPI's receipt of written notice of default and expiration of the time for RHPI to cure such Default as provided in Section 5.1, City may at its option:
(i) Suspend the payment of Covenant Payments otherwise due and payable to RHPI under this Covenant for the period that RHPI remains in Default. If City has so suspended its payments in accordance with the terms of this clause (i), then upon RHPI's cure of such Default, City shall resume its payment obligations,; or if the Default continues uninterrupted for a period of six (6) months, City may terminate this Covenant, in which case City's obligation to make payments to RHPI for any period of time after the occurrence of the Default shall be finally terminated and discharged.
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In no event, however, shall City have the right (A) to specifically enforce RHPI's covenants set forth in Section 3 of this Covenant, (B) to seek damages other than by offset of future Covenant Payments otherwise due hereunder, (C) to prevent RHPI's conversion of the Site to another lawful use (even if such use would be inconsistent with this Covenant), or (D) to sue RHPI or to recover from RHPI any amount that is actually or allegedly attributable to loss of anticipated Sales Tax or other revenues, whether because the amount of Sales Tax generated from the Site is less than projected by RHPI, or City, or because Owner Developer does not allow for the operation of the Improvements on the Site for the entire Operating Period.
5.3 RHI's Remedies Upon Default by City. Upon the occurrence of any Default by City, and after City's receipt of written notice of Default from RHPI and expiration of the time for City to cure such Default as provided in Section 5.1, RHPI may initiate a judicial proceeding seeking an order for the City to continue to perform under this Covenant, or the RHPI may terminate this Covenant by written notice to City and may seek unpaid Covenant Payments due and owing to RHPI up until the date of expiration of this Covenant, Notwithstanding any provisions in this Covenant to the contrary, RHPI's exclusive remedies in equity and at law, including all monetary damages and compensation, are set forth in this Section 5.3.
5.4 Cumulative Remedies; No Waiver. Except as expressly provided herein, the nondefaulting Party's rights and remedies hereunder are cumulative and in addition to all rights and remedies provided by law from time to time and the exercise by the nondefaulting Party of any right or remedy shall not prejudice such Party in the exercise of any other right or remedy.
None of the provisions of this Covenant shall be considered waived by either Party except when such waiver is delivered in writing. No waiver of any Default shall be implied from any omission by City to take action on account of such Default if such Default persists or is repeated.
No waiver of any Default shall affect any Default other than the Default expressly waived, and any such waiver shall be operative only for the time and to the extent stated. No waiver of any provision of this Covenant shall be construed as a waiver of any subsequent breach of the same provision. A Party's consent to or approval of any act by the other Party requiring further consent or approval shall not be deemed to waive or render unnecessary the consenting Party's consent to or approval of any subsequent act. A Party's acceptance of the late performance of any obligation shall not constitute a waiver by such Party of the right to require prompt performance of all further obligations. A Party's acceptance of any performance following the sending or filing of any notice of Default shall not constitute a waiver of that Party's right to proceed with the exercise of its remedies for any unfulfilled obligations. A Party's acceptance of any partial performance shall not constitute a waiver by that Party of any rights relating to the unfulfilled portion of the applicable obligation.
5.5 Limitations on City's Liability. RHPI acknowledges and agrees that:
(i) this Covenant shall not be deemed or construed as creating a partnership, joint venture, or similar association between RHPI and City, the relationship between RHPI and City pursuant to this Covenant is and shall remain solely that of contracting Parties, that the development and operation of the Site is a private undertaking, and City neither undertakes nor assumes any responsibility, other than as expressly provided for in this Covenant or as may be granted the City pursuant to its police power under state and City law, to review, inspect, supervise, approve, or inform RHPI of any matter in connection with the development or -18-
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operation of the Site, including matters relating to architects, designers, suppliers, or the materials used by any of them; and RHPI shall rely entirely on its own judgment with respect to such matters; (ii) by virtue of this Covenant, City shall not be directly or indirectly liable or responsible for any loss or injury of any kind to any person or property resulting from any construction on, or occupancy or use of, the Site, except arising from the City's acts of negligence or willful misconduct, whether arising from: (A) any defect in any building, grading, landscaping, or other onsite or offsite improvement; (B) any act or omission of RHPI, and any of their respective agents, employees, independent contractors, licensees, lessees, or invitees; (C) any accident on the Site or any fire or other casualty or hazard thereon; or (D) City's performance or commitments under this Covenant; and (iii) by accepting or approving anything required to be performed or given to City under this Covenant, including any certificate, survey, appraisal, or insurance policy, City shall not be deemed to have warranted or represented the sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a warranty or representation by City to anyone.
6. GENERAL PROVISIONS.
6.1 Integration and Amendment. This Covenant and the Agreement constitute the entire agreement by and between the Parties pertaining to the subject matter hereof, and supersede all prior agreements and understandings of the Parties with respect thereto. This Covenant may not be modified, amended, supplemented, or otherwise changed except by a writing executed by both Parties.
6.2 l Captions. Section headings used in this Covenant are for convenience of reference only and shall not affect the construction of any provisions of this Covenant.
6.3 Binding Effect; Successors and Assigns; Assignments. This Covenant shall run with the land and shall be binding upon and inure to the benefit of, the Parties and their respective successors and assigns, as limited by this Section 6.3. Except as such assignment relates to Permitted Assigns or a Holder, the RHPI shall not assign, hypothecate, encumber or otherwise transfer, either voluntarily, involuntarily or by operation of law, its rights or obligations as set forth in this Covenant without first obtaining the City's prior written consent, which may be given or denied or conditioned in the City's sole and absolute discretion. For any Permitted Assign, RHPI shall deliver to the City no later than ten (10) days after the execution of an assignment and assumption or other similar agreement notice of such assignment, copy of the agreement memorializing the assignment, the name and addresses) for notices to be delivered to the Permitted Assign by the City pursuant to this Covenant, and any documents or other evidence that the City may request, in its reasonable discretion, to verify that the assignee of the RHPI's rights and obligations under this Covenant is to a Permitted Assign(s). In the event of any assignment that is consented to in writing by the City or that is to a Permitted Assign(s), the references in this Covenant to "RHPI" shall be deemed to refer to the assignee.
6.4 Counterparts. This Covenant may be executed in two or more counterparts, each of which when so executed and delivered shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument. -19-
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6.5 Governing Law. This Covenant shall be governed by and construed in accordance with the internal laws of the State of California without regard to conflict of law principles.
6.6 Force Majeure. Notwithstanding any other provision set forth in this Covenant to the contrary, in no event shall a Party be deemed to be in Default of its obligations set forth herein where delays or failures to perform are caused by circumstances without the fault and beyond the reasonable control of such Party, which circumstances shall include, without limitation, fire/casualty losses; strikes; litigation not related to the performance of the Parties under this Covenant; unusually severe weather; inability to secure necessary labor, materials, or tools; delays of any contractor, subcontractor, or supplier; litigation by third parties challenging the validity or enforceability of the Agreement or this Covenant or the Entitlements; and acts of God (collectively, "force majeure"). Adverse market conditions or RHPI's inability to obtain financing or approval to operate the Improvements shall not constitute events of force majeure.
In the event of an event of force majeure, the Party so delayed shall notify the other Party of the circumstances and cause of the delay within a reasonable time period after commencement of the delay, it shall keep the other Party informed at reasonable intervals upon request regarding the status of its efforts to overcome said delay, and it shall exercise commercially reasonable diligence to perform as soon as practicable thereafter.
6.7 Notices. Notices to be given by City or RHPI hereunder may be delivered personally or may be delivered by certified mail or by reputable overnight delivery service providing a delivery confirmation receipt, with mailed notices to be addressed to the appropriate addresses) hereinafter set forth or to such other address(es) that a Party may hereafter designate by written notice. If served by overnight delivery service or certified mail, service will be considered completed and binding on the Party served on the date set forth in the confirmation or certification receipt.
If notice to RHPI Ron Holley
RH Properties I, LLC
1151 Dove Street, Suite 175
Newport Beach, CA 92660
with a copy to: John Von Helms, Esq.
505 N. Tustin Avenue, Suite 116
Santa Ana, CA 92705
If notice is to City: City of Calexico
608 Heber Avenue
Calexico, CA 92231
Attention: City Manager
with a copy to: Best Best & Krieger, LLP
74-760 Highway 111, Suite 200
Indian Wells, CA 92210
Attention: Carlos Campos, Esq.
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6.8 Further Acts. Each Party agrees to take such further actions and to execute such other documents as may be reasonable and necessary in the performance of its obligations hereunder; reserving to City, however, its lawful discretionary and police power authority.
Without limiting the generality of the foregoing, upon the expiration or termination of the Operating Period, City shall execute and deliver such instruments as may be prepared by RHPI at RHPI's expense to release the cloud upon title to the Site created by this Covenant; provided, however, that any such document shall be in a form reasonably acceptable to the City Attorney of City.
6.9 Third Party Beneficiaries. With the exception of the specific provisions set forth in this Covenant for the benefit of Holder, there are no intended third party beneficiaries under this Covenant and no such other third parties shall have any rights or obligations hereunder.
6.10 Attorney's Fees. The prevailing party shall be entitled to recover its reasonable attorneys' fees and costs, including any fees and costs incurred in any appeal and administrative proceeding, in connection with any breach or Default by the other Party under this Covenant. [Signatures contained on next page.]
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IN WITNESS WHEREOF, the Parties have executed this Covenant to be effective as of the Effective Date.
City"
CITY OF CALEXICO, a California
municipal corporation
By:
Name:
Title:
ATTEST:
City Clerk
APPROVED AS TO FORM:
By:
Name:
Title: City Attorney
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R.H. PROPERTIES I, LLC, a California
limited liability company
By:
Name:
Title:
STATE OF CALIFORNIA
COUNTY OF )
On → before me, → Notary Public,
personally appeared
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _ (Seal)
STATE OF CALIFORNIA
COUNTY OF )
On , before me, - Notary Public,
personally appeared
proved to me on the basis of satisfactory evidence to be the person(s) whose names) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacityies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. -23-
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I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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EXHIBIT "A"
TO COVENANT
LEGAL DESCRIPTION OF SITE
PAR 12A PER LLA 5.76 AC CITY OF CALEXICO
Hacienda Dr Hacienda Dr Hacienda Dr
Ollie Ave Imperial Ave
1119
Imperial wAve
111E
Ollie Ave
Imperial WAve
Imperial WAve
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EXHIBIT "B"
TO COVENANT
FORM OF "REQUEST FOR NOTICE"
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Calexico
608 Heber Avenue
Calexico, CA 92231
Attention: City Manager
(Space above for recorder.]
(Exempt from Recordation Fee per Gov. Code § 27383)
Request for Notice Under Civil Code Section 2924b
In accordance with Section 2924b of the California Civil Code, request is hereby made that a copy of any Notice of Default and a copy of any Notice of Sale under the Deed of Trust recorded as instrument No. _20 Lin
Book _ Page ] Official Records of Imperial County, California, and describing land therein as
See Attachment "1" attached hereto
executed by as Trustor, in
which is named as
Beneficiary, and _ as Trustee, be
mailed to the CITY OF CALEXICO, 608 Heber Avenue, Calexico, California 92231, Attention:
City Manager.
NOTICE: A COPY OF ANY NOTICE OF DEFAULT AND OF ANY NOTICE OF SALE WILL BE SENT ONLY TO THE ADDRESS CONTAINED THIS RECORDED REQUEST. IF YOUR ADDRESS CHANGES, A NEW REQUEST MUST BE RECORDED.
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CITY OF CALEXICO, a California
municipal corporation
By:
Name:
Title: City Manager
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ATTACHMENT "1" TO
REQUEST FOR NOTICE UNDER CIVIL CODE SECTION 2924b
Legal Description of the Site
(Attached)
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[REPLACE WITH LEGAL DESCRIPTION [AND DEPICTION] OF THE SITE -29-
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STATE OF CALIFORNIA
COUNTY OF
On → before me, _ - Notary Public,
personally appeared
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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AB562 REPORT
Private Investment, Revitalization, Job Creation and Offsite Public Improvement Incentive Agreement with
R.H. Properties, LLC
(Portion of Crossroads Shopping Center, Calexico)
Calexico, CA
February 16, 2022
AB 562 Report (February 16, 2022)
81211001151347331491
Private Investment, Revitalization, Job Creation and Offsite Public Incentive Agreement PAGE 1 of 2
INTRODUCTION
This report is provided pursuant to Assembly Bill 562 ("AB 562"), which requires local agencies to provide specific information to the public before applying an economic subsidy within its jurisdiction. This report will be available to the public through the City's Clerk's Office and through the City of Calexico's website (www.calexico.ca.gov) as required for the term of the incentive.
This report uses the term "subsidy" to describe the economic development activity the City proposes in this instance, because the relevant statute uses the term "subsidy." Despite the broad definition of "subsidy" used in this state law, the transaction the City proposes is incentivizing the owner/developer to build out the site with hotels and restaurants and the City will construct the offsite requirements that may be associated with this project; including street widening, curb and gutter, signalization, water and sewer to the property line, at a time as determined by City in its sole discretion. The owner/developer is committing to develop the 78,781 s.f. former Mervyn's building with typical uses normally found in a shopping center. The City expects the project to generate hundreds of thousands of dollars in new sales tax revenue over the life of the project as a direct result of the economic development assistance proposed.
Per AB 562, this report must include: (1) The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy, if applicable; (2) The start and end dates and schedule, if applicable, for the economic development subsidy; (3) A description of the economic development subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the City as a result of the economic development subsidy; (4) A statement of the public purposes for the economic development subsidy; (5) The projected tax revenue to the City as a result of the economic development subsidy; and (6) The estimated number of jobs created by the economic development subsidy, broken down by full-time, part-time, and temporary positions.
AB 562 also requires that this information remain available and be posted on the City's website, if any, for the entire term of the economic development subsidy.
SUBSIDY REPORT COMPONENTS:
I NAME AND ADDRESS OF THE BUSINESS
R.H. Properties, LLC
Address:_ 1151 Dove Street, Suite 175
Newport Beach, CA 92660
Attn: Ron Holley
Portion of the Crossroads Shopping Center, 1407 Imperial Avenue, Calexico, California 92236.
5.76 acre site consisting of APN 058-120-042-000-01.
II. THE START AND END DATES, AND THE SCHEDULE, FOR THE SUBSIDY The proposed agreement start date will be dictated by the recipient, specifically being the date that the developer/owner receives the occupancy permit for the renovated space ("Commencement Date"). This is estimated to occur on or before February 16, 2023.
AB 562 Report (February 16, 2022)
81211.00115134733149.1|
Private Investment, Revitalization, Job Creation and Offsite Public Incentive Agreement PAGE 2 of 2
The Agreement will terminate if all general onsite Improvements are not completed by February 16, 2024, unless automatically extended based upon substantial signed LOI progress from prospective tenants) of retail and other uses in which case the termination date shall be extended for an additional eighteen (18) months.
The City Council is anticipated to consider the agreement at the City Council meeting on February 16, 2022.
III. DESCRIPTION OF THE SUBSIDY, INCLUDING THE ESTIMATED TOTAL
AMOUNT OF THE EXPENDITURE OF PUBLIC FUNDS BY, OR REVENUE
LOST TO, THE LOCAL AGENCY AS A RESULT OF THE SUBSIDY
Approval of the Agreement will authorize the City of Calexico ("City") to make the subsidy which will likely exceed the $100,000 AB 562 threshold over the term. The exact incentive is unknown as the project is anticipated to be completed in several phases with its build out and opening date being unknown at this. The incentive in the amount of 100% of the actual Bradley- Burns sales and use tax revenue City receives solely on sales from the Site up to $3,000,000, then 50% after that up to the expiration of the 10-year term of this Agreement. There will be no split of sales or use tax from any other improvement on the Site. There will be no sharing of TOT from the site.
The agreement will commence when the first Certificate of Occupancy is issued by the City.
IV. STATEMENT OF THE PUBLIC PURPOSE FOR THE SUBSIDY
The incentives are being provided to induce the Business to invest its capital, estimated to be $19,500,000. This investment will result in the revitalization of commercial activity and removal of blight in the area, create jobs, increase of the City's tax base and potentially be a catalyst project that will spur additional redevelopment and investment in the neighboring land parcels.
V. ESTIMATED NUMBER OF JOBS CREATED BY THE SUBSIDY,
CATEGORIZED BY FULL-TIME, PART-TIME, AND TEMPORARY
POSITIONS
The agreement is estimated to create 45 new full time jobs.
AB 562 Report (February 16, 2022)
81211.00115134733149.1