Agenda — Norco City Council, September 18, 2023 (part 1 of 2)

AGENDA
City Council
Monday, September 18, 2023
City Council Chamber – Norco City Hall
2820 Clark Avenue, Norco, CA 92860
CALL TO ORDER 6:00 PM
ROLL CALL Robin Grundmeyer, Mayor
Kevin Bash, Mayor Pro Tem
Katherine Aleman, Council Member
Berwin Hanna, Council Member
Greg Newton, Council Member

CLOSED SESSION

CONFERENCE WITH LABOR NEGOTIATOR
Agency designated representatives: City Manager Sassoon Employee organization: Utility Workers Union of America, AFL-CIO Local 606 CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION
Initiation of litigation pursuant to paragraph (4) of subdivision (d) of Section 54956.9: 1 potential case
CONFERENCE WITH LEGAL COUNSEL—EXISTING LITIGATION
Paragraph (1) of subdivision (d) of Section 54956.9
Name of case: Admin Civil Liability Complaint No. R8-2023-0056 RECONVENE PUBLIC SESSION 7:00 PM

REPORT OF ACTION(S) TAKEN IN CLOSED SESSION
PLEDGE OF ALLEGIANCE Council Member Berwin Hanna
INVOCATION Church of Jesus Christ of Latter-Day
Saints
Member BJ Walker

PRESENTATIONS
Proclamations:

Hispanic Heritage Month
National Preparedness Month

1. CITY COUNCIL REPORTS ON REGIONAL BOARDS

2. CONSENT CALENDAR
City Council Agenda - September 18, 2023
All items listed under the Consent Calendar are considered to be routine and may be enacted by one motion. Prior to the motion to consider any action by the presiding governmental body, any public comments on any of the Consent Items will be heard. There will be no separate action unless members of the governmental body or the audience request specific items be removed from the Consent Calendar. Items removed from the Consent Calendar will be separately considered under Item 3 of the Agenda.

2.A. Waive Reading of all Ordinance Adoptions on this Agenda and Read by Title Only.

RECOMMENDATION:

Waive reading, by title only, of all Ordinances and Resolutions. Said Ordinances and Resolutions which appear on the agenda shall be determined to have been read by title and further reading waived.

Staff Report - Pdf

2.B. Recap of Actions Taken by the Planning Commission at its Meeting Held on September 13, 2023
RECOMMENDATION:

Receive and file the recap of actions taken by the Planning Commission at its meeting held on September 13, 2023.

Staff Report - Pdf

2.C. Ratify City Manager's Approval of Emergency Repair and Authorize Appropriation of Funds for Emergency Repairs to Shadow Canyon Caused by Tropical Storm Hilary
RECOMMENDATION:

Approve appropriation of funds in the amount $48,900 and ratify the City Manager's approval to conduct emergency work for the repair of the Shadow Canyon slope caused by Tropical Storm Hilary.

Staff Report - Pdf

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City Council Agenda - September 18, 2023

2.D. Approve Resolutions to Preliminarily Approve Assessment Engineer's Report, Declaration of the City's Intent to Increase the Assessment Districts Annual Levy, and Setting a Public Hearing on November 15, 2023 for Landscape Maintenance Districts No. 2 - Western Pacific, Tract 25779; and Landscape Maintenance District No. 3 - Centex, Tract 28626 RECOMMENDATION:

Adopt Resolution No. 2023-59, a Resolution of the City Council of the City of Norco, California, Preliminarily Approving the Assessment Engineer’s Report, Declaring its intention to Increase Assessments for Landscape Maintenance District 2 (Western Pacific) and to Provide for the Levy and Collection of Annual Assessments in said District, Setting a Time and Place for a Public Hearing thereon and Ordering the Initiation of Assessment Ballot Procedures; and
Adopt Resolution No. 2023-60, a Resolution of the City Council of the City of Norco, California, Preliminarily Approving the Assessment Engineer’s Report, Declaring its intention to Increase Assessments for Landscape Maintenance District 3 (Centex) and to Provide for the Levy and Collection of Annual Assessments in said District, Setting a Time and Place for a Public Hearing thereon and Ordering the Initiation of Assessment Ballot Procedures.

Staff Report - Pdf

2.E. Accept and Award Contract for the Installation of Musco Sports Lighting Equipment for the Wayne Makin LED Lighting Upgrade Project (Project No. 54111.4), and Approve the Expenditure for Sales Tax on the Sports Lighting Equipment.

RECOMMENDATION:

Accept and award contract to F.E.C. Electric, Inc. for the Wayne Makin LED Lighting Upgrade Project, in the amount of $669,000 and authorize the City Manager to approve contract change orders up to 10% of the original contract;and approve the expenditure in the amount of $133,438 for the sales tax on the sports lighting equipment.

Staff Report - Pdf

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City Council Agenda - September 18, 2023

2.F. Acceptance of Equestrian Trail Easement Dedication for 1090 Sixth Street (APN 131-260-046)
RECOMMENDATION:

Approve to accept the offer of dedication for the public equestrian trail easement located at 1090 Sixth Street (APN 131-260-046), authorize the Mayor to sign the Certificates of Acceptance and direct the City Clerk to file the Certificates of Acceptance with the County of Riverside Recorder’s Office.

Staff Report - Pdf

2.G. Subordination Agreement of existing loan with Wasatch Advantage Group, LLC at Heritage Park Senior Citizen Apartment Complex.

RECOMMENDATION:

Approve and Execute a Subordination Agreement for Wasatch Advantage Group, LLC.

Staff Report - Pdf

3. ITEM(S) PULLED FROM CONSENT CALENDAR

4. PUBLIC COMMENTS
This is the time when persons wishing to address the presiding governmental body regarding the Consent Calendar, Legislative Matters or items within the subject matter jurisdiction of the legislative body. Please submit a speaker card to the Meeting Clerk. Please limit comments to three minutes or less. The Ralph M. Brown Act limits the governmental body’s ability to respond to comments on non-agendized matters at the time such comments are made. The governmental body shall not discuss or act relative to any general public comment.

5. LEGISLATIVE MATTERS
No new evidence will be heard from the public as the public hearing has been closed regarding the items listed. If new substantial amendments are made to the Ordinance at this time, the Ordinance will require a "Third" reading and public comments will be allowed.

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City Council Agenda - September 18, 2023

5.A. Second Readings:

Ordinance No. 1102, Zone Code Amendment 2023-04 (City of Norco): A City-Initiated proposal to amend Norco Municipal Code Title 18 – “Zoning”, Chapter 18.68 – “Accessory Building Use Permits”, to amend the provisions/regulations for Large Vehicle Parking Buildings, and for buildings 240 square feet and under.

Ordinance No. 1103, Zone Code Amendment 2023-05 (City of Norco): A City-Initiated proposal to amend Norco Municipal Code Title 18 – “Zoning”, Chapter 18.31 – “General Provisions – Yards, Setbacks, and Height Exceptions”, to amend the provisions/regulations for roof overhangs/eaves in the required setback areas.

Ordinance No. 1104 Code Amendment 2023-04 (City of Norco): A CityInitiated proposal to amend Norco Municipal Code Title 15 – “Building and Construction”, Chapter 15.02 – “Building Code”, Section 15.02.150 – Conversion of Cargo Carriers, to allow cargo carriers/metal storage containers 240 square feet and under without approval of a conditional use permit, on properties zoned for residential, subject to the requirements of Chapter 18.68 Chapter 18.68 – “Accessory Building Use Permits” of the Norco Municipal Code
RECOMMENDATION:

Adopt Ordinance No. 1102, Second Reading, approving Zone Code Amendment 2023-04;
Adopt Ordinance No. 1103, Second Reading approving Zone Code Amendment 2023-05; and
Adopt Ordinance No. 1104, Second Reading approving Code Amendment 2023-04.

Staff Report - Pdf

6. DISCUSSION / ACTION ITEM(S)
Order of Presentation for Discussion Items:

1. Staff Report Presentation

2. Council Questions of Staff

3. Public Comment

4. Council Discussion and Action

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City Council Agenda - September 18, 2023

6.A. Discussion on recommendations regarding the planned Veteran's Housing project at 4095 and 4061 Sierra Avenue
RECOMMENDATION:

That the City Council provide input on the recommendations for the Veterans Housing project as developed by the RFP consultant, Keyser Marston Associates.

Staff Report - Pdf

7. PUBLIC HEARING(S)
Order of Presentation for Public Hearing Items:

1. Staff Report Presentation

2. Council Questions of Staff

3. Open Public Hearing
a. Public Comment

4. Close Public Hearing

5. Council Discussion and Action

7.A. Public Hearing to consider various actions related to a loan to Five Keys Schools and Programs to finance the purchase of a 2.38 acre property at 4208 California Avenue, for the establishment of a permanent site for the EAT Cultural Center and Farm.

RECOMMENDATION:

It is recommended that the City Council conduct the public hearing, and then adopt Resolution No. 2023-61 approving the Loan Agreement with Five Keys Schools and Programs to finance the purchase of the property at 4208 California Avenue, and authorizing various actions related thereto; receive and file the related AB 562 Report pursuant to Government Code Section 53083; approve the Put-Option Agreement; and appropriate funds for the loan in an amount not to exceed $1,000,000 from the Economic Development Strategic Reserve.

Staff Report - Pdf

8. CITY COUNCIL / STAFF COMMUNICATIONS

9. ADJOURNMENT
In compliance with the Americans with Disabilities Act, any person who requires a modification or accommodation in order to participate in this meeting is encouraged to contact the City Clerk’s Office at (951) 270-5623 or [email protected] at least 48 hours prior to the meeting so that reasonable arrangements can be made to ensure accessibility. Staff reports are on file in the City Clerk’s Office. Any writings or documents provided to a majority of the presiding governmental body regarding any item on this agenda will be available for public inspection at the City Clerk’s Office during normal business hours at Norco City Hall, located at 2870 Clark Avenue in Norco. The meeting is recorded.

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City Council Agenda - September 18, 2023

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City Council

STAFF REPORT
Date: September 18, 2023 Agenda Item:

2.A.

To: Honorable Mayor and City Council Members
Prepared By: Dana Roa, City Clerk
Department: City Clerk
SUBJECT:

Waive Reading of all Ordinance Adoptions on this Agenda and Read by Title Only.

RECOMMENDATION:

Waive reading, by title only, of all Ordinances and Resolutions. Said Ordinances and Resolutions which appear on the agenda shall be determined to have been read by title and further reading waived.

REVIEWED AND APPROVED BY:

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City Council

STAFF REPORT
Date: September 18, 2023 Agenda Item:

2.B.

To: Honorable Mayor and City Council Members
Prepared By: Alma Robles, Planning Director
Department: Planning
SUBJECT:

Recap of Actions Taken by the Planning Commission at its Meeting Held on September 13, 2023
RECOMMENDATION:

Receive and file the recap of actions taken by the Planning Commission at its meeting held on September 13, 2023.

REVIEWED AND APPROVED BY:

ATTACHMENT(S):

Draft Planning Commission - Sep 13 2023 - Minutes

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DRAFT - MINUTES
Planning Commission
Wednesday, September 13, 2023
City Council Chamber – Norco City Hall
2820 Clark Avenue, Norco, CA 92860
CALLED TO ORDER 7:00 PM
ROLL CALL Jeff Shyu, Chair
Fia Sullivan, Vice Chair
Danny Azevedo, Member
Patricia Hedges, Member
Tara Young, Member
Henry Langlois, Youth Commissioner

PLEDGE OF ALLEGIANCE
Youth Commissioner Langlois presented the Pledge of Allegiance.

Community Development Director Robles read the Appeal Notice into the record.

APPEAL NOTICE: In the event that you disagree with the action taken by the Planning Commission in regards to your application, or with any condition for approval of the application which is not a specific requirement of the Norco Municipal Code, you are entitled to appeal such determination or conditions to the Norco City Council, provided that such appeal is filed with the Norco City Clerk within ten calendar days after the requirements for appeals, inclusive of payment of an appeal fee.

1. CONSENT CALENDAR
Member Young pulled Item 1. A. from the Consent Calendar.

2. ITEM(S) PULLED FROM CONSENT CALENDAR

1.A. Approval of Planning Commission Regular Meeting Minutes

Member Young had corrections to the Minutes of August 9, 2023.

M/S SHYU/HEDGES Approve the Planning Commission Meeting Minutes of August 9, 2023, with amendments. The Motion was carried by the following roll call vote:

AYES: SHYU, SULLIVAN, AZEVEDO, HEDGES, and YOUNG
NOES: NONE

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Planning Commission Minutes - September 13, 2023
ABSENT: NONE
ABSTAIN: NONE
YOUTH COMMISSIONER LANGLOIS: AYE

3. PUBLIC COMMENTS
There were no Public Comment's at this time.

4. DISCUSSION / ACTION ITEM(S)

4.A. Site Plan 2023-07 (Vandenraadt): A request to approve an Accessory Building Use Permit for a 1,400 square-foot RV garage/workshop and a 3,140 squarefoot barn at 4204 Hillside Avenue within the A-1-20 (Agricultural Low Density) Zone. (APN 133-062-011)

Assistant Planner Woods-Diaz presented report on Site Plan 2023-07: A request to approve an Accessory Building Use Permit for a 1,400 square-foot RV garage/workshop and a 3,140 square-foot barn at 4204 Hillside Avenue.

Chair Shyu, Vice Chair Sullivan and Member Azevedo had clarifying questions and concerns regarding the Site Plan 2023-07.

Assistant Planner Woods-Diaz and Community Development Director Robles answered questions and addressed concerns.

Applicant Vandenraadt spoke regarding his request confirming that the barn would be used for animal keeping.

Member Sullivan had concerns regarding the square footage discrepancy.

Assistant Planner Woods-Diaz and Community Development Director Robles addressed concerns.

Chair Shyu opened Public Comments.

Bonnie Slager spoke regarding her concerns of the project.

Chair Shyu closed Public Comments.

Following further discussion, motion was made.

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Planning Commission Minutes - September 13, 2023
M/S HEDGES/YOUNG Planning staff recommends approval of Site Plan 2023-07 subject to the attached Conditions of Approval on Resolution 2023-16 with addition of bathroom conditions. The Motion was carried by the following roll call vote:

AYES: SHYU, SULLIVAN, AZEVEDO, HEDGES, and YOUNG
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
YOUTH COMMISSIONER LANGLOIS: AYE

4.B. Site Plan 2023-02 (Afram): A request to convert three existing buildings for commercial/office use and legalize a 460 square-foot addition on one of the existing buildings to accommodate an electrical supply business at 433 Sixth Street, within the C-4 (Commercial) Zone. (APN: 133-160-008).

M/S HEDGES/YOUNG Continue item regarding Site Plan 2023-02 to October 11, 2023, Planning Commission meeting. The Motion was carried by the following roll call vote:

AYES: SHYU, SULLIVAN, AZEVEDO, HEDGES, and YOUNG
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
YOUTH COMMISSIONER LANGLOIS: AYE

5. COMMISSION / STAFF COMMUNICATIONS
There were no additional communications at this time.

6. ADJOURNMENT
Adjourned meeting at 7:36 p.m.

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City Council

STAFF REPORT
Date: September 18, 2023 Agenda Item:

2.C.

To: Honorable Mayor and City Council Members
Prepared By: Amanda Hamilton, Facilities and Maintenance Director
Department: Facilities and Maintenance
SUBJECT:

Ratify City Manager's Approval of Emergency Repair and Authorize Appropriation of Funds for Emergency Repairs to Shadow Canyon Caused by Tropical Storm Hilary RECOMMENDATION:

Approve appropriation of funds in the amount $48,900 and ratify the City Manager's approval to conduct emergency work for the repair of the Shadow Canyon slope caused by Tropical Storm Hilary.

SUMMARY:

Emergency repairs were conducted in order to stabilize the slope behind 2677 Shadow Canyon. All erosion was found at the toe of the slope where sections around the newly installed rip rap were eroded. The emergency work has been completed by Hardy & Harper and inspected by the City Engineer.

BACKGROUND:

On August 20, 2023, the City of Norco received over 2 inches of rainfall in a short period of time from Tropical Storm Hilary. While repairs were made to Shadow Canyon in July, there was not significant growth of plant material to help stabilize the soil which caused further erosion. Staff was contacted by the resident at 2677 Shadow Canyon Circle on August 21, 2023. Staff conducted a site visit the next day with the City Engineer to determine the amount of damage caused by the storm and for the City Engineer to make a determination on the extent and type of repairs needed.

The City Engineer contacted Hardy & Harper to make the necessary repairs to the slope.

The repairs include additional rip rap at the toe of slope, jute netting, and straw wattles to help stabilize the slope from future rain events as seen in Attachment A.

On September 7, 2023, Hardy & Harper began to excavate and install rip rap on the Shadow Canyon slope. Hardy & Harper finalized the jute netting and the remainder of the project on September 8, 2023. The work has been overseen by the City Engineer and

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found to be in conformance with the scope of work requested by RKA Consultants.

Pictures of the damage along with the September repairs can be found in Attachment B.

FISCAL IMPACT:

An appropriation of funds from General Fund Reserves to Park Maintenance division 121.733.34100 in the amount of $48,900 is recommended to cover the cost of the emergency repairs.

RELATIONSHIP TO STRATEGIC PLAN:

Strategic Direction No. 5 - Infrastructure and Asset Management: Ensure timely preservation, replacement, improvement and acquisition of infrastructure and capital assets.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Lori Sassoon, City Manager
Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):

Attachment A _ Hardy & Harper Shadow Canyon Repairs 9.18.23 Attachment B_ Shadow Canyon

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32 Rancho Circle, Lake Forest CA 92630
Ph. (714) 444-1851 / Fax (714) 444-2801
September 5, 2023

CITY OF NORCO
2870 Clark Ave
Norco, CA 92860
Project Name: Additional Erosion Control at Shadow Canyon Project Location: 2677 Shadow Canyon Circle
Item No. Description Qty U/M Unit Total
1 Remobilization / Demobilization 1 LS $ 8,320.00 $ 8,320.00 2 Install Jute Netting and Straw Wattle 1 LS $ 6,430.00 $ 6,430.00 3 Excavation & Place Rip Rap 1 LS $ 34,127.00 $ 34,127.00 $ 48,877.00
Import/Export Dirt to balance
Survey by others
Soils testing by others
Accepted:

The above prices, specification and conditions are satisfactory and are hereby accepted.

Buyer:

Signature:

Date:

Total Bid Price:

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Attachment B
Shadow Canyon Repairs – Tropical Storm Hilary
Damage from Tropical Storm Hilary – August 20, 2023
Repairs Completed – September 8, 2023

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City Council

STAFF REPORT
Date: September 18, 2023 Agenda Item:

2.D.

To: Honorable Mayor and City Council Members
Prepared By: Amanda Hamilton, Facilities and Maintenance Director
Department: Facilities and Maintenance
SUBJECT:

Approve Resolutions to Preliminarily Approve Assessment Engineer's Report, Declaration of the City's Intent to Increase the Assessment Districts Annual Levy, and Setting a Public Hearing on November 15, 2023 for Landscape Maintenance Districts No. 2 - Western Pacific, Tract 25779; and Landscape Maintenance District No. 3 - Centex, Tract 28626
RECOMMENDATION:

SUMMARY:

As stipulated in the Landscaping and Lighting Act of 1972, the continuation of an existing Landscape Maintenance District (LMD) assessment shall be reviewed and approved each fiscal year. Over the last several years, the Council has reviewed the annual assessments and discussed the continued deficits found in LMD 2 & 3. Since the rates in LMD 2 & 3 have been outpaced by costs even with annual escalations based on CPI, ballot measures for these districts will be set for vote on November 15, 2023, in order to allow property owners an opportunity to consider adjusting assessment rates.

BACKGROUND:

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Proposition 218, passed by California voters in 1996, requires that prior to any increase in an assessment be approved by a vote of the property owners, other than CPI increases included in the initial formation of a district. As discussed at prior City Council meetings this year, the City initiated a process to bring ballot measures forward to the property owners in LMD 2 and 3. This action is another required step in the process for those ballot measures.

A ballot describing the proposed increase in assessment will be mailed to the affected property owners per Section 53753 of the Government Code and 45 days after the ballot is sent, the governmental body may hold the Public Hearing. After holding the Public Hearing to receive public testimony, the Public Hearing will be closed, the ballots opened and tabulated, the results will be made public and the City Council will adopt the appropriate Resolution.

A majority protest exists if the assessment ballots submitted, and not withdrawn, in opposition to the proposed assessment exceed the assessment ballots submitted, and not withdrawn, in its favor, weighting those assessment ballots by the amount of the proposed assessment to be imposed upon the identified parcel for which each assessment ballot was submitted.

PROPOSED BALLOT MEASURE INCREASE:

Staff along with the Assessment Engineer has reviewed the annual engineer reports and has determined the following percentages to meet the needs of each district. The proposed increases are found in all informational messaging to the affected homeowners.

LANDSCAPING MAINTENANCE DISTRICT NO. 2 (WESTERN PACIFIC) LMD No. 2 is comprised of 219 parcels and has a service level deficit, meaning that the level of service is not adequate or up to the City's typical standards for neighborhood upkeep. In addition, the original trail fencing is deteriorating and in need of replacement.

However, the district lacks the funding to complete the fencing capital project. The district also lacks a capital reserve to maintain and replace the amenities in the future.

The proposed ballot measure incorporates a 16% increase for the property owner approval. This provides a fix to the service level deficit now and in the future, and allows for property owners to see new assessment revenues invested in capital improvements in their neighborhood. The 16% increase also provides fence replacement on a 20-year cycle and funding of capital reserves to maintain improvements with the assessment per home of $969. This is an increase of $134 from the current year.

The proposed increase shown as follows:

LMD FY 23-24 Annual
Levy
Proposed 16%
Increase
Proposed FY 24-
25 Assessment
2 $836 $134 $969
LANDSCAPING MAINTENANCE DISTRICT NO. 3 (CENTEX)

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LMD No. 3 is comprised of 82 parcels and also has a service level deficit. The current annual assessment does not cover current operations and maintenance along with the need to replace the original trail fencing. The fund balance is declining and the district lacks any capital reserves.

The ballot measure proposes a 19% increase for the property owner approval. This provides a fix to the service level deficit now and in the future. It also allows for property owners to see a near-term improvement with new fencing. This recommendation will create a balanced O&M budget. In addition, it would provide for fence repairs on a 20- year replacement cycle with an assessment per home at $1,489. This is an increase of $238 from the current year.

The proposed increase shown as follows:

LMD FY 23-24 Annual
Levy
Proposed 19%
Increase
Proposed FY 24-
25 Assessment
3 $1,252 $238 $1,489
BALLOT MEASURE TIMELINE:

The informational messaging to residents for the Ballot Measure has already begun through a partnership between the Communications Division and the Facilities and Maintenance Department. The Communications Division has prepared material provided by the Facilities and Maintenance Department to create a cohesive informational experience to ensure that every property owner has the information necessary to make a fully-informed decision regarding the proposed assessment measure. To date we have sent out 2 rounds of postcard mailers, installed lawn signs and have held a public outreach meeting on August 31, 2023.

The remaining timeline of events includes the following:

Date Task
September 27, 2023 Ballot & Letters Sent Out
September 28, 2023 Virtual Meeting
October 16, 2023 City Hall Informational Meeting
October 18, 2023 Ballot Reminder Mailer Sent Out
November 15, 2023 Public Hearing/Results Tallied
FISCAL IMPACT:

If passed, the annual assessments in LMD 2 would increase from $181,340 to $212,211.

Assessments in LMD 3 would increase annually from $102,630 to $122,098 resulting in assessments that cover the general operating budget for each district and allowing for a growth of reserves to allocate towards CIP projects within the respective district. If the ballot measures are not passed, the assessments will continue to be increased by CPI

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and the City may consider adjusting services to match the revenues provided by the existing District assessments.

RELATIONSHIP TO STRATEGIC PLAN:

This item is consistent with Strategic Direction No. 3 - Economic Development and Financial Stability: Assure financial stability by expanding development efforts, diversifying revenue sources and continuing prudent financial management.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Lori Sassoon, City Manager
Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):

Resolution No. 2023-59 LMD 2 Public Hearing Prop 218
Resolution No. 2023-60 LMD 3 Public Hearing Prop 218
Norco_Engineer Report_LMD 2 - 24-25 Rev 9-14-23
Norco_Engineer Report_LMD 3 - 24-25 Ref 9-14-23

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RESOLUTION NO. 2023-59

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORCO,

CALIFORNIA, PRELIMINARILY APPROVING THE ASSESSMENT
ENGINEER’S REPORT, DECLARING ITS INTENTION TO INCREASE
ASSESSMENTS FOR LANDSCAPE MAINTENANCE DISTRICT 2
(WESTERN PACIFIC) AND TO PROVIDE FOR THE LEVY AND

COLLECTION OF ANNUAL ASSESSMENTS IN SAID DISTRICT,

SETTING A TIME AND PLACE FOR A PUBLIC HEARING THEREON

AND ORDERING THE INITIAITON OF ASSESSMENT BALLOT
PROCEDURES.

WHEREAS, On October 20, 1999, by Resolution No 99-76, the City Council of the City of Norco (“City”), State of California, under the Landscaping and Lighting Act of 1972 (“1972 Act”) (California Streets and Highways Code section 22500 et seq.) established the Landscape Maintenance District known as and designated as Landscape Maintenance District No. 2 (Western Pacific, Tract No. Tract 25779); and WHEREAS, Landscape Maintenance District No. 2 funds landscaping services in Landscape Maintenance District No. 2 to maintain the character of the neighborhood (hereafter, referred to as the “District”); and

WHEREAS, this measure maintains landscaping along Norco Hills Road, Hidden Valley Parkway, selected interior slopes, wetlands, equestrian trails, and Norco Hills Park; and
WHEREAS, this measure will continue to fund maintenance activities such as providing landscape maintenance services, sprinkler repairs, cleaning park restrooms, maintaining equestrian trails and providing fuel modification efforts on various slopes throughout the District; and
WHEREAS, the District needs additional funding to offset the service level deficit and provide for capital reserves to complete a trail fencing project; and WHEREAS, funds are no longer sufficient to maintain the almost 32,000 LF of equestrian trail, 150,000 SF of retention basin, 103,000 SF of maintained slope and 52,000 SF of Norco Hills Park which includes all sprinkler systems and the neighborhood park arena in Norco Hills Park; and
WHEREAS, to monitor expenditures, this measure requires annual independent audits published for public review; and
WHEREAS, the costs of servicing and maintaining the landscape improvements within the District have increased and the existing assessments levied therein are

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Resolution No. 2023-59, Western Pacific

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September 18, 2023
insufficient to service and maintain the landscape improvement at their current level; and
WHEREAS, the City Council has determined it is appropriate to provide property owners within the District whose property is subject to the levy of assessments the opportunity to indicate their support for or opposition to the proposed increase of assessments within the District and provide for ongoing adjustments to the assessments for inflation; and
WHEREAS, the City Council has retained RKA Consultants for the purpose of assisting with the proposed increase in assessments to be levied and to prepare and file a report with the City Clerk in accordance with the 1972 Act, Article XIIID, Section 4 of the Constitution of the State of California (“Article XIIID”) and the Proposition 218 Omnibus Implementation Act (“Proposition 218”) (California Government Code Section 53750 et seq.), (the 1972 Act, Article XIIID, and Proposition 218 are collectively referred to as the “Assessment Law”); and
WHEREAS, if the levy of the proposed increase in assessments within the District is not approved by the property owners, the existing District and assessments shall remain in place and the City may continue to adjust services to match the revenues provided by the existing District assessments as previously authorized and approved by the City Council; and
WHEREAS, on June 19, 2023, the City Council authorized staff to initiate the 218 process to increase the assessments and to levy assessments within the District to pay for increase costs of servicing and maintain the improvements; and WHEREAS, at this time the City Council desires to declare its intention to increase the assessments within the District and to provide for the levy and collection of annual assessments, beginning with the next fiscal year, to provide for the costs and expenses necessary to pay for the service and maintenance of the improvements (defined below) including an annual adjustment based on CPI within the District, if approved by property owners; and
WHEREAS, the Engineer’s Report has been filed with the City Clerk and submitted to this City Council in accordance with the Assessment Law; and WHEREAS, the City Council has carefully examined and reviewed the Engineer’s Report as presented and is preliminarily satisfied with the proposed increase in assessments, each and all of the budget items and documents as set forth therein, and is satisfied that the levy amounts, on a preliminary basis, have been spread in accordance within the special benefits received from the improvements, operation, maintenance and services withing the District as set for in said Engineer’s Report.

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Resolution No. 2023-59, Western Pacific

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September 18, 2023
NOW, THEREFORE, the City Council of the City of Norco, DOES HEREBY RESOLVE as follows:

1. That the Engineer’s Report as presented, consisting of the following: a description of improvements, the estimated costs of improvements, a diagram for the District and the District assessment roll containing the Fiscal Year 2024/25 levy for each Assessor’s parcel within the District, is hereby approved on a preliminary basis and ordered to be filed in the Office of the City Clerk as a permanent record and to remain open for public inspection.

2. It is the Intention of the City Council to order the increase in the assessments within the District and to levy and collect the assessments to pay the annual costs and expenses for the service and maintenance of the improvements within the District, including annual adjustment for inflation based on CPI.

3. The improvements located in and serviced and maintained by the District generally include: The landscaping and irrigation systems along roadways, medians, and slopes; one neighborhood park (Norco Hills Park) that includes the park equestrian arena;) equestrian trails and fencing that are a direct and special benefit to the parcels within the District. These improvements are located within the street public rights-of-ways and dedicated public easements which are within the boundaries of the District. The landscaping maintenance includes, but is not limited to, the pruning, fertilizing, mowing, weeding, pest control, removal trash/debris/graffiti, and irrigation of the trees, shrubs, ground cover, and turf.

Maintenance of associated improvements including the parks and irrigation systems, includes, but is not limited to, grading and replacement of trail surfacing, trail fence repair and replacement and irrigation systems control, adjustment, repair, and replacement. Services include personnel, materials, contracting services, utilities, and all necessary costs associated with the maintenance, replacement and repair required to keep the improvements in healthy, vigorous, and satisfactory condition.

4. The Engineer’s report as preliminarily approved by the City Council, is on file with the City Clerk and open for public inspection. Reference is made to the Engineer’s Report for a full detailed description of the improvements to be serviced and maintained, the boundaries of the District, Engineer’s estimate of the itemized total costs and expenses of servicing and maintaining the improvements and the incidental expenses in connection therewith, and the proposed assessments upon assessable lots and parcels of land within the District.

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Resolution No. 2023-59, Western Pacific

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September 18, 2023
heard. All interested persons shall be afforded the opportunity to hear and be heard. The City Council shall consider all oral statements or written communications made or filed by any interested person in regards to the proposed District.

6. The City Clerk is herby authorized and directed to give notice of the Public Hearing to affected property owners by mailing the Notice of Public Hearing and Assessment Ballot Procedure and filing of the Engineer’s Report, together with the assessment ballots and ballot materials to the record owners of all real property proposed to be assessed within the District in accordance with Section 53753 of the California Government Code and Section 4 of Article XIIID of the California Constitution.

PASSED AND ADOPTED by the City Council of the City of Norco at an adjourned regular meeting held on September 18, 2023.
_____________________________
Mayor of the City of Norco, California
ATTEST:
________________________________
Dana Roa, City Clerk
City of Norco, California
I, DANA ROA, City Clerk of the City of Norco, California, do hereby certify that the foregoing Resolution was adopted by the City Council of the City of Norco, California, at an adjourned regular meeting thereof held on September 18, 2023, by the following vote of the City Council:

AYES:

NOES:

ABSENT:

ABSTAIN:

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Resolution No. 2023-59, Western Pacific

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September 18, 2023
IN WITNESS WHEREOF, I have hereunto set my hand affixed the official seal of the City of Norco, California, held on September 18, 2023. ________________________________
Dana Roa, City Clerk
City of Norco, California

Page 25 of 223 ends

RESOLUTION NO. 2023-60

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORCO,

CALIFORNIA, PRELIMINARILY APPROVING THE ASSESSMENT
ENGINEER’S REPORT, DECLARING ITS INTENTION TO INCREASE
ASSESSMENTS FOR LANDSCAPE MAINTENANCE DISTRICT 3
(CENTEX) AND TO PROVIDE FOR THE LEVY AND COLLECTION OF

ANNUAL ASSESSMENTS IN SAID DISTRICT, SETTING A TIME AND

PLACE FOR A PUBLIC HEARING THEREON AND ORDERING THE
INITIAITON OF ASSESSMENT BALLOT PROCEDURES.

WHEREAS, On April 18, 2001, by Resolution No 2001-31, the City Council of the City of Norco (“City”), State of California, under the Landscaping and Lighting Act of 1972 (“1972 Act”) (California Streets and Highways Code section 22500 et seq.) established the Landscape Maintenance District known as and designated as Landscape Maintenance District No. 3 (Centex, Tract No. Tract 28626); and WHEREAS, Landscape Maintenance District No. 3 funds landscaping services in Landscape Maintenance District No. 3 to maintain the character of the neighborhood (hereafter, referred to as the “District”); and

WHEREAS, this measure maintains landscaping along Norco Hills Road, parkways, selected interior slopes, wetlands, and equestrian trails; and WHEREAS, this measure will continue to fund maintenance activities such as providing landscape maintenance services, sprinkler repairs, maintaining equestrian trails and providing fuel modification efforts on various slopes throughout the District; and
WHEREAS, the District needs additional funding to offset the service level deficit and provide for capital reserves to complete a trail fencing project; and WHEREAS, funds are no longer sufficient to maintain the almost 8,400 LF of equestrian trail, 38,000 SF of parkway, and 150,000 SF of maintained slope which includes all sprinkler systems and utilities; and
WHEREAS, to monitor expenditures, this measure requires annual independent audits published for public review; and
WHEREAS, the costs of servicing and maintaining the landscape improvements within the District have increased and the existing assessments levied therein are insufficient to service and maintain the landscape improvement at their current level; and
WHEREAS, the City Council has determined it is appropriate to provide property owners within the District whose property is subject to the levy of assessments the

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Resolution No. 2023-60, Centex

Page 2 ends

September 18, 2023
opportunity to indicate their support for or opposition to the proposed increase of assessments within the District and provide for ongoing adjustments to the assessments for inflation; and
WHEREAS, the City Council has retained RKA Consultants for the purpose of assisting with the proposed increase in assessments to be levied and to prepare and file a report with the City Clerk in accordance with the 1972 Act, Article XIIID, Section 4 of the Constitution of the State of California (“Article XIIID”) and the Proposition 218 Omnibus Implementation Act (“Proposition 218”) (California Government Code Section 53750 et seq.), (the 1972 Act, Article XIIID, and Proposition 218 are collectively referred to as the “Assessment Law”); and
WHEREAS, if the levy of the proposed increase in assessments within the District is not approved by the property owners, the existing District and assessments shall remain in place and the City may continue to adjust services to match the revenues provided by the existing District assessments as previously authorized and approved by the City Council; and
WHEREAS, on June 19, 2023, the City Council authorized staff to initiate the 218 process to increase the assessments and to levy assessments within the District to pay for increase costs of servicing and maintain the improvements; and WHEREAS, at this time the City Council desires to declare its intention to increase the assessments within the District and to provide for the levy and collection of annual assessments, beginning with the next fiscal year, to provide for the costs and expenses necessary to pay for the service and maintenance of the improvements (defined below) including an annual adjustment based on CPI within the District, if approved by property owners; and
WHEREAS, the Engineer’s Report has been filed with the City Clerk and submitted to this City Council in accordance with the Assessment Law; and WHEREAS, the City Council has carefully examined and reviewed the Engineer’s Report as presented and is preliminarily satisfied with the proposed increase in assessments, each and all of the budget items and documents as set forth therein, and is satisfied that the levy amounts, on a preliminary basis, have been spread in accordance within the special benefits received from the improvements, operation, maintenance and services withing the District as set for in said Engineer’s Report.

NOW, THEREFORE, the City Council of the City of Norco, DOES HEREBY RESOLVE as follows:

1. That the Engineer’s Report as presented, consisting of the following: a description of improvements, the estimated costs of improvements, a diagram for

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Resolution No. 2023-60, Centex

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September 18, 2023
the District and the District assessment roll containing the Fiscal Year 2024/25 levy for each Assessor’s parcel within the District, is hereby approved on a preliminary basis and ordered to be filed in the Office of the City Clerk as a permanent record and to remain open for public inspection.

3. The improvements located in and serviced and maintained by the District generally include: The landscaping and irrigation systems along roadways, parkways, slopes, equestrian trails, and fencing that are a direct and special benefit to the parcels within the District. These improvements are located within the street public rights-of-ways and dedicated public easements which are within the boundaries of the District. The landscaping maintenance includes, but is not limited to the pruning, fertilizing, mowing, weeding, pest control, removal trash/debris/graffiti, and irrigation of the trees, shrubs, ground cover, and turf.

Maintenance of associated improvements including irrigation systems, includes but is not limited to, grading and replacement of trail surfacing, trail fence repair and replacement and irrigation systems control, adjustment, repair, and replacement. Services include personnel, materials, contracting services, utilities, and all necessary costs associated with the maintenance, replacement and repair required to keep the improvements in healthy, vigorous, and satisfactory condition.

5. Notice is hereby given that a Public Hearing is scheduled to be held at the City of Norco, City Council Chambers, 2820 Clark Avenue, Norco, CA 92860 on November 15, 2023, at 7:00 p.m. or as soon thereafter as the matter may be heard. All interested persons shall be afforded the opportunity to hear and be heard. The City Council shall consider all oral statements or written communications made or filed by any interested person in regards to the proposed District.

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Resolution No. 2023-60, Centex

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September 18, 2023

AYES:

NOES:

ABSENT:

ABSTAIN:

IN WITNESS WHEREOF, I have hereunto set my hand affixed the official seal of the City of Norco, California, held on September 18, 2023.

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Resolution No. 2023-60, Centex

Page 5 ends

September 18, 2023
________________________________
Dana Roa, City Clerk
City of Norco, California

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ENGINEER’S REPORT
FOR
LANDSCAPE MAINTENANCE DISTRICT NO. 2
(WESTERN PACIFIC – TRACT 25779)
FISCAL YEAR 2024-2025

PREPARED FOR THE

CITY OF NORCO

RIVERSIDE COUNTY, CALIFORNIA
PREPARED BY:

CODY A. HOWING, P.E.

ASSESSMENT ENGINEER

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ENGINEER’S REPORT

CITY OF NORCO
LANDSCAPE MAINTENANCE DISTRICT NO. 2
(WESTERN PACIFIC – TRACT 25779)
FISCAL YEAR 2024-2025
The undersigned respectfully submits the enclosed report as directed by the City Council.

Date: November 15, 2023 By:
________________________
Cody A. Howing, P.E.

R.C.E. No. 86054
Assessment Engineer
I HEREBY CERTIFY that the enclosed Engineer’s Report, together with the Assessment Roll and Assessment Diagram thereto attached, was filed with me on ___________, 2023.

City Clerk, City of Norco
Riverside County, California
By: _________________________
I HEREBY CERTIFY that the enclosed Engineer’s Report, together with the Assessment Roll and Assessment Diagram thereto attached, was approved and confirmed by the City Council of the City of Norco, California, on _____________, 2023.

City Clerk, City of Norco
Riverside County, California
By: _________________________

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FISCAL YEAR 2024-2025

CITY OF NORCO
ENGINEER’S REPORT PREPARED PURSUANT TO THE PROVISIONS OF THE LANDSCAPING AND LIGHTING ACT OF 1972 SECTION 22500 THROUGH 22679 OF THE CALIFORNIA STREETS AND HIGHWAYS CODE
Pursuant to Part 2 of Division 15 of the Streets and Highways Code of the State of California, and in accordance with the Resolution of Initiation, being Resolution No. 98-97, adopted by the Council of the City of Norco, State of California, in connection with the proceedings for:

CITY OF NORCO
LANDSCAPING MAINTENANCE DISTRICT NO. 2
(WESTERN PACIFIC – TRACT 25779)
Hereinafter referred to as the “Assessment District,” I, Cody A. Howing, P.E. authorized representative of the City of Norco, the duly appointed ENGINEER OF WORK, submit herewith the “Report” consisting of four parts as follows:

PART A
Plans and specifications for the improvements are as set forth herein and are on file in the Office of the Clerk of the City.

PART B
An estimate of cost of the proposed improvements, including incidental costs and expenses in connection therewith, is as set forth herein.

PART C
The Diagram of the Assessment District Boundaries showing the exterior boundaries of the Assessment District, the boundaries of any zones within the Assessment District, and the lines and dimensions of each lot or parcel of land within the Assessment District has been submitted to the Clerk of the City. The lines and dimensions of each lot or parcel within the Assessment District are those lines and dimensions shown on the maps of the Assessor of the County of Riverside for the year when this Report was prepared. The Assessor’s maps and records are incorporated by reference herein and made part of this Report. The legal description of the Assessment District is attached hereto.

PART D
An assessment of the estimated cost of the improvements on each benefited lot or parcel of land within the Assessment District.

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PART A

PLANS AND SPECIFICATIONS

DESCRIPTION OF IMPROVEMENTS

FOR THE CITY OF NORCO
LANDSCAPE MAINTENANCE DISTRICT NO. 2
(WESTERN PACIFIC – TRACT 25779)
FISCAL YEAR 2024-2025
The improvements are the operation, maintenance, and servicing of landscaping, wetlands, horse trails, hardscaping, and masonry, and appurtenant facilities including but not limited to personnel, electrical energy, utilities such as water, materials, contracting services, and other items necessary for the satisfactory operation of these services, described as follows:

LANDSCAPING
Landscaping, planting, shrubbery, trees, irrigation, hardscapes, masonry wall surfaces, fixtures, and appurtenant facilities located within public right-of-way (parkways) and easements (slope) are specifically excluded. Trails and publicly owned parcels park within the boundary of the Assessment District are to be maintained except as specifically excluded.

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PART B

ESTIMATE OF COST
LANDSCAPE MAINTENANCE DISTRICT NO. 2 (WESTERN PACIFIC)
NORCO, CALIFORNIA (FUND NO. 53105)
The estimated costs for the operation, maintenance and servicing of the facilities, included in this Part, are the estimated costs of maintenance if the facilities were fully maintained for Fiscal Year 2024-2025. The 1972 Act provides that the total cost of the maintenance and services, together with incidental expenses, may be financed from the assessment proceeds.

The incidental expenses may include engineering fees, legal fees, printing, mailing, postage, publishing, and all other related costs identified with district proceedings.

Direct Cost
Contractual Maintenance (34100)

1. Landscape Maintenance: Generally includes all pruning, weed and pest control, fertilization, turf care, trash and debris cleanup, irrigation to include maintenance and repair, water cost, electrical cost for controllers, tree trimming up to 15 feet, tree staking, backflow testing, rodent control and plant replacement.

A. Internal Streets $ 0.00
B. Hidden Valley Parkway $ 5,850.00
C. Norco Hills Road $ 14,170.00

2. Slope Maintenance: includes same activities as Item 1 for exterior slopes along Hidden Valley Parkway.
$
A. District Areas (Hidden Valley Parkway) $ 15,890.00
B. Norco Hills Road Fuel Modification $ 4,920.00

3. Parkway Maintenance (District Areas) $ 0.00

4. Equestrian Trails: includes minor grading, replacement of wooden posts and rails, and addition of decomposed granite for trail surface. Major storm sandbag contingency.
$ 41,320.00

5. Maintenance of Wetland (Lot 71): trash and debris cleanup, plant replacement, pest and rodent control.
$ 490.00

6. Park Maintenance (Lot 2): trash and debris cleanup, mowing, fertilization, turf care, pest and rodent control, and
observation.
$ 8,860.00
Utilities (33100)
Water
A.District Areas $ 26,760.00
B.Norco Hills Rd $ 7,950.00
Electrical $ 2,000.00
Phone $ 206.00
Annual Tree & Plant Replacement & Removals (32405) $ 3,000.00 Subtotal Direct Cost $ 131,416.00 $ 131,416.00
Operating Contingency (1.5 percent max) (35512) $ 1,971.00 Replacement Reserve (2.0 percent) (District Only) $ 2,628.00 Repayment of City Funded Deficit $ 0.00
Trail Fence Replacement Fund $ 41,862.00
CIP Project: Norco Hills Park Play Surface Replacement $ 0.00 Administrative Costs
Observation: City Staff to Manage District (30100) $ 22,602.00 Engineer's Report (34105) $ 3,150.00
City Overhead/Administration (34150) $ 7,340.00
Riverside County Admin. Fees (35210) $ 242.00
Incidentals (35511) $ 1,000.00
Prop. 218 Hearing $ 0.00
Subtotal Administrative Costs $ 34,334.00 $ 34,334.00
TOTAL ANNUAL BUDGET $ 212,211.00

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The 1972 Act requires that a special fund be set up for the revenues and expenditures of the District. Funds raised by assessment shall be used only for the purpose as stated herein. The City may advance funds to the District, if needed, to ensure adequate cash flow, and will be reimbursed for any such advances upon receipt of assessments. Any surplus or deficit remaining on July 1 must be carried over to the next fiscal year. The estimated fund balance for fiscal year ending June 30, 2024 and cash flow funding needs are as follows:

Fund Balance
Estimated Beginning Fund Balance July 1, 2024 ($15,980.00) Budgeted Assessment for Future Trail Fence Replacement $41,862.00 Repayment of City Funded Deficit $0.00
Estimated Current Year Revenue Surplus/(Deficit)** ($0.00) Estimated Fund Balance June 30, 2025 $25,882.00
Estimated Fund Balance Needs:
2024-2044 Budgeted Trail Fence Replacement Capital Project Balance $0.00
6 Months Operating Cash Flow (District Only) $85,174.00 Estimated Needs $85,174.00
Estimated Surplus or (Unfunded Needs) July 1, 2024: ($85,174.00) Total Replacement Cost for Vinyl Trail Fence (29,800 Lineal Feet @ $27.00/LF) $804,600 Set-Aside Balance for Budgeted Trail Fence Replacement * $ 0.00 *Replacement cycle for vinyl fencing will be 20 years ($40,230/YR) as wood fencing is replaced with vinyl. Replacement funds are being set-aside each year, improvement projects to implement the trail fence replacement will commence after adequate funds have been accumulated to initiate work. It is anticipated a trail fence replacement project will occur every 3-5 years.
**City funded maintenance, water & capital project not calculated in current year deficit.

The total annual levy of assessments hereunder may be increased annually by an amount not to exceed the increase in the consumer price index applicable to the City of Norco. In no case may the increase exceed the actual cost of providing the services rendered within and pursuant to the District.

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PART C

ASSESSMENT DIAGRAM
An Assessment Diagram for the Assessment District is on file in the office of the City Clerk.

The lines and dimensions of each lot or parcel within the Assessment District are those lines and dimensions shown on the maps of the Assessor of the County of Riverside, for the year when this Report was prepared, and are incorporated by reference herein and made a part of this Report. A reduced scale map depicting the assessment diagram is attached hereto.

Also attached as Exhibit “A’ is the Legal Description of Assessment District.

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EXHIBIT A

LEGAL DESCRIPTION
LANDSCAPE MAINTENANCE DISTRICT NO. 2 (WESTERN PACIFIC)
That certain real property situated in the City of Norco, County of Riverside, State of California, more particularly described as follows:

Lots 3 through 70 inclusive, and Lots 72 through 221, exclusive of Lot 219, of Tract No. 25779 in the City of Norco, County of Riverside, State of California, as per map recorded in Book 284, Pages 20 through 30, inclusive, of Maps in the Office of the County Recorder of Said County.

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PART D

ASSESSMENT
WHEREAS, on October 20, 1999, the City Council of the City of Norco, California, pursuant to the provisions of the Landscaping and Lighting Act of 1972, Part 2 (commencing with Section 22500) of Division 15 of the California Streets and Highways Code (the “Act”) adopted its Resolution of the City Council of the City of Norco Initiating Proceedings for the Formation for a Maintenance Assessment District and thereafter formed Landscape Maintenance District No. 2 (Western Pacific) (the “District”) as more particularly described in said proceedings; and
WHEREAS, said resolution directed the undersigned to prepare and file a report pursuant to Section 22565, et seq., of said Act;
WHEREAS, at this time, this City Council is desirous to provide for the annual levy of assessments for the territory within the District for the next ensuing fiscal year, to provide for the costs and expenses necessary for continual maintenance of improvements within said District; and
NOW, THEREFORE, the undersigned, by virtue of the power vested in me under said Act and the order of the City Council of said City, hereby makes the following assessment to cover the portion of the estimated cost of the maintenance of said improvements and the costs and expenses incidental thereto to be paid by said District.

The amount to be paid for the maintenance of said improvement, and the expenses incidental thereto, are as follows:
(1) (2) (3)
As Filed As Preliminarily As Finally
Approved Approved
Cost of Maintenance $ 131,416.00 $ $
Repayment of City $ 0.00 $ $
Funded Deficit
City funded expenses $ (0.00)
in district
Operating Contingency/
Reserve $ 4,599.00 $ $
Trail Fence CIP Fund $ 41,862.00 $ $
Prop. 218 Hearing $ 0.00 $ $
Incidental Expenses $ 34,334.00 $ $
Total Cost $ 212,211.00 $ $
Surplus or (Deficit) $ (0.00) $ $
NET TO BE ASSESSED $ 212,211.00 $ $

FOR FISCAL YEAR
2024-2025
The total annual levy of assessments hereunder may be increased annually by an amount not to exceed the increase in the consumer price index (CPI) applicable to the City of Norco. In no case may the increase exceed the actual cost of providing the services rendered within and pursuant to the District. For fiscal year 2024-25, an assessment increase of 16% has been proposed. The increase exceeds the likely CPI ending March 31, 2024 and thus a protest hearing process conforming to the applicable provisions of Government Code

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Section 53753 was undertaken to ballot the owners of the property.

The noticed protest hearing occurred on November 15, 2023. At the conclusion of the protest hearing, City Council determined that a majority protect did not exist. The proposed increase established the maximum per parcel assessment from $835.00 to $969.00. The maximum per parcel assessment of $969.00 will be levied. The total District wide levy will be $212,211.00.

The 1972 Act requires that a special fund be set up for the revenues and expenditures of the District. Funds raised by assessment shall be used only for the purposes as stated herein. A contribution to the District by the City may be made to reduce assessments, as the City Council deems appropriate. Any balance remaining on July 1 must be carried over to the next fiscal year. The estimated fund balance for fiscal year ending June 30, 2025 will be a surplus of $25,882.00.

As required by said Act, a diagram is hereto attached showing the exterior boundaries of said District. The lines and dimensions of each lot or parcel of land within the said District as the same existed at the time of the passage of said resolution are as shown on the maps of the County Assessor of the County of Riverside. Reference is hereby made to said maps and said maps shall govern for all details concerning the lines and dimensions of such lots and parcels.

I do hereby assess the net amount to be assessed upon all assessable lots or parcels of land within said District by apportioning that amount among the several lots or parcels in proportion to the estimated benefits to be received by each such lot or parcel from the maintenance of said improvements, and more particularly set forth in the list hereto attached and by reference made a part hereof.

Said assessment is made upon the several lots or parcels of land within the District in proportion to the estimated benefits to be received by said lots or parcels, respectively, from the maintenance of said improvements. The diagram and the assessor’s map are the documents to which reference is hereby made for a more particular description of said property.

Each lot or parcel of land assessed is described in the assessment list by reference to its parcel number as shown on the Assessor’s Maps of the County of Riverside for the Fiscal Year 2023-2024 and includes all of such parcel. For a more particular description of said property, reference is hereby made to the deeds and maps on file and of record in the office of the County Recorder of said County.

City of Norco
Dated: _______, 2023
__________________________
Cody A. Howing, P.E.

Assessment Engineer

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EXHIBIT B

METHOD AND FORMULA OF ASSESSMENT SPREAD
The law requires and the statutes provide that assessments, as levied pursuant to the provisions of the “Landscaping and Lighting Act of 1972,” must be based on the benefit that the properties receive from the works of improvement. The statute does not specify the method or formula that should be used in any special assessment district proceedings. The Assessment Engineer is appointed for the purpose of making an analysis of the facts and determining the correct apportionment of the assessment obligation. For these proceedings, the City has based its determination on standard assessment practices utilized by consulting civil engineers with a background of experience in the design of such works of improvement and experience in the completion of assessment district formation projects.

IDENTIFYING THE BENEFIT
First of all, it is necessary to identify the benefit that the public improvement will render to the properties within the Assessment District. The landscaping, irrigation, and equestrian trails have been designed and will be constructed for the benefit of enhanced aesthetics and neighborhood identity for all properties within the Assessment District.

APPORTIONMENT OF COSTS
In further making the analysis, it is necessary that the property owners receive a special and direct benefit distinguished from that of the general public. In this case, several factors are being used in the final method and spread and assessment.

The individual parcels of land within the Assessment District are currently developed or have the potential for development to single family residential units. The proposed improvements are designed to enhance the appearance and appeal of the District and all of the parcels within. The improvements will provide a sense of neighborhood identity for the District. As such, each parcel will benefit equally from the proposed improvements.

In conclusion, it is my opinion that the assessments for the referenced Assessment District have been spread in direct accordance with the benefits that each parcel receives from the works of improvements.

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LIST OF ASSESSMENTS
LANDSCAPE MAINTENANCE DISTRICT NO. 2 (WESTERN PACIFIC)
FISCAL YEAR 2024-2025
As Preliminarily As Finally Confirmed As Preliminarily As Finally Confirmed Lot No. Approved and Recorded Lot No. Approved and Recorded 1 $969.00 46 $969.00
2 $ 0.00 47 $969.00
3 $969.00 48 $969.00
4 $969.00 49 $969.00
5 $969.00 50 $969.00
6 $969.00 51 $969.00
7 $969.00 52 $969.00
8 $969.00 53 $969.00
9 $969.00 54 $969.00
10 $969.00 55 $969.00
11 $969.00 56 $969.00
12 $969.00 57 $969.00
13 $969.00 58 $969.00
14 $969.00 59 $969.00
15 $969.00 60 $969.00
16 $969.00 61 $969.00
17 $969.00 62 $969.00
18 $969.00 63 $969.00
19 $969.00 64 $969.00
20 $969.00 65 $969.00
21 $969.00 66 $969.00
22 $969.00 67 $969.00
23 $969.00 68 $969.00
24 $969.00 69 $969.00
25 $969.00 70 $969.00
26 $969.00 71 $ 0.00
27 $969.00 72 $969.00
28 $969.00 73 $969.00
29 $969.00 74 $969.00
30 $969.00 75 $969.00
31 $969.00 76 $969.00
32 $969.00 77 $969.00
33 $969.00 78 $969.00
34 $969.00 79 $969.00
35 $969.00 80 $969.00
36 $969.00 81 $969.00
37 $969.00 82 $969.00
38 $969.00 83 $969.00
39 $969.00 84 $969.00
40 $969.00 85 $969.00
41 $969.00 86 $969.00
42 $969.00 87 $969.00
43 $969.00
44 $969.00
45 $969.00

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LANDSCAPE MAINTENANCE DISTRICT NO. 2 (WESTERN PACIFIC)
FISCAL YEAR 2024-2025
As Preliminarily As Finally Confirmed As Preliminarily As Finally Confirmed Lot No. Approved and Recorded Lot No. Approved and Recorded 88 $969.00 132 $969.00
89 $969.00 133 $969.00
90 $969.00 134 $969.00
91 $969.00 135 $969.00
92 $969.00 136 $969.00
93 $969.00 137 $969.00
94 $969.00 138 $969.00
95 $969.00 139 $969.00
96 $969.00 140 $969.00
97 $969.00 141 $969.00
98 $969.00 142 $969.00
99 $969.00 143 $969.00
100 $969.00 144 $969.00
101 $969.00 145 $969.00
102 $969.00 146 $969.00
103 $969.00 147 $969.00
104 $969.00 148 $969.00
105 $969.00 149 $969.00
106 $969.00 150 $969.00
107 $969.00 151 $969.00
108 $969.00 152 $969.00
109 $969.00 153 $969.00
110 $969.00 154 $969.00
111 $969.00 155 $969.00
112 $969.00 156 $969.00
113 $969.00 157 $969.00
114 $969.00 158 $969.00
115 $969.00 159 $969.00
116 $969.00 160 $969.00
117 $969.00 161 $969.00
118 $969.00 ` 162 $969.00
119 $969.00 163 $969.00
120 $969.00 164 $969.00
121 $969.00 165 $969.00
122 $969.00 166 $969.00
123 $969.00 167 $969.00
124 $969.00 168 $969.00
125 $969.00 169 $969.00
126 $969.00 170 $969.00
127 $969.00 171 $969.00
128 $969.00
129 $969.00
130 $969.00
131 $969.00

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LANDSCAPE MAINTENANCE DISTRICT NO. 2 (WESTERN PACIFIC)
FISCAL YEAR 2024-2025
As Preliminarily As Finally Confirmed As Preliminarily As Finally Confirmed Lot No. Approved and Recorded Lot No. Approved and Recorded 172 $969.00 216 $969.00
173 $969.00 217 $969.00
174 $969.00 218 $969.00
175 $969.00 219 $ 0.00
176 $969.00 220 $969.00
177 $969.00 221 $969.00
178 $969.00
179 $969.00
180 $969.00
181 $969.00
182 $969.00
183 $969.00
184 $969.00
185 $969.00
186 $969.00
187 $969.00
188 $969.00
189 $969.00
190 $969.00
191 $969.00
192 $969.00
193 $969.00
194 $969.00
195 $969.00
196 $969.00
197 $969.00
198 $969.00
199 $969.00
200 $969.00
201 $969.00
202 $969.00
203 $969.00
204 $969.00
205 $969.00
206 $969.00
207 $969.00
208 $969.00
209 $969.00
210 $969.00
211 $969.00
212 $969.00
213 $969.00
214 $969.00
215 $969.00
TOTAL NUMBER OF ASSESSED PARCELS: 219
TOTAL TO BE ASSESSED IS $212,211.00

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ENGINEER’S REPORT
FOR
LANDSCAPE MAINTENANCE DISTRICT NO. 3
(CENTEX– TRACT 28626)
FISCAL YEAR 2024-2025

PREPARED FOR THE

CITY OF NORCO

RIVERSIDE COUNTY, CALIFORNIA
PREPARED BY:

CODY A. HOWING, P.E.

ASSESSMENT ENGINEER

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ENGINEER’S REPORT

CITY OF NORCO
LANDSCAPE MAINTENANCE DISTRICT NO. 3
(CENTEX – TRACT 28626)
FISCAL YEAR 2024-2025
The undersigned respectfully submits the enclosed report as directed by the City Council.

Date: November 15, 2023 By: _________________________
Cody A. Howing, P.E.

City Clerk, City of Norco
Riverside County, California
By: _________________________

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FISCAL YEAR 2024-2025

CITY OF NORCO
LANDSCAPING MAINTENANCE DISTRICT NO. 3
(CENTEX – TRACT 28626)
Hereinafter referred to as the “Assessment District,” I, Cody A. Howing, P.E. authorized representative of the City of Norco, the duly appointed ENGINEER OF WORK, submit herewith the “Report” consisting of four parts as follows:

PART A
Plans and specifications for the improvements are as set forth herein and are on file in the Office of the Clerk of the City.

PART B
An estimate of cost of the proposed improvements, including incidental costs and expenses in connection therewith, is as set forth herein.

PART D
An assessment of the estimated cost of the improvements on each benefited lot or parcel of land within the Assessment District.

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PART A

PLANS AND SPECIFICATIONS

DESCRIPTION OF IMPROVEMENTS

FOR THE CITY OF NORCO
LANDSCAPE MAINTENANCE DISTRICT NO. 3
(CENTEX – TRACT 28626)
FISCAL YEAR 2024-2025
The improvements are the operation, maintenance, and servicing of landscaping, horse trails, hardscaping, and masonry, and appurtenant facilities including but not limited to personnel, electrical energy, utilities such as water, materials, contracting services, and other items necessary for the satisfactory operation of these services, described as follows:

LANDSCAPING
Landscaping, planting, shrubbery, trees, irrigation, hardscapes, masonry wall surfaces, fencing, fixtures, and appurtenant facilities located within public rights-of-way (parkways),easements (slope and trail) and publicly owned parcels within the boundary of the Assessment District except as specifically excluded.

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PART B

ESTIMATE OF COST
LANDSCAPE MAINTENANCE DISTRICT NO. 3 (CENTEX – TRACT 28626) NORCO, CALIFORNIA (FUND NO. 53110)
The estimated costs for the operation, maintenance and servicing of the facilities, shown below, are the estimated costs of maintenance if the facilities were fully maintained for Fiscal Year 2024-2025. The 1972 Act provides that the total cost of the maintenance and services, together with incidental expenses, may be financed from the assessment proceeds. The incidental expenses may include engineering fees, legal fees, printing, mailing, postage, publishing, and all other related costs identified with district proceedings.

Direct Cost
Contractual Maintenance (34100)

2. Equestrian Trails: includes minor grading, replacement of wooden posts and rails, and addition of decomposed granite for trail surfaces.
$ 6,520.00

3. Slope Maintenance: includes same activities as Item 1 for exterior slopes along Parkview Drive and Norco Hills Road as well as private slopes at Lots 1, 2, 3, and 4 Cost included in item

1. $ 0.00
Utilities (33100) $
Water $ 41,870.00
Electrical $ 1,200.00
Phone $ 65.00
Annual Tree & Plant Replacement (32405) $ 2,500.00
Subtotal Direct Cost 83,885.00 $ 83,885.00
Operating Contingency (2.0 percent max) (35512) $ 1,677.00 Replacement Reserve (0.4 percent)
$
$ 379.00
Administrative Costs
Observation: City Staff to Manage District (30100) $ 18,082.00 Engineer's Report (34105) $ 2,704.00
City Overhead/Administration (34150) $ 5,068.00
Riverside County Admin. Fees (35210) $ 266.00
Incidentals (35511) $ 1,000.00
Subtotal Administrative Costs $ 27,120.00 $ 27,120.00
Operating Reserve $ 0.00
Annual Capital Project- Trail Fence $ $ 9,037.00
Prop 218 Hearing $ 0.00 $ 0.00
TOTAL ANNUAL BUDGET $ 122,098.00

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Fund Balance
Estimated Beginning Fund Balance July 1, 2024 $ (25,575.00) Assessment for Future Trail Fence Replacement $ 9,037.00 Estimated Current Year Revenue Surplus (Deficit) $ (0.00) Estimated Fund Balance June 30, 2025 $ (16,538.00)
Estimated Fund Balance Needs:

Budgeted Trail Fence Replacement Capital Project Balance $ 0.00 6 Months Operating Cash Flow $ 56,530.00
Estimated Needs $ 56,530.00
Estimated Surplus or (Unfunded Needs): $ (56,530.00)
Total Replacement Cost for Vinyl Trail Fence (6,694 Lineal Ft @ $27.00/LF) $ 180,738.00 Set-Aside Balance for Budgeted Trail Fence Replacement * $ 0.00 * Replacement cycle for vinyl fencing will be 20 years (9,037.00/yr) as wood fencing is replaced with vinyl. Replacement funds are being set-aside each year, improvement projects to implement the trail fence replacement will commence after adequate funds have been accumulated to initiate work. It is anticipated a trail fence replacement project will occur every 3-5 years.

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PART C

ASSESSMENT DIAGRAM
An Assessment Diagram for the Assessment District is on file in the office of the City Clerk.

Also attached as Exhibit “A’ is the Legal Description of Assessment District.

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EXHIBIT A

LEGAL DESCRIPTION
LANDSCAPE MAINTENANCE DISTRICT NO. 3 (CENTEX – TRACT 28626) That certain real property situated in the City of Norco, County of Riverside, State of California, more particularly described as follows:

Lots 1 through 82 inclusive, of Tract No. 28626 in the City of Norco, County of Riverside, State of California, as per map recorded in Book 295, Pages 46 through 53, inclusive, of Maps in the Office of the County Recorder of Said County.

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PART D

ASSESSMENT
WHEREAS, on April 18, 2001, the City Council of the City of Norco, California, pursuant to the provisions of the Landscaping and Lighting Act of 1972, Part 2 (commencing with Section 22500) of Division 15 of the California Streets and Highways Code (the “Act”) adopted its Resolution of the City Council of the City of Norco Initiating Proceedings for the Formation for a Maintenance Assessment District and thereafter formed Landscape Maintenance District No. 3 (Centex – Tract 28626) (the “District”) as more particularly described in said proceedings; and
WHEREAS, said resolution directed the undersigned to prepare and file a report pursuant to Section 22565, et seq., of said Act;
WHEREAS, at this time, this City Council is desirous to provide for the annual levy of assessments for the territory within the District for the next ensuing fiscal year, to provide for the costs and expenses necessary for continual maintenance of improvements within said District; and
NOW, THEREFORE, the undersigned, by virtue of the power vested in me under said Act and the order of the City Council of said City, hereby makes the following assessment to cover the portion of the estimated cost of the maintenance of said improvements and the costs and expenses incidental thereto to be paid by said District.

The amount to be paid for the maintenance of said improvement, and the expenses incidental thereto, are as follows:
(1) (2) (3)
As Filed As Preliminarily As Finally
______________________Approved Approved
Cost of Maintenance $ 83,885.00 $ $
Incidental Expenses $ 27,120.00 $ $
Operating Contingency/Reserve $ 2,056.00 $ $
Trail Fence CIP Fund $ 9,037.00 $ $
Prop 218 Hearing $ 0.00 $ $
Total Cost $ 122,098.00 $ $
Estimated Budget Deficit
Fiscal Year 2024-2025 $ (0.00) $ $
NET TO BE ASSESSED $ 122,098.00 $ $

FOR FISCAL YEAR
2024-2025
The total annual levy of assessments hereunder may be increased annually by an amount not to exceed the increase in the consumer price index applicable to the City of Norco. In no case may the increase exceed the actual cost of providing the services rendered within and pursuant to the District. For fiscal year 2024-25, an increased assessment of 19% has been proposed. The increase exceeds the likely CPI ending March 31, 2024 and thus a protest hearing process conforming to the applicable provisions of Government Code Section 53753 was undertaken to ballot the owners of the property.

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The noticed protest hearing occurred on November 15, 2023. At the conclusion of the protest hearing, City Council determined that a majority protect does not exist. The proposed increase established the maximum per parcel assessment from $1,252.00 to $1,489.00. The maximum per parcel assessment of $1,489.00 will be levied. The total District wide levy will be $122,098.00.

Each lot or parcel of land assessed is described in the assessment list by reference to its parcel number as shown on the Assessor’s Maps of the County of Riverside for the Fiscal Year 2024-2025 and includes all of such parcel. For a more particular description of said property, reference is hereby made to the deeds and maps on file and of record in the office of the County Recorder of said County.

City of Norco
Dated: ______, 2023
__________________________
Cody A. Howing, P.E.

Assessment Engineer

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EXHIBIT B

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LIST OF ASSESSMENTS
LANDSCAPE MAINTENANCE DISTRICT NO. 3 (CENTEX – TRACT 28626) FISCAL YEAR 2024-2025
As Preliminarily As Finally Confirmed As Preliminarily As Finally Confirmed Lot No. Approved and Recorded Lot No. Approved and Recorded 1 $1,489.00 45 $1,489.00
2 $1,489.00 46 $1,489.00
3 $1,489.00 47 $1,489.00
4 $1,489.00 48 $1,489.00
5 $1,489.00 49 $1,489.00
6 $1,489.00 50 $1,489.00
7 $1,489.00 51 $1,489.00
8 $1,489.00 52 $1,489.00
9 $1,489.00 53 $1,489.00
10 $1,489.00 54 $1,489.00
11 $1,489.00 55 $1,489.00
12 $1,489.00 56 $1,489.00
13 $1,489.00 57 $1,489.00
14 $1,489.00 58 $1,489.00
15 $1,489.00 59 $1,489.00
16 $1,489.00 60 $1,489.00
17 $1,489.00 61 $1,489.00
18 $1,489.00 62 $1,489.00
19 $1,489.00 63 $1,489.00
20 $1,489.00 64 $1,489.00
21 $1,489.00 65 $1,489.00
22 $1,489.00 66 $1,489.00
23 $1,489.00 67 $1,489.00
24 $1,489.00 68 $1,489.00
25 $1,489.00 69 $1,489.00
26 $1,489.00 70 $1,489.00
27 $1,489.00 71 $1,489.00
28 $1,489.00 72 $1,489.00
29 $1,489.00 73 $1,489.00
30 $1,489.00 74 $1,489.00
31 $1,489.00 75 $1,489.00
32 $1,489.00 76 $1,489.00
33 $1,489.00 77 $1,489.00
34 $1,489.00 78 $1,489.00
35 $1,489.00 79 $1,489.00
36 $1,489.00 80 $1,489.00
37 $1,489.00 81 $1,489.00
38 $1,489.00 82 $1,489.00
39 $1,489.00
40 $1,489.00
41 $1,489.00
42 $1,489.00
43 $1,489.00
44 $1,489.00
TOTAL PARCELS TO BE ASSESSED: 82
TOTAL TO BE ASSESSED: $ 122,098.00

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City Council

STAFF REPORT
Date: September 18, 2023 Agenda Item:

2.E.

To: Honorable Mayor and City Council Members
Prepared By: Amanda Hamilton, Facilities and Maintenance Director
Department: Facilities and Maintenance
SUBJECT:

Accept and Award Contract for the Installation of Musco Sports Lighting Equipment for the Wayne Makin LED Lighting Upgrade Project (Project No. 54111.4), and Approve the Expenditure for Sales Tax on the Sports Lighting Equipment.

RECOMMENDATION:

Accept and award contract to F.E.C. Electric, Inc. for the Wayne Makin LED Lighting Upgrade Project, in the amount of $669,000 and authorize the City Manager to approve contract change orders up to 10% of the original contract; and approve the expenditure in the amount of $133,438 for the sales tax on the sports lighting equipment.

SUMMARY:

The Wayne Makin LED Lighting Upgrade Project will replace all sports field lighting, security lighting, and parking lot lighting at the complex. The lighting upgrade is anticipated to provide up to 10% or more in energy savings, offer better play lighting for our sports leagues, and will address safety hazards associated with the current wooden poles.

BACKGROUND:

On February 15, 2023, the City Council approved the purchase of equipment for the Wayne Makin LED Lighting Project in the amount of $1.5 Million. That cost did not include sales tax. The purchase was to ensure timely delivery of the equipment along with eliminating contractor markup pricing for the equipment. Musco Sports Lighting, LLC has scheduled the delivery of the equipment on October 9, 2023 (Phase I Material) and November 20, 2023 (Phase II Materials).

Installation of Equipment:

Staff worked with Musco and the design engineer to create a comprehensive Request for Proposal (RFP) that detailed the phasing of the project along with material delivery in a timely manner not to interrupt youth sports activities. On July 27, 2023, staff released the

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Request for Proposals for the project. On August 25, 2023, six proposals were evaluated based on criteria set in the RFP:

1. Quality and Completeness of Proposal

2. Experience and Capability of Contractor

3. Staff Qualifications

4. Detailed List of three Completed MUSCO Sports Lighting Projects

5. Proposed Project Schedule

6. Proposal Cost Bid Sheet
Proposals ranged from $669,000 to $2.2 Million for the installation of the sports lighting equipment. F.E.C. Electric, Inc., provided the highest-ranking proposal out of the six proposals received in the amount of $669,000. A detailed breakdown of cost can be found in Attachment B.

F.E.C. Electric, Inc. has a valid California State Contractors A License and has been in business since 1997. F.E.C. has experience in installing Musco Sports Lighting Systems and has completed work for Cal Poly Pomona, Cal State University, Temecula Valley School District, and Garden Grove School District. Staff has contacted F.E.C. Electric's references and only positive feedback was received.

Outstanding Musco Sales Tax:

The cost of the Musco equipment was $1,525,000, which did not include sales tax. It is customary for Musco to provide pricing without the sales tax due to long lead times in equipment, recognizing that sales tax rates can change. Final sales tax is calculated at the time of shipment, and with the delivery scheduled in early October, Musco has provided the updated outstanding sales tax invoice, Attachment C.

The final Musco cost will include 8.75% sales tax of $133,438. The purchase of the equipment was based on Soucewell's Purchase Contract No. 071619-MSL and 041123- MSL with Musco Sports Lighting, LLC. Sourcewell is authorized to establish competitively awarded cooperative purchasing contracts on behalf of its participating agencies.

Sourcewell follows the competitive contracting law process to solicit, evaluate, and award cooperative purchasing contracts for goods and services.

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Including the sales tax and these installation costs, the project remains within the original budget.

Wayne Making LED Lighting Upgrade Project Schedule:

Staff has determined the least impactful construction schedule for the Wayne Makin Sports Lighting LED Update Project:
• Project Phase I - October 2, 2023, to November 20, 2023 • Project Phase II - November 21, 2023, to February 2, 2024 Staff will work with the contractor to allow for the Shearer Fields to be utilized by sports groups until October 31, 2023. The contractor will finalize work by 4 p.m. and provide a safe and useable space for the groups based on the approved dates listed in the AYSO permit.

FISCAL IMPACT:

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The Wayne Makin LED Sports Lighting Upgrade Project was approved as a Capital Improvement Project (CIP) in the Measure R Fund for Fiscal Year 2022-23. $2,500,000 in Measure R Funds were appropriated in account 132.930.43130 for the Wayne Makin LED Sports Lighting Upgrade Project, Project No. 54111.4.

The remaining balance of $975,000 will be used and is sufficient to fund the F.E.C.

Electric, Inc. installation portion of the project including the 10% contingency in the amount of $735,900, and the remaining sales tax on the Musco sports lighting equipment in the amount of $133,438.

RELATIONSHIP TO STRATEGIC PLAN:

The Wayne Makin LED Sports Lighting Upgrade Project closely aligns with Strategic Direction No. 5, Infrastructure and Asset Management: Ensure timely preservation, replacement, improvement and acquisition of infrastructure and capital assets.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Lori Sassoon, City Manager
Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):

Attachment A Contract - WM LED Lighting Updgrade Project_FEC Electric Attachment B_Proposal Breakdown WM LED Lighting Upgrades Attachment C_ Musco Outstanding Tax

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CONTRACT AGREEMENT

CITY OF NORCO

WAYNE MAKIN LED LIGHTING UPGRADE

1. Parties and Date.

This Agreement is made and entered into this 18th day of September 2023 by and between the City of Norco, a municipal corporation of the State of California, located at 2870 Clark Avenue, Norco, California 92860, County of Riverside, State of California, (hereinafter referred to as “City”) and F.E.C. Electric Inc., a corporation with its principal place of business at 760 E. Stuart Avenue, Redlands, CA 92373 (hereinafter referred to as “Contractor”). City and Contractor are sometimes individually referred to as “Party” and collectively as “Parties” in this Agreement.

2. Recitals.

2.1 Contractor.

Contractor desires to perform and assume responsibility for the provisions of the Wayne Makin LED Lighting Upgrade on the terms and conditions set forth in this Agreement.

Contractor represents that it is experienced in constructing MUSCO LED sports and parking lot lighting improvements for public clients, that it and its employees or subcontractors have all necessary licenses and permits to perform the Services in the State of California, and that is familiar with the plans of the City.

2.2 Project.

The City desires to engage the Contractor to render such services for the Wayne Makin LED Lighting Upgrade Project (“Project”) as set forth in this Agreement. 3364 Western Avenue., Norco, CA 92860 (Wayne Makin is located at Fifth Street and Western Avenue – Adjacent to Norco Correctional Facility.

3. Terms.

3.1 Scope of Services and Term.

3.1.1 General Scope of Services. Contractor promises and agrees to furnish to the City all labor, materials, tools, equipment, services, and incidental and customary work necessary to construct the improvements outlined by the Wayne Makin LED Lighting Upgrade Project. The Project is more particularly described in Exhibit A attached hereto and incorporated herein by reference. The Project shall be subject to, and performed in accordance with this Agreement, the exhibits attached hereto and incorporated herein by reference, and all applicable local, state, and federal laws, rules, and regulations.

Attachment A

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3.1.2 Term. The terms of this Agreement shall begin at the Notice to Proceed and shall extend 95 working days. Contractor shall complete the Services within the term of this Agreement and shall meet any other established schedules and deadlines.

3.2 Responsibilities of Contractor.

3.2.1 Control and Payment of Subordinates; Independent Contractor. The Project shall be constructed by Contractor or under its supervision. Contractor will determine the means, methods, and details of constructing the Project subject to the requirements of this Agreement. City retains Contractor on an independent contractor basis and not as an employee. Any additional personnel constructing the Project under this Agreement on behalf of Contractor shall also not be employees of City and shall at all times be under Contractor’s exclusive direction and control. Contractor shall pay all wages, salaries, and other amounts due such personnel in connection with the construction of the Project under this Agreement and as required by law. Contractor shall be responsible for all reports and obligations respecting such additional personnel, including, but not limited to: social security taxes, income tax withholding, unemployment insurance, disability insurance, and workers’ compensation insurance.

3.2.2 Schedule of Services. Contractor shall construct the Project expeditiously, within the term of this Agreement, and in accordance with the Project timeframe set forth herein. Contractor represents that it has the professional and technical personnel required to construct the Project in conformance with such conditions. In order to facilitate Contractor’s conformance with the Project timeframe, City shall respond to Contractor’s Requests for Information in a timely manner. Upon request of City, Contractor shall provide a more detailed schedule of anticipated performance to meet the Project timeframe.

3.2.3 Conformance to Applicable Requirements. All work prepared by Contractor shall be subject to the approval of City.

3.2.4 City’s Representative. The City hereby designates the Director of Facilities and Maintenance, or her designee, to act as its representative for the performance of this Agreement (“City’s Representative”). City’s Representative shall have the power to act on behalf of the City for all purposes under this Agreement. Contractor shall not accept direction or orders from any person other than the City’s Representative or his or her designee.

3.2.5 Contractor’s Representative. Contractor hereby designates Ronald Moore, President, or his designee, to act as its representative for the performance of this Agreement (“Contractor’s Representative”). Contractor’s Representative shall have full authority to represent and act on behalf of the Contractor for all purposes under this Agreement. The Contractor’s Representative shall supervise and direct the Project, using his best skill and attention, and shall be responsible for all means, methods, techniques, sequences, and procedures and for the satisfactory coordination of all portions of the Project under this Agreement.

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3.2.6 Coordination of Project. Contractor agrees to work closely with City staff in the construction of the Project and shall be available to City’s staff, consultants, and other staff at all reasonable times.

3.2.7 Standard of Care; Performance of Employees. Contractor shall construct the Project under this Agreement in a skillful and competent manner, consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Contractor represents and maintains that it is skilled in the professional calling necessary to construct the Project. Contractor warrants that all employees and subcontractors shall have sufficient skill and experience to construct the Project. Finally, Contractor represents that it, its employees, and subcontractors have all licenses, permits, qualifications and approvals of whatever nature that are legally required to construct the Project, including a City Business License, and that such licenses and approvals shall be maintained throughout the term of this Agreement. As provided for in the indemnification provisions of this Agreement, Contractor shall perform, at its own cost and expense and without reimbursement from the City, any services necessary to correct errors or omissions which are caused by the Contractor’s failure to comply with the standard of care provided for herein. Any employee of the Contractor or its subcontractors who is determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project, a threat to the safety of persons or property, or any employee who fails or refuses to construct the Project in a manner acceptable to the City, shall be promptly removed from the Project by the Contractor and shall not be re-employed to perform any work on the Project.

3.2.7.1 Period of Performance and Liquidated Damages. Contractor shall perform and complete the Project under this Agreement within the term set forth in Section 3.1.2 above (“Term”). Contractor shall construct the Project in strict accordance with any timeframe provided herein, or which may be provided separately in writing to the Contractor. Contractor agrees that if the Project is not completed within the Term and/or pursuant to any such completion schedule or Project milestones developed pursuant to provisions of this Agreement, it is understood, acknowledged, and agreed that the City will suffer damage. Pursuant to Government Code Section 53069.85, Contractor shall pay to the City as fixed and liquidated damages, and not as a penalty, the sum of $500.00 per working day:

3.2.8 Laws and Regulations. Contractor shall keep itself fully informed of and in compliance with all local, state, and federal laws, rules and regulations in any manner affecting the performance of the Project, including all Cal/OSHA requirements, and shall give all notices required by law. Contractor shall be liable for all violations of such laws and regulations in connection with the Project. If the Contractor performs any work knowing it to be contrary to such laws, rules, and regulations and without giving written notice to the City, Contractor shall be solely responsible for all costs arising therefrom. Contractor shall defend, indemnify, and hold City, its officials, directors, officers, employees, and agents free and harmless, pursuant to the indemnification provisions of this Agreement, from any claim or liability arising out of any failure or alleged failure to comply with such laws, rules or regulations.

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3.2.9 Insurance.Throughout the life of this Contract, Contractor shall pay for and maintain in full force and effect all policies of insurance required hereunder with an insurance company(ies) either (i) admitted by the California Insurance Commissioner to do business in the State of California and rated not less than "A- VII" in Best's Insurance Rating Guide, or (ii) as may be authorized in writing by City Manager or his/her designee at any time and in his/her sole discretion. The following policies of insurance are required:
(i) COMMERCIAL GENERAL LIABILITY insurance which shall be at least as broad as the most current version of Insurance Services Office (ISO) Commercial General Liability Coverage Form CG 00 01 and include insurance for “bodily injury,” “property damage” and “personal and advertising injury” with coverage for premises and operations (including the use of owned and non-owned equipment), products and completed operations, and contractual liability (including, without limitation, indemnity obligations under the Contract) with limits of liability of not less than the following:
$5,000,000 per occurrence for bodily injury and property damage $1,000,000 per occurrence for personal and advertising injury $10,000,000 aggregate for products and completed operations $10,000,000 general aggregate
(ii) COMMERCIAL AUTOMOBILE LIABILITY insurance which shall be at least as broad as the most current version of Insurance Service Office (ISO) Business Auto Coverage Form CA 00 01, and include coverage for all owned, hired, and non-owned automobiles or other licensed vehicles (Code 1 - Any Auto) with limits of liability of not less than $5,000,000 per accident for bodily injury and property damage.
(iii) WORKERS' COMPENSATION insurance as required under the California Labor Code.

(iv) EMPLOYERS’ LIABILITY insurance with limits of liability of not less than $1,000,000 each accident, $1,000,000 disease policy limit and $1,000,000 disease each employee.
(v) BUILDERS RISK (Course of Construction) insurance in an amount equal to the completed value of the project with no coinsurance penalty provisions. (Only required if the project includes new construction of a building; or renovation of, or addition to, an existing building.)
(vi) CONTRACTORS POLLUTION LIABILITY (Unless waived in
writing by the City Manager or his/her designee in his/her sole discretion, Contractors Pollution Liability is required for all environmental and water remediation work and for all work transporting fuel. Unless waived in writing by the City Manager or his/her designee in his/her sole discretion, Contractors Pollution Liability is also required for demolition, renovation, HVAC, plumbing or electrical (including, without limitation, lighting) work on any structure built prior to the year 1990.) insurance with limits of liability of not

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less than the following:
$5,000,000 per occurrence or claim
$10,000,000 general or policy aggregate
In the event Contractor purchases an Umbrella or Excess insurance policy(ies) to meet the minimum limits of insurance set forth above, this insurance policy(ies) shall “follow form” and afford no less coverage than the primary insurance policy(ies).

Should this Contract involve any lead based, mold or asbestos environmental hazard, either the Automobile Liability insurance policy or the Contractors Pollution Liability insurance policy shall be endorsed to include Transportation Pollution Liability insurance covering materials to be transported by Contractor pursuant to the Contract.

In the event this Contract involves any lead-based environmental hazard (e.g., lead based paint), the Contractors Pollution Liability insurance policy shall be endorsed to include coverage for lead based environmental hazards. In the event this Contract involves any asbestos environmental hazard (e.g., asbestos remediation), the Contractors Pollution Liability insurance policy shall be endorsed to include coverage for asbestos environmental hazards. In the event this Contract involves any mold environmental hazard (e.g., mold remediation), the Contractors Pollution Liability insurance policy shall be endorsed to include coverage for mold environmental hazards and “microbial matter including mold” within the definition of “Pollution” under the policy.

Contractor shall be responsible for payment of any deductibles contained in any insurance policies required hereunder and Contractor shall also be responsible for payment of any self-insured retentions. Any deductibles or self-insured retentions must be declared to, and approved by, the City Manager or his/her designee in his/her sole discretion. At the option of the City Manager or his/her designee, either (i) the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects City, its officers, officials, employees and agents; or (ii) Contractor shall provide a financial guarantee, satisfactory to the City Manager or his/her designee in his/her sole discretion, guaranteeing payment of losses and related investigations, claim administration and defense expenses. At no time shall City be responsible for the payment of any deductibles or self-insured retentions.

All policies of insurance required hereunder shall be endorsed to provide that the coverage shall not be cancelled, non-renewed, reduced in coverage or in limits except after 30 calendar day written notice has been given to City. Upon issuance by the insurer, broker, or agent of a notice of cancellation, non-renewal, or reduction in coverage or in limits, Contractor shall furnish City with a new certificate and applicable endorsements for such policy(ies). In the event any policy is due to expire during the work to be performed for City, Contractor shall provide a new certificate, and applicable endorsements, evidencing renewal of such policy not less than 15 calendar days prior to the expiration date of the expiring policy.

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The General Liability and Automobile Liability insurance policies shall be written on an occurrence form. The Contractors Pollution Liability insurance policy shall be written on either an occurrence form, or a claims-made form. The General Liability (including ongoing operations and products/completed operations), Automobile Liability and Contractors Pollution Liability insurance policies shall name City, its officers, officials, employees and agents as an additional insured. All such policies of insurance shall be endorsed so Contractor’s insurance shall be primary and no contribution shall be required of City, its officers, officials, employees and agents. The Builders Risk (Course of Construction) insurance policy shall be endorsed to name the City as a loss payee. Any Workers’ Compensation insurance policy shall contain a waiver of subrogation as to City, its officers, officials, employees and agents. The coverage(s) shall contain no special limitations on the scope of protection afforded to City, its officers, officials, employees and agents. Should Contractor maintain insurance with broader coverage and/or limits of liability greater than those shown above, City requires and shall be entitled to the broader coverage and/or the higher limits of liability maintained by Contractor. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to City.

Claims-Made Policies - If any coverage required is written on a claims-made coverage form:
(i) The retroactive date must be shown and must be before the effective date of the Contract or the commencement of work by Contractor. (ii) Insurance must be maintained, and evidence of insurance must be provided for at least 5 years after completion of the work or termination of the Contract, whichever first occurs.
(iii) If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the effective date of the Contract, or work commencement date, Contractor must purchase extended reporting period coverage for a minimum of 5 years after completion of the work or termination of the Contract, whichever first occurs. (iv) A copy of the claims reporting requirements must be submitted to City for review.
(v) These requirements shall survive expiration or termination of the Contract.

Contractor shall furnish City with all certificate(s) and applicable endorsements effecting coverage required hereunder. All certificates and applicable endorsements are to be received and approved by the City’s Risk Manager or his/her designee in his/her sole discretion prior to City’s execution of the Contract and before work commences. Upon request of City, Contractor shall immediately furnish City with a complete copy of any insurance policy required under this Contract, including all endorsements, with said copy certified by the underwriter to be a true and correct copy of the original policy. This requirement shall survive expiration or termination of this Contract.

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If at any time during the life of the Contract or any extension, Contractor or any of its subcontractors fail to maintain any required insurance in full force and effect, all work under this Contract shall be discontinued immediately, and all payments due or that become due to Contractor shall be withheld until notice is received by City that the required insurance has been restored to full force and effect and that the premiums therefore have been paid for a period satisfactory to City. Any failure to maintain the required insurance shall be sufficient cause for City to terminate this Contract. No action taken by City hereunder shall in any way relieve Contractor of its responsibilities under this Contract.

The fact that insurance is obtained by Contractor shall not be deemed to release or diminish the liability of Contractor, including, without limitation, liability under the indemnity provisions of this Contract. The duty to indemnify City shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by Contractor. Approval or purchase of any insurance contracts or policies shall in no way relieve from liability nor limit the liability of Contractor, its principals, officers, agents, employees, persons under the supervision of Contractor, vendors, suppliers, invitees, consultants, sub-consultants, subcontractors, or anyone employed directly or indirectly by any of them.

In the event of a partial or total destruction by the perils insured against of any or all of the work and/or materials herein provided for at any time prior to the final completion of the Contract and the final acceptance by the City of the work or materials to be performed or supplied thereunder, the Contractor shall promptly reconstruct, repair, replace, or restore all work or materials so destroyed or injured at his/her sole cost and expense. Nothing herein provided for shall in any way excuse the Contractor or his/her insurance company from the obligation of furnishing all the required materials and completing the work in full compliance with the terms of the Contract.

If Contractor should subcontract all or any portion of the services to be performed under this Contract, Contractor shall require each subcontractor to provide insurance protection in favor of City, its officers, officials, employees and agents in accordance with the terms of each of the preceding paragraphs, except that the subcontractors' certificates and endorsements shall be on file with Contractor and City prior to the commencement of any work by the subcontractor.

3.2.10 Safety. Contractor shall execute and maintain its work to avoid injury or damage to any person or property. In constructing the Project, the Contractor shall at all times be in compliance with all applicable local, state and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed. Safety precautions as applicable shall include, but shall not be limited to: (A) adequate life protection and lifesaving equipment and procedures; (B) instructions in accident prevention for all employees and subcontractors, such as safe walkways, scaffolds, fall protection ladders, bridges, gang planks, confined space procedures, trenching and shoring, equipment and other safety devices, equipment and wearing

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apparel as are necessary or lawfully required to prevent accidents or injuries; and (C) adequate facilities for the proper inspection and maintenance of all safety measures.

3.2.11 Bonds.

3.2.11.1 Performance Bond. Contractor shall execute and provide to City concurrently with this Agreement a Performance Bond in the amount of the total, not-to-exceed compensation indicated in this Agreement, and in a form provided or approved by the City. If such bond is required, no payment will be made to Contractor until it has been received and approved by the City.

3.2.11.2 Payment Bond. Contractor shall execute and provide to City concurrently with this Agreement a Payment Bond in the amount of the total, not-toexceed compensation indicated in this Agreement, and in a form provided or approved by the City. If such bond is required, no payment will be made to Contractor until it has been received and approved by City.

3.2.11.3 Bond Provisions. Should, in City’s sole opinion, any bond become insufficient, or any surety be found to be unsatisfactory, Contractor shall renew or replace the affected bond within 10 days of receiving notice from City. In the event the surety or Contractor intends to reduce or cancel any required bond, at least thirty (30) days prior written notice shall be given to the City, and Contractor shall post acceptable replacement bonds at least ten (10) days prior to expiration of the original bonds. No further payments shall be deemed due or will be made under this Agreement until any replacement bonds required by this section are accepted by the City. To the extent, if any, that the total compensation is increased in accordance with the Agreement, the Contractor shall, upon request of the City, cause the amount of the bonds to be increased accordingly and shall promptly deliver satisfactory evidence of such increase to the City.

To the extent available, the bonds shall further provide that no change or alteration of the Agreement (including, without limitation, an increase in the total compensation, as referred to above), extensions of time, or modifications of the time, terms, or conditions of payment to the Contractor, will release the surety. If the Contractor fails to furnish any required bond, the City may terminate this Agreement for cause.

3.2.11.4 Surety Qualifications. Only bonds executed by an admitted surety insurer, as defined in Code of Civil Procedure Section 995.120, shall be accepted. The surety must be a California admitted surety with a current A.M. Best’s rating no less than A: VIII and satisfactory to the City. If a California admitted surety insurer issuing bonds does not meet these requirements, the insurer will be considered qualified if it is in conformance with Section 995.660 of the California Code of Civil Procedure, and proof of such is provided to the City.

3.3 Fees and Payments.

3.3.1 Compensation. Contractor shall receive compensation, including authorized reimbursements, for all construction services rendered under this Agreement at the rates set forth in Exhibit B attached hereto and incorporated herein by reference.

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Extra work may be authorized, as described below, and if authorized, will be compensated at the rates and manner set forth in this Agreement.

3.3.2 Payment of Compensation. Contractor shall submit to City a monthly itemized statement which indicates work completed by Contractor. The statement shall describe the amount of Services and supplies provided since the initial commencement date, or since the start of the subsequent billing periods, as appropriate, through the date of the statement. City shall, within 45 days of receiving such statement, review the statement and pay all approved charges thereon.

3.3.3 Reimbursement for Expenses. Contractor shall not be reimbursed for any expenses unless authorized in writing by City.

3.3.4 Extra Work. At any time during the term of this Agreement, City may request that Contractor perform Extra Work. As used herein, “Extra Work” means any work which is determined by City to be necessary for the proper completion of the Project, but which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Contractor shall not perform, nor be compensated for, Extra Work without written authorization from City’s Representative.

3.3.5 Prevailing Wages. Contractor is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 1600, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on "public works" and "maintenance" projects. If the Services are being performed as part of an applicable "public works" or "maintenance" project, as defined by the Prevailing Wage Laws, and if the total compensation is $1,000 or more, Contractor agrees to fully comply with such Prevailing Wage Laws. City shall provide Contractor with a copy of the prevailing rates of per diem wages in effect at the commencement of this Agreement.

Contractor shall make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the Services available to interested parties upon request and shall post copies at the Contractor's principal place of business and at the project site. Contractor shall defend, indemnify, and hold the City, its elected officials, officers, employees, and agents free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.

3.4 Accounting Records.

3.4.1 Maintenance and Inspection. Contractor shall maintain complete and accurate records with respect to all costs and expenses incurred under this Agreement. All such records shall be clearly identifiable. Contractor shall allow a representative of City during normal business hours to examine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement. Contractor shall allow inspection of all work, data, documents, proceedings, and activities related to the Agreement for a period of three (3) years from the date of final payment under this Agreement.

3.5 General Provisions.

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3.5.1 Termination of Agreement.

3.5.1.1 Grounds for Termination. City may, by written notice to Contractor, terminate the whole or any part of this Agreement at any time and without cause by giving written notice to Contractor of such termination, and specifying the effective date thereof, at least seven (7) days before the effective date of such termination.

Upon termination, Contractor shall be compensated only for those services which have been adequately rendered to City, and Contractor shall be entitled to no further compensation. Contractor may not terminate this Agreement except for cause.

3.5.1.2 Effect of Termination. If this Agreement is terminated as provided herein, City may require Contractor to provide all finished or unfinished Documents and Data and other information of any kind prepared by Contractor in connection with the performance of Services under this Agreement. Contractor shall be required to provide such document and other information within fifteen (15) days of the request.

3.5.1.3 Additional Services. In the event this Agreement is terminated in whole or in part as provided herein, City may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated.

3.5.2 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective parties at the follow address, or at such other address as the respective parties may provide in writing for this purpose:

Contractor:

F.E.C. Electric, Inc.

ATTN: Ronald Moore
PO Box 77
Redlands, CA 92373

City:

City of Norco
2870 Clark Avenue
Norco, CA 92860
Attention: Director of Facilities and Maintenance
Such notice shall be deemed made when personally delivered or when mailed, forty-eight (48) hours after deposit in the US Mail, first class postage prepaid and addressed to the party at its applicable address. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of service.

3.5.3 Cooperation; Further Acts. The Parties shall fully cooperate with one another and shall take any additional acts or sign any additional documents as may be necessary, appropriate, or convenient to attain the purposes of this Agreement.

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3.5.4 Attorney’s Fees. If either party commences an action against the other party, either legal, administrative, or otherwise, arising out of or in connection with this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the losing party reasonable attorney’s fees and all other costs of such action.

3.5.5 Indemnification. To the furthest extent allowed by law, including California Civil Code section 2782, Contractor shall indemnify, hold harmless and defend City and its officers, officials, employees, agents and volunteers from any and all loss, liability, fines, penalties, forfeitures, costs and damages (whether in contract, tort or strict liability, including but not limited to personal injury, death at any time and property damage) incurred by City, Contractor or any other person, and from any and all claims, demands and actions in law or equity (including attorney's fees and litigation expenses), arising or alleged to have arisen directly or indirectly out of performance of this Agreement.

Contractor’s obligations under the preceding sentence shall apply regardless of whether City or any of its officers, officials, employees, agents, or volunteers are passively negligent, but shall not apply to any loss, liability, fines, penalties, forfeitures, costs, or damages caused by the active or sole negligence, or the willful misconduct, of City or any of its officers, officials, employees, agents or volunteers.

If Contractor should subcontract all or any portion of the work to be performed under this Agreement, Contractor shall require each subcontractor to indemnify, hold harmless and defend City and its officers, officials, employees, agents, and volunteers in accordance with the terms of the preceding paragraph.

This section shall survive termination or expiration of this Agreement.

3.5.6 Entire Agreement. This Agreement contains the entire Agreement of the parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings, or agreements. This Agreement may only be modified by a writing signed by both parties.

3.5.7 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Riverside County.

3.5.8 Time of Essence. Time is of the essence for each and every provision of this Agreement.

3.5.9 City’s Right to Employ Other Contractors. City reserves right to employ other contractors in connection with this Project.

3.5.10 Successors and Assigns. This Agreement shall be binding on the successors and assigns of the parties.

3.5.11 Assignment or Transfer. Contractor shall not assign, hypothecate, or transfer, either directly or by operation of law, this Agreement, or any interest herein without the prior written consent of the City. Any attempt to do so shall be null and void, and any assignees, hypothecates or transferees shall acquire no right or interest by reason of such attempted assignment, hypothecation, or transfer.

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3.5.12 Construction; References; Captions. Since the Parties or their agents have participated fully in the preparation of this Agreement, the language of this Agreement shall be construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days or period for performance shall be workdays (Monday through Friday, excluding holidays). All references to Contractor include all personnel, employees, agents, and subcontractors of Contractor, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, and volunteers except as otherwise specified in this Agreement. The captions of the various articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content, or intent of this Agreement.

3.5.13 Amendment; Modification. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.

3.5.14 Waiver. No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual rights by custom, estoppel or otherwise.

3.5.15 No Third-Party Beneficiaries. There are no intended third-party beneficiaries of any right or obligation assumed by the Parties.

3.5.16 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.

3.5.17 Prohibited Interests. Contractor maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Contractor, to solicit or secure this Agreement. Further, Contractor warrants that it has not paid, nor has it agreed to pay any company or person, other than a bona fide employee working solely for Contractor, any fee, commission, percentage, brokerage fee, gift, or other consideration contingent upon or resulting from the award or making of this Agreement. Contractor further agrees to file, or shall cause its employees or subcontractors to file, a Statement of Economic Interest with the City’s Filing Officer as required under state law in the performance of the Services. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer, or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom.

3.5.18 Equal Opportunity Employment. Contractor represents that it is an equal opportunity employer, and it shall not discriminate against any subcontractor, employee, or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or

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recruitment advertising, layoff, or termination. Contractor shall also comply with all relevant provisions of City’s Minority Business Enterprise program, Affirmative Action Plan or other related programs or guidelines currently in effect or hereinafter enacted.

3.5.19 Labor Certification. By its signature hereunder, Contractor certifies that it is aware of the provisions of Section 3700 of the California Labor Code which require every employer to be insured against liability for Workers’ Compensation or to undertake self-insurance in accordance with the provisions of that Code and agrees to comply with such provisions before commencing the performance of the Services.

3.5.20 Authority to Enter Agreement. Contractor has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement.

Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and bind each respective Party.

3.5.21 Counterparts. This Agreement may be signed in counterparts, each of which shall constitute an original.

3.6 Subcontracting.

3.6.1 Prior Approval Required. Contractor shall not subcontract any portion of the work required by this Agreement, except as expressly stated herein, without prior written approval of City. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement.

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Name of Contractor: F.E.C. ELECTRIC, INC.
*By:
________________________________________________
Signature
________________________________________________
Name and Title
OWNER: CITY OF NORCO, a municipal corporation
*By:
________________________________________________
Robin Grundmeyer - Mayor
ATTEST:
________________________________________________
Dana Roa, City Clerk
APPROVED AS TO FORM:
________________________________________________
Harper and Burns, LLC., City Attorney

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EXHIBIT A

WAYNE MAKIN LED LIGHTING UPGRADE
The work to be done consists of furnishing all materials, equipment, tools, labor, and incidentals as required by the Plans, Specifications, and Contract Documents for the above stated project.

The general items of work to be done hereunder consist of the removal of the existing sports lighting poles and equipment. Installation of new poles, LED sports lighting, conduit, wiring, installation of new parking lot lighting, and all other apparent facilities in connection to the lighting upgrades found in the plans for the specified project.

The City procured the MUSCO materials in December of 2022 to be delivered on October 9, 2023 (Phase I Material) and November 20, 2023 (Phase II Materials).

The services shall be performed in accordance with the Standard Specifications for Public Works Construction (Green Book), latest edition, including all current supplements, addenda, and revisions thereof (hereinafter referred to as “Standard Specifications”) incorporated herein by this reference. Any provisions which supplement or modify the Standard Specifications are attached hereto as Special Provisions and incorporated herein by this reference. • There are 95 working days allowed to complete this project. The project will be phased in the following approach:
• Project Phase I - October 2, 2023, to November 20, 2023 • Project Phase II - November 21, 2023, to February 2, 2024 The phasing plan can be adjusted as approved by the City of Norco. Liquidated damages shall be assessed at $500.00 per working day. The project plans have approved by the City of Norco Building Department, the contractor is responsible for obtaining a building permit with the City for the construction of the project.

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City of Norco
Bid Results for Project Request for Proposals: Wayne Makin LED Lighting Upgrade Project (54111.4) Issued on 07/27/2023
Bid Due on August 25, 2023 10:00 AM (PDT)
ITEM QUANTITY UNIT DESCRIPTION OF ITEMS FEC ELECTRIC, INC. ACE ELECTRIC, INC. RMF CONTRACTING, INC. SERVITEK ELECTRIC, INC. TOWO ENTERPRISE, INC. M BREY ELECTRIC, INC. 11 L.S. Mobilization $ 5,500.00 $ 20,200.00 $ 42,850.00 $ 40,000.00 $ 70,000.00 $ 95,000.00 2 1 L.S. Building Permits, Business License $ 300.00 $ 600.00 $ 4,000.00 $ 6,000.00 $ 15,000.00 $ 10,000.00 3 1 L.S. Provide secured storage area for all City
furnished materials along with any
contractor furnished materials and
equipment. The contractor is responsible for
the security of the site along with storage
containers. $ 10,500.00 $ 9,400.00 $ 12,800.00 $ 60,000.00 $ 30,000.00 $ 60,000.00 41 L.S. Demolition/Removal of all existing poles,
fixtures, etc. as referenced in Demolition
Plans E-1.0 and in the Wayne Makin LED
Lighting Upgrade Plans. $ 59,800.00 $ 54,900.00 $ 18,650.00 $ 85,050.00 $ 115,000.00 $ 240,000.00 5 1 L.S. Installation of MUSCO Sports Lighting
System (Phase I) All equipment and
material listed in the Wayne Makin LED
Lighting Upgrade Plans. $ 283,700.00 $ 424,900.00 $ 445,631.00 $ 1,073,429.00 $ 412,191.58 $ 227,732.00 6 1 L.S. Installation of MUSCO Sports Lighting
System (Phase II) All equipment and
material listed in the Wayne Makin LED
Lighting Upgrade Plans. $ 301,700.00 $ 328,800.00 $ 414,750.00 $ 854,481.00 $ 338,343.18 $ 341,597.00 7 1 L.S. Disposal of all materials and hazardous
materials with proof provided to the City
along with the administration and
completion of a demolition deposit. $ 7,500.00 $ 25,200.00 $ 13,366.00 $ 100,000.00 $ 50,000.00 $ 20,000.00 TOTAL $ 669,000.00 $ 864,000.00 $ 952,047.00 $ 2,218,960.00 $ 1,030,534.76 $ 994,329.00

ATTACHMENT B

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100 1st Avenue West
P.O. Box 808
Oskaloosa, IA 52577
USA
Musco Sports Lighting, LLC
Customer #
Payment Terms
8525
Currency USD
Net 30
Project
Date
142916
9/11/2023
Invoice 413625
2870 Clark Ave
Norco, CA 92860
USA
Please Detach And Return With Payment
Wayne Makin Shearer Sports Complex
3364 Western Avenue
Norco, CA 92860
USA
Bill To: Ship To:

City of Norco
Invoice # Customer # PO # Ship Via Ship Date
413625 8525 2023-00000213
Project: 142916 Wayne Makin Shearer Sports Complex
Description Amount
Materials for Wayne Makin Shearer Sports Complex $1,525,000.00 Subtotal $1,525,000.00
Sales Tax $133,437.50
Total (USD) $1,658,437.50

Page 1 of 1 ends

To remit payment by ACH or Wire:

Bank: Wells Fargo Bank, 420 Montgomery Street, San Francisco, CA 94104 ABA Routing Number: 121000248
SWIFT Number: WFBIUS6S (USD Payment) WFBIUS6WFFX (Non-USD Payment) Account Number: 4121225395
Account Name: Musco Sports Lighting, LLC
To remit payment by check:

P.O. Box 200692
Dallas, TX 75320-0692
USA
If you have any questions, please call 800-825-6020 or email [email protected] Musco Sports Lighting City of Norco
Mark Kivett, Credit Manager
This invoice is the final billing for Wayne Makin Shearer Sports Complex, Materials only, City PO 2023-00000213 Sourcewell contract number is 041123-MSL
Expiration 06/16/2027
Attachment C

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City Council

STAFF REPORT
Date: September 18, 2023 Agenda Item:

2.F.

To: Honorable Mayor and City Council Members
Prepared By: Chad Blais, Public Works Director
Department: Public Works
SUBJECT:

Acceptance of Equestrian Trail Easement Dedication for 1090 Sixth Street (APN 131- 260-046)
RECOMMENDATION:

SUMMARY:

The property owner at 1090 Sixth Street is offering for dedication to the City of Norco a public easement for equestrian trail purposes. The easement documents have been prepared and are ready for acceptance by City Council for recordation.

BACKGROUND:

During staff review of Site Plan 2017-03 it was determined a portion of the existing horse trail along the property's Corona Avenue frontage was located on private property. Upon further investigation the staff confirmed that the northbound portion of Corona Avenue widened at Sixth Street resulting in the horse trail crossing private property. The City conditioned the project per Resolution 2017-25 to dedicate a public equestrian easement to maintain horse trail access at this corner of the intersection.

The City desires to accept the offer of dedication of the easement located at 1090 Sixth Street (see Easement Legal & Plat) for equestrian trail purposes. Therefore, staff is recommending that the City Council accept the offer of dedication for the public equestrian easement, authorize the Mayor to sign the Certificate of Acceptance, and direct the City Clerk to file the Certificate of Acceptance with the County Recorder.

FISCAL IMPACT:

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There is no financial contribution for the acquisition of this easement.

RELATIONSHIP TO STRATEGIC PLAN:

Acceptance of the proposed trail easement is consistent with Strategic Direction #5 - Infrastructure Management: Ensure timely preservation, replacement, improvement and acquisition of infrastructure and capital assets.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Lori Sassoon, City Manager
Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):

Easement Legal & Plat

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Recording requested by:

CITY OF NORCO
When recorded mail to:

City Clerk
City ofNorco
2870 Clark Avenue
Norco, CA 92860

SPACE ABOVETHISLINE FOR RECORDER'S USE
APN: 131-260-046

EASE ENT DEED
FOR A VALUABLECONSIDERATION, receipt of which is hereby acknowledged Luis Larrea, a single man, do hereby grant to the CITY OF NORCO, a municipal corporation, an EASEMENT FOR EQUESTRIAN TRAIL PURPOSES and incidental uses (including but not limited to the construction, use, operation, maintenance, repair, rehabilitation, improvement, expansion, and enlargement,) in over, under, and upon the land inthe City of Norco, County of Riverside, State of California described in Exhibit “A (legal description) and as shown on Exhibit “B”(plat). " BY:

Signature <must be notarized>
Luis Larrea, Owner

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State of California
County of K §)‘J ‘%
On us 5r ?0;a?
Date
_ before me,
Here Inse/1‘ Name nd Title of the Officer
Anotary publicorother officercompleting this certificateverifiesonlythe identityofthe individualwho signed the document to whichthis certificate is attached, and not the truthfulness, accuracy,or validityof that document.

CALIFORNIA ACKNOWLEDGMENT CIVIL CODE § 1189

DANAKAYROA
NotaryPublic- California
RiversideCounty
Commission# 2405488
MyComm.ExpiresMay 24, 2026
i
I certify under PENALTY OF PERJURY under the
laws of the State of California that the foregoing
paragraph is true and corre
WITNESS my hand d official eal.

Nc/me(s) of Signer(s)
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

Place Notary Seal and/or Stamp Above ' ure 0 ota/y Public

OPTIONAL
Completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document.

Description of Attached Document
Title or Type of Document:

Document Date: Number of Pages:

Signer(s) Other Than Named Above:

Capacity(ies) Claimed by Signer(s)
Signer’s Name: Signer’s Name:

El Corporate Officer — Tit|e(s): I:I Corporate Officer Tit|e(s):

El Partner— El Limited El General El Partner— Limited General El Individual El Attorney in Fact El Individual III Attorney in Fact El Trustee El Guardian or Conservator El Trustee El Guardian or Conservator III Other: D Other:

Signer is Representing: Signer is Representing:
©2019 National Notary Association
Signature
personally appeared
Pub‘{L

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Page 1 of 1 ends

March 28, 2018
J.N. 17-2764
EXHIBIT“A”
THAT PORTION OF LOT 2 IN BLOCK 34 OF NORCO FARMS TRACT NO. 1 PER MAP RECORDED IN BOOK 11, PAGE 3 OF MAPS IN THE OFFICE OF THE COUNTY

RECORDER OF THE COUNTYOF RIVERSIDE, INTHE CITYOF NORCO, COUNTY OF RIVERSIDE, STATE OF CALIFORNIADESCRIBED AS FOLLOWS:

COMMENCINGAT THE NORTHWEST CORNER OF SAID LOT 2;
THENCE SOUTH 0°O0'36" EAST A DISTANCE OF 20.00 FEET TO THE SOUTHWEST CORNER OF THE LAND DESCRIBED IN DEED RECORDED AUGUST 12, 1976 AS INSTRUMENT NO. 118929 OF OFFICIALRECORDS. THEAFORESAID CORN ER ALSO BEING THE TRUE POINT OF BEGINNING;
THENCE SOUTH 89°56'53" EAST ALONG THE SOUTHERLY LINE OF THE LAN DESCRIBED IN SAID DEEDA DISTANCE OF 15.00; D
THENCE SOUTH 13°30'56" WEST A DISTANCE OF 64.14 FEET TO A POINT INTHE WEST LINEOF SAID LOT 2;
THENCE NORTH 0°O0'36" WEST ALONG THE WEST LINE OF SAID LOT 2 A DISTANCE OF 62.37 FEET TO THE POINT OF BEGINNING.

Containing 468.0 square feet (0.01 ac.), more or less.

ALL AS SHOWN ON EXHIBIT"B" ATTACHED HERETO AND BYTHIS REFERENCE

MADE A PART HEREOF
4 Prepared by:

Kelsoe & Associates, Inc.

Robert Isoe, PLS 695
Exp. Date 9-30-19

Page 85 of 223 ends

STREET
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_J S 3: r0 ACCOMPANYLEGALDESCRIPTION BYROBERTI KELSOE,PLS 6957 77-115PMT5 $‘0L£lYAN AIDINLOCATIM‘ THEPARC£7.($)DE.9a?lB?J IN THEATTACHH J B754 KENDRA LANE. B-=RU~A- BA 92880 D0-IIBIT71' /r/5 NOTA PARTor IHEmernzwDESORIPTION courwvmmay/4. (951)735-0755 o FAX (951)735-3421 a«m.=.- M?/1WNan c//Ec/(£0 B)? ././V. 3-23-2073 /er/( /7-2754
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INST. NO 2014-0301387 O.R.

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graphic scale: 1" = 20'
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M98. .6 8.

Page 86 of 223 ends

City Council

STAFF REPORT
Date: September 18, 2023 Agenda Item:

2.G.

To: Honorable Mayor and City Council Members
Prepared By: Lisette Free, Finance Director
Department: Finance
SUBJECT:

Subordination Agreement of existing loan with Wasatch Advantage Group, LLC at Heritage Park Senior Citizen Apartment Complex.

RECOMMENDATION:

Approve and Execute a Subordination Agreement for Wasatch Advantage Group, LLC.

SUMMARY:

Wasatch Advantage Group, LLC ("Developer") currently operates the eighty-six (86) unit Heritage Park Senior Housing complex located at 2665 Clark Avenue. The City of Norco Redevelopment Agency ("Agency") provided gap financing in the amount of $5.1 Million to provide a low/moderate income complex for Senior Citizens. The loan will be repaid from available proceeds over a term of fifty-seven (57) years. The complex will remain as a low/moderate income senior housing complex over the entire term of the loan.

BACKGROUND:

In 1985, the Agency approved a Disposition and Development Agreement (DOA) with Cal-Norco, Inc. Properties (Cal-Norco) to construct the Heritage Park apartment complex located at 2665 Clark Avenue. The complex had sixty-four (64) one-bedroom units and twenty-two (22) two-bedroom units. The DOA provided Agency financial assistance in exchange for a fifteen (15)-year covenant to restrict rents to low/moderate income senior citizens ages sixty-two (62) and above. The income and age covenant expired in 2000. A subsequent property owner converted the project into a market rate senior citizen complex and lowered the age restriction from sixty-two (62) to fifty-five (55).

Wasatch Advantage Group, LLC is in process of obtaining a new loan to refinance the current primary loan on the property. As a requirement of a new primary loan Wasatch Advantage Group, LLC is seeking a subordination Agreement from the Housing Successor Agency of the City of Norco (Successor Agency).

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There are two outstanding loans. The original loan, to which the Successor Agency is not a party and funded the Heritage Park land purchase and construction, has an outstanding balance of approximately $3,800,000. The complex was originally constructed as a market rate facility. The facility was deteriorating, and, in 2007, the RDA loaned the Owner $5,100,000 to rehabilitate the facility and in exchange for converting it to a low-mod facility. The RDA loan was subordinate to the original loan. The Owner is making payments to both the original lender and the Housing Fund.

The Owner is refinancing the original loan, which is now due and payable, through Wasatch in the amount of approximately $4,000,000. If not refinanced, the Owner has indicated that the current lender will foreclose and shutter the facility and wipe out the RDA loan, which is behind the original loan. The new loan will result in no change from the current circumstance. The Subordination Agreement acknowledges that Wasatch will be in the same position as the original lender; i.e.; superior to the Successor Agency loan.

Essentially, there will be no change from the current financial arrangement and the facility will continue to operate as a low-mod multi-family facility.

The City Attorney has reviewed the subordination agreement and is recommending approval.

FISCAL IMPACT:

The loan payments are part of the Housing Fund.

RELATIONSHIP TO STRATEGIC PLAN:

Consistent with Strategic Direction No. 3 - Economic Development and Financial Stability: Assure financial stability by expanding development efforts, diversifying revenue sources and continuing prudent financial management.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Lori Sassoon, City Manager
Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):

Intercreditor and Subordination Agreement

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4892-0116-7729
Recording requested by, and
when recorded, mail to:

Sunwest Bank
10011 Centennial Parkway, Suite 450
Sandy, Utah 84070
Attn: Shaun Nielson

INTERCREDITOR AND SUBORDINATION AGREEMENT
THIS INTERCREDITOR AND SUBORDINATION AGREEMENT is dated as of ____________ __, 2023 by and among SUNWEST BANK, a Utah corporation (the “Subordinated Lender”), The WASATCH ADVANTAGE GROUP, LLC, a Utah limited liability company (“Borrower”), and HOUSING SUCCESSOR AGENCY OF THE CITY OF NORCO, a California public entity (the “Senior Lender”).

The parties hereto hereby agree as follows:

1. Definitions. The following terms shall have the following meanings:
“Agreement”: this Intercreditor and Subordination Agreement, as the same may be amended, supplemented or otherwise modified from time to time.
“Collateral”: the collective reference to any and all real and personal property or assets, tangible or intangible, from time to time subject to security interests to secure payment or performance of the Senior Obligations or the Subordinated Obligations.
“Insolvency Event”: (a) Borrower commencing any case, proceeding or other action (1) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (2) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower making a general assignment for the benefit of its creditors; or (b) there being commenced against the Borrower any case, proceeding or other action of a nature referred to in clause (a) above which (1) results in the entry of an order for relief or any such adjudication or appointment or (2) remains undismissed, undischarged or unbonded for a period of 60 days; or (c) there being commenced against the Borrower any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (d) the Borrower taking any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (a), (b) or (c) above; or € the Borrower generally not paying, or being unable to pay, or admitting in writing its inability to pay, its debts as they become due. “Senior Lender”: the Housing Successor Agency of the City of Norco, as successor to the Redevelopment Agency of the City of Norco as a result of the dissolution of California Redevelopment Agencies pursuant to Assembly Bill X1 26, as modified by Assembly Bill 1484, said dissolution and assignment of housing assets to housing successor agencies effective February 1, 2012. “Senior Loan Documents”: the collective reference to the Senior Note, the Senior Mortgage and all other documents that from time-to-time evidence the Senior Obligations or secure payment or performance thereof, as such documents may be amended or modified from time to time.

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“Senior Mortgage”: that certain ________________ in favor of Senior Lender of approximately even date herewith to be recorded in the official records of Riverside County, California, as it may be modified and amended from time to time.
“Senior Note”: that certain promissory note executed by Borrower in favor of Senior Lender of approximately even date herewith in the original principal amount of $4,000,000.00, as it may be modified and amended from time to time.
“Senior Obligations”: the collective reference to the unpaid principal of and interest on the Senior Note and all other obligations and liabilities of the Borrower to the Senior Lender of whatever kind or nature, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, whether arising under, out of, or in connection with, the Senior Note, this Agreement, the other Senior Loan Documents or any other document made, delivered or given by Borrower, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Senior Lender that are required to be paid by the Borrower pursuant to the terms of this Agreement or any other Senior Loan Document).
“Subordinated Loan Documents”: the collective reference to the Subordinated Note, the Subordinated Mortgage and any other documents or instruments that from time-to-time evidence the Subordinated Obligations or secure or support payment or performance thereof. “Subordinated Mortgage”: that certain Deed of Trust with Assignment of Rents executed by Borrower for the benefit of Subordinated Lender, dated May 22, 2007, recorded on July 2, 2007 in the Official Records of Riverside County, California as Instrument Number 0431343, encumbering Borrower’s interest in property located in Riverside County, California more particularly described in Exhibit A attached hereto, as it may be modified and amended from time to time. “Subordinated Note”: that certain promissory note executed by Borrower in favor of Subordinated Lender, in the original principal amount of $5,100,000.00, as it may be modified and amended from time to time.
“Subordinated Obligations”: the collective reference to the unpaid principal and interest on the Subordinated Note and all other obligations and liabilities of the Borrower to the Subordinated Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Subordinated Note, this Agreement, or any other Subordinated Loan Document, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Subordinated Lender that are required to be paid by the Borrower pursuant to the terms of this Agreement or any other Subordinated Loan Document). “Termination Date”: the date on which the Senior Obligations are indefeasibly paid in full and Senior Lender’s obligations to extend credit under any Senior Loan Document shall have been irrevocably terminated.
“Uniform Commercial Code”: the Uniform Commercial Code in effect in the State of Missouri.

2. Rights in Collateral.
(a) Notwithstanding anything to the contrary contained in any Senior Loan Document or any Subordinated Loan Document and irrespective of:
(i) the time, order or method of attachment or perfection of the security interests created by any Senior Loan Document or any Subordinated Loan Document;

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4892-0116-7729
- 3 -
(ii) the time or order of filing or recording of the Senior Mortgage, the Subordinated Mortgage, any financing statements or other documents filed or recorded to perfect security interests in any Collateral;
(iii) anything contained in any filing or agreement to which the Senior Lender or the Subordinated Lender now or hereafter may be a party; and (iv) the rules for determining perfection or priority under the Uniform Commercial Code or any other law governing the relative priorities of secured creditors, any security interest in any Collateral pursuant to any Senior Loan Document has and shall have priority, to the extent of any unpaid Senior Obligations, over any security interest in such Collateral pursuant to any Subordinated Loan Document.
(b) So long as the Senior Obligations have not been paid in full and any Senior Loan Document remains in effect, whether or not any Insolvency Event has occurred, (i) the Subordinated Lender will not (A) exercise or seek to exercise any rights or exercise any remedies with respect to any Collateral or (B) institute any action or proceeding with respect to such rights or remedies, including without limitation, any action of foreclosure or (C) contest, protest or object to any foreclosure proceeding, postpetition financing, use of cash collateral or action brought by the Senior Lender or any other exercise by the Senior Lender of any rights and remedies under any Senior Loan Documents; and (ii) the Senior Lender shall have the exclusive right to enforce rights and exercise remedies with respect to the Collateral and Senior Lender shall not be required to marshal any Collateral.
(c) In exercising rights and remedies with respect to the Collateral, the Senior Lender may enforce the provisions of the Senior Loan Documents and exercise remedies thereunder, all in such order and in such manner as it may determine in the exercise of its sole business judgment. Such exercise and enforcement shall include, without limitation, the rights to sell or otherwise dispose of Collateral, to incur expenses in connection with such sale or disposition and to exercise all the rights and remedies of a secured lender under the Uniform Commercial Code.
(d) When all Senior Obligations have been paid in full and the Senior Loan Documents no longer are in effect, the Subordinated Lender shall have the right to enforce the provisions of the Subordinated Loan Documents and exercise remedies thereunder.
(e) Any money, property or securities realized upon the sale, disposition or other realization by the Senior Lender upon all or any part of the Collateral, shall be applied by the Senior Lender in the following order:
(i) First, to the payment in full of all costs and expenses (including, without limitation, attorneys’ fees and disbursements) paid or incurred by the Senior Lender in connection with the such realization on the Collateral or the protection of their rights and interests therein; (ii) Second, to the payment in full of all Senior Obligations in such order as the Senior Lender may elect in its sole discretion;
(iii) Third, to the payment in full of all Subordinated Obligations then due and which are secured by such Collateral, which shall be paid to the Subordinated Lender; and (iv) Fourth, to pay to the Borrower, or its representative or as a court of competent jurisdiction may direct, any surplus then remaining.

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4892-0116-7729
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3. Payments to Subordinated Lender.
(a) Notwithstanding anything in the Subordinated Note to the contrary, Subordinated Lender agrees and covenants that the Subordinated Obligations are and shall be subordinate in right of payment to the prior payment in full of the Senior Obligations. Prior to the occurrence of a default or event of default under any Senior Loan Document, whether or not declared by Senior Lender, the Subordinated Lender shall be entitled to receive regularly scheduled payments of principal and interest on the Subordinated Note, as such Subordinated Note is in effect on the date hereof, so long as both before or after any such payment no Default exists at the time of such payment or is created in connection with Borrower making such payment. In no event shall the Subordinated Lender be entitled to receive any whole or partial prepayments of principal, or any accelerated or rescheduled payments of principal or interest, or interest at any rate greater than that provided for as of the date hereof, without the prior written consent of Senior Lender.
(b) In the event that the Subordinated Obligations are declared due and payable or the maturity thereof is accelerated for any reason, then and in such event, Senior Lender shall be entitled to receive payment in full of all amounts due or to become due on or in respect of the Senior Obligations (whether or not a default has occurred thereunder or such Senior Obligations are, or have been declared to be, due and payable prior to the date on which it otherwise would have become due and payable) before Subordinated Lender shall be entitled to receive any payment of the Subordinated Obligations.
(c) In the event that, notwithstanding the foregoing provisions prohibiting such payment or distribution, Subordinated Lender shall have received any payment or distribution in respect of the Subordinated Obligations contrary to such provisions, then and in such event such payment or distribution shall be received and held in trust for Senior Lender and shall be paid over or delivered to Senior Lender for application (in the case of cash) to or as collateral (in the case of non-cash property or securities) for the payment or prepayment of all Senior Obligations in full after giving effect to any concurrent payment or distribution to Senior Lender in respect of the Senior Obligations.

4. Consent of the Subordinated Lender. The Subordinated Lender agrees that, without notice to or consent by the Subordinated Lender, the Senior Note and any other Senior Loan Document may be extended, amended, modified, supplemented or terminated, in whole or in part, as the Senior Lender may deem advisable from time to time, and any collateral security at any time held by the Senior Lender for the payment of any of the Senior Obligations may be sold, exchanged, waived, surrendered or released, in each case without impairing, abridging, releasing or affecting the subordination provided for herein.

5. Negative Covenants of the Subordinated Lenders. So long as any of the Senior Obligations shall remain outstanding or the obligation of Senior Lender to extend credit to Borrower remains in effect, the Subordinated Lender shall not, without the prior written consent of the Senior Lender, commence, or join with any creditors other than the Senior Lender in commencing any case or proceeding referred to in the definition of Insolvency Event.

6. Senior Obligations Unconditional. All rights and interests of the Senior Lender hereunder, and all agreements and obligations of the Subordinated Lender and the Borrower hereunder, shall remain in full force and effect irrespective of:
(a) any lack of validity or enforceability of any Senior Loan Document; (b) any change in any term of all or any of the Senior Obligations, or any amendment or waiver or other modification, whether by course of conduct or otherwise, of the terms of any Senior Loan Document;
(c) any exchange, release or non-perfection of any security interest in any Collateral, or any release, amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the Senior Obligations or any guarantee thereof; or

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4892-0116-7729
- 5 -
(d) any other circumstances which otherwise might constitute a defense available to, or a discharge of, the Borrower in respect of the Senior Obligations, or of either the Subordinated Lender or the Borrower in respect of this Agreement.

7. Waiver of Claims. To the maximum extent permitted by law, the Subordinated Lender waives any claim it might have against the Senior Lender with respect to, or arising out of, any action or failure to act or any error of judgment, negligence, or mistake or oversight whatsoever on the part of the Senior Lender, or its directors, officers, employees or agents with respect to any exercise of rights or remedies under the Senior Loan Documents or any transaction relating to the Collateral. Neither the Senior Lender, nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Borrower or the Subordinated Lender or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The Subordinated Lender further waives promptness, diligence, notice of acceptance and any other notice with respect of the Senior Obligations.

8. Provisions Applicable After Bankruptcy: No Turnover. (a) The provisions of this Agreement shall continue in full force and effect notwithstanding the occurrence of any Insolvency Event.
(b) To the extent that the Subordinated Lender has or acquires any rights under Section 363 or Section 364 of the Bankruptcy Code with respect to the Collateral, the Subordinated Lender hereby agrees not to assert such rights without the prior written consent of the Senior Lender; provided that, if requested by the Senior Lender, the Subordinated Lender shall seek to exercise such rights in the manner requested by the Senior Lender, including the rights in payments in respect of such rights. The Subordinated Lender (both in its capacity as Subordinated Lender and in its capacity as a party which may be obligated to Borrower or any of Borrower’s affiliates with respect to contracts which are part of the Senior Lender’s Collateral) agrees not to initiate or prosecute or encourage any other person to initiate or prosecute any claim, action or other proceeding (i) challenging the enforceability of the Senior Lender’s claim (ii) challenging the enforceability of any liens or security interests in assets securing the Senior Obligations or (iii) asserting any claims which the Borrower may hold with respect to the Senior Lender.

9. Further Assurances. The Subordinated Lender and the Borrower, at their own expense and at any time from time to time, upon the written request of the Senior Lender will promptly and duly execute and deliver such further instruments and documents and take such further actions as the Senior Lender reasonably may request for the purposes of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted.

10. Expenses.
(a) The Borrower will pay or reimburse the Senior Lender, upon demand, for all its costs and expenses in connection with the documentation, enforcement or preservation of any rights under this Agreement, including, without limitation, fees and disbursements of counsel to the Senior Lender. (b) The Borrower will pay, indemnify, and hold each Senior Lender harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions (whether sounding in contract, tort or on any other ground), judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of, or in any other way arising out of or relating to this Agreement or any action taken or omitted to be taken by any Senior Lender with respect to any of the foregoing.

11. Provisions Define Relative Rights. This Agreement is intended solely for the purpose of defining the relative rights of the Senior Lender on the one hand and the Subordinated Lender on the other, and no other person shall have any right, benefit or other interest under this Agreement.

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4892-0116-7729
- 6 -

12. Notices. All notices, requests and demands to or upon the Senior Lender or the Borrower or the Subordinated Lender to be effective shall be in writing (or by telex, fax or similar electronic transfer confirmed in writing) and shall be deemed to have been duly given or made (1) when delivered by hand or (2) if given by mail, when deposited in the mails by certified mail, return receipt requested, or (3) if by telex, fax or similar electronic transfer, when sent and receipt has been confirmed, addressed as follows:

If to the Senior Lender:

Sunwest Bank
Salt Lake City Banking Office
10011 Centennial Parkway, Suite 450
Sandy, Utah 84070
Attention: Shaun Nielson
If to the Borrower:

Heritage Park Apartments, LP
26522 La Alameda, Suite 260
Mission Viejo, California 92691
Attention: Kipling Shepard
If to the Subordinated Lender:

Housing Successor Agency of the City of Norco
2870 Clark Avenue
Norco, California 92860
Attention: Lori Sassoon, Executive Director
The Senior Lender, the Borrower and the Subordinated Lender may change their respective addresses and transmission numbers for notices by notice in the manner provided in this Section.

13. Counterparts. This Agreement may be executed by one or more of the parties on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

14. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

15. Integration. This Agreement represents the agreement of the Senior Lender and the Subordinated Lender with respect to the subject matter hereof and there are no promises or representations by the Senior Lender or the Subordinated Lender relative to the subject matter hereof not reflected herein.

16. Amendments in Writing; No Waiver: Cumulative Remedies. (a) None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed by the Senior Lender, the Borrower and the Subordinated Lender; provided that any provision of this Agreement may be waived by the Senior Lender in a letter or agreement executed by the Senior Lender or by telex or facsimile transmission from the Senior Lender. (b) No failure to exercise, nor any delay in exercising, on the part of the Senior Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right,

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4892-0116-7729
- 7 -
power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
(c) The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

17. Successors and Assigns. This Agreement shall be binding upon the successors, heirs, administrators, executors and assigns of the Borrower and the Subordinated Lender and shall inure to the benefit of the Senior Lender and their successors and assigns.

18. Invalidated Payments. To the extent that the Senior Lender receives payments on, or proceeds of Collateral for, the Senior Obligations which are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to Borrower, a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law, or equitable cause, then to the extent of such payment or proceeds received, the Senior Obligations, or part thereof, intended to be satisfied shall be revived and continue in full force and effect as if such payments or proceeds had not been received by the Senior Lender.

19. Specific Performance. The Senior Lender is hereby authorized to demand specific performance of this Agreement at any time when the Subordinated Lender shall have failed to comply with any of the provisions of this Agreement applicable to the Subordinated Lender whether or not the Borrower shall have complied with any of the provisions hereof applicable to the Borrower, and the Subordinated Lender hereby irrevocably waives any defense based on the adequacy of a remedy at law which might be asserted as a bar to such remedy of specific performance.

20. GOVERNING LAW. THIS AGREEMENT AND THE OBLIGATIONS ARISING

HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE

WITH, THE LAWS OF THE STATE OF UTAH APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.
[Remainder of Document Intentionally Left Blank]

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4892-0116-7729
- 8 -
SENIOR LENDER:

SUNWEST BANK
a Utah corporation
By:

Name: Shaun Nielson
Title: Senior Vice President
A notary public or other officer completing this
certificate verifies only the identity of the
individual who signed the document to which this
certificate is attached, and not the truthfulness,
accuracy, or validity of that document.

State of }
County of }
On ______________, 2023, before me, _____________________________________, Notary Public, personally appeared SHAUN NIELSON, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Notary Public Signature
Notary Public Seal

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4892-0116-7729
- 9 -
BORROWER:

WASATCH ADVANTAGE GROUP, LLC
a Utah limited liability company
By:

Name:

Title:

A notary public or other officer completing this
certificate verifies only the identity of the
individual who signed the document to which this
certificate is attached, and not the truthfulness,
accuracy, or validity of that document.

State of }
County of }
On ______________, 2023, before me, _____________________________________, Notary Public, personally appeared _________________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Notary Public Signature
Notary Public Seal

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4892-0116-7729
- 10 -
SUBORDINATED LENDER:

HOUSING SUCCESSOR AGENCY OF THE CITY OF
NORCO
By:

Name:

Title:

State of }
County of }
On ______________, 2023, before me, _____________________________________, Notary Public, personally appeared _______________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Notary Public Signature
Notary Public Seal

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- 11 -

EXHIBIT A

LEGAL DESCRIPTION
Real property in the City of Norco, County of Riverside, State of California described as follows:

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Page 100 of 223 ends

City Council

STAFF REPORT
Date: September 18, 2023 Agenda Item:

5.A.

To: Honorable Mayor and City Council Members
Prepared By: Dana Roa, City Clerk
Department: City Clerk
SUBJECT:

Second Readings: Ordinance No. 1102, Zone Code Amendment 2023-04 (City of Norco):

A City-Initiated proposal to amend Norco Municipal Code Title 18 – “Zoning”, Chapter

18.68 – “Accessory Building Use Permits”, to amend the provisions/regulations for Large Vehicle Parking Buildings, and for buildings 240 square feet and under. Ordinance No. 1103, Zone Code Amendment 2023-05 (City of Norco): A City-Initiated proposal to amend Norco Municipal Code Title 18 – “Zoning”, Chapter 18.31 – “General Provisions – Yards, Setbacks, and Height Exceptions”, to amend the provisions/regulations for roof overhangs/eaves in the required setback areas. Ordinance No. 1104 Code Amendment 2023-04 (City of Norco): A City-Initiated proposal to amend Norco Municipal Code Title 15 – “Building and Construction”, Chapter 15.02 – “Building Code”, Section 15.02.150 – Conversion of Cargo Carriers, to allow cargo carriers/metal storage containers 240 square feet and under without approval of a conditional use permit, on properties zoned for residential, subject to the requirements of Chapter 18.68 Chapter 18.68 – “Accessory Building Use Permits” of the Norco Municipal Code
RECOMMENDATION:

Adopt Ordinance No. 1102, Second Reading, approving Zone Code Amendment 2023- 04;
Adopt Ordinance No. 1103, Second Reading approving Zone Code Amendment 2023- 05; and
Adopt Ordinance No. 1104, Second Reading approving Code Amendment 2023-04.

SUMMARY:

The First Reading of Ordinances 1102, 1103, and 1104 was held on September 6, 2023 and were adopted by the City Council.

BACKGROUND:

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In 2017, Chapter 18.68 – “Accessory Building Use Permits” was adopted into the Norco Municipal Code (NMC), establishing an application and review process and establishing regulations for non-habitable accessory buildings on properties zoned for residential uses. Review of the adopted regulations is required yearly to update the regulations as needed based on implementation issues.

For 2023, clarifying the provisions for Large Vehicle Parking Buildings and for buildings 240 square feet and under, which will now include storage containers, were discussed with the Planning Commission and City Council as a part of the annual review of the Accessory Building Ordinance. Other items have surfaced along the way are discussed below as part of the proposed amendments to the NMC. The Planning Commission reviewed the proposed amendments on August 9, 2023 and their recommendations are reflected in Attached Ordinances 1102, 1103, and 1104 that were adopted at the first reading at City Council on September 6, 2023.

FISCAL IMPACT:

Not applicable for this item.

RELATIONSHIP TO STRATEGIC PLAN:

This item is consistent with Strategic Plan Direction No. 3 - Economic Development and Financial Stability: Assure financial stability by expanding development efforts, diversifying revenue sources and continuing prudent financial management.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Lori Sassoon, City Manager
Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):

Ordinance No 1102 Zone Code 2023-04
Ordinance No 1103 Zone Code Amendment 2023-05
Ordinance No 1104 Code Amendment 2023-04

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ORDINANCE NO. 1102

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NORCO,
CALIFORNIA, APPROVING ZONE CODE AMENDMENT 2023-04: A CITYINITIATED PROPOSAL TO AMEND NORCO MUNICIPAL CODE TITLE 18 – “ZONING”, CHAPTER 18.68 – “ACCESSORY BUILDING USE PERMITS”, TO

AMEND THE PROVISIONS/REGULATIONS FOR LARGE VEHICLE PARKING BUILDINGS, AND FOR BUILDINGS 240 SQUARE FEET AND UNDER.

WHEREAS, the CITY OF NORCO initiated Zone Code Amendment 2023-04, a proposal to amend Chapter 18.68 of the Norco Municipal Code Title 18 (Zoning Code), relating to residential accessory buildings; and
WHEREAS, the Zone Code Amendment was duly submitted to said City’s Planning Commission for decision at a public hearing for which proper notice was given; and WHEREAS, the Zone Code Amendment was scheduled for public hearing on August 9, 2023 on or about 7 p.m. in the Council Chambers at 2820 Clark Avenue, Norco, California 92860; and
WHEREAS, at the time set, the Planning Commission held a public hearing and received both oral and written testimony pertaining to the Zone Code Amendment; and WHEREAS, the Planning Commission adopted Resolution 2023-18, recommending approval of Zone Code Amendment 2023-04 to the City Council; and WHEREAS, the Zone Code Amendment was duly submitted to said City’s City Council for decision at a public hearing for which proper notice was given; and WHEREAS, the Zone Code Amendment was scheduled for public hearing on September 6, 2023 on or about 7 p.m. in the Council Chambers at 2820 Clark Avenue, Norco, California 92860; and
WHEREAS, at the time set, the City Council held a public hearing and received both oral and written testimony pertaining to the Zone Code Amendment; and WHEREAS, the City of Norco acting as the Lead Agency has determined that this Zone Code Amendment is exempt from review under the California Environmental Quality Act (CEQA).

NOW, THEREFORE, the City Council of the City of Norco does hereby make the following FINDINGS AND DETERMINATIONS:

I. FINDINGS.

A. The proposed Zone Code Amendment are in response to the 2023 review of Chapter 18.68 – “Accessory Building Use Permits”. A review of Chapter 18.68

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Ordinance No.1102 for Zone Code Amendment 2023-04
September 18, 2023

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is required on a yearly basis to ensure that the compatibility of accessory buildings in residential zones on an on-going basis.

B. The proposed Zone Code Amendment will increase the compatibility of accessory buildings in their respective residential zones. Residential and associated accessory buildings are allowed in residential zones, and these zones are consistent with the land use designation of the General Plan. The proposed Zone Code Amendment will therefore not conflict with City of Norco General Plan.

C. The proposed Zone Code Amendment will not be detrimental to the public convenience, health, safety, or general welfare of the City because the amendment will increase compatibility of residential accessory building uses with surrounding residential properties.

D. The above Zone Code Amendment is exempt from review under the California Environmental Quality Act (CEQA). Pursuant to CEQA Guidelines (California Code of Regulations, §§ 15000 et seq.) Section 15061 (b) (3), it can be seen with certainty that there is no possibility that the adoption and implementation of the subject amendment will have a significant effect on the environment.

II. DETERMINATION:

NOW THEREFORE, the City Council for the City of Norco, California, does hereby approve as follows:

SECTION 1:

Title 18 (Zoning) of the Norco Municipal Code, Chapter 18.68 (Accessory Building Use Permits), Section 18.68.02 - "Intent and purpose”, is hereby amended to read as follows:

It is hereby found and declared that the City of Norco lies in a natural setting of rural, scenic and historical beauty; that this rural environment generates a strong characteristic for development of Norco as a new equestrian focal point in Southern California; that this unique rural environment and historically significant location contribute a material economic advantage to the citizens, business, and industry within the City and particularly to the property owners who reside therein; and that development in an orderly manner with compatible uses and appearances of structures within and between zones and with the natural rural environment is necessary to maintain such historic and economic advantage, to stabilize, protect, and maintain property values, and to encourage permanence of desirable residential areas.

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Ordinance No.1102 for Zone Code Amendment 2023-04
September 18, 2023

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The purpose of the accessory building use permit is to review the location, architectural design, and/or conduct of certain land uses associated with accessory buildings in residential and agricultural zones. Accessory buildings and their associated uses can have a unique and distinct impact on the area and surrounding properties in which they are located, and thus require special review and conditions as needed. An accessory building use permit may be granted at the discretion of the Planning Commission, or City Council on appeal, whichever is the approving body, and is not the automatic right of any applicant.

Accessory buildings that are 240 square feet or smaller and not higher than 14 feet are exempt from having to be reviewed by the Planning Commission prior to the issuance of a building permit. This provision shall include metal storage containers/cargo carriers 240 square feet or less, subject to the requirement of a building permit, subject to the requirements of Section 18.68.20 (3, (c), (d), (f), and (i) of this chapter, and provided that no more than one storage container is allowed per every 20,000 square feet.

Accessory buildings 120 square feet or less including metal storage containers that do not require a building permit, are not subject to requirements of Chapter 18.68, however, in no instance shall these buildings be placed closer than five to the side or rear property lines, be closer than five feet to any other structure, nor shall they exceed a building side wall height of eight feet and an overall height of 14 feet to the roof peak.

AND;
Norco Municipal Code (NMC) Title 18 (Zoning) of the Norco Municipal Code, Section

18.68.20 - Size, Layout and Design of Accessory Buildings", subsection (1) large Vehicle Parking Building, Item (b) is hereby amended to read as follows:
(b). Additional allowed square footage:

Size: 400 square feet at the following maximum allowed heights.

Height: Maximum height at eave: eight feet; maximum building height: 14 feet.

SECTION 2. EFFECTIVE DATE: This Ordinance shall become effective 30 days after final passage thereof.

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Ordinance No.1102 for Zone Code Amendment 2023-04
September 18, 2023

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portions of the Ordinance, and each section, subsection, sentence, clause, sentences, clauses, or phrases here of irrespective of the fact that any one or more of the sections, subsections, sentences, clauses, or phrases hereof be declared invalid or unconstitutional.

SECTION 4. POSTING: The Mayor shall sign this Ordinance and the City clerk shall attest hereto and shall cause the same within 15 days of its passage to be posted at no less than five public places within the City of Norco.

PASSED AND ADOPTED by the City Council of the City of Norco, California at a regular meeting held September 18, 2023.
__________________________
Robin Grundmeyer, Mayor
City of Norco, California
ATTEST:
________________________
Dana Roa, CMC, City Clerk
City of Norco, California

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Ordinance No.1102 for Zone Code Amendment 2023-04
September 18, 2023

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I, Dana Roa, CMC, City Clerk of the City of Norco, California, do hereby certify that the foregoing Ordinance was introduced at a regular meeting of the City Council of the City of Norco, California, duly held on September 6, 2023, and thereafter at a regular meeting of said City Council duly held on September 18, 2023, it was duly passed and adopted by the following roll call vote of the City Council:

AYES:

NOES:

ABSENT:

ABSTAIN:

IN WITNESS THEREOF, I have hereunto set my hand and affixed the official seal of the City of Norco, California, on September 18, 2023
________________________
Dana Roa, CMC, City Clerk
City of Norco, California

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ORDINANCE NO. 1103

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NORCO,
CALIFORNIA, APPROVING ZONE CODE AMENDMENT 2023-05: A CITYINITIATED PROPOSAL TO AMEND NORCO MUNICIPAL CODE TITLE 18 – “ZONING”, CHAPTER 18.31 – “GENERAL PROVISIONS – YARDS,
SETBACKS, AND HEIGHT EXCEPTIONS”, TO AMEND THE

PROVISIONS/REGULATIONS FOR ROOF OVERHANGS/EAVES IN THE
REQUIRED SETBACK AREAS.

WHEREAS, the CITY OF NORCO initiated Zone Code Amendment 2023-05, a proposal to amend Chapter 18.68 of the Norco Municipal Code Title 18 (Zoning Code), relating to residential accessory buildings; and
WHEREAS, the Zone Code Amendment was duly submitted to said City’s Planning Commission for decision at a public hearing for which proper notice was given; and WHEREAS, the Zone Code Amendment was scheduled for public hearing on August 9, 2023 on or about 7 p.m. in the Council Chambers at 2820 Clark Avenue, Norco, California 92860; and
WHEREAS, at the time set, the Planning Commission held a public hearing and received both oral and written testimony pertaining to the Zone Code Amendment; and WHEREAS, the Planning Commission adopted Resolution 2023-19, recommending approval of Zone Code Amendment 2023-05 to the City Council; and WHEREAS, the Zone Code Amendment was duly submitted to said City’s City Council for decision at a public hearing for which proper notice was given; and WHEREAS, the Zone Code Amendment was scheduled for public hearing on September 6, 2023 on or about 7 p.m. in the Council Chambers at 2820 Clark Avenue, Norco, California 92860; and
WHEREAS, at the time set, the City Council held a public hearing and received both oral and written testimony pertaining to the Zone Code Amendment; and WHEREAS, the City of Norco acting as the Lead Agency has determined that this Zone Code Amendment is exempt from review under the California Environmental Quality Act (CEQA).

NOW, THEREFORE, the City Council of the City of Norco does hereby make the following FINDINGS AND DETERMINATIONS:

I. FINDINGS.

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Ordinance No.1103 for Zone Code Amendment 2023-05
September 18, 2023

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A. The proposed Zone Code Amendment is necessary to minimize potential roof overhangs/eaves drainage impacts of one property on surrounding adjacent properties.

B. The proposed Zone Code Amendment address building roof overhangs/eave encroachments onto a required setback area/yard in zoning designations that are consistent with the land use designation of the General Plan. The proposed Zone Code Amendment will therefore not conflict with City of Norco General Plan.

C. The proposed Zone Code Amendment will not be detrimental to the public convenience, health, safety, or general welfare of the City because the amendment will minimize potential roof overhangs/eaves drainage impacts from one property on surrounding adjacent properties.

NOW THEREFORE, the City Council for the City of Norco, California, does hereby approve as follows:

SECTION 1:

Title 18 (Zoning) of the Norco Municipal Code, Chapter 18.31 – “General Provisions – Yards, Setbacks, and Height Exceptions”, Section 18.31.08 - "Yard Requirements -Walls, Fences and Structures in Setback Area", Subsection 7, Item b, is hereby amended to read as follows:
(b) Cornices, canopies, and other similar architectural features not providing additional floor space within the building, may extend into a required yard not to exceed one (1) foot. Eaves may extend two (2) feet into a required yard; however, in no case shall a roof eave be closer than three (3) feet from a property line in a required yard. One (1) pergola or one (1) covered but unenclosed passenger landing may extend into either side yard provided it does not reduce the side yard below five (5) feet and its depth does not exceed twenty (20) feet.

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Ordinance No.1103 for Zone Code Amendment 2023-05
September 18, 2023

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SECTION 2. EFFECTIVE DATE: This Ordinance shall become effective 30 days after final passage thereof.

SECTION 3. SEVERABILITY: If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of the Ordinance, and each section, subsection, sentence, clause, sentences, clauses, or phrases here of irrespective of the fact that any one or more of the sections, subsections, sentences, clauses, or phrases hereof be declared invalid or unconstitutional.

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Ordinance No.1103 for Zone Code Amendment 2023-05
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AYES:

NOES:

ABSENT:

ABSTAIN:

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ORDINANCE NO. 1104

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NORCO,
CALIFORNIA, APPROVING CODE AMENDMENT 2023-04: A CITYINITIATED PROPOSAL TO AMEND NORCO MUNICIPAL CODE TITLE 15 – “BUILDING AND CONSTRUCTION”, CHAPTER 15.02 – “BUILDING CODE”, SECTION 15.02.150 – CONVERSION OF CARGO CARRIERS, TO ALLOW CARGO CARRIERS/METAL STORAGE CONTAINERS 240 SQUARE FEET

AND UNDER WITHOUT APPROVAL OF A CONDITIONAL USE PERMIT, ON

PROPERTIES ZONED FOR RESIDENTIAL, SUBJECT TO THE
REQUIREMENTS OF CHAPTER 18.68 CHAPTER 18.68 – “ACCESSORY BUILDING USE PERMITS” OF THE NORCO MUNICIPAL CODE.

WHEREAS, the CITY OF NORCO initiated Code Amendment 2023-04, a proposal to amend Title 15 (Building and Construction), Chapter 15.02 – “Building Code”, Section 15.02.150 – Conversion of Cargo Carriers, relating to the provision of cargo carriers/metal storage containers; and
WHEREAS, the Code Amendment was duly submitted to said City’s Planning Commission for decision at a public hearing for which proper notice was given; and WHEREAS, the Code Amendment was scheduled for public hearing on August 9, 2023 on or about 7 p.m. in the Council Chambers at 2820 Clark Avenue, Norco, California 92860; and
WHEREAS, at the time set, the Planning Commission held a public hearing and received both oral and written testimony pertaining to said Code Amendment; and WHEREAS, the Planning Commission adopted Resolution 2023-20, recommending approval of Code Amendment 2023-04 to the City Council; and WHEREAS, the Code Amendment was duly submitted to said City’s City Council for decision at a public hearing for which proper notice was given; and WHEREAS, the Code Amendment was scheduled for public hearing on September 6, 2023 on or about 7 p.m. in the Council Chambers at 2820 Clark Avenue, Norco, California 92860; and
WHEREAS, at the time set, the City Council held a public hearing and received both oral and written testimony pertaining to the Code Amendment; and WHEREAS, the City of Norco acting as the Lead Agency has determined that this Code Amendment is exempt from review under the California Environmental Quality Act (CEQA).

NOW, THEREFORE, the City Council of the City of Norco does hereby make the following FINDINGS AND DETERMINATIONS:

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Ordinance No.1104 for Code Amendment 2023-04
September 18, 2023

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I. FINDINGS.

A. The proposed Code Amendment are in response to the 2023 review of Chapter

18.68 – “Accessory Building Use Permits”. A review of Chapter 18.68 is required on a yearly basis to ensure that the compatibility of accessory buildings in residential zones on an on-going basis.

B. The proposed Code Amendment will increase the compatibility of cargo carriers/metal storage containers as accessory buildings in their respective residential zones. Residential and associated accessory buildings are allowed in residential zones, and these zones are consistent with the land use designation of the General Plan. The proposed Code Amendment will therefore not conflict with City of Norco General Plan.

C. The proposed Code Amendment will not be detrimental to the public convenience, health, safety, or general welfare of the City because the amendment will increase compatibility of cargo carriers/metal storage containers with surrounding residential properties.

D. The Code Amendment is exempt from review under the California Environmental Quality Act (CEQA). Pursuant to CEQA Guidelines (California Code of Regulations, §§ 15000 et seq.) Section 15061 (b) (3), it can be seen with certainty that there is no possibility that the adoption and implementation of the subject amendment will have a significant effect on the environment.

II. DETERMINATION:

NOW THEREFORE, the City Council for the City of Norco, California, does hereby approve as follows:

SECTION 1:

Title 15 (Building and Construction) of the Norco Municipal Code, Chapter 15.02 – “Building Code”, Section 15.02.150 – "Conversion of Cargo Carriers", Item "C" be amended to read as follows:

C. Cargo carriers converted for use as structures may be permitted upon approval of a conditional use permit and subject to the following:

1. All necessary building and safety, fire department, and planning department permits are granted;

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Ordinance No.1104 for Code Amendment 2023-04
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2. The structure and its location meet all zone requirements as they pertain to accessory buildings;

3. The structure is accessory to a main building;

4. The structure is internally stable and the exterior is in proper order as determined by the City Building Inspector;

5. The structure is anchored securely to the ground. The manner of securing the structure shall be appropriate for the particular structure and to the satisfaction of the Building Official. The Building Official may request a report from a registered civil or structural engineer on the method of securing the structure.

6. The applicant provides signed letters of support from a majority of adjacent property owners and/or tenants;

7. Approval of the Conditional Use Permit shall include architectural and site treatments that may include, but not be limited to, painting, construction of eaves, awnings, roofs, sidings, railings, etc.; and landscaping;

8. The application fee shall be the current fee for a Minor Conditional Use Permit; and

9. A report from a registered civil or structural engineer is submitted indicating how the cargo container will be converted to meet all building codes or their equivalent.

10. Cargo carriers 240 square feet or less are not subject to the requirements of this Section and shall be subject to the requirements of Chapter 18.68 – “Accessory Building Use Permits” of the Norco Municipal Code.

SECTION 2. EFFECTIVE DATE: This Ordinance shall become effective 30 days after final passage thereof.

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Ordinance No.1104 for Code Amendment 2023-04
September 18, 2023

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Ordinance No.1104 for Code Amendment 2023-04
September 18, 2023

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AYES:

NOES:

ABSENT:

ABSTAIN:

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City Council

STAFF REPORT
Date: September 18, 2023 Agenda Item:

6.A.

To: Honorable Mayor and City Council Members
Prepared By: Alma Robles, Planning Director
Department: City Council
SUBJECT:

Discussion on recommendations regarding the planned Veteran's Housing project at 4095 and 4061 Sierra Avenue
RECOMMENDATION:

That the City Council provide input on the recommendations for the Veterans Housing project as developed by the RFP consultant, Keyser Marston Associates.

SUMMARY:

Based on the required affordability and with the goal of making the project financially feasible, it is recommended that the Veteran's Housing Project consist of rental units, and that that the density be no more than 10 dwelling units per the acre for a maximum of 50 rental units/apartments total for the project. A rental project of this size can be designed to fit in architecturally with the surrounding neighborhoods and appear similar to a singlefamily development, while providing the necessary affordability and viability for an affordable housing developer.

BACKGROUND:

On June 21, 2023, the City Council approved a Professional Consultant Services contract with Keyser Marston Associates (KMA) to provide affordable housing developer selection services for the veterans housing (VH) project on 4095 and 4061 Sierra Avenue.

KMA has embarked on the first step of the project which is to gather information pertaining to the City’s goals for the development of City-owned site (Site) that is comprised of approximately five acres.

As part of this first step, KMA met with the City Manager, the Community Development Director and the VH sub-committee (Councilmembers Bash and Aleman) to discuss two major issues/aspects of the project, which are the financial feasibility of a homeownership project versus a rental project, and the financial feasibility of the project's density (see attached issue analysis from KMA). A consensus on these two aspects of the VH

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project is necessary to move forward with a project description that will eventually be in the Request for Proposal (RFP) to qualified affordable developers.

Up until this point, it has been the City’s goal to convey the property to a developer for the subsequent development of ownership housing units. The issue with the implementation of this goal is the limitations due to affordability requirements placed on the allowable sales prices. As the attached analysis indicates, this would result in the need for a significant amount of additional City assistance to cover the gap to keep the unit affordable for 45-55 years, which is not financially feasible. State funding available to support affordable projects are targeted toward multi-family projects, as they result in lower costs per housing unit. It is highly unlikely that additional funds could be attracted to make the owner-occupied project pencil out for development.

Additionally, at these low household income levels, owners are challenged to maintain their homes and manage the inevitable repair and upkeep expenses that come with home ownership. The lack of household income makes saving for repairs and emergencies especially challenging, and can ultimately result in a decline neighborhood conditions.

This is another reason why affordable home ownership developments are somewhat rare, relative to the number of rental projects.

Affordable housing projects typically compete for state funds and tax credits, and are rated based on their cost per unit and overall benefit to housing production relative to one another. As a result, projects need a certain critical mass to be developable from a practical perspective. Based on KMA's extensive experience in this field, to attract multifamily development to the property, it is likely that the project would need to include at least 50 units. The property’s current zoning standards require the development of single family homes at a minimum lot size of 21,780 square feet, which allows for the maximum development of 10 units; it is therefore a fundamental assumption of the RFP that the zoning will be amended to allow for higher intensity development. At that density, KMA's opinion is that outside public funding sources are likely to be available to assist with the development.

The recommendation from the Subcommittee and staff is for a VH project of a maximum of 50 rental units, and a creative design that is in keeping with the neighborhood character.

It is important to note that whether a given project is for rental units or ownership units, the project design is a separate issue; while keeping affordability and necessary density in mind, the City will be expecting interested developers to bring an architectural and site planning approach that fits in with the City's large lot, animal-keeping lifestyle. It is anticipated that this likely means development of no more than two stories, with a variety of unit types, and the incorporation of green spaces and areas for keeping small animals.

Developers responding to the RFP will be invited to bring their best ideas to their project proposals in order to meet the City's affordability and design goals.

Kathe Head from KMA will be present at the scheduled meeting to assist with the presentation of this item and to answer questions.

FISCAL IMPACT:

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Not applicable at this time.

RELATIONSHIP TO STRATEGIC PLAN:

This item is consistent with Strategic Plan Direction No. 1 - Public Health, Safety & Wellness: Enhance quality of life by promoting public health, safety and wellness initiatives for all community members; Action Plan No. 5 - Implement the actions identified in the General Plan 2021-2029 Housing Element: Sub-action 5.1: Identify opportunities to create veterans housing.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Lori Sassoon, City Manager
Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):

Attachment 1 - KMA Issue Analysis

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230811.NOR:KHH Page 1
16102.003.001 September 14, 2023

ISSUES SUMMARY
DISPOSITION OF 4095 AND 4061 SIERRA AVENUE

PROPERTY ACQUISITION
The property includes approximately 5.02 acres of land area. The property was acquired for approximately $2.46 million using Low Moderate Income Housing Asset Funds (LMIHAF). Given the funding source used to acquire the properties, the following obligations are placed on the property:

1. At least 30% of the funds must be used to assist extremely low income households.

2. No more than 20% of the funds may be used to assist households earning between 60% and 80% of the San Bernardino County median income (AMI).

3. The balance of the funds must be used to assist households earning between 0% and 59% of AMI. For the purposes of this analysis, Keyser Marston Associates, Inc. (KMA) has assumed that these units will be allocated to households earning 59% of AMI.

SURPLUS LAND ACT REQUIREMENTS
Based on the LMIHAF requirements identified above, the best option for fulfilling the Surplus Land Act (SLA) requirements is the Government Code Section 54221 (f) (1) (F) (i) exemption category. The requirements imposed by this exemption category can be described as follows:

1. 100% of the units must be subject to income and affordability covenants. The standards are:
a. At least 75% of the units must be allocated to households that earn less than 80% of AMI.
b. The remaining units can be allocated to households earning up to 120% of AMI.

2. The minimum covenant periods are:
a. 45 years for ownership housing units; and
b. 55 years for rental housing units.

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Issues Summary: Disposition of 4095 and 4061 Sierra Avenue Page 2 2308011.NOR:KHH / 16102.003.001 September 14, 2023

DEVELOPMENT ISSUES
Density
The property’s current zoning standards require the development of single family homes at a minimum lot size of 21,780 square feet. This allows for the maximum development of 10 units.

It is a fundamental assumption that the zoning will be amended to allow for higher intensity development. Prior to entering into the developer solicitation process it is advisable for the City to reach consensus on the number and type of units that will be permitted.

Affordable Housing Requirements
The following table provides a summary of the “Affordable Sales Prices” and “Affordable Rents” as required by the LMIHAF and SLA restrictions:

Tenure

OWNERSHIP HOUSING DEVELOPMENT
It has been the City’s goal to convey the property to a developer for the subsequent development of ownership housing units. The issue with the implementation of this goal is the limitations placed on the allowable sales prices. This will result in the need for a significant amount of additional City assistance in order to implement the development.

Affordable Rents - Net of Utilities Allowances
Zero
Bdrms One Bdrm
Two
Bdrms
Three
Bdrms
Extremely Low Income: 30% HCD Median Income $429 $487 $525 $565 Hybrid Income: 59% HCD Median Income $909 $1,035 $1,141 $1,250 Affordable Sales Prices
One Bdrm
Two
Bdrms
Three
Bdrms
Four
Bdrms
Extremely Low Income: 30% HCD Median Income $21,800 $19,400 $16,800 $11,700 Hybrid Income: 59% HCD Median Income $96,900 $103,900 $110,700 $113,200 Low Income: 70% HCD Median Income $125,500 $135,900 $146,400 $151,600

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Issues Summary: Disposition of 4095 and 4061 Sierra Avenue Page 3 2308011.NOR:KHH / 16102.003.001 September 14, 2023
Using an 10 unit project as an example, the KMA analysis findings can be summarized as follows:

1. The required affordability mix is:
a. Three extremely low income units;
b. Five units at 59% of AMI; and
c. Two low income units.

2. Based on that affordability mix, on an order-of-magnitude basis, KMA estimates that the City costs as follows:
10 Unit Ownership Housing Alternative
Construction Cost Gap $3,723,000
Property Acquisition Cost 2,458,000
Total Gap to be Filled by the City $6,181,000
Gap Per Unit $618,100
Using a 50 unit project as an example, which represents a density of 10 units per acre, the KMA analysis findings can be summarized as follows:

1. The required affordability mix is:
a. 13 extremely low income units;
b. 26 units at 59% of AMI; and
c. 11 low income units.

2. The resulting City costs are estimated as follows:
50 Unit Ownership Housing Alternative
Construction Cost Gap $18,393,000
Property Acquisition Cost 2,458,000
Total Gap to be Filled by the City $20,851,000
Gap Per Unit $417,000

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Issues Summary: Disposition of 4095 and 4061 Sierra Avenue Page 4 2308011.NOR:KHH / 16102.003.001 September 14, 2023

APARTMENT DEVELOPMENT
To attract apartment development to the property it is likely that the project would need to include at least 50 units. If density of this magnitude is permitted, it will be more financially advantageous to pursue apartment development on the property. This is attributable to the fact that numerous outside public funding sources are available to assist deeply affordable apartment developments.

To test this concept, KMA prepared the following two conceptual pro forma analyses of a 50 unit apartment project:

1. A project that is financed with a combination of Tax-Exempt Multifamily Bonds and the 4% Low Income Housing Tax Credit (Tax Credit) that is awarded automatically to projects that receive bond financing allocated by the California Debt Limit Allocation Committee.

2. A project in which the project receives the competitively awarded 9% Tax Credit.

The results of the analyses are presented in the following table:
50 Unit Apartment Alternatives
Bond / 4% Tax
Credit
Alternative
9% Tax Credit
Alternative
Construction Cost Gap $10,629,000 $6,686,000
Property Acquisition Cost 2,458,000 2,458,000
Total Gap to be Filled by the City $13,087,000 $9,144,000 Gap Per Unit $262,000 $182,900

SUMMARY
The order-of- magnitude financial gaps associated with the three 50-unit housing development alternatives are compared in the following table:

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Issues Summary: Disposition of 4095 and 4061 Sierra Avenue Page 5 2308011.NOR:KHH / 16102.003.001 September 14, 2023
Financial Gaps Comparison
50 Unit Housing Development Alternatives
Total Financial
Gap
Financial Gap /
Unit
Ownership Housing Alternative $20,851,000 $417,000
Bond / 4% Tax Credit Alternative $10,629,000 $262,000
9% Tax Credit Alternative $9,144,000 $182,900
The financial gap analyses for the apartment alternatives are based on the assumption that Tax Credits and bond financing are the only outside funding sources that are received by the project. There are several other state and county assistance sources that could potentially be obtained by an affordable apartment project. As such, it can clearly be concluded that an apartment development would generate a substantially lower financial gap than an ownership housing development.

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City Council

STAFF REPORT
Date: September 18, 2023 Agenda Item:

7.A.

To: Honorable Mayor and City Council Members
Prepared By: Lori Sassoon, City Manager
Department: Administration
SUBJECT:

Public Hearing to consider various actions related to a loan to Five Keys Schools and Programs to finance the purchase of a 2.38 acre property at 4208 California Avenue, for the establishment of a permanent site for the EAT Cultural Center and Farm.

RECOMMENDATION:

SUMMARY:

Five Keys Schools and Programs (Five Keys) currently operates the EAT Farm at the City-owned properties on Sierra Avenue on an interim basis, until the planned affordable Veterans' housing development is under construction. It also operates the EAT Cultural Center on Hamner Avenue in the City's former library building, which is also an interim use. Approval of this item will provide a loan of up to $1 million for Five Keys to purchase the 2.38 acre property at 4208 California Avenue for a permanent site for the EAT Cultural Center and Farm. EAT's operations on this new site will promote Norco's animal-keeping and small plot agricultural lifestyle through an ongoing, permanent partnership with the City, including regularly-scheduled classes and programming to promote Norco's lifestyle.

BACKGROUND:

As a statewide organization, Five Keys Schools and Programs is a non-profit organization that provides educational opportunities at 120 teaching sites throughout California. The City of Norco's partnership with Five Keys dates back to 2019, when Five Keys began operating what is now known as the EAT Cultural Center in the City's former library building on Hamner Avenue. Since coming to Norco, EAT's mission has been to teach sustainable farming skills and support small agricultural business development through

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its Small Farm Apprentice Program. EAT also operates the successful Farmer's Market on Thursday nights throughout the year.

In 2022, Five Keys' MOU with the City was amended to allow the interim operation of the City's Sierra Avenue properties for the EAT Farm. Those properties are intended for an affordable veterans' housing project, but in the interim, the EAT Farm was established on the 5-acre site to provide participants in the Small Farm Apprentice Program a place to learn and farm together.

More recently, members of the City Council and EAT staff began a conversation concerning the opportunity to secure a permanent location for the EAT Cultural Center and Farm, to ensure that farming education can be continued once the Sierra properties are no longer available. Given the continual adverse pressures on the City's agricultural and animal-keeping lifestyles, the establishment of a permanent site, where residents can learn skills and practices that promote Norco's lifestyle today and into the future, supports and promotes the City's vision in a significant way.

Earlier this month, Five Keys Schools and Programs entered into escrow for the purchase of 4208 California Avenue at a price of $950,000. This property is a 2.38 acre site and includes a 728 square foot residential building and ancillary improvements. The flat site, and its location on California Avenue, make it an ideal location as a permanent site for the EAT Cultural Center and Farm.

It is proposed that the City loan Five Keys the funds for the property acquisition, as further described below. Once acquired, Five Keys will begin transitioning its farming operations from the Sierra property to the California Avenue property in the coming months; Five Keys will not farm both sites. The interim use of the library site for the Cultural Center and as home base of the Farmer's Market will continue for the present time until a future date still to be determined.

Loan Agreement
By adopting the proposed resolution, the City Council would approve a loan agreement and related documents to provide for a loan from the City to Five Keys to finance Five Keys' purchase of the property. Key terms of the loan are summarized as follows:
- City will lend Five Keys up to $1 million for the purchase of the property and related purchase costs
- The Loan is provided at 0% interest for five (5) years - The loan will be due and payable on the fifth anniversary of the loan - The Loan will be secured by a deed of trust recorded against the subject property and will be non-recourse to Five Keys (meaning that the City’s only remedy in the event Five Keys does not pay the loan is to foreclose on the property) - Property is to be used for farming and agricultural purposes - EAT will provide no fewer than five (5) hours per month of workshops, classes, events, and programs on topics related to farming and agriculture. These classes will be marketed and administered through the City's Community Services Department, and be free of charge to Norco residents. Failure to provide these classes is a default under the terms of the agreement.
- Five Keys can prepay the loan at any time. The organization anticipates pursuing grant funds to pay off the loan during the loan period.

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Public Hearing and AB 562 Report
Approval of this loan constitutes an economic development subsidy, requiring a public hearing and preparation of a report providing certain information regarding this subsidy.

The public hearing was noticed in accordance with the statute, and the required AB 562 report was prepared and made available to the public (attached).

Put-Option Agreement
The interest-free loan to Five Keys represents a considerable investment by the City; calculating interest annually, that value is approximately $338,000 if an interest rate of 6% is assumed. In recognition of the value of that loan, the parties have agreed to a PutOption agreement. The Put-Option Agreement provides that, during the fifteen (15) year period following the repayment of the loan, if Five Keys wants to sell the property they must first offer the property to the City. The purchase price payable by the City in such instance shall be (i) the Appraised Value of the Property, less (ii) $338,000, reduced by 1/15 of such amount during each year of the Option Period.

The Put-Option agreement also grants Five Keys the right, during the loan term, to convey the property to the City in exchange for the forgiveness of the loan.

The Put-Option agreement contains provisions protecting the City such as a requirement that the property be in the same condition as it is today with no additional liens or encumbrances.

This Put-Option agreement helps meet goals of both parties. It provides for the City to repurchase the property during the term after loan payoff, at effectively a reduced price; it provides Five Keys the ability to discontinue the loan arrangement without incurring penalties if for some reason it must do so during the loan period.

FISCAL IMPACT:

Approval of this item will authorize a loan of up to $1 million to Five Keys for the purchase of the property. Funds are available in the City's Economic Development Strategic Reserve for this purpose.

RELATIONSHIP TO STRATEGIC PLAN:

This action supports the City's mission and vision, as well as Strategic Plan Item 2.3 - Identify new potential commercial uses and business concepts that contribute to the City's economic strength and are consistent with the City's rural lifestyle, and determine if Zone Code amendments are necessary.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Lori Sassoon, City Manager
Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):

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Resolution No. 2023-61 Property Acquisition Loan
Property Acquisition Loan Agreement (Five Keys)
Deed of Trust (Five Keys)
Put - Option Agreement, Five Keys
Promissory Note (Five Keys), 4857-3381-4397_7

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4889-4374-1310v2/200760-0007
RESOLUTION NO. 2023- 61

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORCO

APPROVING A PROPERTY ACQUISITION LOAN AGREEMENT

BETWEEN THE CITY OF NORCO AND FIVE KEYS SCHOOLS AND
PROGRAMS; AUTHORIZING THE CITY MANAGER TO FINALIZE,

EXECUTE, AND DELIVER SUCH AGREEMENT AND THE RELATED

PROMISSORY NOTE, DEED OF TRUST, AND OTHER ANCILLARY
LOAN DOCUMENTS; AUTHORIZING THE CITY MANAGER TO
IMPLEMENT SUCH AGREEMENT; AND MAKING CERTAIN OTHER

FINDINGS IN CONNECTION THEREWITH
WHEREAS, the City of Norco (the “City”) is a California municipal corporation and charter city;
WHEREAS, the City has a longstanding farming and animal keeping culture, as reflected in the City’s Charter, which expressly protects animal keeping rights, zoning rights, and horse trails in the City;
WHEREAS, the City Council (“City Council”) for the City is authorized and empowered under its Charter and municipal code to provide educational programming and workshops to its residents, including programming relating to farming and animal keeping; WHEREAS, California Education Code sections 32330, 52450, et seq., 52460, et seq., reflect the State’s policy promoting agricultural education; WHEREAS, the City is authorized by Government Code Section 37102 to use any available funds to provide employment opportunities to the City’s destitute or needy unemployed residents;
WHEREAS, the City has partnered since 2019 with Five Keys Schools and Programs, a nonprofit public benefit corporation (“Five Keys”), to provide educational programming in the City relating to farming, agriculture, and animal keeping; WHEREAS, throughout the State, Five Keys provides educational programs serving disadvantaged and incarcerated persons, assisting them to obtain a high school diploma, GED or obtain workforce training (including training relating to farming, agriculture, and animal keeping), while providing necessary support to help them achieve their goals; WHEREAS, Five Keys has entered into a purchase agreement to acquire certain real property consisting of a 2.38 acre parcel of land located at 4208 California Avenue, Norco, California, together with a 728 square foot residential building and other ancillary improvements located thereon (the “Property”), from a private seller for a purchase price of $950,000; WHEREAS, Five Keys requested the City’s assistance in acquiring the Property and the City has proposed to provide a short term loan at zero percent (0%) interest to pay the purchase price and buyer’s closing costs for the acquisition of the Property, subject to certain conditions;

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2 4889-4374-1310v2/200760-0007
WHEREAS, the City and Five Keys have negotiated the terms of a Property Acquisition Loan Agreement (the “Loan Agreement”) pursuant to which the City will agree to provide a loan of [up to $1,000,000] to the Borrower to finance the purchase price of the Property and Borrower’s share of closing costs. The Loan Agreement requires the Borrower to operate the Property with farming, agricultural, and animal raising uses and to provide related educational programming and workshops at the Property for City residents. The loan will mature and be due and payable in full on the fifth (5th) anniversary of the closing date for acquisition of the Property and funding of the loan;
WHEREAS, in accordance with Government Code Section 53083 (AB 562), the City has made a report available to the public containing the information required by AB 562 and, following publication of notice, the City Council held a public hearing regarding the Loan Agreement on September 18, 2023;
WHEREAS, the City Council has duly considered all terms and conditions of the presently drafted Loan Agreement and has determined that the Loan Agreement is in the vital and best interest of the City and the health, safety, morals and welfare of its residents, in accord with the goals, objectives and public purposes and provisions of applicable state and local laws.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORCO AS FOLLOWS:

Section 1. The City Council hereby finds and determines that the foregoing recitals are true and correct and are a substantive part of this Resolution.

Section 2. The Loan Agreement is exempt from the requirements of the California Environmental Quality Act, Public Resources Code Section 21000, et seq., and the implementing regulations thereto pursuant to Section 15061(a) (Common Sense Exemption) of Title 14 of the California Code of Regulations (collectively, “CEQA”). The City Manager (or authorized representative) is directed to prepare and file a Notice of Exemption pursuant to CEQA that states that the approval of the Loan Agreement is exempt from the requirements of CEQA pursuant to Section 15061(a) (Common Sense Exemption) of Title 14 of the California Code of Regulations.

Section 3. The City Council hereby approves the Loan Agreement, with such changes as may be mutually agreed upon by the Buyer, the City Attorney, and the City Manager, respectively, as are minor and in substantial conformance with the form of the Loan Agreement submitted herewith. The Mayor, the City Manager, and the City Clerk (and their authorized designees) are hereby authorized to execute and attest the Loan Agreement, including any related attachments, on behalf of City. In such regard, the Mayor and the City Manager (or either of them, and their authorized designees) are authorized to sign the final version of the Loan Agreement after completion of any such non-substantive, minor revisions. Copies of the final form of the Loan Agreement, when duly executed and attested, shall be placed on file in the office of the City Clerk. Further, the City Manager (and her authorized designees) is authorized to implement the Loan Agreement and take all further actions and execute all documents referenced therein and/or necessary and appropriate to carry out the transaction contemplated by the Loan Agreement, including all exhibits thereto. The City Manager (and her authorized designees) is hereby authorized to the extent necessary during the implementation of the Loan Agreement to make

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3 4889-4374-1310v2/200760-0007
technical or minor changes and interpretations of the Loan Agreement after execution, as necessary to properly implement and carry out the Loan Agreement, including all exhibits thereto, provided any and all such changes shall not in any manner materially adversely affect the rights and obligations of the City under the Loan Agreement.

Section 4. In addition to the authorization of Section 2 above, the Mayor and the City Manager (or either of them, and their authorized designees) are hereby authorized, on behalf of the City, to sign all other documents necessary or appropriate to carry out and implement the Loan Agreement, including all exhibits thereto and including causing the issuance of warrants in implementation thereof, and to administer the City’s obligations, responsibilities and duties to be performed under the Loan Agreement, including all exhibits thereto.

Section 5. The City Clerk shall certify to the adoption of this Resolution.

THE FOREGOING RESOLUTION is approved and adopted by the City Council of the City of Norco this 18th day of September, 2023, by the following roll call vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

CITY OF NORCO
By:

Robin Grundmeyer, Mayor
ATTEST:

Dana Roa, CMC, City Clerk

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Stradling Draft of 9/13/23
4855-4474-2269v6/200760-0007

PROPERTY ACQUISITION LOAN AGREEMENT
Dated as of __________, 2023
Between
[FIVE KEYS SCHOOLS AND PROGRAMS,
a California nonprofit public benefit corporation,]
as Borrower
[Borrower to confirm entity name and corporate status]
and

CITY OF NORCO,
a California municipal corporation and chartered city,
as Lender

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4855-4474-2269v6/200760-0007

TABLE OF CONTENTS

1. DEFINITIONS...........................................................................................................................1

2. GENERAL TERMS...................................................................................................................6

2.1 Loan Commitment; Disbursements to Borrower .......................................................6

2.2 Interest Rate................................................................................................................6

2.3 Usury Savings.............................................................................................................6

2.4 Payments.....................................................................................................................6

2.5 Prepayment .................................................................................................................7

2.6 Release of Property.....................................................................................................7

2.7 Term ...........................................................................................................................8

3. CONDITIONS PRECEDENT ...................................................................................................8

3.1 Loan Documents.........................................................................................................8

3.2 Title Insurance ............................................................................................................8

3.3 Encumbrances.............................................................................................................9

3.4 Property Carrying Costs .............................................................................................9

3.5 Authorization..............................................................................................................9

3.6 No Leases ...................................................................................................................9

3.7 Payment of Fees and Expenses...................................................................................9

3.8 Representations and Warranties; Compliance with Conditions .................................9

3.9 No Events of Default ..................................................................................................9

3.10 Material Adverse Change ...........................................................................................9

3.11 Further Documents .....................................................................................................9

4. REPRESENTATIONS AND WARRANTIES........................................................................10

4.1 Organization .............................................................................................................10

4.2 Assumed Business Name .........................................................................................10

4.3 Authorization............................................................................................................10

4.4 Compliance...............................................................................................................10

4.5 No Conflict ...............................................................................................................10

4.6 Agreements...............................................................................................................10

4.7 Title...........................................................................................................................11

4.8 Financial Information ...............................................................................................11

4.9 Condemnation...........................................................................................................11

4.10 Physical Condition....................................................................................................11

4.11 Not a Foreign Person ................................................................................................12

4.12 Not a Prohibited Person............................................................................................12

4.13 Assessments..............................................................................................................12

4.14 No Leases .................................................................................................................12

4.15 Filing and Recording Taxes......................................................................................12

4.16 Hazardous Substances ..............................................................................................13

4.17 Litigation and Claims ...............................................................................................13

4.18 Compliance...............................................................................................................13

4.19 Utilities and Public Access.......................................................................................14

4.20 Taxes.........................................................................................................................14

4.21 No Change in Facts or Circumstances; Disclosure ..................................................14

4.22 Full and Accurate Disclosure ...................................................................................14

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5. AFFIRMATIVE COVENANTS..............................................................................................14

5.1 Existence; Compliance with Legal Requirements; Use of the Property ..................14

5.2 Performance..............................................................................................................16

5.3 Financial Records .....................................................................................................16

5.4 Financial Reporting; Other Reports..........................................................................16

5.5 Insurance...................................................................................................................16

5.6 Title to the Property..................................................................................................17

5.7 No Leases .................................................................................................................17

5.8 Cooperation ..............................................................................................................17

5.9 Loan Proceeds ..........................................................................................................17

5.10 Taxes, Charges and Liens.........................................................................................17

5.11 Operations.................................................................................................................18

5.12 Environmental Studies..............................................................................................18

5.13 Inspection .................................................................................................................18

5.14 Notice of Default; Notice of Material Adverse Change...........................................18

5.15 Notices of Claims and Litigation..............................................................................18

5.16 Compliance Certificates ...........................................................................................18

5.17 Environmental Compliance and Reports..................................................................18

5.18 Enforcement Costs....................................................................................................18

5.19 Obligation to Subordinate Debt................................................................................19

5.20 Additional Assurances..............................................................................................19

6. NEGATIVE COVENANTS ....................................................................................................19

6.1 Subordinate Financing Prohibition...........................................................................19

6.2 Reserved ...................................................................................................................19

6.3 Dissolution................................................................................................................19

6.4 Loans, Acquisitions and Guaranties .........................................................................20

6.5 No Debt Cancellation ...............................................................................................20

6.6 Agreements...............................................................................................................20

6.7 Unauthorized Transfers ............................................................................................20

7. INSURANCE; CASUALTY; CONDEMNATION.................................................................20

7.1 Required Insurance...................................................................................................20

7.2 Lender’s Right to Cure .............................................................................................21

7.3 Delivery of Policies; Payment of Premiums ............................................................21

7.4 Damages and Insurance and Condemnation Proceeds .............................................22

7.5 Use of Proceeds by Borrower...................................................................................22

7.6 Assignment of Insurance Policies Upon Foreclosure...............................................23

7.7 Subrogation; Waiver of Offset .................................................................................23

8. LENDER’S EXPENDITURES................................................................................................24

9. ADDITIONAL REQUIREMENTS.........................................................................................25

9.1 Appraisals .................................................................................................................25

9.2 Collateral Security ....................................................................................................25

9.3 Right of First Refusal ...............................................................................................25

10. DEFAULT................................................................................................................................26

10.1 Events of Default......................................................................................................26

10.2 Remedies ..................................................................................................................27

11. MISCELLANEOUS PROVISIONS........................................................................................28

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11.1 Notices......................................................................................................................28

11.2 Further Assurances ...................................................................................................28

11.3 Not Assignable .........................................................................................................28

11.4 Consent to Loan Participation ..................................................................................28

11.5 Waiver of Right of Trial by Jury; Judicial Reference ..............................................29

11.6 Integration and Interpretation ...................................................................................30

11.7 Miscellaneous ...........................................................................................................30

11.8 Amendments.............................................................................................................30

11.9 Delay Not a Waiver ..................................................................................................30

11.10 Severability...............................................................................................................31

11.11 Principles of Construction ........................................................................................31

11.12 Supplement to Loan Documents ..............................................................................31

11.13 Caption Headings .....................................................................................................31

11.14 Construction .............................................................................................................31

11.15 Survival of Representations and Warranties ............................................................31

11.16 Attorneys’ Fees; Expenses .......................................................................................31

11.17 Preferences ...............................................................................................................31

11.18 Waiver of Notice ......................................................................................................31

11.19 Duplicate Originals; Counterparts............................................................................32

11.20 Time Is of the Essence..............................................................................................32

11.21 Choice of Venue .......................................................................................................32

11.22 Governing Law.........................................................................................................32

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4855-4474-2269v6/200760-0007

PROPERTY ACQUISITION LOAN AGREEMENT
THIS PROPERTY ACQUISITION LOAN AGREEMENT (“Agreement”) is made and entered into as of __________, 2023 (“Effective Date”), by FIVE KEYS SCHOOLS AND PROGRAMS, a California nonprofit public benefit corporation (“Borrower”), and CITY OF NORCO, a California municipal corporation and chartered city (“Lender”).

RECITALS
A. Borrower desires to obtain the Loan (as hereinafter defined) from Lender.

B. Lender is willing to make the Loan to Borrower, subject to and in accordance with the provisions and conditions of this Agreement and the other Loan Documents (as hereinafter defined).

NOW THEREFORE, in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant, agree, represent and warrant as follows:

1. DEFINITIONS. As used in this Agreement, the following terms have the following meanings:
“ALTA” shall mean American Land Title Association, or any successor thereto. “Bankruptcy Action” shall mean with respect to any Person: (a) such Person filing a voluntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (b) the filing of an involuntary petition against such Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law in which such Person colludes with, or otherwise assists such Person, or soliciting or causing to be solicited petitioning creditors for any involuntary petition against such Person; (c) such Person filing an answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; or soliciting or causing to be solicited petitioning creditors for any involuntary petition against such Person from any other Person; (d) such Person seeking, consenting to or acquiescing in or joining in an application for the appointment of a custodian, receiver, trustee, or examiner for such Person or any portion of the Property; or (e) such Person making an assignment for the benefit of creditors, or admitting, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due. “Bankruptcy Code” shall mean 11 U.S.C. § 101 et seq., as the same may be amended from time to time.
“Business Day” shall mean any day other than a Saturday, Sunday or any other day on which Lender is not open for business.
“City” means the City of Norco, California.
“Closing Date” shall mean the date of the funding of the Loan and the recordation of the Security Instrument.

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“Collateral” shall mean all of Borrower’s personal property and fixtures, both now owned and hereafter acquired or arising, and wherever located at the Property, as follows: (a) all goods, fixtures and other equipment of every kind in which Borrower now or at any time hereafter owns or acquires any interest in connection with the Property, including, without limitation, all tools, equipment, appliances, heating, ventilating and air conditioning systems, plumbing, mechanical and electrical systems, , lighting, alarm systems, fire control systems, carpets and carpeting, furnishings, furniture, trailers, farming equipment and vehicles, building or maintenance equipment, and all additions and accessions thereto, whether located at the Property, Borrower’s places of business or elsewhere; (b) all inventory and tangible assets used or consumed in connection with the Property in which Borrower now or at any time hereafter owns or acquires any interest, and all products thereof, whether in the possession of Borrower, warehousemen, bailees or any other person and to the extent now or hereafter located at the Property; (c) all goods and property covered by any warehouse receipts, bills of lading and other documents evidencing any goods or other tangible personal property of any kind in which Borrower now or at any time hereafter has any interest in connection with the Property or Collateral; (d) all goods and other tangible personal property of every kind, character or nature in which Borrower now has or at any time hereafter shall have any interest, located on or used in the operation, use, maintenance, development or construction of or otherwise in connection with the Property or Collateral, including, without limitation, any equipment, inventory and other goods and assets which are now or hereafter acquired with loan proceeds or acquired pursuant to or in connection with any lease or other contract pertaining to any use of the Property; (e) all general intangibles, accounts, agreements, contracts, documents and leases of any kind or nature in which Borrower now or at any time hereafter has an interest related to the Property or the use, operation or maintenance of the Property or any part thereof, and all amendments, supplements, substitutions and renewals thereof, including without limitation all contract rights of Borrower in leases, warranties, letters of credit, construction contracts, permits, licenses, approvals, governmental authorizations, consulting contracts, bonds, plans and specifications, architectural and engineering drawings, fire insurance policies and other insurance policies, condemnation awards and settlements, copyrights, trademarks, trade names, goodwill, and accounts receivable; (f) all profits, payments or proceeds of and from any and all agreements for the sale, lease, transfer or conveyance of all or any portion of the Property, subject to the rights of Borrower to collect and retain the same so long as no event of default under the Security Instrument shall have occurred and is continuing; and (g) any and all products, accessions, additions, substitutions, replacements or proceeds of or to any of the Collateral which may now or hereafter exist, and any and all rent or income derived from any or all of the Collateral, subject to the rights of Borrower to collect and retain the same so long as no Event of Default shall have occurred and is continuing.
“Condemnation” shall mean a temporary or permanent taking by any Governmental Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, of all or any part of the Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting the Property or any part thereof.
“Default” shall mean the occurrence of any event hereunder or under any other Loan Document which, but for the giving of notice or passage of time, or both, would be an Event of Default.
“Default Rate” shall mean six percent (6%) per annum, compounded on a monthly basis.

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“Environmental Laws” shall mean any and all state, Federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99 499 (“SARA”), the Hazardous Substances Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or Federal laws, rules, or regulations adopted pursuant thereto.
“Event of Default” shall have the meaning set forth in Section 10.1. “GAAP” shall mean generally accepted accounting principles. “Governmental Authority” shall mean any court, board, agency, bureau, department, commission, office or other authority of any nature whatsoever for any governmental unit (Federal, state, county, district, municipal, city or otherwise), whether now or hereafter in existence. “Hazardous Substances” shall mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous Substances” are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term “Hazardous Substances” also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
“Improvements” shall have the meaning set forth in the granting clause of the Security Instrument.
“Indebtedness” shall mean the Outstanding Principal Balance, together with all interest accrued and unpaid thereon and all other sums due to Lender in respect of the Loan under the Note, this Agreement, the Security Instrument and the other Loan Documents. “Insurance Premiums” shall mean all premiums due under the insurance policies required hereby and by the other Loan Documents.
“Interest Rate” shall mean zero percent (0%).
“Lease” shall mean any lease, sublease or subsublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect), pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in the Property, and: (a) every modification, amendment or other agreement relating to such lease, sublease, subsublease, or other agreement entered into in connection with such lease, sublease, subsublease, or other agreement; and (b) every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto. “Legal Requirements” shall mean all Federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting Borrower, the Property, or any part thereof, or the

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construction, use, alteration or operation thereof, or any part thereof, whether now or hereafter enacted and in force, including, without limitation, the Americans with Disabilities Act of 1990, as amended, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting Borrower, the Property, or any part thereof, including any which may: (a) require repairs, modifications or alterations in or to the Property or any part thereof; or (b) in any way limit the use and enjoyment thereof. “Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation, easement, restrictive covenant, preference, assignment, security interest, or any other encumbrance, charge or transfer of, or any agreement to enter into or create any of the foregoing, on or affecting Borrower, the Property, or any portion thereof or any interest therein, or any direct or indirect interest in Borrower, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialman’s and other similar liens and encumbrances. “Loan” shall mean the loan in the principal amount of [ONE MILLION AND NO/100 DOLLARS ($1,000,000.00] made by Lender to Borrower pursuant to this Agreement and the Note. “Loan Documents” shall mean, collectively, this Agreement, the Note, the Security Instrument, the Put – Option Agreement, and any and all other documents evidencing or securing the Loan or executed in connection therewith, all dated as of even date herewith, and any amendments, modifications, renewals, and/or extensions thereof.
“Maturity Date” shall have the meaning set forth in the Note. “Note” shall mean that certain Promissory Note of even date herewith in the principal amount of [ONE MILLION AND NO/100 DOLLARS ($1,000,000.00], made by Borrower to the order of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Obligations” shall mean, collectively, Borrower’s obligations for the payment of the Outstanding Principal Balance, together with all interest accrued and unpaid thereon and all other sums due to Lender in respect of the Loan under the Note, this Agreement, the Security Instrument and the other Loan Documents, and Borrower’s performance of the Other Obligations. “Other Charges” shall mean all ground rents, assessments, maintenance charges, impositions other than Taxes, and any other charges, now or hereafter levied or assessed or imposed against the Property or any part thereof.
“Other Obligations” shall mean: (a) the performance of all obligations of Borrower contained herein; (b) the performance of each obligation of Borrower contained in any other Loan Document; and (c) the performance of each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of this Agreement, the Note or any other Loan Documents. “Outstanding Principal Balance” shall mean, as of any date, the outstanding principal balance of the Note.

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“Permitted Liens” shall mean, collectively: (a) the Liens and security interests created by the Loan Documents; (b) all Liens, encumbrances and other matters disclosed in the Title Insurance Policy; (c) Liens, if any, for Taxes imposed by any Governmental Authority not yet due or delinquent, and (d) such other Title and survey exceptions as Lender has approved or may approve in writing in Lender’s sole discretion.
“Person” shall mean any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any Governmental Authority, and any fiduciary acting in such capacity on behalf of any of the foregoing. “Property Carrying Costs” shall mean, for any period, the sum of the following costs:
(a) Taxes; (b) Other Charges; and (c) Insurance Premiums. “Property” shall mean each parcel of real property, the Improvements thereon and all personal property owned by Borrower and encumbered by the Security Instrument, together with all rights pertaining to such property and Improvements, as more particularly described in the granting clause of the Security Instrument and referred to therein as the “Property”. Each individual parcel of real property (and the Improvements thereof) and all of such parcels (and the Improvements thereon) collectively, shall each be referred to as the “Property” as the context may require. “Put – Option Agreement” means that certain Put – Option Agreement to be executed by Borrower and Lender and recorded against the Real Property in the official records of Riverside County, California concurrently with the Security Instrument. “Real Property” shall mean the real property and improvements located at 4208 California Avenue, Norco, California, APN No. 133-080-010, and consisting of a 2.38 acre parcel of land, together with a 728 square foot residential building and other ancillary improvements, and legally described in Exhibit B, attached hereto and incorporated herein by reference. “Rents” shall mean all rents (including, without limitation, percentage rents), rent equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in a Bankruptcy Action) or in lieu of rent or rent equivalents, royalties (including, without limitation, all oil and gas or other mineral royalties and bonuses), income, receivables, receipts, revenues, deposits (including, without limitation, security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, all other amounts payable as rent under any Lease or other agreement relating to the Property, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower or any of their respective agents or employees from any and all sources arising from or attributable to the Property, and proceeds, if any, from business interruption or other loss of income insurance.
“Security Instrument” shall mean that certain first priority Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, of even date herewith, executed and delivered by Borrower as security for the Loan and encumbering the Real Property. “Security Interests” shall mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel, mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease

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or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.
“Taxes” shall mean all real estate and personal property taxes, assessments, water rates or sewer rents, now or hereafter levied or assessed or imposed against the Property or part thereof, together with all interest and penalties thereon.
“Title Company” shall mean Ticor Title Company of California or another title company acceptable to Lender and licensed to issue title insurance in the state in which the Property is located. “Title Insurance Policy” shall mean an ALTA mortgagee title insurance policy in a form, including endorsements acceptable to Lender issued with respect to the Property and insuring the lien of the Security Instrument.
“Transfer” shall have the meaning set forth in Section 6.7.

2. GENERAL TERMS.

2.1 Loan Commitment; Disbursements to Borrower. Upon and subject to the provisions and conditions set forth herein, Lender hereby agrees to make, and Borrower hereby agrees to borrow and accept the Loan on the Closing Date. Any amount borrowed and repaid under the Note in respect to the Loan may not be reborrowed. The Loan shall be evidenced by the Note and secured by the Security Instrument, and certain other Loan Documents. Borrower shall use the proceeds of the Loan: (i) on the Closing Date, to fund any and all closing costs approved by Lender; and (ii) on the Closing Date, to finance the acquisition of the Property, upon and subject to the provisions and conditions of this Agreement.

2.2 Interest Rate. The Outstanding Principal Balance shall bear interest at the Interest Rate.

2.3 Usury Savings. All agreements between Borrower and Lender, now existing or hereafter arising, are hereby expressly limited so that in no event whatsoever shall the amount paid, or agreed to be paid, to Lender hereof for the use, forbearance or detention of money to be loaned pursuant to the Note or otherwise, or for the performance or payment of any covenant or obligation contained herein, exceed the maximum amount permissible under applicable law. If from any circumstance whatsoever fulfillment of any provision hereof exceeds the limit of validity prescribed by law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstance Lender hereof shall ever receive as interest under the Note or otherwise an amount that would exceed the highest lawful rate, such amount that would be excessive interest shall be applied to the reduction of the Outstanding Principal Balance owing under the Note (without charge for prepayment) and not to the payment of interest, or if such excessive interest exceeds the Outstanding Principal Balance, such excess shall be refunded to Borrower.

2.4 Payments.
(a) No Periodic Payments. In the absence of a Default or Event of Default, there shall be no periodic payments on the Note prior to the Maturity Date thereof. (b) Repayment on Maturity Date. On the Maturity Date, or on such earlier date as the Note becomes due and payable, whether by acceleration or otherwise, the entire

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unpaid principal balance of the Loan and all accrued interest thereon, and all other sums owing to Lender hereunder and under the Loan Documents, shall be due and payable in full. Borrower acknowledges and agrees that, unless sooner paid, the Note contemplates a balloon payment of all unpaid principal of the Loan and all accrued interest thereon, and all other sums owing to Lender hereunder and under the Loan Documents, on the Maturity Date. (c) No Additional Fundings. This Loan is not a revolving line of credit and, to the extent that Borrower prepays principal under the Note, Borrower shall not be entitled to thereafter have said principal funded (again) to Borrower by Lender. (d) Late Payment Charge. Borrower acknowledges that late payment to Lender of any sums due under the Loan Documents will cause Lender to incur additional costs, the exact amount of which will be impracticable or extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges. Accordingly, if any installment, payment or any other sum due from Borrower shall not be received by Lender or Lender’s designee within ten (10) calendar days after it is due, Borrower shall then pay to Lender a late payment charge equal to five percent (5%) of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lender will incur by reason of late payment. This provision shall not, however, be construed as extending the time for payment of any amount due under the Loan Documents, and acceptance of such late charge by Lender shall in no event constitute a waiver of Borrower’s Default with respect to such overdue amount nor prevent Lender from exercising any of the other rights and remedies with respect to such Default. (e) Default Rate. If Borrower fails to timely pay any payment within thirty (30) days after it is due or upon the occurrence of any Event of Default, the interest rate on the Outstanding Principal Balance of the Loan shall thereafter increase to the Default Rate. On the Business Day following the date on which Borrower pays the late payment and any then accrued and unpaid interest (including any interest calculated at the Default Rate, if applicable), then the interest rate on the Outstanding Principal Balance shall automatically (and without further action on the part of Borrower or Lender) decrease from the Default Rate to the interest rate then applicable to the Outstanding Principal Balance, as if the Default Rate of interest had not been applied to the Loan. (f) Method and Place of Payment. Except as otherwise specifically provided herein, all payments and prepayments under this Agreement and the Note shall be made to Lender not later than 4:00 P.M., California local time, on the date when due and shall be made in lawful money of the United States of America in immediately available funds at Lender’s office or as otherwise directed by Lender, and any funds received by Lender after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day.

2.5 Prepayment. The Note may be prepaid, in whole or in part, at any time during the term of the Note, without prepayment penalty or premium, at a prepayment price equal to the principal amount to be prepaid, plus accrued interest thereon (at the Interest Rate or Default Rate, as applicable), calculated to the date of prepayment, plus the amount of all outstanding fees, charges, and other amounts due to Lender hereunder.

2.6 Release of Property. Except as set forth in this Section 2.6, no repayment, prepayment or defeasance of all or any portion of the Note shall cause, give rise to a right to require, or otherwise result in, the release (or partial release) of the Lien of the Security Instrument. Lender shall, upon the written request and at the expense of Borrower, upon payment in full of all principal

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and interest due on the Loan and all other amounts due and payable under the Loan Documents in accordance with the provisions of the Note and this Agreement, release the Lien of the Security Instrument and all other security interests granted herein and under the Loan Documents.

2.7 Term. This Agreement shall be effective as of the effective date hereof, and shall continue in full force and effect until such time as all of Borrower’s Obligations in favor of Lender have been performed or paid in full, including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement.

3. CONDITIONS PRECEDENT. The obligation of Lender to make the Loan hereunder is subject to the fulfillment by Borrower or waiver by Lender of the following conditions precedent no later than the Closing Date:

3.1 Loan Documents. Lender shall have received a copy of this Agreement and the Note, in each case, duly executed and delivered on behalf of Borrower. Lender shall also have received from Borrower fully executed and acknowledged counterparts of the Security Instrument and Put – Option Agreement and evidence that counterparts of the Security Instrument and Put – Option Agreement have been delivered to the Title Company for recording, in the reasonable judgment of Lender, such that the Security Instrument shall effectively create upon such recording valid and enforceable Liens upon the Property, of the requisite priority, in favor of Lender (or such other trustee as may be required or desired under local law), subject only to the Permitted Liens and such other Liens as are permitted pursuant to the Loan Documents. Lender shall have also received and approved all of the following documents, duly executed by the parties thereto (and notarized, as applicable):
(a) UCC-1 Financing Statement.
(b) Incumbency Certificate of the Borrower.

Lender reserves the right to require such other documents and instruments as may be necessary in Lender’s reasonable judgment to evidence and secure Borrower’s obligations under this Agreement, the Note, and the other Loan Documents.

3.2 Title Insurance. Lender shall have received an irrevocable commitment by Title Company to issue the Title Insurance Policy dated as of the Closing Date, with reinsurance and direct access agreements acceptable to Lender. Without limiting the foregoing, the Title Insurance Policy shall be the 2006 ALTA mortgagees extended coverage title insurance policy or its equivalent, or another form ALTA Lender’s Policy of title insurance selected by Lender in its discretion, with a liability limit of not less than the principal amount of the Note, issued by Title Company. Such Title Insurance Policy shall also: (a) provide coverage in amounts satisfactory to Lender; (b) insure Lender that the Security Instrument creates a valid first priority Lien on the Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Liens and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements); (c) contain such endorsements and affirmative coverages as Lender may reasonably request; and (d) name Lender and its successors and assigns as the insured. Lender also shall have received evidence that all premiums in respect of such Title Insurance Policy have been paid by Borrower; provided that proceeds of the Loan may be applied to pay such premiums pursuant to Section 2.1. The Title

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Insurance Policy shall be assignable. Borrower shall furnish to Title Company all surveys and any other information required to enable it to issue the Title Insurance Policy.

3.3 Encumbrances. Borrower shall have taken or caused to be taken such actions in such a manner so that Lender has a valid and perfected first priority Lien as of the Closing Date with respect to the Security Instrument, subject only to applicable Permitted Liens and such other Liens as are permitted pursuant to the Loan Documents, and Lender shall have received satisfactory evidence thereof.

3.4 Property Carrying Costs. Borrower shall have paid all Property Carrying Costs relating to the Property which are in arrears, including without limitation: (a) accrued but unpaid Insurance Premiums; (b) currently due Taxes (including any in arrears); and (c) currently due Other Charges, which amounts may be funded with proceeds of the Loan.

3.5 Authorization. All corporate and other proceedings taken or to be taken by Borrower in connection with the transactions contemplated by this Agreement and the other Loan Documents and all documents incidental thereto shall be reasonably satisfactory in form and substance to Lender, and Lender shall have received all such counterpart originals or certified copies of such documents as Lender may reasonably request.

3.6 No Leases. There shall be no Leases relating to any portion of the Property.

3.7 Payment of Fees and Expenses. Borrower shall have paid or reimbursed Lender for any and all title insurance premiums, recording and filing fees, costs of environmental reports, appraisals and other reports, all other third party out-of-pocket expenses incurred in connection with the origination of the Loan and other expenses which are due and payable at or prior to the closing of the Loan as specified in this Agreement or in any of the other Loan Documents; provided that proceeds of the Loan may be applied to pay such premiums pursuant to Section 2.1.

3.8 Representations and Warranties; Compliance with Conditions. The representations and warranties of Borrower contained in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the Closing Date with the same effect as if made on and as of such date, and Borrower shall be in compliance in all material respects with all terms and conditions set forth in this Agreement and in each other Loan Document on its part to be observed or performed.

3.9 No Events of Default. No Default or Event of Default shall have occurred and be continuing.

3.10 Material Adverse Change. There shall have been no material adverse change in the financial condition or business condition of Borrower or the Property since the date of the most recent financial statements or other information delivered to Lender. The income and expenses of the Property, the occupancy thereof, and all other features of the transaction shall be as represented to Lender without material adverse change. The Borrower shall not be the subject of any Bankruptcy Action.

3.11 Further Documents. Lender or its counsel shall have received such other and further approvals, opinions, documents and information as Lender or its counsel may have

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reasonably requested including the Loan Documents in form and substance satisfactory to Lender and its counsel.

4. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants as of the Closing Date that:

4.1 Organization. Borrower has been duly formed and is validly existing and in good standing in the jurisdiction in which it is formed and in each jurisdiction in which it is qualified to do business with requisite power and authority to own its properties or assets and to transact the businesses in which it is now engaged. Borrower is duly qualified to do business and is in good standing in each jurisdiction where it is required to be so qualified in connection with its properties, assets, businesses and operations. Borrower possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to allow it to own its properties or assets and to transact the businesses in which it is now engaged. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower’s business activities.

4.2 Assumed Business Name. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. There are no assumed business names under which Borrower does business.

4.3 Authorization. Borrower has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the other Loan Documents. This Agreement and the other Loan Documents have been duly executed and delivered by or on behalf of Borrower and constitute the legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms, subject only to applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

4.4 Compliance. Borrower is and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower’s business activities.

4.5 No Conflict. The execution, delivery and performance of this Agreement and the other Loan Documents by Borrower will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance (other than pursuant to the Loan Documents) upon any of the property or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, operating agreement, co-tenancy agreement, partnership agreement, management agreement or other agreement or instrument to which Borrower is a party or by which any of Borrower’s property or assets is subject, nor will such action result in any violation of the provisions of any statute or any order, rule or regulation of any Governmental Authority having jurisdiction over Borrower or any of Borrower’s properties or assets, and any consent, approval, authorization, order, registration or qualification of or with any such Governmental Authority required for the execution, delivery and performance by Borrower of this Agreement or any other Loan Documents to which it is a party has been obtained and is in full force and effect.

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4.6 Agreements. Borrower is not a party to any agreement or instrument or subject to any restriction which might materially and adversely affect Borrower, the Property, or Borrower’s business, properties or assets, operations or condition, financial or otherwise. Borrower is not in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which it is a party or by which Borrower, the Property or Borrower’s business, properties or assets are bound.

4.7 Title. Borrower has good, marketable and insurable fee simple title to the real property comprising part of the Property and good title to the balance of the Property, free and clear of all Liens whatsoever except the Permitted Liens and such other Liens as are permitted pursuant to the Loan Documents and the Liens created by the Loan Documents. The Permitted Liens in the aggregate do not materially and adversely affect the value, operation or use of the Property (as currently used) or Borrower’s ability to repay the Loan. The Security Instrument, when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create: (a) a valid, perfected first priority lien in and to Borrower’s right, title and interest to the Property, subject only to Permitted Liens and the Liens created by the Loan Documents; and (b) perfected security interests in and to, and perfected collateral assignments of, Borrower’s right, title and interest to all personal property (including the Leases), all in accordance with the terms thereof, in each case subject only to any applicable Permitted Liens, such other Liens as are permitted pursuant to the Loan Documents and the Liens created by the Loan Documents. There are no claims for payment for work, labor or materials affecting the Property, which are or may become a Lien prior to, or of equal priority with, the Liens created by the Loan Documents.

4.8 Financial Information. All financial data, including, without limitation, the statements of cash flow and income and operating expense, that have been delivered to Lender in connection with the Loan: (a) are true, current, complete and correct in all material respects; (b) accurately represent the financial condition of the Property as of the date of such reports; and (c) to the extent prepared or audited by an independent certified public accounting firm, have been prepared in accordance with industry standards throughout the periods covered, except as disclosed therein. Except for Permitted Liens, Borrower does not have any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower and reasonably likely to have a materially adverse effect on the Property. Since the date of such financial statements, there has been no material adverse change in the financial condition, operation or business of Borrower from that set forth in said financial statements.

4.9 Condemnation. No Condemnation or other similar proceeding has been commenced or, to Borrower’s best knowledge, is threatened or contemplated with respect to all or any portion of the Property or for the relocation of any roadway providing access to the Property.

4.10 Physical Condition. Except as disclosed by Borrower to Lender, the Property, including, without limitation, all buildings, improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all structural components, are in good condition, order and repair in all material respects, normal wear and tear excluded. To the best of Borrower’s knowledge there exist no structural or other material defects or damages in the Property, whether latent or otherwise, and Borrower has not received notice from any insurance company or bonding company of any defects or inadequacies in the

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Property, or any part thereof, which would adversely affect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond.

4.11 Not a Foreign Person. Neither Borrower nor or any other holder of a direct or indirect legal or beneficial interest in Borrower is or will be, held, directly or indirectly, by a “foreign corporation,” “foreign partnership,” “foreign trust,” “foreign estate,” “foreign person,” “affiliate” of a “foreign person” or a “United States intermediary” of a “foreign person” within the meaning of IRC Sections 897 and 1445, the Foreign Investments in Real Property Tax Act of 1980, the International Investment and Trade in Services Survey Act, the Agricultural Foreign Investment Disclosure Act of 1978, the regulations promulgated pursuant to such acts or any amendments to such acts.

4.12 Not a Prohibited Person. Borrower is not and will not become a person (individually, a “Prohibited Person,” and collectively, “Prohibited Persons”) listed on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Asset Control, U.S. Department of the Treasury (“OFAC List”) or otherwise subject to any other prohibitions or restriction imposed by laws, rules, regulations or executive orders, including Executive Order No. 13224, administered by OFAC (collectively, “OFAC Rules”). Borrower represents and covenants that it also: (a) is not and will not become owned or controlled by a Prohibited Person; (b) is not acting and will not act for or on behalf of a Prohibited Person; (c) is not otherwise associated with and will not become associated with a Prohibited Person; and (d) is not providing and will not provide any material, financial or technological support for or financial or other service to or in support of acts of terrorism or a Prohibited Person. Borrower will not transfer any interest in Borrower to or enter into a lease with a Prohibited Person. Borrower will not enter into any lease or any other transaction or undertake any activities related to the Loan in violation of the Federal Bank Secrecy Act, as amended (“BSA”), 31 U.S.C. §5311, et seq. or any Federal or state laws, rules, regulations or executive orders, including, but not limited to, 18 U.S.C. §§1956, 1957 and 1960, prohibiting money laundering and terrorist financing (collectively, “Anti Money Laundering Laws”). Borrower shall: (1) not use or permit the use of any proceeds of the Loan in any way that will violate either the OFAC Rules or Anti Money Laundering Laws; (2) comply and cause all of its subsidiaries to comply with applicable OFAC Rules and Anti Money Laundering Laws; (3) provide information as Lender may require from time to time to permit Lender to satisfy its obligations under the OFAC Rules and/or the Anti-Money Laundering Laws; and (4) not engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the foregoing.

4.13 Assessments. There are no pending or, to Borrower’s knowledge, proposed special or other assessments for public improvements or otherwise affecting the Property, nor are there any contemplated improvements to the Property that may result in such special or other assessments.

4.14 No Leases. There are currently no Leases with respect to the Property that will remain in effect following the Effective Date.

4.15 Filing and Recording Taxes. All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid by any Person under applicable Legal Requirements currently in effect in connection with the transfer of the Property to Borrower have been paid. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid by any Person under applicable Legal Requirements currently in effect in connection with the

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Norco City CouncilSeptember 18, 2023

Norco City Council
September 18, 2023