HomeMy WebLinkAbout2018/04/24 5pm Item 7 City of Chula Vista
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AV Staff Report
File#: 18-0171, Item#: 7.
A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE
DISPOSITION AND DEVELOPMENT AGREEMENT BY AND AMONG THE SAN DIEGO
UNIFIED PORT DISTRICT, THE CITY OF CHULA VISTA, AND RIDA CHULA VISTA, LLC, FOR A
HOTEL-CONVENTION CENTER PROJECT (CHULA VISTA BAYFRONT MASTER PLAN
PARCEL H-3) INCLUDING A CONCEPTUAL PLAN OF FINANCE
B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE
REVENUE SHARING AGREEMENT BY AND BETWEEN THE CITY OF CHULA VISTA AND THE
SAN DIEGO UNIFIED PORT DISTRICT (CHULA VISTA BAYFRONT RESORT HOTEL AND
CONVENTION CENTER AND RELATED INFRASTRUCTURE)
C. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN
ECONOMIC DEVELOPMENT SUBSIDY TO RIDA CHULA VISTA, LLC, FOR A HOTEL-
CONVENTION CENTER PROJECT (CHULA VISTA BAYFRONT MASTER PLAN PARCEL H-3)
AND MAKING CERTAIN FINDINGS IN CONNECTION THEREWITH
(This item was continued from the City Council/San Diego Unified Port District Board Joint
Meeting of April 24, 2018 at 2:00 p.m.)
RECOMMENDED ACTION
Council conduct the public hearing adopt the resolutions.
SUMMARY
On May 14, 2014, the San Diego Unified Port District's (Port District) Board of Commissioners
selected RIDA Development Corporation to enter negotiations to develop a large-scale destination
resort and convention center on parcel H-3 of the Chula Vista Bayfront Master Plan (also known as
the "CVBMP," "Chula Vista Bayfront" or "CVB"). On February 10, 2015, the Board of Port
Commissioners approved an Exclusive Negotiating Agreement (ENA) with RIDA, establishing a
timeline of deliverables during the term of the agreement, including programming the type and size of
the hotel and convention center. On June 20, 2017, the Port District, RIDA, and the City entered into
a non-binding Letter of Intent (LOI) that established basic business terms. Since that time, Port and
City staff have worked diligently to negotiate final deal terms.
At a joint meeting of the City Council and the Port District Board of Commissioners held at 2:00 p.m.
on April 24, 2018, the City Council conducted a public hearing, took public testimony, accepted an
Economic Subsidy Report, and approved a Disposition and Development Agreement (DDA)and a
Revenue Sharing Agreement, contingent upon approval of the associated Economic Development
Subsidy. Today's actions, approving a Disposition and Development Agreement (DDA), approving a
Revenue Sharing Agreement, and approving an Economic Development Subsidy represent the next
steps in the process of developing a destination resort hotel and convention center project on the
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File#: 18-0171, Item#: 7.
Chula Vista Bayfront.
ENVIRONMENTAL REVIEW
Environmental Notice
The Project was adequately covered in previously adopted Environmental Impact Report
UPD#83356-EIR-658/SCH# 20005081077.
Environmental Determination
The Development Services Director has reviewed the proposed activity for compliance with the
California Environmental Quality Act (CEQA) and has determined that the activity was covered in
previously certified Environmental Impact Report UPD#83356-EIR-658/SCH#2005081077. The
Development Services Director has also reviewed the proposed activity for additional compliance
with CEQA and has determined that there is no possibility that the activity may have a significant
effect on the environment; therefore, pursuant to Section 15061(b)(3) of the State CEQA Guidelines
the activity is not subject to CEQA. Thus, no environmental review is required.
BOARD/COMMISSION RECOMMENDATION
Not Applicable.
DISCUSSION
Please see Port District staff report (Attachment 1) for a discussion of the proposed project,
Disposition and Development Agreement (DDA), and Revenue Sharing Agreement. Please see
Attachment 2 for the Economic Development Subsidy Report, provided pursuant to California
Government Code Section 53083.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council members and has found no property
holdings within 500 feet of the boundaries of the property which is the subject of this action.
Consequently, this item does not present a disqualifying real property-related financial conflict of
interest under California Code of Regulations Title 2, section 18702.2(x)(11), for purposes of the
Political Reform Act (Cal. Gov't Code §87100, et seq.).
Staff is not independently aware, and has not been informed by any City Council member, of any
other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy
Community, Strong and Secure Neighborhoods and a Connected Community. Approving a
Disposition and Development Agreement with the Port District and RIDA Chula Vista, LLC, supports
the Economic Vitality Goal by continuing implementation of the Chula Vista Bayfront Master Plan,
Initiative 2.1.1 of the City's Strategic Plan.
CURRENT YEAR FISCAL IMPACT
There is no current year fiscal impact as a result of approving this item.
ONGOING FISCAL IMPACT
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Support for the Resort Hotel and Convention Center (RHCC) project is expected to include a
combination of one-time and ongoing contributions from the City, the Port and the County (a
proposed Enhanced Infrastructure Financing District (EIFD) is still under negotiations). The revenue
projections are based on information provided by Keyser Marston Associates, Inc. (KMA), the City,
the District and RIDA Chula Vista, LLC.
Based on the most recent projections, it is anticipated that the City and Port through the Joint Powers
Exercise Authority (JEPA), may be issuing approximately $296 million (up to $56 million for
Infrastructure and $240 million for the convention center) in bonded debt. The ability to finance the
public contribution as contemplated is dependent on the realization of a number of assumptions
relating to any such financing. The assumptions for the financing and the anticipated outcome based
on those assumptions are described in the Conceptual Joint Exercise of Power Agreement (JEPA)
Plan of Finance ("Plan"). The Revenue Sharing Agreement details agency revenue contributions and
the application of revenues remaining after payment of debt service and any debt service reserves
("Residual Revenues").
Agency Contributions - City of Chula Vista
One-time contributions by the City reflect the purchase of a potential fire station site on the Bayfront
and development impact and other fees applicable to CVBMP public infrastructure, including:
• Bayfront Development Impact Fees;
• Development Impact and In-Lieu Fees;
• Sewer Facility funding.
Anticipated ongoing contributions by the City include the following:
Existing:
• General Fund support in an amount equal to the TOT funds received from the existing and
new RV park;
• General Fund support in an amount equal to the funds currently received from the Port,
reimbursing the City for the cost of providing municipal public safety services in the tidelands
(MSA Funds).
Project Generated:
• The City's portion of Property Tax and associated Property Tax In-Lieu of Motor Vehicle
License Fees generated by the project (EIFD);
• Transient Occupancy Tax (TOT) generated by the proposed RHCC;
• Sales tax generated by the proposed RHCC;
• Project generated additional occupancy-based revenues (replaces repealed Chula Vista
Tourism Marketing District);
Per the Revenue Sharing Agreement, within a reasonable time prior to the Close of Escrow, the City
and the Port will each contribute an amount equal to existing revenues generated and actually
received from and after July 1, 2018. These funds will be applied to the financing and/or construction
of the RHCC project and initial infrastructure required to serve the project (Phase 1A Infrastructure).
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The City's contribution beginning July 1, 2018 will be $1.3 million and increasing annually at the rate
of 3% per annum until maturity of the JEPA bonds. Based on estimated debt service payments and
cash flow projections, it is anticipated that these funds could be recovered beginning in the first full
year the RHCC project is in operation.
The City will also provide fire service to the CVBMP. Per the Revenue Sharing Agreement, the City
will be reimbursed for 73.6% of associated operating expenses. This reimbursement to the City will
be the second priority use of Residual Revenues.
The overall RHCC project is anticipated to result in a net positive impact to the General Fund
beginning in year 23 of operations. The actual results will depend on the performance of the Hotel
and Convention Center.
Agency Contributions - San Diego Unified Port Authority
One-time contributions by the Port include the following:
• SDG&E Relocation Fees
• Pacifica Funds
• CIP Funds
Anticipated ongoing contributions by the Port include the following:
Existing:
• Existing Bayfront Lease Revenues
Project Generated:
• Support Payments by the Port
• RIDA Ground Lease Payments
Annual Support Payments by the Port will not exceed the schedule provided in Table 1 below. Per
the Revenue Sharing Agreement, reimbursement of the Port for this contribution will be the first
priority use of Residual Revenues.
Table 1: Port Annual Support Payments
Lease Year Annual Support Payment
Years 1 - 4 $0
Years 5 - 14 $5.0 M
Years 15 - 19 $6.0 M
Years 20 - 24 $3.0 M
Years 25 - 38 $3.5 M
Per the Revenue Sharing Agreement, within a reasonable time prior to the Close of Escrow, the City
and the Port will each contribute an amount equal to existing revenues generated and actually
received from and after July 1, 2018. These funds will be applied to the financing and/or construction
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of the RHCC project and Phase 1A Infrastructure. The Port's contribution beginning July 1, 2018 will
be $2.1 million and increasing annually at the rate of 3% per annum until maturity of the JEPA bonds.
Based on estimated debt service payments and cash flow projections, it is anticipated that these
funds could be recovered beginning in the first year the RHCC project is in operation.
Revenue Sharing Agreement Residual Revenue Priorities
The Revenue Sharing Agreement establishes the following order of priority for the use of Residual
Revenues:
1. Reimburse Port for Support Payments; then
2. Reimburse City for 73.6% of cost of providing fire service within CVBMP Project Area; then
3. Reimburse City and Port on a proportionate, pro-rata basis, for existing revenues contributed
to the Project as of the close of escrow; then
4. Reimburse City and Port on a proportionate, pro-rata basis, for existing revenues contributed
to the Project after close of escrow through defeasance of the bonds; then
5. Fund an additional reserve fund or reserve fund insurance policy; and
6. Distribute any remaining funds equally between City and Port.
Please see Attachment D to Attachment 1 for additional detail.
Projected Annual NOI Participation Payments to the City/District
In addition to ground lease payments paid to the District, the Developer will pay the City and District
an annual participation payment based on surplus Net Operating Income (NOI) from the RHCC
Project. Specifically, the City and District will receive 20% of surplus NOI above an 11% Return on
Investment (ROI) threshold on the Developer's Contribution during Lease Years 5-38. KMA has
prepared a preliminary projection of this potential future revenue stream, which is summarized in
Table 2 below.
Table 2: Projected Annual NOI Participation Payments to the
City/District
Lease Year Estimated Annual NOI
Participation Payment to City ani
District
Years 1-4 - Construction N/A
Years 5-8 $0
Year 9 $0.1 M
Year 20 $3.5 M
Year 30 $9.7 M
Year 38 $16.2 M
Per the Revenue Sharing Agreement, the Participation Payments will be split equally between the
Port and the City.
Economic Benefit
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The development of the Project is estimated to generate 120 full-time (temporary) construction jobs
and 3,300 permanent full-time jobs in the City of Chula Vista (includes direct, indirect, and induced
jobs). It is also anticipated that the Project will increase property values and revitalize the CVBMP
project area by drawing visitors, consumers, and employees to the area, thereby stimulating the local
economy.
The City further anticipates that the operation of the Project will help to foster a business and civic
environment that will attract additional businesses and investment in the community due to the
increased public and private services resulting from the generation of jobs, tax revenues, and
consumers in the City and the area surrounding the Project site. The project will also serve the City
and the surrounding community by providing commercial facilities that are not currently available in
the community.
The Project would bring a AAA Four Diamond hotel/convention center to the City of Chula Vista that
will accommodate community events and gatherings such as high school dances, meetings of local
trade organizations, fundraisers and other community events. The nature of the Project as a high-
end, resort is expected to bring a demand for additional facilities and services in the community,
encouraging related investment and development in the City and immediately surrounding areas.
ATTACHMENTS
1. San Diego Unified Port District File #2018-0070 dated April 24, 2008, including Attachments A
though E.
2. Resort Hotel and Convention Center (Chula Vista Bayfront Master Plan Parcel H-3) Chula
Vista, California, Economic Development Subsidy Report, Pursuant to the Disposition and
Development Agreement Between the San Diego Unified Port District, the City of Chula Vista,
and RIDA Chula Vista, LLC, a Delaware Limited Liability Company, dated April 2018.
Staff Contact: Tiffany Allen, Development Services Department
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OF SAV 3165 Pacific Hwy.
San Diego Unified Port District San Diego,CA 92101
PORT
File #:2018-0070
DATE: April 24, 2018
SUBJECT:
RIDA CHULA VISTA, LLC RESORT HOTEL AND CONVENTION CENTER:
A) RESOLUTION AUTHORIZING A DISPOSITION AND DEVELOPMENT AGREEMENT (DDA)
WITH RIDA CHULA VISTA, LLC AND THE CITY OF CHULA VISTA FOR A RESORT HOTEL
AND CONVENTION CENTER WITHIN THE CHULA VISTA BAYFRONT
B) RESOLUTION AUTHORIZING A REVENUE SHARING AGREEMENT WITH THE CITY OF
CHULA VISTA
EXECUTIVE SUMMARY:
The Chula Vista Bayfront Master Plan' (CVBMP) (Attachments A and B) is the result of a decade-
long joint planning effort by the San Diego Unified Port District (District), the City of Chula Vista (City),
and a broad coalition of stakeholders. The CVBMP was collaboratively planned through an extensive
public participation program that included over 100 community meetings and resulted in a
comprehensive Environmental Impact Report (EIR) and Port Master Plan Amendment, which was
approved by the Board of Port Commissioners (Board) in May 2010 and certified by the California
Coastal Commission (CCC) in August 2012. The amended and restated financing agreement'
(Financing Agreement) for the Chula Vista Bayfront (CVB) was approved by the Board in 2017 and
set forth the framework for the financing and development of the public improvements and
infrastructure within the CVB by the District and City, referred to collectively herein, as the "Public
Entities".
The resort hotel and convention center (RHCC), located on approximately 36 acres of land within the
CVB (Site), is the catalyst Project for the CVB with the goal to not only provide a world-class hotel
and convention center to the region, but also provide a vehicle to build future parks, restore sensitive
habitat, and construct public infrastructure. After over three years of collaborating with RIDA Chula
Vista, LLC (RIDA) and solving the economic model for financial feasibility, the District, the City, and
RIDA are in a position to enter into a Disposition and Development Agreement (DDA) for
development of the resort RHCC. Attachment A includes the complete DDA. The DDA sets forth the
mechanism to design, finance, and construct the RHCC and surrounding public infrastructure (the
Phase 1A infrastructure). The RHCC and the Phase 1A Infrastructure are collectively referred to
herein, as the "Project". The Scope of Development of the RHCC is set forth in Attachment No. 5,
which is attached to the DDA. The Scope of Development covers the following:
• RHCC to be operated as a Gaylord hotel;
• Phase 1A Infrastructure including the construction of Harbor Park and portions of E, G, and H
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Streets;
• Parking Improvements which will include either a garage or surface parking.
On June 20, 2017, at a joint meeting, the Board and the City Council approved a non-binding letter of
intent (LOI) to memorialize the key economic terms of the RHCC Project with RIDA. Attachment E is
the full staff report, including attachments that document this important interim step prior to the
negotiation and execution of the DDA. Since the approval of the LOI, the Exclusive Negotiating
Agreement (ENA) with RIDA was extended on February 6, 2018 by six months to allow for
negotiations between the parties to continue 3. Specifically, the scope of the Project changed from
1,450 rooms in the LOI to 1,600 rooms and the parties developed a financing approach to deliver the
RHCC and surrounding Phase 1A Infrastructure.
The DDA sets forth the necessary steps for the parties to authorize the financing of the Project and
commence construction of the Project, ultimately leading to a ground lease and required subleases
for development and operations of a world-class hotel and convention center. Details of the Project
financing, specifically the Public Entities contribution (Public Financing) and RIDA's private
investment (Private Financing), are described below. The Public Financing is anticipated to be
delivered to the Project through future bond offerings. In brief, the parties are contributing as follows:
• District/Port Convention Center: $240 Million
• District/Port Phase 1A Infrastructure: $63 Million
• District Parking: $40 Million
• RIDA RHCC: $785 Million
• TOTAL PROJECT COST: $1.128 Billion
Keyser Marston Associates, Inc. (KMA) prepared a comprehensive report that analyzes the Project
feasibility, proposed method of financing for the Project, and public investment. The full KMA report
is included as Attachment C. The details of the DDA, including a brief overview of the agreements
and previous actions taken by the Board related to the redevelopment of the CVB, Project scope and
public contribution, is discussed below.
Staff recommends that the Board approve the DDA because in RIDA and the City, together with the
Gaylord Hotels brand, the District has found the right partners that are ready to move forward with
the implementation of the CVBMP. Moreover, the Project economics represent a good deal for the
District, for the City, and for RIDA. Approving the DDA will allow the parties to memorialize their
agreement on the path forward to the redevelopment of the RHCC as soon as possible. Once
constructed, the CVB will become a world-class destination that reflects strong planning and design
principles, economic feasibility, and community benefits.
RECOMMENDATION:
RIDA Chula Vista Resort Hotel and Convention Center:
A) Resolution Authorizing a DDA with RIDA Chula Vista, LLC and the City of Chula Vista for a
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File #:2018-0070
Resort Hotel and Convention Center within the Chula Vista Bayfront
B) Resolution Authorizing a Revenue Sharing Agreement with the City of Chula Vista
FISCAL IMPACT:
The requested Board action to authorize the DDA will not result in a direct fiscal impact to the District,
as any contribution and commitment of revenue sources by the District to the implementation of the
CVBMP will be subject to a future plan of finance (included as Attachment No. 4 to the DDA,
Conceptual Outline of the Plan of Finance), which may be amended from time to time. Further, the
plan of finance will be presented to the Board for the Board's consideration at a future date and will
also be subject to Board approval. Based on the KMA Report, the development of the RHCC could
potentially result in positive surplus revenues to the District in as early as Year 4 of hotel operations.
The requested Board action to authorize the Revenue Sharing Agreement between the District and
the City (Revenue Sharing Agreement) will commit the Public Entities to a commitment of existing
CVB revenues starting July 1, 2018 to be used to pay financing and/or construction contingencies for
the Project. The Revenue Sharing Agreement is Attachment D to this report.
COMPASS STRATEGIC GOALS:
This agenda item supports the following Strategic Goal(s).
• A vibrant waterfront destination where residents and visitors converge.
• A Port with a healthy and sustainable bay and its environment.
• A Port with a comprehensive vision for Port land and water uses integrated to regional plans.
• A Port that is a safe place to visit, work and play.
• A financially sustainable Port that drives job creation and regional economic vitality.
DISCUSSION:
After over three years of collaboration, the District, City, and RIDA believe that the DDA should be
approved because the right partners are ready to move forward with the right plan for the CVB, the
Project economics represent a good deal for the Public Entities and for RIDA, and time is of the
essence to enter into the agreements necessary to ensure that the redevelopment of the CVB
proceeds as soon as possible.
After extensive due diligence efforts, the parties wish to enter into the DDA to memorialize the terms
of the Project necessary to commence and complete approvals for the financing necessary for the
Project. The DDA will allow the District, RIDA and City to deliver not only the RHCC, which is a key
part of the CVB vision, but also a majority of the public amenities for the CVB, including parks and
public access that were envisioned through the decades-long community planning effort.
This discussion provides a detailed overview of the DDA and other attached agreements, including
certain provisions being negotiated for the ground lease (Ground Lease), and a conceptual outline of
the public financing (Conceptual Plan of Finance). The final form of the Ground Lease will be
presented to the Board for its consideration in the next few months.
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PROJECT SCOPE
The following lists the key components of the RHCC. The Project as currently designed is under
review by the District for consistency with the CVBMP, EIR, and other agreements applicable to the
CVB, and may be presented with some modifications for approval at a future date.
Project Feature Description
Resort Hotel Brand Gaylord Hotels
Hotel Rooms 1,600
Convention & Meeting space 275,000 Net Usable Square Feet
Amenities Associated Retail, Resort-level Amenities
Phase 1A Infrastructure Site preparation, New Public Streets (portions of E, G
and H streets), Utility services and Harbor Park
Parking 1,600-space garage or 1,200-space surface lot
DISPOSITION AND DEVELOPMENT AGREEMENT
District and City staff recommend that the Board and City Council, respectively, approve the DDA
attached hereto as Attachment A. A summary of the DDA is described in detail below:
• Responsibilities of the Parties;
• Conditions Precedent to the Close of Escrow; and
• Closing and Delivery of the Site.
Attachment 6 of the DDA is an implementation schedule of performance (Schedule of Performance)
that requires certain actions be performed by RIDA, the City, the District, and other governmental
agencies, which actions include, but are not limited, to Project approvals, coastal development
permits, building permits, infrastructure plans, and actions related to the plan of financing the Project.
The Schedule of Performance serves as the roadmap to perform the actions required under the DDA
for the financing, development, and operations of the Project. At each milestone, the Parties can
consider whether to pause, delay, or terminate the DDA. Depending on the milestone, the check-ins
would be limited to a maximum number of days to either resolve or to continue discussions. In no
event would the check-ins collectively exceed the term of the DDA, which has an initial term of four
years, and may be extended up to three times for one year each for a total term of seven years. The
check-ins would be structured as follows:
Check-In Length Reason
Pause 90 Days Allows the Parties to Meet and Confer regarding a
particular Schedule of Performance milestone
Delay 60 Days Allows the Parties to Meet and Confer regarding a
particular Schedule of Performance milestone
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Responsibilities of Parties
The DDA outlines the funding and construction responsibilities of the Parties involved. The chart
below describes the allocation of responsibility for the construction of the Project:
Responsibilities of Parties
RIDA Public Entities District
Fund € Construct Fund € Construct Fund Construct
Private Improvements X X
.....................................................................................................................................................................................i...............................................................'s................................................................................................
Convention Center X X X
......................................................................................................................................................................................€................................................................€..............................................................$...............................
Phase 1A Infrastructure
......................................................................................................................................................................................:................................................................€...............................................................:...............................
E Street(G Street to H Street) X X
......................................................................................................................................................................................i...............................................................€................................................................................................
G Street Connection X X
......................................................................................................................................................................................€...............................................................:...............................................................:...............................
H Street(Bay Blvd to Street A) X X
H Street(Marina Pkwy to E Street) X X
................................................................:..............................................................n...............................
Harbor Park(initial) X X
......................................................................................................................................................................................€................................................................€...............................................................:...............................
H-3 Utility Corridor X X
........................................................................................................................................................................€...............................................................................................................................s...............................
E Street(Bay Blvd to F Street) X X
....................................................................................................................................................................................................................................................................................................................;...............................
E Street(Lagoon Drive to G Street) X X
......................................................................................................................................................................................€................................................................€...............................................................:...............................
F Street(Bay Blvd to F Street) X X
......................................................................................................................................................................................'i............................................................................................................................8...............................
F Street(E Street to Gunpowder Pt Dr) X X
......................................................................................................................................................................................i................................................................i...............................................................;...............................
G Street Sewer Pump Station X X
......................................................................................................................................................................................€................................................................€..............................................................a...............................
Gunpowder Point Drive Relocation X X
.....................................................................................................................................................................................€...............................................................€.............................................................................................
S-2 Sweetwater Signature Park X X
...................................................................................................................................................................................................................................................................................................................8...............................
SP-1 Sweetwater Buffer(for S-1) X X
......................................................................................................................................................................................€................................................................8..............................................................................................
SP-1 Sweetwater Buffer(for S-2) X X
.....................................................................................................................................................................................€..............................................................@.............................................................................................
SP-2 Seasonal Wetlands X X
......................................................................................................................................................................................i...............................................................i.............................................................................................
SPA SDG&E X X
......................................................................................................................................................................................€................................................................€................................................................................................
H-3 Site Prep X X
....................................................................................................................................................................................€...............................................................€..............................................................................................
Parking Improvements X(Surface) X X(Garage)
The chart below describes the allocation of responsibility for the funding of the Phase 1A
Improvements for the Project:
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EXHIBIT 4
CITY INFRASTRUCTURE SOURCES AND USES MATRIX
City Sewer
Cost Developer BFDIF Funding Other
Improvement Descrition Estimate" Credit Eli ible" Eligible" Fundin 14
Developer's Phase IA Infrastructure Improvements
E Street(G Street to H Street) 6,680,000 4,050,000 580,000 2,050,000
G Street Connection 950,000 430,000 110,000 410,000
H Street(Bay Blvd to Street A) 430,000 270,000 - 160,000
H Street(Nlarina Pkwy to E Street) 5,380,000 3,350,000 2,030,000
Harbor Park(Initial) 19,500,000 310,000 19,190,000
H-3 Site Prep15 6,000,000 6,000,000
H-3 Utility Corridor16 1,530,000 310,000 1,220,000
Subtotal 40,470,000 8,410,000 1,000,000 31,060,000
Remaining Phase IA Infrastructure Improvements
E Street(Bay Blvd to F Street) 3,970,000 - 60,000 3,910,000
E Street(Lagoon Drive to G Street) 290,000 - 290,000
F Street(Bay Blvd to E Street) 1,530,000 280,000 1,250,000
F Street(E Street to Gunpowder Pt Dr) 630,000 50,000 580,000
Gunpowder Point Drive Relocation 1,360,000 - 1,360,000
S-2 Sweetwater Signature Park 7,600,000 7,600,000
SP-1 Sweetwater Buffer(for S-1) 2,570,000 2,570,000
SP-1 Sweetwater Buffer(for S-2) 1,160,000 1,160,000
SP-2 Seasonal Wetlands 950,000 950,000
SP-4 SDG&E 60,000 60,000
Subtotal 20,120,000 390,000 19,730,000
City Infrastructure Improvements
G Street Sewer Pump Station 2,640,000 - 2,640,000 -
Total 63,230,000 8,410,000 4 030 000 50 790 000
"Cost Estimates are in 2016 dollars. Estimates include hard costs,soft costs,and contingencies.
Developer BFDIF Credit Eligible column reflects the estimated value of planned improvements that will be eligible for
credit against Developer's Bayfront Development Impact Fee("BFDIF")obligation. Actual BFDIF credit amount may
vary. Developer will be responsible for payment of BFDIF fees in excess of credits earned
13 City Sewer Funding Eligible column reflects the estimated value of sewer improvements associated with each project
that will be eligible for funding by the City through its sewer facility contribution. Actual sewer funds contributed may
vary. See Developer's Sewer Improvements.
14 Other Funding column reflects the estimated amount to be funded through the issuance of debt,the application of funds
on hand,or such other funding mechanisms as may be most appropriate.
15 H-3 Site Prep budget of$6 million represents the maximum funds that will be provided by District and City for this
purpose,assuming District provides at least 130,000 cubic yards of imported soil. If District does not deliver sufficient
soil,funding will be increased to$10 million. Actual costs may vary. See Section 4.8.
is 611-3 Utility Corridor budget of$1.53 million represents the maximum funds that will be provided by District and City
for this purpose. Actual costs may vary.
Exhibit 4 to Attachment No. 5
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RIDA
RIDA Development Corporation is a full service real estate organization that has created and
invested in innovative and economically successful office, residential, industrial, hospitality, and retail
developments for more than 40 years.
RIDA will be responsible for an investment in the RHCC of no less than $785 Million. This
investment is expected to take the form of a combination of debt and equity. RIDA's investment will
cover the design and construction of the resort hotel, the design of the Convention Center, and a
portion of the cost of the Convention Center construction. The Private Financing and the Public
Financing will close simultaneously at the close of escrow.
RIDA has engaged a design team for the RHCC, consisting of Nasland Engineering and HKS
Architects. RIDA has communicated to staff that the design of the RHCC portion of the Project is on
schedule to be completed prior to the time that the parties execute the ground lease and construction
is scheduled to commence in late 2019. Staff anticipates that the Board will consider the coastal
development permit (CDP) for the RHCC portion of the Project sometime in the Fall of 2018.
RIDA will construct a portion of the Phase 1A infrastructure requirements, listed in the chart above,
and herein described as RIDA's Phase 1A Infrastructure Improvements. As memorialized in the DDA
and described in detail in Attachment 5 of the DDA, through negotiations with the District and the
City, the District will complete the design of RIDA's Phase 1A Infrastructure Improvements to 30%
design drawings, as required to issue a CDP for that portion of the Project.
RIDA has agreed to prepare the Site and complete the construction of RIDA's Phase 1A
Infrastructure Improvements concurrent with the construction of the RHCC. Through due diligence,
staff has determined that the estimated cost to prepare the Site is $10 Million. If the District provides
less than 130,000 cubic yards of imported soil to the Project Site prior to the close of escrow, the
estimated cost will be decreased equal to the difference of: (1) $10 million minus (2) $30.77 per cubic
yard of soil delivered by the District. The District is working on opportunities for dirt to import to the
Site currently. RIDA will fund the expense for the remaining Site preparation and will be reimbursed
by the Public Financing bond financing proceeds.
Public Entities
In the process of determining the financial feasibility of the RHCC, it was determined that in order for
the RHCC to be developed a public financial subsidy would be needed, herein described as the
Public Financing. Per the chart above, the following is a breakdown of the Public Financing
contribution:
1. Phase 1A Infrastructure: $63 Million
2. Public Entities Contribution for Convention Center Project: $240 Million
3. District owned parking: $40 Million
The Public Entities entered into a financing agreement (Financing Agreement, as amended), setting
forth the revenue sources and financing alternatives necessary to implement the development of the
Project. The District and City will approve the use of the revenue sources through a future plan of
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finance substantially based on the Conceptual Plan of Finance, as shown as Attachment 4 to the
DDA, which will cover the Convention Center and required Phase 1A Infrastructure of the Project.
Subject to the terms of the Conceptual Plan of Finance, the Public Entities will work collaboratively to
issue debt at the close of escrow to fund the contributions required for the Project. According to the
Financing Agreement, subject to the final plan of finance, the Public Entities will commit sources of
revenues identified in the Financing Agreement that will be used to service the anticipated debt.
If the Board approves the DDA, the District will contribute the following revenues consistent with the
Financing Agreement, Conceptual Plan of Finance, and final plan of finance: (1) existing and
designated future lease revenues from the CVB; and (2) ground rent from the RHCC. (The proposed
ground rent structure for the RHCC ground lease is discussed below.) Additionally, it is contemplated
that the District will contribute the previously received SDG&E contribution of $1.7 million and the
Pacifica contribution of $3.0 million toward the Phase 1A Infrastructure cost. The District will also be
responsible for an annual contribution (District Annual Contribution) toward bond debt service to
support the Convention Center contribution not to exceed the following schedule of amounts during
Lease Years 5 through 38:
Lease Years 1-4 $0
Lease Years 5-14 $5.0 million
Lease Years 15-19 $6.0 million
Lease Years 20-24 $3.0 million
Lease Years 25-38 $3.5 million
If the conditions precedent described in the DDA are satisfied, the District will ground lease the land
to RIDA with a modified rent structure that is needed to allow - but not guarantee - the RHCC Project
to achieve a rate of return acceptable to RIDA. The District's contribution of the land under a modified
rent structure is also an additional contribution to the Project.
If the City Council approves the DDA, the City will also contribute toward the construction of the
required sewer and fire services and contribute to the Project through transient occupancy tax (TOT)
for the existing and future RV Park and Project generated revenues, and revenues from the
Municipal Services Agreement (MSA) through the sublease of the Convention Center. The KMA
Report details the Public Entities contribution toward the Project.
Cash Flow in Excess of Debt Service Distribution ("Waterfall')
The proposed bond financing structure is projected to result in cash flow after debt service toward the
bond issue, estimated to occur in Lease Year 19 (see KMA Report). The agreed-to terms of the
District and City participation in the anticipated future cash flow in excess of debt service is as follows
and detailed within the Revenue Sharing Agreement, Attachment D:
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Priority Disbursement Description
1 To District, Reimbursement of its Annual
Contribution
2 To City, Reimbursement of 73.6% of Actual
Bayfront Fire Services Costs
3 To District and City, Reimbursement of General
Fund Contributions(Through Close of Escrow)
4 To District and City, Reimbursement of General
Fund Contributions(After Close of Escrow)
5 To JPA, One Year Additional Debt Service
Reserves or Reserve Fund Insurance Policy
6 To District and City, Split Remaining Revenues
50/50
Following is a more
detailed discussion of each disbursement:
(1) The District's Annual Contribution is described above and is the first position to be reimbursed
from any surplus revenues after debt service is paid.
(2) The second priority is the City's contribution toward fire services. It is contemplated that fire
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services will be required for the RHCC and CVB as a whole with the construction of the Project. Any
actual fire services contribution toward the Project by the City will be reimbursed with excess
revenues after the District is reimbursed for their Annual Contribution.
(3) The third priority is reimbursement of both the District and City's general fund contributions
toward the Project (Before Close of Escrow), which includes the District's existing CVB lease
revenues and the City's existing transient occupancy tax (TOT) and municipal services agreement
revenues.
(4) The fourth priority is reimbursement of both the District and City's general fund contributions
toward the Project (After Close of Escrow), which includes the District's existing CVB lease revenues,
RHCC lease revenues, and the City's TOT and municipal services agreement revenues.
(5) The fifth priority, establishing one year of additional debt reserves, is not anticipated to be
required by the bondholders (as these are above and beyond those ordinarily required by the
proposed debt structure, as described in more detail below); however, the District and the City
believe the additional reserves would be prudent and may be covered through an insurance policy.
(6) The sixth priority would be any remaining revenues to be split evenly between the District and
the City equally.
Operations and Maintenance of the Project and public infrastructure are not covered in the waterfall;
however, both the District and the City anticipate using the excess revenues to fund on-going
operations and maintenance of their respective facilities.
District Obligations
Parking for the Project will take the form of either an approximately 1,600 space public parking
garage or surface parking on the adjacent site. To fund the construction of the parking garage, on
April 10, 2018, the Board resumed the collection of a previously adopted user fee to be collected by
transportation vendors doing business on tidelands Funds collected will only be used for financing
and construction costs of the planned Chula Vista Bayfront Convention Center parking facilities.
Conditions Precedent to the Close of Escrow
The primary conditions necessary to occur for the Close of Escrow of the DDA, ultimately leading to
the execution of the Ground Lease and Convention Center Sublease, are:
1. Overview of Project Financing
2. Closing and Delivery of Site
The DDA outlines the necessary steps and schedule in order to close escrow on both the Public
Financing and Private Financing for the RHCC and Phase 1A infrastructure. The conditions
precedent to close of escrow, if achieved, will ultimately lead to the construction, development, and
operation of the Project. Staff will return back to the Board to memorialize certain steps prior to the
close of escrow, such as approving the proposed method of financing through the plan of finance,
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any Project design elements, and requirements for Site delivery to RIDA. Below describes the
requirements of having the financing in place and preparing the Site prior to the close of escrow.
OVERVIEW OF PROJECT FINANCING
Overview of Feasibility of Proposed RHCC Project
The District, the City, and RIDA have worked together to identify the key economic terms that will
support the construction and operation of the RHCC Project, all while achieving favorable market
returns to both the Public Entities and RIDA. During earlier discussions with Gaylord and prior to the
selection of RIDA, the District and City had already anticipated that early phases of development on
the CVB would require public financial contributions.
The Financing Agreement identifies sources of revenues from the City and District to develop the
public improvements and infrastructure for the Project. Additionally, the LOI approved by the District
and City on June 20, 2018 identifies further sources of revenue from the District and City in order to
make the Project feasible. The District and City will provide evidence of the sources of revenue and
financing based on a future plan of finance to be entered into the District and City in order to fund the
Public Fund Contribution toward the H-3 site preparation costs, Public Improvements, and Project
Public Investment in the Project. At this time, it is anticipated that the District and City will use bond
financing for the Public Fund Contribution. The Public Entities will work collaboratively to enter into a
Plan of Finance within the term of the DDA that will set forth the terms necessary to issue the debt for
the Public Fund Contribution prior to the close of escrow of the DDA.
The District and City proposed Public Fund Contribution identified in the DDA and Conceptual Plan of
Finance have been analyzed by KMA. The KMA financial feasibility analysis is presented in
Attachment C. The KMA report includes a comprehensive financing gap analysis justifying the need
for the District and City proposed Public Fund Contribution toward construction of the Project. The
KMA report illustrates how the public contribution toward the RHCC related public infrastructure and
improvements will be supported primarily through Project-generated revenues, i.e., most of the
District and City committed revenues will in effect be "performance-based". To that end, KMA has
concluded that the RIDA Projected return after the proposed Public Fund Contribution and ground
rent structure is not excessive. This finding indicates that the Public Entities' contribution and District
rent structure is warranted and needed in order for the Project to move forward and to be developed.
KMA further concludes that RIDA will need to control development costs and/or improve operating
performance in order to achieve a satisfactory long-term return.
Overview of Proposed Public Fund Contribution
As set forth in the KMA report, total Project costs, including both public infrastructure and private
development, are estimated to be $1.1 billion. As determined in the KMA report, of this total, RIDA
will be responsible for a minimum investment, including private debt and equity, of no less than $785
million. Based on these findings, it is anticipated that the Public Entities will be responsible for: (a)
infrastructure design costs, estimated at $1.7 million; (b) Parcel H-3 site preparation costs, estimated
at $6.0 million; ( c) $240 million Project Public Investment toward the convention center portion of the
RHCC Project; (d) public infrastructure, estimated at $57.2 million, and (e) up to $40 million in
Parking Improvements. These cost estimates, and respective responsibilities, are summarized in the
KMA report and set forth in the chart below from the KMA report.
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Proposed Sources and Uses of Funds
Developer District/City
Private Public Total
Investment Investment
A. Infrastructure Design Costs ---- $1.7 V $1.7 M
B. Parcel H-3 Site Preparation Costs(1) ---- $6.0 M $6.0 M
C. Hotel/Convention Center $785.0 M $240.0 M $1,025.0 M
D. Infrastructure ---- $57.2 M $57.2 M
E. Parking Improvements ---- $40.0 M $40.0 M
F. Total $785.0 M $344.9 M $1,129.9 M
(1) Maximum contribution not to exceed$10,0 M. KMA assumes Parcel H-3 site preparation costs of
$6.0 M,reflecting 130,000 cubic yards of soils imported to the Project Site prior to the close of
escrow. If less than 130,000 cubic yards are imported,the cost will be prorated.
Proposed Method of Financing the Public Fund Contribution
Attachment 4 of the DDA presents the Conceptual Outline of JEPA Plan of Finance (Conceptual Plan
of Finance). The Plan of Finance includes bond underwriting assumptions and projections prepared
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by JP Morgan Securities, LLC (JP Morgan) on behalf of the City. JP Morgan prepared bond
underwriting projections based on the revenue streams to be committed by the District and City
toward bond debt service. The ability to finance the Public Fund Contribution as contemplated is
dependent on the realization of a number of assumptions relating to any such financing. The
assumptions for the financing and the anticipated outcome based on those assumptions are
described in the Conceptual Plan of Finance, but the outcome is limited as described in Section 2 of
the Conceptual Plan of Finance. The debt service included in the Plan of Finance for the purpose of
determining the feasibility of the proposed method of financing the Public Fund Contribution is based
on the information contained in the Plan of Finance and reference is made to the entire Plan of
Finance for detailed assumptions and further information relating to the financing.
The District engaged the financial advisory firm, Hutchinson Shockey Erley & Co. (HSE), to review
the JP Morgan projections and the Plan of Finance. The HSE review identified factors and
opportunities for District consideration with respect to the Plan of Finance. HSE also prepared
preliminary bond sizing and cash flows based on the financing criteria presented in the Plan of
Finance. In addition, a report on the projected revenues for the Project by CBRE Hotels is included
as Attachment E.
CLOSING AND DELIVERY OF SITE
Relocation of Existing RV Park
A portion of a recreational vehicle park (Existing RV Park) is currently existing on a portion of the Site
pursuant to a certain lease between Chula Vista Marina/RV Park, Ltd. and the District (District Clerk
No. 14243), will terminate on March 4, 2019 (as amended from time to time, the Existing RV Park
Lease). The District is required to enter into a new lease (the New S-1 RV Park Lease for
development of a new RV Park (New S-1 RV Park) on a 19-acre site commonly known as Parcel S-1
located within the Chula Vista Bayfront (New S-1 RV Park Site) pursuant to a California Coastal
Commission (CCC) requirement when the Environmental Impact Report (EIR) for the CVB was
certified. The CCC requirement was to replace the 237 stalls that would be removed for the RHCC in
a new location within the CVB. Request for Proposals 16-36RH (Destination RV Park Development
Opportunity) for the New S-1 RV Park was issued on October 24, 2016, and the BPC selected the
team of Sun Communities, Inc. and Northgate Resorts LLC on April 11, 2017 pursuant to Resolution
No. 2017-055.
Utility Mapping
District staff has been working with Rick Engineering on master planning the utilities for the Site.
Through the District's design of the Phase 1A Improvements up to 30%, utility locations will be
identified to serve the RHCC. The location or relocation of any utilities will need to occur prior to the
close of escrow as the expectation is that the Site will be ready to start construction after execution of
the ground lease.
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Easements
It shall be the sole responsibility of the District and Chy, at the sole expense of the District and City, to investigate and
determine aooeoo and uU|itien, identify approva|o, as neoeooary, for the relocation and/or abandonment ofany easements
or rights of way, and their related termination and related modification of record from title to the Site, as may be necessary
for the construction of the Project and the parking impnovemenio, and to specify by when the District and the City will
complete the relocation and/or abandonment of each such easement and right of way and their related termination and
related modification of roonrd, as app|ioab|o, for the construction of the Project and the parking improvements
(collectively, Easement Findings), and, to the extent necessary, to include such Easement Findings with respect thereto in
the plans for development ofthe Phase 1/\ Improvements submitted toR|DA.
RIDA shall have sixty (60) days after receipt of the Easement Findings to provide written comments thereto to District and
City. If the District or the City disagrees with any of the comments to the Easement Findings provided by RIDA, then the
Parties shall meet and confer. If the District and the City agree with all of the comments to the Easement Findings
provided by R|DA or if the Parties reach an agreement on the Easement Findingo, than it shall be the no|o naopunaibi|ih/
of the District and the Cih/, at the sole expense of the District and the Cih/, to relocate and/or abandon, terminate and
modify of record from tide to the Site each of the easements and rights of way identified in such Easement Findings by
the corresponding date set forth in such Easement Findings (as modified to reflect such comments or agreement).
The District and the City shall reimburse R|DA in cash for any and all funds expended prior to the o|000 of escrow by
R|DA in connection with design, architectural vvork, and engineering work for 0DA'o Phase 1A Infrastructure
Improvements as set forth in Attachment 5 to the ODA. Scope of Development, prior to the o|000 of escrow in accordance
with, to the extent applicable, Chula Vista Municipal Code 2.50.100.1-1. including the reimbursement procedure sot forth
therein, and any applicable agreements implementing Chula Vista Municipal Code 2.56.160.H.
Lease of Site
Once the implementation of the Schedule of Performance in achieved and the Project can be financed with both the
Public Financing and Private Financing, the close ofescrow will occur. Once the close ufescrow occurs, the District and
R|OAvvi|| enter into a 66-year Ground Lease for the Site. In addition, associated Convention Center Subleases will be
entered into and will require future actions by the City.
Basic Ground Lease Terms
Under the terms of the Ground Lonso. R|OA will pay n fixed ground rent schedule for the Project during the bond
financing term, estimated to coincide with Lease Years 1'38. The fixed ground rent schedule for this period is as shown
below.
~ Lease Years 1-18 $0
*
Lease YG8[8 19-23 $3.0 million
w
Lease Y8@[S 24-38 $3.5 million
As detailed in the KM/\ rUDOrt, beginning in Year 39, the Dn]pOSed rent structure for the Project will be
in line with or higher than the District's standard percentage rent categories for rOD0O' food, and
beverage. The b@OQV0t percentage rent category has been broken out from the n000 rent CGtegO[V
and is slightly lower than in typical District leases. Percentage rent rates for the n00O8iniOg categories
Of revenue are consistent with the District's standard percentage rental [@tOS. The Ground [0@SB
term will be for a total Of 66 Ve2[8 and COVe[ the construction and operation Of the RHCC.
Attachment 9 Of the [}[}A is the current form of the ground lease but has not been GpDn]Ved by the
District or RI[)/\.
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Parking
A major Ground Lease term that has been negotiated with RIDA gives the District the election to fund
a 1,600 space parking structure. The parking terms memorialized in the Ground Lease are outlined
below:
If there is a parking structure:
• District to pay for design and construction costs in an amount not to exceed $40
million;
• RIDA to pay for design and construction costs in excess of$40 million (up to $44
million);
• RIDA to operate and maintain and pay for all costs of operations and
maintenance;
• RIDA to pay 12.5% of gross parking revenues during lease years 1-38;
• RIDA to pay 15% of gross parking revenues during lease years 39-66;
• If there is a sale or assignment of the lease during lease years 1-38, the gross
parking revenues paid to the District would increase from 12.5% to 15%;
• If there is a sale or assignment of the lease during lease years 39-66, the gross
parking revenues paid to the District would increase from 15% to 20%.
If there is surface parking:
• RIDA to pay for design and construction costs;
• RIDA to operate and maintain and pay for all costs of operations and
maintenance
• RIDA to pay 3% of gross parking revenues to the District for surface parking.
Management Agreement
RIDA is negotiating with Marriott to operate a Gaylord hotel for the proposed RHCC. A requirement of
the Ground Lease is that the RHCC will be a Gaylord Hotels brand for the first ten years of the
Ground Lease (Lease Year 1 to 10) and on and after the 11th year of the Lease, the Gaylord Hotels
brand or any other hotel brand comparable or superior in quality to the Gaylord Hotels brand that has
achieved AAA Four Diamond rating standards in a reasonable number of its hotels or its equivalent
as determined by the District in its sole and absolute discretion.
NEXT STEPS
If the Board and the City Council approve the DDA, RIDA will expend additional funds to advance the
Project, specifically with regard to Project design. It is anticipated that the design process will take
approximately 18 months to complete. The CDP for the Project is expected to be presented to the
Board as soon as Fall 2018.
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The Public Entities will need to approve of the financing mechanism needed to fund the Phase 1A
Infrastructure, Convention Center Project and Parking Improvements. After the public agencies take
all required actions for approval of the public financing, it is anticipated that these approvals will go
through a validation action, which is expected to occur in Spring 2019. The final financing approvals
and issuance of the debt will be required prior to the close of escrow and then for construction to
commence.
RECOMMENDATION
After three years of negotiations with RIDA, District and City staffs believe that the DDA should be
approved by the Board and City Council for the financing, development and operations of the RHCC,
the catalyst Project for development of the CVB. The District has found the right partners that are
ready to move forward with the implementation of the CVB and construct the RHCC. The Project
economics represent a good deal for the District, for the City, and for RIDA; and time is of the
essence to memorialize the economics to ensure that the redevelopment of the CVB proceeds as
soon as possible. Once implemented, the CVBMP will create a world-class destination that reflects
strong planning and design principles, economic feasibility and community benefits.
General Counsel's Comments:
The General Counsel's Office has reviewed this agenda sheet as presented to it and approves this
agenda sheet as to form and legality.
Environmental Review:
The proposed Board actions for authorizing a Disposition and Development Agreement, related
agreements and a conceptual plan of finance with RIDA Chula Vista, LLC and the City of Chula Vista
for a resort hotel and convention center was adequately covered in the Chula Vista Bayfront Master
Plan Final EIR (State Clearinghouse No. 2005081077), prepared and adopted/certified by the District
on May 2010. The proposed project is not a separate "project" for CEQA purposes but is a
subsequent discretionary approval related to a previously approved project. (CEQA Guidelines §
15378(c); Van de Kamps Coalition v. Board of Trustees of Los Angeles Comm. College Dist. (2012)
206 Cal.AppAth 1036.) Additionally, pursuant to CEQA Guidelines Sections 15162 and 15163, and
based on the review of the entire record, including without limitation, the Final EIR, the District finds
and recommends that the approval of the Disposition and Development Agreement does not require
further environmental review as: 1) no substantial changes are proposed to the project and no
substantial changes have occurred that require major revisions to the FEIR due to the involvement of
new significant environmental effects or an increase in severity of previously identified significant
effects; and 2) no new information of substantial importance has come to light that (a) shows the
Project will have one or more significant effects not discussed in the FEIR, (b) identifies significant
impacts would not be more severe than those analyzed in the FEIR, (c) shows that mitigation
measures or alternatives are now feasible that were identified as infeasible and those mitigation
measures or alternatives would reduce significant impacts, and (d) no changes to mitigation
measures or alternatives have been identified or are required. Because none of these factors have
been triggered and the adoption of the Disposition and Development Agreement does, the District
has the discretion to require no further analysis or environmental documentation (CEQA Guidelines
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§15162(b)). Pursuant to CEQA Guidelines §15162(b), the District finds and recommends that no
further analysis or environmental documentation is necessary. Accordingly, the proposed Board
action is merely a step in furtherance of the original project for which environmental review was
performed and no supplemental or subsequent CEQA has been triggered, and no further
environmental review is required.
In addition, the proposed Board action allows for the District to implement its obligation under Section
87(a)(2) of the Port Act because it authorizes a Disposition and Development Agreement for a resort
hotel and convention center in the Chula Vista Bayfront Master Plan area. The Port Act was enacted
by the California Legislature and is consistent with the Public Trust Doctrine. Consequently, the
proposed Board action is consistent with the Public Trust Doctrine.
The proposed Board direction or action does not allow for "development," as defined in Section
30106 of the California Coastal Act, or "new development," pursuant to Section 1.a. of the District's
Coastal Development Permit (CDP) Regulations because they will not result in, without limitation, a
physical change, change in use or increase the intensity of uses. Therefore, issuance of a Coastal
Development Permit or exclusion is not required. However, development within the District requires
processing under the District's CDP Regulations. Future development, as defined in Section 30106 of
the Coastal Act, will remain subject to its own independent review pursuant to the District's certified
CDP Regulations, PMP, and Chapters 3 and 8 of the Coastal Act. The Board's direction or action in
no way limits the exercise of the District's discretion under the District's CDP Regulations. Therefore,
issuance of a CDP or exclusion is not required at this time.
Equal Opportunity Program:
Not applicable.
PREPARED BY:
Adam Meyer,
Department Manager, Real Estate
Stephanie Shook
Program Manager, Real Estate
Sean Jones
Asset Manager, Real Estate
Attachment(s):
Attachment A: Disposition and Development Agreement
Attachment B: June 20, 2017 Letter of Intent Agenda Sheet
Attachment C: KMA Feasibility Report
Attachment D: Revenue Sharing Agreement
Attachment E: CBRE Hotels Report
'. SDUPD Clerk's Office Document No.59406 filed October 5,2012, Port Master Plan Amendment
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2. SDUPD Clerk's Office Document No. 59001 filed May 30, 2012, Chula Vista Bayfront Master Plan Financing Agreement between City of
Chula Vista and San Diego Unified Port District
s. SDUPD Clerk's Office Document No. 62899 filed February 11, 2015, Exclusive Negotiating Agreement; SDUPD Clerk's Office Document No.
65707 filed October 13,2016(Amendment No. 1);SDUPD Clerk's Office Document No.66141 filed February 14,2017(Amendment No.2)
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Attachment A to Agenda File No. 2018-0070
FINAL
DISPOSITION AND DEVELOPMENT AGREEMENT
by and among
SAN DIEGO UNIFIED PORT DISTRICT
("District"),
CITY OF CHULA VISTA
("City")
and
RIDA CHULA VISTA,LLC
a Delaware limited liability company
("Developer")
RESORT HOTEL AND CONVENTION CENTER PROJECT
(Chula Vista Bayfront Master Plan Parcel H-3)
Attachment A to Agenda File No. 2018-0070
Prue:
I, ENE A� PROVISIONS.. .......... ....... :::.... ....., .......- ,,.,,,..p ........... :................. ,,,;,,.....
I.'I Purpose oI t hug;, Agerrrent,. —.... .., ... �....... .............. ....... "....,..,,... .. .,.,,....,. .. ,
1.3, Projekt Approvals................... ..... ................ .r,,,...,,...., ......,,,,,, ..................,,,..... .,.
L4 Inru"rple tinting Actions by 'pity, District and Government Agencies .. ....... ........ ...7
1 .
. "l� A, �,`or"rt�rl�i�rr�.r'.,�a�......... . ......... ... .............." .,,,,,.,,... .,......,, ...... ......
1.6, [kposit.............. ........, .,...... --....... .........................,.. ....................., ..........M,w,.,,.. .,..
if. I E `"1`1"'ry OF PARTIES .................. .............. ......
2
. „ .... ....... ......... . .....
13
2.; City.......---....... ....... ......................... ...... :......... ...........—.,............ 1
.4 Notioes,............... , , ........ — ....... .,".... ,,,,,...................................,.. "" ,....., 1
111. 'TER M„—.,,,,.„ ....... ..----...----.....,, ,,,,, .,; ...... ., . ............ ,,.".......,,, ................... ... . 1
3,1 ernrr.......... ....... ....... ............... ....... ..... .... ........, ..,,.,, ...,., ... lir
IV. DE IGN .AND DDEV I-OPLENT OF PROJECT .... ....... ..... „ ,.. ......,. ...,.. . ,,............,,...,17'
w
4.1 De�"�i p and tloprnent of the Project.......... ........ ,.,,,,, ....... . ,,,,,. 17
4.2 ,,.., .
1"r�t In1�lrastr"tnc�tuure Inrproveeuu�ts........ .....".,,,.. ;.,,,,,...... ...,......... .................,, 18
4.3 Design of Surface Parking and Parking Improveriwnts................. ... .. ........ ,...,.... 1'
4.4 Submission and Approval of Schernatic Plans and Building Permit
Appincatilon Drawings ,-........ ,,,.............. 18
4,5 AgreementonTotal ' 'rojectC(,.ists....... ........ .... . . ... ... . ..—.... ..,,,..
4.6, No Nvelolner's Obl'ugation to Construct the Developer's Improvements
Surfact Parking or Parking Improvements... ..,.... ",,—.................. " „.,,23
43 District anidd City Financial Contribution........ ,,,.,.,;,,,.,..................... ........................ 23
4,8 Expenditures Prior to the Close of Escrow ... ,.".............. ...... ......., .... .................. 4
4 Inspection, o1 IRocords ............................ ..,,..,
Ins
4,10 Insurance -, ......... ...... ......
.➢ Liability .". ....... ....... .... .
1 ��u� t:yInsurance Policy L��ir�rruts„"»,; „ . ................ ....:... :.,,...
4.12 Ba ilder's "All Risk” Insurance .,........- ....".... --.......... ............... ....... ..-. .."....,,2 '
4.13 Required Po'Iicy Provisions ........................ . . ........ .......
4,14 Payment Bonds and Perwlbrinarnce Bonds...,. ....... . .................. ................... .....,.,,"
4,15 Cornpletion (:°luraranty ... .--..,............ ,.krr..,..... ..... 28
4,10 Prevailing Wages ......................... ................... ,,....,........ ,,;,,..... ..,,.,. "......28
4.17 Developer's Indemnity Obligations........... .... —.......,.,.., ,.,.,, w, ,,,,, ...... ,.,, --...... .3
4 ... ........
,I � ferns and 1�Il;�iirr�rs........ a„wM.... ........ ...... ........ ...... ............... 1
4.19 Validation Action;....:. ........................................................... ........... ............ ...... ..,,...3'1
4„20, Cit Pro
c,,urutemewrt Process......:....................,,,, M,..., ...,.................................................
4.21 Complianct with Law; I nlorcevibilit by'District, Cit and .If�PA�.................. .....,..... 2
4 ”, "..............
"2 1'rrer°8 eul�nur�rruents 3;
i
Attachment A to Agenda File No. 2018-0070
" REQ1,11REMENTS OF PAR'TIES; CONDITIONS PRECED N""I'"To CLOSE OF
ESCROW,......... ...:-, -111..... 1.1.1.......1 - �............. 1111 .".. ,
.....: ......... 1111..", �.,.....,............ 1,
5.1 Periodic Review} Meet and (7ourofer........... . ......... ......... ......... ,", .--."34
51,2 Conditions Precedent, to,Close onf P.scrow Beriefifing the District and the:City .........3
ondutiort�Precedent to Close o� Escrow � ."„"„
�,�.�,� -.� e�u �"utuin Developer
51.4 Approvals; Cooperation Between Partue ..a.. ........, "„�M",.�M.�l l
Changes �� round e
5.5�� Consideration of �
thGround �ca�r��"o����ewlutiion " rrwte.r
Subleases., ........ ...... .....1 ....................... ""......................... ...... ......,... ........ .”
1
42
5.6 Waiver of Certain Conditions ..........",,."1111 .., 4
5.7 Pli,ysical Condition, of the,F"�rojectSite ...... ...-" . ",,1111 11...11.. .-. „," .-..... ...........42�
5.8 Due Diligence Investigations, Dourly Entry y Developer,ger, ue Diligence
Period "fork. ... ............. .. ...... ......... ..- ,," "........ .......... ......... ...-.....42
5"9 Exclusive Np otiations......... .......1 .....- .............................".,,M. ......... ...........43
'L 1.1"'A S E OF PROJECT SITE, CLOS E 1"E C ''.....--....... ........ ................. ..... ",,,M 44
1.1 I. asu of Project Bute.,.,, --,................. "„„»,"1111."...--... .......1. ......... ......... ...11 11. 1 .........4
6-2 Opening of Escrow: Updated. Preliminary Title Reports, ......... 4,
.
Execution, and Delivery of ........11-11--l-I.-....-'.-.---46
6.4 Close�o Ew,-ro ; TiIte Pol icies........ . ....... ......... ... ""," .,......, ......... . ""","„ ..........46
5 Costs of Escrow', Title Insaranoo ..... ..... 48
VII" DEFAULTS, EMI',DI ...... . ..,.k.,"
7.1 -,neral Developer Default ... ......... ,.,--.......................r ”,".,,,..,......................... .......48
7.2 Defattlt by D isturuct or Cit .. , ................. 1111,,, ,--... ......... ....... 49
7.3 Remedies 1.1 cl usive .. ... ......... .... .... .................. ......". .... ......... . --,49
7A Dispute Resolution..... ......... ...... .. ......... ..1111,.. ... ",,, „ 1111.. ,,,,,..... '
VII1. EV E NTS OF TER MIN'A"I"[ON DIGIN A 'D OB1,I 'XT'I ;'NS OF PAR°I""IES....... ..........491
8..1 Events of Termination .... ......... ......... �.................. 11...11, ....,.............
8.2 Disposition of Deposit-...,--,. ,. .... ,".................. ........" .,.,r,.,, ,.,,... . ......... ...,......50
8�3 Effect ofT rminationi. ,.. """„ ... �. . ........ ......... ..... �,,.5'
IK MI 'ELLA E ''S PROVISIONS ....,....... 1111,""". ......... ......... .......,, .............................52
9.1 Real :state Commissions....... .........
"........ ......... ...",u"u. .. ,......52
9,2 Tiu"uu,e of B%ence......,.. 11.11.......................... „ ,",,,". ......... ........ 57
9.31 Consent............. ..... ... .............,....... ...,,
9A, Entire Agreement ................... 111 . ......... ... ...... ,, ......... 5
9.5 Interpretation.... ......... ......... ........1 ......... .,................. 1111,,"", 111...... ....1111 ..-....,5;
.
9.6 lovernuru8,. in, "
La --................ "1:.....1........... ................... ....... 5
' .7 Captions", ........ ......... ..... „" .................... . ..., -5:
.. .a 1111
91.8 to I'°�iurd Parti„ ,.,. ......-..................1.... .., ...... ............. ... w"..1 ........1.53
9,91 Modification or Amilertidment of Agreement; Operating Memoranda oranda ,:,,: .,_....., ........,,.5
9.10 waiver-- .... .. ...
", ......... .. .. . 1:111. .,, ,., 5,119.1 1 SeveNibil t ...... .....-.....1.....1 ......... ......... ......... ”",...., ....., ........, ........1 5
9,12 e;rtificates ................. .. .................. ....... " ....,,. .,1.11... , "..... ""....... ......... ...,-,,,"5
9,13, Counterparts..... .................... ......111 ,...............................
........ 111.....1 ... .,M " "","...., ............... .... ..,....,..
514
9,14 No Joint and � ,eves,, Liability.,--.............. . ....... ......... 1111,.. ................1111 „....SSI
ii
Attachment A to Agenda File No. 2018-0070
APPENDICES AND ATTACHMENTS
Appendix No. l Definitions
Attachment No. 1 Map of Project Site
Attachment No. 2 Legal Description of Project Site
Attachment No. 3 Map Showing General Location of
Elements of the Project (Site Plan)
Attachment No. 4 Conceptual Outline of JEPA Plan of Finance
Attachment No. 5 Scope of Development
Attachment No. b Schedule of Performance
Attachment No. 7 Form of Developer's Private Improvements and Convention Center
Budget
Attachment No. 8 Quality of Imported Soil
Attachment No. 9 Draft of the Ground Lease
iii
Attachment A to Agenda File No. 2018-0070
DISPOSITION AND DEVELOPMENT AGREEMENT
Resort Hotel and Convention Center Project
[Chula Vista Bayfront Master Plan Parcel H-3]
This Disposition and Development Agreement (this "Agreement') is entered into as
20_ (the "Execution Date"), by and among the SAN DIEGO
UNIFIED PORT DISTRICT, a public corporation (the "District"), the CITY OF CHULA VISTA, a
chartered municipal corporation (the "City"), and RIDA CHULA VISTA, LLC, a Delaware limited
liability company (the "Develoyer'). The District, City and Developer are the sole parties (each, a
"Party" and, collectively, the "Parties") to this Agreement. The "Effective Date" shall be May 7,
2018.
RECITALS
This Agreement is based upon the following recitals, facts and understandings of the Parties:
A. In 2002, the District, the City and the Redevelopment Agency of the City of Chula
Vista, a redevelopment agency formed pursuant to California Health and Safety Code Section 33000
et seq. (the "Redevelopment Agencx") began work to create a master plan, known as the Chula Vista
Bayfront Master Plan (District Clerk No. 59406) (the "Master Plan") for development of the
approximately 535-acre Chula Vista Bayfront (the "Chula Vista. Bayfront') located on the
southeastern edge of San Diego Bay in the City of Chula Vista. The purpose of the Master Plan was
to reconfigure the approximately 497 acres of land and 59 acres of water which comprise the Chula
Vista Bayfront by connecting the land and water acres in a way that will promote public access to,
and engagement with, the water while enhancing the quality and protection of key habitat areas, with
the ultimate goal of creating a world-class bayfront through strong planning and design, economic
feasibility and community outreach.
B. On May 18, 2010, the District, as Lead Agency (as such term is defined in California
Public Resources Code Section 21067), certified a Final Environmental Impact Report for the Chula
Vista Bayfront Master Plan and Port Master Plan Amendment (UPD No. 83356-EIR-658; SCH
No. 2005081077) (District Clerk No. 56562) ("Original FEIR"). The City is a Responsible Agency
(as such term is defined in California Public Resources Code Section 21069). The Master Plan is the
project described in the FEIR (as defined in Section 1.3(b)), and the area encompassed by the Master
Plan is referred to herein as the "Master Plan Pro'ect Area".
C. On May 18, 2010, the City, as a Responsible Agency (as such term is defined in
California Public Resources Code Section 21069) after having considered and relying on the Final
Environmental Impact Report (No. 83356-EIR-658; SCH No. 2005081077) for the Master Plan and
Master Plan Amendment, pursuant to the California Environmental Quality Act (Public Resources
Code Section 21000, et seq.) ("CEOA"), made certain Findings of Fact; adopted a Statement of
Overriding Considerations and adopted a Mitigation Monitoring and Reporting Program for the
Master Plan Project Area.
D. On August 9, 2012, the California Coastal Commission conducted a public hearing
and approved a request by the City to amend the certified Local Coastal Plan (LCP Amendment
No. t-11), Land Use Plan and Implementation Plan to revise the Local Coastal Plan boundaries and
Attachment A to Agenda File No. 2018-0070
provide alternate land uses and development standards for the Master Plan in conjunction with the
District. On August 9, 2012, the California Coastal Commission conducted a public hearing and
approved a request by the District to amend the Master Plan (PMP Amendment No. 41) to revise the
Master Plan boundaries, provide alternate land uses and development standards for the Master Plan
in conjunction with the City.
E. On May 6, 2014, the District Board of Port Commissioners ("BPC") adopted a
resolution authorizing the issuance of a Request for Qualifications ("RM") for the development of
the Project in the Master Pian Project Area. After considerable local, regional, national and
international marketing efforts by District staff and City staff, RFQ 14-24 (District Clerk No. 62033)
was issued on June 30, 2014. The responses to the RFQ were due on September 8, 20I4. A response
was received from RIDA Development Corporation ("RIDA"). On October 14, 2014, the BPC
adopted Resolution No. 2014-200 selecting RIDA as the successful respondent to the RFQ and
Resolution No. 2014-201 authorizing District staff to negotiate an Exclusive Negotiating Agreement
with RIDA. RIDA formed the Developer for the Project and the District entered into an Exclusive
Negotiating Agreement with the Developer, dated February 10, 2015 (District Clerk No. 62899)
("Original ENA"), as modified by Agreement for Amendment of Exclusive Negotiating Agreement
Amendment No. 1, dated August 9, 2016 (District Clerk No. 65707) ("First Amendment"),
Agreement for Amendment of Exclusive Negotiating Agreement Amendment No. 2, dated
January 25, 2017 (District Clerk No. 66141) ("Second Amendment"), and Agreement for
Amendment of Exclusive Negotiating Agreement Amendment No. 3, dated February 16, 2018
(District Clerk No. 67906) ("Third Amendment") (the Original ENA, the First Amendment, the
Second Amendment, and Third Amendment are collectively referred to herein as, the "ENA"). This
Agreement is the "Definitive Agreement" contemplated in the ENA as the culmination of the
negotiations between the District and the Developer.
F. Through the implementation of the Master Plan, the Developer, the District and the
City have determined to cause the redevelopment of a portion of the Master Plan Project Area
referred to as Parcel H-3 (exclusive of the District Retained Property) (the "Project Site"), as shown
on the Map of the Project Site attached hereto as Attachment No. I and incorporated herein by
reference, and as more particularly described in the Description of the Project Site attached hereto as
Attachment No. 2 and incorporated herein by reference, with the development of a resort hotel and
convention center in accordance with the terms herein, and, as further defined in the Scope of
Development attached hereto as Attachment No. 5 and incorporated herein by reference ("Scope of
_Development"), to serve as the anchor project of the Master Plan (the "Proiect"). The Parties
anticipate that the Project will generate substantial benefits to the local and regional community in
the form of increased tax and lease revenues, permanent and temporary jobs, and the provision of
significant public amenities and public infrastructure and will be the development catalyst for the
Master Plan Project Area. As such, the District and City have found and determined that the
development of the Project Site pursuant to the terms of this Agreement are in the vital and best
interests of the people of the State of California, County of San Diego, and the City, and in accord
with the public purposes and provisions set forth in California Harbors and Navigation Code
Appendix 1, and the City Charter.
G. Development of the Master Plan Project Area, which area is currently largely vacant
land, will require the construction of substantial public improvements during the development and
construction process ("Phase lA") of the Project. Such public improvements are contemplated in the
Amended and Restated Chula Vista Bayfront Master Plan Financing Agreement, dated June 20,
2017, between the City and District (District Clerk No. 67068) ("Financing Agreement") and the
2
Attachment A to Agenda File No. 2018-0070
Scope of Development. Developer shall construct a portion of the Phase IA Infrastructure
Improvements ("Developer's Phase 1A Infrastructure Improvements") and District (or City, if
applicable) shall construct, or cause to be constructed on their behalf, the remaining Phase IA
Infrastructure Improvements ("Remaining Phase IA Infrastructure Improvements" and, together with
Developer's Phase I A Infrastructure Improvements, the "Phase 1 A Infrastructure Improvements"),
as more fully described in the Scope of Development. The Financing Agreement may be amended
from time to time during the predevelopment and approval process (the "Predevelopment Phase") set
out in this Agreement. The Financing Agreement anticipates the development of a binding
agreement between the District and the City that sets forth, amongst other things, certain criteria and
objectives related to the financing by the District and the City of the Phase 1A Infrastructure
Improvements required under Phase IA ("Plan of Finance") as such Phase IA Infrastructure
Improvements are set forth in Exhibits 1 and 2 attached to the Scope of Development. The Financing
Agreement further contemplates the financing of such Phase I A Infrastructure Improvements by the
District and the City, collectively, through the contribution of various sources of revenue to be
further defined in the approved Plan of Finance. The total Development Costs of the Phase IA
Infrastructure Improvements (the "Phase IA Infrastructure Costs"), which are currently estimated to
be SIXTY MILLION FIVE HUNDRED NINETY THOUSAND DOLLARS ($60,590,000), shall be
the sole obligation of the District and the City. The City and District expect to issue bonds through
the JEPA to finance up to FIFTY-SIX MILLION DOLLARS ($56,000,000) of the Phase ]A
Infrastructure Costs and to use other sources of funds to fund the remaining Phase ]A Infrastructure
Costs. Pursuant to one or more agreements to be negotiated by the Parties prior to the Close of
Escrow and to be executed by the Parties at the Close of Escrow, a portion of the proceeds of such
financing shall be used to pay or credit the Developer for the Development Costs of the Developer's
Phase IA Infrastructure Improvements that are incurred before or after the Close of Escrow (the
"Developer's Phase 1 A Infrastructure Improvements Costs"), which are currently estimated to be
FOURTY MILLION FOUR HUNDRED SEVENTY THOUSAND DOLLARS $40,470,000, a
portion of which is anticipated to be offset by Bayfront Development Impact Fees due from
Developer to City in accordance with the Scope of Development. Developer shall not perform any
work at the Project Site prior to the Close of Escrow, except for due diligence investigations which
shall be covered through a separate agreement between the District and the Developer. The ultimate
Plan of Finance will be based on the Conceptual Outline of JEPA Plan of Finance set forth in
Attachment No. 4 attached hereto and incorporated herein by reference, which may be amended from
time to time during the Predevelopment Phase.
H. In furtherance of the Project, the District, City and Developer entered into a Non-
Binding Letter of Intent ("LOI") dated June 14, 2017, which outlines some of the basic economic
terms and conditions upon which this Agreement was prepared.
I. In addition to the Phase IA Infrastructure Costs, the District and the City will
together contribute an amount not to exceed the Project Public Investment Amount (the "Project
Public Investment") to be used to pay the Developer for the Development Costs of the convention
center component of the Project, as described in the Scope of Development ("Convention Center"),
as may be determined by the District and City in the Plan of Finance. The payment of the Project
Public Investment is anticipated to be made through an existing Joint Exercise of Powers Authority
created by the District and City commonly known as the Chula Vista Bayfront Facilities Financing
Authority ("ExistingJEPA"),EPA"), or a new Joint Powers Authority to be formed by the District and City
(the Existing JEPA or any new Joint Powers Authority formed by the City and District pursuant to
this Agreement, shall be referred to herein as, the "JEPA"), as described in the Financing Agreement.
The "Project Public Investment Amount" equals TWO HUNDRED FORTY MILLION DOLLARS
3
Attachment A to Agenda File No. 2018-0070
($240,000,000). Any Development Costs of the Convention Center in excess of the Project Public
Investment Amount shall be the sole obligation of Developer (the "Developer's Convention Center
Costs"). The DeveIoper's Convention Center Costs are currently estimated to be ONE HUNDRED
THIRTEEN MILLION DOLLARS ($113,000,000) and the Developer expects to use other sources
of funds to fund the Developer's Convention Center Costs. The Project Public Investment Amount is
based on the assumption that the Hotel will be constructed and operated in accordance with the
Scope of Development and the Ground Lease, including that the Hotel will have at least 1,570
Rooms and not more than 1,600 Rooms (where "Room" shall mean a separately keyed lodging unit
of the Hotel) and will, initially, be branded as a Gaylord Hotel,
J. The Parties agree that a portion of Parcel H-3 will be reserved by the District should
the District elect to fund the construction of a parking structure (the "Parking Improvements"),
which, if so elected by the District, will be designed and constructed by Developer and will be
financed by the District in an amount not to exceed FORTY MILLION DOLLARS ($40,000,000)
(the "Parking Improvements Costs").
K. The City will pay for and cause the construction of the sewer and fire service
improvements required for the Project (collectively, the "City Infrastructure Improvements"). A
portion of the City Infrastructure Improvements may be constructed by the Developer as a part of the
Developer's Phase IA Infrastructure Improvements, the Development Costs of which are to be
financed by the City as set forth in the Plan of Finance ("City Infrastructure Improvements Costs").
L. The Developer's Phase IA Infrastructure Improvements and the Convention Center
are collectively referred to herein as the "Develo er's Public Improvements", as further defined in
the Scope of Development.
M. The Developer will design a resort hotel component of the Project, which shall
consist of no less than 1,570 Rooms and no more than 1,600 Rooms in accordance with the terms
herein, and, as further defined in the Scope of Development (the "Hotel") and related resort-level
amenities as more fully described in the Scope of Development (collectively, the "Developer's
Private Improvements" and, together with the Developer's Public Improvements, the "Dever
Improvements"). The estimated Development Costs of the Developer's Private Improvements are
SIX HUNDRED SEVENTY ONE MILLION FOUR HUNDRED FORTY ONE THOUSAND TWO
HUNDRED SEVENTY SIX DOLLARS ($671,441,276) and will be financed by the Developer and
will be the sole obligation of Developer(the "Developer's Private Improvements Costs").
N. The Remaining Phase IA Infrastructure Improvements and the City Infrastructure
Improvements are collectively referred to herein as the "Public Im rovements". The Public
Improvements and the Developer's Improvements are collectively referred to herein as the "Project'.
O. The Parties now desire to set forth the terms and conditions upon which the District
may lease the Project Site to the Developer for the development, operation and maintenance of the
Project and the District and City may finance the Phase ]A Infrastructure Costs, the Project Public
Investment and the City Infrastructure Improvements Costs (collectively, the "Public Improvements
Costs") and the Developer may finance the Developer's Convention Center Costs and the
Developer's Private Improvements Costs.
4
Attachment A to Agenda File No. 2018-0070
AGREEMENTS
For valuable consideration, receipt of which is hereby acknowledged, and the mutual
obligations of and benefits to the Parties set forth herein, the District, the City and Developer agree as
follows:
I. GENERAL PROVISIONS.
1.1 Purpose of this Agreement. The intent and purpose of this Agreement is to set forth
the obligations of the Parties and conditions precedent to the leasing, development and construction
of the various elements of the Project, as applicable, and the financing and disbursement by the
District and the City of the Public Improvements Costs and the financing by the Developer of the
Developer's Convention Center Costs and the Developer's Private Improvements Costs.
Accordingly, this Agreement is intended to provide for the completion of all actions necessary to
plan and design the Project, and obtain all approvals necessary for the lease of the Project Site to the
Developer and for commencement of development and construction of the Project, including, but not
limited to, the preparation of all construction plans, specifications and cost estimates (to the extent
required under this Agreement as a condition to the Close of Escrow) and related documents for the
Project, the securing of private and public financing for the various elements of the Project and the
negotiation and execution of the Ground Lease and Convention Center Subleases. This Agreement
shall expire and be of no further force or effect as of the Closing Date except for those provisions that
expressly survive the expiration or earlier termination of this Agreement, which are set forth in
Article X.
1.2 Project Site.
(a) The Project Site, as shown on Attachment No. 1 and more particularly
described in Attachment No. 2, consists of approximately thirty-six (36) acres. The "Proiect Site"
shall include the Hotel Site and the Convention Center Site, each as defined below, which shall be
identified in accordance with Section 6.1(a). If the District elects to fund the construction of the
Parking Improvements, the District intends to use land directly adjacent to the Project Site for the
Parking Improvements (the "District Retained Propert "), and the location and boundaries of such
District Retained Property shall be further defined and revised by the Developer for mutual
agreement by Developer and the District consistent with the Project Site Plan attached hereto as
Attachment No. 2 and incorporated herein by reference. The portion of the Project Site where the
Hotel is located (the "Hotel Site") shall be leased to the Developer pursuant to a ground lease with
the District (the "Ground Lease"), as described in more detail in Section 6.1, for development of the
Hotel as part of the Project. The portion of the Project Site where the Convention Center is located
(the "Convention Center Site") shall be leased to the Developer by the District pursuant to the
Ground Lease, as described in more detail in Section 6.1, for development of the Convention Center
as part of the Project. The Developer shall cause a legal description of the Hotel Site, the Convention
Center Site and the District Retained Property to be prepared by a surveyor licensed in the State of
California, which legal description shall be approved by the District, in its reasonable discretion, and
attached to the Ground Lease and the Convention Center Subleases (defined in Section 6.1), as
applicable, prior to the Close of Escrow and prior to the execution of such documents.
(b) A portion of a recreational vehicle park (the "Existing RV Park") is currently
existing on a portion of the Project Site pursuant to a certain lease between Chula Vista Marina/RV
Park, Ltd. ("Existing RV Park Lessee") and the District (District Clerk No. 14243), which is set to
5
Attachment A to Agenda File No. 2018-0070
terminate on March 4, 2019 (as amended from time to time, the "Existing RV Park Lease"). On or
prior to the Target Date set forth in the Schedule of Performance attached hereto as Attachment No. 6
and incorporated herein by reference ("Schedule of Performance"), the District shall enter into a new
lease (the "New S-1 RV Park Lease") for development of a new RV Park (the "New S-I RV Park")
on a 19-acre site commonly known as Parcel S-1 located within the Chula Vista Bayfront (the "New
S-1 RV Park Site"). Request for Proposals 16-36RH (Destination RV Park Development
Opportunity) for the New S-1 RV Park was issued on October 24, 2016, and the BPC selected the
team of Sun Communities, Inc. and Northgate Resorts LLC on April 11, 20I7 pursuant to Resolution
No. 2017-055. On March 2, 2018, the District delivered notice of termination of the Existing RV
Park Lease to the Existing RV Park Lessee. The District shall use commercially reasonable efforts to
cause the Existing RV Park Lessee and each of the tenants, occupants or guests on the land
encumbered by the Existing RV Park Lease to vacate such land on or before the Target Date set forth
in the Schedule of Performance and, if the District is unable to do so by such Target Date, then the
District shall use commercially reasonable efforts to do so as soon as is reasonably practicable
thereafter.
1.3 Project Approvals. The Parties agree that, as of the Execution Date, the following
documents in furtherance of the Master Plan have been approved and may be amended from time to
time by the City or the District (the "Existing Approvals"):
(a) The Master Plan, including all amendments thereto, as described in the
Recitals;
(b) The Original FEIR and findings and determinations by the District and City
related thereto, including adoption of Findings of Fact and a Statement of Overriding Considerations,
mitigation measures and a Mitigation Monitoring and Reporting Program (District Clerk No. 56555),
as made by District Resolution No. 2010-78 adopted on May 18, 2010, and the Addendum to the
Original FEIR (District Clerk No. 60864) adopted by District Resolution No. 2013-138, on
August 13, 2013 (collectively, the "FEIR");
(c) Chula Vista Bayfront Master Plan Settlement Agreement, dated May 4, 2010,
among the Bayfront Coalition Member Organizations identified therein, the District, the City and the
Redevelopment Agency of the City of Chula Vista (District Clerk No. 56523) ("Settlement
Agreement");
(d) Chula Vista Bayfront Development Policies;
(e) Chula Vista Bayfront Master Plan Natural Resources Management Plan
(District Clerk No. 65065), approved by the BPC on May 10, 2016, by Resolution No. 2016-79, and
the City Council of the City of Chula Vista (the "City Council") on June 14, 2016, by Resolution
No. 2016-119;
(f) Chula Vista Bayfront Master Plan Public Access Program;
(g) City's Local Coastal Plan, as amended, as described in Recital D;
(h) Chula Vista Bayfront Design Guidelines adopted on February 7, 2018;
(i) The Financing Agreement; and
6
Attachment A to Agenda File No. 2018-0070
0) City Council compliance with Government Code Section 53083 (AB 562), by
City Resolution No. 2018-062, adopted on or about April 24, 2018.
1.4 Implementing Actions by City, District and Government Agencies. The
implementation of this Agreement requires certain actions by the City, District, and other
governmental agencies with an interest in the Project Site, which actions include, but are not limited
to, the following, which have been or shall be completed on or prior to the applicable target date set
forth in the Schedule of Performance (as such date may be extended pursuant to the terms of this
Agreement, the "Target Date") for such respective items:
(a) Preliminary project approval for the Project by the District ("Preliminary
Project Approval");
(b) Review of Tenant Project Plan Application (as described in Section 4.4(a)) by
the District and City;
(c) All discretionary approvals and actions required to be taken by the County of
San Diego ("County"), District and/or City for construction of the Phase IA Infrastructure
Improvements, including the Developer's Phase I Infrastructure Improvements;
(d) All discretionary approvals and actions required to be taken by the County,
JEPA, District and/or City for the financing and disbursement of the Phase I A Infrastructure Costs as
provided for under the Plan of Finance;
(e) All discretionary approvals and actions required to be taken by the County,
District, City, or affiliated entities, as required for the formation of a community facilities district
("CFD") and enhanced infrastructure financing district ("EIFD"), if applicable;
(t) All discretionary approvals and actions to be taken by the District and/or City
for construction of the Hotel;
(g) All discretionary approvals and actions to be taken by the District and/or City
for construction of the Convention Center;
(h) All discretionary approvals and actions required to be taken by the District for
the approval of the Parking Improvements;
(i) All discretionary approvals and actions required to be taken by the City for
the approval of the City Infrastructure Improvements;
0) All discretionary approvals and actions to be taken by JEPA, the District
and/or City for financing and disbursement of the Project Public Investment as provided for under the
Plan of Finance;
(k) All discretionary approvals and actions to be taken by the District for
financing and disbursement of the Parking Improvements Costs, as provided for under the Plan of
Finance;
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Attachment A to Agenda File No. 2018-0070
(1) All discretionary approvals and actions to be taken by the City for financing
and disbursement of the City Infrastructure Improvements Costs as provided for under the Plan of
Finance;
(m) All discretionary approvals and actions to be taken by the District to issue a
Coastal Development Permit for the Project;
(n) Issuance by the City of grading and building permits for the construction of
the Project;
(o) BPC approval of, and authorization for the District's Executive Director or
her designee, on behalf of the District, to execute the Ground Lease or any amendments thereto, as
applicable;
(p) BPC approval of, and authorization for the District's Executive Director or
her designee, on behalf of the District, to execute the Convention Center Subleases (as applicable);
(q) BPC approval of, and authorization for the District's Executive Director or
her designee, on behalf of the District as a member of the JEPA, to execute the Convention Center
Subleases (as applicable);
(r) City Council approval of, and authorization for the City Manager, on behalf
of the City, to execute the applicable Convention Center Subleases;
(s) City Council approval of, and authorization for the City Manager, on behalf
of the City, as a member of the JEPA, to execute the applicable Convention Center Subleases;
(t) Approval of the location, design and cost of the public art as part of the final
plans submitted to the District for approval, as provided for in Section 4.1(c);
(u) All approvals and actions required to be taken by the District to authorize the
District's Executive Director or her designee, on behalf of the District, to execute the New S-I RV
Park Lease and authorize construction of the New S-l RV Park;
(v) All discretionary approvals and actions required to be taken by the State of
California, acting by and through the California State Lands Commission ("State Lands
Commission") for the New S-1 RV Park Lease and construction of the New S-1 RV Park;
(w) City Council approval of, and authorization for the City Manager, on behalf
of the City and on behalf of the City as a member of the JEPA, to execute all other documents and do
all acts necessary or convenient, to carry out the provisions of this Agreement and, subject to the
provisions of this Agreement and the Plan of Finance, the Convention Center Subleases (as
applicable), without the necessity for any further approval, authorization or action by the City
Council, except as provided under this Agreement;
(x) One or more approvals by BPC providing authorization for the District's
Executive Director or designee, on behalf of the District and on behalf of the District as a member of
the JEPA, to execute all documents and do all acts necessary or convenient to carry out the
provisions of this Agreement, the Ground Lease, the Convention Center Subleases, and other
requirements pertaining to the full implementation of the Project;
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Attachment A to Agenda File No. 2018-0070
(y) The District and Developer shall execute within 60 days of the Effective Date
an exclusive negotiating agreement with a term of one year from the Execution Date, concerning a
definitive agreement for the lease of up to 10 acres of Parcel H-23 that are closest to the Project Site,
for the development of up to 550 additional Rooms.
1.5 CEQA Compliance. The District prepared and certified, pursuant to CEQA and the
Guidelines for Implementation of the California Environmental Quality Act (California Code of
Regulations, Title 14, Section 15000, et seq.), the FEIR for the Project, which satisfies CEQA for
purposes of this Agreement and the Existing Approvals.
While no new or supplemental environmental approvals are contemplated, the Parties shall
cooperate with respect to any supplemental environmental documentation or approvals that may be
required for the Project.
The Developer understands and agrees that the District or City may require subsequent or
supplemental environmental review or other environmental analysis to implement the Project as
required by CEQA, the California Coastal Act and/or by changes in applicable local, state, federal
laws, including, without limitation, the applicable codes, ordinances, regulations and policies of the
City and the District(collectively, the "Laws").
1.6 Deposit.
(a) As security for the performance of the obligations of the Developer
hereunder, the Developer shall deliver to the District on or before the Target Date set forth in the
Schedule of Performance a deposit in the sum of ONE MILLION DOLLARS ($1,000,000)
("Deposit") which shall be in the form of either cash or an irrevocable standby letter of credit in a
form, and from a financial institution, acceptable to the District.
(b) The Deposit shall be retained by the District until such time as (i) the Ground
Lease has been executed, in which event the Deposit shall be made part of the deposit required under
the Ground Lease, and shall thereafter be governed by the terms of the Ground Lease, or (ii) this
Agreement is earlier terminated, at which time the remaining Deposit shall be returned to the
Developer in whole or in part, retained in whole or in part by the District and the City, or otherwise
applied in accordance with the provisions of Section 8.2.
II. IDENTITY OF PARTIES.
2.1 Developer.
(a) The Developer is RIDA CHULA VISTA, LLC, a Delaware limited liability
company. The Developer's only member and manager is Ira M. Mitzner. It is on the basis of the
qualifications and experience of the Developer and Ira M. Mitzner that the District and the City are
entering into this Agreement. Accordingly, the provisions of this Section 2.1 are deemed necessary
by the District and the City and are agreed to be reasonable by the Developer to assure the District
and the City that the purposes of this Agreement will be achieved.
(b) Subject to Section 2.I(c), during the Term:
(i) Except for any Permitted Transfers, the Developer shall not
voluntarily or involuntarily assign any interest in this Agreement or sell, convey or transfer, or permit
9
Attachment A to Agenda File No. 2018-0070
any of its members, to sell, convey or transfer any of such member's direct or indirect membership
interests in the Developer (each, a "Transfer") without the prior written consent of the District and
the City. The City and the District shall not unreasonably withhold, condition or delay their consent
to a Transfer proposed by Developer that requires their consent if all of the following conditions are
satisfied:
(A) Ira M. Mitzner will continue to Control (as defined below) the
Developer and will continue to hold, directly or indirectly, not less than ten percent 4,100 of the
membership interests in the Developer.
(B) Developer shall have disclosed to the City and District in
writing, each Person who will be a member of the Developer and each Person that will hold, directly
or indirectly, at least ten percent (10%) of the membership interests in the Developer as of the
effective date of such proposed Transfer.
(C) Developer shall provide documentation reasonably acceptable
to the City and the District that following the proposed Transfer, Developer shall have sufficient
financial resources for the Developer to perform its obligations under this Agreement and to achieve
the Close of Escrow, and to obtain financing in an amount sufficient to pay the Developer's Debt
Contribution.
(D) Developer shall provide documentation reasonably acceptable
to the City and the District that following the proposed Transfer, the Developer will continue to have
the commercial and real estate experience needed to perform the Developer's obligations under this
Agreement and the Ground Lease (including, without limitation, the ability to secure and maintain
the required Hotel brand and Operator and extensive experience financing and developing resort
hotel and convention center projects of a similar size and quality to the Resort Hotel and Convention
Center Project).
(E) The District and the City shall have reasonably determined
that each Unaffiliated Third Party (as defined below) that acquires ten percent (10%) or more of the
membership interests in the Developer is reputable (which shall mean the absence of reputations for
dishonesty, criminal conduct or association with criminal elements W "reputable" shall not mean
"prestigious", nor shall the determination of whether one is reputable involve considerations of
personal taste or preference), and has no history of, or reputation for, either discriminatory
employment practices which violate any Laws or non-compliance with applicable Environmental
Laws.
(F) Neither the transferee nor any Person with any direct or
indirect membership interest in the Developer shall be a Prohibited Person.
(G) Developer shall have provided to the District and the City an
outline of any change in the proposed corporate structure of the Developer, in writing, in a detailed
narrative and a visual organizational flow chart.
(ii) The Developer shall not permit or suffer to exist any Change of
Control (as hereinafter defined) without the prior written consent of the District and the City, which
may be given or withheld in the sole and absolute discretion of each of the District and the City.
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Attachment A to Agenda File No. 2018-0070
(iii) Except for any Permitted Transfers, the Developer shall prohibit each
of its members from voluntarily or involuntarily selling, conveying, or transferring any of such
member's direct or indirect membership interest in the Developer to any Person without the prior
written consent of the District and the City (which consent shall be given or withheld in the sole and
absolute discretion of the District and the City unless such Transfer satisfies the criteria of Section
2.1(b) in which case the City and the District's consent shall not be unreasonably withheld,
conditioned or delayed), and in no event to any Prohibited Person (as hereinafter defined).
Any purported Transfer in violation of this Section 2.1(b) shall be null and void, undone by
Developer at Developer's sole cost and expense, and not binding on the District or City.
(c) Upon written request by the Developer to the District and the City for consent
to a Transfer as required under Section 2.1(b), the District and the City shall mutually determine,
each in its reasonable discretion, within thirty (30) days following delivery of the Developer's
request and all information reasonably required by District and City to review the request, whether
the proposed Transfer as of the effective date of the proposed Transfer, meets the qualifications set
forth in Section 2.1(b).
(d) The Developer shall deliver to the District and the City all agreements and all
certified documents evidencing the formation, existence, and good standing of the Developer (with
all information regarding distributions, including any definitions primarily related thereto, redacted),
for review by the District and the City for consistency with the provisions of this Agreement. Each
of the District and the City may request updates to such documents and/or agreements from time to
time during the Term and Developer shall deliver such updates within thirty (30) days of District's or
City's notice to Developer.
(e) The Developer represents and warrants to the District and the City that it has
disclosed to the District and the City each of its members, each Person that holds, directly or
indirectly, at least ten percent (10`0) of the membership interests in the Developer, and each Person
that Controls the Developer.
(f) For purposes of this Section 2.1, the following definitions shall apply:
(i) "Change of Control" means a merger, consolidation, recapitalization
or reorganization of the Developer or other transaction or an amendment to any governing document
of the Developer that results in any Unaffiliated Third Party having the ability to Control the
Developer.
(ii) "Unaffiliated Third Party" means any Person that is not Ira M.
Mitzner or is not Controlled by Ira M. Mitzner.
(iii) "Person" means a natural person, whether acting for himself or
herself, or in a representative capacity, a partnership, a corporation, a limited liability company, a
governmental authority, a trust, an unincorporated organization or any other legal entity of any kind.
(iv) "Control" means with respect to any Person (the "Controlling
Person") the power to both (A) direct or cause the direction of the management or policies of another
Person (the "Controlled Person"), whether through the ownership of voting equity, by contract or
otherwise; and (B) maintain active and direct control and supervision of the operations of Developer,
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Attachment A to Agenda File No. 2018-0070
including without limitation, the day to day operations of the Project; provided, however, that a
contractual or other requirement that a Controlling Person obtain the consent or approval of one or
more other Persons as a condition to undertaking a Major Decision shall not affect whether such
Controlling Person Controls such Controlled Person. "Controls", "Controlled" and "Controlling"
shall have correlative meanings to "Control".
(v) "Ma'or Decisions" means, with respect to any Person, any decision
that is of the type that requires the consent or approval of such Person's non-managing members,
limited partners or minority shareholders, which may include by way of example, any decision to (A)
enter into any financing or incur, assume or guarantee any indebtedness that has not been previously
approved in an approved budget or operating plan; (B) enter into or terminate or amend any material
agreement; (C) merge, liquidate, sell, restructure, consolidate, recapitalize, reorganize, wind up, or
dissolve the Person; (D) authorize or declare voluntary bankruptcy, assignment for benefit of
creditors, acceleration of third-party obligations, confession of judgment, reorganization or any other
similar insolvency action involving the Person or make any filing in connection therewith; (E) make
any material changes to the Project; (F) terminate or amend this Agreement; (G) purchase insurance
except as required by this Agreement or the Ground Lease; (H) sell or transfer any asset of the
Person; (I) approve any budget or operating plan; (J) amend any of the organizational documents of
the Person; (K) issue, redeem, repurchase or cancel equity or other ownership interests in the Person
(or any rights, warrants or options to acquire the foregoing); (L) make changes to the governing body
of the Person; (M) declare or pay any distributions; (N) engage in new lines of business; (0) make
capital expenditures or similar expenditures except as required in an approved capital budget; (P)
make or change tax elections or accounting methodologies; or (Q) undertake an initial public
offering of securities.
(vi) "Permitted Transfer" means the following Transfers, provided that
there is no Change of Control as a result of such transfer: (A) any Transfer of not more than five
percent (5%) of direct or indirect membership interests in the Developer to any Affiliated Transferee
(as defined below) that is not a Prohibited Person; (B) if by a natural person, any Transfer upon the
death of such person by will or other instrument taking effect upon such death or by applicable laws
of descent and distribution to such person's estate and executors and then to such person's heirs; or
(C) if by a natural person, any Transfer made in connection with the dissolution of the transferee's
marriage or the legal separation of the transferee and his or her spouse on the account of any
settlement of any community property or other marital property rights such spouse may have in any
membership interests in the Developer.
(vii) "Prohibited Person" means any Person (A) named as a "Specifically
Designated National and Blocked Person" ("SDN") on the most current list published by the U.S.
Department of the Treasury Office of Foreign Assets Control at its official website or any
replacement website or other replacement official publication of such list or (B) that is Controlled by
an SDN.
(viii) "Affiliated Transferee" means, with respect to any Transfer, any of
the following: (A) each sibling of the transferor, the spouse of the transferor, and each parent, child,
grandchild or great-grandchild of the transferor (including relatives by marriage); (B) any trust for
the benefit of the transferor or any of the foregoing members of his or her family; (C) where the
transferor is a trust, any beneficiary of the trust or any of the foregoing family members of a
beneficiary of the trust, or any other trust established for the benefit of any of the foregoing; and (D)
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Attachment A to Agenda File No. 2018-0070
each Person that Controls, is Controlled by, or is under common Control of, the transferor or any of
the foregoing Persons.
In addition, for purposes of this Section 2.1, the quantum of a Person's indirect ownership in
any other Person is calculated as the percentage of the proportional ownership interest at each level.
As an example, if Person A owns a 50% interest in Person B and Person B owns a 50% interest in
Person C, then Person A would be deemed to have a 25% indirect ownership interest in Person C.
2.2 District. The District is the San Diego Unified Port District, a public corporation
created by the legislature in 1962 pursuant to California Harbors and Navigation Code
APPENDIX 1, Section I et seq.
2.3 City. The City is the City of Chula Vista, a charter city and municipal corporation.
2.4 Notices.
(a) To Developer. Notices to the Developer shall be given or served by
(a) recognized national overnight delivery service, or (b) facsimile with a confirmed receipt of such
transmittal, provided a copy of such facsimile notice is also sent by mail, as provided below, or
(c) first-class mail or certified mail, return receipt requested, addressed as follows, or to such other
address(es) as the Developer may from time to time designate by notice to the other Parties:
RIDA Chula Vista, LLC
1777 Walker Street, Suite 501
Houston, Texas 77010
Attention: Ira Mitzner
With copy to:
RIDA Chula Vista, LLC
1777 Walker Street, Suite 501
Houston,Texas 77010
Attention: Legal Department
and
Latham & Watkins
12670 High Bluff Drive
San Diego, CA 92130
Attention: Steven Levine
(b) To District. Notices to the District shall be given or served by (a) recognized
national overnight delivery service, or (b) facsimile with a confirmed receipt of such transmittal,
provided a copy of such facsimile notice is also sent by mail, as provided below, or (c) first-class
mail or certified mail, return receipt requested, to the following address, or to such other address(es)
as the District may from time to time designate by notice to the other Parties:
1,
Attachment A to Agenda File No. 2018-0070
Executive Director
San Diego Unified Port District
Administration Building
3165 Pacific Highway
San Diego, California 92101-1128
(Mailing Address: P.O. Box 120488
San Diego, California 92112-0488)
With copy to:
Assistant Vice President, Real Estate
San Diego Unified Port District
Administration Building
3165 Pacific Highway
San Diego, California 92101-1128
(Mailing Address: P.O. Box 120488
San Diego, California 92112-0488)
With a copy to:
Port Attorney
San Diego Unified Port District
3165 Pacific Highway
San Diego, California 92101-1128
(Mailing Address: P.O. Box 120488
San Diego, California 92112-0488)
(c) To City. Notices to the City shall be given or served by (a) recognized
national overnight delivery service, or (b) facsimile with a confirmed receipt of such transmittal,
provided a copy of such facsimile notice is also sent by mail, as provided below, or (c) first-class
mail or certified mail, return receipt requested, at the following address, or to such other address(es)
as the City may from time to time designate by notice to the other Parties:
City of Chula Vista
Attention: City Manager
276 Fourth Avenue
Chula Vista,California 91910
With a copy to:
City Attorney
City of Chula Vista
276 Fourth Avenue
Chula Vista, California 91910
(d) To JEPA. Notices to the ]EPA shall be given or served by (a) recognized
national overnight delivery service, or (b) facsimile with a confirmed receipt of such transmittal,
provided a copy of such facsimile notice is also sent by mail, as provided below, or (c) first-class
mail or certified mail, return receipt requested, at the following address, or to such other address(es)
as the JEPA may from time to time designate by notice to the other Parties:
14
Attachment A to Agenda File No. 2018-0070
To the Citv:
City of Chula Vista
Attention: City Manager
276 Fourth Avenue
Chula Vista, California 91910
With a copy to:
City Attorney
City of Chula Vista
276 Fourth Avenue
Chula Vista, California 91910
To the District:
Executive Director
San Diego Unified Port District
Administration Building
3165 Pacific Highway
San Diego, California 92101-1128
(Mailing Address: P.O. Box 120488
San Diego, California 92112-0488)
With copy to:
Assistant Vice President, Real Estate
San Diego Unified Port District
Administration Building
3165 Pacific Highway
San Diego, California 92101-1 128
(Mailing Address: P.O. Box 120488
San Diego, California 92112-0488)
With a copy to:
Port Attorney
San Diego Unified Port District
3165 Pacific Highway
San Diego, California 92101-1128
(Mailing Address: P.O. Box 120488
San Diego, California 92112-0488)
(e) Forms of Delivery. Facsimile notice shall be deemed given on the date set
forth in the sender's confirmation notice; overnight delivery notice shall be deemed given the next
business day from when sent; and mailed notice shall be deemed to have been given or served, if
mailed by first class mail, on the third business day from when mailed, and, if by certified mail, on
the date set forth in the return receipt.
1
Attachment A to Agenda File No. 2018-0070
III. TERM.
3.1 Term. The term of this Agreement shall commence on the Execution Date and shall
expire on the earlier of the Closing Date and the Early Expiration Date (the "Term"). The "Early
Expiration Date" will occur on the fourth anniversary of this Agreement (subject to extensions as
provided below). Upon written request from the Developer, the District and City may
administratively extend the Early Expiration Date up to three (3) times (each, an "Extension"), for a
period of one (l) year for each such Extension ("Extension Period"), for a total possible term of
seven (7) years, in accordance with the following terms:
(a) Developer delivers notice to the District and City no later than sixty (60) days
prior to the Early Expiration Date or no later than forty-five (45) days prior to the expiration of an
Extension Period, as applicable, of its request to extend the Early Expiration Date, together with
written evidence that the following conditions precedent have been satisfied or requesting that some
or all of the conditions precedent be waived or the time for satisfying such condition(s) precedent be
extended by the District and City:
(i) The Developer shall have obtained approval of Schematic Plans and
Building Permit Application Drawings as required by this Agreement and shall have obtained, or be
diligently working to obtain, approvals of Building Permits in accordance with this Agreement; and
(ii) The Developer shall have completed its Due Diligence Investigations
of the Project Site and delivered to the District its notice that Developer accepts the conditions of the
Project Site as set forth in Section 5.8 or shall have made substantial effort towards completing its
Due Diligence Investigations and shall report to the District and City steps taken to complete its Due
Diligence Investigations; and
(iii) The Developer shall have submitted to the District and City for their
review and approval a current design and construction schedule for the Developer's Improvements.
(b) Administrative staff-level approval of any Extension by the District and City
shall be conditioned upon, and shall be granted if (i) the Parties have completed a Periodic Review,
after the Extension request, as provided in Section 5.1, and District staff and City staff have
determined that the Project continues to be feasible and practicable (taking into consideration the
written evidence that the Developer has provided pursuant to Section 3.1(a) and the proposed
Extension), (ii) District staff and City staff have determined that no Developer Event of Default has
occurred and is continuing, (iii) District staff and City staff have determined that each of the Parties
is diligently proceeding in good faith to complete their respective obligations under this Agreement
for development of the Project, and (iv) District staff and City staff have determined that any such
Extension will be beneficial to the Parties.
(c) Upon receipt of notice of Extension in accordance with Section 3.1(a) which
requests the waiver of, or an extension of time to satisfy, any of the conditions precedent set forth in
Section 3.1(a) to achieve such Extension, the Parties shall meet and confer in good faith to determine
(i) if such waiver or extension would still make it feasible or practicable to proceed with the Project;
and (ii) how much additional time is required to satisfy the applicable conditions precedent for such
Extension. If it is determined by the Parties that it is feasible and practicable to proceed with the
Project and if the conditions precedent set forth in Section 3.1(b) have been satisfied, then the
District and the City shall extend the time period to satisfy the applicable condition(s) precedent. If it
16
Attachment A to Agenda File No. 2018-0070
is determined by any Party that it is not feasible or practicable to proceed with the Project, then any
Party may terminate this Agreement in accordance with Section 5.1 and Article VIII.
Notwithstanding any such waivers or Extensions granted pursuant to this Section 3.1, this Agreement
shall terminate upon an Event of Termination as provided in Section 8.1.
IV. DESIGN AND DEVELOPMENT OF PROJECT.
4.1 Design and Development of the Project.
(a) The Project, other than the Phase IA Infrastructure Improvements (to the
extent designed by the District pursuant to Section 4.4(b)), the Remaining Phase IA Infrastructure
Improvements and the City Infrastructure Improvements, shall be designed by the Developer in
accordance with the Scope of Development, the Preliminary Project Approval and this Agreement.
(b) The final designs and plans for the Developer's Private Improvements and the
Convention Center shall be attached to the Ground Lease.
(c) The Developer shall comply with all Laws applicable to the Project,
including, without limitation, BPC Policy Nos. 357 ("Approval of Tenant Project Plans") and 608
(the "Public Arts Policy'). The Building Permit Application Drawings submitted to the District for
approval shall include the location, type and cost of the public art required pursuant to the Public
Arts Policy; provided that the Developer's contribution to the total costs of the public art shall be
equal to one percent (1%) of the estimated Hard Construction Costs of the Developer's Private
Improvements.
(d) The Developer shall comply with all Laws applicable to the development and
construction of the Developer's Private Improvements.
(e) The Developer shall comply with all Laws applicable to the development and
construction of the Developer's Public Improvements and, if applicable, the Parking Improvements.
(f) The Developer shall pay when due all fees pertaining to the review and
approval of the Developer's Improvements and, if applicable, the Parking Improvements, that are
lawfully required by any government agency, including, without limitation, the District and the City,
and by any public utility. The Developer shall endeavor to obtain, prior to the commencement of
construction of the Developer's Improvements and, if applicable, the Parking Improvements, any and
all governmental approvals and permits that are required for commencement of such construction and
any and all discretionary governmental approvals and permits that are required for completion of the
Developer's Improvements and, if applicable, the Parking Improvements.
(g) Subject to Sections 4.8(c) and 4.8(d), the Developer, the District and the City,
as applicable, shall cooperate to identify, design and obtain approvals and permits, as necessary, for
the relocation and/or abandonment of any easements or rights of way and their related termination
and related modification of record from title to the Project Site, as may be necessary for the
construction of any of the Developer's Public Improvements and, if applicable, the Parking
Improvements.
(h) The design and development of the Project by the Developer pursuant to this
Agreement shall provide for continuous vehicular access and utility service to surrounding
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Attachment A to Agenda File No. 2018-0070
properties, including, but not limited to, the leaseholds of Marine Group Boat Works LLC, Chula
Vista Marina/RV Park, Ltd., Rohr, Inc., a United Technologies Aerospace Systems Company
("Rohr") and California Yacht Marina-Chula Vista, LLC., to the satisfaction of the District and City.
Vehicular and pedestrian access and utility service to all or portions of Bayside Park shall be
maintained to the extent practicable.
4.2 City Infrastructure Improvements.
(a) The City shall prepare, or cause the preparation of, preliminary and final
construction plans and documents for the City Infrastructure Improvements as set forth in the Scope
of Development on or before the Target Date set forth in the Schedule of Performance.
(b) The District and the City shall cause the Remaining Phase IA Infrastructure
Improvements to be completed in a manner that will not result in a delay to the Developer obtaining
a temporary certificate of occupancy for, or the opening for business of, the Developer's
Improvements. The City shall cause a sewage substation, that is compatible with a hotel with 1,600
rooms and meeting space comparable to the meeting space at the Convention Center and other uses
contemplated at the Project, as applicable, to be completed not later than twelve (12) months after the
Closing Date.
4.3 Design of Surface Parking and Parking Improvements. Developer shall prepare,
or cause the preparation of, the design of the surface parking improvements to be located on Parcel
H-23 ("Surface Parking") in accordance with Section 4.4. If and to the extent that the District elects
to fund the construction of the Parking Improvements and notifies the Developer thereof, each
subject to Section 4.7(e), then the Developer shall prepare, or cause the preparation of, the design of
the Parking Improvements in accordance with Section 4.4. If the District does not elect to fund the
Parking Improvements and notifies the Developer thereof, each in accordance with Section 4.7(e),
then the Developer shall prepare, or cause preparation of, the Schematic Plans for the Parking
Improvements in accordance with Section 4.4(a)(i) and shall have the right to elect to prepare, or
cause the preparation of, the Building Permit Application Drawings of the Parking Improvements at
its sole and absolute discretion.
4.4 Submission and Approval of Schematic Plans and Building Permit Application
Drawings.
(a) On or before the Target Date set forth in the Schedule of Performance, the
Developer shall have submitted or shall submit for approval to the District a tenant project plan
application pursuant to BPC Policy No. 357 ("Tenant Project Plan Application") for the Developer's
Improvements, the Surface Parking and the Parking Improvements. Subsequently, the Developer
shall submit (x) to the District, Schematic Plans for the Developer's Improvements, the Surface
Parking and the Parking Improvements and Building Permit Application Drawings for the
Developer's Improvements in accordance with clauses (i) and (ii) below, respectively, and (y) to the
City, Building Permit Application Drawings for the Developer's Improvements in accordance with
clause (iii) below.
(i) Schematic Plans: On or before the Target Date set forth in the
Schedule of Performance, Developer shall submit to the District, for approval as part of a Tenant
Project Plan Application, three (3) hardcopies and an electronic version (pdf) of "Schematic Plans"
for development of the Developer's Improvements, the Surface Parking and the Parking
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Attachment A to Agenda File No. 2018-0070
Improvements (each, "Schematic Plans Set" and, collectively, "Schematic Plans Sets")
demonstrating conformance with applicable mitigation measures in the FEIR, Port Master Plan,
Chula Vista Bayfront Development Policies and Public Access Program, the Settlement Agreement
and the California Coastal Act. Each Schematic Plans Set shall be prepared by an architect or an
engineer licensed in the State of California and shall include, as applicable, the following:
(l) A detailed dimensional site plan drawn to scale showing all of the
Developer's Improvements or the Parking Improvements planned to be
constructed on the Project Site, including buildings, vehicle and pedestrian
circulation, surface parking areas, outdoor improvements including hardscape
and furniture, public access and amenities, and existing and proposed utilities.
Such site plan shall include the location of all existing and proposed
easements and how they will be accommodated, location of all existing and
proposed utilities, site drainage and stormwater plans, site grading plan, grade
elevations of all structures, proposed site work, and site horizontal
(coordinate) and vertical control drawings with a benchmark reference.
(2) Floor and roof plans, elevations, and sections of all structures, and
mechanical design measures to ensure adequate indoor air quality.
(3) Exterior lighting plan (building and site) indicating required shielding.
(4) Exterior public wayfinding signage necessary to obtain a CDP.
(5) Landscape and fencing development plans with plant material list and
estimated mature heights.
(6) Preliminary sustainable materials and energy conservation systems.
(7) Complete outline specifications to cover all phases of the work.
(8) A detailed description of improvements and methods of operation.
(9) A general outline specification indicating materials and methods of
construction.
(10) Civil plans including grading plan, drainage study and soil study reports.
(1 1) Stormwater Quality Management Plan.
(12) Exterior color schemes and materials.
Each Schematic Plans Set will include a soils and/or foundation report of a scope
commensurate with the Developer's Improvements or the Parking Improvements, as applicable,
planned for the Project Site prepared by a licensed soils consultant.
District staff shall comment on each Schematic Plans Set and deliver a copy of such
comments to the Developer within twenty (20) business days following submittal of such Schematic
Plans Set by the Developer. The District, the City and the Developer shall reasonably cooperate to
obtain comments on required portions of each Schematic Plans Set from the Wildlife Advisory
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Attachment A to Agenda File No. 2018-0070
Group, Bayfront Cultural and Design Committee, and the District's Accessible Advisory Committee.
At the District's sole discretion, each Schematic Plans Set or any portion thereof may be presented to
the BPC for "Preliminary Project Review". If the BPC reviews a Schematic Plan Set or any portion
thereof, and directs District staff to further review or revise such Schematic Plan Set, then the District
shall comment on such Schematic Plans Set based on the BPC's direction and deliver a copy of such
comments to the Developer within sixty(60) days following submittal of such Schematic Plans Set
by the Developer. Within thirty (30) business days after the District delivers a copy of its comments
on such Schematic Plans Set, Developer shall correct factual errors in such Schematic Plans Set and
consider modifications to such Schematic Plans Set proposed by the District, and the Developer shall
resubmit such Schematic Plans Set to the District for review and approval. Inspection, review,
approval or comment by the District with respect to any of the Schematic Plans shall not in any way
affect or reduce the Developer's obligations under this Agreement or be deemed to be a warranty or
acceptance by the District with respect to such Schematic Plans; it being understood that the District
is relying upon the Developer for designing and engineering the Developer's Improvements (except
for the Schematic Plans for the development of Phase IA Infrastructure Improvements that the
District shall submit to the Developer in accordance with Section 4.4(b)), the Surface Parking and the
Parking Improvements in accordance with this Agreement. Within ten (10) business days after the
Developer receives a "Tenant Construction Project Number" or "District Project Engineering Work
Order Number", whichever is the latest, from the District, the Developer shall submit an application
for approval of a Coastal Development Permit ("CDP") to the District with all required supplemental
information pursuant to the District's certified CDP regulations.
(ii) Building Permit Application Drawings: On or before the Target
Date set forth in the Schedule of Performance, Developer shall submit to District for approval by the
District, six (6) hardcopies and electronic version (pdf) of "Building Permit Application Drawings"
for development of the Developer's, Improvements. Building Permit Application Drawings shall be
prepared by an architect or engineer, as appropriate, licensed to do business in the State of California,
and shall consist of the following:
(1) Complete architectural, civil, structural, mechanical, electrical, plumbing,
utility layout, landscaping and irrigation, fencing, public access and
amenities, lighting, stormwater and site horizontal (coordinate) and vertical
control plans included in the civil drawings.
(2) Complete specifications, materials, and color list, and engineering
calculations for all improvements.
(3) Draft construction contract form.
(4) Draft construction schedule.
(5) A detailed final construction cost estimate of all of the Developer's
Improvements, with indirect costs, furniture, fixtures and equipment
separately identified.
The Building Permit Application Drawings are also known as the Tenant Project Plans. The
District shall review the Building Permit Application Drawings only to confirm that they are in
substantial conformance to the Schematic Plans approved by the District and the CDP. The District
shall approve or comment on the Building Permit Application Drawings within twenty (20) business
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Attachment A to Agenda File No. 2018-0070
days following submittal thereof. Within twenty (20) business days after the District comments on
the Building Permit Application Drawings, Developer shall correct factual errors in the Building
Permit Application Drawings and consider modifications to the Building Permit Application
Drawings proposed by the District, and the Developer shall resubmit the Building Permit Application
Drawings to the District for review and approval. Inspection, review, approval or comment by the
District with respect to any of the Building Permit Application Drawings shall not in any way affect
or reduce the Developer's obligations under this Agreement or be deemed to be a warranty or
acceptance by the District with respect to such Building Permit Application Drawings; it being
understood that the District is relying upon the Developer for designing and engineering the
Developer's Improvements (except for the Schematic Plans for the development of Phase IA
Infrastructure Improvements that the District shall submit to the Developer in accordance with
Section 4.4(b)) in accordance with this Agreement. The Parties understand that the Developer may
submit the Building Permit Application Drawings in multiple phases.
(iii) Building Permits: After the District has approved the Building
Permit Application Drawings, the Developer shall submit such Building Permit Application
Drawings to the City for the City's review and approval and the City's issuance of final and complete
building permits that are required to commence the construction of the Developer's Improvements
("Building Permits"). All standard City fees with respect to the issuance of the Building Permits will
apply and shall be paid by the Developer. After the City's approval of the Building Permit
Application Drawings, the Developer shall submit the final signed Building Permit Application
Drawings for the Phase IA Infrastructure Improvements to the District for the BPC's adoption of
such Building Permit Application Drawings.
(b) Subject to Sections 4.8(c) and 4.8(d), on or before the Target Date set forth
in the Schedule of Performance, the District shall submit to the Developer three (3) hardcopies,
native digital files in computer-aided design (CAD) and electronic version (pdf) of "Schematic
Plans" for development of the Phase I A Infrastructure Improvements (other than Schematic Plans for
development of Harbor Park which the District shall submit to the Developer on or before the
corresponding Target Date set forth in the Schedule of Performance). Such Schematic Plans shall be
completed by, or on behalf of, the District to the extent sufficient to achieve approval of the CDP.
The Developer shall complete such Schematic Plans to fifty percent (50%) completion and shall
submit such 50% completed plans, together with Development Cost estimates for the Phase 1 A
Infrastructure Improvements as set forth in Section 4.4(c), to the District, for the District's approval,
in accordance with Section 4.4(a)(i). The Developer shall submit to the District, for the District's
approval, Building Permit Application Drawings for the Phase IA Infrastructure Improvements in
accordance with Section 4.4(a)(ii).
(c) With each submission of Schematic Plans and the Building Permit
Application Drawings pursuant to this Section 4.4, the Developer shall submit to the District
Development Cost estimates for such portion of the Developer's Improvements and, if applicable, the
Parking Improvements, prepared by Developer, Developer's general contractor or a qualified cost
estimator in such detail as warranted by the extent of detail and completeness of the Schematic Plans
and Building Permit Application Drawings submitted to the District. Such Development Cost
estimates shall be prepared in good faith and shall reflect the reasonable judgment of the Developer
regarding such estimates. The Parties acknowledge that such estimates are estimates only and that
final Development Costs may differ from the previously provided estimates. Whenever this
Agreement requires the Developer to submit Development Cost estimates for such portion of
Developer's Improvements and, if applicable, the Parking Improvements, a separate Development
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Attachment A to Agenda File No. 2018-0070
Cost estimate shall be prepared for each major category of such portion of the Developer's
Improvements, including the Developer's Private Improvements, the Convention Center and the
Developer's Phase IA Infrastructure Improvements (each, a "Major Component of Developer's
Improvements") and, if applicable, the Parking Improvements.
(d) Common costs shall be reasonably and equitably allocated between the
Developer's Private Improvements and the Convention Center, generally consistently with the
allocation of such common costs set forth in the Form of Developer's Private Improvements and
Convention Center Budget attached hereto as Attachment No. 7, and such allocations shall be subject
to review and approval by the District and City. All such common costs of the Developer's Private
Improvements and the Convention Center shall be tracked and allocated so as to properly distinguish
common cost allocations between the Developer's Private Improvements and the Convention Center
for purposes of complying with public finance requirements.
4.5 Agreement on Total Project Costs.
(a) "Hard Construction Costs" shall mean, with respect to any component of the
Project, all costs that the Developer is required to pay to the respective construction contractor for the
construction of such component of the Project under the construction agreement for such component
of the Project.
(b) Not later than thirty (30) days following Developer submission of the Tenant
Project Plans, the Developer shall submit final estimates of the total Development Costs of the
Developer's Improvements, including the items set forth in Section 4.5(d).
(c) Following receipt of the Developer's final estimates of the Development
Costs of the Developer's Improvements pursuant to Section 4.5(b), the District and City shall
promptly review such Development Cost estimates and may elect to have their own construction cost
estimator separately estimate the Development Costs of the Developer's Improvements and allocated
items thereof to the Developer's Private Improvements and the Developer's Public Improvements,
taking into consideration the prices received from contractors by the Developer. The final estimates
of the Development Costs for the Developer's Improvements which are either (i) reviewed and
consented to by the District and City as submitted by the Developer in accordance with
Section 4.5(b) or (ii) agreed by the District, the City and the Developer, are herein referred to as the
"Total Project Costs".
(d) As to each Major Component of Developer's Improvements, such estimates
shall include an estimate for all Development Costs in connection with such Major Component of
Developer's Improvements. "Development Costs" shall mean, with respect to any component of the
Project, (i) the costs of the entire design, architectural work, engineering work, development work
and construction work and (ii) contingency which shall, except with respect to the Hotel, be in an
amount equal to ten percent (10%) of the sum of the costs set forth in clause (i). Development Costs
shall include, without limitation, costs of site preparation, soils testing, foundations, excavation costs,
landscaping, sprinklers, utilities (vaulting or relocation as deemed necessary by the District and City,
installation and connection), elevators, stairways, equipment, furnishings, fixtures and equipment,
striping and signs, compliance with special conditions, construction supervision, and that portion of
payments reasonably attributable to each element of the Developer's Improvements for architectural,
engineering, design consulting, construction liability and other insurance, including insurance
required under Article IV and each of the applicable Closing Documents, labor and materials and
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Attachment A to Agenda File No. 2018-0070
performance bonds, title insurance services, City development and Building Permit fees, other
project permitting costs, contingency, and all other related costs required under this Agreement.
(e)i In the event that at any time the estimated amounts of the Total Project Costs
allocated to the Developer's Public Improvements exceed the amount estimated in the Conceptual
Outline of JEPA Plan of Finance or the Plan of Finance, the Parties shall meet and confer in
accordance with Section 5.1.
(f) The Developer, City and District shall determine the Total Project Costs
pursuant to this Section 4.5 at the earliest possible time and, in any event, within sixty (60) days
following the Developer's submission of the final estimates of the Development Costs of the
Developer's Improvements pursuant to Section 4.5(b).
(g) The Developer shall submit executed guaranteed maximum price construction
contracts or fixed price construction contracts, as applicable, with respect to the Developer's
Improvements, based on signed bids from Developer's contractors and subcontractors (if applicable),
other than bids with respect to the Convention Center, for the construction of the Developer's
Improvements (all of which shall be provided to the District and City) on or before the Target Date
set forth in the Schedule of Performance. Each such contract will name the District and the City, as
applicable, as an intended third-party beneficiary. The Developer shall provide drafts of such
contracts to the District and the City, as applicable, for the District's and the City's review and
comment before execution, in which case the District and the City, as applicable, shall promptly
provide to the Developer any comments thereto.
4.6 No Developer's Obligation to Construct the Developer's Improvements Surface
Parking or Parking Improvements. The Developer shall have no responsibility for the
construction of any of the Developer's Improvements, Surface Parking or the Parking Improvements
unless and until the Close of Escrow occurs.
4.7 District and City Financial Contribution.
(a) The District and the City shall use good faith, commercially reasonable
efforts to provide certain financial contributions to the design, development and construction of the
Project and other activities, including the Public Improvements Costs, as provided in and subject to
the Plan of Finance, the Financing Agreement, and the Scope of Development ("Public Fund
Contribution"). The scope of, and limitations on, the District and City's obligations to provide the
Public Fund Contribution shall be set forth in the Plan and Finance. The Parties acknowledge that a
condition precedent to the issuance of bonds to fund any portion of the Public Fund Contribution
("Bond Financing") shall be the completion, on or prior to the applicable Target Date set forth in the
Schedule of Performance, of "Review of Underwriter's Updated Projections" and the receipt by
JEPA, City and District of a final, non-appealable judgment in the Validation Action finding in favor
of the JEPA, City and District on all points, among other conditions precedent to such Bond
Financing. If the District or the City determines in its good faith, reasonable discretion that it will
not be able to secure such Bond Financing before or at Close of Escrow, then it shall meet and confer
with the other Parties to attempt to identify mutually acceptable alternative forms of financing for the
Public Fund Contribution pursuant to Section 5.1.
(b) The Public Fund Contribution and Equity Investor Contribution shall be
disbursed pari passe for the benefit of the Project.
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Attachment A to Agenda File No. 2018-0070
(c) The District and the City shall reimburse the Developer in cash for any and
all funds expended prior to the Close of Escrow by the Developer in connection with design,
architectural work, and engineering work for the Developer's Phase I Infrastructure Improvements
and the Parking Improvements as set forth in the Scope of Development, other than the amounts that
have been paid to Developer pursuant to Section 4.8(e), from the first disbursement of the Public
Fund Contribution pursuant to the Construction Loan Account Instructions.
(d) The Developer acknowledges that the City and District have made no
representation that the terms and provisions of this Agreement and form of Ground Lease are
consistent with or sufficient to enable the City, District or JEPA to finance the Public Fund
Contribution.
(e) The District shall have the right to elect to fund the construction of the
Parking Improvements, which, if so elected by the District, would be designed and constructed by
Developer and financed by the District in an amount not to exceed the Parking Improvements Costs.
4.8 Expenditures Prior to the Close of Escrow.
(a) The District and City shall be solely responsible for all of the costs of
completing the Schematic Plans for development of the Phase 1 A Infrastructure Improvements to the
extent sufficient to achieve approval of the CDP ("Pre-Close Res onsibilit Costs").
(b) The District may elect in its sole and absolute discretion to perform some of
the Project Site preparation work, as set forth in Exhibit I to the Scope of Development, prior to the
Close of Escrow, but only as it relates to the import of soil to the Project Site ("Preliminary
Preparation"). If the District elects to import soil to the Project Site as part of the Preliminary Site
Preparation, then the District shall import soil that is of quality not worse than the quality of soil set
forth on Attachment No. 8 attached hereto and incorporated herein by reference. The Ground Lease
will provide that the District will pay TEN MILLION DOLLARS ($10,000,000) (the "Preliminary
Site Preparation Amount") to the Developer for certain costs in connection with the Preliminary Site
Preparation; provided, however, that (i) if the District imports 130,000 cubic yards of soil to the
Project Site in accordance with this Section 4.8(b) prior to the Close of Escrow, then the Preliminary
Site Preparation Amount will be reduced to SIX MILLION DOLLARS ($6,000,000) or (ii) if the
District imports soil to the Project Site in accordance with this Section 4.8(b) in an amount less than
130,000 cubic yards, then the Preliminary Site Preparation Amount will be reduced to equal to the
difference of(1) $10,000,000 minus (2) $30.77 per cubic yard of soil that the District delivers to the
Project Site in accordance with this Section 4.8(b).
(c) It shall be the sole responsibility of the District and City, at the sole expense
of the District and City, to investigate and determine access and utilities, identify approvals, as
necessary, for the relocation and/or abandonment of any easements or rights of way, and their related
termination and related modification of record from title to the Project Site, as may be necessary for
the construction of the Developer's Improvements and the Parking Improvements, and to specify by
when the District and the City will complete the relocation and/or abandonment of each such
easement and right of way and their related termination and related modification of record, as
applicable, for the construction of the Developer's Improvements and the Parking Improvements
(collectively, "Easement Findings'), in each case on or before the Target Date set forth in the
Schedule of Performance and, to the extent necessary, to include such Easement Findings with
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Attachment A to Agenda File No. 2018-0070
respect thereto in the Schematic Plans for development of the Phase I Infrastructure Improvements
submitted to the Developer in accordance with Section 4.4(b).
(d) The Developer shall have sixty (60) days after receipt of the Easement
Findings to provide written comments thereto to District and City. If the District or the City
disagrees with any of the comments to the Easement Findings provided by the Developer, then the
Parties shall meet and confer in accordance with Section 5.1. If the District and the City agree with
all of the comments to the Easement Findings provided by the Developer or if the Parties reach an
agreement on the Easement Findings pursuant to Section 5.1, then it shall be the sole responsibility
of the District and the City, at the sole expense of the District and the City, to relocate and/or
abandon, terminate and remove of record from title 4) the Project Site each of the easements and
rights of way identified in such Easement Findings by the corresponding date set forth in such
Easement Findings (as modified to refect such comments or agreement).
(e) The District and the City shall reimburse the Developer in cash for any and
all funds expended prior to the Close of Escrow by the Developer in connection with design,
architectural work, and engineering work for the Developer's Phase I A Infrastructure Improvements
as set forth in Scope of Development, prior to the Close of Escrow in accordance with, to the extent
applicable, Chula Vista Municipal Code 2.56.160.1-1, including the reimbursement procedure set forth
therein, and any applicable agreements implementing Chula Vista Municipal Code 2.56.160.H.
4.9 Inspection of Records. In addition to requirements imposed elsewhere in this
Agreement, requirements of the financing of the Public Improvements Costs, and other applicable
Laws, including the PWL, the Developer shall use commercially reasonable efforts to keep and use
commercially reasonable efforts to maintain, and shall require the Developer's general contractor
(the "General Contractor"), subcontractors and materialmen to keep and maintain, for a period of
seven (7) years after the date such record was created (or such longer period that the Developer may
decide in its sole discretion), all records, books, correspondence, receipts, vouchers and similar items
relating to the construction of the Developer's Improvements, together with the originals of all
contracts and purchase orders and any related warranties or guarantees relating to such construction.
The District, City and their agents and representatives shall have the right to access all such records,
books, correspondence, receipts, vouchers and similar items during regular business hours on
business days or at other reasonable times within the boundaries of San Diego County; provided that
the District or City, as applicable, shall have given the Developer at least three (3) business days'
prior notice thereof. Developer shall use commercially reasonable efforts to keep and use
commercially reasonable efforts to maintain the records described in this Section 4.9 in a safe
condition. At the expiration of the seven- (7-) year period, Developer shall deliver the records to the
District or to such other location as may be requested by District in writing.
4.10 Insurance. The Developer shall, and shall require its architects, engineers,
contractors and subcontractors to purchase and maintain such insurance as will protect the City, the
District, the Developer, the architects, engineers and contractors from claims which may result from
the undertakings of the Developer, its architects, engineers and contractors under this Agreement,
which include without limitation:
(a) Claims under workers' compensation benefit Laws;
(b) Claims for damages due to bodily injury, occupational sickness or disease, or
death of employees;
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Attachment A to Agenda File No. 2018-0070
(c) Claims for damages because of bodily injury, sickness or disease, or death of
any person other than employees;
(d) Claims for damages insured by usual personal injury liability coverage which
are sustained (i) by any person as a result of an offense directly or indirectly related to the
employment of such person by the Developer, architect, engineer, contractors, subcontractors or
(ii) by any other person;
(e) Claims for damages, other than to the physical improvements which
constitute the Developer's Public Improvements themselves, as a result of injury to or destruction of
tangible property, including loss of use resulting therefrom;
(f) Claims for damages because of bodily injury or death of any person or
property damage arising out of the ownership, maintenance or use of any motor vehicle; and
(g) Claims for the usual damages insured by Professional Errors and Omissions
insurance against any Professionals (Developer, architect, engineer, contractors or any other
Persons).
4.11 Liability Insurance Policy Limits. The insurance required by this Agreement shall
be written for not less than the following limits of Iiability; provided that all such limits may, at the
Developer's option, be satisfied by limits set forth in primary policies and excess policies:
(a) Workers' Compensation in the State: Statutory limits as set forth in Article
(commencing with Section 3700) of Chapter 4 of Article 1 of Division 4 of the California Labor
Code. Employer's Liability: Not less than $2,000,000, which limit of insurance may be satisfied
through primary and excess liability policies.
(b) Commercial General Liability, Occurrence Form, Coverages A, B, and C:
Dedicated Project Policy limit not less than $2,000,000 per occurrence limit and $5,000,000
aggregate limit. Required limits of insurance may be satisfied through primary and excess liability
policies.
(c) Comprehensive Automobile Liability for any vehicle used for or in
connection with the Work (owned, hired or leased): Not less than $1,000,000.
(d) Pollution Legal Liability for any new or exacerbated conditions caused by
any contractor or subcontractor in the amount of $1,000,000 per claim and $2,000,000 in the
aggregate, dedicated project limits.
(e) Professional Liability for Professional acts, errors and omissions covering (i)
any engineer, contractor or any other Person for Developer's Improvements (other than the
Developer's Private Improvements and the Convention Center) in the amount of $1,000,000 per
claim and $2,000,000 in the aggregate and (ii) any architect for the Developer's Private
Improvements and the Convention Center in the amount of$5,000,000 per claim and $10,000,000 in
the aggregate, it being understood that such insurance may be obtained by such architect, engineer,
contractor or subcontractor (each, a "Professional"), instead of the Developer, if such Professional
provides such insurance to the City and District in accordance with Section 4.13.
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Attachment A to Agenda File No. 2018-0070
4.12 Builder's "All Risk" Insurance. If there is any construction of any of the
Developer's Improvements and/or the Parking Improvements during the Term by the Developer,
which, for the avoidance of doubt, is not required or permitted pursuant to Section 4.6, Developer
shall obtain and maintain, or require its General Contractor and its subcontractors and all other
contractors, subcontractors and consultants to obtain and maintain, at all times during the course of
construction of the Developer's Improvements and/or the Parking Improvements by the Developer,
all insurance as required herein, the construction contracts for the Developer's Improvements or the
Parking Improvements, if applicable, the Ground Lease and the Convention Center Subleases, as
applicable, with respect to the applicable portion of the Developer's Improvements and/or the
Parking Improvements, as applicable, constructed by the Developer. Developer, District and City
shall be named, as applicable, for their interests in the Project.
4.13 Required Policy Provisions. The insurance policies required under this Agreement
shall include the following provisions:
(a) The City and the District shall be named as additional insureds on all
insurance policies, with an endorsement identifying the same, except the workers' compensation and
Professional Liability policies, with waivers of subrogation in form acceptable to the District and
City.
(b) Each policy of insurance required under this Agreement shall be obtained
from a provider licensed to do business in California and having not less than a Best's Insurance
Guide current rating of A-: X or better and shall bear an endorsement precluding cancellation or
termination of the policy or reduction in coverage unless the City and District have been given
written notice of such intended action at least thirty (30) days prior to its effective date.
(c) The Developer shall provide to the City and the District, or, if applicable, in
the case of Section 4.11(e) cause its architects, engineers, contractors, subcontractors and consultants
to provide to the City and the District, certificates of said insurance on or prior to the Execution Date,
and shall provide to the District copies of all of the policies of said insurance within fifteen (15) days
from the Developer's receipt of written request therefor from the District.
(d) If the Developer fails to obtain and maintain, or cause its architects,
engineers, contractors, subcontractors and consultants, to obtain and maintain, any insurance required
by this Agreement and if the Developer does not cure such failure within ten (10) days from the date
when the Developer receives notice thereof from the District and the City, then the District and City
shall have the right to purchase the insurance on behalf of Developer, its architects, engineers,
contractors, subcontractors and consultants (as applicable) and the Developer shall promptly
reimburse the District or City, as applicable, the full cost of such insurance.
4.14 Payment Bonds and Performance Bonds.
(a) Prior to the Developer commencing the construction of the Developer's
Improvements and, if applicable, the Parking Improvements, the Developer shall furnish the District
and the City with the following separate corporate surety bonds from each contractor that is
responsible for the construction of a Major Component of Developer's Improvements, if applicable,
the Parking Improvements or, in each case, a portion thereof:
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Attachment A to Agenda File No. 2018-0070
(i) A corporate surety performance bond ("Performance Bond") issued
by a surety company licensed and admitted to transact business as such in the State of California, in
an amount not less than one hundred percent (100%) of the estimated Hard Construction Costs of the
applicable Major Component of Developer's Improvements, the Parking Improvements or a portion
thereof, as applicable. The Performance Bond shall name Developer as principal obligee and the
District, the City, each of the Private Construction Lenders and each of the public lenders as co-
obligees, The Performance Bond shall assure full completion of the construction by such contractor
of such Major Component of Developer's Improvement, the Parking Improvements or such portion
thereof, as applicable; and
(ii) A corporate surety payment bond ("Payment Bond") issued by a
surety company licensed and admitted to transact business as such in the State of California, in an
amount equal to one hundred percent (100%) of the estimated Hard Construction Costs of the
applicable Major Component of Developer's Improvements, the Parking Improvements or a portion
thereof, as applicable, guaranteeing payment for all materials, provisions, supplies and equipment
used in, upon, for or about the performance of the construction by such contractor of such Major
Component of Developer's Improvements, the Parking Improvements or such portion thereof and for
labor done thereon and protecting the District and the City from any and all liability, loss or damages
arising out of or in connection with any failure to make any such payments. The Payment Bond shall
name Developer as principal obligee and the District, the City, each of the Private Construction
Lenders and each of the public lenders as co-obligees.
(b) The Payment Bonds and Performance Bonds shall be in form and content
reasonably satisfactory to the District and the City.
4.15 Completion Guaranty. "Completion Guaranty" shall mean a guaranty, or
guaranties, from a Person or multiple Persons (collectively, the "Guarantor"), each of which is not a
Prohibited Person, and which, in the aggregate, have a net worth, which shall mean total assets less
the amount of total liabilities, determined in accordance with generally accepted accounting
principles of at least TWO HUNDRED MILLION DOLLARS ($200,000,000) and which are
approved by each of the District and the City, in its reasonable discretion, guaranteeing to the
District, the City and the JEPA the completion by the Developer of the Developer's Improvements in
accordance with the Ground Lease. The Parties shall negotiate the form of the Completion Guaranty
on or before the Target Date set forth in the Schedule of Performance. The Parties shall execute and
deliver the Completion Guaranty at the Close of Escrow.
4.16 Prevailing Wages. The Developer acknowledges and agrees that:
(a) Any construction, alteration, demolition, installation or repair work that the
Developer performs, or causes to be performed, or that the Developer is required to perform, under
this Agreement ("Developer Construction Work"), constitutes "public work" under California
Prevailing Wage Law, including Labor Code Sections 1720 through 1861, et seq. (as such statutes
may be amended from time to time, "PWL"), and PWL obligates the Developer to cause such
Developer Construction Work to be performed as "public work", including, but not limited to, the
payment of applicable prevailing wages to all Persons subject to the PWL.
(b) The Developer shall cause all Persons performing Developer Construction
Work to comply with all applicable provisions of the PWL and other applicable wage Laws.
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Attachment A to Agenda File No. 2018-0070
(c) The District hereby notifies the Developer and the Developer hereby
acknowledges that the PWL includes, without limitation, Labor Code Section 1771.1(b) that provides
that the following requirements described in Labor Code Section 1771.1(a) shall be included in all
bid invitations and "public work" contracts: A contractor or subcontractor shall not be qualified to
bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract
Code, or engage in the performance of any contract for "public work", unless it is currently
registered and qualified to perform "public work" pursuant to Section 1725.5. It is not a violation of
Section 1771.1 for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of
the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code if the
contractor is registered to perform "public work" pursuant to Section 1725.5 at the time the contract
is awarded.
(d) The Developer acknowledges that its obligations under the PWL include,
without limitation, ensuring that:
(i) pursuant to Labor Code Section 1771.1(b), a bid shall not be accepted
nor any contract or subcontract entered into without proof of the contractor or subcontractor's current
registration to perform "public work"pursuant to Section 1725.5;
(ii) pursuant to Labor Code Section 177 l.4(a)(1), the call for bids and
contract documents shall specify that the project is subject to compliance monitoring and
enforcement by the California Department of Industrial Relations
(iii) pursuant to Labor Code Section 1771.4(a)(2), it posts or requires the
prime contractor to post job site notices, as prescribed by regulation; and
(iv) pursuant to Labor Code Section 1773.3(a)(1), it provides notice to the
DIR of any "public works" contract subject to the requirements of the PWL, within thirty (30) days
of the award, but in no event later than the first day in which a contractor has workers employed
upon the public work. Pursuant to Labor Code Section 1773.3(a)(2), the notice shall be transmitted
electronically in a format specified by the DIR and shall include the name and registration number
issued by the DIR pursuant to Section 1725.5 of the contractor, the name and registration number
issued by the DIR pursuant to Section 1725.5 of any subcontractor listed on the successful bid, the
bid and contract award dates, the contract amount, the estimated start and completion dates,job site
location, and any additional information that the DIR specifies that aids in the administration and
enforcement of the PWL. PWC-100 is the name of the form currently used by the DIR for providing
the notice, but the Developer shall determine and use whatever form the DIR requires.
(e) The District and the City shall not be responsible for the Developer's failure
to comply with any applicable provisions of the PWL.
(f) The Developer's violations of the PWL shall constitute a breach of this
Agreement.
(g) The Developer shall not be responsible for the District's or the City's failure
to comply with any applicable provisions of the PWL with respect to any work performed by, or on
behalf of, District or City (other than by the Developer or any of the Developer's contractors,
subcontractors or consultants).
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Attachment A to Agenda File No. 2018-0070
4.17 Developer's Indemnity Obligations. Without limitation of the Developer's other
obligations under this Agreement, the Developer agrees, at its sole cost and expense, and with
counsel approved by District and City, each in its reasonable discretion, to indemnify, defend and
hold harmless the District and City, and their officers, directors, employees, partners, affiliates,
agents, contractors, successors and assigns ("District and City Parties") from any claims, demands,
actions, causes of action, suits (collectively, "Claims") and any costs, damages (of all kinds including
punitive damage, diminution in value and loss of use), claims, liabilities, expenses (including
reasonable attorneys', consultants' and experts' fees), losses, fines, penalties and court costs related
to the subject matter of such costs (collectively, the "Related Costs") and amounts paid in settlement
of any claims or actions related to the subject matter of the Related Costs (as determined by the
Developer, District and City), arising out of:
(a) the obligations undertaken by the Developer and their officers, directors,
employees, partners, affiliates, agents, contractors, successors and assigns in connection with this
Agreement;
(b) the possession, use, occupancy, operation or development of the Project Site
by the Developer or the Developer's representatives, partners, directors, officers, agents, employees,
consultants, contractors, invitees, subtenants, successors, assigns or similar users/affiliates
(collectively, "Developer Affiliate");
(c) the approval of this Agreement or the approval of permits or approvals
granted to the Developer or a Developer Affiliate related to the Project or the Project Site, including,
but not limited to, approvals or permits for the development of any structures, buildings, installations,
and improvements on the Project Site, or use of the Project Site (collectively, "Related Approvals");
(d) any third party challenges to the approval of the Project and the Related
Approvals;
(e) the granting or failure to grant any approvals set forth in this Agreement
(collectively, "Discretionary Approvals');
(f) environmental documents, mitigation and/or monitoring plans, or
determinations conducted and adopted pursuant to CEQA or the National Environmental Policy Act
for this Agreement, Related Approvals or Discretionary Approvals of the Developer; and
(g) the Developer's obligation to comply with the PWL with respect to the Work
to be performed by or under contract with the Developer.
The foregoing indemnity, defense and hold harmless obligations of the Developer shall not
include any Claims and Related Costs and amounts paid in settlement of any Claims or actions
related to the subject matter of the Related Costs (as determined by the Developer), arising out of
District's or the City's failure to comply with the applicable provisions of the PWL with respect to
any work performed by, or on behalf of, District or City (other than by the Developer or any of the
Developer's contractors, subcontractors or consultants).
If any of the District and City Parties tender to the Developer any Claim arising out of the
Project or the Project Site, the District and/or the City, then the Developer shall have the right to
terminate this Agreement in accordance with Article VIII and, if the Developer elects to exercise
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Attachment A to Agenda File No. 2018-0070
such right to terminate this Agreement, then the Developer shall have the right not to participate in
the defense of any such Claim and the Developer shall have no indemnity, defense or hold harmless
obligations to any District and City Party or any third party.
The District and the City may, in their sole and absolute discretion, participate in the defense
of any Claims, but the Developer shall have no obligation to reimburse the District and the City for
any costs of defense incurred by the District and/or the City, including, without limitation,
reimbursement for attorneys' fees, experts' fees and other costs. The District's and the City's
participation shall not relieve the Developer of any of its obligations under this Section 4.17. If the
District and City tender the defense of any Claim to Developer pursuant to this Section 4.17 and
Developer does not elect to terminate this Agreement in accordance with Article VIII, then the
Parties contemplate that they will execute a binding agreement providing for the Parties' obligations
with respect to the defense of such Claim, including Developer's obligation to pay costs relating to
such Claim. The foregoing indemnity obligations of the Developer are in addition to, and not in
limitation of, any other indemnity obligations of the Developer contained in this Agreement. This
indemnity shall survive expiration or earlier termination of this Agreement, but solely with respect to
any event or condition that has occurred prior to, or exists at the time of, such expiration or
termination.
4.18 Liens and Claims.
(a) The Developer agrees that, if any Professional or materialman performing the
Work, or furnishing materials in connection therewith, or if anyone claiming directly or indirectly
under or through the Developer or any Developer Affiliate, Professional or materialman shall file or
cause to be filed any mechanics lien or other lien or security interest against the Project Site, the
Developer's Improvements, the Parking Improvements or any portion thereof, or against any assets
of or funds appropriated to or by the District or the City, then, within thirty (30) days after the
Developer receives notice of filing thereof, the Developer shall cause such lien or security interest to
be discharged of record by payment, deposit, bond, order of court of competent jurisdiction or
otherwise. If the Developer shall fail to cause such lien or security interest to be discharged of record
within the period aforesaid, then, in addition to any other right or remedy, the District or the City
may, but shall not be obligated to, discharge the same either by paying the amount claimed to be due
from retentions or any progress payment next due to the Developer or by procuring the discharge of
record of such lien or security interest. Any amount so paid by the District or the City, including all
reasonable costs and expenses incurred by the District or the City in connection therewith, shall be
payable by the Developer to the District or the City, as applicable, on demand. Each of the City and
District will endeavor to notify Developer of any lien notices that it receives; provided, however, that
the failure by City or District to so notify the Developer shall not affect Developer's obligations
hereunder.
(b) Notwithstanding Section 4.18(a), the Developer shall not be required to
discharge of record any such lien or security interest if the Developer is in good faith, and consistent
with applicable Law, at its own expense, currently and diligently contesting the same; provided that
the Developer first records a surety bond sufficient to release such lien or such security interest, as
applicable.
4.19 Validation Action. Subject to the remaining provisions of this Section 4.19, the
District and City, as the sole members of the JEPA, shall file and reasonably pursue on behalf of the
JEPA a validation action under California Code of Civil Procedure §860, petition for writ of mandate
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Attachment A to Agenda File No. 2018-0070
pursuant to California Code of Civil Procedure section 1085 and/or 1094.5 and a complaint for
declaratory relief(collectively, "Validation Action") to (a) validate selected contracts relating to the
financing of the Public Improvements Costs for the Convention Center and the Phase IA
Infrastructure Improvements, including the scope and extent of legal obligations arising therefrom
(collectively, the "Public Financing Contracts") and (b) obtain a judicial determination that none of
the Public Financing Contracts, the Qualified Private Contracts or the Project violates any Laws.
Prior to filing the Validation Action, District and City shall meet and confer with Developer to
discuss the potential for including within the Validation Action private contracts reasonably
designated by Developer that are consistent with Project Financing Contracts, and are themselves
integral to the development of the Project (collectively, the "Qualified Private Contracts"). If City
and District reasonably determine, each in its reasonable discretion, that the addition of the Qualified
Private Contracts to the Validation Action is lawful and feasible, and will not materially delay or
compromise the effective prosecution of the Validation Action with respect to the Public Financing
Contracts, City and District agree to include the Qualified Private Contracts in the Validation Action.
The JEPA shall be responsible for the payment of all costs and expenses incurred in connection with
such Validation Action; provided, however, that (i) Developer shall be responsible for payment of
any and all incremental legal and other costs arising from the inclusion of the Qualified Private
Contracts; and (ii) if there is a third-party challenge to the Validation Action, whether or not it
includes the Qualified Private Contracts, such challenge shall trigger Developer's obligation to
defend the Project and Related Approvals pursuant to Section 4.17(d) (subject to the Developer's
right to terminate this Agreement pursuant to the last paragraph of Section 4.17). The Developer
acknowledges that (1) a final unappealable judgment finding in favor of the JEPA, District and City
on all points is a condition precedent to the issuance of the financing for the Public Improvements
Costs, and (2) the City, the District and/or the JEPA may request the Developer's cooperation with
respect to participation in such Validation Action, or request the Developer to provide documentation
or information in support of such Validation Action, and (3) in the absence of such cooperation or
participation by the Developer, the Validation Action may not succeed. Notwithstanding the
foregoing, in the event that the District and City, as the sole members of the JEPA, determine, each
in its reasonable discretion, that filing or pursuing a Validation Action is not likely to succeed, or will
be overly burdensome, the District and City, as the sole members of the JEPA, shall, each in its sole
and absolute discretion, have the right to decline to commence a Validation Action or to terminate
such Validation Action and in the event the District or City makes such a determination, the Parties
shall meet and confer pursuant to Section 5.1 (provided that if the Developer has exercised its right to
terminate this Agreement as a result of challenges to the Validation Action, the City and District shall
have no obligation to meet and confer with Developer before terminating such Validation Action).
Developer acknowledges and agrees that the City and District shall have sole and absolute discretion
with respect to the prosecution of the Validation Action, including without limitation decisions
relating to procedural, tactical and substantive matters. The JEPA and the District and City shall
keep the Developer informed of the progress made on such Validation Action.
4.20 City Procurement Process. Developer acknowledges and agrees that, in addition to
any and all other requirements set forth in this Agreement, the process for procurement and
implementation of Developer's Public Improvements shall be governed by Chula Vista Municipal
Code Section 2.56.160.H.
4.21 Compliance with Law; Enforceability by District, City and JEPA. Each of the
District, the City and the JEPA shall provide to the Developer copies of its findings, policies and
resolutions which authorize (a) the District, the City or the JEPA, as applicable, to enter into each
and every of the Closing Documents to which it is a party and (b) the Person or Persons executing
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Attachment A to Agenda File No. 2018-0070
each of such Closing Documents on behalf of the District, the City or the JEPA, as applicable, to do
so (collectively, "Compliance Documents"), when they are made available to the public. The
Developer shall provide its written comments to the Compliance Documents within a commercially
reasonable period of time of the receipt thereof. If the District, the City or the JEPA disagree with
any of the comments provided by the Developer, then the Parties shall meet and confer in accordance
with Section 5.1. If disagreements between the Developer, the District, the City and the JEPA are
not resolved pursuant to Section 5.I, then the Developer may terminate this Agreement in accordance
with Article VIII.
4.22 Energy Requirements. The Parties acknowledge that Section 15 of the Settlement
Agreement requires that all "Developments" within the Proposed Project (as defined in the
Settlement Agreement) area achieve, in the aggregate, a fifty percent (50%) reduction in annual
energy use (the "50% Energy Standard") compared to that allowed under the Building Energy
Efficiency Standards, Title 24, Part 6, of the California Code of Regulations in effect as of May 4,
2010 ("2010 Title 24"). To implement Section 15 of the Settlement Agreement with respect to the
Project, the Parties agree as follows:
(a) Developer shall cause the design of Developer's Private Improvements, the
Convention Center, and the Parking Improvements so that each building will operate at an energy
consumption level equal to or better than the more stringent of the following two standards, which
shall be referred to herein as, the "Minimum Energy Efficiency n Standard": (i) fifteen percent
(15%) less than the amount of energy that each building would otherwise be permitted to consume
under 2010 Title 24; or (ii) the minimum energy efficiency performance standard adopted by the City
at the time a building permit application is submitted for each building. District and City shall
coordinate with Developer and its design teams(s) throughout the design process to identify
additional energy savings measures or credits which Developer shall consider implementing, in good
faith, in the design of the Developer's Private Improvements, to achieve or exceed the Minimum
Energy Efficiency Design Standard.
(b) The Developer agrees to include in the form of Ground Lease the following
two requirements, which will exist throughout the term of the Ground Lease:
(i) Developer shall develop, implement, and maintain a measurement and
verification plan for energy efficiency for the Developer's Private Improvements, the Convention
Center, and the Parking Improvements ("M&V Plan"); and
(ii) Developer shall cause the performance of, and deliver to the District
and City, an energy consumption audit for each of the Developer's Private Improvements, the
Convention Center, and the Parking Improvements no less frequently than every three (3) years after
the issuance of the temporary certificate of occupancy of the Developer's Private Improvements, the
Convention Center or the Parking Improvements, as applicable, as more particularly set forth in
Section 15.2.2.4 of the Settlement Agreement (the "Required Energy Audits").
(c) City and District will review and evaluate Developer's designs for the
Developer's Private Improvements, the Convention Center, and the Parking Improvements to
determine Developer's compliance with the Minimum Energy Efficiency Design Standard and the
50% Energy Standard. In such evaluation, City and District will (i) assume the 5% energy
consumption credit that would be achieved with Developer's commitment to perform the Required
Energy Audits and develop, implement, and maintain the M&V Plan for the term of the Ground
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Attachment A to Agenda File No. 2018-0070
Lease; and (ii) work with Developer to identify and apply the most advantageous of the two "paths"
identified in Section 15.2.2 of the Settlement Agreement, the "Title 24 Path" or the "LEED Path," to
measure overall energy savings. If City and District ultimately determine that Developer's actions
and commitments under Sections 4.22(a) and 4.22(b) do not achieve the 50% Energy Standard as
applied to the Project, City and District shall work with Developer to identify additional energy
savings measures, programs or credits (collectively, "Additional Energy Savings Measures")
available to achieve the 50% Energy Standard. Such Additional Energy Savings Measures may
include, without limitation, Developer's participation in renewable or "time of use" energy purchase
programs, and/or other measures identified in Section 15.2 of the Settlement Agreement. Developer
agrees to participate in and/or implement the Additional Energy Savings Measures so identified at
Developer's cost, to the extent "commercially reasonable" (as defined below), in order to maximize
energy use reduction at the Project, in the aggregate, up to the 50% Energy Standard. If, despite
Developer's efforts, Developer cannot reduce the energy use standard at the Project to achieve the
50% Energy Standard, either because it is not commercially reasonable to do so, or Developer's
participation in and/or implementation of the Additional Energy Savings Measures identified by the
City and District do not result in the 50% Energy Standard, the City and District agree to identify
additional energy savings measures or credits that the City and District could implement (at a cost to
be shared equally by the City and District) or cause third parties to implement (without a public
subsidy or rent reduction), throughout the Proposed Project area, to achieve the 50% Energy
Standard for the Project. For purposes of this Section 4.22(c) "commercially reasonable" Additional
Energy Savings Measures are the Additional Energy Savings Measures that the Developer
reasonably determines can be implemented practicably and cost-effectively at the Project.
(d) For purposes of this Agreement, Developer's obligations to comply with
Section 15 of the Settlement Agreement are limited to the requirements set forth herein. So long as
the Developer has complied with its obligations under this Section 4.22, Developer will not be in
default and will not be in breach under this Agreement based upon any alleged failure to comply with
the terms of Section 15 of the Settlement Agreement in the design of the Project.
V. REQUIREMENTS OF PARTIES; CONDITIONS PRECEDENT TO CLOSE OF
ESCROW.
5.1 Periodic Review; Meet and Confer.
(a) The District and City shall have the option, not more frequently than every
three (3) months during the Term, to conduct a review (the "Periodic Review") to evaluate, among
other things, the extent to which the Developer is complying with its obligations under this
Agreement, and the Parties' determinations of whether it is feasible to continue with the development
of the Project pursuant to this Agreement(collectively, "Periodic Review Matters").
(b) Meet and Confer. (i) Within thirty (30) days following submittal by the
Developer of the information and materials reasonably requested by the District and/or the City in
accordance with Section 5.1(a) or (ii) within five (5) days following notice of any Event of Default,
District staff, City staff and the Developer shall meet and confer to seek mutual resolution of areas of
concern covered in the Periodic Review or such Event of Default, as applicable, and to come to a
mutual agreement whether to take one of the following actions:
(i) Pause. To the extent feasible, pause any actions and activities of the
Parties pursuant to this Agreement (except, to the extent applicable, insurance, maintenance and
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Attachment A to Agenda File No. 2018-0070
indemnification obligations) for a period up to ninety (90) days to enable the Parties to schedule one
or more additional meet and confer events to gather additional information and continue discussions
of the Periodic Review Matters or such Event of Default, as applicable; or
(ii) Delay. To the extent feasible, delay for a period up to sixty (60) days
any further actions or activities of the Parties under this Agreement to enable the Parties to further
investigate their respective positions and whether it is feasible to proceed with the development of
the Project as provided for hereunder. If disagreements between the Parties are not resolved pursuant
to Section 5.1(b)(i) or (ii), then the Parties shall attempt to resolve such disagreements through
mediation in accordance with Section 7.4. If such disagreements are not resolved through mediation
within one hundred twenty (120) days after the commencement of mediation, then either Party may
terminate this Agreement pursuant to Article VIII.
(c) If disagreements between the Parties are resolved pursuant to Section 5.1(b),
then, if applicable, the Parties shall revise the Schedule of Performance to incorporate the changes
agreed to by the Parties pursuant to Section 5.1(b) and such revisions to the Schedule of Performance
shall be made without the need for an amendment to this Agreement in accordance with Section 9.9.
(d) Notwithstanding any other provision in this Agreement, in the event Schedule
of Performance extensions pursuant to Sections 5.1(b)(i) and 5.1(b)(ii) above exceed three hundred
sixty five (365) days cumulatively, any Party may elect to terminate this Agreement in accordance
with Article VIII.
5.2 Conditions Precedent to Close of Escrow Benefiting the District and the City.
The District's and the City's obligations in connection with the Close of Escrow are expressly
conditioned upon the satisfaction by the District, City, and/or Developer (or waiver by both the
District and the City in writing) of each of the following conditions:
(a) the District shall have received from the Developer and shall have approved
in accordance with this Agreement: (i) the Schematic Plans for the Developer's Improvements, the
Surface Parking and the Parking Improvements as required under this Agreement; (ii) the Building
Permit Application Drawings for the Developer's Improvements as required under this Agreement;
and (iii) final Development Cost estimates for the Developer's Improvements as required under
Section 4.5(d);
(b) the District and the City shall have approved in accordance with this
Agreement the identity of each Person, other than the Managing Person, that is a member in
Developer (each, an "Equity Investor" and, collectively, "the Equity Investors");
(c) the District and the City shall have received from the Developer and
reasonably accepted the terms of (i) the executable versions of the agreements with the Equity
Investor(s) evidencing the commitments of such Equity Investors to make contributions for the
Developer's Private Improvements Costs (the "Equity Investor Contribution"), and (ii) the
disbursement instructions or contribution terms for the portion of the Equity Investor Contribution
attributable to the Developer's Private Improvements that require that the Equity Investor
Contribution and the Public Fund Contribution be disbursed or contributed, as applicable,pari passu
for the benefit of the Project;
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Attachment A to Agenda File No. 2018-0070
(d) the District and the City shall have caused the portion of the Public Fund
Contribution attributable to the Developer's Public Improvements to be deposited at the Close of
Escrow, and thereafter held and disbursed in accordance with a disbursement agreement which shall
be negotiated by relevant parties prior to the Close of Escrow and shall be executed by the relevant
parties at the Close of Escrow (the "Construction Loan Account Instructions");
(e) the District and the City shall have received from the Developer and shall
have approved an encumbrance package in accordance with BPC Policy No. 355, including the
Appraisal, audited financial statements of the Developer for not less than the past two (2) years (or
such shorter period of time as the Developer has existed) and a term sheet or loan commitment from
a lender (the "Private Construction Lender'') in an amount not in excess of the DeveIoper's Debt
Contribution; provided that, as a condition subsequent to the effectiveness of such approval, the
Developer shall provide to the District and the City, prior to the recordation of such encumbrance, an
affidavit by an authorized representative of Developer with authority to bind Developer stating that
the final loan documents for the approved encumbrance ("Loan Documents") conform substantially
to the terms of the encumbrance package, without material changes, and the Loan Documents or the
Developer, as applicable, satisfy the criteria of any conditions set forth in the resolution of the BPC
approving such encumbrance; and provided, further, that in no event shall the principal amount of the
indebtedness that is secured by an encumbrance on the Developer's leasehold interest created by the
Ground Lease exceed seventy-five percent (75%) of the expected value upon completion of all of the
following: the Developer's Private Improvements, the Developer's leasehold interest in the
Convention Center pursuant to the Convention Center Subleases, the Developer's leasehold interest
in the Project Site and the Developer's interest in the Surface Parking (for the avoidance of doubt and
for purposes of such 75% calculation, any indebtedness that is unsecured or secured only by an
encumbrance on other assets, including any equity in the Developer, shall be excluded from the
indebtedness), as determined by an appraisal that is (i) prepared by an appraiser that is reasonably
approved by the District and the City and (ii) in accordance with the Uniform Standards of
Professional Appraisal Practice (USPAP) as modified from time to time and for so long as it is a
generally accepted standard for commercial real estate appraisals ("Appraisal ');where:
(i) "Developer's Debt Contribution" shall mean the Developer's
Contribution (as hereinafter defined) less the amount of the Equity Investor Contribution; and
(ii) "Developer's Contribution" shall mean the budgeted amount for the
Development Costs of the Developer's Private Improvements and the Convention Center to the
standard required by the Ground Lease and the Convention Center Subleases (which is currently
estimated to be ONE BILLION TWENTY FIVE MILLION DOLLARS ($1,025,000,000), including
all furnishings, fixtures and equipment) less the Project Public Investment Amount;
(f) the District and the City shall have received from the Developer, and BPC
and City Council shall have consented to that certain management agreement (the "Management
Agreement") between the Developer and Marriott Hotel Services, Inc. as operator ("OOperator'),
pursuant to which the Operator will operate the Hotel and the Convention Center upon the opening
and initially as set forth in the Ground Lease under the Gaylord Hotel brand; provided that the
Developer may deliver to the District and the City a copy of the Management Agreement with all
proprietary information contained therein redacted (provided that the Developer makes a copy of an
unredacted version of the Management Agreement available to the District and the City for review
36
Attachment A to Agenda File No. 2018-0070
(but not copying) at the main offices of the District or City); and provided, further, that Developer
accepts as a condition to approval, the delivery of an affidavit by an authorized representative of
Developer that the fully executed Management Agreement is the same as the unredacted version of
the Management Agreement reviewed by the District and the City;
(g) the District and the City shall have received from the Developer notice that
the Developer has completed its Due Diligence Investigations and has accepted the Project Site in its
then "as-is" condition in accordance with Section 5.8;
(h) the District and the City shall have received from the Developer copies of the
Required Building Permits and all other permits that are required for the commencement of
construction of Developer's Improvements; "Required Building Permits" means (i) the Building
Permits or (ii) certification by the City, to the reasonable satisfaction of the District, that final
building permits that are required for the commencement of construction of Developer's
Improvements will be issued subject only to payment of applicable fees, immediately following the
Close of Escrow as set forth in Article VI (which certifications the City shall provide if such
certifications would be factually correct);
(i) the District and the City shall have reviewed and accepted (such acceptance
not to be unreasonably withheld, conditioned or delayed) the terms of the Developer construction
contracts with any contractor for the Developer's Improvements, including guaranteed maximum
price construction contracts or fixed price construction contracts for all Major Components of
Developer's Improvements;
0) the District and the City shall have approved the form of Completion
Guaranty required under Section 4.15 and the identity of the Guarantor in accordance with this
Agreement and the Guarantor shall be committed to delivering such Completion Guaranty at the
Close of Escrow;
(k) the District shall have received from the Developer evidence reasonably
satisfactory to the District that all discretionary permits and approvals that are required to complete
construction of the Developer's Improvements have been obtained from any and all governmental
agencies having jurisdiction over the Project Site;
(1) the District and the City shall have received from the Developer certificates
of insurance for each of the policies of insurance required under the Ground Lease and Convention
Center Subleases evidencing that such policies meet the respective insurance requirements set forth
in the Ground Lease and Convention Center Subleases and will be effective as of the Close of
Escrow;
(m) the District and the City shall have received from the Developer reasonably
satisfactory evidence that the Payment Bonds and the Performance Bonds have been issued in
accordance with Section 4.14;
(n) the District and the City shall have received evidence that the Title Company
is irrevocably committed to issue to the JEPA and the City, simultaneously with the Close of Escrow,
leasehold policies of title insurance policy in such form and amounts and with such special
endorsements as may be reasonably required by the District, City, JEPA and any public lender, as
applicable, subject only to the Approved Title Exceptions;
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Attachment A to Agenda File No. 2018-0070
(o) the following actions set forth in the Schedule of Performance shall have been
completed: (i) Approval of New S-1 RV Park Lease, and (ii) the final Review of Underwriter's
Updated Projections for the Public Improvements Costs;
(p) JEPA, District and City shall have received a final, non-appealable judgment
in the Validation Action in favor of JEPA, District and City on all points;
(q) no Developer Event of Default shall have occurred and be continuing;
(r) the Developer shall have executed the Ground Lease and each of the
Convention Center Subleases to which it is a party, and in each case delivered the Ground Lease and
Convention Center Subleases to the escrow for this transaction, with the effectiveness thereof subject
only to the consummation of the Close of Escrow;
(s) District, City and JEPA shall have considered and approved items set forth in
Section 1.4;
(t) the District, City, and JEPA shall have determined that moneys are available,
through Bond Financing, in an amount no less than the Project Public Investment Amount, in
accordance with the Plan of Finance;
(u) the District shall have received required approvals from any and all third
parties, including without limitation, the State Lands Commission, for lease of the New S-I RV Park
Site and construction of Sweetwater Park and any related construction;
(v) the District and City shall have completed, or shall have caused to be
completed, relocation, and/or abandonment, termination and related modification of record from title
to the Project Site of each of the easements and rights of way that the District and City are required to
relocate, remove and/or abandon prior to the Close Escrow in accordance with the Easement
Findings;
(w) District and City shall have obtained commitments for all financing that is
necessary to satisfy their respective obligations under the Plan of Finance, with such financing to
close concurrently with the Close of Escrow;
(x) the District shall have secured the fee interest in the "Triangle Parcel"; and
(y) The District and the City shall have received and accepted (such acceptance
not to be unreasonably withheld, conditioned or delayed) the final, executed versions of the Loan
Documents that evidence the commitments for the Developer's Debt Contribution and the
disbursement conditions therefor; provided, however, the Developer may provide redacted versions
of such Loan Documents to the District and the City so long as such redacted versions of the Loan
Documents include all of the material terms sufficient to enable the City, District and JEPA to
disclose to investors in the Bond Financing the amount of the financing to be provided under such
Loan Documents, the conditions for disbursement of such financing, the default and remedies
provisions contained therein and any additional matters reasonably determined to be necessary by
disclosure counsel to the City, District and/or JEPA or the underwriters of the Bond Financing.
Attachment A to Agenda File No. 2018-0070
5.3 Conditions Precedent to Close of Escrow Benefiting Developer.
The Developer's obligations in connection with the Close of Escrow are expressly
conditioned upon the Developer, District and/or the City, as applicable, satisfying, or causing the
satisfaction, of each of the following conditions (or waiver by the Developer in writing of any of the
following conditions):
(a) the Title Company shall be irrevocably committed to issue to the Developer,
simultaneously with the Close of Escrow, a leasehold policy or policies of title insurance in such
form and amounts and with such special endorsements as may be reasonably required by the
Developer and the Private Construction Lender, subject only to the Approved Title Exceptions;
(b) the Developer shall have received notice from the District and the City that
the District and the City have approved or disapproved, the Developer's submittals required under
this Agreement;
(c) the Developer shall have received notice from the District and the City that
the District and the City have determined that the Public Improvements Costs may be funded in
accordance with the Plan of Finance;
(d) the District and the City shall have executed the Construction Loan Account
Instructions, the effectiveness thereof subject only to the consummation of the Close of Escrow;
(e) the District and the City shall have completed, or shall have caused to be
completed, relocation and/or abandonment, termination and related modification of record from title
to the Project Site of each of the easements and rights of way that the District and City are required to
relocate, remove and/or abandon prior to the Close Escrow in accordance with the Easement
Findings;
(f) the Developer shall have approved each of the Compliance Documents in
accordance with Section 4.21 or the Developer, the District, the City and the JEPA shall have
reached an agreement regarding each of the Compliance Documents pursuant to Section 4.21;
(g) the Developer shall have received notice from the District and the City that
the District, the City and JEPA have executed the Plan of Finance substantially based on the
Conceptual Outline of JEPA Plan of Finance;
(h) the District, the City and the JEPA shall have deposited moneys, or shall have
provided instructions for the deposit of proceeds of Bond Financing at the Close of Escrow, in
amounts sufficient to satisfy the Public Improvements Costs, subject only to the Close of Escrow and
the Construction Loan Account Instructions;
(i) the Developer shall have entered into an agreement with the District on terms
mutually acceptable to the Developer and the District, the effectiveness of which shall only be
conditioned on the consummation of the Close of Escrow, to provide up to 15 acres of land (or such
smaller amount of land as is acceptable to the Developer) adjacent to the Project Site on Parcel H-23
or another mutually-acceptable site in a location and configuration mutually acceptable to the District
and Developer for Developer to locate construction trailers, construction material, equipment staging
and parking during the construction of the Project at no cost to the Developer;
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(j) the Developer shall have received from the District and the City evidence that
the District and the City have obtained commitments for all financing that is necessary to satisfy their
respective obligations under the Plan of Finance, with such financing to close concurrently with the
Close of Escrow;
(k) the Developer shall have received the Required Building Permits and all other
permits that are required for the commencement of construction of Developer's Improvements;
(1) the Developer shall have completed its Due Diligence Investigations and shall
have accepted the Project Site in its then "as is" condition in accordance with Section 5.8;
(m) the Management Agreement shall have been agreed to and executed by all of
the parties thereto, with the effectiveness thereof subject only to the consummation of the Close of
Escrow;
(n) the Developer shall have received all discretionary permits and approvals that
are required to complete the construction of the Developer's Improvements from any and all
governmental agencies having jurisdiction over the Project Site and all such discretionary permits
and approvals are final beyond any applicable appealable periods;
(o) no Public Entities Event of Default has occurred and is continuing;
(p) the Loan Documents shall have been executed, with the effectiveness thereof
subject only to the consummation of the Close of Escrow, in an amount sufficient to pay the
Developer's Debt Contribution;
(q) the District shall have executed the Ground Lease and each of the District, the
City and the JEPA shall have executed each of the Convention Center Subleases to which it is a
party, with the effectiveness thereof subject only to the consummation of the Close of Escrow;
(r) District and City shall have considered and approved items set forth in
Section 1.4;
(s) the Developer shall have received evidence that the District and City have
determined that moneys are available, through Bond Financing, in an amount sufficient to fund the
Project Public Investment, in accordance with the Plan of Finance;
(t) the Developer shall have received evidence that the District has received
required approvals from any and all third parties, including without limitation, the State Lands
Commission, for lease of the New S-1 RV Park Site and construction of Sweetwater Park and any
related construction;
(u) a final, non-appealable order shall have been granted in the Validation Action
in accordance with Section 4.19 finding in favor of the Project on all points; and
(v) the City Council shall have passed and adopted an ordinance that amends,
among other things, the Chula Vista Municipal Code Section 2.56.160.H.
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Notwithstanding anything to the contrary set forth in this Agreement, the obligations of JEPA, the
City and the District shall be subject to all limitations set forth in the Financing Agreement and the
Plan of Finance.
5.4 Approvals; Cooperation Between Parties.
(a) All approvals required by the District, City and Developer under this
Agreement shall not be unreasonably withheld or denied (except where such actions are specifically
said to be in the sole and absolute discretion of a Party) and, where specifically referenced in this
Agreement or in the Schedule of Performance, shall be given within the times set forth in this
Agreement or in the Schedule of Performance.
(b) The Developer recognizes and agrees that implementation of a Plan of
Finance will require certain Developer actions, consents or approvals and the provision by the
Developer of all such actions, consents or approvals required for implementation of the Plan of
Finance, whether with respect to the Bond Financing, CFD, EIFD or otherwise, as determined in the
sole and absolute discretion of the City and the District, shall be a condition precedent to the
obligations of the District and the City hereunder.
(c) The District, City and Developer shall, to the extent reasonably necessary,
cooperate with each other to enable each Party to perform its obligations under this
Agreement(including with respect to the financing of each Party's financial contributions to the
Project, each Party's due diligence investigations, each Party's design and site preparation
obligations, and otherwise); provided, however, that in the event that any Party is asked to provide
cooperation, assurance, assistance, documentation, or investigation and such Party determines that
complying with such request will be unlawful, unreasonably burdensome, unreasonably expensive,
or unreasonably time consuming, such Party may refuse to cooperate, without liability to that Party,
by providing notice to the Party requesting the cooperation. Notwithstanding this provision, this
Section 5.4(c) does not limit District's or City's discretionary actions and the District and City
reserve the right to exercise discretionary actions, each in in its sole authority and in its sole and
absolute discretion.
(d) From and after the second (2"`') anniversary of the Execution Date, the
District shall not use the Project Site for any uses other than legally permitted uses that would not
reasonably be expected to materially and adversely affect the development or use of the Project. For
the first twenty-four (24) months after the Execution Date, the District shall not permit any portion of
the Project Site to be used for any uses other than (i) the uses of such portion of the Project Site as of
the Execution Date (or if such portion of the Project Site is subject to a lease, license, right of entry,
or other form of occupancy agreement as of the Execution Date, that are permitted under the
applicable lease, license, right of entry, or other form of occupancy agreement) and (ii) other uses to
which the Developer consents; provided, however, that nothing in this Section 5.4(d) shall require the
District to terminate any existing agreements for the Project Site or remove any existing easements
on the Project Site, except as otherwise expressly set forth in this Agreement. Notwithstanding the
foregoing, Developer consents to one or more rights of entry between the District and Rohr or any
affiliate of Rohr to construct subsurface infrastructure or improvements, including without limitation,
monitoring wells, that are permanent on the Project Site, pursuant to any order from the San Diego
Regional Water Quality Control Board; provided that Rohr coordinates with Developer in
determining the location or re-location, as applicable, of the monitoring wells and provided, further,
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that the District, the City and Rohr cooperate with the Developer to minimize the impact of such
construction on the Project.
5.5 Consideration of Changes to the Ground Lease or Convention Center Subleases.
Except for subordination of the District's ownership in the Project Site, which shall not be
allowed, the District, City and Developer shall consider, each in its sole discretion, modifications to
the Ground Lease and/or Convention Center Subleases, which may be requested by lenders or
financial or legal advisors to the District, City or Developer and which do not substantially increase
the obligations of the affected Parties under this Agreement or the Ground Lease and/or Convention
Center Subleases (as determined, in each case, by the affected Parties acting in good faith), and
which are consistent with the requirements of the financing to be issued or provided by the City,
District and/or JEPA, as set forth in the Plan of Finance.
5.6 Waiver of Certain Conditions. Any Party, at its sole election, may in writing waive
satisfaction of any of the conditions by another Party set forth in Section 5.2 or Section 5.3 that is to
the benefit of such waiving Party only, or if it is to the benefit of two of the Parties, then upon the
agreement between such Parties. Any such condition waived by a Party or two Parties, as applicable,
shall be deemed to be "satisfied" for purposes of Section 5.2 or Section 5.3, as applicable. Any such
waiver shall be set out in an Operating Memorandum in accordance with Section 9.9.
5.7 Physical Condition of the Project Site. Subject to the Developer's right to
terminate this Agreement under Section 5.8, the Developer agrees to unconditionally accept the
Project Site SUBJECT TO ALL FAULTS AND CONDITION, "AS-IS", "WHERE IS", WITHOUT
ANY WARRANTY AS TO QUALITY, CHARACTER, PERFORMANCE OR CONDITION and
with full knowledge of the physical condition of the Project Site, all Laws applicable to the Project
Site, the Approved Title Exceptions and of any and all conditions, restrictions, encumbrances and all
matters of record relating to the Project Site. The Developer's delivery of its written notice of
acceptance of the Project Site provided for in Section 5.8 hereof shall constitute the Developer's
representation and warranty to the District and City that the Developer is relying solely on its own
investigation of the Project Site and has received assurances acceptable to the Developer by means
independent of the District or any employee, official, consultant or agent of the District of the truth of
all facts material to the Developer's leasing of the Project Site pursuant to this Agreement, the
Ground Lease and the Convention Center Subleases, and that the Project Site are being leased and
subleased, respectively, by the Developer as a result of its own knowledge, inspection and
investigation of the Project Site and not as a result of any representation(s) made by the District or
City, or any employee, official, consultant or agent of the District or City relating to the condition of
the Project Site. The District and City hereby expressly and specifically disclaim any express or
implied warranties regarding the Hotel Site and the Convention Center Site, except as expressly set
forth in this Agreement.
5.8 Due Diligence Investigations, Early Entry by Developer, Due Diligence Period
Work.
(a) It shall be the sole responsibility of the Developer, at the Developer's sole
expense, to investigate and determine the conditions of the Project Site and the suitability of such
conditions for the Developer's Improvements to be constructed by the Developer ("Due Diligence
Investigations"). If, following the completion of the Due Diligence Investigations, the conditions of
the Project Site are not, in the Developer's opinion, in all respects entirely suitable for development
of the Project Site and the Developer elects to proceed with the Close of Escrow, then it is the sole
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responsibility and obligation of the Developer to take such action as may be necessary to place the
conditions of the Project Site in a condition suitable for development of the Project Site.
(b) The Developer shall conduct all of its Due Diligence Investigations, at its sole
cost and expense in accordance with that certain Right of Entry Agreement, dated as of March 16,
2018 (the "Initial Right of Entry Agreement"), and other right of entry agreements, as required, by
and between the Developer and the District (collectively, the "Right of EntryAgreement"). The
Parties agree that the District and the Developer hereby extend the term of the Initial Right of Entry
Agreement to the Effective Date. Any Due Diligence Investigations shall not unreasonably disrupt
any then-existing use or occupancy of the Project Site or the operations of the District on the Project
Site other than as expressly set forth in the Right of Entry Agreement.
(c) Upon completion of the Due Diligence Investigations, the Developer shall
deliver to the District a written notice that the Developer accepts or rejects the condition of the
Project Site. If the Developer does not unconditionally accept the condition of the Project Site on or
before the Target Date set forth in the Schedule of Performance, the Developer shall be deemed to
have not accepted the condition of the Project Site. If the Developer accepts the condition of the
Project Site, the District shall notify the Developer of each change to the condition of the Project Site
that could adversely affect the development or use of the Project as soon as reasonably practicable
after learning thereof and the Developer shall promptly investigate such change. After the
Developer's investigation of any change in the condition of the Project Site, the Developer shall have
the right to reject the condition of the Project Site based on such change, irrespective of its prior
acceptance of the condition of the Project Site. If the condition of the Project Site is rejected by the
Developer (including after the Developer's initial acceptance of the condition of the Project Site as
set forth in the preceding sentence), then the Developer or the District shall have the right to
terminate this Agreement, each in its sole and absolute discretion. Any termination of this
Agreement pursuant to this Section 5.8 shall be without liability to the other Party, except as
provided in the Right of Entry Agreement, and shall be accomplished by delivery of a written notice
of termination to the other Party, in which case the Parties shall proceed pursuant to Article VIII.
5.9 Exclusive Negotiations.
(a) The District hereby agrees that, during the Term, it shall negotiate exclusively
with the Developer regarding the development of any project at the Project Site; provided, however,
that the District shall not be precluded from negotiating with other parties for other developments on
other District properties, including, but not limited to, those in the Chula Vista Bayfront; provided,
further, that nothing herein shall prohibit the District from using the Project Site before the Closing
Date in accordance with Section 5.4(d).
(b) The City hereby agrees that it shall, during the Term, negotiate exclusively
with the Developer regarding the development of any project at the Project Site; provided, however,
that the City shall not be precluded from negotiating with other parties for other developments on
other City properties, including, but not limited to, those in the Chula Vista Bayfront.
(c) The Developer hereby agrees that it shall, during the Term, negotiate
exclusively with the District and the City regarding the development of any project that is to be
branded as a Gaylord Hotel and located in any of the following counties: the County of Santa
Barbara, the County of Ventura, the County of Los Angeles, the County of San Bernardino, the
County of Orange, the County of Riverside, the County of San Diego and Imperial County.
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VI. LEASE OF PROJECT SITE; CLOSE OF ESCROW.
6.1 Lease of Project Site.
(a) The Hotel Site shall be leased to the Developer pursuant to the Ground Lease.
On or before the Target Date set forth in the Schedule of Performance, the District and the Developer
shall negotiate and agree on the form of Ground Lease. Attachment No. 9 attached hereto and
incorporated herein by reference is a draft of the Ground Lease prepared by the District and is subject
to review by the Developer in all respects and shall not be considered final or binding on the
Developer or the District in any respect. Developer shall commission an ALTA survey, at its sole
cost and expense, to determine the boundaries of the Project Site ("Site Survey"). Developer shall
deliver the legal descriptions of the Project Site, Hotel Site and Convention Center Site as determined
in the Site Survey to the District for review and approval. Upon written approval of the legal
description of the Project Site, Hotel Site and Convention Center Site by the District, the legal
description of each shall be attached to the Ground Lease and Convention Center Subleases, as
applicable.
(b) The Parties anticipate that the Convention Center Site will be leased by the
District to the Developer pursuant to the Ground Lease, then immediately thereafter subleased by the
Developer to the JEPA, by the JEPA to the City and by the City to the Developer pursuant to various
sublease agreements (collectively referred to as the "Convention Center Subleases"), for
development of the Convention Center and for the purpose of supporting the City's contribution to
the Project Public Investment. Pursuant to the Convention Center Subleases, the Developer shall be
responsible for the development, construction, operation and maintenance of the Convention Center,
excluding the obligation of the City to pay rent under the Convention Center Sublease made by the
JEPA to the City, which rent payments shall secure and be used to pay debt service on the Bond
Financing pursuant to the Plan of Finance, and the proceeds of such Bond Financing shall be used to
pay the Project Public Investment Amount, The Convention Center Subleases shall be negotiated on
or before the Target Date set forth in the Schedule of Performance and shall be executed by the
Developer, JEPA and City, as applicable, at the Close of Escrow. Upon approval of the legal
description of the Convention Center Site by the District pursuant to Section 6.1(a), the legal
description of the Convention Center Site shall be attached to each of the Convention Center
Subleases.
6.2 Opening of Escrow; Updated Preliminary Title Reports. The Parties shall open
an escrow with Chicago Title Insurance Company, or such other escrow company as the Parties may
mutually select (the "Escrow Agent") to consummate the Close of Escrow as herein provided.
Within sixty (60) days of the Execution Date ("Delivery Date"), the Developer shall deliver to the
District and City a preliminary title report ("Preliminary Title Report") for the Project Site prepared
by Chicago Title insurance Company (the "Title Company").
Developer shall have ninety (90) days after the Delivery Date to provide written notice to
District of any exceptions to title that are disapproved by Developer ("Developer's Disapproval
Notice '). Developer's failure to deliver Developer's Disapproval Notice to District within said
ninety- (90-) day period shall be deemed Developer's approval of all exceptions to title identified in
the Preliminary Title Report. District shall have ninety (90) days following receipt of Developer's
Disapproval Notice to provide written notice to Developer ("District's Response Notice") if District
elects to remove any such exceptions disapproved by Developer. If District agrees to remove all of
the disapproved exceptions identified by Developer, then District shall cause such disapproved
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exceptions to be removed from title to the Project Site prior to Close of Escrow. If District elects not
to remove one or more of the disapproved exceptions, Developer may elect to either (a) terminate
this Agreement in accordance with Article VIII, or (b) waive the disapproved exceptions that the
District elected not to remove by providing written notice to District, Escrow Agent and Title
Company, in which case the District shall cause the disapproved exceptions that the District agreed
to remove (if any) to be removed from title to the Project Site prior to Close of Escrow. Any
exceptions in the Preliminary Title Report that are approved or deemed approved by the Developer
shall be considered approved and shall be referred to collectively as the "Approved Title
Exceptions'.
Not Iater than sixty (60) days after the Developer delivers a copy of the then-current
Preliminary Title Report to the Private Construction Lenders, the Developer shall deliver to the
District a copy of such Private Construction Lenders' notice of any exceptions to title that are
disapproved by such Private Construction Lenders ("Private Construction Lenders' Disapproval
Notice"); provided that the Private Construction Lenders' Disapproval Notice may not disapprove
any of the Approved Title Exceptions that are the result of a discretionary governmental approval of
a government authority, including the City and District, or that are otherwise agreed to by the
District, City and Developer in writing. Developer's failure to deliver Private Construction Lenders'
Disapproval Notice to District within said sixty- (60-) day period shall be deemed the Private
Construction Lenders' approval of all such exceptions to title. District shall have twenty (20) days
following receipt of Private Construction Lenders' Disapproval Notice to provide written notice to
Developer ("District's Response Notice") if District elects to remove any such exceptions
disapproved by the Private Construction Lenders. If District agrees to remove all of the disapproved
exceptions identified by the Private Construction Lenders, then the District shall cause such
disapproved exceptions to be removed from title to the Project Site prior to Close of Escrow. If
District elects not to remove one or more of the disapproved exceptions, Developer may elect to
either (a) terminate this Agreement in accordance with Article VIII, or (b) waive the disapproved
exceptions that the District elected not to remove by providing written notice to District, Escrow
Agent and Title Company, in which case the District shall cause the disapproved exceptions that the
District agreed to remove (if any) to be removed from title to the Project Site prior to Close of
Escrow. Any exceptions in the Preliminary Title Report that are approved or deemed approved by
the Private Construction Lenders shall be considered approved and shall form part of the Approved
Title Exceptions.
The Title Company may provide an update to the Preliminary Title Report from time to time.
The Developer shall have twenty (20) days after receipt of such update to provide written notice to
District of any new or modified exceptions to title that may materially affect the development or use
of the Project Site and that are disapproved by Developer ("Developer's Disapproval Notice");
provided that the Developer's Disapproval Notice shall not contain any new or modified exceptions
which were created by Developer or Developer's employees, agents, contractors, or subcontractors,
or that were consented to or requested by Developer. Developer's failure to deliver Developer's
Disapproval Notice to District within said twenty- (20-) day period shall be deemed Developer's
approval of all such exceptions to title and such new or modified exceptions shall be considered
Approved Title Exceptions. If the Developer provides Developer's Disapproval Notice before a
final, non-appealable judgment in the Validation Action has been granted, then the District shall
provide written notice to Developer ("District's Response Notice") if District elects to remove any
such exceptions disapproved by Developer, at the time that is the earlier of (a) ninety (90) days
following receipt of Developer's Disapproval Notice before a final, non-appealable judgment in the
Validation Action and (b) ten (10) days after a final, non-appealable judgment in the Validation
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Attachment A to Agenda File No. 2018-0070
Action is granted. If the Developer provides Developer's Disapproval Notice after a final, non-
appealable judgment in the Validation Action has been granted, then the District shall have ten (10)
days following receipt of Developer's Disapproval Notice to provide written notice to Developer
("District's Response Notice") if District elects to remove any such exceptions disapproved by
Developer. If District agrees to remove all of the disapproved exceptions identified by Developer,
then the District shall cause such disapproved exceptions to be removed from title to the Project Site
prior to Close of Escrow. If District elects not to remove one or more of the disapproved exceptions,
Developer may elect to either (i) terminate this Agreement in accordance with Article VIII, or
(ii) waive the disapproved exceptions that the District elected not to remove by providing written
notice to District, Escrow Agent and Title Company, in which case the District shall cause the
disapproved exceptions that the District agreed to remove (if any) to be removed from title to the
Project Site prior to Close of Escrow. Any new or modified exceptions in the Preliminary Title
Report that are approved or deemed approved by the Developer shall be considered approved and
shall form part of the Approved Title Exceptions. The Developer shall not request an update to the
Preliminary Title Report from the Title Company other than (1) once after the Existing RV Park
Lessee and each of the tenants, occupants or guests on the land encumbered by the Existing RV Park
Lease have vacated such land, (2) once after a final, non-appealable judgment in the Validation
Action has been granted, and (3) two more times during the Term, in each case, as the Developer
determines in its sole and absolute discretion.
The Parties acknowledge that JEPA, District and the City will require confirmation of
satisfactory title to the Convention Center Site pursuant to a title policy in form and substance
acceptable to support the financing of the Project Public Investment pursuant to the Plan of Finance,
as further described in Section 5.2(n).
6.3 Execution and Delivery of Documents. The applicable Parties shall complete,
execute and deliver the Closing Documents as set forth in Section 6.4(a).
6.4 Close of Escrow; Title Policies. Provided that each of the conditions in Sections 5.2
and 5.3 has been satisfied, or waived in writing by the Party or the Parties, as applicable, to whose
benefit such condition exists, the Parties shall close the transaction contemplated by this Agreement
("Close of Escrow") on or before the Target Date set forth in the Schedule of Performance (the
"Closing Date"), but in no event earlier than the following conditions have been satisfied:
(a) Escrow Agent and Title Company shall have received fully executed originals
of all of the following documents (the "Closing Documents"), all of which Closing Documents shall
be delivered not later than one (1) business day prior to the Closing Date:
(i) Two (2) originals of the Ground Lease, executed by the District and
Developer;
(ii) One (1) notarized original of the Memorandum of Ground Lease,
executed by the District and Developer, in recordable form;
(iii) Four (4) originals of each of the Convention Center Subleases,
executed by the Developer, the District, the City, and the JEPA, as applicable;
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Attachment A to Agenda File No. 2018-0070
I;iv) One (1) notarized original of the Memorandum of Convention Center
Sublease for each of the Convention Center Subleases, executed by the District, Developer, City and
JEPA, as applicable;
(v) One (1)original Closing Statement, executed by the District;
(vi) One (1)original Closing Statement, executed by the City;
(vii) One (l)original Closing Statement, executed by the JEPA;
(viii) One (1)original Closing Statement, executed by the Developer;
(ix) As to each of the lenders involved in the Close of Escrow, one (l)
original executed Closing Statement; and
(x) Such other customary and reasonable title and escrow documents
reasonably required by the Title Company and Escrow Company for the Close of Escrow in a form
and with terms reasonably acceptable to the Parties executing such documents and supplemental
escrow instructions as may be reasonably required for the Close of Escrow.
i'b) The Title Company is irrevocably committed to issue to the Developer a
leasehold policy or policies of title insurance related to the Project Site in such form and amounts and
with such special endorsements as may be reasonably required by the Developer and the Private
Construction Lender, subject only to the Approved Title Exceptions;
(c) The Title Company is irrevocably committed to issue to the JEPA and City
leasehold policies of title insurance related to the Convention Center Site in such form and amounts
and with such special endorsements as may be reasonably required by the JEPA and City, as
applicable, subject only to the Approved Title Exceptions;
(d) Escrow Agent shall have received from the Developer evidence that the Title
Company is irrevocably committed to issue to the Private Construction Lender a lender's policy of
title insurance in the amount of the first lien leasehold mortgage, subject only to the Approved Title
Exceptions, and with special endorsements as may be required by the Private Construction Lender;
(e) Escrow Agent shall have received from the District and/or City evidence that
the Title Company is irrevocably committed to issue to any public lender a lender's policy of title
insurance in the amount of the financing, subject only to the Approved Title Exceptions, and with
special endorsements as may be required by the public lenders;
(f) The Developer and the Escrow Agent shall have received from the District
and the City certification in writing that all conditions to Close of Escrow set forth in Section 5.2
have either been satisfied or waived; and
(g) The District, the City and the Escrow Agent shall have received from the
Developer certification in writing that all conditions to Close of Escrow set forth in Section 5.3 have
either been satisfied or waived.
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Attachment A to Agenda File No. 2018-0070
6.5 Costs of Escrow; Title Insurance.
(a) The Developer shall pay in escrow to the Escrow Agent the following fees,
charges and costs promptly after the Escrow Agent has notified the Developer of the amount of such
fees, charges and costs, but not earlier than ten (10) days prior to the Closing Date:
(i) The escrow fee;
(ii) All premiums for title insurance policies and special endorsements
issued by the Title Company to the Developer and the Private Construction Lenders pursuant to
Sections 6.4(b) and 6.4(d);
(iii) Ad valorem taxes and assessments, including possessory interest
taxes, upon the Project Site accruing on and after the Closing Date;
(iv) Any transfer taxes required to be paid at the Close of Escrow;
(v) Any fees payable for the recordation of any of the Closing Documents
in the Official Records of the County of San Diego; and
(vi) One-half(112) of all other fees, charges and costs of escrow.
(b) The District, the City or the JEPA, as applicable, shall pay in escrow to the
Escrow Agent the following fees, charges and costs promptly after the Escrow Agent has notified the
District of the amount of such fees, charges and costs, and District has approved the same, but not
earlier than ten (10) days prior to the Closing Date:
(i) All premiums for title insurance policies and special endorsements
issued by the Title Company to the District, the City, the JEPA and the any public lender pursuant to
Sections 6.4(c) and 6.4(e);
(ii) The cost of any endorsements that are required to remove any Title
Exception that the District has agreed to remove; and
(iii) One-half(112) of all other fees, charges and costs of escrow.
Except as otherwise set forth in this Agreement, each of the Parties shall be responsible for the costs
of its own due diligence investigations or activities, including, without limitation, the costs of its own
consultants and legal counsel.
VII. DEFAULTS; REMEDIES.
7.1 General Developer Default. 1f, prior to the Close of Escrow and delivery of the
Project Site to Developer, the Developer shall fail to perform or fulfill any obligation required of it
under this Agreement and/or under the Right of Entry Agreement and shall not have cured or
commenced to cure such failure within thirty (30) days following written notice thereof from the
District and/or the City (or has commenced to cure such failure, but is not diligently proceeding to
cure such failure), then the Developer shall be in default under this Agreement (each such event or
occurrence, a"Developer Event of Default").
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Attachment A to Agenda File No. 2018-0070
In the event of a Developer Event of Default, the District and the City may, each in its sole
discretion, (a) extend the time for the Developer to perform the applicable obligation(s) hereunder for
a period of time acceptable to the District and City beyond the cure period set forth in this
Section 7.1, or (b) terminate this Agreement by giving written notice (as required under Section 2.4)
of such termination to the other Parties. Upon termination, the rights and obligations of the Parties
shall be as set forth in Section 7.3 and Article VIII.
7.2 Default by District or City. If, prior to the Close of Escrow, the District or the City
shall fail to perform or fulfill any obligation required of such Party under this Agreement and/or
under the Right of Entry Agreement and shall not have cured or commenced to cure such failure
within thirty (30) days following written notice thereof from the Developer (or has commenced to
cure such failure, but is not diligently proceeding to cure such failure), then the District or the City,
as applicable, shall be in default under this Agreement (each such event or occurrence, a "Public
Entities Event of Default" and, together with a Developer Event of Default, any "Event of Default").
In the event of a Public Entities Event of Default, the Developer may, in its sole discretion,
(a) extend the time for the District or the City, as applicable, to perform the applicable obligation(s)
hereunder for a period of time acceptable to the Developer beyond the cure period set forth in this
Section 7.2, or (b) terminate this Agreement by giving written notice (as required under Section 2.4)
of such termination to the other Parties. Upon termination, the rights and obligations of the Parties
shall be as set forth in Section 7.3 and Article VIII.
7.3 Remedies Exclusive.
(a) Because of the nature of this Agreement, the Parties agree that remedies
expressly set forth in this Agreement are the only remedies available to the Parties.
(b) The Developer shall not have any remedy for money damages against the
City, District or JEPA, except for return of the Deposit in accordance with Article VIII.
(c) Neither the District nor the City shall have any remedy for money damages
against the Developer, except for retention of the Deposit in accordance with Article VIII.
(d) The District, the City or the Developer, as applicable, shall be entitled to
compel specific performance of the other Party's(ies') obligation to meet and confer in accordance
with Section 5.1.
(e) Except as set forth in Section 7.3(d), the Parties shall not have any remedy for
specific performance against any other Party.
7.4 Dispute Resolution. The Parties shall, before the commencement of any lawsuit or
court action against any other Party relating to this Agreement or the Project, attempt in good faith to
settle their dispute by third-party mediation.
VIII. EVENTS OF TERMINATION; RIGHTS AND OBLIGATIONS OF PARTIES.
8.1 Events of Termination. This Agreement shall automatically terminate if any of the
following events (an "Event of Termination") occur prior to Close of Escrow:
49
Attachment A to Agenda File No. 2018-0070
(a) the Early Expiration Date or expiration of any Extension Period without an
approved Extension or expiration of the final Extension Period;
(b) termination of this Agreement by any Party pursuant to Section 3.1(c);
(c) termination of this Agreement by the Developer pursuant to Section 4.17;
(d) termination of this Agreement by the Developer pursuant to Section 4.21;
(e) termination of this Agreement by any Party pursuant to Section 5.1(c);
(f) termination of this Agreement by any Party pursuant to Section 5.1(e);
(g) termination of this Agreement by the Developer or the District pursuant to
Section 5.8(c);
(h) termination of this Agreement by the Developer by reason of a Public Entities
Event of Default or by the District or the City by reason of a Developer Event of Default, in each
case, pursuant to Article VII; and
(i) the failure to otherwise satisfy, by the Closing Date, the conditions set forth in
Sections 5.2, 5.3 and 6.5, unless said failure is waived by the Party or Parties which the condition
benefits.
8.2 Disposition of Deposit.
(a) IF THIS AGREEMENT IS TERMINATED BY THE DISTRICT OR THE
CITY PURSUANT TO SECTION 8.l(h), THE DEVELOPER ACKNOWLEDGES AND AGREES
THAT THE DEPOSIT MAY BE RETAINED BY THE DISTRICT (50% OF THE DEPOSIT
AMOUNT) AND CITY (50% OF THE DEPOSIT AMOUNT) AS LIQUIDATED DAMAGES AND
AS THEIR PROPERTY WITHOUT ANY DEDUCTION, OFFSET OR RECOUPMENT
WHATSOEVER BY THE DEVELOPER. IF THE DEVELOPER SHOULD DEFAULT UPON ITS
OBLIGATIONS HEREUNDER, ANY SUCH TERMINATION OF THIS AGREEMENT WOULD
RESULT IN IMMEASURABLE DAMAGE AND LOSS TO THE DISTRICT AND THE CITY. IT
IS IMPRACTICABLE AND EXTREMELY DIFFICULT TO FIX THE AMOUNT OF SUCH
DAMAGES TO THE DISTRICT AND THE CITY, BUT THE PARTIES ARE OF THE OPINION,
UPON THE BASIS OF ALL INFORMATION AVAILABLE TO THEM, THAT SUCH
DAMAGES WOULD APPROXIMATELY EQUAL THE AMOUNT OF THE DEPOSIT, AND
THE AMOUNT OF SUCH DEPOSIT SHALL BE PAID TO THE DISTRICT AND THE CITY
UPON ANY SUCH OCCURRENCE AS THE TOTAL OF ALL LIQUIDATED DAMAGES FOR
ANY AND ALL SUCH DEVELOPER EVENTS OF DEFAULT AND NOT AS A PENALTY.
50
Attachment A to Agenda File No. 2018-0070
THE DEVELOPER, THE CITY AND THE DISTRICT SPECIFICALLY
ACKNOWLEDGE THIS LIQUIDATED DAMAGES PROVISION BY THEIR
SIGNATURES HERE:
DISTRICT:
By:
CITY:
By:
DEVELOPER:
By:
(b) If this Agreement is terminated by reason other than of a Developer Event of
Default, then the District shall promptly return or release the Deposit then held by the District to the
Developer as the Developer's sole remedy hereunder.
8.3 Effect of Termination.
(a) Following the Close of Escrow, the provisions of this Agreement shall be
governed by Article VIII, and the rights and obligations of the parties under the Ground Lease and
the Convention Center Subleases shall be governed by those documents.
(b) If this Agreement is terminated or expires, then the District and City shall
have the absolute right to enter into agreements relating to the Project, Developer's Improvements
and the Project Site with any developer or operator and brand of its choosing, including, without
limitation, the Operator and the Gaylord Hotel brand.
(c) Effect of Termination of this Agreement on Plans and Specifications and
Products.
(i) If either the District or the City terminates this Agreement by reason
of a Developer Event of Default, then the Developer shall transfer and assign to the District all of the
Developer's interest in (A) any and all Plans and Specifications with respect to the Phase IA
Infrastructure Improvements and the Parking Improvements ("Partial Plans and Specifications") and
any and all documents relating to the Partial Plans and Specifications and (B) any and all surveys,
soils and hazardous materials investigations, tests and reports, engineering reports and geotechnical
reports (collectively, "Products") with respect to the Phase IA Infrastructure Improvements and the
Parking Improvements, other than due diligence materials, material correspondence and work
product documents (collectively, "Partial Products"), in each case, with the right of the District to use
such Partial Plans and Specifications and related documents and Partial Products for any purpose
without compensation to the Developer or any other Person; provided that each such Partial Plan and
Specification, related document or Partial Product shall be reviewed by an engineer retained by the
District and/or the City and stamped by such engineer before being used by the District or the City
for any purpose; or
51
Attachment A to Agenda File No. 2018-0070
(ii) If the District, or the City or the Developer terminates this Agreement
for any reason other than a Developer Event of Default, then the Developer shall not be obligated to
transfer or assign to the District except those Developer paid for under Section 4.7(c) any of the
Developer's interest in (A) any Plans and Specifications or any documents relating to such Plans and
Specifications or (B) any Product, except for any Plans and Specifications and Products which the
City or District has reimbursed the Developer for on or prior to the termination of this Agreement.
(iii) With respect to clause (i) and (ii) above, neither the Developer nor
any architect, engineer or other Person that prepared or contributed to such Plans and Specifications
and related documents and Products makes, and shall not be deemed to have made, any warranty or
representation as to the quality of such Plans and Specifications (including that such Plans and
Specifications were prepared in accordance with any standard of care) or Products or as to the
suitability of such Plans and Specifications and related documents and Products for any purposes of
the District.
(d) Except as otherwise expressly provided in this Article VIII and in subsection
(e) below, upon an Event of Termination none of the Parties shall have any further rights, obligations
or remedies to or against any other Party pursuant to this Agreement.
(e) Notwithstanding termination of this Agreement, the Parties agree that the
following provisions shall survive such termination to the extent and for such period as necessary to
give them full force and effect under the circumstances giving rise to termination of this Agreement:
(i) Sections 4.1(f), 4.7(c), 4.7(d) and 4.17;
(ii) Section 8.2; and
(iii) this Section 8.3.
IX. MISCELLANEOUS PROVISIONS.
9.1 Real Estate Commissions. Neither Party shall be liable for any real estate
commission or brokerage fees which may arise from this Agreement. Each Party represents that it
has engaged no broker, agent or finder in connection with this Agreement, and each Party agrees to
hold the other Party or Parties harmless from any claim by any broker, agent or finder retained by
such Party.
9.2 Time of Essence. Time is of the essence in the performance of the respective
obligations of the Parties under this Agreement.
9.3 Consent. The District and the City shall reasonably cooperate with the Developer in
the preparation and submittal of any governmental applications the Developer must submit in the
furtherance of this Agreement. The District and the City further agree to reasonably cooperate with
the Developer in the timely processing of any such applications.
9.4 Entire Agreement. This Agreement consists of 55 pages together with Attachment
Nos. I through 7, inclusive, which are attached hereto and incorporated herein by this reference,
which constitute the entire agreement between the Parties.
52
Attachment A to Agenda File No. 2018-0070
9.5 Interpretation. This Agreement has been negotiated at arm's length and between
Persons sophisticated and knowledgeable in the matters dealt with herein. In addition,each Party has
been represented by experienced and knowledgeable legal counsel. Accordingly, any rule of law
(including California Civil Code Section 1654) or legal decision that would require interpretation of
any ambiguities in this Agreement against the Party that has drafted it, is not applicable and is
waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the
purposes of this Agreement.
9.6 Governing Law. This Agreement shall be governed by the laws of the State of
California.
9.7 Captions. The captions used herein are inserted only as a matter of convenience and
for reference and in no way define, limit or describe the scope or the intent of any Section hereof.
9.8 No Third Party Rights. Nothing in this Agreement shall create or shall give to third
parties any claim or right of action against the District, the City or the Developer beyond such as may
legally exist, irrespective of this Agreement.
9.9 Modification or Amendment of Agreement; Operating Memoranda.
(a) No change in, modification to, termination or discharge of this Agreement in
any form whatsoever shall be valid or enforceable unless it is in writing and signed by the Party to be
charged therewith or its duly authorized representative;.
(b) The Parties acknowledge that the provisions of this Agreement require a close
degree of cooperation, and that new information and future events may make appropriate changes
with respect to the details of performance of the Parties under this Agreement. If, as a result of a
Periodic Review provided for in Section 5.1, or otherwise from time to time prior to the Early
Expiration Date or during any Extension Period, the Parties find that non-substantive refinements or
adjustments that do not require any public review or approval and that concern details of
performance of the Parties hereunder, are necessary or appropriate, they may effectuate such
refinements or adjustments through a memorandum (individually, "OOperatinMeorandum", and
collectively, "Operating Memoranda") approved by the Parties which, after execution, shall be
attached to this Agreement as addenda and become a part hereof. Operating Memoranda must be
executed on the District's behalf by its Executive Director or designee, on behalf of the City by its
City Manager or designee, and on behalf of the Developer by its authorized representative.
Operating Memoranda shall not require prior notice or approval by the BPC nor the City Council,
and shall not constitute an amendment to this Agreement.
(c) Any substantive or significant modifications to the terms and conditions set
forth in this Agreement, such as an increase of the Project Public Investment Amount, reduction in
insurance or indemnity requirements, or waiver of any discretionary approval requirement, shall be
processed as an amendment of this Agreement, and must be approved by the Developer, BPC, and
City Council.
9.10 Waiver. No waiver or any breach of any of the terms, covenants, agreements,
restrictions or conditions of this Agreement shall be construed to be a waiver of any succeeding
breach of the same or other terms, covenants, agreements, restrictions and conditions hereof.
5
Attachment A to Agenda File No. 2018-0070
9.11 Severability. If any term, covenant or condition of this Agreement or the application
thereof to any Person or circumstance shall to any extent be invalid or unenforceable, the remainder
of this Agreement or the application of such term, covenant or condition of this Agreement shall be
valid and enforceable to the fullest extent permitted by Law.
9.12 Certificates.
(a) On or before the Target Date set forth in the Schedule of Performance, the
Developer shall provide to the District and the City an incumbency certificate, in form and substance
reasonably satisfactory to the District and the City and signed by a duly authorized officer of the
Developer, certifying that Ira M. Mitzner is duly authorized to execute this Agreement on behalf of
the Developer, and attaching a copy of the Amended and Restated Limited Liability Company
Agreement of RIDA Chula Vista, LLC and any applicable resolutions.
(b) On or before the Target Date set forth in the Schedule of Performance, the
District shall provide to the Developer a copy of the resolution duly adopted by the BPC, evidencing
that the Executive Director is authorized to execute this Agreement on behalf of the District.
(c) On or before the Target Date set forth in the Schedule of Performance, the
City shall provide to the Developer a copy of the ordinance duly passed and adopted by the City
Council, evidencing that the Mayor of the City is duly authorized to execute this Agreement on
behalf of the City.
9.13 Counterparts. This Agreement may be executed in counterparts which taken
together shall constitute one agreement.
9.14 No,point and Several Liability. There shall be no joint and several liability between
or among the JEPA, District and City.
[Signatures on Following Pages]
54
Attachment A to Agenda File No. 2018-0070
DISPOSITION AND DEVELOPMENT AGREEMENT
Resort Hotel and Convention Center Project
[Chula Vista Bayfront Master Plan Parcel H--3]
Signatory Page
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.*
DISTRICT:
SAN DIEGO UNIFIED PORT DISTRICT, a public
corporation
I y:
Randa Coniglio, Executive Director
APPROVED AS TO FORM AND LEGALITY:
GENERAL COUNSEL
By
Assistant/Deputy
Attachment A to Agenda File No. 2018-0070
DISPOSITION AND DEVELOPMENT AGREEMENT
Resort Hotel and Convention Center Project
[Chula Vista Bayfront Master Plan Parcel H-3]
Signafoty� Poge
CITY:
CITY OF CHULA VISTA, a charter city and
municipal corporation
By: � „®
Mary Casillas Salas, Mayor
ATTEST:
_._................._._.
Kerry K. Bigelow, City Clerk
APPROVED AS TO FORM:
Glen R. Googins, City Attorney
Attachment A to Agenda File No. 2018-0070
DISPOSITION AND DEVELOPMENT AGREEMENT
Resort Hotel and Convention Center Project
[Chula Vista Bayfront Master Plan Parcel H-31
Signatory Page
DEVELOPER:
RIDA CHULA VISTA, LLC, a Delaware
limited liability company
Its:
Attachment A to Agenda File No. 2018-0070
APPENDIX NO. 1
DEFINITIONS
....._. ......................................._______
50% Energy Standard As defined in Section 4.22.
,,,,,,,,,,,,,,,,, ,,,,,,,,,,u,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,..,,,,,,,,,,,,,,,,, .......................................................
2010 Title 24 As defined in Section 4.22.
Additional Ener Savings As defined in Section 4.22(c).
gY g
Measures
........ ...... ....�
Affiliated Transferee As defined in Section 2.1(f)(vii).
P
Agreement As defined in the Preamble.
Appraisal As defined in Section 5.2(e).
Approval of Tenant Project Plans As defined in Section 4.1(c).
_ ......................................................
Approved Title Exceptions As defined in Section 6.2.
.......
Bond Financing ? As defined in Section 4.7(a).
...._._...................... ...........
_�m..�
BPC As defined in Recital E.
—Building1,11 it Application ...___�......................................................._
As defined in Section 4.4(a)(ii).
Drawings
Building Permits As defined in Section 4.4
.. ....... ..........�� „..,..,..,.
I
CDP As defined in Section 4 4(a)(i)
�.,....
CEQA As defined in Recital C.
n
CFD As defined in Section 1.4(e).
....... ........_._............_.—.._......_
Change of Control As defined in Section 2.1(f)(i).
Chula Vista Bayfront As defined in Recital A.
_____......................................................................._
City As defined in the Preamble.
City Council As defined m�Section 1.3(e).
(e).
._._._._..............
City Infrastructure Improvements As defined in Recital K.
City Infrastructure Improvements As def
ned in Recital K.
Costs
Appendix No. l
Page l of 3
Attachment A to Agenda File No. 2018-0070
Claims As defined in Section 4.17.
Close of Escrow As defined in Section 6.4.
Closing Date As defined in Section 6.4.
Closing Documents As defined in Section 6.4(a).
Completion Guaranty As defined in Section 4.15.
Compliance Documents As de-fined in Section 4.21.
Construction Loan Account Asdefinedin Section 5.2(d).
Instructions
Control Controls Controlled As defined in Sec tion 2 1(f)(i v).
Controlling)
................................................................................................................................................................................................................................. ----—-----
Controlled Person As defined in Section 2.1(f)(iv).
............................................................................................................................................................................................................................ ..........................................................................................................................................................—
Controlling Person As defined in Section 2.1(f OO.
.......................................... ... ........ ......... ......... ......... ............................................................................ ........................ .................................. ................................. ........
Convention Center As�defined—ne i�in Recital 1.
.....
Convention..............................................................Center...............................................Site.................................. ... ........-——------------------------------------------------------------
As defined in Section 1.2(a).
................................................................................................................................................................................................................................ .................................................... —---,
Convention Center Subleases As defined in Section 6.l(b),
..................................................................................................................................................................................-—---—------
County As defined in Section 1.4(c).
................................................. .......................................................................................................................................
Delivery Date As defined in Section 6.2.
..........................................................................................................................................................................................................
Deposit As defined in Section 1.6(a).
Developer As defined in the Preamble.
.................................................................................................................................................................................. ......................................
Developer Affiliate As defined in Section 4.17(b).
Developer Construction Work As defined in Section 4.16(a).
Developer Event of Default As defined in Section 7.1.
Developer's Contribution As defined in Section 5.2(e)(ii).
Developer's Convention Center As defined in Recital 1.
Costs
Developer's Debt Contribution As defined in Section 5.2(e)(i).
..................................................................................................................
Developer's Disapproval Notice As defined in Section 6.2.
........................
Appendix No. I
Page 2 of 8
Attachment A to Agenda File No. 2018-0070
Developer's Improvements As defined in Recital M
„. �..........
Developer's Phase IA As defined in Recital G.
Infrastructure Improvements
.... — ........
Developer's - wn ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,w,
er's Phase I As defined in Recital G.
Infrastructure Improvements Costs
.....................
Developer's Private Improvements As defined in Recital M.
m..................
m� �.
Developer's Private Improvements As defined in Recital M.
Costs
,. ._..� .............................................................. .... ...............
Developer's Public Improvements As defined in Recital L.
�m„-, ,,,,,,,,,,,,, �----.. ,,.,,,.. ............................................................... ................................
Developer's Public Improvements As defined in Section 4.5(e)
Costs
........ .... _ .. ............__ __-_ m ,
Development Costs As defined in Section 4.5(d).
DIR As defined in Section 4.16(d)(6)
......................................
Discretionary Approvals As defined in Section 4.17(e).
District and City Parties _ As defined in Sec �� ,,,,„,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
tion 4.17.
1-11,. . ......
District Retained Property As defined in Section 1.2(a).
.. ...... ....... .. ,... .........
District's Response Notice As defined in Section 6.2.
......... ............... ,r,,,,���'.,�.�.
Due Diligence Investigations As defined �n Section 5.8(a).
... .....
Earl . �
y Expiration DateAs definedin Section 3.1.
Easement Findings As defined in Section �
4.8(c).
,,,,,,,,,,, ................................._..,
EIFD As defined in Section 1.4(e).
................
ENA As defined in Recital E.
........ ......... .........
Equity Investor As defined in Section 5.2(b).
„ ..- ....................................... ...............
Equity Investor Contribution As defined in Section 5.2(c).
_.............................................. — .-„ ._. ...,._ _ ...........
Escrow Agent As defined in Section 6.2.
”'
_____........ �.,,,,,n
Event of Termination —' As defined in Section 8.1.
... �T
Execution Date As defined in the Preamble.
...... .,,,,,,, �,,, ... ---- ...--- ..
Existing Approvals As defined in Section 1.3.
Appendix No. I
Page 3 of 8
Attachment A to Agenda File No. 2018-0070
Existing JEPA As defined in Recital I.
Existing RV Park As defined in Section 1.2(b).
Existing RV Park Lease As defined in Section 1.2(b).
Existing RV Park Lessee As defined in Section 1.2(b).
Extension As defined in Section 3.1.
Extension Period As defined in Section 3.1.
FEIR As defined in Section 1.3(b).
Financing Agreement As defined in Recital G.
First Amendment As defined in Recital E.
General Contractor As defined in Section 4.9.
Ground Lease As defined in Section 1.2(a).
Guarantor As defined in Section 4.15.
Hard Construction Costs As defined in Section 4.5(a).
Hotel As defined in Recital M.
Hotel Site As defined in Section 1.2(a).
Initial Right of Entry Agreement As defined in Section 5.8(b).
JEPA As defined in Recital I.
Laws As defined in Section 1.5.
Loan Documents As defined in Section 5.2(e).
LOI As defined in Recital H.
Major Component of Developer's As defined in Section 4.4(c).
Improvements
Major Decisions As defined in Section 2.1(f)(v).
Management Agreement As defined in Section 5.2(f).
Managing Person Ira M. Mitzner.
Master Plan As defined in Recital A.
Appendix No. l
Page 4 of 8
Attachment A to Agenda File No. 2018-0070
....... ,1111
Master Plan Project Area As defined in Recital B.
.......... ,,,,,,,,,,, ......................... ...m .
Minimum Energy Efficiency A. defined m Section 4.22(a).
Design Standard
......... ........� � ��,,,,,,,,,,,,,,,,,,,,,�,,,,,,,,,,,,,"I',"",',,...........,, �.
�.��„ � .�.�._ 1111_
M&V Plan As defined in Section 4.22(b)(i;).
_��,.
New S-1 RV Park As defined in Section 1.2(b).
New S-1 RV Park Lease As defined in Section 1.2(b).
New ���� - ,�,�,,,,�.........................................
w.. S-1 RV Park Site As defined in Section 1.2(b).
.. ......... .. ......... .� ,
Operating Memorandum As defined in Section 9.9(b).
. .�... ..___ ....... ......... ........ ........
Operator As defined in Section 5.2(f).
... _. ......... ......... ........
Original ENA As defined in Recital E.
. .___ .... .......__
Original FEIR As defined in Recital B.
�. _111..1 ..._._.
Outstanding Issues As defined in Section 4.8(c).
....
Parking Improvements As defined in Recital J.
___ ........ ........ .
Parking Improvements Costs As defined in Recital J.
��,�,�� ...�.�...._. ...........
Partial Products As defined in Section 8.3(c)(i).
....._._ ........ __ ..... -----
Partial Plans and Specifications As defined in Section 8.3(c)(i).
......... .........
Party As defined in the Preamble.
Payment Bond As defined in Section 4.14(a)(ii.
�,e. ......... _ _�..� ,, ®,,,,,,,,,,,,,,,,,,�,,,,
Performance Bond As defined in Section 4.14(a)(i),
...... ......... ........ �m„�
Periodic Review As defined in Section 5.1(a).
..........................................._._._._._._................................................. 11111,11—
Periodic
1111... _Periodic Review Matters As defined in Section 5.1(a)
............................................_ .........
Permitted Transfer As defined in Section 2.1(fl(vi)
......... ..........._._._._.. ... ,.,..
Person As defined in Section 2.1(f)(iii).
Phase 1A As defined in Recital G
Phase 1A Infrastructure Costs As defined in Recital G.
Phase 1 A Infrastructure As defined in Recital G
Improvements
Appendix No. 1
Page 5 of 8
Attachment A to Agenda File No. 2018-0070
Plan of Finance As defined in Recital G.
Plans and Specifications As defined in Attachment No. 5.
Pre-Close Responsibility Costs As defined in Section 4.8(a).
Pre-Existing Hazardous Material As defined in Section 4.17(g).
Predevelopment Phase As defined in Recital G.
Preliminary Project Approval As defined in Section 1.4(a).
Preliminary Site Preparation As defined in Section 4.8(b).
Preliminary Site Preparation As defined in Section 4.8(b).
Amount
Preliminary Title Report As defined in Section 6.2.
Private Construction Lender As defined in Section 5.2(e).
Private Construction Lenders' As defined in Section 6.2.
Disapproval Notice
Products As defined in Section 8.3(c)(i).
Professional As defined in Section 4.10(e).
Prohibited Person As defined in Section 2.1(f)(vii),,
Project As defined in Recital F.
Project Public Investment As defined in Recital I.
Project Public Investment Amount As defined in Recital I.
Project Site As defined in Recital F and Section 1.2(a).
Public Arts Policy As defined in Section 4.1(c).
Public Entities Event of Default As defined in Section 7.2.
Public Financing Contracts As defined in Section 4.19.
Public Fund Contribution As defined in Section 4.7(a).
Public Improvements As defined in Recital N.
Public Improvements Costs As defined in Recital O.
PWL As defined in Section 4.16(a).
Appendix No. 1
Page 6 of 8
Attachment A to Agenda File No. 2018-0070
Qualified Private Contracts As defined in Section 4.19,
Redevelopment Agency As defined in Recital A.
Related Approvals As defined in Section 4.17(c).
Related Costs As defined in Section 4.17.
Remaining Phase 1 A Infrastructure As defined in Recital G.
Improvements
Required Building Permits As defined in Section 5.2(h).
Required Energy Audits As defined in Section 4.22(b)(ii).
RFQ As defined in Recital E.
RIDA As defined in Recital E.
Right of Entry Agreement As defined in Section 5.8(b).
Rohr As defined in Section 4.1(h).
Room As defined in Recital I.
Schedule of Performance As defined in Section 1.2(b).
Schematic Plans Set As defined in Section 4.4(a)(i).
Scope of Development As defined in Recital F.
SDN As defined in Section 2.1(f)(vii),
Second Amendment As defined in Recital E.
Settlement Agreement As defined in Section 1.3(c).
Site Survey As defined in Section 6.1(a).
State Lands Commission As defined in Section 1.4(v).
Surface Parking As defined in Section 4.3.
Target Date As defined in Section 1.4.
Tenant Construction Project As defined in Section 4.4(a)(i).
Number
Tenant Project Plan Application As defined in Section 4.4(a)(ii).
Tenant Project Plans As defined in Section 4.5(a).
Appendix No. 1
Page 7 of 8
Attachment A to Agenda File No. 2018-0070
Term As defined in Section 3.1.
Title Company As defined in Section 6.2.
Total Project Costs As defined in Section 4.5(c).
Transfer As defined in Section 2.1(b)(i).
Unaffiliated Third Party As defined in Section 2.1(f)(ii).
Validation Action As defined in Section 4.19.
Work As defined in Section 4.13(c).
Appendix No. 1
Page 8 of 8
Attachment A to Agenda File No. 2018-0070
ATTACHMENT NO. I
MAP OF PROJECT SITE
Attachment No. 1
Page 1 of 1
Attachment A to Agenda File No. 2018-0070
MAP 217 _ ` �Q
ORDINARY.—, ���* STA Drew
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=219.74' N
iro
F 1ffL MM RECORD DATE
A 163052 CHULA VISTA STREET DED UNK 10/10/1966 Nw o
(OB 66-52677 ROHR ACCESS 40' 3/29/1966 � , A ;49 04'34"
D ETAI L
76-188061 PORT SD/ACCESS 15' 6/17/1976 � "-R=20;d0`
04-101-9579 EDGE U.G./UTILITIES VARIES 6/17/1976 CALL: 1, _100 L;=17.13'
69-204761 CHULA VISTA SEWER 50' 11/7/1969 rP.aa
81-294452 SWEETWATER U,G./UTILITY 15' 9/15/1981 R'0.CZ � v Cio
83-267669 CHULA VISTA SEWER 12' 8/2/1983 V
81-307302 S TWATER U.G./UTILITY 15' 9/28/1981
d7'"@0 1992•--241584 CHULA VSTA STREET LIGHT 4' 4/24/1992 STA 107-
@
1992--444884 CHULA VISTA 'STREET LIGHT 4' 7/16/1992 P.O.C. POINT OF COMMENCEMENT 300 150 0 300
83--080370 SDG&E UTILITIES 10' 3/14/1983 T.P.O. . TRU POINT OF BEGINNING
I 83115695 SDG&E UTILITIES 10' 4/12/1983 SCALE 1 m» 300'
DRAM BY.° R 0AIE. _MA&B 8 201L
CHECKED BY.• J.W am DEW WFM PM, W SCALL": " 300'
REWEWED BY. D.K.N. SAN DIEGO BAY TIDELANDS LEASE REI=.,
APPROVED DRAWING NO.
SHEET 1 OF 2
xxx-000
LAND SURVEYOR. SDUPD
Attachment A to Agenda File No. 2018-0070
,,,,,,,,,,,,,,,,,,,,,,,, ,,..,,,,,,,,,.,,,,,,,,,,,,,,,,,,,,,,,,.......,.................-.-..........................
.�,
CURVE DATA °TABLE LINE DATA TABLE
. I............. .. ....................
NO. DEL TA RADIUS LENGTH NO. BEARING LENGTH
C1 71°44 5,, 69.00' 86.40' LI N 72012'12" E 14.67'
C2 18°15-08"` 94.00' 29.94' L2 N 67045'00" E 64.39'
...........-,...................................................................................................
C3 04°35'46" 306.00' 24.55' L3 N 72012'12" E 148.94'
............................................
_
C 10403546" 494.00' 39.63' L4 N 59003'25" E 48.36'
............._...............-_
C5 00°3YO6"'5006.00' 46.74' L5 N 68°48'31" E 50.66'
C6 39°43'43" 83.00' 57.55' L6 N 17047'48" W 5.46'
C7 4605931" 77.00' 63.15' E7 N 22°23'34" W 67.73'
C8 39°38'46" 123 00' 85.111;8 N 15016'32" W 79.40'
C9 �23015�'330" 481.00' 195.25' L9 N 26°48'02" W 11.00'
C10 20,00' 770' L,10 N 84025'04" W 2.80'
..............................................
L11 S 7201926" W 56.32'
LA
,,,
DRAWN BY. R, sm �, DATE: MARCH 0 2016
CHECKED BY J.W. ....... ........_ oSCALE:µNSA..
REVIEWED BY. D.K.N. SAN DIEGO BAY TIDELANDS LEASE REF
APPROVED DRAWING NO.
SWEET 2 OF 2
LAND SURVEYOR, SDUPD XXX°000
Attachment A to Agenda File No. 2018-0070
ATTACHMENT NO. 2
DESCRIPTION OF PROJECT SITE
Attachment No. 2
Page I of l
Attachment A to Agenda File No. 2018-0070
Attachment 2
COMMENCING AT STATION No. 107 ON THE ORDINARY HIGH WATER MARK OF SAN DIEGO BAY AS
SHOWN ON MISCELLANEOUS MAP NO. 217, FILED IN THE IN THE OFFICE OF THE SAN DIEGO COUNTY
RECORDER, CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,ON SEPTEMBER 25,
1950,
THENCE ALONG THE LINE BETWEEN SAID STATION No. 107 AS THE POINT OF COMMENCEMENT AND
STATION No. 108 OF SAID MISCELLANEOUS MAP No. 217,SOUTH 58'27' 22" EAST A DISTANCE 105.95
FEET(SOUTH 580 28'01" EAST RECORD)TO A POINT ON THE EASTERLY RIGHT OF WAY LINE OF
TIDELANDS AVENUE AS SAID TIDELANDS AVENUE WAS DEDICATED AS AND FOR A PUBLIC STREET BY THE
CITY COUNCIL OF THE CITY OF CHULA VISTA BY RESOLUTION No.4205. SAID POINT ALSO BEING THE
INTERSECTION OF SAID LINE BETWEEN STATIONS No. 107 AND No. 108 WITH A NON TANGENT CURVE,
CONCAVE EASTERLY, HAVING A RADIUS OF 20 FEET, A RADIAL LINE TO SAID CURVE BEARS NORTH 33-
15' 14" WEST;
THENCE SOUTHERLY ALONG SAID EASTERLY RIGHT OF WAY OF TIDELANDS AVENUE ON SAID 20 FOOT
RADIUS CURVE THROUGH A CENTRAL ANGLE OF 49'04' 34"A DISTANCE OF 17.13 FEET TO THE TRUE
POINT OF BEGINNING.
THENCE CONTINUING SOUTHERLY ALONG SAID CURVE AND RIGHT OF WAY OF TIDELANDS AVENUE
THROUGH A CENTRAL ANGLE OF 220 02'58"A DISTANCE OF 7.70 FEET TO A POINT OF TANGENCY;
THENCE ALONG SAID EASTERLY RIGHT OF WAY SOUTH 14° 22'45" EAST,269.73 FEET TO THE
BEGINNING OF A TANGENT CURVE,CONCAVE EASTERLY, HAVING A RADIUS OF 4,740.00 FEET;
THENCE SOUTHERLY ALONG SAID CURVE AND RIGHT OF WAY THROUGH A CENTRAL ANGLE OF 03'321
05" A DISTANCE OF 292.42 FEET;
THENCE ALONG SAID RIGHT OF WAY SOUTH 17'54'50" EAST,705.69 FEET;
THENCE LEAVING SAID RIGHT OF WAY SOUTH 72" 12' 12"WEST, 14.67 FEET;
THENCE SOUTH 67"45'00" WEST,64.39 FEET;
THENCE SOUTH 72" 12' 12" WEST, 148.94 FEET;
THENCE SOUTH 59'03' 25" WEST,48.36 FEET;
THENCE SOUTH 72"12' 12" WEST,474.20 FEET;
THENCE SOUTH 68°48' 31-WEST, 50.66 FEET;
THENCE SOUTH 72' 12' 12"WEST, 353.50 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE
NORTHERLY, HAVING A RADIUS OF 69.00 FEET;
Page 1 of
Attachment A to Agenda File No. 2018-0070
THENCE WESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 71'44' 521,A DISTANCE OF
86.40 FEET TO THE BEGINNING OF A TANGENT COMPOUND CURVE, CONCAVE NORTHEASTERLY,
HAVING A RADIUS OF 94.00 FEET;
THENCE NORTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 18" 15'08"A DISTANCE OF
29.94 FEET;
THENCE NORTH 170 47'48- WEST, 5.46 FEET TO THE BEGINNING OF A TANGENT CURVE,CONCAVE
WESTERLY, HAVING A RADIUS OF 306.00 FEET;
THENCE NORTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 04'35'461, A DISTANCE OF
24.55 FEET;
THENCE NORTH 22'23'34- WEST,67.73 FEETTO THE BEGINNING OF A TANGENT CURVE, CONCAVE
EASTERLY, HAVING A RADIUS OF 494.00 FEET;
THENCE NORTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 04`35' 46"A DISTANCE OF
39.63 FEET;
THENCE NORTH 17'47'48- WEST,460.08 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE:
EASTERLY, HAVING A RADIUS OF 4,994.00 FEET;
THENCE NORTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 02°31' 16"A DISTANCE OF
219.74 FEET;
THENCE NORTH 15" 16'32" WEST, 79.40 FEET TO THE BEGINNING OF A TANGENT CURVE,CONCAVE
WESTERLY, HAVING A RADIUS OF 5,006.00 FEET;
THENCE NORTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 00'321 06"A DISTANCE OF
46.74 FEET TO THE BEGINNING OF A TANGENT REVERSE CURVE,CONCAVE SOUTHEASTERLY, HAVING A
RADIUS OF 272.00 FEET;
THENCE NORTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 79'00' 36"A DISTANCE OF
375.08 FEET;
THENCE NORTH 63° 11'58- EAST,574.01 FEET;
THENCE SOUTH 26°48'02" EAST, 11.00 FEET TO THE BEGINNING OF A NON TANGENT CURVE, CONCAVE
SOUTHERLY, HAVING A RADIUS OF 83.00 FEET,A RADIAL LINE TO SAID POINT BEARS NORTH 26"48'02-
WEST;
8'02"WEST;
THENCE EASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 39°43,43" A DISTANCE OF
57.55 FEET TO THE BEGINNING OF A TANGENT REVERSE CURVE,CONCAVE NORTHERLY, HAVING A
RADIUS OF 77.00 FEET;
Page 2 of
Attachment A to Agenda File No. 2018-0070
THENCE EASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 46°59' 31"A DISTANCE OF
63.15 FEET TO THE BEGINNING OF A TANGENT REVERSE CURVE,CONCAVE SOUTHERLY, HAVING A
RADIUS OF 123.00 FEET;
THENCE EASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 39"38'46" A DISTANCE OF
85.11 FEET;
THENCE SOUTH 84'25'04" EAST 2.80 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE
NORTHERLY, HAVING A RADIUS OF 481.00 FEET;
THENCE EASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 23° 15' 30" A DISTANCE OF
195.25 FEET;
THENCE NORTH 72°19' 26" EAST 56.32 FEET TO THE TRUE POINT OF BEGINNING.
AREA= 1,597,085 SF/36.664 ACRES, MORE OR LESS.
D.K. NASLAND LS 5562 DA'T
Page 3 of
Attachment A to Agenda File No. 2018-0070
ATTACHMENT NO. 3
MAP SHOWING GENERAL LOCATION OF ELEMENTS OF THE
PROJECT
Attachment No, 3
Page 1 of 1
Attachment A to Agenda File No. 2018-0070
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Attachment A to Agenda File No. 2018-0070
ATTACHMENT NO.4
CONCEPTUAL OUTLINE OF THE
JOINT EXERCISE OF POWERS AGREEMENT PLAN OF FINANCE
Exhibit 1 to Attachment No. 5
Page l of 1
Attachment A to Agenda File No. 2018-0070
CONCEPTUAL OUTLINE OF JOINT EXERCISE
POWERS AUTHORITY (JEPA) PLAN OF FINANCE
Table of Contents
section on 1, Purpose!................ .......... ... .......»....».».. ...... »»,... Page 1
Section 2., Limitations..........................m.. ..... ............,....,...,...,.. Page 1
Section 3. Financing b eetl es.... ...... .., Page 1
Section 4. Soorcesof Revenue, .»,.......... Page
Section 5. Other Obligations,"°1"0 Be Funded By ""1"lie District And Cit
And Other Available Funding.......................... ........ Page 3
Section 6. JEPAPonds �Fina�ncing Structure, .. .., Page
Section 7. District Commitment.... ............. .......... Page 6
Section g,. Citi ................... .....,..... ... Page 7
Section 9, Pledged Revenues.._.. CP�D» Page 8
Section 10. Pledged Revenues- '1P .»» Page 8
Swim 11. Projected Flow of Funds................................................. Page 9
ect�.aoo 12» ProjectedSources andLjses� Page 10
Section 13. Propected Revenue by Page 11
Section 14. Projected CashFlows-.,1P'P.A Bon&. Page 12
Attachment A to Agenda File No. 2018-0070
CONCEPTUAL OUTLINE OF JOINT EXERCISE OF POWERS
AUTHORITY (JEPA) PLAN OF FINANCE
SECTION 1. PURPOSE
The purpose of the Conceptual JEPA Plan of Finance ("Plan") is to document the expected
method of financing the "Phase IA Infrastructure Costs" and the "Project Public Investment," as
those terms are defined in the Disposition and Development Agreement by and among the San
Diego Unified Port District ("District"), the City of Chula Vista ("City") and RIDA Chula Vista,
LLC ("Developer").
SECTION 2. LIMITATIONS
The funding analysis described herein is for illustration purposes only, and outlines the
anticipated sources of funds, the flow of funds from the City and the District to the Joint Exercise
of Powers Authority (")EPA"), the uses of funds, the debt service coverage and the cash flow
relating to a financing through the issuance of bonds by the JEPA ("JEPA Bonds"). No
assurance can be given that any transaction described herein could in fact be executed, or that the
coverage ratios shown in Section 6 will be sufficient to achieve the credit rating upon which the
estimated bond proceeds are based. Interest rates are subject to change and will likely increase
prior to the completion of the financing. Any such increase in rates or increase in coverage
requirements will have an adverse impact on the JEPA bond proceeds available to fund the
Resort Hotel and Convention Center("RHCC")project.
SECTION 3. FINANCING OBJECTIVES
Public Entity Contributions:
• Finance, through the issuance of debt, Phase IA Infrastructure Costs in the not-to-exceed
amount of$56,000,000
• Finance Project Public Investment in the not-to-exceed amount of $240,000,000 to be
used to construct the Convention Center.
• Provide for funding of the eligible sewer improvements with the City's Sewer Facility
funds ("Sewer Facility Contribution").
• Provide for funding of parking improvements ("Parking Improvements") by the District,
if applicable.
• Provide for funding and operation of a future fire station and fire services to serve the
Bayfront and the RHCC Project("Fire Services").
• Funding based on the construction and operation of between 1,570 and 1,600 rooms at
the RHCC.
1
Attachment A to Agenda File No. 2018-0070
SECTION 4. SOURCES OF REVENUE
District Revenue Commitment:
• Bayfront Lease Revenues — an annual amount measured by net revenues received by
the District from the existing Bayfront ground leases set forth in the Financing
Agreement between the City and the District, together with an annual amount measured
by the net revenues received by the District under the new RV park ground lease less
any rent credits used to pay for the prior RV park lease buyout, starting July 1, 2018
and thereafter until maturity of the JEPA Bonds.
• Support Payments — an annual amount equal to $5,000,000 for Lease Years 5-14 (i.e.
first 10 operating years), $6,000,000 for Lease Years 15-19 (i.e. next 5 operating years),
$3,000,000 for Lease Years 20-24 (i.e. next 5 operating years), and $3,500,000
thereafter until maturity of the JEPA Bonds.
• RIDA Ground Lease Payments — to the extent received by the District, an annual
amount equal to $3,000,000 beginning in Lease Years 20-24 (i.e. 16'" operating year
through the 20'b operating year), and $3,500,000 thereafter until maturity of the JEPA
Bonds.
City Revenue Commitment:
• RV Park TOT — an annual amount measured by Transient Occupancy Tax ("TOT")
revenues from the existing RV Park and new RV Park, starting July 1, 2018 and
thereafter, until maturity of the JEPA Bonds.
• PMSA Revenue — an amount measured by annual revenues paid to the City under the
existing Police, Fire and Medical Services Agreement (MSA) between the District and
the City, starting July 1, 2018 at $1,059,364 and increasing annually at the rate of 3%
per annum as included in the MSA agreement until maturity of the JEPA Bonds.
• RHCC TOT — an annual amount measured by new TOT revenue generated by the
Resort Hotel and Convention Center ("RHCC") and received by the City until maturity
of the JEPA Bonds.
• RHCC Sales Tax — an annual amount measured by new sales tax revenue generated by
the RHCC and received by the City until maturity of the JEPA Bonds.
Community Facilities District Funding:
• Special Tax — New Special Tax Revenues levied in the H-3 Community Facilities
District ("CFD"), shall be equal to 5% room revenue on the RHCC and may include
non-room revenue taxes.
Attachment A to Agenda File No. 2018-0070
Enhanced Infrastructure Financing District Funding:
• EIFD Revenues — The City and the County of San Diego ("County") tax revenues
generated in the CVBMP Enhanced Infrastructure Financing District ("EIFD") together
with the VLF component authorized to be included in EIFD funding until maturity of
the JEPA Bonds.
• Property Tax Revenue - In the event that the EIFD is not formed, an amount equal to
incremental property tax and VLF revenue ("City Tax Increment") generated by RHCC
and received by the City will be included in "City Commitment" in Section 8 until
maturity of the JEPA Bonds.
SECTION 5. OTHER OBLIGATIONS TO BE FUNDED BY THE DISTRICT AND CITY
AND OTHER AVAILABLE FUNDING
Other Obligations to be funded by the District and the City:
• City Sewer Facility Contribution an amount of the Sewer Facility Contribution
authorized to be used for specific sewer improvements included in the City Infrastructure
Improvement Costs.
• The District will provide some or all of the funding for the Parking Improvements, if
applicable.
• The City will provide funding for fire services and a fire station to serve the RHCC and
surrounding development.
• The District will contribute SDG&E relocation fees of $1,653,750, Pacifica Funds of
$3,000,000 and CIP funds of$1,000,000.
• The District has received preliminary approval for a park grant in the amount of
$4,800,000 to be applied to park improvements and bike pathways within the Bayfront
Project area. Due to the provisions of the grant, the District will be required to spend its
own funds on the improvements and be reimbursed from the grant.
SECTION 6. JEPA BONDS FINANCING STRUCTURE
The District and the City have created the Chula Vista Bayfront Facilities Financing Authority
("Authority" or "JEPA") (amended as necessary). The JEPA will issue revenue bonds to be sold
to the investing public, secured by the District Revenues Commitment, the City Revenues
Commitment, the CFD Pledged Funding and the EIFD Pledged Funding (collectively, the
"Revenues").
The JEPA Bonds are expected to be issued in two series, a taxable series to pay for the Project
Public Investment ("Taxable Bonds"), and a tax-exempt series to pay for the Phase 1 A
3
Attachment A to Agenda File No. 2018-0070
Infrastructure Costs ("Tax-Exempt Bonds") and, together with the Taxable Bonds, the JEPA
Bonds.
The Taxable Bonds and the Tax-Exempt Bonds will be secured and payable on parity from the
Revenues (that is, it is not contemplated at this time that there will be series of bonds payable
with a first lien on the Revenues and a series of bonds payable secured by a subordinate lien on
the Revenues).
Leases and Subleases. Close of Escrow for the Project will be dependent on, among other
things, execution of the ground lease for the Site, the issuance of the JEPA Bonds and the
Developer financing. ]EPA Bond proceeds will be structured to pay for the convention center
and related infrastructure and the Convention Center shall be subleased back to Developer for $1
per year.
Debt Policy, The JEPA is required to adopt a Debt Policy in compliance with Government Code
Section 8855(i) prior to the sale of any JEPA Bonds.
Limitations on Financing. The District and the City are not obligated to spend any of their own
funds to pay debt service on the Bonds except as described herein. To the extent that interest
rates increase to a level that reduces available net proceeds to fund the Public Project Investment
and Phase IA Infrastructure Costs, the parties shall not be required to issue the JEPA Bonds. To
the extent that debt service coverage levels described herein cannot be achieved without a
reduction in available net proceeds to fund the Public Project Investment and Phase 1 A
Infrastructure Costs the parties shall not be required to issue the JEPA Bonds subject to the terms
of the Disposition and Development Agreement section 5.1.
To the extent that revenues shown in the Feasibility Study (described in the following paragraph)
are lower than the estimates used herein and are at a level that reduces available net proceeds to
fund the Public Project Investment and Phase IA Infrastructure Costs, the parties shall not be
required to issue the JEPA Bonds. If the EIFD cannot be formed to include the County share of
property tax, and as a result, there is a reduction in net proceeds to fund the Phase IA
Infrastructure Costs and therefore a corresponding reduction in the net proceeds to fund the
Public Project Investment, the parties shall not be required to issue the JEPA Bonds. Factors that
may contribute to a limitation on the net proceeds available from the issuance of the JEPA Bonds
include, but are not limited to, the following:
• Debt Service Coverage Ratio to be determined
• No District or City General Fund exposure except as otherwise provided for herein
• Interest Rate to be determined
• Guaranteed maximum price contract requirement of the bond financing
• Assurance in the form of bonds or sureties of timely completion and opening of the
RHCC Project within the times required by the funded sources.
Feasibility Study. The JEPA Bonds to be issued will be supported by a Feasibility Study
prepared by a firm acceptable to the City, the District and the Underwriter. The revenues
projected in the Feasibility Study may or may not be the same as the revenues shown in Section
4
Attachment A to Agenda File No. 2018-0070
13, which were prepared by Keyser Marston Associates, Inc. (KMA) for planning purposes. To
the extent that Feasibility Study revenues are lower than those herein, funding will be adversely
affected.
Construction Period. The construction period is expected to total 48' months for the
Developer's Phase IA Infrastructure and the RHCC. Interest on the Phase IA Infrastructure
Construction Fund during the construction period will accrue to the Construction Fund. The
Project Public Investment Construction Fund will be drawn down pursuant to instructions to be
agreed upon by the City, the District and RIDA. Interest on the Project Public Investment
Construction Fund during the draw down period will accrue to the Construction Fund. The
Project Public Investment Construction Fund will generally be utilized parr passu with
Developer's equity contribution (currently estimated at $200,000,000) and before any mezzanine
or mortgage debt of the Developer.
Debt Service Coverage Ratio. For the purposes of illustration, the Revenues are leveraged
using a coverage ratio of 1.75 times combined revenue to debt service. This is the anticipated
minimum coverage ratio required to obtain an investment grade rating for the entire financing.
The coverage ratio and the rating were used to estimate interest rates used in the funding analysis
but are preliminary and subject to change. See "Section 2 Limitations" regarding coverage
ratios and interest rates that might change the analysis.
Capitalized Interest. Capitalized interest on the Tax-Exempt Bonds will be funded from Tax-
Exempt Bond proceeds for 3 years from the date of issuance. An additional 4'" year of
capitalized interest on the Tax-Exempt Bonds will be funded from Taxable Bond proceeds.
It is expected that 100 - of the interest on the Taxable Bonds will be capitalized for 4 years.
Following the end of construction, a portion of interest on the Taxable Bonds will be capitalized
for a significant number of subsequent years, in the amount needed each year to provide 1.75x'
coverage of revenue compared to net debt service, net of capitalized interest on both series of
bonds. However, additional capitalized interest may be added based on investor or rating
agency feedback
As described under "Remaining Revenue" below, pre-opening Bayfront Lease Revenues, RV
Park TOT and PMSA Revenues may be used to fund a portion of capitalized interest, or may be
accumulated to pay for any contingencies that arise during the construction period.
Debt Service Reserve Fund, A reserve fund will be funded from bond proceeds of each series,
in the maximum amount equal to the lesser of 10% par amount, maximum annual debt service or
125% average annual debt service.
Remaining Revenue. During the period when interest on the Bonds is fully capitalized,
Revenues will not be needed for current debt service and will be accumulated in the Revenue
' Preliminary and subject to change.
2 Preliminary and subject to change.
5
Attachment A to Agenda File No. 2018-0070
Fund or other agreed upon Fund to be applied to avoidance of capitalized interest, future debt
service, financing gap or construction contingencies. Beginning in Year 53, all Revenues will be
deposited in a Revenue Fund established for the Bonds and used to pay current debt service on
the Bonds. Once the debt service on the Bonds has been paid each year, the remaining amount
will be determined annually. The remaining balance in the Revenue Fund will be disbursed in
accordance with a Revenue Contribution and Sharing Agreement to be entered into by the City
and Port.
SECTION 7. DISTRICT COMMITMENT
The District expects to enter into a Support Agreement to pay an annual amount to the JEPA, to
be deposited in the Revenue Fund. The annual payment will equal the Support Payment (fixed),
the Bayfront Lease Revenue (in amounts received) and the RIDA Ground Lease (in amounts
received).
The District has certain outstanding bonds that have a prior lien on such revenue, and those
bonds would have to be paid before deposit of such revenues with the JEPA.
Payments to the JEPA under the Support Agreement will be made as follows:
• Bayfront Lease Revenues: Quarterly in arrears within 30 days of the end of a quarter, in
an amount equal to 1/4 of the annual projected revenue shown in Section 13, with the final
payment for such year to be adjusted for actual revenue, to the extent received by the
District.
• Support Payments: Quarterly in arrears within 30 days of the end of a quarter, in an
amount equal to 1/4 of the annual revenue shown in Section 13.
• RIDA Ground Lease: Quarterly in arrears within 30 days of the end of a quarter, in an
amount equal to 1/4 of the annual revenue shown in Section 13, to the extent received by
the District.
Other than as described herein, the District has not committed additional revenues from its
General Fund to pay debt service on the JEPA Bonds. There may be an obligation of the District
to fund some or all of the parking improvements referred to in Section 5 and to use other funds
for pre-development and other costs during construction as described in Section 5.
SECTION S. CITY COMMITMENT
The City expects to enter into a Lease Agreement to pay lease payments to the JEPA for use of
the Convention Center, such lease payments to be deposited in the Revenue Fund. The annual
payment will be made from the RV Park TOT, the PMSA Revenue, RHCC Sales Tax and RHCC
TOT in amounts received.
3 Preliminary and subject to change.
6
Attachment A to Agenda File No. 2018-0070
The City will collect and deposit the following revenues into an account held by the City or
JEPA under the lease agreement for the Convention Center and used to make lease payments to
the JEPA:
• RV Park TOT: Monthly in arrears within 30' days of the end of a month, in an amount
equal to actual revenue to the extent received by the City.
• PMSA Revenue: Quarterly in arrears within 30 days of the end of a quarter, in an
amount equal to 1/4 of the annual projected revenue shown in Section 13, with the final
payment for such year to be adjusted for actual revenue.
• RHCC TOT Monthly in arrears within 30" days of the end of a month, in an amount
equal to actual revenue received by the City.
• RHCC Sales Tax Quarterly in arrears within 30 days of the end of a quarter, in an
amount equal to actual revenue received by the City.
In the event that the EIFD is not established, a payment equal to the City's share of the property
tax and VLF generated from the RHCC will be collected and deposited in an account held by the
City or JEPA under the Lease Agreement and used to make lease payments to the JEPA. The
payment will be made twice annually, with the first half paid by January 31, in an amount equal
to !/2 of the projected amount shown in Section 13 and the second half paid by June 30, in an
amount equal to the actual revenue received by the City over the entire year less the amount of
January 31 payment.
Other than as described herein, the City has not committed additional revenues to pay Lease
Payments from its General Fund. There is an obligation of the City to provide for funding and
operation of a future fire station and fire services to serve the Bayfront and the RHCC Project as
described in Section 5 and to use other funds for pre-development and other costs during
construction as described in Section 5.
SECTION 9. PLEDGED REVENUES —CFD
The CFD will issue Special Tax Bonds with an annual special tax levy equal to projected Special
Taxes to be levied based on 5% of RHCC room revenue. The JEPA would acquire the Special
Tax Bonds with proceeds of the Tax-Exempt Bonds and the debt service paid by the CFD to the
JEPA would be deposited in the Revenue Fund. The proceeds of the sale of the Special Tax
Bonds will be applied to Phase 1 A Infrastructure Costs.
The annual tax levy will initially be equal to the amount projected in Section 13. The debt
service/special tax levy each year will be adjusted to reflect 5% of the actual room revenue. The
special taxes will be paid by the Developer monthly to the CFD to be remitted to the JEPA.
Preliminary and subject to change.
s Preliminary and subject to change.
7
Attachment A to Agenda File No. 2018-0070
SECTION 10. PLEDGED REVENUES—EIFD
If formed, the EIFD will issue Tax Increment Bonds with annual payments equal to projected
taxes to be allocated to the EIFD. The JEPA would acquire the Tax Increment Bonds with
proceeds of the JEPA Bonds and the debt service paid by the EIFD to the JEPA would be
deposited in the Revenue Fund. The debt service on the Tax Increment Bonds each year will be
adjusted to reflect actual tax increment received.
The debt service payments,will be made twice a year, with the first half paid by January 31, in an
amount equal to 1/2 of the projected amount shown in Section 13 and the second half paid by June
30, in an amount equal to the actual revenue received by the EIFD over the entire year less the
amount of January 31 payment.
8
Attachment A to Agenda File No. 2018-0070
SECTION 11. PROJECTED FLOW OF FUNDS
PLAN OF FINANCE-FLOW OF FUNDS
General Pond Projed Generated One Time
u
Re"nue Revenue
1,y r f
Ispecrall �j�...,i01,'M u
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EIPb Yee �'/�i���_ti�� EIFO
Yaarernent Il aw
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PA,hcgt cares Inc,ilt
QIA'Balhms w4h,IMXreds
:k ff IIA Vvona uu.tl lRvf,rre,,T^w
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AM Foil yr tilDR^Nu,g�otlliam
VnrcnitiVV�u I �nPa Pear
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)EPA Rewenue Bands„
forQ n ir,t�aBevs rlkuau� r ,�I111�1 j�
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'mur rn rv^arurllwdd ptuiWle Ali ailur lroau urw";tl llae"11 m t�r vn....,
VI it II'��Ru�tluu eau w.ti hVrou^�
* I4elpdafioniw are Hirmrqel wdWgP'raakh throe Coun'IW ka leu bu'br„nta!^V!hvn �wuflylha r.yell ll:'J Il rru'nYS+^utgx'Yu'u�w
9lhaertd^u1,u,aaCmaii igrygr.and V ww lh let wn„�ua wh 6wis tar P u rwo,:�n�.
9
Attachment A to Agenda File No. 2018-0070
SECTION 12. PROJECTED SOURCES AND USES"
Tax-Exempt Taxable
Series Series Total
Phase 1A Project Pubic
Infrastructure Investment
Par Amount $63,825,000 $ 324,715,000 $388,540,000
Original Issue Premium(Discount) 7,072,567 - 7,072,567
Pre-Opening Cash flow - 15,067,521 15,067,521
Net Proceeds $70,897,567 $339,782,521 $410,680,088
Project Fund $ 55,324,185 $239,610,455 $294,934,639
Capitalized Interest 8,510,000 74,493,830 83,003,830
Debt Service Reserve Fund 5,462,254 28,911,729 34,373,983
Issuance Expenses 1,601,129 8,121,236 9,722,365
Total Use of Proceeds $70,897,567 $351,137,249 $422,034,816
Net Funding Shortfall $0 $ 11,354,728 $ 11,354,728
Less Projected Offsets
SDG&E and Pacifica Funds' $4,653,750 $4,653,750
Cash Contingencies? $3,354,971 $3,354,971
Reduction in Infrastructure Costs10 $3,346,007 $3,346,007
Total Pro'.Offsets to Shortfall $11,354,728 $11,354,728
Projected Funding Ga $0 $0
The financing structure as presented herein is highly dependent on achieving investment grade ratings and a public
offering solution. Achieving an investment grade rating is not just limited to coverage ratios but is also dependent
on certain commercial terms negotiated between the JEPA and the developer. These terms may impact the rating
agencies' view of the credit, which could significantly impact credit, coverage, reserves and, ultimately,deliverable
proceeds.
fi Preliminary and subject to change.
7 Project funds are net of interest earnings earned during the construction period which will be available for the
project.
e SDG&E and Pacifica funds as discussed on page 3 of the Plan of Finance.
Existing revenues generated by the City and District from July 1,2018 to close of escrow.
"'Projected reduction in infrastructure projects costs to be financed from,$56 million to $50.8 million as described
in the Economic Development Subsidy Report. These projections also continue to assume the County of San
Diego's participation through an EIFD over the term of the debt...
10
Attachment A to Agenda File No. 2018-0070
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Attachment A to Agenda File No. 2018-0070
Harrell & Company Advisors Disclaimer
This information was prepared exclusively for the benefit and use of the City of Chula Vista in order to
assist the City in evaluating, on a preliminary basis, the feasibility of alternative financing scenarios for
the RHCC project. The materials have been provided to the City for informational purposes only and are
not an evaluation of the merits of pursuing transactions described herein. Information has been obtained
from sources believed to be reliable but neither J.P. Morgan nor Harrell &Company Advisors warrants its
completeness or accuracy. Opinions and estimates constitute our judgment as of the date of this material
and are subject to change without notice. Past performance is not indicative of future results. This
information does not constitute a commitment by any underwriter to underwrite, subscribe for or place
any securities or to extend or arrange credit or to provide any other services.
Harrell & Company Advisors has been engaged by the City and does not act as an advisor to the District.
The City may have interests that are different from the District. Harrell & Company Advisors does not
owe a fiduciary duty to the District and the District should consult its own advisors and experts that it
deems appropriate before acting on this information.
J.P.Morgan's General Disclaimer
This plan was prepared exclusively for the benefit and internal use of the City of Chula Vista to whom it
is directly addressed and delivered(including such client's affiliates,the"City") in order to assist the City
in evaluating, on a preliminary basis, the feasibility of possible transactions referenced herein. The
materials have been provided to the City for informational purposes only and may not be relied upon by
the City in evaluating the merits of pursuing transactions described herein. No assurance can be given that
any transaction mentioned herein could in fact be executed.
Information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its
completeness or accuracy. Opinions and estimates constitute our judgment as of the date of this material
and are subject to change without notice. Past performance is not indicative of future results. Any
financial products discussed may fluctuate in price or value. This plan does not constitute a commitment
by any J.P. Morgan entity to underwrite, subscribe for or place any securities or to extend or arrange
credit or to provide any other services.
J.P. Morgan's plan is delivered to the City for the purpose of being engaged as an underwriter, not as an
advisor, (including, without limitation, a Municipal Advisor(as such term is defined in Section 975(e) of
the Dodd-Frank Wall Street Reform and Consumer Protection Act)) . The role of an underwriter and its
relationship to an issuer of debt is not equivalent to the role of an independent financial advisor. The
primary role of an underwriter is to purchase, or arrange for the purchase of, securities in an arm's-length
commercial transaction between the issuer and the underwriter. An underwriter has financial and other
interests that differ from those of the issuer. If selected as the City's underwriter, J.P. Morgan will be
acting as a principal and not as the City's agent or fiduciary with respect to the offering of the securities
or the process leading to issuance (whether or not J.P. Morgan or any affiliate has advised or is currently
advising the Client on other matters). Any portion of this plan which provides information on municipal
financial products or the issuance of municipal securities is given in response to the City's questions or to
demonstrate our experience in the municipal markets and does not constitute "advice" within the meaning
of Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. We encourage the
City to consult with its own legal and financial advisors to the extent the City deems appropriate in
connection with the offering of the securities. If the City has any questions concerning our intended role
and relationship with the City, we would be happy to discuss this with the City further.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall
13
Attachment A to Agenda File No. 2018-0070
there be any sale of the securities in any state or jurisdiction in which such an offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities laws of any such state or
jurisdiction.
This material is not a product of the Research Departments of J.P. Morgan Securities LLC ("JPMS") and
is not a research report. Unless otherwise specifically stated, any views or opinions expressed herein are
solely those of the authors listed, and may differ from the views and opinions expressed by JPMS's
Research Departments or other departments or divisions of JPMS and its affiliates. Research reports and
notes produced by the Research Departments of JPMS are available from the City's Registered
Representative or at http://www.jpmm.com JPMS's policies prohibit employees from offering, directly or
indirectly, a favorable research rating or specific price target, or offering to change a rating or price target,
to a subject Client as consideration or inducement for the receipt of business or for compensation. JPMS
also prohibits its research analysts from being compensated for involvement in investment banking
transactions except to the extent that such participation is intended to benefit investors.
J.P. Morgan makes no representations as to the legal, tax, credit, or accounting treatment of any
transactions mentioned herein, or any other effects such transactions may have on the City and the City's
affiliates or any other parties to such transactions and their respective affiliates. The City should consult
with its own advisors as to such matters.
JPMorgan Chase & Co. and its affiliates do not provide tax, legal or accounting advice. This material has
been prepared for informational purposes only, and is not intended to provide, and should not be relied on
as the basis for making an investment decision nor as tax, legal or accounting advice. The City should
consult its own advisors in respect of any tax, legal or accounting matter.
This plan does not carry any right of publication or disclosure, in whole or in part, to any other party,
without the prior consent of J.P. Morgan. Additional information is available upon request.
J.P. Morgan is the marketing name for the investment banking activities of JPMorgan Chase Bank, N.A.,
J.P. Morgan Securities LLC (member, NYSE), J.P. Morgan Securities plc (authorized by the FSA and
member, LSE) and their investment banking affiliates.
J.P.Morgan's Municipal Advisor Rules Disclaimer
(a) This material is provided to the City in reliance on the Independent Registered Municipal Advisor
exemption pursuant to Section 15B of the Securities Exchange Act of 1934, as amended; (b) J.P. Morgan
is not acting as an advisor to the City and does not owe a fiduciary duty pursuant to Section 15B of the
Securities Exchange Act of 1934, as amended, to the City with respect to the information and material
contained in this communication; (c) J.P. Morgan is acting for its own interests; (d) The City should
discuss any information and material contained in this communication with any and all internal or
external advisors and experts that the City deems appropriate before acting on this information or
material; and (e) J.P. Morgan seeks to serve as an underwriter on a future transaction and not as a
financial advisor or municipal advisor. The information provided is for discussion purposes only in
anticipation of being engaged to serve or in relation to our engagement as an underwriter. The primary
role of an underwriter is to purchase securities with a view to distribute in an arm's-length commercial
transaction.The underwriter has financial and other interests that differ from the City.
14
Attachment A to Agenda File No. 2018-0070
ATTACHMENT NO. 5
SCOPE OF DEVELOPMENT
I. General
The Project and all related public improvements shall be designed and constructed
substantially in accordance with the provisions of this Agreement, including without limitation the
Laws, and all specifications, drawings, plans, data, reports, maps, permit applications, land use
applications, zoning applications, environmental review and disclosure documents and design review
documents (collectively, "Plans and Specifications") and related documents to be approved by the
District and City pursuant hereto. The District staff, the City staff, the District's engineers, the City's
engineers, the Developer and the Developer's architects, engineers, General Contractor and
subcontractors shall coordinate with respect to the overall design, architecture and nature of the
improvements on the Project Site.
In the event of any conflict between the contents of this Scope of Development and the
Agreement, the provisions of the Agreement shall prevail.
II. Developer's Improvements
Subject to the terms and conditions of this Agreement, including all attachments hereto, the
Developer shall be responsible for the design and construction of all of the following improvements
(collectively, the "Developer's Improvements"):
A. Developer's Private Improvements. The Developer shall construct the Hotel
portion of the Project on the Hotel Site, which shall consist of the following improvements
(collectively, the "Developer's Private Improvements"):
I. Single-branded resort hotel with at least 1,570 Rooms but not more than
1,600 Rooms, which must initially be branded as a Gaylord Hotel (the "Hotel");
2. Associated retail and resort amenities, subject to required discretionary
review by regulatory entities.
B. Developer's Public Improvements. The Developer shall construct the Convention
Center portion of the Project on the Convention Center Site and other public improvements, which
shall consist of the following (collectively, the "Developer's Public Improvements"):
1. The Project of approximately 275,000 net usable square feet of meeting space
in the Convention Center ("Meeting Space"), including all ancillary uses (including pre function),
together with other related public improvements in accordance with this Agreement. A portion of the
cost of constructing the Convention Center will be financed by the JEPA in an amount not to exceed
the Project Public Investment Amount, as set out in the Plan of Finance.
2. That portion of the Phase lA Infrastructure Improvements identified in Exhibit 1 attached
hereto (collectively, the "Developer's Phase lA Infrastructure Improvements"), to be constructed by
the Developer in lieu of remitting Bayfront Development Impact Fees to the City, pursuant to
Attachment No. 5
Page 2 of 4
Attachment A to Agenda File No. 2018-0070
Chapter 3.55 of the Chula Vista Municipal Code. A portion of the Developer's Phase IA
Infrastructure Improvements shall be financed by the District and City (the "Developer's Phase to
Infrastructure Improvements Costs"), and the remaining portion of the Developer's Phase IA
Infrastructure Improvements (the "Developer's Sewer Improvements") shall be financed by the City,
each as set out in the Plan of Finance and in the Sources and Uses Matrix (Exhibit 4).
III. Architecture and Design
The Developer's Improvements shall be of high architectural quality and shall be sufficiently
landscaped. The Schematic Plans and the Building Permit Application Drawings shall describe the
architectural character intended for the Developer's Improvements and the Parking Improvements, as
applicable. The Developer shall also comply with the District's Public Arts Policy in the
development of the Project on the Project Site, as provided in Section 4.1(c) of this Agreement.
IV. Other Project Public Improvements
The District and City shall be responsible for the construction of, or causing the construction
of, the remaining portion of the public improvements, as identified below, to be financed by the
District and City in accordance with the Plan of Finance and the Sources and Uses Matrix
(Exhibit 4), including:
1. That portion of the Phase lA Infrastructure Improvements identified in Exhibit 2
attached hereto ("Remaining Phase lA Infrastructure Improvements"). The Remaining Phase IA
Infrastructure Improvements will be completed based on a schedule to be agreed to by the District,
City and Developer; provided, however, the District and City shall have the right to prioritize the
construction of certain Remaining Phase IA Infrastructure Improvements required to meet any
existing contractual obligations of the District and City, including without limitation, any contractual
obligations under the Settlement Agreement and any other agreements applicable to the Project Site
and, provided, further, that the District and the City shall cause the Remaining Phase IA
Infrastructure Improvements to be completed in a manner that will not result in a delay to the
Developer obtaining a temporary certificate of occupancy for, or the opening for business of, the
Developer's Improvements. The Remaining Phase IA Infrastructure Improvements identified in
Exhibit 2 will be financed by the District and City, in the amount of up to TWENTY MILLION ONE
HUNDRED TWENTY THOUSAND DOLLARS ($20,120,000), which together with the
Developer's Phase IA Infrastructure Improvements Cost to be financed by District and City shall not
exceed a maximum combined total of FIFTY SIX MILLION DOLLARS ($56,000,000',), as set out in
the Plan of Finance and the Sources and Uses Matrix (Exhibit 4).
2. Required service improvements identified in Exhibit 3, consisting solely of the G
Street Sewer Pump Station (the "City Infrastructure Im rovements"), to be constructed by or on
behalf of the City, and financed by the City, which financing may be through any financing
mechanism in City's sole and absolute discretion; provided that the City shall cause the City
Infrastructure Improvements, that are compatible with a hotel with 1,600 rooms and meeting space
comparable to the Meeting Space and other uses contemplated at the Project, as applicable, to be
completed not later than twelve (12) months after the Closing Date.
Attachment No. 5
Page 3 of 4
Attachment A to Agenda File No. 2018-0070
3. If elected by the District, the Parking Improvements to be constructed on the District
Retained Property and financed by the District up to the amount of FORTY MILLION DOLLARS
($40,000,000).
4. Removal of Existing RV Park and Site Preparation for H-3 Parcel.
Attachment No. 5
Page 4 of 4
Attachment A to Agenda File No. 2018-0070
EXHIBIT 1
DEVELOPER'S PHASE I INFRASTRUCTURE IMPROVEMENTS
The following Phase IA Infrastructure Improvements shall be constructed by the Developer relating
to the Project:
1. E Street (G Street to H Street): Project consists of the construction of a two-lane Class III
Collector street with turn lane, drainage, water, sewer, dry utilities, and connection/transition
to existing Lagoon Drive. Streetscape improvements include landscape, sidewalks,
biofiltration, lighting, furnishings, etc. The project includes on-street diagonal parking on the
west side of the north-south portion.
2. G Street Connection: Project consists of the construction of a two-lane collector street to
Rohr's Gate 66 with drainage, water, sewer, and dry utilities. Streetscape improvements
include landscape, sidewalk, biofiltration, lighting, etc.
3. H Street (Bay Boulevard to Street A): Project consists of improvements along an existing
roadway. Streetscape improvements will include landscape, Class I bike path and gateway
sign at Bay Boulevard.
4. H Street (Marina Parkway to E Street): Project consists of the construction of a Class II
Collector street with turn lane, drainage, water, and dry utilities. Streetscape improvements
include landscape, sidewalk, biofiltration, lighting, furnishings, etc. The project includes a
Class I bike path along Parcel H-9, on-street diagonal parking on the south side, traffic
signals at Marina Parkway, and dry utilities extended to Bay Boulevard.
5. Harbor Park (Initial): Project consists of the expansion of the existing Bayside Park to
include amenities, such as open lawn, plaza, lighting, restrooms, bicycle racks, playground,
picnic areas, benches, interpretive signage and public art. Project includes a Pedestrian
Promenade and Class I bike path, parking, drainage and biofiltration. Harbor Park will be
constructed in multiple phases. Developer is responsible for initial phase only, to be
identified based on available funding.
6. H-3 Site Prer): Project consists of clearing the site, demolition of existing improvements on
H-3 and vicinity, rough grading, and temporary drainage and erosion control. Includes
maintaining access and utility service to surrounding businesses.
7. H-3 Utility Corridor: Project includes installation of new storm drain, sewer, water, and dry
utilities
Exhibit 1 to Attachment No. 5
Page l of 1
Attachment A to Agenda File No. 2018-0070
EXHIBIT 2
REMAINING PHASE 1 A INFRASTRUCTURE IMPROVEMENTS
The following Remaining Phase I A Infrastructure Improvements shall be constructed, or caused to
be constructed, by the District (and City, if applicable) relating to the Project:
1. E Street (Bay Boulevard to F Street): Project consists of the construction of a collector street
and roundabout with drainage, water and dry utilities. Streetscape improvements include
landscape, sidewalks, bioretention, lighting, furnishings, etc. The project includes a Class I
Bike Path, gateway signage, pedestrian crossings, and traffic signal modifications at Bay
Boulevard.
2. E Street (Lagoon Drive to G Street): Project consists of pavement repair and restriping.
3. F Street (Bay Boulevard to E Street): Project consists of the construction of earthwork,
drainage, sewer, and dry utilities.
4. F Street (E Street to Gunpowder Point Drive): Project consists of the construction of a
collector street with drainage, water, sewer, and dry utilities. Streetscape improvements
include landscape, sidewalks, lighting, etc.
5. Gunpowder Point Drive Relocation (Private Road): Project consists of the construction of a
two-lane roadway with water and dry utilities.
6. S-2 Sweetwater Signature Park: Project consists of construction of an 18-acre park. The
Signature Park will be a passive-use, meadow-type park. The project includes a Pedestrian
Promenade and Class 1 bike path connecting to Harbor Park, with a bridge over the channel
to the F& G Street Marsh.
7. SP-I Sweetwater Buffer: Project consists of the restoration of a 400-foot-wide ecological
buffer with pedestrian trails.
8. SP-2 Seasonal Wetlands: Project consists of a bioretention basin. Restoration may be
provided as mitigation for projects.
9. SP-4 SDG&E: Project includes a decomposed granite trail for pedestrians and bicycles.
Exhibit No. 2
Page 1 of I
Attachment A to Agenda File No. 2018-0070
EXHIBIT 3
CITY INFRASTRUCTURE IMPROVEMENTS
The following City Infrastructure Improvements shall be constructed, or caused to be constructed, by
the City relating to the Resort Hotel and Convention Center Project:
1. G Street Sewer Pump Station: Project consists of an upgrade to an existing sewer pump
station to provide sufficient emergency storage for planned development, as well as
miscellaneous upgrades to the pump station equipment, concrete wet well, odor control
systems, and other related appurtenances on site and in the immediate vicinity of the pump
station.
Exhibit No. 3
Page I of 1
Attachment A to Agenda File No. 2018-0070
EXHIBIT 4
CITY INFRASTRUCTURE SOURCES AND USES MATRIX
Cost Developer BFDIF City Sewer Other
Im rovement Description Estimates Credit Eligible 2 FundingEligible-' Fundin a
Developer's Phase IA Infrastructure Intprovements
E Street(G Street to H Street} 6,680,000 4,050,000 580,000 2,050,000
G Street Connection 950,000 430,000 110,000 410,000;
H Street(Bay Blvd to Street A) 430,000 270,000 - 160,000;
H Street (Marina Pkwy to E Street) 5,380,000 3„350,000 - 2,030,000
Harbor Park(Initial) 19,500,000 310,000 - 19,190,000!;
H-3 Site Preps 6,000,00 - 6,000,000'
H-3 Utility Corridor 1,530,000 310,000 1,220,000',
Subtotal 40,470,000 8,410,000 1,000,000 31,060,000
Remaining Phase 1A hnfiastructure hnprovements
E Street(Bay Blvd to F Street) 3,970,000 60,000 3,910,000
E Street(Lagoon Drive to G Street) 290,00 - - 290,000
FStreet(Bay Blvd to E Street ) 1,530,000 - 280,000 1,250,000
F Street(E Street to Gunpowder Pt Dr) 630,000 - 50,000 580,000
Gunpowder Point Drive Relocation 1,360,000 - - 1,360,000
S.2 Sweetwater Signature Park 7,600,000 - - 7,600,000
SP-1 Sweetwater Buffer(for S-1) 2,570,000 - - 2,570,000
SP-I Sweetwater Buffer(for S-2) 1,160,000 - - 1,160,000
SP-2 Seasonal Wetlands 950,000 - - 950,000
SP-4 SDG&E 60,000 60,000
Subtotal 20,120,000 390,000 19,730,000
Cit),Infrastructure Improventents
G Street Sewer Pump Station 2,640,000 2,640,000
..............................................__ ...........................................................
Total _ 63,230,000 8,410,000 4,030,000 50,790 000
” Cost Estimates are in 2016 dollars. Estimates include hard costs,soft costs,and contingencies.
Developer BFDIF Credit Eligible column reflects the estimated value of planned improvements that will be eligible for
credit against Developer's Bayfront Development Impact Fee ("BFDIF") obligation. Actual BFDIF credit amount may
vary. Developer will be responsible for payment of BFDIF fees in excess of credits earned
w City Sewer Funding Eligible column reflects the estimated value of sewer improvements associated with each project
that will be eligible for funding by the City through its sewer facility contribution. Actual sewer funds contributed may
vary. See Developer's Sewer Improvements.
14 Other Funding column reflects the estimated amount to be funded through the issuance of debt, the application of funds
on hand,or such other funding mechanisms as may be most appropriate.
N H-3 Site Prep budget of$6 million represents the maximum funds that will be provided by District and City for this
purpose, assuming District provides at least 1,30,000 cubic yards of imported soil. If District does not deliver sufficient
soil, funding will be increased to$10 million. Actual costs may vary. See Section 4.8.
6 H-3 Utility Corridor budget of$1.53 million represents the maximum funds that will be provided by District and City for
this purpose. Actual costs may vary.
Attachment A to Agenda File No. 2018-0070
ATTACHMENT NO. 6
SCHEDULE OF PERFORMANCE
In the event of any conflict between the contents of the Schedule of Performance and the Agreement,
the provisions of the Agreement shall prevail.
ACTION TARGET DATE
I. Execution of Agreement by District, City. 10 Days from Approval of the Agreement
District and City to hold public hearings to
consider and approve or disapprove
Agreement. If approved, District and City
to execute Agreement.
2. Deposit. Developer to deliver the Deposit 5 Days from Full Execution of the Agreement
to the District. (§1.6(a))
3. Approval --Form of Ground Lease. BPC to 60 Days from Full Execution of the Agreement
approve and authorize form of Ground
Lease, and other related documents.
(§6.1(a))
4. District Submits Draft Plans for Phase I 60 Days from Full Execution of the Agreement
Infrastructure Improvements and District
and City-Submit Easement Findings.
District to submit to Developer draft plans
for Phase 1 A Infrastructure Improvements
to the extent sufficient to achieve approval
of CDP, and District and City to submit to
Developer Easement Findings (§4.4(b));
(§4.8(c))
5. Developer Comments on Easement 60 Days after No. 4 (District Submits Plans for
Findings. Developer to provide comments Phase I Infrastructure Improvements and
on Easement Findings to District and City. District and City Submit Easement Findings)
(§4.8(d))
6. District and City to Review Comments on 30 days after No. 5 (Developer Comments on
Easement Findings. (§4.8(d)) Easement Findings)
Attachment No. 9
Page l of 12
Attachment A to Agenda File No. 2018-0070
ACTION TARGET DATE
7. Submission of Tenant Project Plan 60 Days from Full Execution of the Agreement
Application and Development Cost
Estimates—Developer's Improvements,
Surface Parking and Parkin Improvements
includes Schematic Plans). Developer to
submit to the District Tenant Project Plan
Application and Development Cost
estimates for the Developer's
Improvements, Surface Parking and
Parking Improvements which includes
Schematic Plans. (§4.4(a))
8. District Staff Comments on Schematic 20 Business Days after No. 7 (Submission of
Plans. The District Staff to provide Tenant Project Plan Application and
comments on Schematic Plans. (§4.4(a)(i)) Development Cost Estimates and Development
Cost Estimates—Developer's Improvements,
Surface Parking and Parking Improvements
(includes Schematic Plans)) (each submittal);
or
If BPC reviews, 60 Days after No. 7
(Submission of Tenant Project Plan
Application and Cost Estimates)
9. Developer Corrections to Schematic PIans. 30 Business Days after No. 8 (District Staff
Developer to make corrections to Comments on Schematic Plans)
Schematic Plans in response to District
Staff comments. (§4.4(a)(i))
10. Developer Submits CDP Application to 10 Business Days after the Developer receives
District. Developer to submit an application a "Tenant Construction Project Number" or
for a CDP to the District. (§4.4(a)(i)) "District Project Engineering Work Order
Number", whichever is the latest
11. Developer Submits Building Permit May, 2019
Application Drawings to the District.
Developer to submit Building Permit
Application Drawings for Developer's
Improvements to the District. (§4.4(a)(ii))
12. District Staff Reviews Building Permit 20 Business Days after No. 11 (Developer
Application Drawings. District Staff to Submits Building Permit Application Drawings
review Building Permit Application to the District) (each submittal)
Drawings for substantial conformance with
Schematic Plans. (§4.4(a)(ii))
US,,D005197048325..39
Attachment A to Agenda File No. 2018-0070
ACTION TARGET DATE
13. Developer Corrections to Building Permit 20 Business Days after No. 12 (District Staff
Application Drawings. Developer to make Reviews Building Permit Application
corrections to Building Permit Application Drawings)
Drawings based on District Staff
comments. (§4.4(a)(ii))
14. District Approves Building Permit 20 Business Days after No. 13 (Developer
Application Drawings. (§4.4(a)(ii)) Corrections to Building Permit Application
Drawings) (each submittal)
15. Developer Submits Total Project Costs. 30 Days after the Districts approval of the
Developer to submit to District and City Tenant Project Plan Application (includes both
Total Project Costs. (§4.5(a)) Schematic Plans and Building Permit
Application Drawings)
16. Developer, City, and District Determine Earliest Possible Time Within 60 Days of No.
Total Project Costs. The Developer, City, 15 (Developer Submits Tenant Project Plans)
and District to determine the Total Project
Costs of the Developer's Public
Improvements. (§4.5(f))
17. Approval of New S-1 RV Park Lease and 150 Days from Full Execution of the
Funding. BPC to approve and authorize Agreement
District to enter into a New S-I RV Park
Lease, and approve funding for Sweetwater
District Infrastructure and New S--„I RV
Park. (§1.2(b))
18. Approval of Tenant Project Plans. The 180 Days from No. 7 (Submission of Tenant
Developer to take all actions as necessary Project Plan Application and Development
to obtain Approval of Tenant Project Plans Cost Estimates— Developer's Improvements
in compliance with BPC Policy No. 357. Surface Parking,and Parking Improvements
(§4.5)} (includes Schematic Plans))
19. Coastal Development Permit. District to 180 Days from No. 10 (Developer Submits
complete all documents and actions CDP Application to District)
necessary to consider Coastal Development
Permit for development of the Developer's
Improvements. (§1.4)
20. Developer Submits Building Permit Promptly After No. 19 (Coastal Development
Application Drawings to City. Developer Permit)
to submit Building Permit Application
Drawings to City for review and approval
and issuance of Building Permits.
(§4.4(a)(iii))
U5-DOC&97048325,38
Attachment A to Agenda File No. 2018-0070
ACTION TARGET DATE
21. Design of City Infrastructure 12 Months after Close of Escrow
Improvements. The City to prepare, or
cause the preparation of, preliminary and
final construction plans and documents for
the City Infrastructure Improvements.
(§4.2(a))
22. Wildlife Advisory Group and Bayfront 90 Days from Full Execution of the Agreement
Cultural and Design Committee Review.
The District, City and Developer to
cooperate to take such actions to obtain
comments on required portions of the
Schematic Plans from the Wildlife
Advisory Group, Bayfront Cultural and
Design Committee. (§4.4(a)(i))
23. Formation of CFD. The City to complete 120 Days from Full Execution of the
all documents and actions necessary to Agreement
commence formation of CFD. (§1.4)
24., City Property Tax Contribution, The City January, 2019
to decide on EIFD and if appropriate
commence all documents and actions
necessary to commence formation of EIFD,
or identify other mechanism to contribute
City property tax increment. (§1.4)
25. Open Escrow Account; Preliminary Title 60 Days from Full Execution of the Agreement
Report. The District, City and Developer to
open an escrow with the Escrow Agent and
Developer to deliver Preliminary Title
Report to District and City. (§6.2)
26. Developer Title Review. The Developer to 90 Days from delivery of Preliminary Title
complete its title review and deliver Report
Developer's Disapproval Notice to District.
(§6.2)
27. District Response to Title Review. The 90 Days from No. 26 (Developer Title Review)
District to complete its title review and to
deliver District's Response Notice to
Developer. (§6.2)
US-DOCS%97048325..38
Attachment A to Agenda File No. 2018-0070
ACTION TARGET DATE
28. Developer Due Diligence Investigations. 45 Days after completion of soil import to
The Developer to complete its Due Project Site by District. If no soil import to
Diligence Investigations and provide notice Project Site, then no later than 90 Days after
to District that it accepts or rejects the termination of the Existing RV Park Lease
conditions of the Project Site. (§5.8(c)) (March 2019)
29. Submission of Completed BuildingP15 Months from Full Execution of the
Application and Final Cost Estimates - Agreement
Developer's Improvements. Developer to
submit to the District/City completed
Building Permit Application, final cost
estimates and documents for the
Developer's Improvements. (§4.5(b))
30. Developer to Obtain Building Permit 90 Days after Full Execution of the Agreement.
Processing Agreement.
31. Staff Approval and Acceptance— 20 Days after No. 29 (Submission of Final Cost
Completed Final Cost Estimates. The Estimates— Developer's Improvements)
District Staff and City Design Review Staff
to approve or disapprove the completed
documents, and accept the final cost
estimates, for the Developer's
Improvements. (§4.5)
32. Execution of New S-1 RV Park Lease and 150 Days from Full Execution of the
Construction of New S-1 RV Park. District Agreement
to execute the New S-I RV Park Lease, and
cause commencement of construction of
New S-I RV Park and related
improvements. (§1.2(b); §1.4)
33. Submission of Encumbrance Package and Month 15 from Full Execution of the
Proposed Completion Guarani. Developer Agreement
to submit to District encumbrance package
per BPC Policy No. 355 and proposed
Completion Guaranty language
34. Acceptance or Reiection of Encumbrance 60 days after No. 33 (Submission of
Package and Completion Guaranty. BPC to Encumbrance Package and Proposed
accept encumbrance package per BPC Completion Guaranty)
Policy No. 355 for construction financing
and Completion Guaranty language.
(§5.2(e))
US•DOCM97048175 18
Attachment A to Agenda File No. 2018-0070
ACTION TARGET DATE
35. Submission of Management Agreement. Month 15 from Full Execution of the
Developer to submit to District and City the Agreement
Management Agreement. (§5.2(f))
36. Consent—Management Agreement. BPC 60 Days after No. 35 (Submission of
and City Council to consent to the Management Agreement)
Management Agreement. (§5.2(f))
37, Vacation of the Existing RV Park. District Not later than September 4, 2019
to cause the Existing RV Park Lessee and
each of the tenants, occupants or guests on
the land encumbered by the Existing RV
Park Lease to vacate such land.
38, Review of Underwriter's Updated 20 Days from completion of No. 19 (CDP
Projections. The District and City to Approval by District)
review and evaluate the underwriter's
updated financial projections. (§5.2(o))
39, Final Plan of Finance. BPC and City 10 Days from completion of No. 38 (Review of
Council to prepare the Final Plan of Underwriter's Updated Projections)
Finance, estimated financing schedule and
all ongoing and one-time funding sources
for public financing.
40. Commence Drafting of Bond Documents. 10 Days from completion of No. 39 (Final Plan
The District Staff and City Staff to of Finance)
commence drafting all documents to
present to the BPC and the City Council for
approval of issue of Bonds for public
financing. (§1.4)
41. Preparation of JEPA Bond Documents. 10 Days from completion of No. 39 (Final Plan
The JEPA to commence all documents to of Finance)
present to the JEPA Board, BPC and the
City Council for approval of issue of Bonds
for public financing. (§1.4)
42. Approval -Convention Center Subleases. 30 Days from completion of all tasks
JEPA Board, BPC and City Council to commenced as referenced in Nos. 38-41
approve and authorize execution of
Convention Center Subleases, and other
related documents.
US-DOCM97438325.38
Attachment A to Agenda File No. 2018-0070
ACTION TARGET DATE
43. Authorization for City Manager. The City 30 Days from completion of all tasks
Council to authorize the City Manager to commenced as referenced in Nos. 38-41
execute all documents and do all acts
necessary to carry out the provisions of this
Agreement, the Convention Center
Subleases, and other requirements
pertaining to the full implementation of the
Project, including the Plan of Finance.
(§1.4)
44. Authorization for District's Executive 30 Days from completion of all tasks
Director. BPC to authorize the District's commenced as referenced in Nos. 38-41
Executive Director to execute all
documents and do all acts necessary to
carry out the provisions of this Agreement,
the Ground Lease, the Convention Center
Subleases, and other requirements
pertaining to the full implementation of the
Project, including the Plan of Finance.
(§1.4)
45. Approval of JEPA Bonds. The JEPA 30 Days from completion of all tasks
Board to conditionally approve and commenced as referenced in Nos. 38-41
authorize execution of JEPA Bond
documents and issue of JEPA Bonds.
(§1.4)
46. CFD Financing. The City R)conditionally 30 Days from completion of all tasks
approve and authorize levy of Special tax. commenced as referenced in Nos. 38-41
(§1.4)
47. EIFD Bonds. The City to conditionally 30 Days from completion of all tasks
approve and authorize execution of EIFD commenced as referenced in Nos. 38-41
Bond documents and issue of EIFD Bonds.
(§1.4)
48. Validation Action--Bonds. The JEPA and 30 Days from completion of all tasks
consultants to file an action for validation commenced as referenced in Nos. 42-47
of the bonds. (§4.19)
CLOSE OF ESCROW:
US-DOCS197048325.38
Attachment A to Agenda File No. 2018-0070
ACTION TARGET DATE
49. Submission of Construction Contracts. 30 Days Prior to Close of Escrow.
Developer to submit to the District and the
City executed guaranteed maximum price
construction contracts or fixed price
construction contracts, as applicable for the
Developer's Improvements. (§4.5(g))
50. Grading Permits and all Discretionary 30 Days Prior to Close of Escrow.
Actions. Final and complete grading
permits ready to be issued by the City for
the Developer's Improvements and
approval of all Discretionary Actions by
City, District and any third-parties required
for the completion of Developer's
Improvements (§5.2)
51. Project Public Investment. District and Prior to Close of Escrow.
City to submit to the Developer evidence
that the Project Public Investment and
Developer's Phase 1 A Infrastructure
Improvements Costs will be available at the
Close of Escrow. (§5.3)
52. Execution and Delivery of Ground Lease. Concurrently with Close of Escrow on
etc. The District and Developer to Convention Center Subleases and Issuance of
complete, execute and deliver into escrow Bonds.
the Ground Lease (including memorandum
relating thereto), together with all
documents and supplemental escrow
instructions required to close escrow.
(§6.3, 6.4(a)(i))
53. Execution and Delivery of Convention Concurrently with Close of Escrow on Ground
Center Subleases, etc. The District, City, Lease and Issuance of Bonds.
JEPA and Developer to complete,execute
and deliver into escrow the Convention
Center Subleases (including recordable
memoranda relating thereto), together with
all documents and supplemental escrow
instructions required to close escrow.
(§6.4(a)(iii))
54. Escrow Fees, Charges. The District, City, Prior to Close of Escrow.
JEPA and Developer to pay their respective
fees, charges and other costs into escrow.
(§6.5)
U5-DOCS197048325 19
Attachment A to Agenda File No. 2018-0070
ACTION TARGET DATE
55. Issue of Bonds. The JEPA to prepare and Concurrently with Close of Escrow.
close on sale of JEPA Bonds for public
financing. (§1.4)
56, Developer's Financing. Developer shall Concurrently with Close of Escrow.
complete all actions necessary to close on
Equity Investors contributions and
financing from the Private Construction
Lender for the Developer's costs for
construction of the Developer's Private
Improvements. (§5.2)
w
7. Certificates.if cates. City. District and Developer to 30 Days Prior to the Close of Escrow
,...,.,�,.
provide required incumbency certificates,
resolutions or ordinances, as applicable.
(§9.12)
58. Close of Escrow. The District, City, October 30, 2019
Developer and JEPA to cause Close of
Escrow and recordation of memoranda of
Ground Lease and Convention Center
Subleases. (§6.4)
59.
US-DOCS\97048325.39
Attachment A to Agenda File No. 2018-0070
ATTACHMENT NO. 7
FORM OF DEVELOPER'S PRIVATE IMPROVEMENTS AND CONVENTION CENTER
BUDGET
U S-DOCS'%97048325..38
Attachment A to Agenda File No. 2018-0070
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Attachment A to Agenda File No. 2018-0070
ATTACHMENT NO. 8
QUALITY OF IMPORTED SOIL
US-DOCS147048325.38
Attachment A to Agenda File No. 2018-0070
1110110 MINI
(3ri(nloalcuuo �� .�,a(�nW�ti',zi�rr4v ri+„k S ,� i i s rrr,.
April 19, 20 17 (revised April 19, 2018)
Project No. 108244001
Ms. Lir.,da Scott
Capital Project Manager
San Diego Unified Port District
3165 Pacific Highway
Sail Diego, California 92101
Subject: Geotechnical econunendations for Import of'fill Soils
Chula Vii;ta Bayfront
Chula Vista, California
Dear Ms. Scott:
In accordalrice with your authorizrition. we have prepared this geotechnical specification report
for the propos,ed import of fill �o the San Diego Unified Fort District's Chula Vista Bayfront pro-
ject. The intent of this geotecivaical specification report is to:
• Stipulate that the earth materials that are imported to the Bayfront project site are suitable
for use as fill from a geotechnical engineering standpoint;
• Reduce costs associated with remedial earthwork for future developments within the project site,
• Provide guidance so that the import materials are placed and compacted as engineered fill in
general accordance with the current California Building Code and local building/grading or-
dinances; and
• Provide consistent geotechnical conditions across the Bayfront project site once import and
placement of the import fill materials has concluded.
It should be understood that this geotechnical specification report is not intended to serve as a
substitute for site specific geotechnical evaluations for future developments. Developers of indi-
vidual parcels within the site should retain a geotechnical consultant to perforin such evaluations,
based on their individual project needs.
r'.�.70 ��uNvl �rvi(`.I ^➢(' I�rl4` ^�,;'t. ' �.x�ld'Ckl'p,.II�A ',� �°'=fi I°"Ri"'ltl.Vry oc �.J� :7�a4"r k���'l'"11, ,Ir` �9rrr,"rl r'S�r6� � 1r4GO
San(efgo 111 °one m ;.^ addjnr,110"'aiC"NWlV"iga (.'(,as1,o9j San°mnci'cc. � '`&I,1V _051 ;ria. wiiq�Arlra
'/ar,caas w, np.F'A-fl¢n,,, I)r. sour= d xlrtt,oi,I
Attachment A to Agenda File No. 2018-0070
Chula Vista Bayfront April 19, 2017 (revised April 19, 201,S)
Chula Vista, California Projcct No. 108244001
IMPORT MATERIALS
Import materials to be placed at the Chula Vista Bayfront site: should be comprised of ganular soil,
'I'he import material should be free of deleterious materials and confbrin to the following criteria:
• Particle sizes of less than 6 inches, with less than 30 percent by weight) retained on a
34-inch Ste`a'd;
• Less than 35 percent(by weight) fiber than a US, Standard No. 200 Steve;
• Expansion bidex of less then 50 (based on ASTM international A TNN] DIS 4829);
• Plasticity Index of less than 1 (Erased on ASTM 43115);
• Organic material of less than 1 percent (by weight);
• Classified as non corrosive in accordance with Caltrans Corrosion Guidelines (2015), where
the: soil possesses an electrical resisitivity of more than 1,000 ohrn-centimeters, a pl-I of more
than 5,5, a chloride content of fess than 500 pkals per million ipni), and a sulfate content of
less than 2,000 ppm.
The contractor should be responsible for the uniforinity of import material brought to the site.
c: recommend that materials proposed for use as select fill be evaluated ftorn a contractor's
stockpile or large cuts, rather than in-place materials, Once an evaluation ofart import source is
requested, three days should be anticipated for results of the inaterial evaluation.
To reduce the potential for importing contaminated materials outer the Chula Vista Bayfront site,
proposed import soils should conform to appropriate environmental cHt ria established by the Salt
Diego Uri3 ifie:l Port District, prior to their import to the site.
Attachment A to Agenda File No. 2018-0070
Chula Vista Bayfront April 19, 2017 (revised April 19, `?01 S)
Chula Vista., California Project No. 105244001
PREPARATIONSITE
Site preparation should begin with the rernoval of existing buildings, foundations, othcr strUCc
tures and improverncrats, ve eation, utility lines, asphalt, concrete, and other deleterious debtis
frorn areas to be graded, Trac stumps aar°Ad roots a::kould he removed to such a depth ftat orgaaaic
material is g;ene4,ly not preseat. Clearing and grubbing should extend to the outside of the pro-
posed excavation and fill areas. The debris and unsuitable material generated during; clearing and
grubbing should be rerno`=e -ona areas to be graded and disposed of at a legal duat'apsite away
from the project aarea.
In areas to receive impoal fill, tl e upper 12 inches of existing; sail should be overexcavated. 'Fhe bot-
tom of the overexcavated area should be eiGserved by the geotechnical consultant to evaluate its
suitability to receive fill. Following; obser',a�aation of the bottori of the ovcrcxcavation, the cxpmed
sowls should then be scarified l7, inches, moisture conditioned to a ncar-optimurn anoisture content,
and recoinpacted to 90 pereeaat of the modified Proctor density(based can ASTM D 1557).
If, after overeexc:at ating;the upper soils, the exposed soils are found to be suitable to receive fill,
a writtca7 request to waive the scarification q'Ind recompaac ion of the sails exposed in the bottom
of the excavation shall be submitted to the San Diego Unified Port District (District), The Dis-
trict may ele>.,A to waive the overcxcavation and rccornpaction requirement at its sale discretion.
PLACEMENT AND COMPACTION OF IMPClRT MATERIALS
Prior to placement of compacted fill, the exposed surface to receive the fill should prepared as
described above in the "Site Preparation" section of this report. The evaluation of cor.apasc;tion by
the g;eoteLhnical consultant should not be considered to preclude any requirements for observa-
tion or approval by governing; ageaacies. It is the contractor's responsibility to notify this office
and the appropriate governing agency when project areas are ready for observation, and to pro-
vide reasonable time for that.review
,, 1..,.. A'L
Attachment A to Agenda File No. 2018-0070
Chula Vista Bayfront April 19, 2017 (revised April 19, 2018)
Chula Vista, California Project No. 108244001
Compacted fill should be placed in horizontal lifts of approximately 8 inches in loose thickness.
Prior to compaction, each lift sl,,,,ould be watered or dried as needed to achieve a moisture content
generally above the laboratory optimurn, mixed,, and then compacted by mechanical methods, to
a relative compaction of 90 percent as evaluated by ASTM D 1: 57. Successive lifts should be
treated in a like manner until the desired tinished grades are wrchieved.
Where fill is to be placed on ground sloping more than 5;l (horizontal to vertical), benches
should be excavated in the ground srarface (in accordance with the Ca.lifomia building code).
This %i,ill help rov," e a relatively level surface upon which the fill can be placed.
If the impor-ting of fill materials is not a continuous operation, temporary fills or stockpiles of the
fill materials can be utilized so that the suhse uervt placernent of the import materials can be per-
formed in a more continuous manner. Its addition, if the import operations or placement of fill is
stopped for a per7od of tiiue, the exposed upper surface of the in-place fill should be evaluated
flor- adequate moisture; content and/or potential disturbance prior to the resumption of fill place-
ment. Based on this evaluation, it may be necessary to scarify, moisture condition and recorra act
the upper- 12 inches of the in-place fill materials prior to the placoment of additional fill.
GEOTEC1011CAL DOCUMENTATIONOF IMPORT PLACEMENTAND COMPACTION
Upon Completion of the placement and compaction of the: import materials at the site, =a geotech-
nical report that documents the carlhworlc shall be prepared by a geote:clznical engineer that is
regi=,tcred in the ratc of California. The report shall be appropriately illustrated and should hi-
clude the following:
Discussion ofthe earthwork performed, including site preparation;
Lateral limits of ading;
lcvation/depth of the bottom of the overexcavation or processed native soils prior to fill
placement,
Description of the materials utilized as fill and an opinion on their suitability;
Finish grade elevations;
Attachment A to Agenda File No. 2018-0070
Chula Vista Bayfront April 19, 2017 (revised April 19, 201 S)
Cha Vista, C'aIifortua Projcct No. 105244001
• Field density tcw t locations and elevatio��. s:`depth;:--,;,
• Results of field density testing and laboratory testing; and
• An opinion regarding the suitability of the site's intended use fron-1 a geotechnical engineer-
ing standpoint.
LIMITATIONS
'AT
1°leis geotecluiical specification report h,,zs been preparel in accordance with current engineering
practice and the staw 1,:ird of care exercised by reputable g cotechnieal consultants performing
siniilar tasks in this :sorsa. No warranty, implied or expressed, it unlade regarding the conclusions,
recommendations, alid pro e.;sional opinions expressed in this report.
We appreciate the opportunity to be ofs(�,-.vice on this project.
Sincerely, �� 331Q►
NIN'YO & I OGRE ale lUp
J[,q
iii rE ��I�ilr
4w �
2468
No,Willia
A EV
SetiioriFrw�1�,�h�eeor , Pill,,„ C� OF��� Ronald S. Halbert, PE 6. 2' f°ri
Engineer Principal Engineer �
�pry�7�,9 g'��+ {Eq¢
�Y 141t' iRSH/'gg
Attachment Referencus
Distriburtioit. (1)Addressco
A14700,” ''f
Attachment A to Agenda File No. 2018-0070
Chula Vista Bayfront April 19, 2017 (revised April 19, 2010
Chula Vista, California Project No. 108244001
.............
REFERENCES
California Building Standards Commission (C SC), 2016, California Building Code (CBC), Ti-
tle 24, Part 2, Volumes I and 2.
Califorriia lie ti of Transportation (Caltrans), 2015a, Corrosion Guidelines (Version 2.1), Divi-
slon ofEnginecring and Testing Services, Corrosion Technology Branch: dated January
California Departrnent ofTransporCation(Caltrans),2015b,Standard Specifications.
California Environmental Protection Agency (EPA) Depait-nent ofroxic Substances Control, 2001,
Infon-nation Advisory, Clean linported Fill Matc6al dated: October,
Public Works Standards, Inc., 2012, "Grecnbook," Standard Specifications for Public Works
COIISMICtiffll,
F"It Aflorqo&Moore
Attachment A to Agenda File No. 2018-0070
ATTACHMENT NO.9
DRAFT OF THE GROUND LEASE
US-DOCS197048325.38
SAN DIEGO UNIFIED PORT DISTRICT
LEASE TO
RIDA CHULA VISTA, LLC
OF PROPERTY LOCATED AT
CHULA VISTA, CALIFORNIA
US-DOCS\96961081.42
TABLE OF CONTENTS
1. BASIC LEASE PROVISIONS ........................................................................................ 3
2. GENERAL DEFINITIONS .............................................................................................. 6
3. TERM............................................................................................................................. 7
4. USE................................................................................................................................ 7
5. RENT ........................................................................................................................... 13
6. CONSTRUCTION AND ALTERATION OF INITIAL PROJECT
IMPROVEMENTS........................................................................................................ 24
7. TITLE TO AND DEMOLITION OF ALTERATIONS AND IMPROVEMENTS............... 32
8. ENTITLEMENTS.......................................................................................................... 35
9. LIENS........................................................................................................................... 37
10. LEASE ENCUMBRANCE ............................................................................................ 38
11. SUBLEASE; ASSIGNMENT ........................................................................................ 48
12. EVENTS OF DEFAULT AND REMEDIES................................................................... 55
13. BANKRUPTCY............................................................................................................. 58
14. EMINENT DOMAIN...................................................................................................... 59
15. MAINTENANCE AND REPAIR.................................................................................... 62
16. TAXES AND PROPERTY EXPENSES........................................................................ 68
17. EQUAL EMPLOYMENT OPPORTUNITY/NONDISCRIMINATION AND OFAC.......... 69
18. INSURANCE................................................................................................................ 70
19. INDEMNITY ................................................................................................................. 74
20. DAMAGE OR DESTRUCTION .................................................................................... 74
21. HAZARDOUS MATERIALS ......................................................................................... 76
22. "AS-IS" LEASE AND WAIVERS................................................................................... 83
23. QUITCLAIM OF TENANT'S INTEREST UPON TERMINATION ................................. 85
24. PEACEABLE SURRENDER........................................................................................ 85
25. WAIVER....................................................................................................................... 86
26. HOLDOVER................................................................................................................. 86
27. NOTICES ..................................................................................................................... 86
28. SECURITY DEPOSIT .................................................................................................. 87
29. GENERAL PROVISIONS............................................................................................. 88
-1-
US-DOCS\96961081.42
DEFINITIONS ADDENDUM
SCHEDULES
SCHEDULE1
EXHIBITS
EXHIBIT A LEGAL DESCRIPTION OF PREMISES
EXHIBIT B DEPICTION OF PREMISES
EXHIBIT B-1 DEPICTION OF PARKING IMPROVEMENTS
EXHIBIT B-2 DEPICTION OF NEIGHBORING IMPROVEMENTS
EXHIBIT C PROJECT IMPROVEMENT PLANS
EXHIBIT D CONSTRUCTION REQUIREMENTS
EXHIBIT D-1 CONDITIONS OF PROJECT APPROVAL
EXHIBIT E FORM OF COMPLETION GUARANTY
EXHIBIT F FORM OF MEMORANDUM OF LEASE
EXHIBIT G SUBLEASE INFORMATION
EXHIBIT H FORM OF ESTOPPEL STATEMENT
EXHIBIT I DEVELOPMENT PERMITS AND APPROVALS
EXHIBIT J FORM OF LETTER OF CREDIT
EXHIBIT K LETTER OF CREDIT ISSUERS
EXHIBIT L DESIGN INTENT OF EXTERIOR APPEARANCE
EXHIBIT M PRIOR AGREEMENTS
EXHIBIT N PRE-APPROVED SIGNS
EXHIBIT O PROPERTY TAX EXPENSES
EXHIBIT P FORMS OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
AGREEMENT
EXHIBIT Q SUBLEASE QUESTIONNAIRE
EXHIBIT R-1 PARKING IMPROVEMENTS
EXHIBIT R-2 PARKING IMPROVEMENTS
EXHIBIT S
LANDLORD TRANSFER DOCUMENTS
EXHIBIT T PARKING EASEMENT
EXHIBIT U PARKING STRUCTURE LAND
-2-
LEASE
THIS LEASE ("Lease") is entered into as of 20 by and between
the SAN DIEGO UNIFIED PORT DISTRICT, a public corporation ("Landlord") and RIDA
CHULA VISTA, LLC, a Delaware limited liability company ("Tenant").
For good and valuable consideration, Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, for the Term and upon the terms and conditions hereinafter set forth, the
Premises described in Section 1.2 below, and subject to the terms of Article 23 of this Lease,
Landlord conveys to Tenant, and Tenant accepts from Landlord, all of Landlord's right, title and
interest in and to the Existing Improvements, and Landlord and Tenant hereby agree as follows:
1. BASIC LEASE PROVISIONS
The following basic lease terms are referred to in other provisions of this Lease and constitute a
part of this Lease and are to be read together with and constitute a part of the terms of this
Lease.
1.1 Term (See Article 3):
Sixty (66) years as follows (the "Term"):
1.1.1 "Commencement Date": [ENTER DATE.]
1.1.2 "Expiration Date": [ENTER DATE.]
1.2 Premises:
The "Premises" consist of the real property more particularly described in Exhibit "A" attached
hereto and depicted in Exhibit "B" attached hereto, consisting of approximately thirty-six (36)
acres of land area located at [H-3] in the City of Chula Vista, California, together with any
Existing Improvements.
1.3 Permitted Use (See Article 4):
The Premises and the Improvements shall only be used as follows and for no other purpose
(the "Permitted Use"): (i) a single-branded resort hotel with at least 1,570 Rooms but not more
than 1,600 Rooms on the Premises, with an Acceptable Brand (the "Resort Hotel"); (ii)
approximately 275,000 net usable square feet of associated meeting space in the Convention
Center (the "Convention Center" and, together with the Resort Hotel, the "Primary Use");
(iii) any use which is ancillary or incidental to the Primary Use as described in Article 4; and
(iv) any other use of the Premises and the Improvements that is approved by the Landlord in its
sole and absolute discretion in writing; provided that any such use is not restricted or prohibited
by the CDP or any Laws.
"Acceptable Brand" shall mean the "Gaylord Hotels" brand or any other hotel brand that has
achieved "AAA Four Diamond" rating standards in a reasonable number of its hotels or the
equivalent as determined by Landlord in its reasonable discretion; provided that Tenant shall not
terminate the Hotel Management Agreement that is in effect as of the Commencement Date
before the date that is the third (3rd) anniversary of the later of the date that the Initial Project
Improvements are Complete and the date that Landlord receives a copy of the final certificate of
-3-
occupancy. Tenant shall not name the Resort Hotel or Convention Center with any name that
includes "San Diego".
Tenant agrees to comply with all project conditions and all applicable mitigation measures,
including, without limitation, those contained in the final Environment Impact Report "Chula Vista
Bayfront Master Plan and Port Master Plan Amendment Final Environmental Impact Report,"
(UPD##83356-EIR-658, SCH #2005081077; Document 56562), including, but not limited to, the
"Mitigation Monitoring and Reporting Program" (if any), and the resolution certifying said final
Environmental Impact Report, Resolution No. 2010-79, adopted by the BPC on May 18, 2010
(collectively, the "EIR"), and in the CVBMP Documents.
Except as expressly provided herein, Tenant shall not use or permit the Premises and the
Improvements to be used for any other uses or purposes whatsoever. This restriction on use of
the Premises and the Improvements absolutely prohibits a change in use.
1.4 Rent Commencement Date and Rental Periods (See Section 5.1.1):
The "Rent Commencement Date" shall be the Commencement Date.
The "Rental Periods" under the Lease shall be as follows:
First (1S) Lease Period: Lease Years 1 — 18
Second (2nd) Lease Period: Lease Years 19—23
Third (3rd) Lease Period: Lease Years 24— 37
Fourth (4th) Lease Period: Lease Years 38—66
1.5 Minimum Annual Rent (See Article 5):
The "Minimum Annual Rent" shall be as follows:
First (1S) Lease Period: Zero Dollars ($0) per Lease Year,
Second (2nd) Lease Period: Three Million and No/100 Dollars ($3,000,000) per
Lease Year,
Third (3rd) Lease Period: Three Million Five Hundred Thousand and No/100
Dollars ($3,500,000) per Lease Year
Commencing on the first day of the Fourth (4th) Lease Period, Minimum Annual Rent shall be as
provided in Section 5.3 of this Lease.
Each period of twelve (12) consecutive months commencing on the Rent Commencement Date
and each successive twelve (12) month period thereafter during the Term shall be referred to
herein as a "Lease Year"; provided, however, that, if the first day of the first Lease Year of the
First (1S) Lease Period is the not the first date of a month, such initial partial month shall be
added to the first Lease Year of the First (1S) Lease Period so that such Lease Year will end on
the last day of the month in which the first anniversary of the Rent Commencement Date occurs;
and provided, further, that each subsequent Lease Year shall commence on the day after the
end of the immediately preceding Lease Year and shall end on the anniversary of the end of the
immediately preceding Lease Year, except that the last Lease Year shall expire on the
Expiration Date.
-4-
1.5.1 "Minimum Rent Look Back Adjustment Dates" (See Section 5.3.1): the first
day of each of the 37th, 42nd, 49th, 56th and 63rd Lease Year.
1.6 Percentage Rent Rates (See Article 5):
The Percentage Rent Rates are set forth in Section 5.4.1.
1.7 Parkinq Improvement Rent (See Section 4.3 and 5.1.2):
Tenant shall pay the Parking Improvement Rent in accordance with Section 4.3 and Section
5.1.2.
1.8 Construction of Project (See Article 6):
(a) "Outside Construction Commencement Date": Ten (10) days after the
Commencement Date.
(b) "Outside Construction Completion Date": Forty-Eight (48) months after
the Outside Construction Commencement Date (as such date may be extended for a
Construction Force Majeure Event).
(c) ["Estimated Total Development Costs": [ Dollars
(d) ["JEPA Development Cost Contribution":
Dollars ($ A.
(e) "Premises Preparation Cap": Subject to Section 6.2, up to Ten Million
Dollars ($10,000,000).
(f) ["Estimated Tenant Development Cost Contribution":
Dollars ($ A.
(g) "Tenant Art Investment": [ �.
1.9 Insurance (See Article 18):
1.9.1 Commercial General Liability:
Not less than Twenty Million Dollars ($20,000,000) per occurrence limit for bodily injury
and property damage. The general aggregate limit shall be not less than Forty Million Dollars
($40,000,000) unless a Twenty Million Dollars ($20,000,000) per location aggregate limit is
provided by separate endorsement. All such limits may, at Tenant's option, be satisfied by limits
set forth in primary policies and excess policies.
1.9.2 Liquor Liability:
Not less than Five Million Dollars ($5,000,000).
1.10 Security Deposit (See Section 12.2.4 and Article 28):
One Million Dollars ($1,000,000).
1.11 Notice Addresses (See Article 27):
To Tenant:
-5-
RIDA Chula Vista, LLC
1777 Walker Street, Suite 501
Houston, Texas 77010
Attention: Ira Mitzner
With copy to:
RIDA Chula Vista, LLC
1777 Walker Street, Suite 501
Houston, Texas 77010
Attention: Legal Department
and
Latham & Watkins
12670 High Bluff Drive
San Diego, CA 92130
Attention: Steven Levine
To Landlord:
Executive Director
San Diego Unified Port District
Post Office Box 120488
San Diego, CA 92112-0488
With copy to:
Director, Real Estate Department
San Diego Unified Port District
Post Office Box 120488San Diego, CA 92112-0488
1.12 Completion Guaranty:
Tenant's obligation to Complete all of the Initial Project Improvements and obtain the final
certificate of occupancy with respect to the Initial Project Improvements shall be guaranteed by
Ira Mitzner and, if Tenant's so elects, certain other Persons which are approved by Landlord, in
Landlord's reasonable discretion, subject to the guarantor replacement provisions as and to the
extent set forth on Exhibit "E" attached hereto (each, a "Completion Guarantor" and,
collectively, "Completion Guarantors"). Tenant shall cause each Completion Guarantor to
execute and deliver to Landlord, concurrently with Tenant's execution and delivery of this
Lease, a Completion Guaranty in the form and substance of Exhibit "E" attached hereto (the
"Completion Guaranty"). The Completion Guaranty shall terminate upon the Completion of
the Initial Project Improvements and receipt by Landlord of a copy of the final certificate of
occupancy received by Tenant for the Initial Project Improvements.
2. GENERAL DEFINITIONS
Capitalized terms used in this Lease are more particularly defined or are cross-referenced in the
"Definitions Addendum" attached hereto. The definitions set forth in the "Definitions Addendum"
are incorporated herein by this reference.
-6-
3. TERM
3.1 Term.
The "Term" of this Lease shall be the period commencing on the Commencement Date and
ending on the Expiration Date as described in Section 1.1, unless sooner terminated or
extended as provided in this Lease.
3.2 Prior Agreements.
Except for the documents set forth on Exhibit "M" attached hereto, any and all existing entry
agreements, permits, licenses, leases, or rental agreements between Landlord and Tenant
relating to the Premises which have not already expired or terminated, are hereby terminated as
of the Commencement Date. Notwithstanding the foregoing, any obligations of Landlord or
Tenant under such agreements which by their terms survive such termination, shall remain
enforceable by Tenant or Landlord, as applicable.
4. USE.
4.1 Permitted Use.
Tenant agrees that the Premises and the Improvements shall be used only and exclusively for
the Permitted Use described in Section 1.3 and for no other purpose whatsoever. This
restriction on use of the Premises and the Improvements absolutely prohibits a change in use.
Tenant acknowledges and agrees that the only parking it has a right to utilize in connection with
the Permitted Use is as set forth in Section 4.3. Tenant acknowledges and agrees that with
respect to any public parking (other than the Tenant Use Parking Improvements) located
adjacent to or proximate to the Premises, including without limitation the remaining portions of
the Parking Improvements, Tenant has only the rights of a member of the public notwithstanding
any regular use of such parking by Tenant and/or its employees, Subtenants, independent
contractors, visitors and patrons, and invitees.
4.2 Resort Hotel Use.
Tenant agrees that the Premises and the Improvements shall be used only and exclusively for
the Permitted Use, including the following uses that are ancillary or incidental to the Primary
Use and that are designed primarily for Hotel Resort and Convention Center guests and visitors:
(a) Rental of Rooms;
(b) Rental of Meeting Space;
(c) Full-service restaurant and/or limited service restaurant, including cocktail
lounge and any standalone bar or cocktail lounge;
(d) Snack bar, delicatessen and/or coffee shop(s);
(e) Retail shop(s);
(f) Barber and beauty shop;
(g) Spa services;
(h) Health, recreational, and tennis facilities, including recreational lessons;
(i) Bicycle rentals;
(j) Rental of automobiles;
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(k) Motorcycle rentals;
(1) Boat rentals, beach equipment rentals and beach-related services;
(m) [Special temporary exhibition(s), including production shows (including
any and all uses in connection with the production of ICE! (including the use of the ICE! tent as
temporary additional meeting space when such ICE! tent is not used for purposes of the ICE!
production)) and outdoor entertainment (including ice skating and carnivals)];
(n) Vending machines, including telephones;
(o) Office and counter areas for Resort Hotel management and other
ancillary services that are consistent with services provided by a convention center hotel
comparable with the Resort Hotel;
(p) Installation of telecommunications equipment;
(q) Each other use that (i) is ancillary or incidental to the Primary Use, (ii) is
customary for a convention center hotel operating in the United States of America and that is
comparable with the Resort Hotel and (iii) is not prohibited by the CDP or any Laws.
4.3 Parking Improvements.
[The following Section 4.3.1 is to be included in this Lease if, prior to the Commencement Date,
Landlord has, in accordance with the DDA, notified Tenant that Landlord will not pay for the
Parking Improvements Development Costs up to the amount of$40,000,000:]
4.3.1 Tenant Use Parking Improvements.
Subject to the terms of the Offsite Parking Land Lease, Tenant shall have the right to use the
Offsite Parking Land to surface park at least 1,200 parking spaces ("Surface Parking
Improvements"). Tenant shall pay the Landlord rent for the Surface Parking Improvements in
accordance with the Offsite Parking Land Lease. Tenant shall also have the exclusive right to
use any surface parking Tenant may develop on the Premises ("Premises Surface Parking").
[The following Section 4.3.2 is to be included as Section 4.3.1 in this Lease if, prior to the
Commencement Date, (a) Landlord has, in accordance with the DDA, notified Tenant that
Landlord will pay the Parking Improvements Development Costs up to the amount of
$40,000,000 and (b) either (i) the Estimated Parking Improvements Development Costs, as of
the Commencement Date, do not exceed $44,000,000 or (ii) the Estimated Parking
Improvements Development Costs, as of the Commencement Date, exceed $44,000,000 and
Tenant has agreed, in its sole and absolute discretion, to construct the Parking Improvements:]
4.3.2 Tenant Use Parking Improvements.
(a) Tenant shall have the non-exclusive right to use at least 1,600 parking
spaces within a parking structure ("Parking Improvements") and (ii) the exclusive right to use
any surface parking Tenant may develop on the Premises ("Premises Surface Parking").
Subject to the terms of the Offsite Parking Land Lease, Tenant shall have the right to use the
Offsite Parking Land to surface park at least 1,200 parking spaces ("Surface Parking
Improvements") until ninety (90) days after the issuance of a temporary certificate of
occupancy for the Parking Improvements. Subject to the terms of the Offsite Parking Land
Lease, Tenant may develop such Surface Parking Improvements as Tenant may deem
appropriate on the Offsite Parking Land for use for the Improvements.
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(b) Tenant shall construct the Parking Improvements and shall pay to
Landlord the Parking Improvement Rent in accordance with the terms and conditions set forth
on Exhibit "R-1" attached hereto.
[The following Sections 4.3.3 and 4.3.4 are to be included in this Lease as Sections 4.3.1 and
4.3.2 if the above Section 4.3.1 is not to be included in this Lease:]
4.3.3 No later than ninety (90) days before the sixth (6th) anniversary of the
Commencement Date, Landlord shall notify Tenant whether Landlord will pay the Parking
Improvements Development Costs up to the amount of Forty Million Dollars ($40,000,000).
4.3.4 If Landlord notifies Tenant that Landlord will pay the Parking Improvements
Development Costs up to the amount of Forty Million Dollars ($40,000,000) in accordance with
this Section 4.3.1, the Estimated Parking Improvements Development Costs, as of the time of
such notice do not exceed $44,000,000 and Tenant determines, in the reasonable exercise of
its discretion, that Landlord's obligation to contribute funds towards the Parking Improvements
Development Cost, is valid, enforceable and in compliance with Laws, including any Laws with
respect to Landlord's procurement policies, then:
(a) Tenant shall have (i) the non-exclusive right to use at least 1,600 parking
spaces within a parking structure ("Parking Improvements") and (ii) the exclusive right to use
any surface parking Tenant may develop on the Premises ("Premises Surface Parking").
(b) Subject to the terms of the Offsite Parking Land Lease, Tenant shall have
the right to use Offsite Parking Land to surface park at least 1,200 parking spaces ("Surface
Parking Improvements") starting on the Commencement Date and ending until ninety (90)
days after the issuance of a temporary certificate of occupancy for the Parking Improvements
Subject to the terms of the Offsite Parking Land Lease, Tenant may develop the Surface
Parking Improvements as Tenant may deem appropriate in connection with the use of and on
the Offsite Parking Land.
(c) Tenant shall construct the Parking Improvements and shall pay to
Landlord the Parking Improvement Rent in accordance with the terms and conditions set forth
on Exhibit "R-1" attached hereto. Tenant shall pay Landlord rent for the use of the Surface
Parking Improvements in accordance with the terms of the Offsite Parking Land Lease.
4.4 Continuous Operations.
From and after sixty (60) days after the Completion of the Initial Project Improvements, Tenant
shall actively and continuously use and operate the Premises and the Improvements in
accordance with the Permitted Use, except to the extent an Operation Force Majeure Event
renders Tenant unable to do so (which inability, for the avoidance of doubt, shall be for the
period of time that such Operation Force Majeure Event interferes with the use and/or operation
of the Premises and/or the Initial Improvements) and except for temporary interruptions
reasonably and directly related to Alterations as permitted under Section 6.3 (provided that
Tenant shall diligently prosecute construction of such Alterations to Completion in accordance
with Section 6.3.3). Active and continuous operation shall mean that that the Improvements,
including without limitation, the Resort Hotel and the Convention Center shall be continuously
open for business, and appropriately staffed with personnel, on such days and for such hours as
is customary for similar business operations in San Diego County, California, but that, as Tenant
may decide in its sole discretion and in good faith in order to maximize the long-term best
interest of the Project, portions of the Resort Hotel and the Convention Center which are not
then in use may be temporarily closed (for example, floors of the Resort Hotel and restaurants
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may be closed during low occupancy periods). Tenant acknowledges and agrees that said
active and continuous use and operation of the Premises and the Improvements enhances the
value of the lands within Landlord's jurisdiction; provides public service; and provides additional
employment, taxes, and other benefits to the general economy of the area.
4.5 Compliance with Laws.
Tenant shall in all activities on or in connection with the Premises and the Improvements, and in
all uses thereof, including without limitation the Permitted Use and any construction of the
Project Improvements or the making of any Alterations, abide by and comply with, and cause
Tenant Parties to abide by and comply with, all Laws at Tenant's sole cost and expense, and
Landlord shall not have any obligations or responsibilities to comply with any Laws as to the
Premises and the Improvements or any use thereby by Tenant or Tenant Parties. In particular
and without limitation, Tenant shall have the sole and exclusive obligation and responsibility, at
Tenant's sole cost and expense, to comply with the requirements of the following: (i) the San
Diego Unified Port District Code, including without limitation, Article 10 (Stormwater
Management and Discharge Control), (ii) the ADA, including but not limited to regulations
promulgated thereunder, (iii) applicable federal, state and local laws and regulations regarding
employment and labor practices, including, without limitation, the provisions of Section 6.8 and
Article 17 below, (iv) any Coastal Development Permit ("CDP") (including any conditions of
approval or mitigation measures or project changes pursuant to the environmental review under
the California Environmental Quality Act ("CEQA)") or any other California Coastal Commission
("CCC") regulations or local, state or federal requirements now or hereafter affecting the
Premises or the Improvements, including the use or development thereof, (v) the Port Master
Plan ("PMP"), (vi) any other development permits or approvals accepted by Tenant, and (vii) the
policies adopted by the Board of Port Commissioners. During the term of the Lease, the BPC
shall not adopt a law that only targets RIDA Chula Vista, LLC and the Project, unless the law is
determined by the BPC, in its sole and absolute discretion, but in a manner that is neither
arbitrary nor capricious, to be necessary for health and safety reasons, to protect the welfare of
the people, or to exercise the District's police powers under the Port Act. The foregoing
limitation shall not apply to the adoption of any ordinance that authorizes an amendment to this
Lease or is adopted to authorize the enforcement of Landlord's rights or the performance of
Landlord's obligations under this Lease, including without limitation, any ordinances adopted by
the BPC as part of any discretionary approval.
4.5.1 Tenant's Contest Right.
4.5.2 General.
Tenant is permitted to pay the Property Tax Expenses under protest and contest the
amounts; provided that (a) Tenant shall first provide Landlord at least ten (10) Business Days'
written notice prior to commencing any such Contest, (b) Tenant shall reasonably cooperate
with Landlord with respect to any such Contest and (c) Tenant shall cause the following
conditions (collectively, the "Contest Conditions") to remain satisfied:
(i) Such Contest shall not place the fee estate of the Premises in
material danger of being forfeited or lost;
(ii)Such Contest shall be without cost, liability, or expense to
Landlord;
(iii) Tenant shall prosecute such Contest with reasonable
diligence and in good faith;
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(iv) No Event of Default shall exist under this Lease at the time
of or during such Contest;
4.5.3 Landlord Obligations and Protections
Provided the BPC has consented to Landlord's participation, and subject to any conditions
which may be required by the BPC, Landlord shall join in any Contest only if such Contest
is legally required to be initiated or prosecuted in Landlord's name. In such case, Landlord
shall cooperate, as Tenant reasonably requests, and at Tenant's sole cost and expense, to
permit the Contest to be prosecuted in Landlord's name. Landlord shall give Tenant any
publicly available documents requested by Tenant in writing that are in Landlord's control
and Tenant determines are reasonably necessary for Tenant to prosecute its Contest
except where (i) the document is subject to an exemption or exception under the California
Public Records Act (California Government Code Sections 6250 et seq.); (ii) the document
is confidential pursuant to another agreement between Landlord and another Person; (iii)
the document is protected by the attorney-client privilege or work-product protections; (iv)
the disclosure or release of such document would result in a breach of an agreement to
which Landlord is a party; or (v) the disclosure or release of the document would result in a
violation of Laws. Landlord shall otherwise assist Tenant in such Contest as Tenant
reasonably requires at no cost or expense to Landlord. Tenant shall pay all costs and
expenses, including any legal costs, of any Contest. Tenant shall, at Landlord's request,
advance (when Landlord incurs them) such reasonable costs and expenses that Landlord
incurs or reasonably anticipates incurring, for Tenant's Contest and Landlord's assistance
with such Contest.
4.5.4 Miscellaneous.
Tenant shall pay the contested Property Tax Expenses when due and payable
regardless of any anticipated or ongoing Contest. Tenant shall be entitled to any refund of any
Property Tax Expenses (and penalties and interest) paid by Tenant whether such refund is
made during or after the Term (except to the extent such refund includes any tax increase for
which Tenant has been reimbursed by Landlord prior to receiving such refund). When Tenant
concludes any Contest, Tenant shall pay the amount of any Property Tax Expenses as has
been finally determined in such Contest to be due (except for any amounts that Tenant has
already paid pursuant to this Section 4.6.3), and any costs, interest, penalties, or other liabilities
in connection with such Property Tax Expenses.
4.6 Waste or Nuisance.
Tenant shall not use, or fail to maintain, the Premises or the Improvements in a manner that
constitutes waste or nuisance.
4.7 Reservations.
Tenant shall take possession of the Property subject to the agreements, licenses, right of entry
agreements, and other documents set forth in Exhibit S attached hereto and incorporated herein
by reference ("Approved Agreements"). The Landlord Parties and any third party requested by
Landlord shall have the right to enter the Premises and the Improvements for the purpose of
constructing, installing, maintaining, repairing, replacing or removing monitoring wells during
normal business hours and upon a three (3) Business Days' prior notice to Tenant (except in the
case of an emergency) and provided that the Landlord Parties comply with all applicable
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security and safety procedures of Tenant and use commercially reasonable efforts to minimize
any interference with Tenant's operation and use of the Premises and the Improvements while
on the Premises and at the Improvements, and Tenant shall not be entitled to any monetary
payment or other remuneration for, or resulting from, any such access to the Premises or the
Improvements by the Landlord Parties. Except in the case of an emergency, Landlord shall
consult with Tenant to ensure that the interference with Tenant's operation and use of the
Premises and the Improvements is minimized. In addition, at Tenant's request and expense,
Landlord shall, to the extent reasonably feasible, move such monitoring wells so as to minimize
any interference with Tenant's operation and use of the Premises and the Improvements. . For
the avoidance of doubt, Landlord shall not be limited in its right to enter the Premises for any
purpose to enforce its regulatory authority.
Landlord shall reasonably consider any request by Tenant in writing for an easement on, over,
under or across the Premises to others, including, without limitation, any Governmental
Authority, for the purpose of constructing, installing, maintaining, repairing, replacing and
removing utility systems; provided, however, that (A) the term of such easement shall not
exceed the Term of this Lease; (B) Landlord shall not be responsible for any cost or expense
relating to such easement, including without limitation, maintenance thereof; (C) Landlord shall
have the right to terminate such easement at no cost or expense to Landlord in the event of an
early termination of this Lease; (D) Landlord shall have the right to relocate such easement, at
any time, in Landlord's sole and absolute discretion, at Tenant's sole cost and expense; and (E)
Tenant shall, at its own cost and expense, remove any utility system constructed or installed
pursuant to such easement at the earlier termination or expiration of the Lease.
If required by an order of the SDRWQCB, Landlord shall have the right to grant a license or
easement to Rohr, Inc., a United Technologies Aerospace Systems Company ("Rohr") to
construct, install, maintain, repair, replace and remove monitoring wells on the Premises.
4.8 Neighboring Improvements.
Not later than thirty (30) days prior to submitting to the BPC for consideration a preliminary
design review or conceptual plan for those parcels set forth in Exhibit "B-2" attached hereto and
incorporated herein by reference ("Neighboring Parcels"), Landlord shall provide Tenant with
notice of the proposed agenda item related to such Neighboring Parcels. Within thirty (30) days
of receiving such notice from Landlord, Tenant shall have the right to deliver written comments
to Landlord on the proposed preliminary design review or conceptual plan for such Neighboring
Parcels, as applicable, and Landlord shall act in good faith when considering, accepting or
rejecting any of Tenant's written comments; provided, however, that Landlord shall have no
obligation and shall incur no liability resulting from Landlord's rejection of Tenant's comments or
Landlord's failure to consider Tenant's comments because they are not received by Landlord
prior to the date of the decision of the BPC, and nothing in this Section 4.9 shall limit the
discretion of the Landlord or the BPC in any manner to accept or reject the preliminary design
review or conceptual plan for Neighboring Parcels, as applicable, in each case, in its sole and
absolute discretion.
4.9 Energy Requirements.
Tenant shall develop, implement, and maintain a measurement and verification plan for energy
efficiency for each building on the Premises ("M&V Plan"). Tenant shall cause the performance
of, and deliver to the Landlord and the City, an energy consumption audit for each building on
the Premises ("Energy Audit") not less frequently than each three (3) years after the issuance of
a temporary certificate of occupancy for each building as more particularly set forth in Section
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15.2.2'4 of the Settlement Agreement. Tenant's failure to implement the yN&V Plan ordeliver un
Energy Audit b] Landlord inaccordance with this Section 4.1Oshall result in8default under this
Lease. .
4-10 Health Rating.
Tenant shall use commercially reasonable efforts to maintain the highest health rating given by
the County of San Diego for any portion of the Premises and/or the Improvements that involves
the sale and/or preparation offood.
5. RENT
Tenant agrees to pay to Landlord Greater OfRent, Parking Improvement Rent and Additional
Rent (collectively "Rent") in accordance with this Article 5. All payments of Rent and other
sums due to Landlord hereunder ahu|| be paid in legal tender of the United Gtatea, without
nohoe, invoice, eetoff, deduction or demand, except as otherwise expressly provided herein. No
payment byTenant orreceipt oracceptance byLandlord ofolesser amount than the Rent shall
be deemed to be a waiver of any current or preceding breach by Tenant of any provision hereof.
No endorsement or statement on any check or any letter accompanying any check or payment
on Rent shall be deemed an accord and satisfaction, and Landlord has the right to accept such
check orpayment without prejudice to Landlord's right to recover the bo|8nCw of such Rent or
pursue any other remedy in accordance with this Leaea, atlaw or in equity. Tenant waives all
rights that it may have under present or future law to designate the items of Rent to which any
payments nnodm byTenant are to be credited. Tenant agrees that Landlord may apply any
payments made by Tenant to such items ufRent ua Landlord deuignutea, irrespective of any
designation or request byTenant uatothe items ofRent towhich such payments should be
credited.
All payments of Rent shall be delivered to and statements required under Section 5.4.3 below
aho|| be filed with Landlord's Treasurer. Payments ofRent shall be made by check, electronic
wire transfer orautomated clearing house /"ACH"\ transfer. Checks shall be made payable to
the San Diego Unified Port District and mailed to the San Diego Unified Port District, Finance
Department, Post Office Box 12O488. San Diego, California 92112-O48O. urdelivered tuthe San
Diego Unified Pod District, Finance Department, 3185 Pacific Highvvoy, San Oiego, California
92101. All payments ofRent byelectronic wire transfer VrACH transfer shall be directed to (or
such other location 8SLandlord may instruct bynotice from time t0UO0U):
Beneficiary Bank: Wells Fargo Bank, N.A.
Bank Location: 420Montgomery, MAC: AO112-1O2
San Francisco, CA941O4
ACH/VVireRouting Number: 121000248
Beneficiary: San Diego Unified Port District
Beneficiary Account Number:4944-983881
Type ufAccount: Deposit
Reference Description ofpayment
Required: Customer number and/or invoioe(n) numbers
Landlord has the right tochange the designated place ofpayment urfiling atany time upon ten
(10) BUSiDeSS Days' written notice to T-eD8DL Tenant assumes all risk Ofloss and responsibility
for Late Charges and interest atthe Default Rate for late poymanis, as hereinafter described.
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5.1 Rental Periods and Parking Improvement Rent.
5.1.1 Rental Periods.
The Term of this Lease shall be divided into the "Rental Periods" described in
Section 1.4.
5.1.2 Parking Improvement Rent.
On or before the twentieth (20th) day of each month during the Term, Tenant shall pay to
Landlord the Parking Improvement Rent described in Section 4.3 based on Tenant Parking
Revenues received during the immediately preceding month. If the Commencement Date is
other than the first day of the month, then the first monthly payment of Parking Improvement
Rent shall be prorated based on the number of days within such initial partial month. If the last
month of the Parking Improvement Rent is not a full month, then the last monthly payment of
Parking Improvement Rent shall be prorated based on the number of days within such last
partial month.
5.2 Greater Of Rent.
Commencing on the Rent Commencement Date, the "Greater Of Rent" for each Lease Year
shall be the greater of(i) the Minimum Annual Rent for such Lease Year as periodically adjusted
as provided in Section 5.3, and (ii) with respect to the Fourth (4th) Lease Period, the cumulative
total of the Percentage Rent for such Lease Year as provided in Section 5.4 below.
5.2.1 Monthly Payments of Greater Of Rent.
(a) Calculation of Payments. Concurrently with the delivery of each Monthly
Report, but in no event later than the twentieth (20th) day of each month during the Term, and
on or before the twentieth (20th) day following the last day of the month in which this Lease is
terminated or expires, Tenant shall pay to Landlord the greater of the following two amounts as
and for the Greater Of Rent due with respect to the immediately preceding month:
(i) For any period of time before the beginning of the Fourth (4th)
Lease Period, Zero Dollars ($0), and during the Fourth (4th) Lease Period, the total
Percentage Rent computed for that portion of the Lease Year ending with and including the
last day of the preceding month, less total Percentage Rent and monthly Minimum Annual
Rent previously paid for the Lease Year, or
(ii)One-twelfth (1/12th) of the Minimum Annual Rent, multiplied by the
number of full calendar months from the beginning of the Lease Year to and including the
preceding month, plus the amount of Minimum Annual Rent due with respect to any initial
partial month in the first Lease Year, less the total Percentage Rent and monthly Minimum
Annual Rent previously paid for the Lease Year.
(b) Survival. The terms of this Section 5.2.1 shall survive the expiration or
earlier termination of this Lease.
5.3 Minimum Annual Rent.
Minimum Annual Rent for each Lease Year of the First (1S) Lease Period, Second (2nd) Lease
Period, and Third (3rd) Lease Period is described in Section 1.5. Thereafter, Minimum Annual
Rent shall be periodically adjusted by the "Minimum Annual Rent Look Back Adjustments"
described in Section 5.3.1, which shall occur on the "Minimum Rent Look Back Adjustment
Dates" described in Section 1.5.1.
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5.3.1 Minimum Annual Rent Look Back Adjustments.
The Minimum Annual Rent shall be subject to adjustment on each Minimum Rent Look Back
Adjustment Date set forth in Section 1.5.1 as follows. Within thirty (30) days following each
Minimum Rent Look Back Adjustment Date, Landlord shall determine, and provide to Tenant, a
written statement setting forth the calculation of, the average annual Greater Of Rent that was
payable by Tenant (a) during the period from the first day of the Fourth (4th) Lease Period until
the first Minimum Rent Look Back Adjustment Date and (b) with respect to all subsequent
Minimum Rent Look Back Adjustment Dates, during the period between the applicable Minimum
Rent Look Back Adjustment Date and the prior Minimum Rent Look Back Adjustment Date.
Effective as of the applicable Minimum Rent Look Back Adjustment Date, Minimum Annual Rent
shall be adjusted to an amount equal to sixty-five percent (65%) of such average annual Greater
Of Rent payable over the three (3) Lease Years that immediately precede such Minimum Rent
Look Back Adjustment Date; provided that in no event shall such new Minimum Annual Rent be
less than the Minimum Annual Rent payable for the Lease Year immediately preceding such
Minimum Rent Look Back Adjustment Date. Following the determination of a new Minimum
Annual Rent, Tenant shall pay any underpayment of Minimum Annual Rent to Landlord within
thirty (30) days following such determination. Tenant shall pay Greater Of Rent based on the
Minimum Annual Rent at the rate set forth in Section 1.5 or as determined in accordance with
this Section 5.3.1, as applicable, until such Minimum Annual Rent is adjusted by a Minimum
Annual Rent Look Back Adjustment in accordance with this Section 5.3.1.
5.4 Percentage Rent.
"Percentage Rent" is the product of the applicable percentage set forth in Section 5.4.1 below
(each, a "Percentage Rent Rate") multiplied by the Gross Income with respect to the applicable
category described in Section 5.4.1 below. Percentage Rent shall be calculated on a monthly
basis as provided in this Section 5.4 above and shall be paid in accordance with Section 5.2
above. Except for the Parking Improvement Rent, during the First (1S) Lease Period, the
Second (2nd) Lease Period and the Third (3rd) Lease Period, the amount of the Percentage Rent
for each Lease Year shall be equal to Zero Dollars ($0).
5.4.1 Percentage Rent Categories.'
Percentage Rents shall be based on the following percentages of the Gross Income, whether
collected, uncollected, received, payable or accrued, in the Fourth (4th) Lease Period:
(a) Eight Percent (8%) or Nine Percent (9%) of the Gross Income, as
applicable, from rental of Rooms, rental of in-Room movies, sale of similar in-Room
entertainment services, charges for room service delivery, sale of telephone services, and sale
of laundry and dry-cleaning services as follows:
(i) Lease Years 38—47: Eight Percent (8%)
(ii)Lease Years 48—66: Nine Percent (9%)
(b) Six Percent (6%) or Seven Percent (7%) of the Gross Income, as
applicable, from rental of any meeting space, conference room, banquet room or event space
in the Convention Center, Resort Hotel or anywhere else on the Premises ("Meeting Space")
and sale of related merchandise and services provided to Meeting Space (including Gross
Income from recovery charges for materials, utilities, security, and similarly related
accommodations, sales and services) as follows:
NTD: Subject to review by the Hotel Operator.
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(i) Lease Years 38—47: Six Percent (6%)
(ii)Lease Years 48— 66: Seven Percent (7%)
(c) Four Percent (4%) or Five Percent (5%) of the Gross Income, as
applicable, from sale of food and nonalcoholic beverages (including, without limitation, coffee,
tea or milk) sold in conjunction with food, as follows:
(i) Lease Years 38—47: Four Percent (4%)
(ii)Lease Years 48— 66: Five Percent (5%)
(d) Six Percent (6%) or Seven Percent (7%) of the Gross Income, as
applicable, from sale of nonalcoholic beverages (including, without limitation, coffee, tea or
milk) not served in conjunction with food for consumption on the Premises and the
Improvements, as follows:
(i) Lease Years 38—47: Six Percent (6%)
(ii)Lease Years 48— 66: Seven Percent (7%)
(e) Six Percent (6%) or Seven Percent (7%) of the Gross Income, as
applicable, from sale of alcoholic beverages for consumption on the Premises and the
Improvements, as follows:
(i) Lease Years 38-47: Six Percent (6%)
(ii)Lease Years 48-66: Seven Percent (7%);
(f) Three Percent (3%) of the Gross Income from sale of packaged alcoholic
and nonalcoholic beverages for consumption off of the Premises and the Improvements;
(g) Five Percent (5%) of the Gross Income from sale of merchandise
including, but not limited to, gifts, novelties, souvenirs, clothing, luggage, jewelry, cigars,
cigarettes, candy, sundries, and incidentals of any kind;
(h) Five Percent (5%) of the Gross Income from any admission, cover, or
other entertainment charges;
(i) Five Percent (5%) of the Gross Income from rental of automobiles
(whether or not the automobiles are stored or delivered at the Premises and the
Improvements);
(j) Five Percent (5%) of the Gross Income from sale of health club services,
hair cutting and salon services, make-up and beauty services and/or sale of spa services,
including but not limited to facials, massages, body wraps, and aromatherapy;
(k) Fifteen Percent (15%) of the Gross Income from rental of bicycles and
other recreational equipment;
(1) Ten Percent (10%) of the Gross Income from sale of recreation lessons;
(m) One-half Percent (0.5%) of the Gross Income from sale of any and all
California State Lottery tickets;
(n) Ten Percent (10%) of the Gross Income from the rental of office space to
tourism/visitor-serving tenants and maritime related tenants;
(o) Three Percent (3%) of the Gross (Income from sale of groceries;
(p) Six Percent (6%) of the Gross Income from sale of passenger tickets for
crew-operated excursion boats;
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(q) Six Percent (6%) of the Gross Income from sale of passenger tickets for
crew-operated sport fishing and whale-watching boats;
(r) Five Percent (5%) of the Gross Income from sale of merchandise and/or
services through coin-operated vending or service machines or devices that are owned, rented,
or leased by Tenant or Subtenant;
(s) Twenty-five Percent (25%) of any commissions and other compensation
received for the right to install and operate coin-operated vending or service machines or
devices, including telephones, that are not owned, rented, or leased by Tenant or Subtenant;
(t) Fifty Percent (50%) of the Gross Income from any and all
telecommunications uses which shall include, but are not limited to, rooftop wireless antennas,
antennas attached to a building fagade, microwave antennas, paging antennas and cell phone
equipment, excluding telecommunications uses that exclusively serve the uses on the
Premises and the Improvements;
(u) Ten Percent (10%) of the Gross Income from sale of business services
wherever provided on the Premises and the Improvements, including, without limitation, the
sale of internet access or other telecommunication services (including, without limitation, sale
of internet access or other telecommunication services in connection with the rental of Rooms,
Meeting Space, unless such internet access or other telecommunication services are not
separately charged and are incorporated within the rental charge of the relevant Room or
Meeting Space);
(v) Ten Percent (10%) of any commissions, "mark-ups," income, fees and
commissions that Tenant receives as compensation for handling and/or selling tickets sold for
activities or events occurring outside the Premises and the Improvements and in which neither
Tenant has a direct or indirect ownership interest (for example, admission tickets to the San
Diego Zoo Safari Park located in the City of Escondido);
(w) Ten Percent (10%) of the Gross Income from any and all services or uses
permitted under the terms of this Lease and not otherwise addressed within the foregoing
provisions; and
(x) Twenty Percent (20%) of the Gross Income from any and all services or
uses not permitted under the terms of this Lease and not otherwise addressed within the
foregoing provisions.
5.4.2 Gross Income.
(a) Definition. "Gross Income" shall include all Revenue without any
deductions or exclusions except as provided in Section 5.4.2(b) below, resulting from, directly
or indirectly, or connected to or generated from, the occupancy or use of the Premises and the
Improvements, or any business conducted on or in connection with the Premises and the
Improvements in any manner, whether conducted by a Tenant Party, whether for cash or
credit, whether collected or uncollected, received, payable or accrued and from whatever
source derived, including, but not limited to, any type of sales (whether such sales occur with
respect to the Premises, the Improvements, or elsewhere) arising from the customers of any
Tenant Party receiving services, products or benefits on or from (i) the Premises, (ii) any
property within Landlord's jurisdiction (unless such Revenue is the subject of a separate lease
with Landlord), or (iii) in connection with any vessel going to or from the Premises while in San
Diego Bay (including, without limitation, any vessel traversing or utilizing San Diego Bay in
connection with commercial operations). Without limitation of the foregoing, Gross Income shall
be construed to include, without limitation, the entire amount of the actual sales price (including
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all finance charges by Tenant or Tenant Party) of all sales, rentals, leases and licenses or for
other transfer of merchandise or services, and other receipts whatsoever, including, without
limitation, agency sales and all mail, catalogue, computer, facsimile, telephone,
telecommunication, electronic and other orders filled, transmitted or received through any
media. Gross Income shall include any manufacturer's or importer's excise tax included in the
prices of the goods sold, even though the manufacturer or importer is also the retailer thereof,
whether or not the amount of such excise tax is stated as a separate charge.
(b) Exclusions. Refunds for goods returned shall be deducted from current
Gross Income upon their return. Bad debt losses shall not be deducted from Gross Income.
Gross Income shall not include any of the following:
(i) sales of United States postage;
(ii) any sales or transient occupancy tax payable by Tenant or
a Tenant Party to any Governmental Authority as a direct result of operations under this
Lease; provided that the amount of such taxes is shown on the books and records
elsewhere herein required to be maintained;
(iii) gratuities; provided that the customer voluntarily
determines the amount of said gratuity to be paid, or the customer is aware that Tenant or
a Tenant Party has added a pre-established gratuity to the charge for the services rendered
and said additional amount is segregated and identified as a gratuity on the billing to the
customer;
(iv) proceeds of any disposition of Tenant's trade fixtures (that
is fixtures that relate uniquely to Tenant and which are removable without non-repairable
damage to the Improvements), furnishings, moveable equipment and other personal
property of Tenant located on the Premises or at the Improvements;
(v) the Tenant Parking Improvements Revenue;
(vi) any rent received by Tenant from any Subtenant pursuant
to the applicable Sublease that is in excess of the applicable percentage rent categories
charged under this Lease;
(vii) interest received or accrued with respect to the funds in
any repair and replacement reserve required to be maintained under a Hotel Management
Agreement; provided that such interest is required to be credited to the reserve;
(viii) any rebates, discounts and credits of a similar nature that
are given, paid or returned in the course of obtaining Revenue or components thereof,
which will be deducted from the Gross Income for the period in which such Revenue was
earned; or
(ix) any insurance proceeds, Condemnation proceeds or any
proceeds from a sale of the Project Improvements (or any portion thereof) or any
refinancing of the Project (or any portion thereof).
5.4.3 Reports of Gross Income.
(a) Monthly Reports. On or before the twentieth (20th) day of each month
following the beginning of the Fourth (4th) Lease Period, and on or before the twentieth
(20th) day following the last day of the month in which this Lease is terminated or expires,
Tenant shall deliver to Landlord, in a form prescribed by Landlord, a detailed cumulative report
of Gross Income for that portion of the Lease Year which ends with and includes the last day of
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the previous calendar month ("Monthly Report"). Each Monthly Report shall be signed by
Tenant or an authorized representative of Tenant under penalty of perjury and shall include the
following:
(i) The total Gross Income for said portion of the Lease Year,
itemized as to each of the Percentage Rent categories for which a separate Percentage
Rent Rate (or per unit charge, if applicable) is established;
(ii)The related itemized amounts of Percentage Rent computed, as
herein provided, and the total thereof;
(iii) The total Minimum Annual Rent and Percentage Rent
previously paid by Tenant for the Lease Year within which the preceding month falls; and
(iv) A calculation of the Greater Of Rent due for the preceding
calendar month determined in accordance with the terms of Section 5.2.1(a).
(b) Record Keeping. Tenant shall, during the Term of this Lease and, with
respect to each record, for a period of seven (7) years after the date the record was created
(or such longer period as Tenant may decide in its sole discretion), keep or cause to be kept,
accurate and complete records and books of account of all financial transactions in the
operation of all business activities, of whatever nature, conducted in pursuit of the rights
granted herein (if conducted by or on behalf of Tenant or any Subtenant). The records shall be
supported by source documents of original entry such as sales invoices, cash register tapes,
bank depository documentation, purchase invoices, or other pertinent supporting documents.
A balance sheet and income/expense statement, based upon the books of account, shall be
prepared periodically but not less often than once per annum. All sales and other financial
transactions shall be recorded by means of a comprehensive system which includes sufficient
business processes to ensure that all Gross Income is clearly and accurately recorded and
documented by reports and other original source documents. The system shall provide
reporting and distinction of all sales and other income and Revenue categories and shall
generate an audit trail of all transactions. Any recordation system for sales or other income
and Revenue transactions shall be subject to the written approval of the Landlord (such
approval not to be unreasonably withheld, conditioned or delayed); provided that, so long as
Marriott is the Hotel Operator under the Hotel Management Agreement, the recordation system
for sales or other income and Revenue transactions that is used by Marriott at other Marriott
branded hotels within the Landlord's jurisdiction as of the Commencement Date shall be
deemed to have complied with the requirements set forth in this Section 5.4.3(b) and to have
been approved by Landlord. In the event of admission or cover charges, Tenant shall issue
either preprinted serially numbered tickets for each such admission or cover charge or such
other evidence of the issuance of each individual ticket. In the event of the rental of vehicles or
vessels, Tenant shall issue or cause to be issued either preprinted serially numbered rental
agreements for each such rental transaction or such other evidence of the issuance of each
individual rental transaction. The terms of this Section 5.4.3(b) shall survive the expiration or
earlier termination of this Lease.
(c) Maintenance of Records; Audit. All of Tenant's books of account,
records, financial statements, and documentation related to this Lease or to business
operations conducted within or from the Premises or the Initial Project Improvements, shall be
kept during the Term and, with respect to each record, for a period of seven (7) years after the
date the record was created (or such longer period as Tenant may decide in its sole discretion),
either at the Premises, the Initial Improvements, Tenant's main business office, any of Hotel
Operator's business offices or at such other location in San Diego County, California as is
reasonably acceptable to Landlord. Without limitation of the foregoing, if there is any
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Subtenant occupying or operating from any portion of the Premises or the Improvements, then
the books and records also shall include any occupancy, licensing, permit or operating
agreements pertaining to such Subtenant, as well as the books of account, records, financial
statements, and documentation, relating to the operations of such Subtenant at the Premises
or the Improvements, as applicable. Upon at least forty-eight (48) hours' prior notice to Tenant,
Landlord shall have the right to examine and audit said books of account, records, financial
statements, and documentation (the "Tenant Records"), including, without limitation, for the
purpose of determining the accuracy thereof, the accuracy of the Monthly Reports, and the
accuracy of the Rent paid to the Landlord. Landlord's audit rights shall apply to the current
Lease Year and all prior Lease Years and Tenant waives the right to assert any statute of
limitations in connection with any audit or any underpayment disclosed pursuant to such audit.
In the event that the business operations conducted within or from the Premises or the
Improvements are part of a larger business operation, and any part of the Tenant Records
herein is prepared only for the larger operation, and not solely for the business operations of
the Premises or the Improvements, then Landlord shall also have the right to examine and
audit that part of said books of account, records, financial statements, and documentation of
the larger business operation If Tenant assigns its interest under this Lease, Tenant shall
deliver to the Transferee the originals (or complete copies) of the Tenant Records which shall
be retained by Transferee and available to audit on the same terms as under this
Section 5.4.3(c).
(d) Failure to Maintain Records. Tenant shall keep or cause to be kept each
Tenant Record for a period of seven (7) years after the date the Tenant Record was created
and to make each Tenant Record available for inspection by Landlord in accordance with the
terms hereof. After the seven (7) year period has expired for a certain Tenant Record, Tenant
shall deliver the original Tenant Record to Landlord at the address set forth in Section 1.11 or
such other location designated by Landlord in writing, which may include the main offices of the
City; provided, however, Tenant may elect to deliver all of the Tenant Records that expire in a
given Lease Year at one time, in one delivery, on or about July 1 of each Lease Year.
Landlord may request that Tenant implement any additional accounting methods or controls
that Landlord reasonably deems necessary, subject to prior written notice to Tenant. If
Landlord does so, then Tenant will in good faith consider implementing such additional
accounting methods or controls, as applicable, but Tenant may, in consultation with the Hotel
Operator, elect in its reasonable discretion not to implement such additional accounting
methods and controls. In the event the Tenant does not make available to Landlord the
original Tenant Records, including in electronic form, within San Diego County, then Tenant
agrees to pay all reasonable travel and other expenses incurred by Landlord Parties in
conducting an audit at the location where the Tenant Records are kept.
(e) Underpayment/Overpayment. If the audit conducted by Landlord under
Section 5.4.3(c) above reveals an underpayment or an overpayment of the Rent due, Tenant
shall pay to Landlord the amount of the underpayment within thirty (30) days following written
notice thereof from Landlord, or Landlord shall refund the amount of the overpayment within
thirty (30) days following the determination of such overpayment (or, at Landlord's option,
Landlord shall credit the overpayment against the installment of Greater Of Rent first coming
due after such thirty- (30-) day period), as applicable. If the audit reveals a discrepancy of five
percent (5%) or more between the Rent due as reported by Tenant and the Rent due as
determined by the audit, and/or Tenant has failed to maintain (or has failed to cause to be
maintained) complete and accurate Tenant Records as described in this Section 5.4 above,
then Tenant shall also pay the cost of the audit within thirty (30) days after written notice
thereof from Landlord.
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5.5 Additional Rent.
For each Lease Year of the First (1S) Lease Period, Second (2nd) Lease Period, and Third (3rd)
Lease Period, Tenant shall pay additional rent ("Additional Rent") to Landlord equal to twenty
percent (20%) ("Additional Rent Percentage") of the amount by which the Net Operating
Income for such Lease Year exceeds eleven percent (11%) of the Actual Capital Investment
("Additional Rent Hurdle").
For purposes of this Section 5.5, the following definitions shall apply:
"Net Operating Income" shall mean for any Lease Year the total Project Revenues less all
Operating Expenses calculated on an annual basis.
"Actual Capital Investment" shall mean the actual cost incurred by Tenant to design, construct
and develop the Initial Project Improvements or, if and after Tenant substantially completes the
Parking Improvements in accordance with Section 4.3, the Project Improvements, including,
without limitation, all financing costs and other costs that are capitalized in accordance with
generally accepted accounting principles, as certified by a reputable, certified public accountant
as of the Completion of the Initial Project Improvements and/or as of the substantial completion
of the Parking Improvements, as applicable.
"Project Revenues" shall mean all income, receipts, proceeds, amounts, money, cash, assets,
property or things of value received by Tenant for all goods and merchandise sold, room
revenues derived from hotel operations, food and beverages sold, the charges for all services
performed, or any other revenues generated by or otherwise payable to Tenant (and Tenant
Parties) (including, without limitation, use fees, retail and commercial rent, revenue from rooms,
accommodations, food and beverage, and the proceeds of business interruption insurance) in,
at or from the Premises, whether collected, uncollected, received, payable or accrued, and all
rent actually received by Tenant from any Subtenant pursuant to the applicable Sublease.
Project Revenues shall exclude (a) proceeds from any sale of the Improvements (or any portion
thereof), or (c) proceeds of any disposition of Tenant's trade fixtures (that is fixtures that relate
uniquely to Tenant and which are removable without non-repairable damage to the
Improvements), furnishings, moveable equipment and other personal property of Tenant located
on the Premises or at the Improvements.
"Operating Expenses" shall mean expenses, costs, and amounts of every kind that Tenant
pays or incurs during any Lease Year because of or in connection with the ownership,
operation, management, maintenance, repair, replacement, or restoration of the Premises and
the Initial Project Improvements or, if and after Tenant substantially completes the Parking
Improvements in accordance with Section 4.3, the Project Improvements, or the operation or
management of the business conducted thereon consistent with this Lease (collectively,
"Operation"), including, by way of example, all direct and indirect employment expense
(including wages, salaries, and other compensation and benefits of all persons engaged in
Operation, including employer's social security taxes, unemployment taxes, insurance, and any
other taxes imposed on Tenant that may be levied on those wages, salaries, and other
compensation and benefits), cost of goods sold, costs of supplies or materials consumed and
any other cost or expense of any kind incurred in connection therewith; cost of equipment and
fixtures installed in the Project Improvements or the Premises (to the extent not included in the
calculation of Actual Capital Investment); the cost of any utilities; the cost of operating,
managing, maintaining, and repairing any building system; the cost of licenses, certificates,
permits, and inspections; the cost of any Contest; the costs incurred in connection with the
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implementation and operation of a transportation system management program or similar
program; advertising and marketing expense of any kind (including the cost of participating in a
reservation management or loyalty program); fees, charges, and other costs including
management fees (or amounts in lieu of such fees), consulting fees, legal fees, and accounting
fees of all persons engaged by Tenant or otherwise reasonably incurred by Tenant in
connection with the operation, management, maintenance, and repair of the Premises and the
Project Improvements, or the operation of the business conducted thereon; payments under any
easement, license, operating agreement, declaration, restrictive covenant, or instrument relating
to the sharing of costs by the Premises or the Project Improvements; including industry standard
operator and franchise fees, replacement reserves, and replacement costs in excess of
reserves; asset management fees for the Project Improvements (which shall not exceed one
percent (1%) of the Project Revenues); gross tax receipts for the Project Improvements; sales,
use, transient occupancy or similar tax; the cost of maintaining insurance premiums for the
Initial Project Improvements and, if required pursuant to Section 4.3, the Parking Improvements
(including liability insurance); property taxes for the Project Improvements; possessory interest
tax on Tenant's leasehold interest (land value); incentive management fees ("Management
Incentive Fee") for the Project Improvements (which shall not exceed twenty percent (20%)
("Maximum Incentive Fee Percentage") of the portion of the Net Operating Income that
exceeds [Seventy-Five Million Six Hundred and Eighty Thousand Dollars ($75,680,000)
("Incentive Fee Hurdle")]; Rent actually paid by Tenant under this Lease; any other cost or
expense that is properly allocated to the operation of the Premises or the Project Improvements
under USALI; and all other expenses categorized as "deductions" under the Hotel Management
Agreement. Operating Expenses shall exclude debt service (principal and interest) paid by
Tenant for the Project Improvements, depreciation of the Project Improvements, income taxes
paid by Tenant for Project Revenues related to the Project Improvements and the costs or
expenses of operating any business within any portion of the Premises or Project Improvements
that is subleased to any Subtenant (but not the costs incurred by Tenant (as sublandlord and as
Tenant) in operating such portion of the Premises or Project Improvements (such as insurance
costs, maintenance and repair costs and Property Tax Expenses)).
On or before the twentieth (20th) day of each month of the First (1S) Lease Period, Second (2nd)
Lease Period, and Third (3rd) Lease Period, commencing on the second month of the first Lease
Year of the First (1S) Lease Period and ending on the first month of the first Lease Year of the
Fourth (4th) Lease Period, Tenant shall render to Landlord, a monthly report of Net Operating
Income for the immediately preceding month of the Lease Year and the Additional Rent due, if
any. Each report shall be signed by Tenant or its authorized representative under penalty of
perjury and shall be accompanied by payment of all Additional Rent due.
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5.5.1 Additional Rent Example Calculation.
For the purpose of this Additional Rent example calculation only, the variables are as follows:
AR = Additional Rent
MIF = Management Incentive Fee
a = Additional Rent Percentage
b = Maximum Incentive Fee Percentage
c = Incentive Fee Hurdle
d = Additional Rent Hurdle
LNR = Landlord Net Revenue (Net Operating Income without deducting MIF)
ONR = Operator Net Revenue (Net Operating Income without deducting AR)
AR = a(LNR - b(ONR - c) - d)
1-ab
AR = 20% ($100M - 20% ($100M - $75.68M) - $86.35M)
1 — (20% x 20%)
AR = 20% ($100M - 20% x $24.32M - $86.35M)
1-.04
AR = 20% ($100M - $4.864M - $86.35M)
.96
AR = 20% x $8.786M
.96
AR = 1.7572M
.96
AR = $1.830 Million
5.6 Late Charges.
Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent will cause
Landlord to incur costs not contemplated by this Lease. In the event Tenant has not paid the
Rent due in accordance with the provisions of this Lease, within three (3) Business Days from
when the Rent is due, Tenant shall pay, in addition to the unpaid Rent, five percent (5%) of the
Rent due ("Late Charges"). The Parties hereby agree that said Late Charges are Additional
Rent and are not interest and that the Late Charges apply whether or not Tenant receives notice
of its failure to pay Rent. Notwithstanding the foregoing, in no event shall any Late Charge be
less than One Hundred Dollars ($100). Acceptance by Landlord of any Late Charge or the late
payment of any Rent or any portion thereof shall in no event constitute a waiver of an Event of
Default with respect to such overdue amount, nor shall it prevent Landlord from exercising any
of its other rights and remedies hereunder. In addition to the application of a Late Charge, if
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Tenant fails to pay any Rent when due, then the unpaid Rent amount shall accrue interest at the
Default Rate from the date due until paid, and such interest shall constitute Additional Rent.
5.7 Net Lease.
Tenant acknowledges that the Rent will be absolutely net of any costs or expenses to Landlord
relating to Premises or any Improvements and acknowledges and agrees that Landlord shall not
be responsible for any costs, charges, expenses and outlays of any nature whatsoever arising
from or relating to the Premises or any Improvements during the Term, whether foreseen or
unforeseen and whether or not within the contemplation of the Parties as of the Commencement
Date, except as shall be otherwise expressly provided in this Lease. Without limitation of the
foregoing, Landlord shall not be required to construct, install, provide or arrange for any utilities,
roadway, docks, tide walls, drainage or other improvements of any nature on, in, under or above
the Premises or any other location, except as shall be otherwise expressly provided in this
Lease.
5.8 Reimbursement.
If under the terms of this Lease an amount expended by Landlord is to be reimbursed by Tenant
pursuant to the "Reimbursement Procedure", then Tenant shall reimburse Landlord for the
subject amount within thirty (30) days of Tenant's receipt of reasonable evidence of the work
performed by or for Landlord and the costs incurred by Landlord for such work, including,
without limitation, a reasonably detailed invoice or statement from Landlord for the subject
amount and, if applicable, copies of any applicable third party invoices, and/or work description.
Any amounts owed to Landlord pursuant to the Reimbursement Procedure shall constitute
Additional Rent and shall accrue interest at the Default Rate from the date due until paid if not
paid within the time period permitted under the Reimbursement Procedure.
6. CONSTRUCTION AND ALTERATION OF INITIAL PROJECT IMPROVEMENTS
6.1 Commencement and Completion of Initial Project Improvements.
Subject to the terms of Section 6.5, following the Commencement Date, but not later than the
Outside Construction Commencement Date, Tenant shall commence the construction of the
Initial Project Improvements. Tenant shall be deemed to have commenced the construction of
the Initial Project Improvements when Tenant delivers a notice to proceed with respect to the
construction of the Initial Project Improvements to Tenant's contractor. Thereafter, Tenant shall
diligently proceed with the construction of the Initial Project Improvements to Completion, and
Complete the Initial Project Improvements by the Outside Construction Completion Date.
Without limiting the generality of the foregoing, Tenant acknowledges and agrees that the
cessation of construction of the Initial Project Improvements for more than thirty
(30) consecutive days shall, unless caused by a Construction Force Majeure Event, be deemed
a failure by Tenant to prosecute the construction of the Initial Project Improvements to
Completion and shall constitute an Event of Default under this Lease without further notice or
cure right by Tenant if Tenant does not resume construction of the Initial Project Improvements
within ten (10) days after Tenant receives notice thereof from Landlord. The Initial Project
Improvements shall be constructed substantially in accordance with the plans and
specifications, including but not limited to working drawings, described in Exhibit "C" attached
hereto (the "Plans"). The Plans have been previously approved in writing by Landlord.
Changes to the Plans must be approved by Landlord in writing, in Landlord's sole discretion,
and, once approved, shall be considered a part of the "Plans"; provided, however, Landlord's
approval of any change in the Plans shall not be required if: (a) such change does not change
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the design principles of the exterior appearance of the Initial Project Improvements, as set forth
in the CDP; (b) such change does not require approval by the Landlord pursuant to BPC Policy
No. 357; (c) such change is not inconsistent with the Chula Vista Building Code; and (d) such
change is not inconsistent with the PMP, CDP, the EIR, CVBMP Documents or any other Laws.
The Plans are by this reference made a part hereof. In the event of any inconsistency between
the Plans and the terms and conditions of this Lease, the terms and conditions of this Lease
shall prevail.
In constructing the Initial Project Improvements, Tenant shall comply with all Construction
Requirements set forth in Exhibit D-1 and all Laws, including, without limitation, the PMP
requirements, mitigation measures or conditions of approval under the terms of any of the
approvals by any Governmental Authority for the Project, including any CDPs applicable to the
Premises or the use or development thereof and any conditions of approval or mitigation
measures or Project changes pursuant to any environmental review under CEQA. In addition,
in connection with the construction or Alteration of the Initial Project Improvements, Tenant shall
comply with Section 6.8 regarding PWL requirements.
Notwithstanding the existence of a Force Majeure Event, Tenant hereby acknowledges that if
the Initial Project Improvements are not Complete by the Outside Construction Completion
Date, Landlord will incur costs not contemplated by this Lease. Accordingly, in the event Tenant
does not Complete the Initial Project Improvements by the Outside Construction Completion
Date, Tenant shall pay to Landlord the amount(s) set forth in Schedule 1 attached hereto and
incorporated herein by reference for each day that Tenant fails to Complete the Initial Project
Improvements after the Outside Construction Completion Date ("Construction Late Charges").
The Parties hereby agree that said Construction Late Charges are Additional Rent and are not
interest. The Parties further agree that the Construction Late Charges apply whether or not
Tenant receives notice of its failure to Complete the Initial Project Improvements, and that said
Construction Late Charges are appropriate to compensate Landlord for loss resulting from the
revenues that would have been received should the Initial Project Improvements have been
Completed by the Outside Construction Completion Date; provided, however, Tenant
acknowledges and agrees that there will be an Event of Default under this Lease if Tenant fails
to Complete the Initial Project Improvements within three hundred and sixty (365) days after the
Outside Construction Completion Date.
6.2 Premises Preparation Work.
Landlord shall pay to Tenant up to the Premises Preparation Cap for the work to be completed
by Tenant to prepare the Premises for the construction of the Initial Project Improvements
("Premises Preparation Work"); provided, however, that the Premises Preparation Cap shall
be decreased by Four Million Dollars ($4,000,000) if Landlord delivers one hundred thirty
thousand (130,000) cubic yards of soil to the Premises prior to the Commencement Date or if
Landlord is unable to deliver the one hundred and thirty thousand (130,000) cubic yards to the
Premises, the Premises Preparation Cap shall be decreased proportionally by the amount of
cubic yards of soil that Landlord actually delivers to the Premises prior to the Commencement
Date. For example, if Landlord delivers thirty-two thousand five hundred (32,500) cubic yards of
soil prior to the Commencement Date, the Premises Preparation Cap will be decreased by One
Million Dollars ($1,000,000). On or before the twentieth (20th) day of each month, Tenant shall
provide to Landlord on a monthly basis invoices for an amount equal to the difference (a) the
amount of all costs that Tenant has incurred in connection with the Premises Preparation Work
("Premises Preparation Work Costs") less (b) the amount that Landlord has previously paid to
Tenant in respect of Premises Preparation Work Costs. With each such invoice, Tenant shall
submit supporting documentation and statutory conditional mechanics lien waivers from all of
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Tenant's contractors for the Premises Preparation Work who have not submitted statutory final
lien waivers. Landlord shall pay the amount of each invoice to Tenant no later than thirty (30)
days after Landlord receives such invoice. Tenant shall send to Landlord the statutory
mechanics' final lien waivers for any Premises Preparation Work when Tenant delivers the
statutory mechanics' final lien waivers for the Initial Project Improvements; provided however,
nothing herein shall be interpreted as a modification of or waiver by Landlord of Tenant's
obligations pursuant to Article 9. Notwithstanding the foregoing, Landlord will not be required to
disburse any amount under this Section 6.2 in excess of the Premises Preparation Cap.
6.3 Alterations.
6.3.1 Major Alterations.
The term "Major Alterations" means all Alterations other than Minor Alterations and the
Initial Project Improvements. Tenant shall comply with all Laws, at its sole cost and expense,
including, without limitation, obtaining any permits and approvals required to be obtained for the
Major Alterations from any Governmental Authority. Tenant may not make any Major
Alterations without the prior written consent of Landlord. Landlord's consent will not be
unreasonably withheld; provided, however, nothing in this Section 6.3.1 shall limit the discretion
of the BPC in any manner to approve or disapprove a Major Alteration in their sole and absolute
discretion Any Major Alteration shall be subject to Section 6.7. Landlord may condition its
approval of a Major Alteration on compliance with the Laws and Tenant obtaining insurance
coverages in addition to those required under Article 18 if such additional coverage is
customarily obtained in connection with work similar in scope to the Major Alteration. All Major
Alterations shall be in accordance with plans and specifications, including but not limited to
working drawings (collectively, "Alteration Plans") submitted to and approved by Landlord in
writing prior to the commencement of the Major Alterations. Following approval by Landlord,
any changes in the Alteration Plans shall be subject to Landlord's approval, in Landlord's sole
discretion. If Landlord approves the Alteration Plans, and if Tenant elects to proceed with the
Major Alterations, then Tenant shall construct and Complete all of the Major Alterations set forth
in the Alteration Plans in one (1) integrated construction project with all due diligence; provided,
however, that any Major Alterations may be Completed in phases if such phasing is permitted
by the Laws.
6.3.2 Minor Alterations.
Tenant may make Minor Alterations without Landlord's written consent except to the extent they
require Landlord's approval when to comply with Laws. "Minor Alterations" shall mean
Alterations that do not: (i) significantly change the silhouette or appearance of the area, (ii)
result in a use inconsistent with Permitted Use, (iii) require new subsurface utility installations,
(iv) require structural modifications, (v) result in an exterior replacement that results in a
substantial change to the exterior appearance of the Improvements, (vi) result in the removal of
trees in violation of the CDP, (vii) pave any area greater than 25 square feet, (viii) trigger any
storm water construction BMP permit or permanent structural BMP permit or alterations to
existing permanent structural BMPs, or (ix) violate any Laws or the CDP..
6.3.3 Diligent Construction; Continuous Operations.
Once construction of any Alterations is commenced, Tenant shall diligently prosecute
construction of the Alterations to Completion. After Completion of the Initial Improvements,
Tenant shall continue to operate the Premises and the Improvements for the Permitted Use
during the course of construction of the Major Alterations to the greatest extent feasible. Once
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an Alteration is Complete, Tenant shall operate the Alteration as part of the Premises and the
Improvements, as applicable, throughout the Term of the Lease.
6.3.4 Construction Requirements.
In constructing any Alterations, Tenant shall comply with all Construction Requirements
and all Laws, including, without limitation, any PMP requirements, mitigation measures or
conditions of approval under the terms of any of the approvals of the Project from any
Governmental Authority, including any CDP applicable to the Premises or the use or
development thereof and any conditions of approval or mitigation measures or project changes
pursuant to any environmental review under CEQA.
6.4 Cost Reporting.
Tenant shall, during the Term and, with respect to each record, for a period of seven (7) years
after the date such record is created (or such longer period as Tenant may decide in its sole
discretion), maintain customary records of construction costs incurred by Tenant in connection
with the Improvements and any Major Alterations . Such records shall include, but are not
limited to, a general ledger, vendor invoices, cancelled checks, agreements with third-party
contractors and contractor progress payment billings. Tenant shall furnish to Landlord an
itemized statement of the construction costs incurred and paid by Tenant in connection with the
Improvements or any Major Alterations thereto, as applicable, within thirty (30) days after
Tenant receives Landlord's request therefor (which request shall not be provided to Tenant until
the Initial Improvements or the respective Major Alterations have been Completed). The
statement shall be sworn to and signed, under penalty of perjury, by Tenant as fairly
representing, to the best of Tenant's knowledge, the construction costs incurred and paid by
Tenant. Should Tenant perform any construction with its own personnel, Tenant shall during
the Term and, with respect to each record, for a period of seven (7) years after the date of such
record (or such longer period as Tenant may decide in its sole discretion), maintain the following
records with respect to the actual work performed by its own personnel: a payroll journal, copies
of cancelled payroll checks, and timecards or other payroll documents which show dates
worked, hours worked, and pay rates. Books and records herein required shall be maintained
and made available either at the Premises, the Improvements, or at such other location in San
Diego County, California as is reasonably acceptable to Landlord. Landlord shall have the right
with 48 hours' advanced notice and at reasonable times to examine and audit said books and
records without restriction for the purpose of determining the accuracy thereof, and the accuracy
of the aforesaid statement. In the event Tenant does not make available the original books and
records at the Premises or within the limits of San Diego County, California, then Tenant agrees
to pay all expenses incurred by Landlord Parties in conducting an audit at the location where
said books and records are maintained in accordance with Section 5.4.3. After the seven (7)
year period has expired for any record subject to this Section 6.4, Tenant shall deliver the
original of such record to Landlord at the address set forth in Section 1.11 or such other location
designated by Landlord in writing, which may include the main offices of the City of Chula Vista;
provided, however, Tenant may elect to deliver all of the records subject to this Section 6.4 that
expire in a given Lease Year at one time, in one delivery, on or about July 1 of each Lease
Year.
6.5 Force Majeure Event.
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6.5.1 Definition. "Force majeure" means the occurrence of any of the following events,
individually or in any combination, to the extent that such event is beyond the
reasonable control of Tenant and prevents Tenant from the performance of its
obligations under this Lease:
(a) A strike, or similar labor disturbances causing a work stoppage,
excluding any such strike or work stoppage that could have been avoided
had Tenant or a Tenant Party, as applicable, complied with Law or labor
agreements, if any.
(b) Hurricanes, typhoons, tornadoes, cyclones, other severe storms, lightning
or floods.
(c) Days of precipitation or high winds in any month in excess of ten (10)
year average for the area within Landlord's jurisdiction.
(d) An earthquake, volcanic eruptions, wildfires, explosions, disease,
epidemics or other natural disaster.
(e) Fires.
(f) Inability to procure labor, utilities, equipment, materials, or supplies in the
open market due to lack of availability (but, in each case, not attributable
to a mere increase in price or Tenant's or Tenant Parties' acts or failure to
act).
(g) Acts of war or armed conflict, insurrections, riots, and acts of terrorism
(including hijacking, chemical or biological events, nuclear events,
disease related events, arson or bombing) or, with respect to any of the
foregoing, any threat thereof.
(h) Delays in the issuance of any approvals or authorizations from any
Governmental Authority (excluding the District and the City of Chula
Vista) that is necessary to proceed with development or operation of the
Initial Project Improvements (provided that Tenant has timely and
properly filed all applications, submitted all required documents and fees
and taken all other reasonable actions that are necessary to obtain such
approvals or authorizations and that Tenant or a Tenant Party is not
primarily responsible for the delay in the issuance of such approvals or
authorizations).
(i) An act of God.
(j) Embargoes or blockades.
6.5.2 Calculation of Delay. Actual delays resulting from the occurrence of one or more
Force Majeure events occurring concurrently shall be calculated concurrently and
not consecutively.
6.5.3 Exclusions. For purposes of this Section 6.5, a Force Majeure event shall not
include adverse general economic or market conditions not caused by any of the
events described in 6.5.1(a) through (h), above.
6.5.4 Obligation to Pay Rent. In no event will a Force Majeure event excuse the
payment of rent or any other monies due Landlord under this Lease.
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6.5.5 Notice and Acceptance Requirement. Tenant shall notify Landlord in writing
within ten (10) days after Tenant learns of, and in no event later than thirty (30)
days after commencement of a Force Majeure event. Such notice (the "Force
Majeure Notice") must be made in good faith and describe the Force Majeure
Event creating delay, why such delay is occurring, the expected duration of such
delay, and the commercially reasonable efforts that Tenant is taking to minimize
the period of delay. Landlord's approval of Tenant's assertion of the existence of
a Force Majeure event shall not be unreasonably withheld or delayed. As long as
Tenant delivers the Force Majeure Notice in accordance with this Section 6.5 and
requests then, until the propriety and duration of such extension is agreed to by
the Parties, such extension shall be deemed granted.
6.5.6 Initial Public Financing Payments. Construction of the Initial Project
Improvements includes public financing provided in part by Landlord through a
Joint Exercise of Powers Agreement (JEPA) with the City of Chula Vista (the
"Public Debt Service Obligation" or PDSO). From and after the fifth year of the
Lease, if a Force Majeure event results in a delay in the Completion of
construction of the Initial Project Improvements, then Tenant shall pay to
Landlord each month the total annual payment for the Public Service Debt
Obligation, prorated monthly, (the "Tenant Public Financing Payment" or TPFP)
less:
(a) "Existing Revenues" contributed by the City of Chula Vista as defined
under Section 3.1.B of that certain Revenue Sharing Agreement between
City and Landlord dated April 24, 2018 ("Revenue Sharing Agreement"),
that are generated and ultimately received by City (the "City Force
Majeure Contribution" or CFMC); and
(b) "Existing Revenues" and "District Support Payments" contributed by
Landlord as defined under Section 3.1.A of the Revenue Sharing
Agreement that are generated and ultimately received by Landlord (the
"Landlord Force Majeure Contribution" or LFMC).
(c) Calculation of Tenant Public Financing Payment (TPFP) Formula
TPFP = PDSO — (CFMC + LFMC) _
12
(d) Example Calculation of Tenant Public Financing Payment (TPFP)
Assuming the following annual amounts:
• Annual PDSO: $18,000,000
• Annual CFMC: $4,000,000
• Annual LFMC: $4,000,000
TPFP = $18,000,000 — ($4,000,000+ $4,000,000)
12
TPFP = $10,000,000
12
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TPFP = $833,333.33
6.5.7 Limits on Term of Force Majeure. In no event shall a Force Majeure event
extend beyond the term of the Ground Lease.
6.6 Advertising Devices.
All signs, flags and other advertising devices (collectively, the "Advertising Devices") visible from
outside the Premises or the Improvements, as applicable, except the Advertising Devices set
forth on Exhibit "N" attached hereto which have been previously approved by the Landlord in
writing, must be expressly approved by Landlord (in its reasonable discretion, if such approval is
ministerial, and in the Landlord's sole and absolute discretion, if such approval is discretionary),
prior to installation. Not later than one hundred and eighty (180) days prior to the Completion of
the Resort Hotel, Tenant may submit to Landlord a list of Advertising Devices to be flown,
installed, placed or erected on the Premises and the Improvements, to be approved or
disapproved by Landlord as provided herein. Such list shall specify, with respect to each
proposed Advertising Device, its form, proposed location on the Premises or the Project
Improvements, dimensions, frequency and duration of display and any other information that
Landlord may request. Tenant shall not sell any naming rights to any portion of the Convention
Center without the prior written consent of the Landlord, which consent may be denied,
conditioned, or withheld in the Landlord's sole and absolute discretion. If Landlord consents to
the sale of naming rights, Tenant shall pay Landlord percentage rent, in an amount to be
mutually agreed to by Landlord and Tenant, based on the gross income for the sale of such
naming rights. All signage in the Landlord's jurisdiction is subject to all Laws, including without
limitation, San Diego Unified Port District Code Section No. 8.30. If Landlord hereafter adopts
any other ordinance or policy governing signage, Tenant shall comply with such ordinance or
policy subject to any grandfathering terms thereof.
6.7 Tenant Percent for Art.
Tenant shall expend no less than the Tenant Art Investment amount set forth in Section 1.8.
Tenant acknowledges and agrees that any requests for proposed Alterations during the Term
may be conditioned on the payment of additional commissions or purchases of artwork and/or
in-lieu contributions.
6.8 Prevailing Wage.
6.8.1 Tenant acknowledges and agrees that:
(a) Any construction, alteration, demolition, installation or repair work
required or performed under this Lease constitutes "public work" under California Prevailing
Wage Law, including Labor Code §§ 1720 through 1861, et seq. ("PWL"), and obligates Tenant
to cause such work to be performed as "public work," including, but not limited to, the payment
of applicable prevailing wages to all persons or entities subject to the PWL.
(b) Tenant shall cause all Persons performing "public work" under the Lease
to comply with all applicable provisions of the PWL and other applicable wage laws.
(c) Landlord hereby notifies Tenant and Tenant hereby acknowledges that
the PWL includes, without limitation, Labor Code § 1771.1(b) that provides that the following
requirements described in Labor Code § 1771.1(a) shall be included in all bid invitations and
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"public work" contracts: A contractor or subcontractor shall not be qualified to bid on or be
listed in a bid proposal, subject to the requirements of § 4104 of the Public Contract Code, or
engage in the performance of any contract for "public work," unless it is currently registered
and qualified to perform "public work" pursuant to § 1725.5. It is not a violation of § 1771.1 for
an unregistered contractor to submit a bid that is authorized by § 7029.1 of the Business and
Professions Code or by §§ 10164 or 20103.5 of the Public Contract Code provided the
contractor is registered to perform "public work" pursuant to § 1725.5 at the time the contract is
awarded.
(d) Tenant acknowledges that its obligations under the PWL include, without
limitation, ensuring that:
(i) pursuant to Labor Code § 1771.1(b), a bid shall not be
accepted nor any contract or subcontract entered into without proof of the contractor or
subcontractor's current registration to perform "public work" pursuant to § 1725.5;
(ii) pursuant to Labor Code § 1771.4(a)(1), the call for bids
and contract documents shall specify that the project is subject to compliance monitoring
and enforcement by the California Department of Industrial Relations ("DIR");
(iii) pursuant to Labor Code § 1771.4(a)(2), it posts or requires
the prime contractor to post job site notices, as prescribed by regulation; and
(iv) pursuant to Labor Code § 1773.3(a)(1), it provides notice
to the DIR of any "public works" contract subject to the requirements of the PWL, within five
(5) days of the award. Pursuant to Labor Code § 1773.3(a)(2), the notice shall be
transmitted electronically in a format specified by the DIR and shall include the name of the
contractor, any subcontractor listed on the successful bid, the bid and contract award
dates, the contract amount, the estimated start and completion dates, job site location, and
any additional information that the DIR specifies that aids in the administration and
enforcement of the PWL. PWC-100 is the name of the form currently used by the DIR for
providing the notice, but Tenant shall determine and use whatever form the DIR requires.
(e) Landlord shall not be responsible for Tenant's failure to comply with any
applicable provisions of the PWL.
(f) Tenant's violations of the PWL shall constitute a default under this Lease.
(g) Tenant shall not be responsible for Landlord's failure to comply with any
applicable provisions of the PWL with respect to any work performed solely by any Landlord
Party.
6.9 Historical Designation.
Neither Landlord nor Tenant shall designate, cause any Person to designate, submit or support
any application to designate, the Premises or any Improvements as a federal, state or local
historical landmark or as a historical resource, without the other Party's prior written consent,
which may be withheld by such other Party in its sole and absolute discretion. The terms of this
Section 6.9 shall survive the expiration or earlier termination of this Lease.
6.10 Submission of Redevelopment Plan.
Provided that there is no Event of Default, and subject to the restrictions set forth in Section
15.1 and Tenant's submission of an Inspection Report and completion of any outstanding work
pursuant to Section 15.3, Tenant shall have the right to submit a redevelopment plan to the
Landlord for the Project Improvements ("Redevelopment Plan") during or before the fifty-fifth
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(55") Lease Year. The Redevelopment Plan shall be accompanied by the following documents,
which collectively shall be referred to herein as, the "Redevelopment Plan Package": (a)
description of the development concept and the proposed project sufficient for the Landlord to
understand the reason for the proposed redevelopment (including business expansion,
modernization of facilities, aesthetic enhancement, increase in revenues); (b) description of the
development concept and the proposed project sufficient for the Landlord to understand the
scope of the entire development concept and whether it covers some or all of the Premises or
Improvements, which may include renderings and drawings showing a scaled site layout,
interiors and exteriors of all significant buildings, landscape development and layout, preliminary
sign concept, and any other prominent features; (c) evidence that Tenant is a "tenant in good
standing", which means that the Tenant has (i) maintained the Premises and Improvements in
good condition, free of deferred maintenance; (ii) a prompt payment history; (iii) not had an
Event of Default; (iv) maximized the gross revenue of the Improvements; and (v) maintained
accurate financial records that are accessible to the Landlord in accordance with the terms
hereof; (d) any proposed changes to ownership; (e) description of the development team and its
qualifications; (f) proforma cash flows for each part of the proposed redevelopment; (g) any
proposed changes to the Acceptable Brand or Resort Hotel management team; (h) anticipated
development cost, with repair and maintenance, furniture, fixture and equipment items
separately identified; and (i) any proposed changes to the existing use. Within sixty (60) days
after the Landlord's receipt of the Redevelopment Plan Package, Landlord shall determine in its
reasonable discretion whether additional information is required or if the Redevelopment Plan
Package is complete. Landlord shall have the right to request additional information related to
the Redevelopment Plan Package. Within ninety (90) days of the date that Landlord determines
that the Redevelopment Plan Package is complete, Landlord's staff shall present the
Redevelopment Plan Package to the BPC for the BPC's consideration, which the BPC may
approve or disapprove in the BPC's sole and absolute discretion. If the BPC approves the
Redevelopment Plan, Tenant shall proceed with the Redevelopment Plan in accordance with
the terms of this Lease related to Alterations, including, without limitation, Article 6 and Article 8
herein, and any other direction from the BPC. The terms of this Section 6.10 shall survive the
expiration or earlier termination of this Lease.
6.11 Construction of Developer's Phase 1A Improvements
Concurrently with the construction of the Initial Improvements, Tenant shall construct those
certain public improvements described in Exhibit L] attached hereto and incorporated herein
by reference ("Developer's Phase 1A Improvements"). Tenant shall construct the Developer's
Phase 1A Improvements in accordance with the Plans.
7. TITLE TO AND DEMOLITION OF ALTERATIONS AND IMPROVEMENTS
7.1 Title.
All Improvements which may be installed, constructed or placed in, on, over or under the
Premises, from time to time by Tenant in accordance with Section 6, (a) shall be so installed,
constructed or placed at Tenant's sole cost and expense except for the JEPA Development
Cost Contribution, (b) shall remain Tenant's property during the Term (excluding the Convention
Center for so long as the Convention Center is subject to public financing including any
associated leases or subleases), and (c) subject to the terms of Section 7.2, at the expiration or
earlier termination of this Lease, shall either be demolished by Tenant at Tenant's sole cost and
expense or remain on the Premises and automatically become the property of Landlord without
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additional compensation from Landlord; provided that, subject to Section 7.3 below, Tenant's
trade fixtures (that is fixtures relating uniquely to Tenant and which are removable without non-
repairable damage to the other Improvements), furnishings, moveable equipment and other
personal property of Tenant shall remain the property of Tenant and shall be removed by
Tenant as provided in Section 7.3. Upon Landlord's request, following the expiration or earlier
termination of this Lease, Tenant shall execute and deliver (at no cost or expense to Landlord) a
quitclaim deed as provided in Article 23 to confirm Landlord's ownership of the Improvements
which are to remain on the Premises pursuant to Section 7.2, which obligation shall survive the
expiration or earlier termination of this Lease. Notwithstanding the foregoing, if title to artwork in
fulfillment of Tenant Art Investment is governed by a separate agreement between Tenant and
the artist which has been approved by Landlord, then such agreement shall govern over this
Lease with respect to the title of such artwork following the expiration or earlier termination of
this Lease.
7.2 Demolition of Improvements.
If the Redevelopment Plan is disapproved by the BPC pursuant to Section 6.10, and Tenant
elects to demolish the Improvements ("Tenant's Demolition Election") by written notice to
Landlord at any time before the end of the sixty-third (63rd) Lease Year, then Tenant shall
demolish all of the Improvements, except for any Existing Improvements and any public and
private utilities that Landlord requires that Tenant does not demolish by written notice to Tenant
("Landlord's Non-Demolition Notice"), and shall perform all remediation work that is required
pursuant to Section 21.3 by the Expiration Date, but not earlier than twelve (12) months prior to
the Expiration Date, and Tenant shall obtain all permits required to perform such work in
advance of the Expiration Date. Tenant acknowledges that demolition of the Improvements
and/or the remediation work pursuant to Section 21.3 may require Tenant to obtain permits,
certain of which may be discretionary. If Tenant makes Tenant's Demolition Election, then
Tenant shall surrender the Premises to Landlord in a Buildable Condition. A "Buildable
Condition" means (i) the demolition and removal of any subsurface Improvements (including
foundations and pilings, the Existing Improvements, and the public and private utilities, unless
Landlord requests that such Existing Improvements and/or public and private utilities not be
removed in the Landlord's Non-Demolition Notice), any Hazardous Materials and Pre-Existing
Materials as required under Article 21, and any debris resulting from the demolition and
removal; (ii) the remediation of any Hazardous Materials and Pre-Existing Materials required
under Article 21; and (iii) the repair of any damage to the Premises, Improvements, Existing
Improvements and/or public and private utilities, caused by (i) and (ii) above, pursuant to plans
and specifications approved by Landlord. If Tenant fails to surrender the Premises to Landlord
in a Buildable Condition within the period allowed under Section 7.5, Landlord may do so,
without obligation, and may charge the cost thereof to Tenant pursuant to the Reimbursement
Procedure, together with Additional Rent for estimated administrative costs in the amount of ten
percent (10%) of such cost, and interest on all such sums at the Default Rate from the date
incurred until paid. Nothing contained in this Section 7.2 shall be interpreted to limit Tenant's
indemnity obligations, including without limitation, Tenant's obligations under Section 21.3.
Tenant acknowledges and agrees that, if (a) the Redevelopment Plan is not submitted by
Tenant during or before the fifty-fifth (55th) Lease Year in accordance with Section 6.10, or (b)
there is an early termination of this Lease by Tenant or an Event of Default, or (c) Tenant fails to
implement the Redevelopment Plan approved by the BPC prior to the end of the sixty-third
(63rd) Lease Year, then, within thirty (30) days after the early termination of this Lease or any
time after the end of the sixty-third (63rd) Lease Year, as may be applicable, Landlord may notify
Tenant in writing of what Improvements Landlord in its sole discretion requires Tenant to
demolish (such notice is referred to herein as the "Landlord End of Term Election"). Unless
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Landlord has previously delivered to Tenant the Landlord End of Term Election, not later than
one (1) year before the Expiration Date or within sixty (60) days after the earlier termination of
this Lease, as applicable, Tenant shall request in writing from Landlord the Landlord End of
Term Election. If Landlord has not provided the Landlord End of Term Election within thirty (30)
days thereafter, the same shall be deemed to be an election by Landlord for all Improvements to
remain upon and be surrendered with the Premises, and title to such Improvements shall vest in
Landlord in accordance with Section 7.1 and Article 23 (but Tenant shall remain responsible for
any remedial work that may be required in accordance with Section 21.3). If Landlord provides
to Tenant the Landlord End of Term Election in accordance with this Section 7.2, then Tenant
shall demolish all of the Improvements set forth in such Landlord End of Term Election, perform
all remedial work in connection therewith pursuant to Section 21.3 and obtain all permits
required to perform such work, by the Expiration Date (but not earlier than six (6) months prior
to the Expiration Date) or, in the event of an early termination of this Lease, by the date set forth
in such Landlord End of Term Election (which date shall not be earlier than ninety (90) days
after Landlord provides such Landlord End of Term Election to Tenant). Tenant acknowledges
that demolition of the Improvements and/or the remediation work in connection therewith
pursuant to Section 21.3 may require Tenant to obtain permits, certain of which may be
discretionary. Tenant shall repair any damage to the Premises (and the Improvements which
Landlord is not requiring Tenant to demolish) caused by such demolition, and Tenant shall
surrender the Premises to Landlord in a Buildable Condition. If Tenant does not make Tenant's
Demolition Election or if Landlord provides to Tenant the Landlord End of Term Election with
respect to fewer than all of the Improvements, then Tenant shall not demolish any
Improvements that Tenant is not required to demolish, and, if any of the Improvements that
Tenant or Landlord elect not to be demolished are not in full compliance with Article 15, then
Landlord may require, at Tenant's sole cost and expense, that such Improvements be modified
to a state and condition which complies with Article 15.
7.3 Removal of Personal Property.
Except as provided below, all of Tenant's personal property including machines, appliances and
equipment and trade fixtures (even though not personal property), located at or on the Premises
and the Improvements, shall be removed by Tenant by the Expiration Date or earlier termination
of this Lease. Tenant shall repair any damage occasioned by any removal of personal property
and trade fixtures pursuant to Section 7.3 by the Expiration Date or earlier termination of this
Lease. Notwithstanding the foregoing, at least ninety (90) days before the Expiration Date or, in
the case of earlier termination of this Lease, within ten (10) days after such termination, unless
Landlord expressly elects within the same time periods to require Tenant to remove the same,
any artworks that constitute personal property and that were provided to comply with Tenant Art
Investment but which are not governed by a separate agreement between Tenant and the artist
relating to the removal of such artworks at the end of the Term, shall not be removed and shall
remain located on the Premises or the Improvements, as applicable. If any personal property
that is required to be removed is not removed by Tenant in accordance with this Section 7.3,
then the same may be considered abandoned and, at the option of Landlord, shall thereupon
become the property of Landlord, without cost to Landlord and without any payment to Tenant,
except that Landlord shall have the right to have such personal property removed and to repair
any and all damage occasioned by such removal, at the sole expense of Tenant pursuant to the
Reimbursement Procedure.
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7.4 [Intentionally Omittedl.
7.5 Removal/Demolition/Remediation Period.
If (a) Tenant has made Tenant's Demolition Election, or (b) Landlord has provided the Landlord
End of Term Election, and/or (c) Tenant is required to perform remediation work pursuant to
Section 21.3, then Tenant shall continue to pay the full Rent to Landlord in accordance with this
Lease during such demolition work and/or any remediation work. If Tenant's demolition work
and remediation work is not completed by the Expiration Date or, in the event of an early
termination of this Lease, by the date set forth in the Landlord End of Term Election (which date
shall not be earlier than ninety (90) days after Landlord provides such Landlord End of Term
Election to Tenant), then the terms of Article 26 regarding Rent payable during holdover shall
apply. Notwithstanding any provision of this Article 7 to the contrary, if (i) Tenant has made
Tenant's Demolition Election, or (ii) Landlord has provided the Landlord End of Term Election
other than because of an early termination of this Lease by Tenant or due to an Event of
Default, and/or (iii) Tenant is required to perform remediation work pursuant to Section 21.3,
and, in each case, the Demolition and Remediation Report indicates that the time period for
completion of such demolition work and/or remediation work is estimated to be greater than six
(6) months, then Tenant shall commence such demolition work and/or remediation work
sufficiently prior to the Expiration Date so that such demolition work and/or remediation work is
anticipated to be completed no later than the Expiration Date (for example, if the estimated
removal period is ten (10) months, then Tenant shall commence such work at least ten (10)
months prior to the end of the Term).
7.6 Survival.
The terms of this Article 7 shall survive the expiration or earlier termination of this Lease.
8. ENTITLEMENTS
8.1 Entitlement Costs.
If any discretionary approval, permit or entitlement, including, without limitation, environmental
analysis under CEQA or the National Environmental Policy Act, the PMP, a Port Master Plan
Amendment ("PMPA"), stormwater permits, a CDP and/or a Coastal Act exclusion (collectively,
"Discretionary Entitlement"), are necessary, in Landlord's sole and absolute determination, in
connection with the any Improvements or Alterations, demolition work, remediation work or
other projects undertaken by Tenant on or at the Premises or the Improvements (each, the
"Discretionary Project"), then Tenant shall enter into agreements, consistent with the
Landlord's applicable standard practices at that time (if any), with third-party experts,
professionals and consultants to prepare reports and other materials ("Consultant Services")
that are required to process the Discretionary Project and for the Landlord or any other relevant
Governmental Authority to consider the Discretionary Entitlement or Discretionary Project.
Tenant shall be directly responsible for the costs of the Consultant Services and Tenant shall
reimburse Landlord pursuant to the Reimbursement Procedure for all reasonable costs and
expenses incurred by Landlord in connection with preparing, processing, considering and
approving any Discretionary Project, any Discretionary Entitlement or any appeal of any CDP or
Coastal Act exclusion to the CCC. If Tenant fails to reimburse Landlord for such costs or
expenses pursuant to the Reimbursement Procedure, then, in addition to any other remedies
that Landlord may have, following three (3) Business Days' prior written notice to Tenant,
Landlord may, at its reasonable discretion, discontinue the preparing, processing, considering or
approving of such Discretionary Project, Discretionary Entitlement or such appeal of a CDP or
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Coastal Act exclusion to the CCC, as applicable, until Tenant reimburses Landlord, and Tenant
shall be responsible for any costs and expenses incurred by Landlord related to such
discontinuance as Additional Rent and such failure shall be an Event of Default. Nothing herein
shall obligate Landlord to seek, process or obtain any Discretionary Entitlement or any other
third-party Governmental Authority approval for a Discretionary Project for the benefit of Tenant,
and Landlord makes no warranty or representation to Tenant that Tenant will obtain any
Discretionary Entitlement or ministerial approval. Landlord shall not be required to pay any
Governmental Authority fees or any Consultant Services associated with any Discretionary
Entitlement or any other third-party Governmental Authority approval for a Discretionary Project.
Notwithstanding the foregoing, Landlord shall, at Tenant's request and at no cost to Landlord,
reasonably cooperate with and provide reasonable assistance to Tenant's efforts to obtain from
any Governmental Authority any licenses, approvals, notifications, registrations or permits in
connection with development, use and operation of the Premises and the Improvements,
including the construction of the Project Improvements.
8.2 Entitlements Indemnity.
Without limitation of Tenant's other obligations under this Lease, Tenant agrees, at its sole cost
and expense, and with counsel reasonably acceptable to Landlord, to indemnify, defend and
hold harmless the Landlord Parties from any third-party claims, demands, actions, causes of
action, suits and Related Costs, arising out of Landlord's approval of any Discretionary Project,
Discretionary Entitlement or appeal of a CDP or Coastal Act exclusion to the CCC. Landlord
may, in its sole and absolute discretion, participate in the defense of any claims, demands,
actions and causes of action and suits, and Tenant shall reimburse Landlord for all reasonable
costs that are incurred by Landlord in connection therewith, including, without limitation,
reimbursement for attorneys' fees, experts' fees and other costs. Landlord's participation in
such defense shall not relieve Tenant of any of its obligations under this Section 8.2. The
foregoing indemnity obligations of Tenant are in addition to, and not in limitation of, any other
indemnity obligations of Tenant contained in this Lease, and this Section 8.2 shall survive the
expiration or earlier termination of this Lease.
8.3 Reservation of Discretion.
Tenant acknowledges and agrees that, notwithstanding the terms and conditions of this Lease,
Landlord reserves its discretion to condition, approve or disapprove any Discretionary
Entitlements or Discretionary Project, including, without limitation, adoption of any and all
feasible mitigation measures, alternatives to a Discretionary Project, including a no project
alternative, and a statement of overriding consideration, if applicable, and that nothing in this
Lease will be construed as circumventing or limiting Landlord's discretion with respect to any
Discretionary Entitlement, or any Discretionary Project, including, without limitation, the exercise
of eminent domain, code enforcement and the making of findings and determinations required
by Law. Tenant acknowledges and agrees that any and all Discretionary Entitlements may be
conditioned, approved or denied by Landlord, in its sole and absolute determination, and Tenant
accepts the risk that Landlord may deny any and all Discretionary Entitlements, and hereby
waives any claims, demands, actions, causes of action, suits against Landlord for such
conditions or denial.
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9. LIENS
9.1 No Right to Bind Landlord.
Neither Tenant, nor any Tenant Party, shall have any power or authority to do any act or thing,
or to make any contract or agreement which shall bind Landlord in any way whatsoever, and
Landlord shall have no responsibility to Tenant, Tenant Party or other Person who performs,
causes to perform, engages in or participates in any construction of any Improvements,
Alterations or any other work on the Premises at the request of Tenant or Tenant Party or other
Persons. Landlord shall not be required to take any action to satisfy any such contract or
agreement or to remove or satisfy any lien resulting therefrom.
9.2 Notice of Non-Responsibility.
Tenant shall give written notice to all contractors, subcontractors and materialmen of Landlord's
non-responsibility in connection with any construction of any Improvements, Alterations or any
other work on the Premises, and shall immediately provide Landlord with true copies of such
notices not less than ten (10) days prior to the commencement of any work on the Premises.
The Landlord Parties shall have the right to post and keep posted thereon notices of
non-responsibility, or such other notices which Landlord may deem to be proper for the
protection of Landlord's interest in the Premises. Tenant shall provide Landlord with any
information required by Landlord to complete the notice of non-responsibility.
9.3 Mechanics' Liens.
Tenant shall pay or cause to be paid all costs for work, labor, services or materials supplied to
or performed on the Premises that might result in any mechanics' lien or similar lien as and
when Tenant is required to do so under Tenant's agreement with the respective provider
thereof. If Tenant receives notice that any mechanics' lien or any similar lien is recorded against
the Premises and Tenant is not contesting such lien in accordance herewith, then Tenant shall
cause such lien to be released and removed of record within thirty (30) days from the
recordation of the mechanics' lien or similar lien. Tenant shall indemnify, defend, release and
save Landlord free and harmless from and against any and all claims of lien of laborers or
materialmen or others for work performed or caused to be performed or for materials or supplies
furnished for or at the Premises by or for any Tenant Party and all Related Costs.
9.4 Contest of Lien.
If Tenant in good faith wishes to contest the amount or validity of any lien, then Tenant shall
have the right to do so; provided that Tenant first records a surety bond sufficient to release
such lien.
9.5 Landlord's Right to Pay.
If Tenant shall be in default in paying any charge for which a lien claim has been filed, and if
Tenant has not contested such lien in accordance with Section 4.6.1, then Landlord may, but
shall not be so obliged to, pay said lien claim and any costs incurred in connection therewith,
and the amount so paid, together with reasonable attorneys' fees incurred in connection
therewith, shall be immediately due and owing from Tenant to Landlord, and Tenant shall pay
the same to Landlord pursuant to the Reimbursement Procedure, together with interest on the
full amount thereof at the Default Rate from the date of Landlord's payments until paid.
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9.6 Notice of Liens.
Should any claims of lien be filed against the Premises or any Improvement or any action
affecting the title to the Premises be commenced, the Party receiving notice of such lien or
action shall give the other Party written notice thereof within five (5) Business Days of receipt.
9.7 Right of Entry.
Nothing herein shall imply any consent on the part of Landlord to subject Landlord's estate to
liability under any mechanics' lien or other lien. Without limiting Tenant's obligations under
Section 9.2 above, the Landlord Parties shall have the right, but not the obligation, to enter upon
and inspect the portions of the Improvements that are generally accessible to the general public
or the portions of the Premises where the construction of the Improvements is ongoing, during
normal business hours and upon a three (3) Business Days' prior notice to Tenant (except in the
case of an emergency where no prior notice shall be required) and provided that the Landlord
Parties comply with all applicable security and safety procedures of Tenant and use
commercially reasonable efforts to minimize any interference with Tenant's operation and use of
the Premises and the Improvements while on the Premises and at the Improvements.
Notwithstanding the foregoing, nothing herein shall limit the Landlord's right to enter the
Premises and Improvements at any time to exercise its police powers.
10. LEASE ENCUMBRANCE
10.1 Restrictions on Encumbrance.
10.1.1 Landlord's Consent.
Tenant shall not encumber or hypothecate this Lease or the Convention Center
Subleases, Tenant's leasehold interest, or the Improvements thereon, or any part thereof or
interest therein (such encumbrance or hypothecation being referred to herein as, a "Financing
Transaction"), without Landlord's prior written consent to each Financing Transaction, which
consent, subject to the terms of Section 10.1.2, shall not be unreasonably withheld, conditioned
or delayed. Tenant shall submit its request for consent to the Financing Transaction in writing to
Landlord, together with the required minimum documentation required pursuant to BPC Policy
No. 355, or any other BPC policy then in effect governing Landlord's consent to a Financing
Transaction. Within ten (10) days of receiving Tenant's request, Landlord may request from
Tenant additional information regarding the lender and/or the proposed Financing Transaction.
Landlord shall provide its response to Tenant's request for consent to the Financing Transaction
within forty-five (45) days following Landlord's receipt of Tenant's request and all information
reasonably requested by Landlord from Tenant. As a condition subsequent to the effectiveness
of such consent, Tenant shall provide to Landlord the final loan documents for the Financing
Transaction (each, a "Loan Document" and, collectively, "Loan Documents") which shall
conform substantially to the term sheet, without any material changes, delivered pursuant to
Section 10.1.2(d) below and (b) after the recordation of the encumbrance in connection with
such Financing Transaction, copies of all Loan Documents recorded in connection with such
Financing Transaction. Tenant shall reimburse Landlord pursuant to the Reimbursement
Procedure for all of Landlord's reasonable costs and expenses associated with its review of the
Financing Transaction, including without limitation, any Cost Recovery Fee pursuant to BPC
Policy No. 106. Said costs shall include, without limitation, Landlord's reasonable legal fees
(whether with in-house or outside counsel or both) and disbursements relating to or arising out
of Landlord's review of any Financing Transaction, regardless of whether such Financing
Transaction is consented to by Landlord or consummated, and Landlord's transaction
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processing fees charged by Landlord for Landlord's analysis and processing of Tenant's
request.
10.1.2 Conditions.
Notwithstanding anything to the contrary herein, Landlord shall administratively grant
consent to any Financing Transaction for a Permitted Lease Encumbrance if all of the following
conditions and requirements are satisfied to the reasonable satisfaction of Landlord:
(a) The lender is a Financial Institution;
(b) The maximum principal amount of the indebtedness that is secured by an
encumbrance does not exceed the greater of: (1) seventy-five percent (75%) of the value of
the aggregate of (i) Tenant's fee interest in the Resort Hotel pursuant to this Lease, provided
that if the Resort Hotel is not Completed, the value of the Resort Hotel as Completed, (ii)
Tenant's fee interest in the Convention Center pursuant to this Lease provided that if the
Convention Center is not Completed, the value of the Convention Center as Completed, (iii)
Tenant's leasehold interest in the Convention Center pursuant to the Convention Center
Sublease, (iv) Tenant's fee interest in any other Improvements (except the Parking
Improvements) pursuant to this Lease, provided that if the Resort Hotel is not Completed, the
value of the Improvements; (v) Tenant's interest in the Parking Improvements, and (vi)
Tenant's leasehold interest in the Premises created by this Lease, as determined by an
Appraisal without accounting for any indebtedness secured by any existing Permitted Equity
Encumbrance; or (2) the amount of repayment of an existing Permitted Lease Encumbrance
which the proposed Financing Transaction is intended to replace (provided that such Permitted
Lease Encumbrance was initially consented to by Landlord);
(c) With respect to any Financing Transaction proposed to occur on or after
the commencement of the Fourth (4t") Lease Period, if requested by Landlord, Tenant has
considered amendments to non-economic provisions of this Lease in good faith for the purpose
of conforming this Lease to Laws that are then in effect; provided that any such amendment
shall neither create any new obligations for Tenant, increase any obligations of Tenant nor limit
any rights or remedies of Tenant that are set forth in this Lease, in each case, except to a de
minimis extent;
(d) The loan secured by the Financing Transaction has a payment term that
provides for the full repayment of the loan prior to the Expiration Date;
(e) The loan secured by the Financing Transaction is not cross-collateralized
with other real property(ies);
(f) The loan secured by the Financing Transaction is not cross-defaulted with
other financings unrelated to the Project;
(g) A written acknowledgment from Tenant that it will not seek rent relief as a
result of not being able to meet its debt service or debt repayment obligations;
(h) A recent Appraisal in accordance with Section 10.1.2(b);
(i) Cash flow projections from Tenant;
(j) If later than the first two years of the Lease, audited financial statements
of Tenant for not less than the past two (2) years (or such shorter period of time as Tenant has
existed);
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(k) Such other documents, information and materials relating to the
Financing Transaction as Landlord may reasonably request within the ten (10) day period
described in Section 10.1.1; and
(1) Term sheet or loan commitment with respect to the Financing
Transaction.
"Appraisal" shall be defined as a third party appraisal in accordance with the Uniform
Standards of Professional Appraisal Practice (USPAP) as modified from time to time and for so
long as it is a generally accepted standard for commercial real estate appraisals or if the
USPAP is no longer in existence or is not a generally accepted standard for commercial real
estate appraisals, a successor or comparable acceptable standard for commercial real estate
appraisals.
10.1.3 Permitted Equity Encumbrance.
Notwithstanding anything to the contrary herein, Landlord shall administratively grant
consent to an encumbrance of the interest in all (or substantially all) of the equity interests of
any Persons that, in the aggregate, directly or indirectly, own all (or substantially all) of the
equity interests of Tenant ("Mezzanine Interests") if all of the following conditions and
requirements are satisfied to the reasonable satisfaction of Landlord:
(a) The lender is the financing arm of the Acceptable Brand;
(b) The borrower is a Person(s) that, in the aggregate, directly or indirectly,
own all of the equity interests of Tenant (collectively, the "Pledgor");
(c) After the loan of the Mezzanine Interests is consummated, there will only
be one outstanding loan of the equity interests in Tenant; and
(d) the loan of the Mezzanine Interests has a payment term that provides for
the full repayment of the loan prior to the Expiration Date;
(e) the loan of the Mezzanine Interests is not cross-collateralized with other
equity interests;
(f) the loan of the Mezzanine Interests is not cross-defaulted with other
equity financing unrelated to the Project;
(g) Written acknowledgment from Tenant that it will not seek rent relief as a
result of not being able to meet its debt service or debt repayment obligations;
(h) Cash flow projections from Tenant;
(i) If later than the first two (2) years of the Lease, audited financial
statements of Tenant for not less than the past two (2) years (or such shorter period of time as
Tenant has existed);
(j) Such other documents, information and materials relating to the
encumbrance as Landlord may reasonably request within the ten (10) day period described in
Section 10.1.1; and
(k) Landlord has received a term sheet or other form of commitment with
respect to the encumbrance.
Any Permitted Equity Encumbrance shall be subject to the same condition subsequent set forth
in the Section 10.1.1 regarding the delivery of final loan documents.
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[MICC (California), LLC, a Delaware limited liability company ("MICC") and an Affiliate has
been approved by Landlord as a Permitted Mezzanine Lender.]
The term "Equity Collateral Enforcement Action" means any action or proceeding or other
exercise of a Permitted Mezzanine Lender's rights and remedies in connection with its security
interests in the Pledgor in order to realize upon its equity collateral, including, without limitation,
the acceptance of an assignment in lieu of foreclosure for the equity collateral. With respect to
any Permitted Equity Encumbrance, (a) the granting of such Permitted Equity Encumbrance by
Landlord shall not be deemed a Change of Control of Tenant, (b) any enforcement action
and/or the completion of any Equity Collateral Enforcement Action (including, without limitation,
the acquisition of all (or substantially all) of the direct or indirect ownership of Tenant) by a
Permitted Mezzanine Lender with respect to such equity collateral security interest shall not be
deemed a Change of Control of Tenant and shall not be prohibited by this Lease if it is
permitted pursuant to the terms of a Permitted Equity Encumbrance consented to by Landlord,
(c) the Permitted Mezzanine Lender shall have the same notice rights and cure rights pursuant
to Section 10.3.2 below, and (d) such Permitted Mezzanine Lender shall have the New Lease
rights as described in Section 10.3.2(d) below.
10.2 Definition of "Permitted Lease Encumbrance", "Permitted Equity Encumbrance"
and "Permitted Encumbrance".
Each mortgage, deed of trust or similar security instrument securing Tenant's payment and
performance under the Financing Transaction that is consented to by Landlord is a "Permitted
Lease Encumbrance". Any security interest in the direct or indirect equity interests in Tenant
securing obligations owed to a Permitted Mezzanine Lender that is consented to by Landlord is
a "Permitted Equity Encumbrance" (together with the Permitted Lease Encumbrance,
"Permitted Encumbrance"). Landlord's consent shall not be required for an assignment or
transfer of indebtedness secured by a Permitted Encumbrance.
10.3 Rights of Permitted Lender.
10.3.1 Voluntary Lease Surrender.
So long as a Permitted Encumbrance remains outstanding, Landlord will not accept the
voluntary surrender, cancellation, or termination of this Lease by Tenant before the Term
expires, unless each Permitted Lender with an outstanding Permitted Encumbrance provides
prior written consent thereto. Nothing in this Section 10.3.1 shall impair Landlord's right to
terminate this Lease as a result of an Event of Default or by reason of Landlord's other rights to
terminate this Lease as set forth in this Lease, subject to the Permitted Lender's notice and cure
rights pursuant to Section 10.3.2 below, if applicable, and the New Lease rights pursuant to
Section 10.3.2(d) below, if applicable.
10.3.2 Right to Cure/New Lease.
(a) Notice of Default. So long as one or more loans secured by a Permitted
Encumbrance remain outstanding, Landlord hereby agrees to give each Permitted Lender with
a Permitted Encumbrance that has provided Landlord with its address and has requested a
copy of the same, a copy of any written notice , which Landlord gives to Tenant pursuant to
Section 12.1, at the same time as it delivers it to Tenant, and such notice shall be deemed
delivered three (3) days after delivery thereof to the respective Permitted Lenders, whereupon
each Permitted Lender shall have the right, but not the obligation, to cure such default or Event
of Default. This Lease shall not terminate as a result of an Event of Default if a Permitted
Lender cures such Event of Default within (i) thirty (30) days after the Permitted Lender is
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deemed to have received such notice of an Event of Default in the payment of Rent, or
(ii) subject to the terms of this Section 10.3.2, within ninety (90) days after the Permitted Lender
is deemed to have received such notice of any other Event of Default under this Lease.
Landlord shall accept performance of the terms of this Lease by the Permitted Lender provided
such performance is completed within the time frames set forth in this Section 10.3.2 as if the
terms were performed by Tenant, regardless of whether there has been an Event of Default. If
there is more than one Permitted Lender and there is a conflict between the cure rights which
the Permitted Lenders assert, then Landlord shall have no duty to resolve such conflict and
shall recognize only the cure rights of the Permitted Mortgage Lender with the first Permitted
Lease Encumbrance without any liability to Tenant or the other Permitted Lenders; provided,
however, that Landlord shall accept without the necessity of further inquiry, as confirmation that
no conflict exists, a written notice executed by all of the Permitted Lenders that recognizes
which Permitted Lender has the first right to exercise any cure rights under this Lease or enter
into a New Lease as set forth in Article 10.
(b) Possession Required. If the Event of Default specified in
Section 10.3.2(a)(ii) cannot be cured until the Permitted Lender has obtained possession of the
Premises (or, in the case of a Permitted Mezzanine Lender, control of Tenant) through
foreclosure or otherwise, and if the Permitted Lender has delivered to Landlord within the
ninety- (90-) day cure period specified in Section 10.3.2(a)(ii) Permitted Lender's written
commitment (in form acceptable to Landlord in its sole discretion) to use diligent efforts to cure
(or to cause Tenant to cure) such Event of Default with due diligence upon obtaining
possession of the Premises (or, in the case of a Permitted Mezzanine Lender, control of
Tenant) through foreclosure or otherwise, then the Permitted Lender shall have such additional
time (but in no event to exceed two hundred and seventy (270) days from the date of obtaining
possession of the Premises) as is reasonably necessary to cure (or to cause Tenant to cure)
such Event of Default, but only if the Permitted Lender: (i) unless judicially stayed, commences
the judicial or other foreclosure of the Permitted Encumbrance within ninety (90) days from
receipt of written notice of the occurrence of an Event of Default under this Lease;
(ii) prosecutes said foreclosure with due diligence; and (iii) cures, during said period, all
monetary Events of Default and, during the period of said stay and/or foreclosure, continues to
pay and perform during said period of stay and/or foreclosure all other monetary obligations of
Tenant in a timely manner, including, without limitation, payment of all Rent, taxes,
assessments, utility charges, insurance premiums and all other amounts required to be paid by
Tenant under this Lease. Notwithstanding anything herein to the contrary, nothing herein shall
require a Permitted Lender who has taken possession of the Premises or, in the case of an
Equity Collateral Enforcement Action, control of Tenant, to cure any non-monetary default that,
by its nature, is not capable of being cured by the Permitted Lender, such as a Bankruptcy
Event (an "Incurable Default"). All such Incurable Defaults shall be deemed to be permanently
waived following the Permitted Lender's taking possession of the Premises or, in the case of an
Equity Collateral Enforcement Action, control of Tenant. All monetary obligations and non-
monetary obligations that are not Incurable Defaults shall still be performed as required under
this Lease, subject to the extended cure periods set forth in this Section 10.3.2. In no event
shall Tenant's waste or nuisance be an Incurable Default.
(c) No Termination by Landlord. Landlord shall not terminate this Lease by
reason of an Event of Default if Landlord has failed to comply with its obligations under Section
10.3 or if the Permitted Lender (i) has cured all Events of Defaults under the Lease in the
payment of Rent within the time frames provided in Section 10.3.2(a)(i) above, and/or (ii) has
cured all other Events of Default within the time frames provided in Sections 10.3.2(a)(ii) and
10.3.2(b) above, other than any Incurable Default.
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(d) New Lease. In the event of any termination of this Lease by reason of a
surrender, cancellation, or termination by Tenant, or as a result of the rejection or disaffirmance
of this Lease pursuant to bankruptcy law or other Law affecting creditors rights, or as a result of
a termination of this Lease by Landlord in violation of Section 10.3.2(c) above, then Landlord
shall deliver notice to each Permitted Lender that the Lease has been terminated or rejected,
as applicable. The notice shall include a statement of all amounts that would be due under this
Lease but for the termination hereof and all other Events of Default then known to Landlord.
The Permitted Mortgage Lender (a "New Tenant") shall then have the option, to be exercised
within sixty (60) days following receipt of such notice of termination or rejection, as applicable,
to enter into a new lease ("New Lease") with Landlord and, if Permitted Mortgage Lender does
not exercise such option within such sixty- (60-) day period, then the Permitted Mezzanine
Lender shall have the option, to be exercised no later than seventy-five (75) days following
receipt of such notice of termination, to enter into a New Lease with Landlord, in each case, on
the following terms and conditions:
(i) The New Lease shall commence as of the date of the
termination of this Lease and shall be for the remainder of the Term, and at the Rent,
terms, covenants, and conditions as this Lease.
(ii) Upon execution of the New Lease, the New Tenant shall
pay any and all sums that would at the time of execution thereof be due under this Lease,
but for termination, and shall pay all expenses, costs, attorneys' fees, court costs, and
disbursements incurred by Landlord in connection with any default and termination of this
Lease, recovery of possession of the Premises, and the execution, preparation and delivery
of the New Lease.
(iii) Upon execution of the New Lease, the New Tenant shall
cure all other defaults under this Lease, which have not yet been cured (other than any
Incurable Default), with due diligence in a timely manner in accordance with the cure
periods under the Lease assuming such cure periods commence with the execution of the
New Lease and without additional notice.
(iv) Nothing herein shall be construed to require Landlord to
deliver possession of the Premises to the New Tenant. Upon execution and delivery of the
New Lease, the New Tenant may take any and all appropriate actions as may be
necessary to remove parties in possession from the Premises. Landlord shall not grant any
real property interest in the Premises during the sixty (60) day period, or seventy-five (75)
day period, as applicable set forth in Section 10.3.2(d).
During such sixty (60) day period and thereafter if Permitted Lender timely accepts such offer of
a New Lease until the termination or expiration of such New Lease, ownership of the
Improvements (excluding the Convention Center for so long as the Convention Center is subject
to public financing including any associated leases or subleases) shall not vest in Landlord, and
the Permitted Lender's lien in and to the Improvements shall continue unaffected by the
termination of this Lease.
Should the Permitted Lender fail to accept said offer for such New Lease in
writing within said sixty (60) day or seventy-five (75) day period, as applicable, or, having so
accepted said offer, should it fail promptly to execute the New Lease or satisfy the requirements
of clauses (ii) and (iii) above in a timely manner, then the termination of this Lease shall be
effective as to all of the Permitted Lenders and the Permitted Lenders shall have no further
rights hereunder, except for any rights that may continue to exist for the Permitted Equity
Lender pursuant to Section 10.3.2(d).
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10.3.3 Loan Default.
If a Permitted Encumbrance is in default at any time, then the Permitted Lender shall, as
provided by Law, have the right, without Landlord's prior consent, to:
(a) In the case of a Permitted Mortgage Lender, accept an Assignment of this
Lease in lieu of foreclosure or, in the case of a Permitted Equity Encumbrance, accept an
assignment of its equity collateral resulting from an Equity Collateral Enforcement Action; or
(b) In the case of a Permitted Mortgage Lender, cause a foreclosure sale to
be held pursuant to either judicial proceedings, power of sale and/or foreclosure proceedings
as provided in its Permitted Lease Encumbrance;
provided, however, that no Assignment to the successful bidder (a "Foreclosure Purchaser")
that is not the Permitted Mortgage Lender shall be effective without Landlord's prior written
consent in accordance with Section 10.4 below.
10.3.4 Assume Lease Obligations.
Notwithstanding anything in this Lease to the contrary, before the Permitted Lender, or
any Foreclosure Purchaser, acquires the leasehold interest, it shall (a) in the case of the
acquisition in connection with a Permitted Mortgage Encumbrance and as an express condition
precedent thereto, agree in writing to be bound by all provisions of, and assume each and every
obligation of Tenant, under this Lease and (ii) in the case of an Equity Collateral Enforcement
Action, cause Tenant to reaffirm, in writing, promptly after the Equity Collateral Enforcement
Action, its obligations under this Lease; provided, however, that under no circumstance shall
such Permitted Lender or such Foreclosure Purchaser have any liability hereunder unless and
until it becomes Tenant under this Lease. Notwithstanding the foregoing, nothing in this Section
10.3.4 shall limit the liability of a Permitted Lender caused by Permitted Lender's attempt to cure
a non-monetary Event of Default. A Permitted Lender that has: (i) acquired the leasehold
interest and assumed the Tenant's obligations, or (ii) entered into a New Lease pursuant to
Section 10.3.2(d) above, shall be released from all obligations under this Lease first arising after
the effective date of the assignment and assumption of the leasehold interest to an assignee
consented to by Landlord, in accordance with Section 10.4.
10.4 Landlord's Consent to Assignment or Transfer.
10.4.1 Landlord's Consent to Assignment
Landlord's prior written consent shall be required for the following: (a) an Assignment to
a Foreclosure Purchaser that is not the Permitted Mortgage Lender, or (b) an Assignment by the
Permitted Lender should the Permitted Lender become the tenant by reason of: (i) being the
successful bidder upon said foreclosure, (ii) an assignment in lieu of foreclosure, or (iii) a New
Lease entered into pursuant to Section 10.3.2(d) above. Landlord shall provide its response to
Tenant's request for consent to the Assignment within sixty (60) days following Landlord's
receipt of Tenant's request and all information reasonably requested by Landlord from Tenant.
Landlord will grant such consent if in Landlord's reasonable determination the following items
have been satisfied:
(a) The assignee is reputable (which shall mean the absence of reputations
for dishonesty, criminal conduct, or association with criminal elements — "reputable" shall not
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mean "prestigious", nor shall the determination of whether one is reputable involve
considerations of personal taste or preference) and has no history of, or reputation for, either
discriminatory employment practices which violate any Laws or non-compliance with applicable
Environmental Laws;
(b) The assignee shall satisfy the subsections 11.5.3(a) (Sufficient
Experience), (b) (Consistent Use), (d)(Reputation), (e) (Public Financing), (f) (Hotel Brand), (g)
(Default), and (i) (Completion Guaranty) of this Lease.
(c) The assignee agrees in writing to assume each and every obligation of
the Tenant under this Lease or the New Lease, as the case may be, pursuant to a form of
assignment and assumption agreement that has been approved by Landlord; and
(d) The assignee agrees in writing to cure all uncured defaults with due
diligence in a timely manner arising under this Lease or the New Lease (including any uncured
defaults under this Lease even if replaced by the New Lease), other than any Incurable
Default.
No such assignee shall subsequently: (i) assign this Lease, or sublease any or all of the
Premises or the Improvements without Landlord's prior written consent, in accordance with
Article 11 herein; or (ii) encumber this Lease, leasehold interest, equity interests of Tenant, the
Premises or the Improvements thereon without Landlord's prior written consent, in accordance
with this Article 10.
10.4.2 Basis for Decision
The burden of producing evidence and the burden of proof showing Landlord that a
prospective assignee meets each and all of the aforesaid qualifications and standards shall be
on said Permitted Lender. Landlord's decision shall be based upon Landlord's high duty of care
in administering a valuable public resource, which it holds in trust for the people of the State of
California. In the absence of fraud or arbitrary action in applying or failing to apply said
standards, Landlord's decision shall be final.
10.4.3 If Landlord Rejects Lease Transferee
(a) Arbitration. In the event Landlord rejects: a proposed assignee of the
Permitted Lender (the "Rejected Transferee," and said proposed assignee being sometimes
referred to hereinafter as the "Applicant"), the sole remedy of the Applicant and Rejected
Transferee shall be to seek relief in the nature of specific performance through the arbitration
procedure hereinafter established and in no event shall Landlord be liable to the Rejected
Transferee or Applicant, or any Person whatsoever, for monetary damages. Notwithstanding
the foregoing, the Rejected Transferee shall be entitled to recover such monetary damages, if
any, it may sustain as a result of Landlord's failure or refusal to comply with a final, non-
appealable, Superior Court order confirming an award in favor of the Rejected Transferee in
said arbitration.
(b) Issue. The issue to be submitted to arbitration shall be whether the
BPC's record contains substantial evidence to support the decision to reject the Applicant in
accordance with the standards set forth in Sections 10.4.1 and 10.4.2 above. The Rejected
Transferee may submit said issue to arbitration.
(c) Arbitration Procedure. The arbitration shall be conducted pursuant to
Title 9 of Part 3 of the California Code of Civil Procedure (section references herein shall be to
the Code of Civil Procedure), as amplified and modified by the following provisions:
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(i) Arbitration shall be initiated by the Rejected Transferee filing a
written demand for arbitration with Landlord no later than thirty (30) days following
Landlord's adoption of a resolution rejecting the Applicant;
(ii)Said arbitration shall be conducted by a single neutral arbitrator;
(iii) If the parties have not agreed on the selection of the
arbitrator within five (5) days after said demand for arbitration is filed, either party may
petition the Superior Court of the State of California, County of San Diego, to select the
arbitrator pursuant to Section 1281.6;
(iv) Each party shall submit its nominees, if any, to the court
within five (5) days after said petition is served and filed;
(v)Said arbitrator shall not conduct a trial de novo, but shall consider
only said record before the BPC; provided, however, that said arbitrator may consider
evidence outside said record if the arbitrator believes that the BPC's decision was affected
by Landlord's fraudulent action which was not reasonably discoverable prior to the BPC's
decision;
(vi) Said arbitrator shall make the award in writing within forty-
five (45) days of being appointed;
(vii) The right of any party to take depositions for discovery
purposes, as provided in Section 1283.05, shall be waived;
(viii) Certain time periods established in said Title 9 shall be
shortened as follows:
(A) Sections 1284, 1288.4, 1290.2, and 1290.6--halved;
(B) Section 1288 -- four years to 30 days and 100 days to 15
days; and
(C) Section 1288.2--100 days to 15 days;
(ix) San Diego, California shall be the venue of the arbitration
hearing and any court proceedings;
(x)The decision of the Superior Court in any proceeding to confirm,
correct, or vacate the award shall be final, and the parties to said arbitration waive any
rights to appeal therefrom, as provided in Sections 1294 and 1294.2, or otherwise; and
(xi) The parties shall bear their costs, fees, and expenses
incurred in connection with said arbitration, in accordance with the provisions of
Section 1284.2.
10.4.4 Notice of Foreclosure Sale.
Permitted Lender shall include a statement in any notice of foreclosure sale covering the
requirements under Section 10.4 for Landlord's consent to an Assignment upon said
foreclosure.
10.4.5 Cancellation; Surrender; Modification; Amendment.
So long as a Permitted Encumbrance remains outstanding, Landlord shall not consent to
any amendment of this Lease that is not consented to in writing by each Permitted Mortgage
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Lender with an outstanding Permitted Lease Encumbrance of which Landlord has received
notice.
10.5 Subordination, Non-Disturbance and Attornment Agreement.
Prior to or on the Commencement Date, (a) Landlord and each Permitted Mortgage Lender
shall enter into a subordination, non-disturbance and attornment agreement substantially in the
form of Exhibit "P-1" attached hereto and (b) Landlord and each Permitted Mezzanine Lender
shall enter into a subordination, non-disturbance and attornment agreement substantially in the
form of Exhibit "P-2" attached hereto.[Subject to Review]
10.6 Miscellaneous.
10.6.1 Estoppel Statements.
Upon not less than fifteen (15) Business Days' notice by Tenant , Landlord shall
execute, acknowledge and deliver to Tenant, or if requested by Tenant in writing, such
Permitted Lender or such prospective qualified Permitted Lender, as applicable, an estoppel
statement in substantially the form of Exhibit"H" attached hereto without any material changes.
10.6.2 Completion of Initial Project Improvements.
If any Foreclosure Purchaser acquires the leasehold interest before the date when the
Initial Project Improvements are Completed, such Foreclosure Purchaser shall have the right,
but no obligation, to Complete any of the Initial Project Improvements. If such Foreclosure
Purchaser elects to Complete any of the Initial Project Improvements ("Initial Project
Improvements Completion Election"), then such Foreclosure Purchaser shall notify Landlord
thereof no later than ninety (90) days after acquiring the leasehold interest ("Initial Project
Improvements Completion Election Notice"). If such Foreclosure Purchaser does not
provide an Initial Project Improvements Completion Election Notice in accordance with this
Section 10.6.2, then Landlord shall have the right to terminate this Lease by giving such
Foreclosure Purchaser written notice thereof and such Foreclosure Purchaser shall have no
liability for any failure to Complete any of the Initial Project Improvements. If such Foreclosure
Purchaser provides an Initial Project Improvements Completion Election Notice in accordance
with this Section 10.6.2, then Landlord shall negotiate in good faith with such Foreclosure
Purchaser to set a new commercially reasonable timetable for Completion of the applicable
Initial Project Improvements ("New Initial Project Improvements Completion Timetable") (for
the avoidance of doubt, the new date of Completion of the applicable Initial Project
Improvements ("New Outside Construction Completion Date") may be later than the Outside
Construction Completion Date set forth in Section 1.8(b)), based on the facts in existence at the
time of the applicable foreclosure or action in lieu of foreclosure, as applicable. Once Landlord
and such Foreclosure Purchaser agree on a New Initial Project Improvements Completion
Timetable, then such Foreclosure Purchaser shall Complete the applicable Initial Project
Improvements in accordance with such New Initial Project Improvements Completion Timetable
and such Foreclosure Purchaser shall pay Construction Late Charges in accordance with
Section 6.1 only if and to the extent that any of the applicable Initial Project Improvements are
not Completed by the New Outside Construction Completion Date. For the avoidance of
doubt, nothing in this Section 10.6.2 shall be construed as limiting Landlord's right to recover
from the original Tenant Construction Late Charges based on the original Outside Construction
Completion Date.
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10.6.3 Amendments and Modifications to Loan Documents.
Notwithstanding anything to the contrary herein, Tenant and Permitted Lender shall have
the right to make any amendment or modification to any of the Loan Documents without
Landlord's consent if the amendment or modification (i) does not modify any material term of the
loan, including without limitation, the amount of the loan, maturity date, borrower or lender; (ii) is
consistent with the terms and conditions of Landlord's encumbrance approval; and (iii) Landlord
receives a copy of the amendment or modification within thirty (30) days after it has been
executed. Notwithstanding the foregoing, no Landlord consent shall be required for any
protective advances made by a Permitted Lender under and in compliance with the applicable
Loan Documents approved by Landlord.
11. SUBLEASE; ASSIGNMENT
11.1 Sublease.
11.1.1 Consent Required.
The Subleases for the Convention Center that are attached hereto as Exhibit U and
incorporated herein by reference ("Convention Center Subleases") have been consented to by
the Landlord in the form attached.
Subject to the terms of Sections 11.1 through 11.4 and except for (a) any Sublease that
is less than five thousand (5,000) square feet of the total square footage of the Project or (b)
any of the Convention Center Subleases, no Sublease shall be made or permitted without the
prior written consent of Landlord (which consent shall not be unreasonably withheld, conditioned
or delayed).
11.1.2 Request for Consent.
If a Sublease is proposed for which Landlord consent is required, Tenant shall notify
Landlord in writing, which notice (the "Sublease Notice") shall include (i) the proposed effective
date of the Sublease, which shall not be less than sixty (60) days and not more than one
hundred eighty (180) days after the date of delivery of the Sublease Notice, (ii) a narrative
description, with supporting documents, of the proposed Sublease, including without limitation,
the name of the subtenant, the term of the Sublease, the proposed use, the experience of the
subtenant, the organizational structure of the subtenant, and any additional information that
Landlord would require to evaluate the sublease based on the factors set forth in Section 11.1.3,
(iii) with respect to any Sublease that has a maximum total term of more than five (5) years, a
copy of the proposed sublease agreement, (vi) a statement of any current litigation or litigation
which was resolved within the prior five (5) years affecting the proposed Transferee and
(vii) such other information as Landlord may reasonably require. Any Sublease made without
Landlord's prior written consent shall, at Landlord's option, be null, void and of no effect undone
at Tenant's sole cost and expense and shall not be binding on Landlord. Tenant shall pay to
Landlord Landlord's standard applicable fee set by the BPC in connection with Landlord
reviewing and approving each Sublease for which Landlord's consent is required pursuant to
the Reimbursement Procedure, regardless of whether the Sublease is consummated or
Landlord's consent thereto is granted. Any Sublease shall be subject to the terms and
provisions of this Lease. Notwithstanding anything to the contrary in this Lease, if Tenant
claims that Landlord has unreasonably withheld, conditioned or delayed its consent under this
Section 11.1 or otherwise has breached or acted unreasonably under this Section 11.1 and, in
each case, Landlord demonstrates that it has acted reasonably under this Section 11.1, then
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Tenant's sole remedies shall be a declaratory judgment and an injunction for the relief sought
without any monetary damages, and Tenant hereby waives the provisions of Section 1995.310
of the California Civil Code, or any successor statute, and all other remedies. The burden of
producing evidence and the burden of proof showing Landlord that a prospective Subtenant
meets each and all of the aforesaid qualifications and standards shall be on the Tenant.
11.1.3 Consent Factors.
If Landlord consents to any Sublease, Tenant may within one hundred eighty (180) days
after the date of delivery of the Sublease Notice, enter into such Sublease; provided that, if
there is any material change to the financial condition of the Subtenant or any other material
change to any of the proposed terms or conditions of the Sublease as set forth or attached to
the Sublease Notice, then Tenant shall again submit a Sublease Notice to Landlord for its
approval and take all other action required under this Section 11.1.
Notwithstanding anything to the contrary herein, Landlord shall grant consent to any Sublease
that is required hereunder if all of the following conditions and requirements are satisfied:
(a) Consistent Use.
The Subtenant's proposed use of the Premises and the Improvements following the
proposed Sublease will be for the Permitted Use only or such proposed use as has been
approved by the Landlord or BPC, as applicable;
(b) Reputation.
The Subtenant is reputable (which shall mean the absence of reputations for dishonesty,
criminal conduct or association with criminal elements — "reputable" shall not mean
"prestigious", nor shall the determination of whether one is reputable involve considerations of
personal taste or preference) and has no history of, or reputation for, either discriminatory
employment practices which violate any applicable Laws or non-compliance with applicable
Environmental Laws;
(c) Financial Stability.
The Subtenant has sufficient financial resources for the Subtenant to perform its
obligations under the Sublease;
(d) Event of Default.
At the time of the delivery of the Sublease Notice and at the time of the execution of the
Sublease, there is no Event of Default;
(e) Public Financing.
The Sublease and Subtenant meet the criteria of any outstanding public financing issued
by the Landlord, City or the JEPA for or related to the Premises, the Phase 1A Infrastructure
Improvements or the Convention Center; provided that such criteria must be no more stringent
that the criteria that were in effect under the public financing that is outstanding as of the
Commencement Date; and
(f) Term.
The proposed Sublease will be for no longer than the remainder of the Term.
11.1.4 Effect of Sublease.
If Landlord consents to a Sublease, (i) the terms and conditions of this Lease shall in no
way be deemed to have been waived or modified, (ii) such consent shall not be deemed
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consent to any further Sublease by either Tenant or a Subtenant, and (iii) Tenant shall deliver to
Landlord, within ten (10) days after execution, an original executed copy of all documentation
pertaining to the Sublease, and any document evidencing a Sublease shall be in form
acceptable to Landlord.
11.1.5 Conditions.
In the event Landlord consents to any Sublease as required hereunder, then at
Landlord's election said consent shall be conditioned upon the following: (i) in the case of a
Subtenant under a Sublease of all or substantially all of the Premises and the Improvements,
such Subtenant shall agree to be bound by all provisions, and assume each and every
obligation, under this Lease (including those obligations arising or pertaining to periods prior to
the effective date of the Sublease), or, in the case of a Subtenant under a Sublease of less than
all or substantially all of the Premises and the Improvements, such Subtenant shall execute a
document reasonably acceptable to Landlord acknowledging that all rights of the Subtenant are
subject to all terms and conditions of this Lease as the same relate to the space subject to the
Sublease; and (ii) the Subtenant shall execute an attornment agreement as provided in
Section 11.2 below.
11.2 Subtenant Attornment.
Every Sublease hereunder is subject to the express condition, and by accepting a Sublease
hereunder each Subtenant shall be conclusively deemed to have agreed, that if this Lease
terminates or if Landlord succeeds to Tenant's estate in the Premises, the Subtenant shall, at
the option of Landlord, attorn to and recognize Landlord as the Subtenant's landlord under the
Sublease, provided that Landlord shall not (i) be liable for any act or omission or negligence of
Tenant, (ii) be subject to any counterclaim, offset or defense which theretofore accrued to such
Subtenant against Tenant, (iii) be bound by any payment of Rent or other sums of money for
more than one (1) month in advance or any security deposit (unless actually received by
Landlord), (iv) be obligated to perform any work in the sublet space, (v) in the event of a
casualty, be obligated to repair or restore Improvements, (vi) in the event of a partial Taking, be
obligated to repair or restore Improvements, (vii) be obligated to make any payment to such
Subtenant, or (viii) be bound by any obligations that Landlord lacks the capacity to perform;
provided, however, that, in the case of clause (v) and (vi), if Landlord determines in its sole and
absolute discretion that the casualty or partial Taking, as the case may be, does not allow
Subtenant to reasonably and economically use the remainder of the Improvements subject to its
Sublease for the Permitted Use of the Sublease, and in the case of clause (v), Subtenant does
not have an obligation to rebuild under the Sublease or did not receive insurance proceeds from
the casualty or in the case of clause (vi), Subtenant did not receive proceeds from
condemnation, then Landlord may elect to allow Subtenant to terminate the applicable
Sublease. Any Subtenant shall promptly execute and deliver any instrument that Landlord may
reasonably request to evidence such attornment. Upon early termination of this Lease, Tenant
shall pay over to Landlord all sums held by Tenant for the benefit of Subtenants or as security
under the provisions of the existing Subleases. In addition, at Tenant's request, Landlord may
agree, in its sole and absolute discretion and without obligation and without liability to the
Landlord, to negotiate a non-disturbance agreement with a Subtenant with a Sublease in excess
of 50% of the Project if Landlord has previously approved the Sublease in writing to such
Subtenant pursuant to which such non-disturbance agreement Landlord would agree not to
disturb the possession of such Subtenant in the event this Lease is terminated.
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11.3 Sublease Rent Requirements.
Subject to the terms of any Permitted Encumbrance, each Sublease shall require the Subtenant
thereunder to make all payments of rent and other sums of money that are owed under the
applicable Sublease to Landlord during the existence of an Event of Default and following
written notice of the same from Landlord, and Landlord shall apply said payments made to all
Rent that is due and payable to Landlord pursuant to this Lease, and any remaining amounts
will be held and applied to future Rent payable under this Lease.
11.4 Reporting of Sublease Information.
If Tenant has entered into any Subleases, then, within thirty (30) days of request from Landlord
and within sixty (60) days after the end of each calendar year, Tenant shall submit to Landlord a
rent roll in the form of Exhibit "G" attached hereto containing the information described therein
for each Sublease then in effect, along with a site plan showing locations of any Subleases.
11.5 Assignment.
11.5.1 Consent Required.
Subject to the terms of this Section 11.5 and except for any Assignment to a Foreclosure
Purchaser that is a Permitted Lender, no Assignment or Change of Control of Tenant
(collectively, "Transfer") shall be made or permitted without, in each instance, the prior written
consent of Landlord (which consent shall not be unreasonably withheld, conditioned or
delayed). Consents to Assignment to a Foreclosure Purchaser are addressed in Section 10.4.
It is mutually agreed that Landlord is a Governmental Authority holding title to the Premises in
trust for the citizens of the State of California and acting as a prudent steward of the Premises
and that the personal qualifications of the parties Controlling Tenant are a part of the
consideration for granting this Lease. As such, a Change of Control is as relevant to Landlord
as an Assignment. No Transfer is allowed prior to the date that the Initial Project Improvements
are Completed and Landlord has received a copy of the final certificate of occupancy.
11.5.2 Request for Consent.
If a Transfer is proposed for which Landlord consent is required, Tenant shall notify
Landlord in writing, which notice (the "Transfer Notice") shall include (i) the proposed effective
date of the Transfer, which shall not be less than ninety (90) days and not more than one
hundred eighty (180) days after the date of delivery of the Transfer Notice, (ii) narrative
description, with supporting documents, of the proposed Transfer, including without limitation,
the name of the Transferee, the proposed use, the experience of the Transferee, the
organizational structure of the Transferee, and any additional information that Landlord would
require to evaluate the Transfer based on the factors set forth in Section 11.5.3, (iii) all of the
terms of the proposed Transfer, including without limitation, any proposed encumbrances, and,
with respect to an Assignment, the name and address of the proposed assignee or, with respect
to a Change of Control of Tenant, the name and address of the Person(s) acquiring an interest
resulting in a Change of Control of Tenant (each such assignee, or Person acquiring an interest
resulting in a Change of Control of Tenant, a "Transferee"), and, with respect to a Change of
Control of Tenant, a complete description of the direct and indirect ownership and Control of
Tenant immediately before and immediately after the Transfer in writing and depicted in an
organizational chart and a copy of all existing and/or proposed documentation pertaining to the
proposed Transfer, including all existing and proposed operative documents to be executed to
evidence such Transfer and the agreements incidental or related to such Transfer, which shall
at a minimum include, organizational documents, and, with respect to an Assignment, a
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complete description of the direct and indirect ownership and Control of the proposed assignee
in writing and depicted in an organizational chart, (iii) a statement of any current litigation or
litigation which was resolved within the prior five (5) years affecting the proposed Transferee,
(iv) in the case of an Assignment only, financial statements of the proposed Transferee as of the
end of the most recent calendar quarter that ended at least one hundred fifty (150) days before
the date of submission that are certified by a reputable, certified public accountant or certified
under penalty of perjury on behalf of the proposed Transferee as being prepared in accordance
with GAAP by a Person that is authorized to execute such financial statements on behalf of the
proposed Transferee, as applicable (which shall be audited if that is the customary practice of
the Transferee), and (v) such other information as Landlord may reasonably require. Any
Assignment made without Landlord's prior written consent shall, at Landlord's option, be null,
void and of no effect, undone at Tenant's sole cost and expense and shall not be binding on
Landlord. Tenant shall pay to Landlord Landlord's standard applicable fee set by the BPC Policy
No. 106, or its equivalent, in connection with Landlord reviewing each Transfer for which
Landlord consent is required pursuant to the Reimbursement Procedure, regardless of whether
the Transfer is consummated or Landlord's consent thereto is granted. Any Transfer shall be
subject to the terms and provisions of this Lease. Notwithstanding anything to the contrary in
this Lease, if Tenant claims that Landlord has unreasonably withheld, conditioned or delayed its
consent under this Section 11.5 or otherwise has breached or acted unreasonably under this
Section 11.5, then Tenant's sole remedies shall be a declaratory judgment and an injunction for
the relief sought without any monetary damages, and Tenant hereby waives the provisions of
Section 1995.310 of the California Civil Code, or any successor statute, and all other remedies.
The burden of producing evidence and the burden of proof showing Landlord that a prospective
Transferee meets each and all of the aforesaid qualifications and standards shall be on the
Tenant.
11.5.3 Consent Factors.
If Landlord consents to any Transfer, Tenant may within one hundred eighty (180) days
after the date of delivery of the Transfer Notice, enter into such Transfer, upon the same terms
and conditions as set forth in the Transfer Notice furnished by Tenant to Landlord; provided that,
if there is any material change to the financial condition of the Transferee or any other material
change to any of the proposed terms or conditions of the Transfer as set forth or attached to the
Transfer Notice, then Tenant shall again submit a Transfer Notice to Landlord for its approval
and take all other action required under this Section 11.5.
Notwithstanding anything to the contrary herein, Landlord shall grant consent to any Transfer
that is required hereunder if all of the following conditions and requirements are satisfied (it
being understood that for the purposes of this Section 11.5.3 and Section 11.5.5, in the case of
a Change of Control, references to "Transferee" shall mean the Person that Controls the
Tenant following the Change of Control):
(a) Sufficient Experience.
The Transferee has at least ten (10) years of experience (directly or through one or more
of its subsidiaries) owning or managing hotels that have at least 500 rooms and meeting space
comparable to the Meeting Space (or retains a manager with such qualifications);;
(b) Consistent Use.
The Transferee's proposed use of the Premises and the Improvements following the
proposed Transfer will be for the Permitted Use only or such proposed use as has been
approved by the Landlord or BPC, as applicable;
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(c) Initial Project Improvements Are Complete and a copy of the Final
Certificate of Occupancy has been received by Landlord.
The Transfer is to occur after the date the Initial Project Improvements are Completed
and a copy of the final certificate of occupancy has been received by Landlord; provided that
this clause (c) shall not apply if such Transfer is (i) in connection with any foreclosure on the
Permitted Encumbrance or any action in lieu of foreclosure to a Foreclosure Purchaser that is a
Permitted Lender or (ii) the immediately subsequent Transfer by such Foreclosure Purchaser
that is a Permitted Lender to any other Person, and in either (i) or (ii), the Foreclosure
Purchaser or immediately subsequent purchaser agree in writing to complete the Initial Project
Improvements and the Completion Guarantor(s) deliver a written acknowledgment to Landlord,
in a form acceptable to Landlord, consenting to the Assignment and reaffirming the obligations
of the Completion Guarantor(s) under the Completion Guaranty.
(d) Reputation.
The Transferee is reputable (which shall mean the absence of reputations for
dishonesty, criminal conduct or association with criminal elements — "reputable" shall not mean
"prestigious", nor shall the determination of whether one is reputable involve considerations of
personal taste or preference) and has no history of, or reputation for, either discriminatory
employment practices which violate any applicable Laws or non-compliance with applicable
Environmental Laws;
(e) Public Financing.
The Transfer and Transferee meet the criteria of any outstanding public financing issued
by the Landlord, City or JEPA for or related to the Premises, the Phase 1A Infrastructure
Improvements or the Convention Center; provided that such criteria must be no more stringent
that the criteria that were in effect under the public financing that is outstanding as of the
Commencement Date;
(f) Hotel Brand.
The Transferee's proposed hotel brand will be in compliance with the Permitted Use;
provided that if the Transfer is prior to the third (3rd) anniversary of the Completion of the Initial
Project Improvements, the Landlord may disapprove of the Transfer on the grounds that the
hotel brand will not be Gaylord Hotels brand;
(g) Default.
At the time of request or Transfer, there is no Event of Default under this Lease
or any other lease between Landlord and Tenant or an entity that is Controlled by or under
common Control with Tenant or which Controls Tenant;
(h) Assignment and Assumption Agreement.
In the case of an Assignment, the Transferee shall be irrevocably committed to
assume all of the obligations of Tenant on and after the effective date of the Transfer pursuant
to a form of Assignment and Assumption Agreement that has been approved by Landlord.
11.5.4 Effect of Transfer.
If Landlord consents to a Transfer, (i) the terms and conditions of this Lease shall in no
way be deemed to have been waived or modified, (ii) such consent shall not be deemed
consent to any further Transfer by either Tenant or a Transferee, and (iii) Tenant shall deliver to
Landlord, within one hundred and eighty (180) days after Landlord's consent, an original
executed copy of all documentation pertaining to the Transfer, including any documents set
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forth in Section 11.5.3, in a form acceptable to Landlord. In the case of an Assignment of this
Lease only, that complies with the terms of this Section 11.5, upon Landlord's receipt of the
items set forth in (iii) above in a form acceptable to Landlord to relieve Tenant (but not the
Completion Guarantor(s) from any liability under this Lease for periods after the effective date of
such Transfer.
11.5.5 Conditions.
In the event Landlord consents to any Assignment as required hereunder, then said
consent shall be conditioned upon (i) the assignee agreeing in writing to be bound by all
provisions, and assuming each and every obligation, under this Lease (including those
obligations arising or pertaining to periods prior to the effective date of the Assignment) through
an assignment and assumption agreement in a form acceptable to Landlord and executed and
delivered to Landlord pursuant to Section 11.5.4; and (ii) the Completion Guarantor(s) (if
applicable) delivering a written acknowledgement, in a form acceptable to Landlord, consenting
to the Assignment and reaffirming their obligations under the Completion Guaranty. Without
limiting the generality of the foregoing, any assignee shall be obligated for the payment to
Landlord of any underpayment of Rent determined to be due under Section 5.4.3(e) above,
together with the cost of the audit, if applicable, notwithstanding that such underpayment of
Rent, and related audit, pertains to a period of time prior to the effective date of the Assignment.
11.6 Landlord Participation Fee.
Upon each (a) Assignment of this Lease pursuant to Section 11.5, (b) a change in the
composition of the direct or indirect ownership of Tenant, and (c) Sublease of all or substantially
all of the Premises and the Improvements, Tenant shall pay to Landlord a fee (the "Assignment
Participation Fee") in an amount equal to one percent (11%) of the Assignment Proceeds of
such transaction; provided, however, that Tenant shall not pay the Assignment Participation Fee
(i) if one or more of the original members of Tenant (as of the time of Completion of the Initial
Project Improvements and Landlord's receipt of a copy of the final certificate of occupancy),
collectively, directly or indirectly, owns at least a ten percent (10%) ownership interest in the
Project Improvements, (ii) in the case of any Transfer in connection with any foreclosure on the
Permitted Encumbrance or any action in lieu of foreclosure to a Foreclosure Purchaser that is a
Permitted Lender or the immediately subsequent Transfer by such Foreclosure Purchaser that
is a Permitted Lender to any other Person consented to by Landlord, (iii) in the case of a change
in the composition of the direct or indirect ownership of Tenant as a result of an Equity Collateral
Enforcement Action by a Permitted Mezzanine Lender or (iv) in the case of a change in the
composition of the direct or indirect ownership of Tenant resulting from a transfer of ownership
interests traded on a recognized public exchange, except in the case of a shareholder with a
direct or indirect interest of ten percent (10%) or more in Tenant. Prior to Landlord's consent to
any transaction subject to an Assignment Participation Fee, Tenant shall deliver to Landlord a
written statement showing the calculation of the Assignment Participation Fee owed to Landlord
from Tenant based on the terms of the transaction and an organizational chart showing all
Persons with a direct and indirect ownership interest in the Improvements prior to such
transaction and after such transaction. The statement of the calculation of the Assignment
Participation Fee shall contain such detail as may be reasonably requested by Landlord to verify
the calculation of the Assignment Participation Fee. The Assignment Participation Fee due to
Landlord shall be payable in full to Landlord concurrent with the completion of the transaction
and shall be a joint and several obligation of the transferee and transferor. When owed, the
Assignment Participation Fee shall constitute Additional Rent.
For the purposes of this Section 11.6, the term "Assignment Proceeds" shall mean the
purchase price or other consideration paid (either in cash or by an assumption of debt or other
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consideration and, if paid over time, the present value of the total consideration using the
discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%)) to the Tenant and/or holders of direct or indirect interests in Tenant in connection
with the subject transaction less the sum of(x) any reasonable prorations, closing costs or other
customary deductions to the purchase price for which the seller is responsible, (y) the certified
cost of designing, developing and constructing the Initial Project Improvements as of the time of
the Completion of the Initial Project Improvements and (z) one hundred (100) times the amount
of any Assignment Proceeds that have been previously paid to Landlord, which sum shall be
prorated in the case of an assignment of a portion of the Improvements.
Upon the request of Landlord from time to time (which request shall not be made more
frequently than once per year), except in the case of Completion of the Initial Project
Improvements, in which case Tenant shall deliver to Landlord such schedule, without request
from Landlord, within five (5) days of Completion of the Initial Project Improvements, Tenant
shall provide Landlord with a schedule listing the name and mailing address of each Person
holding at least ten percent (10%) of direct or indirect interests in Tenant. In the event that such
Person is a trust, Tenant shall include in such schedule the name and mailing address of each
trustee of said trust, together with the name and mailing address of each beneficiary of said
trust.
11.7 Permitted Lender and Foreclosure Purchasers.
The foregoing provisions of this Article 11 shall not apply to the Transfers which are governed
by Sections 10.3 and 10.4.
12. EVENTS OF DEFAULT AND REMEDIES
12.1 Events of Default.
The occurrence of any one (1) or more of the following events shall constitute an event of
default by Tenant hereunder (each, an "Event of Default'):
12.1.1 Abandonment.
"Abandonment" shall mean that either for thirty (30) consecutive days or longer, the
Hotel Operator does not operate a portion of the Project Improvements, except for temporary
closures permitted under Section 4.4 or as a result of an existing Force Majeure Event in
accordance with Section 6.5 that prevents Hotel Operator from being on the Premises or
operating a portion of the Project Improvements and Tenant does not cure such condition within
sixty (60) days after written notice thereof from Landlord.
12.1.2 Failure to Pay.
Failure by Tenant to pay, when due, any Rent, other payment, and/or charge that Tenant
is required to pay hereunder, where such failure continues for a period of five (5) days after
written notice thereof from Landlord; provided, however, that any notice provided under this
Section 12.1.2 shall be in lieu of, and not in addition to, any notice required under Section 1161
of the California Code of Civil Procedure, as amended.
12.1.3 Failure to Perform.
Failure by Tenant to perform any express or implied covenants or conditions in this
Lease (other than as provided in the other subsections of this Section 12.1), where such failure
continues for thirty (30) days after written notice thereof from Landlord; provided that, if the
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nature of such failure is such that the same cannot reasonably be cured within such thirty
(30) day period, and Tenant diligently commences such cure within such thirty (30) day period
and thereafter diligently proceeds to rectify and cure such failure, but in no event exceeding a
period of time in excess of one hundred and twenty (120) days after written notice thereof from
Landlord, then such failure shall not constitute an Event of Default.
12.1.4 Bankruptcy Event.
The occurrence of a Bankruptcy Event.
12.1.5 Specified Defaults.
The occurrence of any event expressly stated to constitute an Event of Default under
this Lease.
12.2 Remedies.
Upon any Event of Default, Landlord may, in addition to all other rights and remedies afforded to
Landlord hereunder or by law or in equity, take any one or more of the following actions:
12.2.1 Termination of Lease.
Terminate this Lease by giving Tenant written notice thereof, in which event Tenant shall
immediately surrender the Premises to Landlord. In the event that Landlord shall elect to so
terminate this Lease, then Landlord may recover from Tenant:
(a) The worth at the time of award of any unpaid Rent which had been
earned at the time of such termination; plus
(b) The worth at the time of award of the amount by which the unpaid Rent
which would have been earned after such termination until the time of award exceeds the
amount of such Rent loss that Tenant proves could have been reasonably avoided; plus
(c) The worth at the time of award of the amount by which the unpaid Rent
for the balance of the Term after the time of award exceeds the amount of such Rent loss that
Tenant proves could be reasonably avoided; plus
(d) Any other amount necessary to compensate Landlord for all detriment
proximately caused by Tenant's failure to perform its obligations under this Lease or which in
the ordinary course of things would be likely to result therefrom, including, without limitation,
the cost of recovering possession of the Premises, expenses of reletting (including necessary
repair, renovation and alteration of the Premises), reasonable attorneys' fees, and any other
reasonable costs; plus
(e) At Landlord's election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by Law.
AS USED IN CLAUSES (A) AND (B) ABOVE, THE "WORTH AT THE TIME OF AWARD" IS
COMPUTED BY ALLOWING INTEREST AT THE DEFAULT RATE. AS USED IN CLAUSE (C)
ABOVE, THE "WORTH AT THE TIME OF AWARD" IS COMPUTED BY DISCOUNTING SUCH
AMOUNT AT THE DISCOUNT RATE OF THE FEDERAL RESERVE BANK OF SAN
FRANCISCO AT THE TIME OF AWARD PLUS ONE PERCENT (1%).
Failure by Landlord to enforce one or more of the remedies herein provided upon an Event of
Default shall not be deemed or construed to constitute a waiver of such Event of Default.
Tenant hereby waives for Tenant and for all those claiming under Tenant all rights now or
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hereafter existing to redeem by order or judgment of any court or by any legal process or writ,
Tenant's right of occupancy of the Premises after any termination of this Lease.
12.2.2 Continue Lease in Effect.
Exercise the remedy described in California Civil Code Section 1951.4 (Landlord may
continue this Lease in effect after Tenant's breach and abandonment and recover Rent as it
becomes due if Tenant has the right to sublet or assign this Lease, subject only to reasonable
limitations).
12.2.3 Perform Acts on Behalf of Tenant.
Perform any act that Tenant is obligated to perform under this Lease (and enter upon the
Premises in connection therewith if necessary) in Tenant's name and on Tenant's behalf,
without being liable for any claim for damages therefor, and Tenant shall reimburse Landlord on
demand for any expenses which Landlord may incur in thus effecting compliance with Tenant's
obligations under this Lease (including, but not limited to, collection costs and legal expenses),
plus interest thereon at the Default Rate.
12.2.4 Increased Security Deposit.
Notwithstanding anything to the contrary in Section 28.4, require Tenant to, in which
case Tenant shall, increase the security deposit with an amount equal to three (3) months of the
Minimum Annual Rent (which remedy may be exercised on more than one occasion with further
increases in the security deposit on any subsequent Event of Default); provided that Landlord
shall return such increased amount of the security deposit to Tenant on the first anniversary of
the date on which the applicable Event of Default ceased to exist upon request in writing from
Tenant except if another Event of Default currently exists.
12.2.5 Payment by Tenant.
Require Tenant to, in which case Tenant shall, pay to Landlord all costs incurred by
Landlord (including court costs and reasonable attorneys' fees and expenses and staff time) in:
(a) obtaining possession of the Premises; (b) removing and storing Tenant's or any other
occupant's property; (c) repairing, restoring, altering, remodeling, or otherwise putting the
Premises into condition acceptable to a new tenant; (d) performing Tenant's obligations which
Tenant failed to perform; and (e) enforcing, or advising Landlord of, its rights, remedies, and
recourses arising out of the Event of Default.
12.2.6 Assignment of Plans and Other Matters.
Require Tenant to, in which case Tenant shall, (i) at Tenant's sole cost and expense,
assign and transfer to Landlord all of Tenant's right, title and interest in and to all plans,
drawings, specifications, permits, approvals, warranties, entitlements, and other similar property
and instruments relating to the Premises, free and clear of liens and claims by third parties, in
connection with and (ii) execute and deliver to Landlord, within five (5) Business Days of
Landlord's request, in a form provided by and acceptable to Landlord, an instrument confirming
the Assignment and transfer of such property and interests to Landlord and, within such five
(5) Business Day period, to deliver the originals of such plans, drawings, specifications, permits,
approvals, warranties, entitlements, and other similar property and instruments relating to the
Premises to Landlord. Tenant agrees to reasonably cooperate with Landlord at no cost or
expense to Landlord in seeking any consent from the preparer of any plans, drawings,
specifications, permits, approvals, warranties, entitlements, and other similar property and
instruments relating to the Premises, which may be required for Landlord to rely on such plans,
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drawings, specifications, permits, approvals, warranties, entitlements, and other similar property
and instruments relating to the Premises.
13. BANKRUPTCY
13.1 Bankruptcy Event.
Upon occurrence of a Bankruptcy Event, Landlord shall have all rights and remedies available
pursuant to Article 12. After the commencement of a Bankruptcy case: (i) the Tenant shall
perform all post-petition obligations of Tenant under this Lease; and (ii) if Landlord is entitled to
damages (including unpaid Rent) from and after any order for relief pursuant to the terms of this
Lease, then all such damages shall be entitled to administrative expense priority pursuant to the
Bankruptcy Code. Tenant acknowledges that this Lease is a lease of nonresidential real
property and therefore Tenant, as the debtor in possession, or the trustee shall not seek or
request any extension of time to assume or reject this Lease or to perform any obligations of
this Lease which arise from or after the order of relief.
13.2 Assignment/Assumption.
13.2.1 General.
Any Person to which this Lease is assigned pursuant to the Bankruptcy Code shall be
deemed without further act or deed to have assumed all of the obligations arising under this
Lease on and after the date of Assignment, and any such assignee shall upon request by
Landlord execute and deliver to Landlord an instrument confirming such assumption in a form
acceptable to Landlord. If the Tenant desires to assume and assign this Lease under the
Bankruptcy Code to any Person who shall have made a bona fide offer, then the Tenant shall
give Landlord written notice of such proposed Assignment (which notice shall set forth the name
and address of such Person, all of the terms and conditions of such offer, and the adequate
assurance to be provided Landlord to assure such Person's future performance under this
Lease) prior to the date Tenant shall make application to the appropriate court for authority and
approval to enter into such Assignment and assumption. Landlord shall thereupon have the
prior right and option, to be exercised by notice to the Tenant given at any time prior to the
effective date of such proposed Assignment, to accept an Assignment of this Lease upon the
same terms and conditions and for the same consideration, if any, as the bona fide offer made
by such Person, less any brokerage commissions which may be payable out of the
consideration to be paid by such Person for the Assignment of this Lease. If the Tenant fails to
assume or assume and assign this Lease in accordance with the requirements of the
Bankruptcy Code within the period provided by the Bankruptcy Code or allowed by the
Bankruptcy Court, then the Lease shall be deemed rejected and the Landlord shall have all
rights and remedies available to it pursuant to Section 12.2.
13.2.2 Financial Statements.
At any time during the Term, upon not less than five (5) days' prior written notice, Tenant
shall provide Landlord with audited financial statements for Tenant for not less than the most
recent two (2) years (or such shorter period of time as Tenant has existed if less than two (2)
years) for which such financial statements have been created. Such statements are to be
certified by an authorized representative of Tenant to be a complete copy of the financial
statements of Tenant and to have been prepared in accordance with generally accepted
accounting principles and audited by any independent certified public accountant.
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13.3 Adequate Assurances.
In the event Tenant or proposed assignee under Section 13.2 proposes under the Bankruptcy
Code to cure any default under this Lease or to assume or assign this Lease and is obliged to
provide adequate assurance to Landlord that (a) a default shall be cured, (b) Landlord shall be
compensated for its damages arising from any breach of this Lease and (c)future performance
of Tenant's obligations under this Lease shall occur, then such adequate assurances shall
include all of the following, as designated by Landlord in its sole and absolute discretion:
(a) Those acts specified in the Bankruptcy Code or other applicable laws as
included within the meaning of"adequate assurance";
(b) A prompt cash payment to compensate Landlord for any monetary
defaults or actual damages arising directly from a breach of this Lease;
(c) A cash deposit in an amount at least equal to the then-current amount of
the security deposit; and
(d) The assumption or Assignment of all of Tenant's interest and obligations
under this Lease.
14. EMINENT DOMAIN
14.1 Eminent Domain.
If all or any portion of the Premises and the Improvements shall be condemned pursuant to
exercise of the power of eminent domain, or acquired under an actual threat of the exercise of
such power (collectively, "Condemnation"), then the rights and obligations of Landlord and
Tenant with respect thereto shall be as set forth in this Article 14. Nothing in this Article 14 shall
be interpreted to prevent Landlord from exercising its power of eminent domain as to Tenant's
leasehold interest, Premises and/or the Improvements.
14.2 Notice of Condemnation.
If either Party receives notice of any Condemnation or intended Condemnation (including,
without limitation, service of process), then, within five (5) Business Days of receipt thereof,
such Party shall deliver to the other Party an exact copy of such notice of any Condemnation or
intended Condemnation and the date such notice was received.
14.3 Representation of Interest.
Landlord and Tenant shall each have the right to represent its respective interests in such
proceeding or negotiation with respect to a Condemnation or intended Condemnation and to
make full proof of its claims. Landlord and Tenant each agrees to execute and deliver to the
other Party any instrument which may be required to effectuate or facilitate the provisions of this
Article 14.
14.4 Early Termination.
In the event of a Condemnation (other than a Temporary Condemnation) of all of the Premises,
all of the Improvements or such portion of the Premises or the Improvements so that Tenant
cannot reasonably and economically use the remainder of the Premises or the Improvements,
as applicable for the Permitted Use (as reasonably determined by Tenant and reasonably
approved by Landlord), this Lease shall then terminate as of the date of such Condemnation. A
termination of this Lease pursuant to this Section 14.4 shall act to relieve Tenant from any
further liability under this Lease except as to obligations accruing or arising on or prior to such
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termination or which are otherwise required to be performed in connection with such termination
or surrender of the Premises or which otherwise expressly survive such termination. Tenant
shall deliver the Premises to Landlord in the condition required for the surrender of the Premises
under this Lease.
14.5 Partial Condemnation.
If only a portion of the Premises or the Improvements is subject to Condemnation and this
Lease is not terminated pursuant to Section 14.4 above, then this Lease shall continue in full
force and effect upon the same terms and conditions as set forth herein, and the Minimum
Annual Rent shall be reduced in proportion to the reduction in the value of the Premises and/or
the Improvements, as applicable, after the Condemnation as compared to the value of the
Premises and/or the Improvements, as applicable, immediately prior to the Condemnation (as
reasonably determined by Landlord and approved by Tenant in its reasonable discretion).
14.6 Temporary Condemnation.
If the Premises, the Improvements or any portion thereof is subject to a Temporary
Condemnation, then this Lease shall continue in full force and effect and there shall be no
adjustment or abatement in Rent during the term of such Temporary Condemnation. Any
portion of an award, settlement or other compensation or damages which may be given for such
Temporary Condemnation attributable to the Term shall be the property of Tenant and any
portion attributable to any period following the expiration of the Term shall be the property of
Landlord. As used herein, a "Temporary Condemnation" shall mean any taking which is not
intended by the condemning authority to be permanent at the time such Condemnation initially
occurs.
14.7 Award.
14.7.1 Leasehold Award.
In the event of any Condemnation of all or any portion of the Premises or all or any
portion of the Improvements (other than a Temporary Condemnation), Landlord shall be entitled
to any and all awards and/or settlements or other compensation or damages which may be
given for (a) any "bonus value" respecting this Lease (which is the excess value of the
leasehold arising from the fact that the scheduled rent is less than the market rent for the
Premises and the Improvements), and (b) the land (and water, if applicable) comprising the
Premises. Any and all other awards and/or settlements or other compensation or damages
(collectively, "Leasehold Award") for the Improvements and the leasehold estate created by
this Lease (excluding any bonus value thereof) shall be paid as follows:
(a) Provided this Lease is not terminated pursuant to Section 14.4 above,
that portion of the Leasehold Award determined by Landlord to be reasonably necessary to
repair and restore the Premises and/or Improvements shall be payable in trust to the Permitted
Mortgage Lender that is a Financial Institution with the first Permitted Lease Encumbrance that
is outstanding, if any, and shall be disbursed for the payment of the costs of repairing and
restoring the remaining portion of the Premises and/or Improvements to substantially its value,
condition and character prior to such Condemnation to the extent the same may be practicable.
If there is no Permitted Mortgage Lender or if there is but the Permitted Mortgage Lender
declines to act as a trustee for the disbursement of funds as provided above, then such
Leasehold Award shall be payable in trust to a bank or trust company doing business in the
County of San Diego California agreed upon by the Parties, or if the Parties fail to agree, to
Bank of America, N.A., or its successor, and shall be disbursed by such trustee as provided
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above. If the Permitted Mortgage Lender is the trustee, then the Permitted Mortgage Lender
may disburse the progress payments in accordance with its normal loan disbursement
procedures (e.g. upon receipt of appropriate mechanics' lien releases, and invoices) so long as
such disbursement procedures are reasonably acceptable to Landlord and ensure that the
Leasehold Award is applied to the costs of repairing and restoring the remaining portion of the
Premises and Improvements.
(b) If this Lease is terminated pursuant to Section 14.4, or if there are excess
proceeds available after completion of the repair and restoration of the remaining portion of the
Premises and the Improvements as provided above, then any portion of the Leasehold Award
not used for the repair and restoration of the remaining portion of the Premises and the
Improvements pursuant to clause (a) above, or used to place the Premises and Improvements
in the condition required for the surrender of same to Landlord, shall be paid as follows (1) first,
to any Permitted Mortgage Lender, to the extent necessary to reduce the amount of
indebtedness that is secured by such Permitted Mortgage Lender's Permitted Encumbrance,
so that such indebtedness is in the same proportion to the value of the Premises and/or the
Improvements, as applicable, after the Condemnation as compared to the proportion of this
indebtedness to the value of the Premises and/or the Improvements, as applicable,
immediately prior to the Condemnation; (2) second, to the JEPA, if such condemnation occurs
while there is any public financing outstanding, to the extent necessary to reduce the amount of
the JEPA Development Cost Contribution, so that such JEPA Development Cost Contribution
is in the same proportion to the value of the Convention Center, as applicable, after the
Condemnation as compared to the proportion of the JEPA Development Cost Contribution to
the value of the Convention Center, immediately prior to the Condemnation; (3) third, to the
Landlord for the any loss to the value of the Premises; and (4) fourth, to the Tenant to reduce
the amount of Tenant's equity investment, so that such equity investment is in the same
proportion to the value of the Improvements (excluding the Convention Center for so long as
the Convention Center is subject to public financing including any associated leases or
subleases), after the Condemnation as compared to the proportion of Tenant's equity
investment to the value of the Improvements (excluding the Convention Center for so long as
the Convention Center is subject to public financing including any associated leases or
subleases), immediately prior to the Condemnation..
(c) Any portion of the Leasehold Award relating to the Project Improvements
(excluding the Convention Center for so long as the Convention Center is subject to public
financing including any associated leases or subleases) and not used as described in clauses
(a) and (b) and which is payable to Tenant pursuant to clause (b) shall be paid to the Permitted
Lender to be applied against the indebtedness that is secured by its Permitted Encumbrance to
the extent such payment is required to be made by Tenant pursuant to the terms of the
Permitted Encumbrance held by the Permitted Lender.
(d) Any remaining portion of the Leasehold Award relating to Project
Improvements (excluding the Convention Center for so long as the Convention Center is
subject to public financing including any associated leases or subleases) and not used as
described in clauses (a), (b) and (c) shall be paid to Tenant. Notwithstanding the foregoing
sentence, with respect to any Leasehold Award received in connection with any Condemnation
for street widening or the installation of utilities, public sidewalks or walkways which occurs at
any time following the Commencement Date, and provided such Condemnation does not result
in material physical damage to then existing buildings or driveways, parkway access or access
ways serving the Improvements and does not impair the use or operation of the Improvements,
Landlord shall be entitled to receive, in addition to any award otherwise payable to Landlord
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pursuant to this Article 14, all of that portion of the Leasehold Award that would otherwise be
distributed to Tenant pursuant to this clause (d).
14.7.2 Claims by Tenant.
Nothing in this Article 14 shall be construed to preclude Tenant from prosecuting any
claim directly against the condemning authority, but not against Landlord, if such claim does not
diminish or otherwise adversely affect the Leasehold Award or Landlord's rights herein.
Notwithstanding anything in this Article 14 to the contrary, Tenant shall not be entitled to any
funds, awards, rights, benefits or entitlement of any kind arising from or out of a Condemnation,
except so far as is designated for damage to Tenant's personal property, if the same occurs
during the period of any Event of Default or after Landlord has exercised any remedy referred
to in Section 12.2 above by reason of the Event of Default, or if the same occurs after Tenant
has exercised its right to terminate this Lease. Tenant shall be entitled to any award allocated
by a court of competent jurisdiction to Tenant's personal property.
15. MAINTENANCE AND REPAIR
15.1 Maintenance and Repair.
Tenant's maintenance and repair obligations with respect to the Parking Improvements (if any)
shall be as set forth in Section 4.3, and not this Article 15. Tenant shall, at its sole cost and
expense, and at all times during the Term, comply with the maintenance and repair standards
for the Premises and the Improvements set forth in the Hotel Management Agreement.
Tenant, at its sole cost and expense, shall also maintain, repair, replace and rebuild the
Premises and Improvements as necessary to keep the Improvements in first-class condition and
repair except for reasonable wear and tear. Without limitation of the foregoing, Tenant shall
perform all maintenance and make all repairs and replacements, ordinary as well as
extraordinary, foreseen or unforeseen, structural or otherwise, which may be necessary or
required so that all times the Premises and the Improvements (together will all equipment, trade
fixtures, mechanical and utility systems, paving, landscaping, installations and appurtenances)
shall be in compliance with the Hotel Management Agreement, and in first-class condition and
repair, except for reasonable wear and tear. Tenant acknowledges and agrees that, during the
Term, in order to adhere to these maintenance and repair standards, certain repairs and
replacements which are accounted for as capital expenditures shall be required and are
bargained for by Landlord as consideration for this Lease, and that regular capital reinvestment
in the Premises and the Improvements should therefore be anticipated by Tenant and that
capital reinvestment for such purposes does not qualify Tenant for any concessions, subsidies,
or other modifications of the Lease during the Term. Tenant also acknowledges that capital
expenditures related to maintenance and repair so as to keep or return the Improvements to
first-class condition and repair are not to be equated with capital expenditures for a major
refurbishment or renovation representing an upgrade to the appearance and/or operation of the
Improvements which extends its useful life and repositions the Improvements in a manner likely
to generate more Revenue. Further, Tenant shall provide containers for the collection of trash
and garbage outside the Improvements, which may require Landlord's approval, and keep the
Premises and the Improvements in a clean, safe, healthy and sanitary condition, free and clear
of rubbish, litter, and any fire hazards. Tenant's maintenance shall include, without limitation, all
preventive maintenance, painting and replacements necessary to maintain and preserve the
Premises and Improvements, and compliance with the Best Management Practices ("BMPs")
set forth in the Jurisdictional Runoff Management Program incorporated by reference in
Article 10 of the San Diego Unified Port District Code.
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Prior to Tenant performing any non-routine repair or replacement (which shall mean any repair
or replacement that does not occur with an expected or known frequency in the normal course
of business) to the exterior, the structure or building systems or which will substantially interfere
with the typical operation of the Improvements, or affect the portions of the Improvements that
are generally accessible to the public, such as the lobby area of the Resort Hotel, Tenant shall
submit to Landlord plans and specifications with respect to such repair or replacement, as
applicable, and receive Landlord's written approval thereof, pursuant to the procedures set forth
in Article 6, as if such repair or replacement, as applicable, were Alterations. If such approval is
administrative, Landlord shall not unreasonably reject any plans or specifications with respect to
any repair or replacement, as applicable, that if not performed by Tenant would result in an
Event of Default.
By entering into this Lease, Tenant expressly waives all rights to make repairs at the expense of
Landlord, as provided in Section 1942 of the California Civil Code, and all rights provided by
Section 1941 of the California Civil Code.
15.2 Condition in Compliance with Laws.
Tenant, at its sole cost and expense, shall keep the Premises and the Improvements (together
with all equipment, trade fixtures, mechanical and utility systems, paving, installations and
appurtenances) in full compliance with all Laws and the requirements of any insurer providing
insurance for the Premises and the Improvements or any part thereof.
15.3 Inspection Report.
Within sixty (60) days after notice from Landlord to Tenant requesting an Inspection Report,
which notice shall not be given more than once in any five- (5-) year period (unless Landlord
determines that Tenant may be in default of its obligations under this Article 15, in which event
such time limitation shall not apply), Tenant, at Tenant's sole expense, shall provide to Landlord
a detailed inspection report listing any known defects, required repairs or deferred maintenance
items in the Premises and the Improvements and recommendations for work to be performed to
ensure that the condition of the Premises and the Improvements is in full compliance with this
Lease, including the standard of condition set forth in Section 15.1 (the "Inspection Report"). If
Landlord requests an Inspection Report more than once in any Rental Period, then Landlord
shall pay Tenant for any reasonable costs incurred by Tenant in connection with such
Inspection Report unless such Inspection Report demonstrates that Tenant is in default of its
obligations under this Article 15. The Inspection Report shall be (i) prepared by an unrelated
third-party inspector licensed in the State of California selected by Tenant, (ii) certified to
Landlord, to the best knowledge of the Person conducting the inspection, as complete and
accurate, and (iii) in a form reasonably acceptable to Landlord. Without limitation of Tenant's
obligations or Landlord's remedies hereunder, Tenant shall commence work to comply with the
recommendations set forth in such Inspection Report within thirty (30) days of receipt of same
and diligently pursue such work to completion within not later than one hundred eighty
(180) days of receipt of such Inspection Report. As a condition precedent to Tenant submitting
the Redevelopment Plan Package, notwithstanding that Landlord may not have requested an
Inspection Report, Tenant shall deliver an Inspection Report not earlier than six (6) months prior
to the submission of the Redevelopment Plan Package and perform any work recommended
therein prior to submitting the Redevelopment Plan Package.
Notwithstanding the requirement in Section 15.3 that Tenant provide Landlord with an
Inspection Report within sixty (60) days after notice from Landlord , so long as there is no Event
of Default and the Premises and the Improvements are operated pursuant to a Hotel
Management Agreement under an Acceptable Brand, and such Hotel Management Agreement
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requires Tenant to maintain and repair the Premises and Improvements in accordance with
such Hotel Management Agreement and requires there to be established a reserve for repair
and maintenance of the Premises and Improvements, including without limitation, the furniture,
trade fixtures and equipment, and such repair and maintenance occur in accordance with the
requirements of such Hotel Management Agreement and Sections 15.1 and 15.2, then the
foregoing Inspection Reports shall not be required; provided, however, that the delivery of an
Inspection Report and performance of the work recommended therein shall continue to be a
condition precedent to Tenant's submission of the Redevelopment Plan Package.
15.4 Hotel Management Agreement.
15.4.1 Consent Required.
Subject to the terms of Section 15.4, any Hotel Management Agreement with a Person
other than Marriott as Hotel Operator shall be subject to prior written consent of Landlord (which
consent shall not be unreasonably withheld, conditioned or delayed).
15.4.2 Request for Consent.
15.4.3 If a Hotel Management Agreement is proposed for which Landlord
consent is required, Tenant shall notify Landlord in writing, which notice (the "Hotel
Management Agreement Notice") shall include (a) the proposed effective date of the Hotel
Management Agreement, which shall not be less than one hundred and eighty (180) days and
not more than one (1) year after the later of: (i) the date of delivery of the Hotel Management
Agreement Notice containing all of the information required in (b) and (c) and (ii) Landlord's
review of the original unredacted version of the proposed Hotel Management Agreement at
Landlord's office at 3165 Pacific Highway, San Diego, California, (b) a copy of the proposed
Hotel Management Agreement with all proprietary information contained therein redacted
together with a certificate from an authorized representative of Tenant certifying under penalty
of perjury that (i) the redacted version of the Hotel Management Agreement is a true, correct
and complete copy of the final proposed Hotel Management Agreement and no additions,
deletions, or revisions will be made to the Hotel Management Agreement; and (ii) Tenant is not
in default or in breach under the provisions of the Lease , and (c) such other information as
Landlord may reasonably require. Any Hotel Management Agreement executed without
Landlord's prior written consent shall, at Landlord's option, be null, void and of no effect and not
binding on Landlord. Tenant shall pay to Landlord Landlord's standard applicable fee set by
BPC Policy No. 106 for the review of subleases in connection with Landlord reviewing each
Hotel Management Agreement pursuant to the Reimbursement Procedure, regardless of
whether the Hotel Management Agreement is consummated or Landlord's consent thereto is
granted. Any Hotel Management Agreement shall be subject to the terms and provisions of this
Lease. Consent Factors.
If Landlord consents to any Hotel Management Agreement, Tenant may within one
hundred eighty (180) days after the date that is the later of: (i) the date of delivery of the Hotel
Management Agreement Notice containing all of the information required in (b) and (c) above
and (ii) Landlord's review of the original unredacted version of the proposed Hotel Management
Agreement at Landlord's office at 3165 Pacific Highway, San Diego, California, enter into such
Hotel Management Agreement; provided that, if there is any material change to the financial
condition of the proposed Hotel Operator or any other material change to any of the proposed
terms or conditions of the Hotel Management Agreement as reviewed by Landlord in person or
as set forth or attached to the Hotel Management Agreement Notice, then Tenant shall again
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submit a Hotel Management Agreement Notice to Landlord for its approval and take all other
action required under this Section 15.4.
Notwithstanding anything to the contrary herein, Landlord shall grant consent to any Hotel
Management Agreement that is required hereunder if all of the following conditions and
requirements are satisfied:
(a) Completion of Initial Project Improvements.
The effective date of the proposed Hotel Management Agreement is later than
the third (3rd) anniversary of the date that the Initial Project Improvements are Completed and
the date the Landlord receives a copy of the final certificate of occupancy.
(b) Consistent Use.
The Hotel Operator's proposed use of the Premises and the Improvements under the
proposed Hotel Management Agreement will be for the Permitted Use only or such proposed
use has been approved by the Landlord or BPC, as applicable;
(c) Reputation.
The Hotel Operator is reputable (which shall mean the absence of reputations for
dishonesty, criminal conduct or association with criminal elements — "reputable" shall not mean
"prestigious", nor shall the determination of whether one is reputable involve considerations of
personal taste or preference) and has no history of, or reputation for, either discriminatory
employment practices which violate any applicable Laws or non-compliance with applicable
Environmental Laws;
(d) Financial Stability.
The Hotel Operator has sufficient financial resources for the Hotel Operator to perform
its obligations under the Hotel Management Agreement and this Lease, where applicable;
(e) Event of Default.
At the time of the Hotel Management Agreement Notice and at the time of the execution
of the Hotel Management Agreement, there is no Event of Default;
(f) Public Financing.
The Hotel Management Agreement and the Hotel Operator meet the criteria of any
outstanding public financing issued by Landlord or issued for or related to the Premises, the
Phase 1A Infrastructure Improvements or the Convention Center; provided that such criteria
must be no more stringent that the criteria that were in effect under the public financing that is
outstanding as of the Commencement Date; and
(g) Term.
The proposed Hotel Management Agreement will be for no longer than the remainder of
the Term.
(h) Sufficient Experience.
The Hotel Operator has at least ten (10) years of experience (directly or through one or
more of its subsidiaries) managing or operating hotels that have at least five hundred (500)
rooms and meeting space comparable to the Meeting Space.
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15.4.4 Effect of Hotel Management Agreement.
If Landlord consents to a Hotel Management Agreement, then (a) the terms and
conditions of this Lease shall in no way be deemed to have been waived or modified, (b) such
consent shall not be deemed consent to any further Hotel Management Agreement by either
Tenant or a Hotel Operator or any amendments to the Hotel Management Agreement
(c) Tenant shall deliver to Landlord, within ten (10) days after execution, an original executed
copy of all documentation pertaining to the Hotel Management Agreement, and any document
evidencing a Hotel Management Agreement shall be in form acceptable to Landlord; and (d) a
certificate from an authorized representative of Tenant certifying under penalty of perjury that (i)
the redacted version of the Hotel Management Agreement provided to Landlord with the Hotel
Management Agreement Notice is a true, correct and complete copy of the Hotel Management
Agreement executed by Tenant and the new Hotel Operator and no additions, deletions, or
revisions were made to the original unredacted Hotel Management Agreement reviewed by
Landlord prior to execution of the new Hotel Management Agreement.
15.4.5 Conditions.
In the event Landlord consents to any Hotel Management Agreement as required
hereunder, then at Landlord's election said consent shall be conditioned upon such Hotel
Operator executing a document reasonably acceptable to Landlord acknowledging that all rights
of the Hotel Operator are subject to all terms and conditions of this Lease as the same relate to
the space subject to the Hotel Management Agreement.
15.4.6 Non-Disturbance Agreement.
Prior to or on the Commencement Date and prior to or concurrently with the execution of each
new Hotel Management Agreement, Landlord and the applicable Hotel Operator shall enter into
a non-disturbance agreement with such Hotel Operator based on terms reasonable acceptable
to both Landlord and Hotel Operator.
15.5 Performance by Landlord.
15.5.1 Inspection.
Landlord shall have the right but not an obligation to enter, view, inspect and determine the
condition of, and protect its interests in the Premises and Improvements (other than Rooms that
are occupied by guests), during normal business hours and upon a three (3) Business Days'
prior notice to Tenant (except in the case of an emergency where no prior notice is required)
and provided that Landlord complies with all applicable security and safety procedures of
Tenant and uses commercially reasonable efforts to minimize any interference with Tenant's
operation and use of the Premises and the Improvements while on the Premises and at the
Improvements. If Landlord determines that the Premises and/or the Improvements are not in
the condition required pursuant to the terms of this Lease, Landlord shall deliver written notice
to Tenant detailing the items to be corrected and Tenant shall commence the necessary
maintenance, alteration, repair, replacement and rebuilding work necessary to remedy the
issues set forth in Landlord's notice within ten (10) days after written notice from Landlord and
diligently pursue such work to completion. Further, if at any time Landlord determines the
Premises are not in the condition required pursuant to the terms of this Lease, upon ten (10)
days' prior written notice thereof Landlord may require Tenant to file and pay for a performance
bond. The amount of said bond shall be adequate, in Landlord's opinion, to correct all
unsatisfactory conditions.
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15.5.2 Landlord Repair Rights.
At Landlord's option, if Tenant fails to commence to perform the necessary maintenance,
alteration, repair, replacement or rebuilding work within ten (10) days of Landlord's written
demand therefor (except in the event of an emergency in which case no such notice shall be
required) in accordance with this Lease, then Landlord may, but shall not be required to,
perform such maintenance, alteration, repair, replacement or rebuilding work, and Tenant shall
pay Landlord the actual cost thereof, together with interest thereon at the Default Rate from the
date due until paid and an administrative fee in the amount of ten percent (10%) of the cost of
such work, pursuant to the Reimbursement Procedure. Such payments shall constitute
Additional Rent under this Lease and shall be paid monthly as billed by Landlord or in a lump
sum payment, as directed by Landlord. If requested by Landlord, Tenant shall pay to Landlord
the entire estimated cost of such work in advance, but such payment shall not relieve Tenant
from the obligation to pay any excess costs that may be actually incurred by Landlord. For all
maintenance, alteration, repair, replacement, or rebuilding work undertaken by Landlord, Tenant
hereby indemnifies and shall defend, at Tenant's sole expense and with counsel reasonably
acceptable to Landlord, and hold the Landlord Parties harmless from any and all liability,
Related Costs, demands, damages, expenses (including, without limitation, attorneys',
consultants' and experts' fees, court costs and amounts paid in settlement of any claims or
actions), arising directly or indirectly out of such work or the performance thereof, unless the
same is the result of the sole gross negligence or sole willful misconduct of Landlord. Landlord
shall have no obligation to repair or maintain any portion of the Premises. The rights of
Landlord under this Section 15.5.2 shall not create any obligations or increase any obligations of
Landlord set forth elsewhere in this Lease, nor shall the exercise of such rights, or the failure to
exercise same, limit any other rights or remedies of Landlord. Landlord shall have the right to
enter the portions of the Premises where the necessary maintenance, alteration, repair,
replacement or rebuilding work, as applicable, is to be performed or is being performed in
accordance with this Section 15.5.2 during normal business hours and upon a three (3)
Business Days' prior notice to Tenant (except in the case of an emergency where no prior
notice is required) and provided that Landlord complies with all applicable security and safety
procedures of Tenant and uses commercially reasonable efforts to minimize any interference
with Tenant's operation and use of the Premises and the Improvements while on the Premises
and at the Improvements.
15.6 Records.
Tenant shall, during the Term and, with respect to each record, for a period of seven (7) years
from the date the record was created (or such longer period as Tenant may decide in its sole
discretion), keep or cause to be kept, accurate and complete records of maintenance conducted
at the Premises and the Improvements. The records must be supported by source documents
of original entry such as invoices, receipts, work orders, construction contracts, service
contracts or other pertinent supporting documents. All of Tenant's maintenance records relating
to the Premises and the Improvements shall be kept either at the Premises or at such other
locations in San Diego County, California as are acceptable to Landlord. Landlord shall have
the right at any time to examine such maintenance records without restriction and, at Landlord's
request, Tenant shall provide Landlord with copies thereof at Tenant's expense for the purpose
of determining the accuracy thereof. After the seven (7) year period has expired for a certain
record of maintenance, Tenant shall deliver the original record of maintenance to Landlord at
the address set forth in Section 1.11 or such other location designated by Landlord in writing,
which may include the main offices of the City; provided, however, Tenant may elect to deliver
all of the records of maintenance that expire in a given Lease Year at one time, in one delivery,
on or about July 1 of each Lease Year.
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16. TAXES AND PROPERTY EXPENSES
16.1 Taxes.
This Lease may result in a taxable possessory interest and be subject to the payment of
property and other taxes. Tenant shall pay, prior to delinquency, all Tax Expenses attributable
to any time period during the Term now or hereafter assessed against, or relating in any way to
the Tenant, this Lease, the Premises, the Improvements, or the use or occupancy thereof by
Tenant and Tenant Parties. Tenant shall promptly following written request therefor from
Landlord, provide Landlord with evidence of the payment of Tax Expenses. "Tax Expenses"
shall include, without limitation, all federal, state, county, or local governmental or municipal
taxes, fees, assessments, charges or other impositions of every kind and nature, whether
general, special, ordinary or extraordinary (including, without limitation, real estate taxes,
possessory interest taxes, use taxes, general and special assessments, leasehold taxes or
taxes based upon Tenant's receipt of rent, including gross receipts or sales taxes applicable to
Tenant's receipt of rent, personal property taxes imposed upon the fixtures, machinery,
equipment, apparatus, systems and equipment, appurtenances, furniture and other personal
property used by Tenant in connection with the Premises and the Improvements) and any taxes
and assessments relating to the business or other activities of Tenant upon or in connection
with the Premises and the Improvements. Tax Expenses also shall include, without limitation:
(a) Any tax on Landlord's receipt of Rent, right to Rent or other income from
the Premises and the Improvements;
(b) Any assessment, tax, fee, levy or charge in addition to, or in substitution,
partially or totally, of any assessment, tax, fee, levy or charge previously included within the
definition of real property tax, possessory interest tax or use tax or other Tax Expenses, and
any assessments, taxes, fees, levies and charges that may be imposed by a Governmental
Authority for services such as fire protection, street, sidewalk and road maintenance, refuse
removal and for other governmental services formerly provided without charge to property
owners or occupants. It is the intention of Tenant and Landlord that all such new and
increased assessments, taxes, fees, levies, and charges and all similar assessments, taxes,
fees, levies and charges be included within the definition of Tax Expenses for purposes of this
Lease; and
(c) Any assessment, tax, fee, levy, or charge, which is levied or assessed
based upon the area of the Premises or the Improvements or the Rent payable hereunder,
including, without limitation, any gross income tax upon or with respect to the possession,
leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant
of the Premises, or any portion thereof.
Notwithstanding the foregoing, Tenant shall not be responsible for any Tax Expenses that are,
after the Commencement Date, imposed on the Premises or the Improvements by Landlord.
16.2 Property Expenses.
Without limitation of Tenant's other obligations under this Lease, Tenant agrees to pay, on or
before the date due, all Property Expenses. As used herein, "Property Expenses" shall
include, without limitation, all costs and expenses of any nature incurred or payable, or arising in
connection with, the ownership, management, maintenance, construction, repair, replacement,
restoration or operation of the Premises and/or the Improvements, including, without limitation,
any amounts paid for: (i) the cost of supplying any utilities, the cost of operating, maintaining,
repairing, renovating and managing any utility systems, mechanical systems, communications
systems, sanitary and storm drainage systems, and the cost of supplies and equipment and
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maintenance and service contracts in connection therewith; (ii) the cost of licenses, certificates,
permits and inspections; (iii) the cost of any insurance carried or required to be carried by
Tenant pursuant to this Lease and the Hotel Management Agreement with respect to the
Premises and/or the Improvements including without limitation any premiums and deductibles;
(iv) the cost of landscaping, supplies, tools, equipment and materials, and all fees, charges and
other costs incurred in connection with the management, operation, repair and maintenance of
the Premises and/or the Improvements; (v) payments under any easement, license, permit,
operating agreement, declaration, or covenant or instrument pertaining to the Premises that
exist as of the Commencement Date or that are created or consented to by Tenant; and (vi) the
cost of any Improvements, capital repairs, capital alterations, or capital equipment, required by
Law, the Hotel Management Agreement or otherwise required under this Lease.
17. EQUAL EMPLOYMENT OPPORTUNITY/NONDISCRIMINATION AND OFAC
17.1 Nondiscrimination.
Tenant shall comply with Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights
Act of 1991; the California Constitution; the California Fair Employment and Housing Act; the
ADA; and any other applicable Laws now existing or hereinafter enacted, requiring equal
employment opportunities or prohibiting discrimination. This shall include, without limitation,
Laws prohibiting discrimination because of race, color, religion, sex, national origin, ancestry,
physical or mental disability, veteran status, medical condition, marital status, age, sexual
orientation, pregnancy, or other non-job related criteria. In complying with all such Laws,
including, without limitation the ADA, Tenant shall be solely responsible for such compliance
and required programs, and there shall be no allocation of any such responsibility between
Landlord and Tenant. Each Subtenant shall comply with the requirements of this Article 17.
17.2 Compliance with Employment and Labor Requirements.
Tenant shall comply with the Federal Fair Labor Standards Act of 1938; the Federal Labor-
Management Reporting and Disclosure Act of 1959; the Occupational Safety and Health Act of
1970; the California Constitution; and any other Laws now existing or hereinafter enacted,
regarding employment and labor practices. Tenant shall also comply with the National Labor
Relations Act, including the provisions with respect to the rights of employees to organize.
17.3 OFAC Compliance.
Tenant represents and warrants that (i) Tenant and, to the best of Tenant's knowledge, the
Persons that directly or indirectly hold an interest in Tenant ("Tenant's Members", each a
"Tenant Member") (other than any such Person that owns an interest in Tenant through publicly
traded securities) is not now, and neither Tenant nor Tenant's Members, (other than any such
Person that owns an interest in Tenant through publicly traded securities) shall during the Term
of this Lease become, a Person with whom Landlord or any citizen of the United States is
restricted from doing business with under the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, H.R. 3162, Public
Law 107-56 (commonly known as the "USA Patriot Act") and regulations promulgated pursuant
thereto, or under any successor statutes or regulations, including, without limitation, persons
and entities ("Prohibited Persons") named on the Specially Designated Nationals and Blocked
Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury
("OFAC") or a Person (also, a "Prohibited Person") with whom a citizen of the United States is
prohibited to engage in transactions by any trade embargo, economic sanction, or other
prohibition of United States law, regulation, or Executive Order of the President of the United
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States, (ii) to the best of Tenant's knowledge, none of the funds or other assets of Tenant
constitute property of, or are beneficially owned, directly or indirectly, by any Prohibited Persons
(iii) to the best of Tenant's knowledge, no Prohibited Person directly or indirectly Controls
Tenant, or any of Tenant's Members, either individually or in the aggregate, (iv) to the best of
Tenant's knowledge, none of the funds of Tenant have been derived from any unlawful activity
with the result that the investment in Tenant is prohibited by Laws or that the Lease is in
violation of Laws, and (v) Tenant has implemented procedures, and will consistently apply those
procedures, to ensure the foregoing representations and warranties remain true and correct at
all times during the Term. Tenant shall reimburse Landlord for all reasonable costs, including,
without limitation, attorneys' fees, resulting from Tenant's failure to comply with this Section
17.3. Notwithstanding any limits set forth in this Section 17.3 any Person who is blocked under
the USA Patriot Act shall be blocked to the full extent required under the USA Patriot Act and
any regulations promulgated thereunder. For avoidance of doubt, wherever "to the best of
Tenant's knowledge" is used in this Section 17.3, such knowledge shall include a duty of inquiry
and investigation..
18. INSURANCE
18.1 Insurance.
Tenant shall maintain the policies of insurance described in this Article 18 in full force and effect
throughout the Term.
18.2 Forms of Coverage.
The policies for said insurance shall, as a minimum, provide the following:
18.2.1 Commercial General Liability.
"Occurrence" form Commercial General Liability covering the Premises, operations and
contractual liability assumed by Tenant in this Lease in the amount of not less than as set forth
in Section 1.9. Tenant's indemnification obligations under this Lease shall in no event be limited
by the terms or qualifications to the contractual liability coverage under such insurance.
18.2.2 Liquor Liability.
If alcoholic beverages are served or sold on the Premises, Liquor Liability coverage in
the amount of not less than as set forth in Section 1.9 shall be obtained. If no alcoholic
beverages are served or sold on the Premises, the proof of insurance shall so state.
18.2.3 All Risk and Builder's Risk Property Coverage.
Tenant's property insurance obligations with respect to the Parking Improvements (if
any) shall be as set forth in Section 4.3, and not this Article 18. All Risk of Physical Loss
Property Coverage, including flood and debris cleanup provisions, in an amount of not less than
the full 100% replacement value of all Improvements, together with business interruption and
extra expense coverage, including a provision for the continuation of Rent payments for twenty-
four (24) months, and coverage for vandalism and malicious mischief, earthquake sprinkler
leakage, boiler and machinery and, if so required by Landlord, earthquake in an amount of not
less than the maximum probable loss for all Improvements. Specific limits of insurance for
earthquake shall be determined at the joint discretion of Tenant and Landlord. The coverage
policies shall be endorsed with a Loss Payee endorsement in favor of the Landlord. It is agreed
that any insurance proceeds in excess of Twenty-Five Thousand Dollars ($25,000) resulting
from a loss under said policies shall be payable jointly to Tenant and Permitted Lender, and it is
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understood that said proceeds will be reinvested in rebuilding and/or repairing the damaged
Improvements and applied to Tenant's Rent obligations hereunder, as applicable. However, if
there is a Permitted Mortgage Lender, then all property damage proceeds from such policies of
insurance (other than from the business interruption and extra expense coverage) shall be
payable in trust, with safeguards reasonably acceptable to Landlord, to such Permitted Lender
to be disbursed for the repair and restoration of the Improvements (or, if there is no Permitted
Mortgage Lender, or if there is, but the Permitted Mortgage Lender declines to hold and
disburse such proceeds, to a bank or trust company doing business in the County of San Diego
agreed upon by the parties, or if the parties fail to agree, to Bank of America, N.A., or its
successor, which proceeds shall be deposited in interest bearing accounts or deposits agreed
upon by the parties, or if the parties fail to agree, then in the bank's regular passbook savings
account); provided, however, if this Lease terminates in accordance with Section 20.2, then
such proceeds shall be disbursed as provided in Section 20.2. All interest shall be added to the
trust funds to be disbursed with the principal. All such proceeds shall be disbursed in progress
payments for the payment of the cost of repairing or restoring the property so damaged or
destroyed. The specific manner of holding such proceeds and the method and conditions of
disbursement shall be subject to the prior written approval of Landlord (which approval shall not
be unreasonably withheld, conditioned or delayed) so as to ensure the application of such
proceeds in compliance with this Lease.
During the construction of the Initial Project Improvements or any subsequent Alterations
or restoration work, builder's risk completed value form insurance covering the perils insured
under the ISO special causes of loss form, including collapse, water damage, transit and flood
and earthquake coverage, covering the total value of work performed and equipment, supplies
and materials furnished (with an appropriate limit for soft costs in the case of construction) and
covering the full insurable value (exclusive of the cost of noninsurable items) of all equipment,
supplies and materials at any off-site storage location used with respect to the Project or in
transit. Specific limits of insurance for earthquake shall be determined at the joint discretion of
Tenant and Landlord. The damage coverage shall be endorsed with a Loss Payee
endorsement in favor of Landlord. The insurance proceeds shall be paid and disbursed in the
same manner as set forth in this Section 18.2.3 above.
18.2.4 Worker's Compensation.
Workers' compensation insurance covering all persons employed by Tenant at the
Premises and with respect to whom death or bodily injury claims could be asserted against
Tenant, Landlord or the Premises, with statutorily required limits, and employer's liability
insurance with minimum limits of not less than One Million Dollars ($1,000,000) for each
accident/employee/disease. Workers' compensation insurance shall include a waiver of
subrogation in favor of Landlord Parties.
18.2.5 Automobile Liability.
Business automobile liability insurance covering liability arising out of vehicles used on
or about the Premises by Tenant or its employees (including owned, non-owned, leased, rented
and/or hired vehicles) insuring against liability for bodily injury, death and property damage in an
amount not less than One Million Dollars ($1,000,000) each accident limit.
18.2.6 UST Insurance Obligations.
In the event underground storage tanks are located on the Premises, Tenant is required
to comply with all Laws applicable to underground storage tanks, including, without limitation,
United States Code, Title 42, Chapter 82, Subchapter IX, 40 Code of Federal Regulations
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("CFR") Part 280, 40 CFR Part 281 and 40 CFR Parts 282.50 — 282.105, and Title 23, Division
3, Chapter 18 of California Code of Regulations, collectively, herein "UST Law." At the time
Tenant is required to comply with any provisions of UST Law requiring financial assurance
mechanisms, Tenant shall provide Landlord with a certified copy of its Certification of Financial
Responsibility. If Tenant's program for financial responsibility requires insurance, then Tenant's
policy(ies) shall name the Landlord Parties as additional insureds, and all other terms of
Section 18.3 below, shall apply. Should Tenant change its financial assurance mechanisms,
Tenant shall immediately provide Landlord with a certified copy of its revised Certification of
Financial Responsibility.
18.2.7 Contractor's Pollution Liability Coverage.
If the Landlord determines, in its sole and absolute discretion, that Tenant performs or
contracts for any work which involves a Hazardous Materials Activity or which has the potential
to disturb or result in the release of any Hazardous Material, for which there is potential
exposure to pollution or Hazardous Materials to Persons or the environment, Tenant shall obtain
or cause its contractor to obtain Contractor's Pollution Liability, Pollution Legal Liability and/or
Asbestos Pollution Liability and/or Errors & Omissions applicable to the work being performed or
the potential release of any Hazardous Material, with limits of $5,000,000 per claim or
occurrence and $10,000,000 aggregate per policy period of one year or the limits maintained by
or available to the contractor, whichever is higher. The Landlord Parties shall also be named as
an additional insured on any such policy. Immediately upon learning of or reasonably
suspecting that a release of Hazardous Materials has occurred on, in, under or about the
Premises, Tenant shall provide notice of the same to Landlord.
18.3 General Requirements.
18.3.1 Certificates and Other Requirements.
All required insurance shall be in force the first day of the Term, and shall be maintained
continuously in force throughout the Term. In addition, the cost of all required insurance shall
be borne by Tenant. During the entire Term, Tenant shall provide Landlord with insurance
certificates, in the form attached as Exhibit (1, issued by the insurer evidencing the existence
of the necessary insurance policies and certified endorsements effecting coverage required by
this Article 18 ("Certificates"). The Certificates and endorsements for each insurance policy
are to be signed by a person authorized by that insurer to bind insurance on its behalf.
Notwithstanding the foregoing, upon written request from Landlord, Tenant shall make available
to Landlord for its review the complete, certified copies of all required insurance policies at the
Premises.
18.3.2 Additional Insureds and Other Requirements.
All liability insurance policies shall name, or be endorsed to name the Landlord Parties
as additional insureds and protect the Landlord Parties against any legal costs in defending
claims. All liability policies shall provide cross-liability coverage. Tenant shall provide Landlord
with at least fifteen (15) days' prior written notice of any material change to any insurance policy
required under this Lease, including without limitation, any modification, suspension, voiding, or
cancellation of an insurance policy. To the extent the policy is blanket endorsed or is
specifically endorsed to provide the same, all insurance policies shall also provide that the
subject policy shall not be cancelled without thirty (30) days' prior written notice to Landlord. All
insurance policies shall be endorsed to state that Tenant's insurance is primary and not excess
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or contributory to any insurance issued in the name of Landlord. Further, all insurance
companies must have a S&P or AM Best rating of not less than "A-".
18.3.3 Deductibles.
Any deductibles or self-insured retentions must be declared and acceptable to both
Tenant and Landlord. If the deductibles or self-insured retentions are unacceptable to Landlord,
then Tenant shall discuss with Landlord the financial impact of revising the deductible to an
amount acceptable to Landlord. If such agreement cannot be met, then Tenant shall have the
option to either: (i) reduce or eliminate such deductibles or self-insured retentions as respects
the Landlord Parties; (ii) procure a bond guaranteeing payment of losses and related
investigations, claim administration, and defense expenses; or (iii) agree to self-insure the risk
with form of collateral or written agreement acceptable to Landlord.
18.3.4 Updates.
If Landlord reasonably determines that the insurance provisions in this Lease do not
constitute adequate insurance, then Landlord shall notify Tenant thereof and of the changes to
the insurance requirements of this Lease that Landlord reasonably believes are necessary. The
Parties agree that the insurance provisions will be modified to increase Tenant's insurance
obligations to the extent that such changes are required by Landlord of other similarly situated
tenants within the Landlord's jurisdiction with hotels in excess of five hundred (500) rooms.
Tenant shall deposit new Certificates incorporating such changes within thirty (30) days of
receipt of Landlord's notice. Failure by Tenant to maintain insurance or deposit insurance
Certificates as required in this Article 11, where such failure is not cured by Tenant within ten
(10) days following written notice to Tenant, shall constitute an Event of Default. Without
limitation of the foregoing, Tenant agrees that if Tenant does not take out and maintain such
insurance or furnish Landlord with Certificates in a timely manner, Landlord may (but shall not
be required to), procure said insurance on Tenant's behalf and charge Tenant the cost thereof,
which amount shall be payable by Tenant to Landlord pursuant to the Reimbursement
Procedure.
18.3.5 No Limit on Liability.
The procuring of such required policies of insurance shall not be construed to limit
Tenant's liability hereunder, nor to fulfill the indemnification provisions and requirements of this
Lease.
18.3.6 Compliance with Insurance Requirements.
Tenant agrees not to keep on the Premises or permit to be kept, used, or sold thereon,
anything prohibited by any fire or other insurance policy covering the Premises. Tenant shall, at
its sole expense, comply with all reasonable requirements for maintaining fire and other
insurance coverage on the Premises and represents to Landlord that Tenant will confirm that it
is in compliance with such requirements at all times.
18.4 Waiver of Subrogation.
Tenant hereby releases the Landlord Parties from any and all liability or responsibility to Tenant
or anyone claiming through or under Tenant by way of subrogation or otherwise for any loss or
damage to the Premises, any Improvements, or any of Tenant's personal property or business
caused by or arising from a fire or any other event that is covered by the insurance required to
be carried pursuant to this Lease or is actually carried, even if such fire or other event shall have
been caused by the fault or negligence of any of the Landlord Parties. Each Subtenant similarly
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releases the Landlord Parties. Tenant, and any Subtenant, shall also obtain an endorsement
waiving the insurance company's subrogation rights against the Landlord Parties for any
insurance policies required by the terms of this Lease. Tenant and Subtenant shall also defend
and indemnify the Landlord Parties in the manner specified in Section 19.1 in the event any
Person asserts such a claim.
19. INDEMNITY
19.1 Indemnity.
Tenant hereby indemnifies and shall defend the Landlord Parties, at Tenant's sole cost and
expense and with counsel reasonably selected by Landlord, and hold the Landlord Parties
harmless from any and all claims (including claims under negligence and strict liability),
demands, liability, losses, causes of actions and suits of any kind, administrative or judicial
proceedings, orders, judgments, and all Related Costs arising directly or indirectly out of (i) the
performance by Tenant of its obligations under this Lease, (ii) the construction of any
Improvements, (iii) any breach by Tenant of its obligations under this Lease, (iv) any accident,
injury or damage whatsoever caused to any Person or the property of any Person on or about
the Premises or at the Improvements; (v) the use, occupancy, possession or operation of the
Premises and the Improvements by any Tenant Party, or any acts or omissions of any Tenant
Party, except for claims or litigation arising through the sole gross negligence or sole willful
misconduct of any Landlord Party (but subject to Section 18.4). The foregoing indemnity,
defense and hold harmless obligations of Tenant shall not include any claims (including claims
under negligence and strict liability), demands, liability, losses, causes of actions and suits of
any kind, administrative or judicial proceedings, orders, judgments, and all Related Costs arising
directly or indirectly out of (w) Landlord's failure to comply with any applicable provisions of the
PWL in connection with any work solely performed by Landlord or caused to performed by
Landlord except for any work performed by Tenant pursuant to this Lease or any other
agreement entered into between Tenant and Landlord .2 Landlord, at its election, may conduct
its own defense with its own counsel independent from Tenant's counsel (and in that event
Tenant will select its own counsel) and the costs incurred by Landlord in such defense shall be
covered by the foregoing indemnification, hold harmless and defense obligations and be subject
to immediate payment once incurred. The terms of this Article 19 shall survive the expiration or
earlier termination of this Lease. The foregoing indemnity obligations of Tenant are in addition
to, and not in limitation of, any other indemnity obligations of Tenant contained in this Lease or
any other agreement between Landlord and Tenant.
20. DAMAGE OR DESTRUCTION
20.1 Casualty.
Tenant's obligations with respect to any damage to or destruction of the Parking Improvements
(if any) shall be as set forth in Section 4.3, and not this Article 20. Subject to Section 20.2, in the
event of any damage to or destruction of any Improvements, whether or not from a risk
coverable by the insurance described in Article 18, Tenant shall promptly repair and restore
such Improvements, in a manner reasonably approved in writing by Landlord, so that after such
restoration and repair, the Initial Improvements are at least as valuable and usable as
immediately prior to such damage or destruction. If the casualty or destruction happens on and
after Lease Year 38, Tenant shall be entitled to have any insurance policy proceeds received
by Tenant held in trust with the Permitted Mortgage Lender with a Permitted Lease
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Encumbrance that has the Improvements as collateral and disbursed as progress payments as
the work of repair, restoration or replacement progresses, to be used solely for paying for such
work; and upon completion of such work free and clear of mechanics or other liens, any
remaining balance of any insurance proceeds shall be paid first to the Permitted Mortgage
Lender to reduce the indebtedness of the Permitted Lease Encumbrance, and thereafter, if the
Permitted Lender permits or if it is required by the terms of the Permitted Encumbrance, to
Tenant and Landlord proportionate to the equity investment of each Party in the Improvements.
The Permitted Mortgage Lender may disburse the progress payments in accordance with its
normal disbursement procedures (e.g. upon receipt of appropriate mechanics lien releases,
invoices, etc.) so long as such disbursement procedures are reasonably satisfactory to Landlord
and ensure that the proceeds of insurance are applied to the costs of repairing, restoring or
replacing the Improvements that were damaged or destroyed. To the extent that the insurance
proceeds are insufficient to pay for the costs of restoring, repairing or replacing the damaged
Improvements, Tenant shall pay such deficiency to the trustee for application to the restoration
costs within sixty (60) days after the insurer first makes available such insurance proceeds for
repair, restoration or replacement, and, if Tenant does not pay such deficiency as required
hereunder, then Permitted Lender shall be permitted to apply such insurance proceeds towards
repayment of the indebtedness that is secured by its Permitted Encumbrance. The provisions
of Articles 6 and 7 shall apply to all work performed pursuant to this Article 20. Notwithstanding
the foregoing, if Tenant and the Permitted Lender are not able to obtain sufficient insurance
proceeds (in the case of an insured casualty) or construction funds (in the case of an uninsured
casualty) to commence repair, restoration or replacement of the damaged Initial Improvements
within ninety (90) days of such damage or destruction, and in the case of an insured casualty,
Tenant and the Permitted Lender have used their best efforts to so obtain such insurance
proceeds, or in the case of an uninsured casualty, Tenant and the Permitted Lender have used
their best efforts to obtain sufficient construction funds, then Tenant and the Permitted Lender
shall have such additional time as is necessary to obtain such insurance proceeds or
construction funds (but in no event to exceed one hundred and eighty (180) days from the date
of such damage or destruction) in which to commence to repair, restore or replace the damaged
Improvements.
20.2 Termination.
Notwithstanding Section 20.1 to the contrary, if (a) there is damage or destruction to the Initial
Improvements during the last three (3) years of the Term, the cost of repairing said damage or
destruction exceeds the cost of demolishing and removing the remaining Initial Improvements
as determined by the Demolition and Remediation Report, and Landlord has delivered to
Tenant a Landlord End of Term Election that requires that Tenant demolish the Initial Project
Improvements , then Tenant shall have the option to terminate this Lease, subject to Tenant's
satisfaction of all of the following requirements: (a) Tenant shall, within ninety (90) days after
the date of the casualty, give Landlord written notice of its election to terminate ("Notice of
Election to Terminate"); and (b) Tenant shall within one hundred and eighty (180) days of
Landlord's receipt of the Notice of Election to Terminate, surrender the Premises to Landlord in
a Buildable Condition. Any and all property damage insurance proceeds (exclusive of any
proceeds applicable to Tenant's personal property that would be retained by Tenant at the end
of the Term, all of which shall be paid to Tenant) paid as a result of the damage or destruction
giving rise to the termination, shall be distributed in accordance with the following order of
priority: (i) first, to the repayment of any indebtedness that is secured by a Permitted Lease
Encumbrance, if any such Permitted Lease Encumbrance is still outstanding; (ii) second, to the
Tenant and Landlord pro rata based on the equity investment of Tenant and in the case of
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Landlord, the JEPA, in the Initial Project Improvements; and (iii) third, to Landlord to cover the
rent that would have been paid by Tenant for the remaining Term but for the termination.
20.3 No Rental Abatement.
Except as may be expressly permitted in this Agreement, Tenant shall not be entitled to any
abatement or reduction in the Rent during any period of time that any Initial Improvements
located on the Premises are in need of repair, restoration or replacement or are under
construction for such repairs, restoration or replacements or any other period of time during the
Term of this Lease.
20.4 Waiver of Statutory Provisions.
The provisions of this Lease, including this Article 20, constitute an express agreement between
Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of
the Premises or Initial Improvements, or any other portion thereof, and any California statute or
regulation, now or hereafter in effect, regarding the rights or obligations of a tenant concerning
damage or destruction following a casualty event are waived and shall have no application to
this Lease or any damage or destruction to all or any part of the Premises or Initial
Improvements as a result of a casualty event.
21. HAZARDOUS MATERIALS
21.1 Hazardous Materials.
21.1.1 Tenant Use of Hazardous Materials.
Tenant shall not cause or permit any Hazardous Material, or products or materials which
include any hazardous substance as a component to be generated, brought onto, used, stored,
emitted, released or disposed of in or about the Premises or Improvements (collectively and
individually, a "Hazardous Materials Activity") by Tenant or its agents, whether by a Tenant
Party or any other Person, during the Term (including any extensions or holdover periods
resulting from Tenant's obligations pursuant to Section 21.1.4) unless expressly approved, at
Landlord's sole discretion, in writing by Landlord after submittal by Tenant of Material Safety
Data Sheets or other information requested by Landlord regarding the Hazardous Material.
Approval by Landlord of any Hazardous Materials Activity shall not create or impose any liability
or obligation on Landlord with respect to such Hazardous Material or Hazardous Materials
Activity and Tenant shall assume all liability and obligations related thereto. All Hazardous
Materials Activity shall be in strict compliance with all applicable Laws and other requirements in
effect during the Term, including, without limitation, Laws and requirements that regulate
Hazardous Materials or otherwise relate to public health and safety or the protection of the
environment ("Environmental Laws"). Tenant shall comply at all times with all Environmental
Laws. Provided that Tenant is in compliance with Environmental Laws, Tenant shall not be
required to obtain Landlord's consent to generate, store or use reasonable and customary
quantities of Hazardous Materials for cleaning materials or supplies, construction materials or
supplies, food service materials or supplies, paint, auto supplies (including, without limitation,
gasoline, oil and other supplies incidental to motorized vehicles) or office materials or supplies
reasonably required to be used in the normal course of the Permitted Use.
21.1.2 Notice of Release or Inquiry.
If Tenant becomes aware of (i) any actual or threatened release that occurs during the
Term of any Hazardous Material on, in, under, from, or about the Premises or Improvements or
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(ii) any notice, inquiry, investigation, proceeding, or claim by any government agency or other
Person regarding the presence that occurs during the Term of any Hazardous Material on, in,
under, from or about the Premises or Improvements (collectively, "Inquiry"), Tenant shall give
Landlord written notice of such release or Inquiry within twenty-four (24) hours after Tenant
learns that there has been a release or Inquiry and shall simultaneously furnish to Landlord
copies of any notices of inquiry or investigation, claims, notices of violation, reports, warning or
other writings received by Tenant that concern such release or Inquiry. Unless Landlord
receives separate notice, Tenant shall provide Landlord with advance written notice of any
meeting scheduled between any Tenant Party and any federal, state or local government
agency (including, but not limited to, the United States Environmental Protection Agency, the
Regional Water Quality Control Board, Department of Toxic Substances Control or Air
Resources Board) ("government agency") where a material item of discussion is directly
related to the subject matter of this Article 21, at least five (5) Business Days prior to such
meeting or as soon as reasonably possible if the government agency schedules such meeting
with any Tenant Party for less than five (5) Business Days from the date the meeting is
proposed. Landlord shall be entitled to have its representatives attend and participate in any
and all such meetings. If the government agency brings up Hazardous Material on, in, under,
from, or about the Premises or Improvements in any other scheduled meeting, Tenant shall
suggest that a separate meeting should be scheduled so that Landlord can participate in such
meeting.
21.1.3 Landlord Right to Inspect and Data.
If Hazardous Materials Activity has occurred during the Term or is ongoing, Landlord or
its designated representatives, at Landlord's sole discretion, may, but are not obligated to, enter
upon the Premises and/or Improvements and make any inspections, non-intrusive tests or
measurements that Landlord deems necessary or desirable to determine if a release or
discharge of Hazardous Materials has occurred. Landlord shall furnish to Tenant a minimum of
twenty-four (24) hours' notice prior to conducting any inspections or tests, unless, in Landlord's
reasonable judgment, circumstances require otherwise. If Landlord reasonably suspects a
possible release of Hazardous Materials or a use of Hazardous Materials in violation of
Environmental Law, then Landlord shall describe the concern to Tenant, and may require
Tenant, at Tenant's sole expense, to have additional investigation for such Hazardous Materials
conducted on, under or about the Premises and/or Improvements by an environmental
consultant or engineering firm designated by Landlord; provided, however, that Tenant's
obligation to conduct such investigation shall terminate if Tenant can demonstrate to Landlord's
reasonable satisfaction that there was neither any release of Hazardous Materials, nor any use
of Hazardous Materials during the Term in violation of Environmental Law. Such tests may
include, without limitation, any area outside the Premises or Improvements that may have been
contaminated, including but not limited to surface and groundwater. Tenant shall provide to
Landlord, as soon as reasonable after they become available to Tenant, access to all non-
privileged information reports and data obtained, generated or learned as a result of sampling or
testing activities on the Premises or Improvements, including raw and verified lab data and
consultant reports. Tenant shall be permitted to have representatives present during any
sampling or testing on or at the Premises, and may obtain split samples, if requested, copies of
the results of on-site testing and visual inspections, and complete access to all samples and
tests taken or conducted as a result of any investigations of the Premises or Improvements.
Access to any non-privileged consultant reports issued by or on behalf of Tenant concerning the
Premises or Improvements shall be provided to Landlord as soon as reasonable after such
reports are finalized. Any environmental reports issued by or on behalf of Tenant regarding the
Premises, the Improvements, or Hazardous Materials Activities related thereto shall first be
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generated in draft form and furnished to Landlord for review and comment, except in the case
when any resulting delay in producing a final environmental report would violate any Laws or
any order of any government agency. Except in the case when any resulting delay in producing
a final environmental report would violate any Laws or any order of any government agency, no
such report shall be made final until Landlord has had reasonable opportunity to review the draft
and to identify any factual inaccuracies therein; provided, however, that if Landlord fails to
comment on a draft report within thirty (30) days after Tenant provides Landlord with the final
draft report and any information needed by Landlord to complete its review, Tenant shall provide
Landlord with notice to deliver any comments to the draft report within fifteen (15) days of the
delivery of the notice. If Landlord does not respond after the second notice, Tenant may
complete and submit the report. Notwithstanding the foregoing, under no circumstance shall
any report submitted by Tenant pursuant to this Section 21.1.3 bind the Landlord or contain any
representation from Landlord. Landlord's failure to inspect, test or take other actions pursuant
to this Section 21.1.3 shall in no way relieve Tenant of any responsibility for a release of a
Hazardous Material.
21.1.4 Environmental Cleanup Obligations.
If, on or after the Commencement Date, any Hazardous Material has been released by
Tenant Parties, or any Pre-Existing Hazardous Material is exacerbated by Tenant Parties and
thereby violates any Environmental Laws and/or results in (a) any investigation mandated by
any government agency, (b) any clean-up order by any government agency, (c) any third-party
claim or demand against Landlord, (d) any material increase in Landlord's liability or (e) any
material increase in the cost or amount of investigation, removal or remediation action required
("Material Exacerbation", and "Materially Exacerbate" and "Materially Exacerbated" shall
have correlative meanings to "Material Exacerbation"), , , then Tenant shall promptly take all
necessary actions, at Tenant's sole expense, to investigate, remove or remediate such
contamination in compliance with all Environmental Laws and in a manner and to the
satisfaction of applicable regulatory authority ("Environmental Cleanup"). Tenant shall have no
obligation to undertake any Environmental Cleanup with respect to any contamination caused
by any Pre-Existing Hazardous Material unless such Environmental Cleanup is required as a
result of Tenant's Material Exacerbation, and the extent of Tenant's obligation to undertake such
Environmental Cleanup shall be limited to that required as a result of the Material Exacerbation.
Tenant shall provide notice to Landlord prior to performing any removal or remedial action. In
the event that an Environmental Cleanup conducted or required of Tenant interferes with the
current or future use of the Premises, Improvements, or other property of Landlord, Tenant shall
promptly alter or amend the Environmental Cleanup (whether such is completed or not and
regardless of the time period elapsed between the cleanup activities and Landlord's request to
alter the Environmental Cleanup because of the interference), upon notice from Landlord, as
necessary to prevent and/or eliminate such interference. Tenant shall not propose, and
Landlord is under no obligation to agree to, any covenant of use restriction or other institutional
controls as part of any removal or remediation required as a result of this Section 21.1.4.
Unless otherwise agreed in writing by Landlord, an Environmental Cleanup required under this
Section 21.1.4 shall avoid and not include the use of additional restrictive covenants or other
institutional controls. To the extent Landlord incurs any costs or expenses in performing
Tenant's obligation to conduct an Environmental Cleanup which is Tenant's obligation under this
Lease or under Environmental Law, Tenant shall reimburse Landlord for all such costs and
expenses in accordance with the Reimbursement Procedure. This provision does not limit the
indemnification obligation set forth in Section 21.2. Notwithstanding any provision of this Lease
to the contrary, if there is contamination caused by Pre-Existing Hazardous Material and Tenant
determines that the additional cost to Tenant of developing the Improvements as a result of Pre-
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Existing Hazardous Materials, including, but not limited to, the cost of investigating such
contamination, removing such Pre-Existing Hazardous Material or remediating such
contamination, and incremental soft costs, any additional general conditions costs and interest
during construction as a result of such Pre-Existing Hazardous Materials, exceeds $10,000,000,
then Tenant shall have the right to terminate this Agreement. Tenant's right to terminate
pursuant to the foregoing sentence shall be conditioned upon Tenant's satisfaction of the
following conditions: (i) Tenant, at its own cost and expense, obtains and delivers to Landlord a
report prepared by a contractor licensed in the State of California with expertise in demolition
and remediation, which report details and estimates the cost and time period for completion of
the demolition of the Project Improvements (if any) and any remediation work that may be
required by Section 21.3; (ii) Tenant delivers to Landlord commercially reasonable evidence that
Tenant has immediately available funds in an amount equal to the estimated costs set forth in
clause (i); (iii) Tenant obtains consent of each of the Permitted Lenders (which consent shall not
be unreasonably withheld, conditioned or delayed); and (iv) Tenant pays to Landlord an amount
equal to the amounts that shall have been disbursed to Tenant from the proceeds of the JEPA
bond issuance pursuant to to pay the costs of developing the [Publicly Financed
Improvements]. If the existence of any Pre-Existing Hazardous Materials delays the Completion
of the Initial Project Improvements, then the Outside Construction Completion Date shall be
extended by the duration of such delay.
21.1.5 Environmental Cleanup Extending Beyond Term.
Should any Environmental Cleanup of Hazardous Materials for which Tenant is
responsible not be completed prior to the expiration or earlier termination of this Lease, then:
(i) Tenant shall deposit with Landlord an amount of money equal to the balance of the estimated
costs of such Environmental Cleanup as reasonably determined by an independent third-party
environmental consultant that is acceptable to Tenant and selected by Landlord (the
"Independent Consultant"), and (ii) if the nature of the contamination or Environmental
Cleanup required of Tenant is such as to make any portion of the Premises untenable or
unleaseable, then Tenant shall be liable to Landlord as a holdover Tenant until the
Environmental Cleanup has been completed the extent required by this Agreement, or to the
extent necessary to render the Premises and/or Improvements, as applicable, in full compliance
with all Environmental Laws and to make the Premises and/or Improvements, as applicable,
suitable for lease to third parties. The estimated cost of the Environmental Cleanup shall
require approval of the Landlord. Landlord shall release funds from such deposit from time to
time to pay for such Environmental Cleanup costs incurred with Landlord's approval. To the
extent the Independent Consultant estimates, at any time, that the funds remaining on deposit
may not be sufficient to cover all remaining anticipated Environmental Cleanup costs, then
Tenant shall deposit, within thirty (30) days of Landlord's written demand therefor, such
additional funds with Landlord as Independent Consultant may estimate at such time may be
required to complete the Environmental Cleanup.
21.1.6 Financial Security.
If Landlord determines, in its reasonable discretion, that Tenant does not have insurance
or other financial resources sufficient to enable Tenant to fulfill its obligations under this
Article 21 whether or not accrued, liquidated, conditional, or contingent, then Tenant shall, at the
request of Landlord, procure and thereafter maintain in full force and effect such commercially
available environmental impairment liability and/or pollution liability insurance policies and
endorsements, or shall otherwise provide such collateral or security reasonably acceptable to
Landlord as is appropriate to assure that Tenant will be able to perform its duties and
obligations hereunder.
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21.2 Hazardous Materials Indemnification.
Excluding Pre-Existing Hazardous Material, Tenant hereby assumes for itself and shall
indemnify, defend Landlord Parties, and hold the Landlord Parties harmless from any and all
claims, demands, liability, losses, causes of actions and suits of any kind, administrative or
judicial proceedings, orders (judicial or administrative), judgments, and all Related Costs
(whether or not based upon personal injury, negligence, strict liability, property damage, or
contamination of, or adverse effects upon, the environment, waters or natural resources,
including any loss of or damage to Landlord's real or personal property), which occur or arise
during or after the Term relating to, or resulting from, any Hazardous Materials Activity, any
Tenant Hazardous Material, any Material Exacerbation of Pre-Existing Hazardous Material by a
Tenant Party, or any breach by Tenant of its obligations under this Article 21, at Tenant's sole
cost and expense and with counsel and experts selected by Landlord in its reasonable
discretion and who act according to Landlord's reasonable direction, with reasonable input and
cooperation from Tenant. Tenant's obligations under this Article 21 (including the
indemnification of Landlord by Tenant under this Section 21.2) include, without limitation, any
Environmental Cleanup required by this Lease, costs incurred in connection with any
investigation of site conditions or any cleanup, treatment, remedial, removal, or restoration work
required by this Lease or any federal, state or local government agency because of Hazardous
Materials present in the air, soil or ground water above, on, or under the Premises or
Improvements. Landlord shall have a direct right of action against Tenant even if no third party
has asserted a claim. The indemnification and Environmental Cleanup requirements under
Article 21 include, but, are not necessarily limited to:
(a) Losses attributable to diminution in the value of the Premises or
Improvements;
(b) Losses of rental or other income from the Premises or Improvements;
(c) Loss of or damage to natural resources regarding which Landlord is the
lawfully designated trustee;
(d) Loss or restriction of use of rentable space(s) in the Premises or
Improvements;
(e) Adverse effect on the marketing of any space(s) in the Premises or
Improvements; and
(f) All other liabilities, obligations, penalties, fines, claims, actions (including
remedial or enforcement actions of any kind and administrative or judicial proceedings, orders,
or judgments), damages (including consequential and punitive damages), and costs (including
reasonable attorney, consultant, and expert fees and expenses).
21.3 Termination of Lease.
Upon the expiration or earlier termination of this Lease Tenant shall: (i) cause all Tenant
Hazardous Materials (and Pre-Existing Hazardous Materials Materially Exacerbated by a
Tenant Party) to be removed from the Premises and Improvements and disposed of in
accordance with all applicable provisions of Environmental Law; (ii) remove any underground or
aboveground storage tanks or other containers installed or used by Tenant, or its predecessors
as Tenant or otherwise under this Lease, if any, to store any Hazardous Material on the
Premises or Improvements, and repair any damage to the Premises caused by such removal;
(iii) cause any soil or other portion of the Premises or Improvements which has become
contaminated by any Hazardous Material (or any Pre-Existing Hazardous Materials Materially
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Exacerbated by a Tenant Party) during the Term to be decontaminated, detoxified, or otherwise
cleaned up in accordance with the applicable requirements of any government agency with
authority over the Premises or Improvements; and (iv) surrender possession of the Premises
and Improvements to Landlord free of any Tenant Hazardous Materials (and any Pre-Existing
Hazardous Material Materially Exacerbated by a Tenant Party); provided, however, with respect
to any Material Exacerbation of any Pre-Existing Hazardous Material, Tenant's responsibility
shall be limited to remediating such Existing Hazardous Material condition to such an extent that
Landlord's liability and responsibility for such Pre-Existing Hazardous Material is no greater than
such liability and responsibility would have been on the Commencement Date had Tenant not
Materially Exacerbated such Pre-Existing Hazardous Material condition thereafter.
21.4 Storage Tanks.
21.4.1 Storage Tanks.
Except as otherwise described in the Plans, no underground storage tanks ("USTs") or
aboveground storage tanks ("ASTs") shall be permitted to be installed on or under the Premises
without the prior written consent of Landlord in its sole and absolute discretion. In the event
Tenant obtains such approval to install a UST or an AST on or under the Premises then Tenant
shall be responsible for complying with all Laws pertaining to such UST or AST, including tank
monitoring of such UST or AST as required by the County of San Diego Hazardous Material
Management Division ("HMMD") or any other responsible agency and Tenant further agrees to
take sole responsibility for reporting unauthorized releases from such UST to HMMD and
Landlord within twenty-four (24) hours of such unauthorized release. Tenant will be responsible
for all fees and costs related to the unauthorized release of any Hazardous Material from such
AST or UST or any required Environmental Cleanup as a result thereof including, but not limited
to: investigative, surface and groundwater clean-up, and expert and agency fees. Tenant shall
maintain evidence of financial responsibility for taking corrective action and for compensating
third parties for bodily injury and/or property damage caused by a release from any such UST or
AST. Tenant further agrees to be responsible for maintenance and repair of any such USTs
and ASTs; obtaining tank permits; filing a business plan with HMMD or other responsible
agency; and for paying for all regulatory agency fees relating to USTs and ASTs.
21.4.2 Records.
Tenant agrees to keep complete and accurate records regarding USTs and ASTs on the
Premises for the prior three (3) year period, including, but not limited to, records relating to
permit applications, monitoring, testing, equipment installation, repairing and closure of the
USTs and ASTs, and any unauthorized releases of Hazardous Materials. Tenant also agrees to
make such records available for Landlord or responsible agency inspection. Tenant further
agrees to include a copy of Health and Safety Code, Chapter 6.7, Section 25299, as part of any
agreement between Tenant and any operator of USTs or ASTs.
21.4.3 Aboveground Storage Tanks.
In the event Tenant obtains approval to install an AST or such approval is not required,
Tenant shall be responsible for complying with all Laws pertaining to such AST. In connection
with such AST, Tenant shall, in accordance with this Lease and applicable Laws, secure and
pay for all necessary permits and approvals, prepare a spill prevention control counter measure
plan and conduct periodic inspections to ensure compliance therewith. In addition, Tenant shall
maintain and repair said tanks to conform and comply with all other applicable Laws for ASTs,
including without limitation all of the requirements of Health & Safety Code, Chapter 6.67,
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Sections 25270 through 25270.13 as presently existing or as hereinafter amended, including
without limitation conducting daily visual inspection of such ASTs, allowing the San Diego
Regional Water Quality Control Board ("SDRWQCB"), Landlord, and/or responsible agency, to
conduct periodic inspections. Tenant also shall comply with valid orders of the SDRWQCB,
filing the required storage tank statement and payment of the fee therefor, establishing and
maintaining the required monitoring program and systems, reporting spills as required, and
payment of lawfully imposed penalties as provided therein and as otherwise provided by Law.
21.5 Environmental Covenants.
21.5.1 Excavated Soil Removal.
Tenant hereby acknowledges that excavation of soils from the Premises could result in
exportation of a regulated waste requiring appropriate characterization, handling, transport and
disposal (collectively, "Excavated Soil Removal"). Landlord takes no responsibility and
assumes no liability whatsoever for Excavated Soil Removal. Accordingly, Tenant hereby
waives any claim, or potential claim, it may have to recover costs or expenses from Landlord
arising out of or associated with Excavated Soil Removal and agrees to indemnify, defend and
hold harmless the Landlord Parties from and against any and all claims (including under
negligence or strict liability), liabilities, losses, damages, costs, and expenses arising from, out
of, or in any way related to Excavated Soil Removal, except only claims or litigation arising
through the gross negligence or willful misconduct of Landlord.
21.5.2 Worker Claims for Hazardous Material.
Landlord shall have no liability or responsibility for ensuring that Tenant's workers,
including without limitation those conducting testing, construction and maintenance activities on
the Premises and Improvements are protected from any Hazardous Material existing on the
Premises and Improvements. Tenant shall assess all human health risks from vapor transport
or direct contact with residual hazardous substances or contaminants and incorporate such
engineering and institutional controls as may be required to sufficiently protect human health of
onsite workers and transient visitors. Tenant hereby waives any claim, or potential claim, it may
have to recover any damages, losses, Related Costs related to worker exposure or alleged
worker exposure to any residual onsite contamination and to indemnify, defend and hold
harmless the Landlord Parties from and against any and all such Related Costs, claims
(including under negligence or strict liability), liabilities, losses and damages, except only claims
or litigation arising through the gross negligence or willful misconduct of Landlord.
21.5.3 Covenant Not To Sue and Release of Landlord.
Tenant hereby RELEASES the Landlord Parties from, COVENANTS NOT TO SUE the
Landlord Parties for and ASSUMES FOR ITSELF all obligations, requirements and liabilities of
Tenant under Article 21, including for claims for contribution, equitable indemnity or otherwise
seeking to transfer or limit the obligations, requirements and liabilities of Tenant under Article
21. With respect to all releases made by Tenant under or pursuant to this Article 21, Tenant
hereby waives the application and benefits of California Civil Code § 1542 and hereby verifies
that it has read and understands the provision of California Civil Code § 1542 set forth in Article
22.
21.6 Survival.
The terms of this Article 21 shall survive the expiration or earlier termination of this Lease.
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22. "AS-IS" LEASE AND WAIVERS
22.1 Tenant's Acknowledgment.
Tenant acknowledges that prior to entering into this Lease, Landlord has given Tenant sufficient
opportunity to consider, inspect and review, to Tenant's complete satisfaction: (1) any and all
rights, appurtenances, entitlements, obligations, and liabilities concerning the Premises,
including without limitation any Existing Improvements; (2) the physical condition of the
Premises, including, without limitation, the condition and value of any Improvements and the
soils, subsoil media, and ground waters at or under the Premises; (3) the risk of climate change
and the possible adverse consequences thereof, including, without limitation, rises in sea level
and possible damage to and destruction of the Premises; (4) the development potential of the
Premises including, without limitation, as may be affected by the preceding clause (3); (5) the
effect of all Laws, including, without limitation, those concerning land use, environmental quality
and maintenance, endangered species, and traffic regulation; (6) the financial prospects of the
Premises and local market conditions; (7) Tenant's determination of the feasibility of Tenant's
intended use and enjoyment of the Premises; (8) the presence of any Pre-Existing Hazardous
Material and any other contamination of the Premises, including any Improvements, soils,
groundwater and adjacent to San Diego Bay water and sediment; and (9) all other facts,
circumstances, and conditions affecting, concerning or relating to the Premises. The land use;
the environmental, biological, physical and legal condition of the Premises; the risks associated
with possible climate change; the feasibility of Tenant's intended use and enjoyment of the
Premises; and such other facts, circumstances and conditions being collectively referred to
herein as the "Condition of the Premises"; and, without limitation on any other provision of this
Lease, Tenant expressly assumes the risk that adverse conditions affecting the Premises have
not been revealed by Tenant's investigations.
22.2 Only Landlord's Express Written Agreements Binding.
Tenant acknowledges and agrees that no Person acting on behalf of Landlord is authorized to
make, and that except as expressly set forth in this Lease, neither Landlord nor anyone acting
for or on behalf of Landlord has made, any representation, warranty, agreement, statement,
guaranty or promise to Tenant, or to anyone acting for or on behalf of Tenant, concerning the
Condition of the Premises or any other aspect of the Premises. Tenant further acknowledges
and agrees that no representation, warranty, agreement, statement, guaranty or promise, if any,
made by any Person for or acting on behalf of Landlord which is not expressly set forth in this
Lease will be valid or binding on Landlord.
22.3 As-Is Lease.
Tenant further acknowledges and agrees that Tenant's execution of this Lease shall constitute
Tenant's representation, warranty and agreement that the Condition of the Premises has been
independently verified by Tenant to its full satisfaction, and that, except to the extent of the
express covenants of Landlord set forth in this Lease, Tenant will be leasing the Premises
based solely upon and in reliance on its own inspections, evaluations, analyses and
conclusions, or those of Tenant's representatives; and that TENANT IS LEASING THE
PREMISES IN ITS "AS-IS, WITH ALL FAULTS" CONDITION AND STATE OF REPAIR
INCLUSIVE OF ALL FAULTS AND DEFECTS, WHETHER KNOWN OR UNKNOWN, AS MAY
EXIST AS OF THE TENANT'S EXECUTION OF THIS LEASE, INCLUDING ANY EXISTING
IMPROVEMENTS. Without limiting the scope or generality of the foregoing, Tenant expressly
assumes the risk that the Premises do not or will not comply with any Laws now or hereafter in
effect.
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22.4 Waivers, Disclaimers and Indemnity.
22.4.1 Waiver and Disclaimer.
Tenant hereby fully and forever waives, and Landlord hereby fully and forever disclaims,
all warranties of whatever type or kind with respect to the Premises, whether expressed, implied
or otherwise including, without limitation, those of fitness for a particular purpose, tenantability,
habitability or use.
22.4.2 Landlord's Materials.
Tenant acknowledges that any information and reports, including, without limitation, any
engineering reports, architectural reports, feasibility reports, marketing reports, soils reports,
environmental reports, analyses or data, or other similar reports, analyses, data or information
of whatever type or kind which Tenant has received or may hereafter receive from Landlord
Parties or its agents or consultants (collectively, the "Landlord's Materials") have been
furnished without warranty of any kind and on the express condition that Tenant will make its
own independent verification of the accuracy, reliability and completeness of such Landlord's
Materials and that Tenant will not rely thereon. Accordingly, subject to terms of Section 22.4.3
below, Tenant agrees that under no circumstances will it make any claim against, bring any
action, cause of action or proceeding against, or assert any liability upon, Landlord Parties or
any of the Persons that prepared or furnished any of the Landlord's Materials as a result of the
inaccuracy, unreliability or incompleteness of, or any defect or mistake in, any such Landlord's
Materials, and Tenant hereby fully and forever releases, acquits and discharges Landlord
Parties and each Person furnishing such Landlord's Materials of and from, any such claims,
actions, causes of action, proceedings or liability, whether known or unknown.
22.4.3 Release and Waiver.
(a) Release. Except to the extent of Claims (as defined below) against
Landlord arising from any breach by Landlord of its covenants and obligations expressly
provided in this Lease, Tenant, on behalf of Tenant, its successors and assigns, hereby fully
and forever releases, acquits and discharges Landlord of and from, and hereby fully, and
forever waives and agrees not to assert any and all claims, actions, causes of action, suits,
proceedings, demands, rights, damages, Related Costs, losses, judgments, provisional relief,
fines, penalties, and fees, including, without limitation, any and all claims for compensation,
reimbursement, or contribution whatsoever (individually and collectively, "Claims"), whether
known or unknown, direct or indirect, foreseeable or unforeseeable, absolute or contingent,
that any Tenant Party or any of Tenant's successors or assigns now has or may have or which
may arise or be asserted in the future arising out of, directly or indirectly, or in any way
connected with: (i) any act or omission of Landlord (or any Person acting for or on behalf of
Landlord or for whose conduct Landlord may be liable), whether or not such act be the active,
passive or sole negligence of Landlord, in connection with prior ownership, maintenance,
operation or use of the Premises; (ii) any condition of environmental contamination or pollution
at the Premises (including, without limitation, any Pre-Existing Hazardous Material or other
contamination or pollution of any soils, subsoil media, surface waters or ground waters at the
Premises and any clean-up or abatement order effecting the Premises); (iii) to the extent not
already included in clause (ii) above, the prior, present or future existence, release or
discharge, or threatened release, of any Hazardous Materials at the Premises (including,
without limitation, the release or discharge, or threatened release, of any Hazardous Materials
into the air at the Premises or into any soils, subsoils, surface waters or ground waters at the
Premises); (iv) the violation of, or noncompliance with, any Environmental Law or other
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applicable Law now or hereafter in effect, however and whenever occurring; (v) the condition of
the soil and groundwater at the Premises; (vi) the Condition of the Premises, including, without
limitation, the condition of any improvements located on the Premises including, without
limitation, the structural integrity and seismic compliance of such improvements; (vii) any
matters which would be shown on an accurate ALTA land survey of the Premises (including,
without limitation, all existing easements and encroachments, if any); (viii) all applicable Laws
now or hereafter in effect; (ix) matters which would be apparent from a visual inspection of the
Premises; or (x) to the extent not already covered by any of the foregoing clauses (i) through
(ix) above, the use, maintenance, development, construction, ownership or operation of the
Premises by Landlord or any predecessors)-in-interest in the Premises of Landlord.
(b) Waiver of Civil Code Section 1542. With respect to all releases made by
Tenant under or pursuant to Article 21 and this Article 22, Tenant hereby waives the application
and benefits of California Civil Code § 1542 and hereby verifies that it has read and
understands the following provision of California Civil Code § 1542:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his or her favor at the time of
executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor."
Tenant:
22.4.4 Survival.
The terms of this Article 22 shall survive the expiration or earlier termination of this
Lease.
23. QUITCLAIM OF TENANT'S INTEREST UPON TERMINATION
Subject to the terms of this Article 23 and Article 7 upon the expiration or earlier termination of
this Lease, all Improvements, excluding trade fixtures, installed or constructed on the Premises,
that either (i) Tenant elects not to demolish pursuant to Tenant's Demolition Election and the
Existing Improvements and public or private utilities that Landlord requests that Tenant does not
demolish pursuant to Landlord's Non-Demolition Notice, or (ii) Landlord elects that Tenant not
demolish pursuant to Landlord End of Term Election, as applicable, shall become the property
of Landlord and a part of the realty without compensation to Tenant and shall be surrendered to
Landlord. In order to confirm such transfer of ownership, at Landlord's request following the
expiration or earlier termination of the Lease, Tenant shall deliver to Landlord a Tenant-
executed quitclaim deed in recordable form conveying the Improvements to Landlord free and
clear of any mechanics' or materialmen's liens and other encumbrances. Without limitation of
the foregoing, Tenant hereby appoints Landlord as Tenant's attorney-in-fact to execute such
deed in the name and on behalf of Tenant and to record same in the official records of San
Diego County, California. This power of attorney is irrevocable and coupled with an interest.
24. PEACEABLE SURRENDER
Upon expiration or earlier termination of this Lease, Tenant shall peaceably surrender the
Premises to Landlord in accordance with the end of Term obligations set forth in this Lease,
including without limitation, Articles 7, 21 and 23. Notwithstanding the foregoing, Tenant shall
leave or demolish such Improvements as required pursuant to Article 7. If Tenant fails to
surrender the Premises at the expiration of this Lease or the earlier termination or cancellation
thereof in the condition required under this Lease, in addition to Landlord's other remedies,
Tenant shall defend and indemnify Landlord from all liability and expense resulting from the
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delay or failure to surrender, including without limitation any succeeding tenant claims based on
Tenant's failure to surrender or Landlord's failure to deliver the Premises and loss of profits.
25. WAIVER
No waiver of any provision of this Lease shall be implied by any failure of a party to enforce any
remedy on account of the violation of such provision, even if such violation shall continue or be
repeated subsequently. Any waiver by a party of any provision of this Lease may only be in
writing, and no express waiver shall affect any provision other than the one specified in such
waiver and that one only for the time and in the manner specifically stated. No receipt of
monies by Landlord from Tenant after the termination of this Lease shall in any way alter the
length of the Term or of Tenant's right of possession hereunder or after the giving of any notice
shall reinstate, continue or extend the Term or affect any notice given Tenant prior to the receipt
of such monies, it being agreed that after the service of notice or the commencement of a suit or
after final judgment for possession of the Premises, Landlord may receive and collect any Rent
due, and the payment of said Rent shall not waive or affect said notice, suit or judgment. The
Landlord shall have the power and authority to waive any requirement of Tenant under this
Lease except as such authority may be limited by the Port Act or BPC from time to time;
provided, however, Landlord may elect to obtain approval of the BPC as a condition to
exercising this authority.
26. HOLDOVER
This Lease shall terminate without further notice at expiration of the Term. Any holding over by
Tenant after either expiration or earlier termination of this Lease without Landlord's prior written
consent shall be a tenancy-at-sufferance upon all of the provisions of this Lease, except those
pertaining to the Term, and except that Minimum Annual Rent shall be 150% of the Minimum
Annual Rent in effect prior to such expiration or termination. If Tenant, with Landlord's consent,
remains in possession of the Premises after the expiration or earlier termination of this Lease,
such possession shall be deemed a month-to-month tenancy terminable upon thirty (30) days'
notice furnished at any time by either Party to the other Party. All provisions of this Lease,
except those pertaining to the Term, shall apply to the month-to-month tenancy, and Tenant
shall continue to pay all Rent required by this Lease. Notwithstanding anything herein to the
contrary, in no event shall the Term of this Lease, together with any holdover period, exceed
sixty-six (66) years.
27. NOTICES
All notices provided for by this Lease or by Law to be given or served upon Landlord or Tenant
shall be addressed as provided in Section 1.11 (as such address may have been changed by
subsequent notice given to the other Party) and shall be in writing and: (i) personally served
upon Landlord or Tenant, or any Person hereafter authorized by either Party in writing to receive
such notice, (ii) delivered via reputable over-night courier service, or (iii) delivered by U.S. postal
service certified letter.
Any notice or notices given or served as provided herein shall be effectual and binding for all
purposes upon the parties so served; provided, however, that, if served by certified mail, service
shall be considered completed and binding on the Party served forty-eight (48) hours after
deposit in the U.S. Mail.
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28. SECURITY DEPOSIT
28.1 Amount of Security Deposit.
A security deposit in the amount set forth in Section 1.10 shall be provided to Landlord by
Tenant, on or before Tenant's execution of this Lease. The security deposit shall be held by
Landlord and used for the purpose of remedying an Event of Default. If there shall be an Event
of Default, then Landlord shall have the right, but shall not be obligated, to use, apply or retain
all or any portion of the security deposit for the payment of any (a) Rent or any other amount
applicable to such Event of Default, or (b) amount that Landlord may spend or become
obligated to spend, or for the compensation of Landlord for any losses incurred, by reason of
such Event of Default (including any damage or deficiency arising in connection with the
reletting of the Premises). If any portion of the security deposit (in whatever form) is so used or
applied, then, within three (3) Business Days after Landlord gives written notice to Tenant of
such use or application, Tenant shall increase the Letter of Credit (as defined below) (or deliver
to Landlord additional funds, in the case of a cash security deposit) in an amount sufficient to
restore the security deposit to the original security deposit amount, and Tenant's failure to do so
shall constitute an Event of Default if such failure is not cured within the notice and cure period
set forth in Section 12.1.2 above. Tenant waives any and all rights that Tenant may have under
Section 1950.7 of the California Civil Code, any successor statute, and all similar provisions of
Law, now or hereafter in effect. Tenant agrees that (i) any statutory time frames for the return of
a security deposit are superseded by the express period identified in this Article 28, and
(ii) Landlord has the right to claim from the security deposit any and all sums expressly identified
in this Article 28, and any additional sums reasonably necessary to compensate Landlord for
any and all losses or damages caused by the Event of Default, including, but not limited to, all
damages or Rent due upon termination of this Lease pursuant to Section 1951.2 of the
California Civil Code. Landlord shall not be required to keep the security deposit in trust,
segregate it or keep it separate from Landlord's general funds, and Tenant shall not be entitled
to any interest accrued on the security deposit.
28.2 Letter of Credit.
Except as provided in this Section 28.2, the security deposit shall be in the form of an
irrevocable stand-by letter of credit ("Letter of Credit") drawn on Wells Fargo Bank. The
principal sum of the Letter of Credit shall be made payable to Landlord or order. Each Letter of
Credit provided during the Term shall be valid for a minimum of twelve (12) months from date of
issuance; provided, however, that, when the remaining Term is one (1) year or less, the Letter
of Credit shall be valid for a minimum of three (3) months beyond the Expiration Date and if a
Letter of Credit is not valid for the entire remaining Term plus three (3) months beyond the
Expiration Date, then such Letter of Credit shall be extended or renewed at least sixty (60) days
prior to its expiration.
All of the principal sum of the Letter of Credit shall be available unconditionally to Landlord for
the purposes and uses for the security deposit provided in Section 28.1. The bank, and the
form and provisions of the Letter of Credit shall be acceptable to the Landlord, in its reasonable
discretion, and if not so acceptable, Landlord shall have the right to reject such Letter of Credit;
provided, however, that a Letter of Credit substantially in the form of Exhibit "J" attached hereto
without material changes shall be deemed acceptable to Landlord and any of the banks listed
on of Exhibit "K" attached hereto shall be deemed acceptable to Landlord. The Letter of Credit
and Drawing Certificate shall not be acceptable to Landlord if it requires Landlord to present the
Letter of Credit in person, send written notice of an Event of Default or request or demand
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payment from Tenant after an Event of Default, prior to Landlord drawing on any funds under
the Letter of Credit.
28.3 Cash Alternative.
Notwithstanding the above, Tenant may elect to provide said security deposit in the form of
cash.
28.4 Release of Security Deposit.
Subject to Section 12.2.4, Landlord shall release to Tenant or order, as applicable, the full then-
remaining amount of the security deposit within ninety (90) days following Completion of all of
the Initial Project Improvements and receipt by Landlord of a copy of the final certificate of
occupancy with respect to the Initial Project Improvements.
29. GENERAL PROVISIONS
29.1 Terms; Captions.
The necessary grammatical changes required to make the provisions hereof apply either to
corporations, limited liability companies or partnerships or individuals, men or women, as the
case may require, shall in all cases be assumed as though in each case fully expressed. The
captions of Articles and Sections are for convenience only and shall not be deemed to limit,
construe, affect or alter the meaning of such Articles and Sections. The word "including" or any
variation thereof means "including, without limitation" and shall not be construed to limit any
general statement that it follows to the specific or similar items or matters immediately following
it.
29.2 Binding Effect.
Each of the provisions of this Lease shall extend to and shall, as the case may require, bind or
inure to the benefit not only of Landlord and of Tenant, but also of their respective heirs,
successors or assigns, provided this clause shall not permit any Assignment by Tenant contrary
to the provisions of Article 11 of this Lease.
29.3 No Merger.
If both Landlord's and Tenant's estates in the Premises become vested in the same owner
(other than by termination of this Lease following an Event of Default hereunder, subject to the
rights of a Permitted Lender pursuant to Section 10.3 above), this Lease shall not be terminated
by application of the doctrine of merger except at the express election of Landlord and with the
consent of any Permitted Lender.
29.4 Recording.
Unless the Parties agree otherwise in writing in advance, on or before the Commencement
Date, Landlord and Tenant shall execute a Memorandum of Lease substantially in the form of
Exhibit "F" attached hereto without any material changes (the "Memorandum of Lease"). At
Tenant's option, Tenant shall cause the Memorandum of Lease to be recorded at Tenant's sole
cost and Tenant shall be solely responsible for any transfer taxes or fees required to be paid in
connection with the recording of the Memorandum of Lease.
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29.5 Landlord Transfer.
Tenant acknowledges that, subject to the Port Act and the oversight of the California State
Lands Commission, Landlord has the right to transfer all or any portion of its interest in the
Premises and in this Lease, and Tenant agrees that in the event of any such transfer (a
"Landlord Transfer"), Landlord shall automatically be released from all liability under this
Lease, and Tenant agrees to look solely to such transferee for the performance of Landlord's
obligations hereunder after the date of such Landlord Transfer. Each landlord hereunder shall
be liable only for those obligations arising during its period of ownership and shall be released
from further obligations after it completes a Landlord Transfer. The liability of Landlord and any
transferee of Landlord shall be limited to their respective interests in the Premises and
Improvements, as the case may be, and Landlord and such transferee shall be without personal
liability under this Lease, and Tenant hereby expressly waives and releases such personal
liability on behalf of itself and all Persons claiming by, through or under Tenant.
29.6 Time of Essence.
Time is of the essence with respect to this Lease and each of its provisions.
29.7 Partial Invalidity.
If any term, provision or condition contained in this Lease shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term, provision or
condition to persons or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term, provision and
condition of this Lease shall be valid and enforceable to the fullest extent possible permitted by
Law.
29.8 Entire Agreement.
It is understood and acknowledged that there are no oral agreements between the Parties
affecting this Lease and this Lease supersedes and cancels any and all previous negotiations,
arrangements, agreements and understandings, if any, between the Parties with respect to the
subject matter hereof. This Lease contains all of the terms, covenants, conditions, warranties
and agreements of the Parties relating in any manner to the rental, use and occupancy of the
Premises and the Improvements and shall be considered to be the only agreement between the
Parties and their representatives and agents; and none of the terms, covenants, conditions or
provisions of this Lease can be modified, deleted or added to except in writing signed by the
Parties. All negotiations and oral agreements acceptable to the Parties have been merged into
and are included herein. There are no other representations or warranties between the Parties,
and all reliance with respect to representations is based totally upon the representations and
agreements contained in this Lease. However, Tenant acknowledges and agrees that other
documents may restrict Tenant's use of the Premises and the Improvements or impose other
obligations not specifically referenced in this Lease, including, but not limited to, conditions of
approval of a CDP or mitigation measures under CEQA.
29.9 Joint and Several.
If there is more than one Person constituting Tenant (i) the obligations imposed upon such
persons or entities under this Lease shall be joint and several and (ii) the act or signature of, or
notice from or to, any one or more of them with respect to this Lease shall be binding upon each
and all of such persons and entities with the same force and effect as if each and all of them
had so acted or signed, or given or received such notice.
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29.10 Tenant's Authority.
Tenant hereby represents and warrants that Tenant is a duly formed and existing entity qualified
to do business in the state in which the Premises are located and that Tenant has full right and
authority to execute and deliver this Lease and that each Person signing on behalf of Tenant is
authorized to do so.
29.11 Financial and Other Information Supplied by Tenant.
Tenant represents and warrants that the financial statements provided to Landlord from the
Completion Guarantor are true, correct and not misleading in any material respect. The breach
of this warranty shall constitute an Event of Default.
29.12 Attorneys' Fees.
Should any suit or action be commenced to enforce, protect, or establish any right or remedy of
any of the terms and conditions hereof, including without limitation a summary action
commenced by Landlord under the laws of the state of California relating to the unlawful
detention of property, the prevailing party shall be entitled to have and recover from the losing
party reasonable attorneys' fees and costs of suit, including, without limitation, any and all costs
incurred in enforcing, perfecting and executing such judgment.
29.13 Transaction Costs.
To the extent Tenant requests any approval, consent or other action by Landlord (including,
without limitation, in connection with any proposed Alterations, Financing Transaction or
Transfer), Tenant shall pay or reimburse Landlord, upon written demand therefor, all of
Landlord's reasonable attorneys' fees and other third party costs incurred by Landlord in
connection therewith, together with Landlord's then current processing or cost recovery fee for
similar transactions consistent with any schedule of such fees then utilized by Landlord.
Landlord shall provide Tenant with a copy of any such fee schedule following written request
therefor from Tenant. Such costs and fees shall be payable to Landlord whether or not
Landlord grants such approval or consent, or undertakes the action requested by Tenant.
29.14 Governing Law.
Venue for any legal proceeding shall be in San Diego County, California. This Lease shall be
construed and enforced in accordance with the Laws of the State of California.
29.15 Brokers.
Landlord and Tenant each hereby warrant to each other that neither has retained or employed
any real estate broker or agent in connection with the negotiation of this Lease. Tenant shall be
solely responsible for the payment of any fee or commission due to any broker and agrees to
indemnify and defend and hold Landlord harmless from any and all claims, demands, losses,
liabilities, lawsuits and costs and expenses (including without limitation reasonable attorneys'
fees) with respect to any leasing commission or equivalent compensation alleged to be owing
by Landlord.
29.16 Counterparts.
This Lease may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same agreement.
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29.17 Drafting Presumption; Review Standard.
The parties acknowledge that this Lease has been agreed to by both the parties, that both
Landlord and Tenant have consulted with attorneys with respect to the terms of this Lease and
that no presumption shall be created against the drafting party. Any deletion of language from
this Lease prior to its execution by Landlord and Tenant shall not be construed to raise any
presumption, canon of construction or implication, including, without limitation, any implication
that the parties intended thereby to state the converse of the deleted language. Unless
otherwise specified in this Lease, any approval or consent to be given by Landlord or BPC may
be given or withheld in Landlord's or BPC's sole and absolute discretion.
29.18 Certified Access Specialist.
For purposes of Section 1938 of the California Civil Code, Landlord hereby discloses to Tenant,
and Tenant hereby acknowledges, that the Premises have not undergone inspection by a
Certified Access Specialist.
29.19 Third Party Beneficiaries.
There are no third party beneficiaries of this Agreement, except for any rights the Permitted
Lender may have under Section 10.3.2 of the Lease.
Signature page follows.
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IN WITNESS WHEREOF, LANDLORD AND TENANT HAVE EXECUTED THIS LEASE AS OF
THE DATE FIRST SET FORTH ABOVE.
APPROVED AS TO FORM AND LEGALITY: SAN DIEGO UNIFIED PORT DISTRICT,
GENERAL COUNSEL a public corporation
By: By:
Assistant/Deputy Tony Gordon
Director, Real Estate
RIDA CHULA VISTA, LLC,
a Delaware limited liability company
By: 1
Signature
NAME:
Its:
By:
Signature
NAME:
Its:
By:
Signature
SDUPD Docs No.
US-DOCS\96961081.42
DEFINITIONS ADDENDUM
This Definitions Addendum constitutes a part of that certain Lease (the "Lease") entered into as
of 1 20_ by and between the SAN DIEGO UNIFIED PORT
DISTRICT, a public corporation ("Landlord") and RIDA CHULA VISTA, LLC, a Delaware limited
liability company ("Tenant") and by reference to the same in the Lease, the following definitions
are incorporated into and constitute a part of the Lease.
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
ABANDONMENT: defined in Section 12.1.1.
.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
ACCEPTABLE BRAND: defined in Section 1.3.
.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
ACH: defined in Section 5.
......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
ADA: the Americans with Disabilities Act, 42 U.S.C. §12101 (et seq.)
and the regulations promulgated thereunder, as the same may
be amended from time to time.
.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
ADDITIONAL RENT: defined in Section 5.5.
......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
ADEQUATE INSURANCE: insurance that using standards customary in the insurance
industry provides adequate protection for the Landlord Parties
and/or members of the public using the Premises or using
services connected with Tenant's use or occupancy of the
Premises.
ADVERTISING DEVICES: defined in Section 6.6
.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
AFFILIATE: with respect to any Person, any Person that Controls, is directly
or indirectly Controlled by, or is under common ownership or
Control with, such Person.
ALTERATIONS: any alterations, additions, installations, removals, demolitions,
improvements or other physical changes to the Premises and
the Improvements following the Completion of the Initial Project
Improvements, including the addition, installation or removal of
any fixtures (other than trade fixtures) but excluding installation,
maintenance, replacement or refreshing of any furniture, trade
fixtures or equipment.
ALTERATION PLANS: defined in Section 6.3.1.
.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
APPLICANT: defined in Section 10.4.3(a).
..........................................................................................................................................................................................................................................
ASSIGNMENT: any disposition, assignment, sale, conveyance, exchange or
other transfer of all or any portion of Tenant's interest in this
Lease (including without limitation any easements), the
leasehold estate created hereby, the Premises or the
Improvements, whether bv operation of law or otherwise.
....................................................................................................................................................................... .........................................................................................................................I...........................................................................................................................................
ASSIGNMENT defined in Section 11.6.
PARTICIPATION FEE:
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
ASSIGNMENT defined in Section 11.6.
PROCEEDS:
US-DOCS\96961081.42
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
ASTS: defined in Section 21.4.1.
BANKRUPTCY CODE: the United States Bankruptcy Code (11 U.S.C. § 101, et seq.),
as amended, andany.successor statute.
....................................................................................................................................................._............................................................................................................. .............................................................................................................................................................................................................................
BANKRUPTCY EVENT: the occurrence with respect to Tenant, any Completion
Guarantor(s) or any other Person liable for Tenant's obligations
hereunder (including without limitation any member or manager
of Tenant) of any of the following: (a) appointment of a receiver
or custodian for any property of such Person, or the institution of
a foreclosure or attachment action upon any property of such
Person; (b) filing by such Person of a voluntary petition under
the provisions of the Bankruptcy Code; or (c) such Person
making or consenting to an assignment for the benefit of
creditors or a composition of creditors.
....................................................................................................................................................._....................................................................................... P ........................................................................................................................................................................................
BRAND STANDARDS: standards of the brand that are applicable to the Improvements,
subject to any waivers or limitations agreed by the holder of
such brand.
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
BMPS: defined in Section 15.1.
BPC: Board of Port Commissioners of the San Diego Unified Port
District.
BUILDABLE CONDITION: defined in Section 7.2.
BUSINESS DAY: a day (other than a Saturday or Sunday) on which banks in San
Diego County, California are open for ordinary banking
business.
CCC: defined in Section 4.5.
CDP: defined in Section 4.5.
CEQA: defined in Section 4.5.
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
CERTIFICATES: defined in Section 18.3.1.
CFR: defined in Section 18.2.6.
CHANGE OF CONTROL: with respect to any Person, a merger, consolidation,
recapitalization or reorganization of such Person or other
transaction or an amendment to any governing document of
such Person that, in the case of any of the foregoing, results in
any third party that is not an Affiliate of such Person having the
ability to Control such Person; provided that, with respect to
Tenant, as long as Ira Mitzner or any of his replacements set
forth in the Original LLC Agreement is the manager of Tenant in
accordance with the Original LLC Agreement, then there shall
be no Chan9.e of Control of Tenant.
....................................................................................................................................................._................................................................. .........................................................................................................................................................................................................................................................................
CHANGE IN defined on Exhibit R-1 attached hereto.
OWNERSHIP:
CHULA VISTA BUILDING Chula Vista Building Standards Code Title 15 of the Chula
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.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
CODE: Vista Municipal Code), as amended, and an successor statute.
....................................................................................................................................................._.............................. ) .........................................................................y.......................................................................................................
CLAIMS: defined in Section 22.4.3(a).
....................................................................................................................................................._.......................................................................................................................................... ..............................................................................................................................................................................................
COMMENCEMENT DATE: defined in Section 1.1.1.
COMPLETION AND shall mean that Tenant has obtained and delivered to Landlord
COMPLETE: (i) a certificate of occupancy or temporary certificate of
occupancy for substantially all of the Initial Project
Improvements or Alterations with respect to the Initial Project
Improvements, as applicable, from the appropriate
Governmental Authority or (ii) equivalent certification from the
appropriate Governmental Authority certifying that substantially
all of the Initial Project Improvements or Alternations to the
Initial Project Improvements, as applicable, may be used in
accordance with the designs therefor; provided, however, that
the Phase 1A Infrastructure Improvements shall be complete
when they are substantially completed.
COMPLETION defined in Section 1.12.
GUARANTORS)
................................................................................................................................................................................................................................................................................................................................................
COMPLETION defined in Section 1.12.
GUARANTY:
COMPONENT OF defined in Paragraph 7 of Exhibit "D" hereto.
PROJECT
IMPROVEMENTS:
CONDEMNATION: defined in Section 14.1.
CONDITION OF THE defined in Section 22.1.
PREMISES:
CONTEST: defined in Section 4.6.1.
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
CONTEST CONDITIONS: defined in Section 4.6.1.
CONSTRUCTION FORCE defined in Section 6.5.
MAJEURE EVENT:
CONSTRUCTION LATE defined in Section 6.1.
CHARGES:
CONSTRUCTION those requirements, conditions and procedures regulating the
REQUIREMENTS: installation, construction, modification and repair of
Improvements and Alterations as described in Exhibit "D"
attached to this Lease.
CONSULTANT defined in Section 8.1.
SERVICES:
CONTROL, CONTROL, shall be deemed, with respect to any Person, to be either or
CONTROLLED AND both (i) the ownership of more than fifty percent (50%) of the
CONTROLLING: stock or other voting interest of such Person or the ownership of
beneficial interests in such Person, or (ii) the power to direct the
-3-
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
management of such Person with respect to major decisions of
such Person, whether through voting interests or by way of
agreement.
....................................................................................................................................................._. ....................................................................................................................................................................................................................................................................................................................................
CONVENTION CENTER: the convention center that is to be located adjacent to the
Resort Hotel as depicted in Exhibit "B-1" hereto.
....................................................................................................................................................._................................................................................................... ......................................................................................................................................................................................................................................
CPI: the Consumer Price Index published by the United States
Department of Labor, Bureau of Labor Statistics, now known as
the "Consumer Price Index" for all Urban Consumers (Index
1982-1984 = 100). As used in this Lease, the phrase "as
adjusted for CPI" with respect to any Dollar amount means such
Dollar amount multiplied by a fraction, the numerator of which is
the CPI as of the first day of the Lease Year in which such
adjustment occurs, and the denominator of which is the CPI as
of the Commencement Date.
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
CVBMP DOCUMENTS: [TO BE INSERTED]
DDA: defined in Section 22.3.
DEFAULT RATE: an annual rate equal to the lesser of (i) the annual "Bank Prime
Loan" rate cited in the Federal Reserve Statistical Release
Publication H.15(519), published weekly (or such other
comparable index as Landlord and Tenant shall reasonably
agree upon if such rate ceases to be published), plus four
(4) percentage points, and (ii) the highest rate permitted by
.._applicable Law.
DEMOLITION AND a report prepared by a contractor licensed in the State of
REMEDIATION REPORT: California with expertise in demolition and remediation, which
report details and estimates the current cost and time period for
completion of the demolition work that is required by Section 7.2
and any remediation y .9y
remediation work that ma be required b Section 21.3.
....................................................................................................................................................._........................................ .................................................................................................................................. ............................. .................................... .............................................................................
DEMOLITION NOTICE: defined in Section 20.2.
DEVELOPMENT COSTS: the costs of the entire design, architectural work, engineering
work, development work and construction work with respect to
the Resort Hotel and the Convention Center.
DIR: defined in Section 6.8.1(d)(ii).
DISCRETIONARY defined in Section 8.1.
ENTITLEMENT:
DISCRETIONARY defined in Section 8.1.
PROJECT:
EIR: defined in Section 1.3.
ENVIRONMENTAL defined in Section 21.1.4.
CLEANUP:
........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
-4-
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
ENVIRONMENTAL LAWS: defined in Section 21.1.1.
EQUITY COLLATERAL defined in Section 10.1.3.
ENFORCEMENT ACTION:
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
EQUITY INVESTMENT: defined in Section 6.5.
ESTIMATED JEPA defined in Section 1.8(d).
DEVELOPMENT COST
CONTRIBUTION:
ESTIMATED PARKING the costs of the entire design, architectural work, engineering
IMPROVEMENTS work, development work and construction work with respect to
DEVELOPMENT COSTS: the Parking Improvements that are estimated by Tenant in its
reasonable discretion.
ESTIMATED TENANT defined in Section 1.8(df).
DEVELOPMENT COST
CONTRIBUTION:
ESTIMATED TOTAL defined in Section 1.8(c).
DEVELOPMENT COSTS:
EVENT OF DEFAULT: defined in Section 12.1.
EXISTING any Improvements (including utilities, storm drains and park
IMPROVEMENTS: ways) located upon the land (and water, if applicable) that are in
existence and located on, in, over or under the Premises as of
the date of this Lease, whether constructed by Landlord, a prior
tenant or another third party.
....................................................................................................................................................._............................
EXPIRATION DATE: defined in Section 1.1.2.
FINANCIAL INSTITUTION: (i) an insurance company qualified to do business in the state of
California; or (ii) a U.S. federally- or state-chartered bank,
savings bank, or savings and loan association; or (iii) a pension
or retirement fund operated for the employees and former
employees of, and regulated and controlled by, the United
States of America or any state thereof, or any agency thereof
(e.g., the California State Teachers' Retirement System); or
(iv) a real estate investment trust; or (v) any lender or
investment fund whose regular on-going business includes real
property secured financing for commercial or industrial
properties, or (vi) a Person owned and controlled by any one or
more of the preceding entities, or (vii) a combination of two or
more of thep......................................receding. entities.
....................................................................................................................................................._................................................................... ............................................................................................................................................................................................................................
FINANCING defined in Section 10.1.1.
TRANSACTION:
FORCE MAJEURE defined in Section 6.5.
EVENT:
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
FORECLOSURE defined in Section 10.3.3.
PURCHASER:
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.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
GOVERNMENTAL each and every governmental agency, authority, bureau,
AUTHORITY: department, quasi-governmental body, or other entity or
instrumentality having or claiming jurisdiction over the Premises
(or any activity this Lease allows), including the United States
federal government, the State and County governments and
their subdivisions and municipalities, and all applicable
Government Agencies, governmental authorities, and
subdivisions thereof.
GOVERNMENT AGENCY: defined in Section 21.1.2.
GREATER OF RENT: defined in Section 5.2.
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
GROSS INCOME: defined in Section 5.4.2(a).
HARD CONSTRUCTION with respect to any component of the Project Improvements, all
COSTS: costs that Tenant is required to pay to the respective
construction contractor for the construction of such component
of the Project Improvements under the construction agreement
_ p 1 p
for such component of the Project Improve
HAZARDOUS MATERIAL: any pollutant, contaminant, or hazardous, dangerous, or toxic
chemical, material, or substance, including, without limitation,
asbestos and oil and petroleum products, which is a "Hazardous
Material" or "Hazardous Substance" within the meaning of any
applicable Law (including, but not limited to, hazardous
substances as defined by Cal. Health & Safety Code § 25316
and anything that may result in contamination or pollution as
defined by Cal. Water Code § 13050), and at any concentration
that is subject to regulation under any Law relating to such
Hazardous Material or Hazardous Substance. Notwithstanding
any exclusion from the definition of hazardous substance or
hazardous material in any applicable Law, Hazardous Material
as defined herein includes any hydrocarbons, petroleum,
petroleum products or waste and any other chemical, substance
or waste, that is regulated by, or may form the basis of liability
under, any Environmental Laws.
HAZARDOUS defined in Section 21.1.1.
MATERIALS ACTIVITY:
HMMD: defined in Section 21.4.1.
HOTEL MANAGEMENT management agreement for the Resort Hotel between Tenant
AGREEMENT: p
and the Hotel Operator.
....................................................................................................................................................._.......................
HOTEL MANAGEMENT defined in Section 15.4.2.
AGREEMENT NOTICE:
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
HOTEL OPERATOR: Marriott or its successor in accordance with this Lease.
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
IMPROVEMENTS: Initial. Im. ro �.
vements and an Alterations thereto.
...........................................................................................................................................................................................
...................................................................................................... .........................................................................................................................................................................................
INCURABLE DEFAULT: defined in Section 10.3.2(b).
-6-
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
INITIAL PROJECT the Improvements that are located on the Premises and are
IMPROVEMENTS: initially developed by Tenant and described by the Plans
referred to in Exhibit "C" to this Lease, (as opposed to Existing
Improvements and subsequent Alterations to the Project
Improvements), and specifically excluding the Parking
Improvements and other than any Alterations to the Parking
Improve_ments_.
INSPECTION REPORT: defined in Section 15.3.
INQUIRY: defined in Section 21.1.2.
LANDLORD: defined in the preamble of this Lease.
....................................................................................................................................................._............................................................................. ................................................................................................................................................................................................................................................
LANDLORD END OF defined in Section 7.2.
TERM ELECTION:
LANDLORD PARTIES: Landlord, its officers, directors, members of the BPC,
employees, partners, affiliates, agents, contractors, successors
and assigns.
LANDLORD TRANSFER: defined in Section 29.5.
LANDLORD'S defined in Section 22.4.2.
MATERIALS:
LANDLORD'S NOW defined in Section 7.2.
DEMOLITION NOTICE:
LATE CHARGES: defined in Section 5.5.1.
LAWS: All applicable present and future state of California, federal and
local laws, rules, orders, ordinances, regulations, statutes,
requirements, codes and executive orders, including, without
limitation, the ADA, and any law of like import, and all rules,
regulations and government orders with respect thereto,
including without limitation any of the foregoing relating to
Hazardous Materials, environmental matters (including, but not
limited to, Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), the Resource
Conservation and Recovery Act ("RCRA"), the Clean Air Act,
the Clean Water Act, Oil Pollution Act, the Toxic Substances
Control Act and comparable and supplemental California laws),
public health and safety matters and landmarks protection, as
any of the same now exist or may hereafter be adopted or
amended. Said Laws shall include, but are not limited to, the
Laws enacted by the San Diego Unified Port District Act, such
as Article 10 of the San Diego Unified Port District Code; and
the Port Master Plan ("PMP"); the policies of the Board of Port
Commissioners; any applicable ordinances of the city in which
the Premises are located, including the building code thereof,
and any permits and approvals by any Governmental Authority
-7-
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
and the Landlord, including, without limitation, any California
Coastal Development Permit, applicable to the Premises or the
use or development thereof.
....................................................................................................................................................._.......................................................................... ................................................................................................................................................................................................................................................................
LEASE: defined in the preamble to this Lease.
LEASE YEAR: defined in Section 1.5.
LEASEHOLD AWARD: defined in Section 14.7.1.
LETTER OF CREDIT: defined in Section 28.2.
LOAN DOCUMENTS: defined in Section 10.1.1.
MAJOR ALTERATIONS: defined in Section 6.3.1.
MARRIOTT: an Marriott Hotel Services, Inc. and of its Affiliates.
....................................................................................................................................................._.................................................................................................................................................... y ............................................................................................................................
MATERIAL CHANGE IN shall occur when the Persons who own, directly or indirectly,
OWNERSHIP OF any equity interest in Tenant as of the Commencement Date, do
TENANT: not, in the aggregate, and would not if they acted in concert,
Control Tenant.
....................................................................................................................................................._...............................................................................................................................................................................................................................................................................................................................................
MEMORANDUM OF defined in Section 29.4.
LEASE:
MINIMUM ANNUAL defined in Section 1.5 and Section 5.3.
RENT:
MINIMUM ANNUAL RENT defined in Section 5.3.
LOOK BACK
ADJUSTMENT:
MINIMUM RENT LOOK defined in Section 1.5.1.
BACK ADJUSTMENT
DATES:
MINOR ALTERATIONS: defined in Section 6.3.2.
MONTHLY REPORT: defined in Section 5.4.3.
MSDS: defined in Section 21.1.1.
NEIGHBORING defined in Section 4.9.
PARCELS:
NEW LEASE: defined in Section 10.3.2(d).
....................................................................................................................................................._.......................................................................................................................................... ..............................................................................................................................................................................................
NEW OUTSIDE defined in Section 10.6.2.
CONSTRUCTION
COMPLETION DATE:
NEW PROJECT defined in Section 10.6.2.
IMPROVEMENTS
COMPLETION
TIMETABLE
....................................................................................................................................................._.................................................................................................................................................................................................................................................................................................................................................
NEW TENANT: defined in Section 10.3.2(d).
-8-
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
NOTICE OF ELECTION defined in Section 20.2.
TO TERMINATE:
OFAC: defined in Section 17.3.
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
OFFSITE PARKING LAND that certain Offsite Parking Land Lease, dated as of the date
LEASE: hereof, between Landlord, as lessor, and Tenant, as lessee.
OPERATION: defined in Section 5.5.
OPERATION FORCE defined in Section 6.5.
MAJEURE EVENT:
OPERATION FORCE defined in Section 6.5.
MAJEURE EVENT
TERMINATION OPTION:
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
OPERATION FORCE defined in Section 6.5.
MAJEURE EVENT
TERMINATION OPTION
CONDITION:
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
OPERATION FORCE defined in Section 6.5.
MAJEURE EVENT
TERMINATION OPTION
ELECTION NOTICE:
OPERATION FORCE defined in Section 6.5.
MAJEURE EVENT
TERMINATION OPTION
PURCHASE PRICE:
OPERATION FORCE defined in Section 6.5.
MAJEURE EVENT
TERMINATION OPTION
PURCHASE PRICE
PERIOD:
ORIGINAL LLC that certain Limited Liability Company Agreement of RIDA Chula
AGREEMENT: Vista, LLC, dated as of [ • ], as amended pursuant to any
amendment that does not amend the mansg.ement of Tenant.
....................................................................................................................................................._................................................................................................................................................................................................................................ .........................................................................................................
OUTSIDE defined in Section 1.8(a).
CONSTRUCTION
COMMENCEMENT DATE:
OUTSIDE defined in Section 1.8(b).
CONSTRUCTION
COMPLETION DATE:
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
PARKING defined in [ • ].
IMPROVEMENTS:
PARKING the costs of the entire design, architectural work, engineering
IMPROVEMENTS work, development work and construction work with respect to....
-9-
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
DEVELOPMENT COSTS: _ the Parking P mIm roveents.
PARKING defined in [ • ].
IMPROVEMENT RENT:
PARKING defined in [ • ].
IMPROVEMENT RENT
RATE:
PARKING STRUCTURE the land described on Exhibit "W" hereto.
LAND:
PAYMENT BOND: defined in Parag..........pra h 7 of Exhibit "D" hereto.
....................................................................................................................................................._................................................................................... .......................................................................................................................................................................................................................................
PERCENTAGE RENT: defined in Section 5.4.
PERCENTAGE RENT defined in Section 5.4.
RATE:
PERFORMANCE BOND: defined in Paragraph 7 of Exhibit"D" hereto.
....................................................................................................................................................._........................................................................... ......................................................................................................................................................................................................
PERMITTED defined in Section 10.2.
ENCUMBRANCE:
PERMITTED EQUITY defined in Section 10.2.
ENCUMBRANCE:
PERMITTED LEASE defined in Section 10.2.
ENCUMBRANCE:
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
PERMITTED MEZZANINE defined in Section 10.1.3.
LENDER:
PERMITTED MORTGAGE defined in Section 10.2.
LENDER:
PERMITTED LENDER: defined in Section 10.2.
PERMITTED USE: defined in Section 1.3.
PERSON: any individual, partnership, firm, joint venture, association,
corporation, limited liability company, government agency or any
other form of business entity._
[PHASE 1A [ • ]].
INFRASTRUCTURE
IMPROVEMENTS:
PLANS: defined in Section 6.1.
PMP: defined in Section 1.3.
PMPA: defined in Section 8.1.
PRE-EXISTING any Hazardous Material located on or under the Premises prior
HAZARDOUS MATERIAL: to the Commencement Date, whether known or unknown, and
any Hazardous Material located outside the Premises (including
any premises owned by Landlord) prior to the Commencement
Date that migrates onto the Premises thereafter.
-10-
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
PREMISES: defined in Section 1.2.
PREMISES defined in Section 1.8(e).
PREPARATION CAP:
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
PREMISES defined in Section 6.2.
PREPARATION WORK:
PREMISES defined in Section 6.2.
PREPARATION WORK
COSTS:
PREMISES SURFACE defined in Section [ • ].
PARKING:
PRIMARY USE: defined in Section 1.3.
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
PROHIBITED PERSON: defined in Section 17.3.
PROHIBITED PERSONS: defined in Section 17.3.
PROJECT: Tenant's development of the Project Improvements.
....................................................................................................................................................._......................................................................................P......................................................... 1 P.............................................................................................................................
PROJECT the Initial Project Improvements and, if and when substantially
IMPROVEMENTS: completed by Tenant in accordance with Section 4.3, the
_
Parking Improvements rovements.
PROJECT defined in Section 10.6.2.
IMPROVEMENTS
COMPLETION
ELECTION:
PROJECT defined in Section 10.6.2.
IMPROVEMENTS
COMPLETION ELECTION
NOTICE:
PROPERTY EXPENSES: defined in Section 16.2.
PROPERTY TAX property taxes (including, without limitation, real estate taxes,
EXPENSES: possessory interest taxes, use taxes, general and special
assessments, leasehold taxes or taxes based upon Tenant's
recei t of rent .
.......................P........................................).................................................................................................................................................................................................................................................................
PURCHASED defined in Section 6.5.
PROPERTY:
PWL: defined in Section 6.8.1(a)
....................................................................................................................................................._.........................................................................................
REGULATED WASTE defined in Section 21.5.1.
REMOVAL:
REDEVELOPMENT defined in Section 6.10.
PLAN:
REDEVELOPMENT PLAN defined in Section 6.10.
PACKAGE:
........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
-11-
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
REIMBURSEMENT defined in Section 5.8.
PROCEDURE:
REJECTED defined in Section 10.4.3(a).
TRANSFEREE:
RELATED COSTS: any costs, damages (of all kinds including punitive damage,
diminution in value and loss of use), claims, liabilities, expenses
(including reasonable attorneys', consultants' and experts' fees),
losses, fines, penalties and court costs related to the subject
matter of the Related Costs and amounts paid in settlement of
any claims or actions related to the subject matter of the
Related Costs.
RENT: defined in Article 5.
RENT COMMENCEMENT defined in Section 1.4.
DATE:
RENTAL PERIODS: defined in Section 1.4.
RESORT HOTEL: defined in Section 1.3.
RETURN ON defined in Section 5.5.
INVESTMENT:
REVENUE: all income, receipts, proceeds, amounts, money, cash, assets,
property or other things of value, whether collected, uncollected,
received, .payable or accrued.
....................................................................................................................................................._....................................................... ....... ..............................................................................
ROOM: a se aratel ke ed lod in unit of the Resort Hotel
.
....................................................................................................................................................._...........................P.............................y................y................................g..........9....................................................................................................................................................................................................
SDRWQCB: defined in Section 21.4.3.
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
SETTLEMENT Chula Vista Bayfront Master Plan Settlement Agreement, dated
AGREEMENT: May 4, 2010, among the Bayfront Coalition Member
Organizations identified therein, Landlord, the City of Chula
Vista and the Redevelopment Agency of the City of Chula Vista
District Clerk No. 56523).
..............................................................
SUBLEASE: any sublease (or sub-sublease or other level of sublease), and
any occupancy, franchise, license, concession agreement or
other right to use applicable to this Lease or the Premises or the
Improvements or any part thereof; provided, however, that
"Sublease" excludes (i) any agreement for temporary use of the
Meeting Space or Rooms in the Resort Hotel and (ii) Hotel
Ma_nag_ement Agreement.
SUBLEASE NOTICE: defined in Section 11.1.2.
SUBTENANT: any subtenant (or sub-subtenant or other level of subtenant),
occupant, franchisee, licensee, or concessionaire under any
Sublease; provided, however, that "Subtenant" shall exclude the
Hotel Operator.
erator.P
SURFACE PARKING defined in Section • .
-12-
.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
DEFINITIONS ADDENDUM
IMPROVEMENTS:
TAX EXPENSES: defined in Section 16.1.
TEMPORARY defined in Section 14.6.
CONDEMNATION:
TENANT: defined in the Preamble of this Lease.
TENANT ART defined in Section 1.8(g).
INVESTMENT:
TENANT HAZARDOUS any Hazardous Material either (i) brought onto the Premises or
MATERIAL: Improvements during the Term of this Lease by any Person or
(ii) brought onto the Premises, Improvements or any other
property by Tenant or Tenant Party or generated by any of the
same.
TENANT PARKING defined in [ • ].
IMPROVEMENT
REVENUE:
TENANT PARTY: Tenant, its agents, employees, representatives, contractors,
subcontractors, suppliers, materialmen, workmen, licensees,
concessionaires, Affiliates and successors and assigns and
Subtenants, and the agents, employees, representatives,
contractors, subcontractors, suppliers, materialmen, workmen,
concessionaires, licensees, Affiliates and successors and
_
assig ns of each of such Subtenants.
TENANT RECORDS: defined in Section 5.4.3(c).
TENANT USE PARKING defined in Section [ • ].
IMPROVEMENTS:
TENANT'S DEMOLITION defined in Section 7.2.
ELECTION:
TENANT'S PARKING defined in [ • ].
IMPROVEMENT OPTION:
TERM: defined in Section 1.1.
....................................................................................................................................................._................................................................................................................................................................................................................................................................................................................................................
TRANSFER: defined in Section 11.5.1.
TRANSFER NOTICE: defined in Section 11.5.2.
TRANSFEREE: Pp
defined in Section 11.5.2 and 11.5.3, as applicable.
....................................................................................................................................................._.................................................................................................................................................................................................................
USA PATRIOT ACT: defined in Section 17.3.
USTs: defined in Section 21.4.1.
-13-
SCHEDULEI
(Section 6.1)
(to be inserted prior to execution.)
Pagel EXHIBIT A
US-DOCS\96961081.42
EXHIBIT A
LEGAL DESCRIPTION OF PREMISES
(to be attached prior to execution.)
Page 1 EXHIBIT A
US-DOCS\96961081.42
EXHIBIT B
DEPICTION OF PREMISES
(to be attached prior to execution.)
Page 1 EXHIBIT B
US-DOCS\96961081.42
EXHIBIT B-1
DEPICTION OF PARKING IMPROVEMENTS
(to be attached prior to execution.)
Page 1 EXHIBIT B
US-DOCS\96961081.42
EXHIBIT B-2
DEPICTION OF NEIGHBORING IMPROVEMENTS
(to be attached prior to execution.)
Page 1 EXHIBIT B
US-DOCS\96961081.42
EXHIBIT C
PROJECT IMPROVEMENTS PLANS
[INCLUDE RESORT HOTEL AND CONVENTION CENTER]
Preparer:
Project:
Job No.:
Approval Date:
Number of pages attached:
-1- EXHIBIT C
US-DOCS\96961081.42
EXHIBIT D-1
CONSTRUCTION REQUIREMENTS
(Initial Prosect Improvements)
1. GENERALLY. TENANT SHALL COMPLY WITH THE PROVISIONS OF THIS
EXHIBIT D-1 AS FOR THE INITIAL PROJECT IMPROVEMENTS, THE CONDITIONS OF
PROJECT APPROVAL SET FORTH IN EXHIBIT D-1 FOR THE INITIAL PROJECT
IMPROVEMENTS, AND THE PROVISIONS OF THE LEASE IN CONNECTION WITH ALL
CONSTRUCTION OR DEMOLITION WORK AT THE PREMISES ("CONSTRUCTION WORK").
2. Contractors. Landlord shall have the right to approve the general contractor for
Construction Work (other than Minor Alterations), in its reasonable discretion. All contractors
and subcontractors performing any Construction Work must be licensed in the State of
California.
3. Architects and Engineers. All architects and engineers must have an active license to
practice in the State of California.
4. Contractors, Architects and Engineers Agreements. Landlord shall have the right to
approve the architectural, engineering and construction contracts for all of the Improvements
(other than Minor Alterations), in its reasonable discretion. All such contracts for work related to
the Convention Center shall provide, in form and content reasonably satisfactory to Landlord, (i)
for the assignment thereof to Landlord as security to Landlord for Tenant's performance
hereunder (ii) that if this Lease is terminated Landlord may, at its election, use any plans and
specifications created by such architect, engineer or contractor for the contemplated Convention
Center at the Premises.
5. Construction Barricades. Tenant shall install a construction barricade around the area of
Construction Work (other than Minor Alterations), and erect such other protective measures as
may be reasonably required by Landlord.
6. Dust and Trash Control. Tenant shall take commercially reasonable steps to minimize
dust resulting from any Construction Work, and shall promptly dispose of all trash generated
from the Construction Work.
7. Performance Bond and Payment Bond. Prior to Tenant commencing the construction of
the Project Improvements, Tenant shall furnish Landlord with the following separate corporate
surety bonds in connection with the construction of each of the components of the Project
Improvements other than the Resort Hotel (each, a "Component of Project Improvements"):
(i) A corporate surety performance bond ("Performance Bond") issued by a surety
company licensed and admitted to transact business as such in the State of California, in
an amount not less than one hundred percent (100%) of the estimated Hard
Construction Costs of the applicable Component of Project Improvements. The
Performance Bond and its issuer shall be reasonably satisfactory to Landlord. The
Performance Bond shall name Tenant as principal and Landlord as obligee, assuring full
completion of the construction by Tenant of such Component of Project Improvements;
and
(ii) A corporate surety payment bond ("Payment Bond") issued by a surety company
licensed and admitted to transact business as such in the State of California, in an
amount equal to one hundred percent (100%) of the estimated Hard Construction Costs
of the applicable Component of Project Improvements, guaranteeing payment for all
1 EXHIBIT D
US-DOCS\96961081.42
materials, provisions, supplies and equipment used in, upon, for or about the
performance of the construction of such Component of Project Improvements and for
labor done thereon and protecting Landlord from any and all liability, loss or damages
arising out of or in connection with any failure to make any such payments. The
Payment Bond shall name Tenant as principal and Landlord as obligee.
(iii) The Payment Bond and Performance Bond shall be in form and content
reasonably satisfactory to Landlord.
8. Financial Assurances. At least ten (10) days prior to commencing any Construction Work
(other than Minor Alterations), Tenant shall deliver to Landlord evidence reasonably
demonstrating to Landlord that Tenant has obtained or retains financial resources and
capabilities in an amount sufficient to complete the Construction Work.
9. Construction Schedule. Tenant shall, at least ten (10) days prior to date on which
Tenant intends to commence construction of any Construction Work (other than Minor
Alterations), deliver to Landlord a construction schedule. Tenant shall use commercially
reasonable efforts to perform the Construction Work in accordance with the construction
schedule.
10. Contractor Insurance. Tenant shall ensure that all contractors and subcontractors
performing Construction Work shall obtain and thereafter maintain so long as such Construction
Work is occurring, at least the minimum insurance coverages set forth below, which insurance
coverages may be modified by Landlord from time to time in its sole and absolute discretion:
(i) Workers' compensation and employer's liability insurance:
(a) Workers' compensation insurance as required by any applicable law or
regulation.
(b) Employer's liability insurance in the amount of $1,000,000 each
accident/employee/disease.
(ii) General liability insurance: Commercial General Liability insurance covering all
operations by or on behalf of the contractor, which shall include the following minimum
limits of liability and coverages:
(a) Required coverages:
(1) Premises and Operation;
(2) Products and Completed Operations;
(3) Contractual Liability;
(4) Broad Form Property Damage (including Completed Operations);
(5) Explosion, Collapse and Underground Hazards; and
(6) Personal Injury Liability.
(b) Minimum limits of liability:
(1) $2,000,000 each occurrence (for bodily injury and property
damage);
(2) $2,000,000 for Personal Injury Liability;
2 EXHIBIT D
US-DOCS\96961081.42
(3) $5,000,000 aggregate for Products and Completed Operations
(which shall be maintained for a three (3) year period following final
completion of the Work); and
(4) $5,000,000 general aggregate applying separately to this Project.
(iii) Automobile Liability Insurance: Automobile liability insurance including coverage
for owned, leased, rented, hired, and/or non-owned automobiles. The limits of liability
shall not be less than $1,000,000 for each accident limit for bodily injury, death and
property damage.
(iv) Umbrella/Excess Liability Insurance: The general contractor shall also carry
umbrella/excess liability insurance in the amount of$5,000,000. If there is no per project
aggregate under the Commercial General Liability policy, the limit shall be $10,000,000.
(v) Contractor's Pollution Liability Coverage: If Landlord determines, in its sole and
reasonable discretion, that Tenant performs or contracts for any work which involves a
Hazardous Materials Activity or which has the potential to disturb or result in the release
of any Hazardous Material, for which there is potential exposure to pollution or
Hazardous Materials to Persons or the environment, Tenant shall obtain or cause its
contractor to obtain Contractor's Pollution Liability, Pollution Legal Liability and/or
Asbestos Pollution Liability and/or Errors & Omissions applicable to the work being
performed or the potential release of any Hazardous Material, with limits of $5,000,000
per claim or occurrence and $10,000,000 aggregate per policy period of one year.
Landlord Parties shall be named as an additional insured on the forgoing insurance, and
such insurance shall provide that the same shall not be canceled, or reduced in amount
or coverage below the requirements of this Lease, nor shall it be allowed to expire,
without at least thirty (30) days prior written notice to Landlord. The foregoing insurance
shall include a waiver of subrogation in favor of Landlord Parties.
11. Notice of Completion. Within ten (10) days after Completion of any Construction Work
(other than Minor Alterations), Tenant shall record a Notice of Completion in the office of the
San Diego County Recorder and furnish a copy thereof to Landlord upon such recordation.
12. Lien Releases. Within sixty (60) days after Completion, Tenant shall deliver to Landlord
unconditional final lien waivers from all contractors and materialmen.
13. Copy of Record Set of Plans and Certificate of Completion. Following the conclusion of
any Construction Work (other than Minor Alterations), deliver to Landlord (i) a set of "as-built
drawings", (ii) a certificate from Tenant's architect and general contractor in favor of Landlord
stating that, to the best knowledge of such certifying party, the Construction Work has been
Completed substantially in accordance, in all material respects, with the approved plans
therefor, and (iii) a copy of the certificate of completion issued by the applicable government
agency, if any such certificate of completion must be issued.
14. Conflict. In the event of conflict between the terms of these Construction Requirements and
terms of the Lease, the terms of the Lease shall control.
3 EXHIBIT D
US-DOCS\96961081.42
EXHIBIT D-1
Conditions of Proiect Approval
(Initial Prosect Improvements)
To be attached prior to execution of Lease.
(PLACEHOLDER PAGE)
EXHIBIT D-1
EXHIBIT D-23
CONSTRUCTION REQUIREMENTS
(Alterations)
1. GENERALLY. TENANT SHALL COMPLY WITH THE PROVISIONS OF THIS
EXHIBIT D, THE CONDITIONS OF PROJECT APPROVAL SET FORTH IN EXHIBIT D-1, AND
THE PROVISIONS OF THE LEASE IN CONNECTION WITH ALL CONSTRUCTION OR
DEMOLITION WORK AT THE PREMISES ("CONSTRUCTION WORK").
2. Contractors. Landlord shall have the right to approve the general contractor for
Construction Work (other than Minor Alterations), in its reasonable discretion. All contractors
and subcontractors performing any Construction Work must be licensed in the State of
California.
3. Architects and Engineers. All architects and engineers must have an active license to
practice in the State of California.
4. Contractors, Architects and Engineers Agreements. Landlord shall have the right to
approve the architectural, engineering and construction contracts for all of the Improvements
(other than Minor Alterations), in its reasonable discretion.
5. Construction Barricades. Tenant shall install a construction barricade around the area of
Construction Work (other than Minor Alterations), and erect such other protective measures as
may be reasonably required by Landlord.
6. Dust and Trash Control. Tenant shall take commercially reasonable steps to minimize
dust resulting from any Construction Work, and shall promptly dispose of all trash generated
from the Construction Work.
7. Performance Bond and Payment Bond. Prior to Tenant commencing the construction of
the Project Improvements, Tenant shall furnish Landlord with the following separate corporate
surety bonds in connection with the construction of each of the components of the Project
Improvements other than the Resort Hotel (each, a "Component of Project Improvements"):
(i) A corporate surety performance bond ("Performance Bond") issued by a surety
company licensed and admitted to transact business as such in the State of California, in
an amount not less than one hundred percent (100%) of the estimated Hard
Construction Costs of the applicable Component of Project Improvements. The
Performance Bond and its issuer shall be reasonably satisfactory to Landlord. The
Performance Bond shall name Tenant as principal and Landlord as obligee, assuring full
completion of the construction by Tenant of such Component of Project Improvements;
and
(ii) A corporate surety payment bond ("Payment Bond") issued by a surety company
licensed and admitted to transact business as such in the State of California, in an
amount equal to one hundred percent (100%) of the estimated Hard Construction Costs
of the applicable Component of Project Improvements, guaranteeing payment for all
materials, provisions, supplies and equipment used in, upon, for or about the
performance of the construction of such Component of Project Improvements and for
labor done thereon and protecting Landlord from any and all liability, loss or damages
3 NTD: Landlord to provide a mark-up of this Exhibit D.
1 EXHIBIT D
US-DOCS\96961081.42
arising out of or in connection with any failure to make any such payments. The
Payment Bond shall name Tenant as principal and Landlord as obligee.
(iii) The Payment Bond and Performance Bond shall be in form and content
reasonably satisfactory to Landlord.
8. Financial Assurances. At least ten (10) days prior to commencing any Construction Work
(other than Minor Alterations), Tenant shall deliver to Landlord evidence reasonably
demonstrating to Landlord that Tenant has obtained or retains financial resources and
capabilities in an amount sufficient to complete the Construction Work.
9. Construction Schedule. Tenant shall, at least ten (10) days prior to date on which
Tenant intends to commence construction of any Construction Work (other than Minor
Alterations), deliver to Landlord a construction schedule. Tenant shall use commercially
reasonable efforts to perform the Construction Work in accordance with the construction
schedule.
10. Contractor Insurance. Tenant shall ensure that all contractors and subcontractors
performing Construction Work shall obtain and thereafter maintain so long as such Construction
Work is occurring, at least the minimum insurance coverages set forth below, which insurance
coverages may be modified by Landlord from time to time in its sole and absolute discretion:
(i) Workers' compensation and employer's liability insurance:
(a) Workers' compensation insurance as required by any applicable law or
regulation.
(b) Employer's liability insurance in the amount of $1,000,000 each
accident/employee/disease.
(ii) General liability insurance: Commercial General Liability insurance covering all
operations by or on behalf of the contractor, which shall include the following minimum
limits of liability and coverages:
(a) Required coverages:
(1) Premises and Operation;
(2) Products and Completed Operations;
(3) Contractual Liability;
(4) Broad Form Property Damage (including Completed Operations);
(5) Explosion, Collapse and Underground Hazards; and
(6) Personal Injury Liability.
(b) Minimum limits of liability:
(1) $2,000,000 each occurrence (for bodily injury and property
damage);
(2) $2,000,000 for Personal Injury Liability;
(3) $5,000,000 aggregate for Products and Completed Operations
(which shall be maintained for a three (3) year period following final
completion of the Work); and
(4) $5,000,000 general aggregate applying separately to this Project.
2 EXHIBIT D
US-DOCS\96961081.42
(iii) Automobile Liability Insurance: Automobile liability insurance including coverage
for owned, leased, rented, hired, and/or non-owned automobiles. The limits of liability
shall not be less than $1,000,000 for each accident limit for bodily injury, death and
property damage.
(iv) Umbrella/Excess Liability Insurance: The general contractor shall also carry
umbrella/excess liability insurance in the amount of$5,000,000. If there is no per project
aggregate under the Commercial General Liability policy, the limit shall be $10,000,000.
(v) Contractor's Pollution Liability Coverage: If Landlord determines, in its sole and
reasonable discretion, that Tenant performs or contracts for any work which involves a
Hazardous Materials Activity or which has the potential to disturb or result in the release
of any Hazardous Material, for which there is potential exposure to pollution or
Hazardous Materials to Persons or the environment, Tenant shall obtain or cause its
contractor to obtain Contractor's Pollution Liability, Pollution Legal Liability and/or
Asbestos Pollution Liability and/or Errors & Omissions applicable to the work being
performed or the potential release of any Hazardous Material, with limits of $5,000,000
per claim or occurrence and $10,000,000 aggregate per policy period of one year.
Landlord Parties shall be named as an additional insured on the forgoing insurance, and
such insurance shall provide that the same shall not be canceled, or reduced in amount
or coverage below the requirements of this Lease, nor shall it be allowed to expire,
without at least thirty (30) days prior written notice to Landlord. The foregoing insurance
shall include a waiver of subrogation in favor of Landlord Parties.
11. Notice of Completion. Within ten (10) days after Completion of any Construction Work
(other than Minor Alterations), Tenant shall record a Notice of Completion in the office of the
San Diego County Recorder and furnish a copy thereof to Landlord upon such recordation.
12. Lien Releases. Within sixty (60) days after Completion, Tenant shall deliver to Landlord
unconditional final lien waivers from all contractors and materialmen.
13. Copy of Record Set of Plans and Certificate of Completion. Following the conclusion of
any Construction Work (other than Minor Alterations), deliver to Landlord (i) a set of "as-built
drawings", (ii) a certificate from Tenant's architect and general contractor in favor of Landlord
stating that, to the best knowledge of such certifying party, the Construction Work has been
Completed substantially in accordance, in all material respects, with the approved plans
therefor, and (iii) a copy of the certificate of completion issued by the applicable government
agency, if any such certificate of completion must be issued.
14. Conflict. In the event of conflict between the terms of these Construction Requirements and
terms of the Lease, the terms of the Lease shall control.
3 EXHIBIT D
US-DOCS\96961081.42
EXHIBIT E
FORM OF COMPLETION GUARANTY
(to beattached prior toexeouUon]
1 EXHIBIT
EXHIBIT F
FORM OF MEMORANDUM OF LEASE
RECORDING REQUESTED BY:
(Above Space for Recorder's Use Only)
MEMORANDUM OF LEASE
This Memorandum of Lease, hereinafter "Memorandum," is dated 20_,
between SAN DIEGO UNIFIED PORT DISTRICT, a public corporation, "Landlord" and RIDA
CHULA VISTA, LLC, a Delaware limited liability company, "Tenant" concerning that certain real
property described in Exhibit "A" and depicted in Exhibit "B", attached hereto and by this
reference made a part hereof (the "Leased Premises").
For good and adequate consideration, Landlord leases the Leased Premises to Tenant,
and Tenant hires them from Landlord, for the term and on the provisions contained in that
certain Lease of even date herewith by and between Landlord and Tenant (the "Lease"),
including without limitation provisions prohibiting assignment, subleasing, and encumbering said
leasehold without the express written consent of Landlord in each instance, all as more
specifically set forth in said Lease, and, subject to the terms of Article 23 of the Lease, Landlord
conveys to Tenant and Tenant accepts from Landlord, all of Landlord's right, title and interest in
and to the Existing Improvements, which said Lease is incorporated in this Memorandum by this
reference.
The term of the Lease is sixty-six (66) years, beginning 20_, and ending
, 20_
This Memorandum is not a complete summary of the Lease. Provisions in this
Memorandum shall not be used in interpreting the Lease provisions. In the event of conflict
between the terms of this Memorandum and terms of the Lease, the terms of the Lease shall
control.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum of
Lease as of the date first set forth above.
-1- EXHIBIT F
US-DOCS\96961081.42
APPROVED AS TO FORM AND LEGALITY: SAN DIEGO UNIFIED PORT DISTRICT,
GENERAL COUNSEL a public corporation
By: By:
Assistant/Deputy Tony Gordon
Director, Real Estate
RIDA CHULA VISTA, LLC,
a Delaware limited liability company
By:
Signature
NAME:
Its:
By:
Signature
NAME:
Its:
-2- EXHIBIT F
US-DOCS\96961081.42
EXHIBIT A TO MEMORANDUM OF LEASE
LEGAL DESCRIPTION OF PREMISES
(to be attached prior to execution.)
-1- EXHIBIT F
US-DOCS\96961081.42
EXHIBIT B TO MEMORANDUM OF LEASE
DEPICTION OF PREMISES
(to be attached prior to execution.)
-1- EXHIBIT F
US-DOCS\96961081.42
(FOR USE BY SAN DIEGO UNIFIED PORT DISTRICT)
EXHIBIT F
US-DOCS\96961081.42
STATE OF CALIFORNIA) 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
COUNTY OF SAN DIEGO) that document.
On 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/she/they executed the
same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
.......--•-l-•................... -•-•-•------ OPTIONAL ----------------------------- -------------------
Though the information below is not required by law,it may prove valuable to person relying on the document
and could prevent fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document:
------------------------
Document Date: Number of Pages:
Signer(s)Other Than Named Above:
Capacity(les)Claimed by Signer(s)
Signer's Name_---------_ Signer's Name_----------_
❑ Individual ❑ Individual
❑ Corporate Officer--Title(s): ❑ Corporate Officer--Title(s):_
❑ Partner--71 Limited-i General ❑ Partner--71 Limited 71 General
❑ Attorney in Fact RIGHT THUMBPRINT ❑ Attorney in Fact RIGHT THUMBPRINT
❑ Trustee OF SIGNER ❑ Trustee OF SIGNER
❑ Guardian or Conservator Top of thumb here ❑ Guardian or Conservator Top of thumb here
❑ Other:_ ❑ Other:_
Signer is Representing: Signer is Representing:
-2- EXHIBIT F
US-DOCS\96961081.42
(FOR USE BY RIDA CHULA VISTA, LLC)
STATE OF CALIFORNIA) 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
COUNTY OF SAN DIEGO) that document.
On 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/she/they executed the
same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
- - - - -
...............--------------------- OPTIONAL ---------------._.-----------------._._._._._._..
Though the information below is not required by law,it may prove valuable to person relying on the document
and could prevent fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document:
------------------------
Document Date:_--------- Number of Pages:----
Signer(s)Other Than Named Above:
Capacity(les)Claimed by Signer(s)
Signer's Name_---------- Signer's Name
------------
❑ Individual ❑ Individual
❑ Corporate Officer--Title(s): ❑ Corporate Officer--Title(s):_
❑ Partner--7 Limited-i General ❑ Partner--7 Limited 7 General
❑ Attorney in Fact RIGHT THUMBPRINT ❑ Attorney in Fact RIGHT THUMBPRINT
❑ Trustee OF SIGNER ❑ Trustee OF SIGNER
❑ Guardian or Conservator Top ofthumb here ❑ Guardian or Conservator Top ofthumb here
❑ Other: ❑ Other:
Signer is Representing: Signer is Representing:
-1- EXHIBIT G
US-DOCS\96961081.42
EXHIBIT G
SUBLEASE INFORMATION
[EXCEL COPY OF THE FOLLOWING AVAILABLE ON REQUEST]
TENANT RENT ROLL
MASTER LESSEE: DATE:
CURRENT
LEASE LEASE LEASE TERM BASE SECURITY
SUBLESSEE(TENANT DBA SUITEIADDRESS USE COMMENCEMENT EXPIRATION MO) OPTIONS SOFT RENT PSF RENT %RENT COLA CAM DEPOSIT OTHER PROVISIONS
TOTAL NNN:
NNN LEASED:
NNN VACANT:
EXHIBIT G
US-DOCS\96961081.42
EXHIBIT H
FORM OF ESTOPPEL STATEMENT
Name
Address
RE: [ ] ("Premises")
Ladies and Gentlemen:
This Estoppel Statement ("Statement") is issued by the SAN DIEGO UNIFIED PORT
DISTRICT, a public corporation (hereinafter referred to as "Landlord"), as landlord under that
certain lease dated [ 1, covering a portion of those lands conveyed to Landlord by
that certain act of the Legislature of the State of California entitled "San Diego Unified Port
District Act", Stats. 1962, 1st Ex. Sess., c. 67, as amended, between Landlord and RIDA Chula
Vista, LLC, a Delaware limited liability company (hereinafter referred to as "Tenant"), as tenant,
a copy of which lease is on file in the Office of the Clerk of Landlord bearing Document
No. [ 1 (the "Lease").
To the actual knowledge of Landlord (without any duty of investigation or inquiry), Landlord
hereby acknowledges and confirms to Recipient (as defined below) the following:
1. The Lease is currently in full force and effect and has not been modified in whole or in
part, except as provided by [that/those] certain amendment[s] described and dated as follows:
[N/A or list amendment(s)], copies of which amendment(s) [is/are] on file in the Office of the
Clerk of Landlord bearing Document No.(s) f 1.
2. The Lease is for a term of sixty-six (66) years, commencing [ 1 and
ending [ 1.
3. As of the date of this Statement, Tenant [is/is not], to the actual knowledge of Landlord
(without any duty of investigation or inquiry), in default or in breach under the provisions of the
Lease.
4. Landlord has no actual knowledge (without any duty of investigation or inquiry) of any
other assignment or hypothecation of said leasehold estate, or any pledge or assignment of
rents with respect to said Premises [except any security interest therein created in favor of
[ 1 for a loan in the amount of [ ] Dollars ($[ 1) as
consented to by Landlord in an Administrative Approval or Resolution No. f 1, a copy
of which is attached hereto and by reference incorporated herein].
5. All rent, and any other charges payable by Tenant pursuant to the Lease (referred to
collectively hereinafter as "Rent") has been paid through and including [ 1;
provided, however, there may be Rent still due and owing which will be discovered at the time of
audit by Landlord and, to that extent, Landlord cannot represent that all Rent has been paid.
-1- EXHIBIT H
US-DOCS\96961081.42
6. This Statement is given by Landlord with the understanding that the statements herein
made may be relied upon only by ( 1 (the "Recipient") and only for the purpose
of estopping Landlord from asserting contrary facts against Tenant which Tenant also has no
knowledge of. Recipient acknowledges and agrees that nothing in this Statement shall be
construed as a consent to any lender, loan, or assignment, a waiver of any of the District's rights
under the Lease or at law or equity, or a modification or amendment to the Lease and to the
extent there may be any conflict between the terms of this Statement and the terms of the
Lease, the Lease shall control and prevail.
Executed this day of 20_
APPROVED AS TO FORM AND LEGALITY SAN DIEGO UNIFIED PORT DISTRICT,
GENERAL COUNSEL a public corporation
By: By:
Assistant/Deputy 1
[ 1
SDUPD Docs No.
_2_ EXHIBIT H
US-DOCS\96961081.42
EXHIBIT I
US-DOCS\96961081.42
EXHIBIT I
FORM OF LETTER OF CREDIT
(to be attached prior to execution.)
EXHIBIT J
US-DOCS\96961081.42
EXHIBIT J
LETTER OF CREDIT ISSUERS
(to be attached prior to execution.)
EXHIBIT K
US-DOCS\96961081.42
EXHIBIT L
US-DOCS\96961081.42
EXHIBIT K
PRIOR AGREEMENTS
(to be attached prior to execution.)
EXHIBIT M
US-DOCS\96961081.42
EXHIBIT N
PRE-APPROVED SIGNS
(to be attached prior to execution.)
EXHIBIT N
US-DOCS\96961081.42
EXHIBIT O
PROPERTY TAX EXPENSES
(to be attached prior to execution.)
EXHIBIT O
US-DOCS\96961081.42
EXHIBIT P
FORM OF SUBORDINATION NON-DISTURBANCE AND ATTORNMENT AGREEMENT
(to be attached prior to execution.)
EXHIBIT P
US-DOCS\96961081.42
EXHIBIT Q
SUBLEASE QUESTIONNAIRE
(to be attached prior to execution.)
EXHIBIT Q
US-DOCS\96961081.42
EXHIBIT R-1
PARKING IMPROVEMENTS
1. Tenant shall construct a parking structure with approximately 1,600 spaces (the
"Parking Improvements to Completion substantially in accordance with plans and
specifications to be approved by the Landlord in its reasonable discretion (the "Plans").
2. Landlord shall fund the Parking Improvements Development Costs up to the amount of
$40,000,000. Tenant shall provide to Landlord on a monthly basis invoices for an
amount equal to the difference (a) the amount of all Parking Improvements Development
Costs that Tenant has incurred less (b) the cost of all Parking Improvements
Development Costs for which Landlord has previously paid Tenant. With each such
invoice, Tenant shall submit supporting documentation and statutory conditional
mechanics lien waivers from all of Tenant's contractors for the Parking Improvements
who have not submitted statutory final lien waivers. Landlord shall pay the amount of
each invoice to Tenant no later than 30 days after Landlord receives such invoice.
Notwithstanding the foregoing, Landlord will not be required to pay any amount in
excess of the Parking Contribution Amount.
3. Landlord shall own the Parking Improvements. Landlord shall grant to Tenant an
easement to use, operate and maintain the Parking Improvements in the form of Exhibit
"U" attached hereto.
4. Tenant shall be responsible for all maintenance, repair and replacement of the Parking
Improvements; provided, however, Landlord shall be responsible for the replacement of
the Parking Improvements in the case of casualty, destruction or Condemnation), if in
the case of the casualty or destruction, such casualty or destruction is not the result of
the actions or inactions of Tenant or any Tenant Party. Landlord shall have the right to
elect not to rebuild the Parking Improvements if Landlord does not receive sufficient
insurance proceeds to do so. Except to the extent caused by Tenant or Tenant Parties,
Landlord shall bear the risk of loss with respect to the structure of the Parking
Improvements only; provided, however, Landlord shall not be responsible for any
personal property of the Tenant, Tenant Parties, any visitor, invitee or any other third
party. If the Parking Improvements are damaged or destroyed, and such damage or
destruction does not result from Tenant's failure to perform ordinary and regular
maintenance of the Parking Improvements, or the actions or inactions of Tenant or
Tenant Parties, then Landlord shall pay Tenant to reconstruct and repair the Parking
Improvements, at Landlord's sole cost and expense, and funds shall be distributed in a
manner substantially similar to the manner set forth in Section 2.]
5. Commencing on the Rent Commencement Date, Tenant shall pay to Landlord monthly
parking improvement rent equal to the product of the applicable percentage set forth
below ("Parking Improvement Rent Rate") multiplied by all Tenant Parking
Improvement Revenue received during the applicable calendar month, which shall be
prorated as set forth in Section 5.1.2 and subject to the adjustment set forth in the next
bullet point ("Parking Improvement Rent"):
-1- EXHIBIT R-1
US-DOCS\96961081.42
o Lease Years 1 — 37: 12.5%
o Lease Years 38— 66: 15%
"Tenant Parking Improvement Revenue" means the following amounts whether
collected or uncollected, received, payable or accrued by Tenant, without any
deductions or exclusions, whether paid in cash or for credit: (a) any amounts paid to
Tenant by any Person for using a parking space in the Parking Improvements, Premises
Surface Parking and, if applicable, Surface Parking Improvements through the Resort
Hotel valet service or (b) any amounts paid to Tenant by any Person for self-parking in
the Parking Improvements, Premises Surface Parking and, if applicable, Surface Parking
Improvements. For the avoidance of doubt, if Tenant permits Tenant's employees,
Subtenants, independent contractors, or visitors to use any of the Parking
Improvements, Premises Surface Parking or, if applicable, Surface Parking
Improvements without charge, then no Tenant Parking Improvement Revenue will
accrue for such use; and no monthly Parking Improvement Rent will accrue for such use.
Upon written notice to Tenant, and not more frequently than five (5) times per year,
Landlord shall have the right to reserve all parkiing spaces in the Parking Improvements
that Tenant or the Hotel Operator determines„ each in its reasonable discretion, are
available during the specified times, for use by the general public during special events
in the Chula Vista Bayfront. Landlord shall have the right to set the rates for such
reserved parking spaces and shall not be required to pay Tenant, any other Tenant
Party or the Hotel Operator for the use of such reserved parking spaces but any
revenues for the use of such spaces will be paid to Tenant shall be included in the
Tenant Parking Improvement Revenue.
6. If the Persons that own the direct and indirect ownership interests in Tenant as of the
Commencement Date own, in the aggregate, less than fifty-one percent (51%) of the
direct and indirect ownership interest in Tenant ("Change in Ownership"), then the
applicable Parking Improvement Rent Rate shall increase as follows, and shall be
effective immediately as of the date of such Change in Ownership:
o Lease Years 1 — 37: 15%
o Lease Years 38— 66: 20%;
provided, however, that the foregoing increases in the Parking Improvement Rent Rate
shall not apply in the case of any Change in Ownership in connection with any
foreclosure on the Permitted Encumbrance or any action in lieu of foreclosure to a
Foreclosure Purchaser that is a Permitted Lender.
-2- EXHIBIT R-1
US-DOCS\96961081.42
1.
EXHIBIT R-2
US-DOCS\96961081.42
EXHIBIT S
US-DOCS\96961081.42
EXHIBIT S
APPROVED DOCUMENTS
Right of Entry with Rohr
Easement with Rohr
CVBMP Documents
Approved Title Exceptions
(to be completed prior to execution.)
EXHIBIT S
US-DOCS\96961081.42
EXHIBIT T
LANDLORD TRANSFER DOCUMENTS
(to be attached prior to execution.)
EXHIBIT S
US-DOCS\96961081.42
EXHIBIT U
PARKING EASEMENT
(to beattached prior toexeouUon]
-1- EXHIBIT
EXHIBIT V
PARKING STRUCTURE LAND
(to beattached prior toexeouUon]
-1- EXHIBIT
-1-
US-DOCS\96961081.42
Attachment B to Agenda File No. 2018-0070
C, SqN 3165 Pacific Hwy.
San Diego Unified Port District San Diego,CA 92101
PORT
File #:2017-0338
DATE: June 20, 2017
SUBJECT:
RESOLUTION AUTHORIZING A NON-BINDING LETTER OF INTENT (LOI) WITH RIDA CHULA
VISTA, LLC AND THE CITY OF CHULA VISTA FOR A RESORT HOTEL AND CONVENTION
CENTER WITHIN THE CHULA VISTA BAYFRONT
EXECUTIVE SUMMARY:
The Chula Vista Bayfront Master Plan' (CVBMP) (Attachments A and B) is the result of a decade-
long joint planning effort by the San Diego Unified Port District (District), the City of Chula Vista (City),
Pacifica Companies LLC (Pacifica), and a broad coalition of stakeholders. The CVBMP was
collaboratively planned through an extensive public participation program that included over 100
community meetings and resulted in a comprehensive Environmental Impact Report (EIR) and Port
Master Plan Amendment, which was approved by the Board of Port Commissioners (Board) in May
2010 and certified by the California Coastal Commission (CCC) in August 2012. The financing
agreement2 (Financing Agreement) for the Chula Vista Bayfront (CVB) was approved by the Board in
2012 and set forth the framework for the financing and development of the public improvements and
infrastructure within the CVB by the District and City, referred to collectively herein, as the "Public
Entities". The Amended and Restated CVBMP Financing Agreement (Amended and Restated
Financing Agreement) was adopted by the City in November 2016 and will be considered by the
Board on June 20, 2017.
After two years of negotiations with RIDA Chula Vista, LLC (RIDA), the District and the City staffs
believe that an important interim step is to enter into a nonbinding Letter of Intent (LOI) for
development of the resort hotel and convention center (RHCC), the catalyst project for development
of the CVB. Attachment C includes the complete LOI executed by RIDA. Staff recommends that the
Board approve the LOI because in RIDA and the City, the District has found the right partners that
are ready to move forward with the implementation of the CVBMP; the project economics represent a
good deal for the District, for the City, and for RIDA; and time is of the essence to memorialize the
economics to ensure that the redevelopment of the CVB proceeds as soon as possible. The LOI is
an important next step toward catalyzing other additional development within the CVB. Once the
CVBMP is implemented, the CVB will become a world-class destination that reflects strong planning
and design principles, economic feasibility, and community benefits.
On May 6, 2014, the Board adopted a resolution authorizing the issuance of a Request for
Qualifications (RFQ) for a hotel and convention center located on 36 acres (Site) within the CVB.
The RFQ also allowed for potential additional development opportunities on the H23 parcel, directly
adjacent to the Site. After considerable local, regional, national, and international marketing efforts
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by District staff, City staff, and consultants, RFQ 14-243 was released on June 30, 2014. A highly-
qualified response from RIDA Development Corporation was received, and on October 14, 2014, the
Board selected RIDA Development Corporation as the successful respondent to the RFQ and
authorized staff to negotiate an Exclusive Negotiating Agreement (as amended from time to time,
ENA) with RIDA Development Corporation. On February 10, 2015, the ENA was approved by the
Board and the District entered into the ENA with RIDA. The ENA currently expires on February 16,
20184.
Over the past two years, the District, City and RIDA have been working to negotiate the key deal
terms for the RHCC project. This unique partnership has identified the economics necessary to
proceed with development of the CVB while achieving market returns for the District, City and RIDA
factoring in the undeveloped nature of this Site and other development challenges. Working
cooperatively with the City and RIDA, staff has negotiated a non-binding LOI which will be considered
jointly by the District and the City on June 20, 2017. This LOI will be the first major, public milestone
for the RHCC since the ENA and will set the stage by defining the key economic terms which will be
the basis for a Disposition and Development Agreement (Definitive Agreement), which will be
presented to both Public Entities for consideration later this year.
The RHCC will be the catalyst project for the CVB and is sure to be the impetus needed for additional
world-class development within the CVB. Public contributions from both the District and the City are
necessary to enable RIDA to achieve a reasonable return on their investment in the RHCC project
and to allow the District and City to construct public infrastructure and improvements. These
concepts are the foundation for the economic terms included in the LOI. Keyser Marston Associates
(KMA) prepared a comprehensive report that analyzes the project feasibility, proposed method of
financing for the project, and public investment. The full report is included as Attachment D. The
details of the LOI, including a brief overview of the agreements and previous actions taken by the
Board related to the redevelopment of the CVB, project scope and public contribution, is discussed
below.
RECOMMENDATION:
Resolution authorizing a non-binding LOI with RIDA Chula Vista, LLC and the City for a resort hotel
and convention center within the Chula Vista Bayfront
FISCAL IMPACT:
The requested Board action will not result in any direct fiscal impact to the District, as the LOI is non-
binding and any contribution of revenue sources by the District to the implementation of the CVBMP
will be subject to a future plan of finance, as set forth in the Financing Agreement, which may be
amended from time to time. Further, the plan of finance will be presented to the Board at a future
date and will also be subject to Board approval. Based on preliminary financial modeling projections
from various consultants' reports and initial financial analysis, the development of the RHCC could
potentially result in positive surplus revenues to the District in as early as Year 4 of hotel operations.
COMPASS STRATEGIC GOALS:
This agenda item supports the following Strategic Goal(s).
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• A vibrant waterfront destination where residents and visitors converge.
• A Port with a healthy and sustainable bay and its environment.
• A Port with a comprehensive vision for Port land and water uses integrated to regional plans.
• A Port that is a safe place to visit, work and play.
• A financially sustainable Port that drives job creation and regional economic vitality.
DISCUSSION:
After two years of negotiations with RIDA, District and City staff believe that the nonbinding LOI
should be approved by the Board because the right partners are ready to move forward with the right
plan for the CVB, the project economics represent a good deal for the Public Entities and for RIDA,
and time is of the essence to memorialize the economics to ensure that the redevelopment of the
CVB proceeds as soon as possible.
After extensive due diligence efforts, the parties wish to enter into the LOI to memorialize the basic
economic terms of the project, subject to the terms of the ENA. These economic terms will allow the
District and City to deliver not only the RHCC, which is a key part of the CVB vision, but also a
majority of the public amenities for the CVBMP including parks and public access that were
envisioned through the community planning effort.
The LOI is subject to the provisions of the ENA and does not supersede the terms of the ENA. The
intent of the LOI is to guide the negotiations pursuant to the ENA with the ultimate goal to enter into a
Definitive Agreement. The terms of the ENA will remain in effect until such time as the ENA either
terminates by its terms or a Definitive Agreement is approved and adopted by the Public Entities.
This discussion provides a detailed overview of the planning efforts associated with the CVB, the
development partnerships necessary for the RHCC, and an explanation of the financial structure of
the project. For reference, a Glossary of Terms and a Timeline Overview are included as
Attachments E and F, respectively. Below is a table of contents for the complete discussion section:
I. Background: Assembling Land, Creating a Plan, and Forming the Partnership
a. South Bay Memorandum of Understanding
b. South Bay Power Plant Acquisition
c. Rohr Relocation Agreement
d. Chula Vista Bayfront Master Plan
e. Early Efforts with Gaylord
f. Obtaining the Port Master Plan Entitlements
g. Pacifica Land Exchange
h. Chula Vista Bayfront Settlement Agreement
i. Port/City Partnership
II. Request for Qualifications for the Resort Hotel and Convention Center
a. Marketing the RFQ
b. RFQ Selection: RIDA Development Corporation
III. Project Economics: A Good Deal for RIDA and the Public Entities
a. Due Diligence Process
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IV. Development Partnerships
a. Private Development Program
b. Public Development Program
V. Financing Agreement
VI. Key Economic Terms
a. Overview of Proposed Method of Financing
b. Proposed Financing Structure
c. Proposed Public Contributions toward Infrastructure and Convention Center
d. Required Private Investment
e. Basic Ground Lease Terms
f. Public Entities Participation in NOI
g. Financial Returns to RIDA
h. Proposed Cash Flow Distribution ("Waterfall")
i. Parking Space Funding TBD - Port Obligation
j. Ancillary Development Rights
VII. Next Steps
a. Disposition and Development Agreement
VIII. Recommendation
I. BACKGROUND: ASSEMBLING LAND, CREATING A PLAN, AND FORMING THE
PARTNERSHIP
In partnership with the City, the District has been working on redeveloping the CVB for more than 20
years. Throughout the past two decades, many actions have been taken by the Board to allow the
District and the City to implement a new vision for the CVB. These actions started with the
consolidation of lands on the CVB and the elimination of blighted industrial uses through the
Relocation Agreement' (Relocation Agreement) with Rohr, Inc., a United Technologies Aerospace
Company (Rohr) and the acquisition of the South Bay Power Plant (SBPP). Each successive action
has built upon the previous to establish a foundation for the master planning process which resulted
in the CVBMP and to allow for the full implementation of the vision for the CVB. The following are
brief summaries of each of these actions.
I. a. South Bay Memorandum of Understanding
In 1996, the District entered into a Memorandum of Understanding' (MOU) with each of the South
Bay cities (National City, Chula Vista, Imperial Beach, and Coronado) as a result of the District's
contribution to the phase two expansion of the San Diego Convention Center. These MOUs identified
specific projects that the District would fund in each city within the District's jurisdiction. Many of the
projects were implemented shortly after execution of the MOUs. Chula Vista utilized the funds
received from its MOU for projects that would lead to the long term redevelopment of the CVB.
I. b. South Bay Power Plant Acquisition
In 1999, the District acquired the SBPP in order to facilitate the vision of reinventing the CVB. The
District entered into a lease agreement with Duke Energy South Bay, LLC, and thereafter, consented
to the assignment of the SBPP Lease and associated agreements to Dynegy South Bay, LLC
(Dynegy South Bay)'. In October of 2010, Dynegy South Bay received a letter from the California
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Independent Systems Operator terminating the Reliable Must Run status of the SBPP and clearing
the way for decommissioning and removal of the SBPP along with associated remediation of the site.
Since then, the District and Dynegy South Bay have demolished the SBPP, which occurred on
February 2, 2013. The removal of the SBPP initiated the development of the CVBMP by providing
additional land area for public infrastructure, improvements and revenue generating development
opportunities on the CVB and was a powerful signal to the community.
I. c. Rohr Relocation Agreement
In 1999, the District entered into the Relocation Agreement with Rohr and the City in order to
consolidate Rohr's operations to its north campus and to free up additional land for future
redevelopment. Specifically, the Relocation Agreement contemplated a series of land exchange
transactions that included the transfer of the uplands portion of Rohr's industrial campus located
south of H Street (referred to as the South Campus) from Rohr to the District, in exchange for Rohr's
tidelands portion of its campus north of H Street.
I. d. Chula Vista Bayfront Master Plan
In 2002, the District and City entered into a Joint Planning Agreement$ and began a collaborative
planning process to create a master plan for the CVB area - comprised of historic tidelands, the
acquired SBPP site and realigned Rohr campus. This process included an award-winning public
participation program with the Citizens Advisory Committee (CAC). The program established three
primary goals for the master plan: to develop a world-class waterfront; to create a plan that is
supported by sound planning and economics; and, to create a plan that has broad-based community
support. In response to the CAC's request, Pacifica joined this process in 20039 in order to integrate
its planning effort with the master plan being implemented for District properties.
The master planning effort involved extensive community outreach and public participation, and has
served as a hallmark example of a successful joint and collaborative planning effort between the
Public Entities. The resulting plan is representative of the collective vision and planning goals of the
community, the broader region, the District, and the City. The CVBMP promotes public access to and
engagement with the water, while enhancing the quality and protection of key habitat areas. Once
fulfilled, the CVBMP will create a world-class destination that reflects strong planning and design
principles, economic feasibility, and community benefits.
For planning purposes, the CVBMP was divided into three districts: the Sweetwater District, which
comprises the northern portion of the planning area, south of the Living Coast Discovery Center; the
Harbor District, which includes the central portion of the planning area where the marinas are located
and the RHCC is proposed; and the Otay District which encompasses the southern portion of the
planning area where the SBPP was previously located.
Sweetwater District
The Sweetwater District, located in the northernmost portion of the CVBMP area, consists of
approximately 130 acres. Development in the Sweetwater District focuses on lower scale,
environmentally sensitive, and environmentally themed uses. Approved uses include a large
ecological buffer, a 21-acre signature park, a bike path and pedestrian trails and other open space
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areas.
Harbor District
The Harbor District is most directly accessible to downtown Chula Vista and will be redeveloped to
provide a significant link from the City to the CVB. It consists of approximately 221 acres of land and
59 acres of water. Visitor-serving amenities and mixed-uses will be clustered in the Harbor District to
reduce impact on environmentally sensitive areas. A close up of the Harbor District parcels is
included as Attachment G.
Otay District
The Otay District, which consists of approximately 125 acres at the southernmost end of the CVBMP
area, is planned to include industrial business park uses, lower-cost visitor serving recreational uses,
a park, as well as other open space areas, an ecological buffer, bike path, pedestrian trails, and new
roadways and infrastructure.
Surrounded by unique and valuable natural resource lands, the CVB seeks to best protect and
enhance environmental resources while accommodating reasonable commercial development for a
vibrant and viable waterfront project. When completed, more than 53% of the plan (286 acres) will
be dedicated to the public realm, including parks, open space, habitat restoration/preservation, and
water areas, as well as roads, bikeways, and promenades. Marina improvements will create an
active commercial harbor with retail shops, restaurants and public space at the water's edge.
I. e. Early Efforts with Gaylord
In June 2005, the District received an unsolicited letter of interest from the Gaylord Hotels brand
(Gaylord) regarding development of a major resort hotel and convention center on the CVB. Gaylord
presented its qualifications, experience and concept to the Board, City Council, and CAC at a number
of public meetings. The Gaylord concept was well received and was recognized as a more
economically viable alternative to the stand-alone event center that had been originally contemplated
as an element of the CVB.
In August 2005 the Board concluded that the Gaylord proposal represented an attractive concept and
suitable "anchor" use for the CVBMP, and directed District staff to conduct a competitive RFQ to
determine if there were other developers that would advance potentially superior proposals. The
Board reviewed the responses to the RFQ at its October 25, 2005 meeting, concluded that the
Gaylord proposal was the best choice, and directed staff to enter into an exclusive negotiating
agreement with Gaylord.
The District entered into exclusive negotiations with Gaylord and in July 2007, the District, the City,
the Redevelopment Agency of the City of Chula Vista, and Gaylord Entertainment Company entered
into a letter of intent. Due to several factors, including the economic downturn, Gaylord chose not to
move forward at that time and the letter of intent expired on December 31, 2008.
I. f. Obtaining the Port Master Plan Entitlements
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The environmental review process for the CVBMP was lengthy and complex, subject to multiple
changes in direction, and resulted in the public circulation of two EIRs - in total taking more than five
years to complete.
The first draft EIR was circulated to the public in 2006 and received substantial public comment. In
order to address comments received, the 2008 Revised Draft EIR included greater detail and added
analysis to address the project specific components of the plan. One of these projects contemplated
in the 2008 Revised Draft EIR was the Gaylord proposal, which would serve as the catalyst and
economic driver for the redevelopment of the CVB. Preparation of the final EIR was nearly complete
when Gaylord withdrew its plan for developing the RHCC. To move the EIR forward, despite
Gaylord's exit, staff revised the document to remove specific references to the project proponent, but
continued to advance the resort hotel and convention center on the H3 parcel in acknowledgement of
that development component as the critical catalyst of the master plan.
In May 2010, the Board certified the final EIR10. At this hearing, the Board unanimously approved the
amendment to the Port Master Plan, and the City Council, City Planning Commission, and City
Redevelopment Corporation each unanimously approved amendments to the City's Local Coastal
Program.
Later that year, in December 2010, the California State Lands Commission (SLC) approved the land
exchange between the District and Pacifica, as described below.
On August 9, 2012, the CCC unanimously approved the CVBMP amendments to the Port Master
Plan and the Local Coastal Program. The adopted Port Master Plan Amendment' includes text, a
precise plan, and a project list specific to the CVB Planning District, as well as a Public Access
Program11 and Development Policies". This approval followed many months of collaboration with
CCC staff, which served to strengthen and enhance the master plan's provision of coastal access
and protection of natural resources.
I. g. Pacifica Land Exchange
It was recognized through the planning process that shifting high density residential land uses from
the more environmentally sensitive Sweetwater District to the centrally located Harbor District would
serve as an economic catalyst for the overall CVB and would also create an environmentally superior
land use plan. Since residential uses are not permitted on District owned land, an exchange was
necessary. To achieve this, Pacifica agreed to give SLC its approximately 97 acre parcel located in
the Sweetwater District in exchange for the District's approximately 35 acre parcel within the Harbor
District.
The Board approved the land exchange between the District and Pacifica on February 2, 2010, and it
was subsequently approved by the SLC on December 10, 201 013. The exchange closed on February
18, 2016.
I. h. Chula Vista Bayfront Settlement Agreement
During the planning stages of the CVBMP, the District and the City sought to obtain the Bayfront
Coalition's (Coalition) support for approval of the CVBMP. Similarly, the Coalition wished to obtain
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additional measures for protection of the environment above and beyond those required by the
California Environmental Quality Act and any other federal, state, and local laws and regulations
applicable to the project. As a result, a Settlement Agreement was negotiated between the Coalition,
the District, and the City detailing the commitments of the parties as they relate to the approvals of
the master plan14
The Coalition is comprised of the Environmental Health Coalition, San Diego Audubon Society, San
Diego Coastkeeper, Coastal Environmental Rights Foundation, Southwest Wetlands Interpretative
Association, Surfrider Foundation (San Diego Chapter), and Empower San Diego.
The Settlement Agreement includes specific planning, design, funding, and implementation elements,
many of which were incorporated into the EIR and Mitigation Monitoring and Reporting Program15, as
well as the Development Policies included with the Port Master Plan Amendment approved by the
CCC. The Settlement Agreement also required the formation of the Wildlife Advisory Group and the
Bayfront Cultural Design Committee.
Wildlife Advisory Group (WAG)
In recognition of the sensitivity of the natural resources in the CVB and the importance of protecting,
restoring, and managing, those resources, the Settlement Agreement required the formation of the
South Bay Wildlife Advisory Group (WAG). One of the primary duties of the WAG is to advise the
District in the preparation of a Natural Resources Management Plan (NRMP)16. The NRMP, which
was adopted by the Board on May 10, 2016, achieves specific management objectives established
by the Settlement Agreement for areas designated as Wildlife Habitat Areas. The WAG actively
meets quarterly to discuss progress on the CVB.
Bayfront Cultural Design Committee (BCDC)
The Settlement Agreement also required the formation of a Bayfront Cultural Design Committee
(BCDC) to advise the District in the establishment of design guidelines to ensure cohesive
development and streetscape design standards, walkways and bikeways design to promote safe
walking and biking, standards for design of park areas, and cultural facilities throughout the CVB.
The BCDC is also required to provide input on the design of major development projects on the CVB.
As such, prior to the Board's consideration of a design concept for the RHCC, District and City staff
will consult with the BCDC to ensure their feedback is incorporated into the design of this project.
I. i. Port/City Partnership
In 2002, the District and City began a collaborative planning process to create a master plan for the
CVB. Through the collaborative process, the partnership worked together to certify the EIR and
amended the Chula Vista Local Coastal Plan. These efforts created the foundation to then identify
the key financing sources and mechanisms needed to implement the CVBMP. The Public Entities
entered into the Financing Agreement, setting forth the revenue sources and financing alternatives
necessary to implement the development of the CVBMP, which Financing Agreement is now being
updated as the Amended and Restated Financing Agreement to incorporate new sources of revenue
and will be considered by the Board on June 20, 2017. The District and City team continue to work
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diligently towards the implementation of the CVBMP. Within the CVBMP program, there are
numerous individual project elements that have been identified. Below are some examples of the
functions the District and the City continue to collaborate on:
Finance and Pre-Development
• Infrastructure - Planning, Development and Operations
0 Environmental Compliance and Entitlements
• Real Estate - Leasing and Acquisitions
0 Communications and Inter-Governmental Affairs
The team includes both District and City representation in order to continue the collaborative spirit
that helped to establish the success of the CVBMP.
II. REQUEST FOR QUALIFICATIONS FOR THE RESORT HOTEL AND CONVENTION
CENTER
The centerpiece and catalyst for development on the CVB is the RHCC project. It is most critical to
the implementation of the CVB because it includes or is expected to generate the revenues
necessary to fund the public infrastructure and improvements and environmental obligations
associated with the CVBMP and the Settlement Agreement requirements for this project. To begin the
process of identifying a developer qualified to construct the project consistent with the vision of the
CVBMP, on May 6, 2014, the Board adopted a resolution authorizing the issuance of a RFQ for
development of Phase 1 of the CVB, which included developing a 1,400-to 1,600-room resort hotel
and an approximate 400,000 square foot convention center. The RFQ also allowed for potential
additional development opportunities on other parcels directly adjacent to the Site. After an extensive
international marketing campaign, RIDA was selected as the developer of the RHCC.
II. a. Marketing the RFQ
The CVB development opportunity was addressed through a multidimensional marketing plan that
was international in scope including a marketing plan for the RFQ that specifically addressed the
hotel convention center industry. The effort included an international invitation to respond to the RFQ
placed in major publications and trade journals and directed to an extensively developed mailing list
and a professionally produced and branded RFQ and pre-solicitation marketing materials were
developed to include high quality graphics and images.
The RFQ was released through web and print based formats. Additionally, the RFQ was marketed
directly to potentially interested parties. Notwithstanding this marketing effort, due to the extremely
complex nature of this project, 1,400 -1,600 room resort hotel and approximately 400,000 square feet
convention center, only one qualified response was received.
II. b. RFQ Selection: RIDA Development Corporation
The RFQ was issued on June 30, 2014 and responses were due on September 8, 2014. One
response to the RFQ was received from RIDA. ARES Management, L.P. (ARES), was included as
the financial partner, WELBRO as the general contractor and three well qualified architectural firms. A
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two stage RFQ/RFP solicitation process for the hotel and convention center parcel was originally
envisioned, however, since there were not multiple responses to the RFQ, and RIDA Development
Corporation is one of the most well-qualified firms to complete a project of this magnitude, the Board
selected RIDA Development Corporation as the successful respondent on October 14, 2014 and
authorized staff to negotiate an ENA with RIDA Development Corporation.
RIDA Development Corporation is the ideal partner to make the RHCC project a reality. RIDA
Development Corporation is a full service real estate organization that has created and invested in
innovative and economically successful office, residential, industrial, hospitality and retail
developments for more than forty years. RIDA Development Corporation's corporate headquarters
are located in Houston, TX with regional offices in Orlando, FL and Warsaw, Poland. These
centralized locations allow RIDA Development Corporation to oversee its projects in the US, as well
as Europe. Among RIDA Development Corporation's strategic relationships is a longstanding
partnership with ARES with whom they have co-invested in over $4 billion worth of investments and
development on three continents. RIDA Development Corporation and ARES have previously
partnered on at least five projects comparable in size and scope to the RHCC project, including the
recently opened Marriott Marquis Houston and the currently under construction Gaylord Rockies
Hotel (Aurora, CO).
The qualifications and experience that RIDA and its prospective subcontractors bring to the project
are summarized below:
• Successfully developed, or in the process of developing, convention style full service
hotels consisting of similar large scale resort hotels and convention centers
o Hilton, Orlando (1,400 room, 175,000 square foot (sf) convention)
o Omni Orlando at Champions Gate (720 room, 128,000 sf convention)
o Marriott Marquis, Houston (1,000 room, 105,000 sf convention)
o Gaylord Rockies Hotel, Aurora, CO (1,507 room, 485,000 sf convention)
• Team members have led the architectural design of similar large scale resort hotels and
convention centers
o Marriott Marquis, Houston
o Omni Orlando at Champions Gate
o Hilton, Orlando
o The Palazzo, Las Vegas
• Team members have successfully secured equity and debt financing for pre-
construction, construction and permanent operations of similar large scale resort hotels
and convention centers
o Hilton, Orlando
o Hyatt Regency, New Orleans
• Relevant experience as a team
o Hilton, Orlando
o Marriott Marquis, Houston
o Omni Orlando at Champions Gate
o Gaylord Rockies Hotel, Aurora, CO (Opening 2018)
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RIDA embraces the District's and the City's vision and commitment to enhance, but respect the
environment. RIDA's proposal successfully captures the vision and understanding of the RHCC
project objectives and thoroughly defines the elements necessary to make the project work. Their
project concept is well-positioned to attract international and national visitors, residents of the South
Bay Area and San Diego County in general.
III. PROJECT ECONOMICS: A GOOD DEAL FOR RIDA AND THE PUBLIC ENTITIES
Concurrent with the Board's selection of RIDA Development Corporation as the successful
respondent to the RFQ, the Board also authorized staff to negotiate an ENA with RIDA. An ENA was
negotiated through a collaborative effort between District staff, City staff and RIDA. The ENA sets
forth a timeline for items to be delivered to the District during the term of the ENA, including a
proposal for the RHCC. The ENA commenced on February 10, 2015 and will terminate on February
16, 2018.
III. a. Due Diligence Process
Since the ENA was entered into, the District, the City and RIDA have conducted extensive due
diligence to understand the challenges of the project, the needs of the CVB and potential economic
impacts. Over the course of the past two years, RIDA has provided staff with financial projections,
including both revenue and cost estimates. Staff has also worked with multiple outside consultants to
provide specific, specialized analysis to understand the information provided by RIDA, and create the
financial projections that will ultimately be used as support for the economic terms of the LOI, and
ultimately the Definitive Agreement. The following are the major consultant reports used in staff's
analysis of the RHCC economic deal terms:
• Revenue Analysis: Report from CBRE Hotels
• Development Cost Analysis: Jones Lang LaSalle (JLL) Development Cost Review
• Feasibility and Financial Gap Analysis: KMA Report
For the Revenue Analysis, staff engaged CBRE Hotels (formerly PKF) to analyze the projected hotel
revenues proposed by RIDA. Attachment H is the most recent CBRE report that analyzes expected
hotel revenues for the RHCC. This analysis provided the basis for the District's and KMA's financial
projections, ultimately assisting with key negotiated deal terms.
For the Development Cost Analysis, JLL provided feedback on estimated development costs
presented by RIDA for the RHCC. This analysis was also used to help understand the proposed
contribution of each of the parties and RIDA's overall project cost. JLL's analysis determined that
compared to recent, new hotels in the market, the higher-than-average cost projections submitted by
RIDA could be justified by their use of additional amenities, hotel theming, and quality of design.
Development cost refinements will be factored into the Definitive Agreement with the requirement that
the District will have the right to review and confirm costs. JLL's report on development cost is
included as Attachment I.
Utilizing the information from RIDA, CBRE and JLL as well as their industry expertise, KMA has
modeled potential financing scenarios and returns which are further described in the Key Economic
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Attachment B to Agenda File No. 2018-0070
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Terms section below.
IV. DEVELOPMENT PARTNERSHIPS
IV. a. Private Development Program
The RIDA proposal chosen in 2014 is consistent with the vision of the CVB and RHCC project.
Through extensive due-diligence review and constant on-going negotiations with RIDA, the project
scope for the RHCC has been identified.
Project Scope
The following lists the key components of the RHCC project, with concept drawings included as
Attachment J. The renderings have not been reviewed for consistency with the CVBMP, EIR, or
other agreements applicable to the CVB, and may be presented with some modifications for approval
at a future date.
Proposed Brand Gaylord Hotels
Hotel Rooms 1,450
Convention & Meeting Space 275,000 Usable Square Feet
Amenities Associated Retail and Resort-level Amenities
Parking Approximately 1,500 spaces
RIDA is negotiating with Marriott to operate a Gaylord hotel for the proposed RHCC. This introduction
of Gaylord is expected to reduce projected risk associated with the project and provide for certainty in
bookings. The Gaylord product type has a proven track record of inducing demand in unproven
markets and guarantees long-term bookings.
Gaylord Hotels is the large convention hotel brand of Marriott International
<https://en.wikipedia.org/wiki/Marriott_International>. The Gaylord properties are owned by Ryman
Hospitality Properties, Inc. (Ryman). It owns four large hotels <https://en.wikipedia.org/wiki/Hotel>,
each with an attached convention center <https://en.wikipedia.org/wiki/Convention_center> and
overflow support hotel property. On May 31, 2012, Marriott International bought the rights to manage
Gaylord's four hotels under the ownership of Ryman and managed under the Gaylord name.
IV. b. Public Development Program
In the process of determining the financial feasibility of the RHCC, it was determined that in order for
the RHCC to move forward and to be developed, there was a need for a public financial subsidy. As
described in further detail in the attached KMA report, the public subsidy contribution contemplated,
but subject to a plan of finance between the District and the City (Plan of Finance) to be developed
during the term of the Definitive Agreement, can be described as follows:
1. Phase 1A Infrastructure: $56.3 Million
2. Public Entities Contribution for Convention Center Project: $225 Million
3. District-developed and owned parking
4. City sewer improvements and fire services
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Attachment B to Agenda File No. 2018-0070
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The District and City will provide evidence of the revenue sources through a future Plan of Finance
that will cover the public portion of the convention center and required infrastructure of the RHCC; it
is anticipated that bond financing will be required to finance the public contribution. Subject to the
terms of the Plan of Finance, the Public Entities would work collaboratively to issue the debt prior to
the close of escrow of the ground lease for the Site. According to the attached Amended and
Restated Financing Agreement (Attachment K), which was approved by the City in November and
will be considered by the Board on June 20, 2017, subject to the Plan of Finance, the Public Entities
would commit sources of revenues identified in the Amended and Restated Financing Agreement that
could be used to pay down the infrastructure bonds and associated debt service.
As a part of the strategy to finance the public infrastructure and improvements, a Phase 1A public
infrastructure program has been developed to identify the infrastructure needed to support the
RHCC. This Phase 1A program includes providing roadway access and utility service to the H-3
parcel; improving the adjacent area; and building new parks. It is currently contemplated that the
Public Entities will fund the Phase 1A infrastructure through the issuance of debt to be further defined
in a Plan of Finance. Similarly, the District will deliver the Site to RIDA upon ground lease execution.
Prior to delivery of the Site to RIDA, the District will complete such portions of the Phase 1A
infrastructure to be agreed to by the parties in the Definitive Agreement and remove, or cause the
removal of, the existing recreational vehicle (RV) park.
To serve the proposed RHCC, new streets and utilities will be constructed around the perimeter of H-
3 as a part of the Phase 1A public infrastructure. H Street will be extended to the expanded Bayside
Park, and the new roadway will continue to the north and east to connect to existing Lagoon Drive.
The existing Bayside Park will be expanded into a 24-acre park with improvements that may include
lawns, plaza, landscaping and parking. A pedestrian and Class I bicycle path will run through the new
Harbor Park and extend to the north through the Sweetwater Signature Park to connect to the
Bayshore Bikeway and City of Chula Vista pedestrian system at E Street and Bay Boulevard.
The District also plans to construct parking spaces to serve not only the RHCC but ultimately the
CVB as a whole. RIDA has requested the use of some of the parking spaces for hotel guests and
employees, with the remainder of the spaces for public use.
V. FINANCING AGREEMENT
The Financing Agreement for the CVB was approved by the Board in 2012 and set forth the
framework for the financing and development of the public improvements and infrastructure within the
CVB by the District and the City. The development of public improvements and infrastructure is
necessary for the implementation of the CVBMP in accordance with the certified EIR and Port Master
Plan Amendment, and for the RHCC to move forward together with other development within the
CVB project area. As contemplated in the Financing Agreement, a subsequent plan of finance would
further define and implement the financing contemplated by the Financing Agreement. Since the
Financing Agreement was entered into in 2012, the parties have been working to update the
approach to the financing and development of the public improvements and infrastructure within the
CVB. Specifically, new sources of revenue from both the District and the City have been identified.
The Financing Agreement is now being updated and on June 20, 2017, the Board will consider the
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Attachment B to Agenda File No. 2018-0070
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Amended and Restated Financing Agreement, which identifies these new revenue sources and
differentiates between the RHCC related public infrastructure and improvements and those required
for future phases of the development on the CVB.
Joint Powers Authority Formation
In 2014, the District and the City formed the Chula Vista Bayfront Facilities Financing Authority
(CVBFFA) to undertake the financing of the CVB project contemplated by the Financing Agreement.
The Amended and Restated Financing Agreement lays the foundation for the District and the City to
use either the CVBFFA or form a new joint powers authority to issue the financing of the public
infrastructure and improvements related to the RHCC.
VI. KEY ECONOMIC TERMS
VI. a. Overview of Proposed Method of Financing
District, the City, and RIDA have worked together to identify the key economic terms that will support
the construction and operation of the RHCC, all while achieving favorable market returns to both the
Public Entities and RIDA. During earlier discussions with Gaylord and prior to the selection of RIDA,
the District and City had already anticipated that early phases of development on the CVB would
require public financial contributions.
The Financing Agreement identified sources of revenues from the City and District to develop the
public improvements and infrastructure, and the Amended and Restated Financing Agreement that
will be considered by the District on June 20, 2017, identifies further sources of revenue from the
District and City in order to make the RHCC project feasible. The District and City will provide
evidence of the sources of revenue and financing based on the Plan of Finance in order to fund the
public portion and required infrastructure of the RHCC, and it is anticipated that bond financing will be
used. The Public Entities will work collaboratively pursuant to the terms of the Plan of Finance and
Definitive Agreement to issue the debt for the public contribution prior to the close of escrow of the
ground lease for the Site.
The District and City proposed financial contributions identified in the proposed LOI have been
analyzed by KMA, and the KMA feasibility and financial gap analysis is presented in Attachment D.
The KMA report includes a comprehensive financing gap analysis justifying the need for the District
and City proposed contributions toward construction of infrastructure, parking, and the convention
center portion of the RHCC. Additionally, the KMA report presents a feasibility analysis of the
proposed method of financing for the RHCC. The KMA report illustrates how the public contribution
toward the RHCC related public infrastructure and improvements will be supported primarily through
project-generated revenues, i.e., most of the District and City financial contribution amounts are in
effect "performance-based". To that end, KMA has concluded that the RIDA projected return after the
public investment and rent structure is not excessive. This finding indicates that the Public Entities
contribution and District rent structure is warranted and needed in order for the RHCC to move
forward and to be developed. Ultimately RIDA will need to control development costs and/or improve
operating performance in order to achieve a satisfactory long-term return.
VI. b. Proposed Financing Structure
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Attachment B to Agenda File No. 2018-0070
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As set forth in the KMA report, total project costs, including both public infrastructure and private
development, are estimated to be $969.3 million. As determined in the KMA report, of this total, RIDA
will be responsible for a minimum investment, including private debt and equity, of no less than $688
million. Based on these findings, it is anticipated that the Public Entities will be responsible for up to
$225 million contribution toward the convention center portion of the RHCC; the public infrastructure,
estimated at $56.3 million; and a minimum of 1,500 parking spaces. For planning purposes, the
District has assumed construction of 1,500-space parking spaces, which estimated cost is to be
determined. These cost estimates, and respective responsibilities, are summarized in the KMA
report and set forth in the chart below from the KMA report.
SOURCES AND USES OF FUNDS
Developer District/City Total
A. Hotel/Convention Center $688M $225M $913M
B. Infrastructure --- $56.3M $56M
C. Parkinq --- TBD TBD
D. TOTAL $688M $281 .3M $969.3M
VI. c. Proposed Public Contribution toward Infrastructure and Convention Center
Proposed Public Revenue Contributions to Support Bond Financing
The District and City propose to finance the $225 million convention center contribution and
estimated $56 million infrastructure cost through a combination of existing and projected revenue
streams from the CVB. (Approaches to financing the parking, which will be solely a District
responsibility, are discussed separately in Section Vl.i below.)
If the Board approves the Amended and Restated Financing Agreement, the District will contribute
consistent with the Definitive Agreement and Plan of Finance: (1) existing and designated future
lease revenues from the CVB; and (2) ground rent from the RHCC. (The proposed ground rent
structure for the RHCC ground lease is discussed in Section We below.) Additionally, it is
contemplated that the District will contribute toward the infrastructure cost the previously received
SDG&E contribution of $1.7 million and the Pacifica contribution of $3.0 million. The City is
contributing toward the construction of required sewer and fire services. The District will also be
responsible for an annual contribution toward bond debt service to support the convention center
contribution not to exceed the following schedule of amounts during Lease Years 4 through 37:
• Lease Years 1-3 $0
• Lease Years 4-13 $5.0 million
• Lease Years 14-18 $6.0 million
• Lease Years 19-23 $3.0 million
• Lease Years 24-37 $3.5 million
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Attachment B to Agenda File No. 2018-0070
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The revenue sources identified are from the Financing Agreement and the proposed Amended and
Restated Financing Agreement. If the Board authorizes the Amended and Restated Financing
Agreement on June 20, 2017, new sources of revenue will be considered. Table IV-6 in the attached
KMA report provides an illustrative example of the District and City revenue contributions toward the
proposed bonds to finance the convention center contribution and infrastructure based on the
Amended and Restated Financing Agreement at Lease Year 7, i.e. projected stabilized year of RHCC
operations.
Furthermore, it is contemplated that the District will lease the land to RIDA with a modified rent
structure that will allow the RHCC project to achieve the necessary return. The District's contribution
of the land under a modified rent structure is essential and represents an additional contribution not
represented in the table referenced.
Preliminary Estimate of Supportable Bond Underwriting
The City engaged JP Morgan Securities, LLC (JP Morgan) to provide investment banking and bond
underwriting services. JP Morgan prepared estimates of achievable bond financing based on the
revenue streams to be pledged by the District and City. In the KMA Report, KMA analyzed JP
Morgan's estimates. Based on this analysis, KMA determined that the JP Morgan projections were
based on currently available bond underwriting terms, the relative creditworthiness of the pledged
revenue streams, and JP Morgan's professional judgement regarding debt service coverage, interest
rate, and costs of issuance and capitalized interest during construction. Moreover, KMA found that
the JP Morgan bond runs assume a 37-year term, inclusive of the construction period, and effective
interest rates of 5.48% for taxable bonds and 4.41% for tax-exempt bonds. Notably, KMA has used a
1.75 debt service coverage ratio recommended by JP Morgan. KMA concluded that JP Morgan
assumed ascending debt service schedules, i.e., annual debt service rises over the term subject to
the 1.75 debt service coverage limit. In effect, KMA determined the bond sizing is based on $1.00 of
debt service for every $1.75 of projected revenue. KMA concludes in its report that while this is a
conservatively high debt service coverage assumption, i.e., it reduces the achievable bond financing
amounts, it also results in significant projected surplus cash flow after debt service (see further
discussion in Section Vl.h below).
The following table summarizes the KMA analysis on the currently anticipated underwriting terms for
the District/City bond financing for the convention center contribution and infrastructure. KMA
determines that by using the currently anticipated underwriting terms, the pledged revenues are
projected to be sufficient to support the net bond proceeds required to fund the District and City
obligations under the LOI. KMA qualified its finding with the fact that the bonds will be issued at a
future date to be determined, at which time economic conditions may vary from the figures used in
this preliminary feasibility analysis. KMA recommends that RIDA, the District, and the City continually
monitor real estate market factors and bond financing parameters to determine if any changes to
these projections are warranted.
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Attachment B to Agenda File No. 2018-0070
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PRELIMINARY UNDERWRITING TERMS FOR PROPOSED BOND FINANCING
Total Revenues Pledged, Lease Year 7 Estimates
District $7.7M
City $22.9M
Tota I $30.6M
Debt Service Coverage Factor 1 .75 DSC
Interest Rate 5.48% taxable
4.41 % tax-exempt
Bond Term 37 Years (including construction period)
Approx. Net Bond Proceeds $225M Convention Center Contribution
$56M Infrastructure
VI. d. Required Private Investment
KMA's report provides that RIDA will be responsible for a private investment in the RHCC project of
no less than $688 million. This investment is expected to take the form of a combination of debt
(third party loans) and equity. The chart below is taken from the KMA report and summarizes the
required private investment in the RHCC project.
REQUIRED PRIVATE INVESTMENT
Factor (Loan to Value) Amount
A. Maximum Debt 65% LTV $447M
B. Minimum Equity 35% LTV $241 M
C. TOTAL PRIVATE $688M
VI. e. Basic Ground Lease Terms
Under the terms of the LOI, RIDA will pay a fixed ground rent schedule for the project during the bond
financing term, estimated to coincide with Lease Years 1-37. The fixed ground rent schedule for this
period is as shown below.
• Lease Years 1-18 $0
• Lease Years 19-23 $3.0 million
• Lease Years 24-37 $3.5 million
As detailed in the KMA report, beginning in Year 38, the proposed rent structure for the project will be
in line with or higher than the District's standard percentage rent categories for room, food, and
beverage. The banquet percentage rent category has been broken out from the room rent category
and is slightly lower than in typical District leases. Percentage rent rates for the remaining categories
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Attachment B to Agenda File No. 2018-0070
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of revenue are to be agreed to in the Definitive Agreement. However, since the proportional size of
the convention center space is larger than found in other hotel properties on District tidelands, the
RHCC is projected to generate disproportionately higher banquet revenues. On this basis, staff
agreed that a lower banquet percentage rate is justified. Additionally, the banquet rate increases to
the District's standard room rent rate in Lease Year 48.
VI.f. Public Entities Participation in NOI
The KMA report also explains that in addition to ground rent paid to the District, RIDA will pay the
Public Entities an annual participation payment based on surplus Net Operating Income (NOI) from
the RHCC project. As set forth in the KMA report, the Public Entities will receive 20% of surplus NOI
above an 11% ROI threshold for RIDA during Lease Years 4-37. KMA has prepared a preliminary
projection of this potential future revenue stream, which is summarized in the chart below. Section
Vl.h below provides a discussion related to the proposed distribution of the Public Entities
participation payments, as well as surplus cash flow after debt service, between the District and City.
PROJECTED Annual NOI Participation Payments to Public Entities
Lease Year Estimated NOI Participation Payme
Years 1-3 (Construction) $0
Years 4-11 $0
Year 12 $0.025M
Year 20 $2.7M
Year 30 $7.8
Year 37 $12.6M
VI.g. Financial Returns to RIDA
Calculations of a target Return on Investment (ROI) to RIDA, and the share of NOI between RIDA
and the Public Entities, were based on an analysis of target returns for RIDA. Given the level of risk
associated with undertaking such a major new investment on the relatively undeveloped CVB in a
single phase, Consultants agree that the upper end of this range is warranted for the proposed
RHCC. The proposed District and City financial contributions are structured to target an ROI to RIDA
of 11% in the stabilized year, i.e., the fourth year of operations or Lease Year 7. The KMA report
projects that RIDA will achieve an ROI in Lease Year 7 of 10%, lower than the target return threshold.
KMA also prepared long-term operating income and expense projections for the duration of the
proposed 66-year ground lease. These projections indicate that the District and City contributions
are warranted, that the RIDA return is not excessive, and ultimately that RIDA will need to control
development costs and/or enhance operating performance in order to achieve a satisfactory long-
term return. At the same time, the proposed participation in RHCC NOI provides for the Public
Entities to participate in the success of the RHCC project as well.
VI.h. Proposed Cash Flow Distribution ("Waterfall")
The KMA reports notes that the proposed bond financing structure will result in significant surplus
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cash flow after debt service. Additionally, RIDA will make NOI participation payments to the Public
Entities. District and City staff have discussed in detail various approaches to distribute these funds.
The KMA report outlines the current concept to allocate these funds through a "waterfall", with the
priority sequence shown in Table IV-11 in the attached KMA report. As an example, the KMA chart
presents the projected figures for Lease Years 7 (stabilized operations) and 13 (10th year of
operations).
KMA concludes that once the RHCC project has stabilized, the District anticipates that it will receive a
reimbursement of its annual contribution toward debt service. Moreover, KMA finds that both the
District and City will be able to reimburse themselves for their respective CVB infrastructure operating
and maintenance (O&M) expenditures. KMA forecasts a remaining positive cash flow even after the
priority distributions,. KMA recommends that District and City staff will need to negotiate how these
surplus funds are distributed.
VIJ. Parking Space Funding TBD - Port Obligation
The KMA report points out that its analysis requires that the District be responsible for financing,
constructing, owning, and operating approximately 1,500 parking spaces to serve the RHCC project.
District staff is evaluating the potential to develop 1,500-space parking spaces on Parcel H3. The
District would assume all operating and maintenance expenditures for the parking for the duration of
the RIDA ground lease. Parking gross revenues would be allocated 90% to RIDA and 10% to the
District. The District's share will increase to 15% of gross revenue if RIDA sells, on a cumulative
basis, 51% or more of the RHCC project.
The total cost for the construction of the 1,500 parking spaces will be estimated at a future date.
District staff is evaluating a variety of approaches to finance the parking. The preferred approach
would be determined by the Board at a later date.
VI.j. Ancillary Development Rights
In order to implement the model adopted by Gaylord to attract sufficient convention business,
Gaylord represents it needs access to additional rooms within close proximity of the main hotel and
convention center in order to maximize the booking opportunities. Allowing for control over bookings
five to six years out is integral to Gaylord operations, especially since standard hotels do not typically
book that far in advance. RIDA requests a portion of the H23 parcel in order to facilitate the
construction of 550 additional rooms necessary for the success of RHCC. Under the LOI, when the
Definitive Agreement is executed, the District will execute a one year exclusive right to negotiate
agreement with RIDA concerning a definitive agreement for the lease of up to 10 acres of the H23
parcel that are closest to the H3 parcel to develop up to 550 hotel rooms.
In addition, RIDA has requested the right to comment on future development projects on the 1-11,
H1A, H8,H9 and H23 parcels that surround H3 parcel. See Attachment G for a map view of the H
parcels. The reason this was requested was to provide guidance on types of operations, to ensure
no duplications in operations, and to offer feedback on quality of design on those parcels. Since
RIDA is a major partner in the development of the CVB, staff supports RIDA's ability to comment on
future development projects and welcomes feedback on future growth opportunities.
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VII. NEXT STEPS
If the Board and the City Council approve the LOI, RIDA will expend additional funds to advance the
RHCC project, specifically on project design. It is anticipated that the design process will take
approximately 18 months to complete. Concurrent with RIDA making advancements on the RHCC
project, the District will continue to advance other components on the CVB. The District is in the
process of acquiring approximately four acres of land, known as the triangle parcel, which is an
integral part of the development of the CVB and the RHCC. Also, the existing RV park leasehold is
located within a portion of the CVB, on the future location of the Harbor District Park and RHCC. The
lease for the Chula Vista RV Park expires in 202117. The CVBMP requires all 237 RV stalls be
replaced prior to the existing RV park closing. On October 13, 2016, the Board authorized the
issuance of a RFP for the development and operation of the new RV park. On April 11, 2017, the
Board selected the Sun Communities, Inc./Northgate Resort LLC team to build and operate the new
RV park. Project design, environmental review and lease negotiations are currently under way. It is
anticipated that construction on the new location will begin in 2018, paving the way for the
development of the RHCC.
Staff will also continue to work with the City in developing the public infrastructure design and
negotiating the Plan of Finance necessary to fund the public infrastructure and improvements.
VI La. Disposition and Development Agreement
The ENA between the District and RIDA sets forth the intent to exclusively negotiate and potentially
enter into a binding agreement that specifies the rights and obligations of the District, the City and
RIDA with respect to the lease, development and operation of the RHCC (Definitive Agreement).
Based on the complexity of the transaction, and the various performance milestones that must be
satisfied by the parties prior to the execution of the ground lease, the parties are currently negotiating
the Definitive Agreement which is anticipated to be brought back to the Board for approval by the end
of 2017.
The Definitive Agreement is contemplated to be for a 4 year term, with three, 1 year options to
extend, and will set forth the obligations of the parties and the performance milestones needed to
complete the pre-construction phase of the RHCC based on an agreed upon schedule of
performance. This schedule of performance will set forth the various steps involved in the pre-
construction phase and the obligations of all parties to complete that phase.
The Definitive Agreement will terminate (a) upon the execution of the ground lease, which will happen
concurrently with the closing of the public and private financing, and commence the construction
phase of the RHCC, or (b) (i) an uncured default or (ii) failure to satisfy a condition precedent prior to
the close or a milestone set forth in the schedule of performance.
At each of the performance milestones to be identified in the Definitive Agreement, the City, District
and RIDA will have the ability to evaluate their respective progress in meeting their milestones. In the
event any of the performance milestones are not timely completed by any of the parties, the other
parties will have certain rights to pause, delay or terminate such performance milestone under the
Definitive Agreement. Only upon satisfaction of all of the conditions precedent and performance
milestones set forth in the schedule of performance, will the necessary public and private financing
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be issued and the District and RIDA enter into the ground lease for the future Site of the RHCC.
VIII. RECOMMENDATION
After two years of negotiations with RIDA, District and City staffs believe that the nonbinding LOI
should be approved by the Board and City Council for the development of the RHCC, the catalyst
project for development of the CVB. The LOI should be approved because in RIDA and the City, the
District has found the right partners that are ready to move forward with the implementation of the
CVBMP; the project economics represent a good deal for the District, for the City, and for RIDA; and
time is of the essence to memorialize the economics to ensure that the redevelopment of the CVB
proceeds as soon as possible. The LOI is an important next step toward catalyzing other additional
development within the CVB. Once implemented, the CVBMP will create a world-class destination
that reflects strong planning and design principles, economic feasibility and community benefits.
General Counsel's Comments:
The Office of the General Counsel has ongoing involvement in this matter and assisted in the
preparation of this agenda sheet. As such, the Office of the General Counsel approves this agenda
sheet and the proposed non-binding Letter of Intent as presented to it as to form and legality.
Environmental Review:
The proposed Board actions to authorize a non-binding Letter of Intent (LOI) does not constitute an
"approval" of a project under the California Environmental Quality Act (CEQA) because the Board's
authorization does not constitute a binding commitment to approve the proposed lease or any other
associated discretionary approvals. Any negotiated lease would require Board approval. CEQA
requires that the District adequately assess the environmental impacts of its leases and reasonably
foreseeable activities that may result from its leases prior to the approval of the same. Accordingly, if
negotiations are completed, and before the Board considers approval of a proposed lease, the
District will conduct CEQA review of any potential environmental impacts from the proposed lease
and any reasonably foreseeable activities that may occur as a result of the proposed lease. Such
CEQA review may result in the District, in its sole and absolute discretion, requiring implementation of
mitigation measures or adopting an alternative, including without limitation, a "no project alternative."
The current Board action in no way limits the exercise of this discretion. Nevertheless, development
associated with the Chula Vista Bayfront Master Plan, including the proposed hotel and convention
center contemplated in the LOI, was previously analyzed under the Chula Vista Bayfront Master Plan
and Port Master Plan Amendment Final Environmental Impact Report (UPD #83356-EIR-658, SCH
#2005081077) which was certified by the Board on May 18, 2010 (Resolution No. 2010-78). At this
time, no further action under CEQA is required.
In addition, the presentation and direction to staff allows for the District to administrate its obligations
under the Port Act and/or other laws. The Port Act was enacted by the California Legislature and is
consistent with the Public Trust Doctrine. Consequently, the proposed presentation is consistent with
the Public Trust Doctrine.
The proposed Board actions do not allow for "development," as defined in Section 30106 of the
California Coastal Act, or "new development," pursuant to Section 1.a. of the District's Coastal
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Development Permit (CDP) Regulations. Therefore, issuance of a Coastal Development Permit or
exclusion is not required for the proposed Board actions. However, the District's leases and activities
that may arise from those leases require processing under the District's CDP Regulations. If a
proposed lease is negotiated, the Board will consider approval of a proposed lease after the
appropriate determination under District's CDP Regulations is made, which could include a Coastal
Development Permit. The current Board action in no way limits the exercise of the District's discretion
under the District's CDP Regulations.
Equal Opportunity Program:
A Small Business Enterprise (SBE) Participation Plan including SBE goals for design/construction
and leasing/operations is required.
PREPARED BY:
Adam Meyer,
Department Manager, Redevelopment
Lesley Nishihira
Principal, Planning and Green Port
Linda Scott
Capital Projects Manager, Engineering-Construction
Stephanie Shook
Asset Manager, Real Estate
Attachment(s):
Attachment A: Historic Chula Vista Tidelands Map
Attachment B: CVBMP Illustrative Graphic
Attachment C: Non-Binding Letter of Intent
Attachment D: KMA Feasibility Report
Attachment E: Glossary of Terms
Attachment F: Timeline Overview
Attachment G: Harbor District Parcel Map
Attachment H: October 4, 2016 Report from CBRE Hotels
Attachment I: March 30, 2017 JLL RIDA Development Cost Review
Attachment J: RIDA RHCC Project Renderings
Attachment K: Amended and Restated Financing Agreement
'. SDUPD Clerk's Office Document No.59406 filed October 5,2012, Port Master Plan Amendment
2. SDUPD Clerk's Office Document No. 59001 filed May 30, 2012, Chula Vista Bayfront Master Plan Financing Agreement between City of
Chula Vista and San Diego Unified Port District
s. SDUPD Clerk's Office Document No. 62033 filed July 3, 2014, Request for Qualifications for Chula Vista Bayfront Development Opportunity
for Waterfront Convention Destination Resort Hotel
4. SDUPD Clerk's Office Document No. 62899 filed February 11, 2015, Exclusive Negotiating Agreement; SDUPD Clerk's Office Document No.
65707 filed October 13,2016(Amendment No. 1);SDUPD Clerk's Office Document No.66141 filed February 14,2017(Amendment No.2)
San Diego Unified Port District Page 22 of 23 Printed on 4/20/2018
poviiraired by Legg sfjr,
Attachment B to Agenda File No. 2018-0070
File #:2017-0338
6. SDUPD Clerk's Office Document No. 39466 filed August 5, 1999, Relocation Agreement by and among City of Chula Vista, Redevelopment
Agency of the City of Chula Vista,San Diego Unified Port District and Rohr, Inc..
6. SDUPD Clerk's Office Document No. 33004, filed September 12, 1996, Memorandum of Understanding between the San Diego Unified Port
District and the City of Chula Vista.
SDUPD Clerk's Office Document No. 38358, filed November 29, 1999, Lease Agreement between San Diego Unified Port District and Duke
Energy South Bay, LLC
8. SDUPD Clerk's Office Document No. 44952 filed December 18, 2002, Joint Planning Agreement Between San Diego Unified Port District and
the City of Chula Vista
s. SDUPD Clerk's Office Document No. 47047 filed June 03, 2004, First Amendment to Joint Planning Agreement Between San Diego Unified
Port District and the City of Chula Vista
1°. Final Environmental Impact Report for the Chula Vista Bayfront Master Plan and Port Master Plan Amendment (UPD #83356-EIR-658, SCH
#2005081077),dated June 18,2010,on file in the Office of the District Clerk bearing Document No.56562
" SDUPD Clerk's Office Document No. 59408 filed October 5, 2012, Chula Vista Bayfront Master Plan Public Access Program San Diego
Unified Port District and the City of Chula Vista
12. SDUPD Clerk's Office Document No.59407 filed October 5,2012,Chula Vista Bayfront Development Policies
13. SDUPD Clerk's Office Document No. 56067 filed February 19, 2010, Exchange Agreement by and between San Diego Unified Port District
and North C.V.Waterfront L.P.
a. SDUPD Clerk's Office Document No. 56523 filed May 20, 2010, Chula Vista Bayfront Master Plan Settlement Agreement by and among the
Bayfront Coalition,San Diego Unified Port District and City of Chula Vista,the Redevelopment Agency of the City of Chula Vista
s. SDUPD Clerk's Office Document No. 56555 filed June 2, 2010, Mitigation Monitoring and Reporting Program for the Chula Vista Bayfront
Master Plan
16. SDUPD Clerk's Office Document No.65065 filed June 6,2016, Natural Resources Management Plan for the Chula Vista Bayfront
7 SDUPD Clerk's Office Document No. 14243 filed November 9, 1981, Lease between Chula Vista Marina/RV Park, Ltd. and San Diego Unified
Port District,as amended from time to time.
San Diego Unified Port District Page 23 of 23 Printed on 4/20/2018
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Attachment B to Agenda File No. 2018-0070
Historic Chula Vista Tidelands
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Attachment B to Agenda File No. 2018-0070
100,000 SF mixed use/commercial
120,000 SF 120,000 SF 3,000 space parking garage 9,500 SF
44 ft max height 45 ft max height 155 ft max height 30 ft max height
• 421
25
91
Portion of 2,850 hotel rooms
! . allowed between H-3+H-23 a
300 ft max height
200,000 SF(cultural/retail)
65 ft max height
-
t�
l
l
0 4 0 MB
225,000 SF
fir, 25 ft
Campground max height
• RV Parkl ®.
25 ft max height
1,5001
�I 25ft-
70ft—
o 15,000
• Portion of 2,850 hotel rooms
allowed between H-3+H-23
• 415,000 SF max conference space
• 240 ft max hotel structure height
120 ft max conference center height
I 0 .
Attachment B to Agenda File No. 2018-0070
NON-BINDING LETTER OF INTENT
June 14, 2017
RIDA Chula Vista, LLC
1777 Walker Street, Suite 501
Houston, Texas 77107
Re: Chula Vista Bayfront Hotel and Convention Center Project
The San Diego Unified Port District ("District"), the City of Chula Vista ("City") and
RIDA Chula Vista, LLC, a Delaware limited liability company ("RIDA"), are working together
with the goal of creating a world-class Chula Vista Bayfront through strong planning and design,
economic feasibility, protection of key habitat areas and community outreach. The District, City
and RIDA shall collectively be referred to herein, as the"Parties."
On February 10, 2015, the District entered into an Exclusive Negotiating Agreement
("ENA") with RIDA ("Original ENA"), as modified by Agreement for Amendment of
Exclusive Negotiating Agreenient, Amendment No. I dated August 9, 2016 ("First
Amendment"), and Agreement for Amendment of Exclusive Negotiating Agreement
Amendment No. 2 dated January 25, 2017 ("Second Amendment") (the Original ENA, First
Amendment and Second Amendment are collectively referred to herein as,, the "ENA").
The District, the City and RIDA are entering into this Letter of Intent ("LOI") with the
understanding that it is subject to the provisions of the ENA and does not supersede the terins of
the ENA. This 1.01 represents a statement of intent by the City, the District and RIDA and, as
further provided in Section 15 below, nothing set forth in this LOI shall be construed as a
binding agreement or enforced against any of the Parties, hereto. The particular business terms
and legal obligations of the Parties will be detailed in the Definitive Agreement to be negotiated
by the authorized representatives of the City, District and RIDA, and will be presented to the
City Council, the Board of Port Commissioners and the authorized representative(s) of RIDA for
approval. and execution at a future date. This LOI sets forth the basic economic terms and
conditions upon which the District, City and RIDA may enter into a future agreement related to
the development of portions of the Chula Vista Bayfront under the following terms and
conditions:
KEYTERMS
I PU!TOS
The purpose of this LOI is to facilitate the negotiation of a disposition and development
agreement ("Definitive Agreement") that sets forth the rights and obligations of the Parties with
respect to the ground lease, use, occupancy, development, operation and financing of the
development of certain private improvements and public infrastructure located on the Chula
Vista Bayfront, to include large scale resort hotel and convention center, to serve as the anchor
prQject of the Chula Vista Bayfront (as further defined in Paragraph 5, "Project"), all as further
66029.00036\29860091.11
Attachment B to Agenda File No. 2018-0070
described below. Among other things, the Definitive Agreement shall set -forth terms relating to
the contribution of certain revenues from each of the Parties to support the financing necessary to
develop the Project and timing, of the development of the private improvements and public
infrastructure.
2. Parties:
The Pat-ties shall be parties to the 1,01 and the Definitive Agreement. The District and
the City and/or a Joint Exercise of Powers Authority ("NEPA") between the City and District
shall collectively be referred to herein as, the "Public Entities".
I Term of Definitive Agreement:
a. The Definitive Agreement shall be for an initial 4-year term with up to 3 one-year
extensions to be exercised by RIDA upon satisfaction of certain conditions precedent and the
milestones set forth in a schedule of performance to be mutually agreed to by the Parties and to
be included in the Definitive Agreement.
b. The Tenn will expire upon the execution of the ground lease for the resort hotel
and convention center by RIDA and the District and of any ancillary document that may be
required to document the Parties' respective continuing obligations in respect of the development
of the Project, unless the Definitive Agreement is terminated earlier due to the failure to satisfy
(i) a condition precedent to the execution and close of escrow on the ground lease under the
Definitive Agreement or (ii) a milestone set forth in the schedule of performance, or an uncured
event of default.
4. Site for Ground Lease; Other Rropeijr.
The Definitive Agreement shall define the specific land to be ground leased from the
District to RIDA, and shall include the following:
a. Approximately 36 acres located at Parcel 1-1-3, subject to a reservation of a portion
of Parcel 1-1-3 by the District for the construction of the Parking Improvements (as
defined below) (the "Site").
b, District shall provide up to 15 acres of land adjacent to the Site on Parcel H-23 in
a location and configuration mutually acceptable to the District and RIDA to
house construction trailers, construction material, and equipment staging, and
parking during the construction of the Project at no cost to RIDA.
c. When the Definitive Agreement is executed, the: Parties, shall execute a one year
exclusive right to negotiate agreement with RIDA concerning a definitive
agreement for the lease of up to 10 acres of Parcel H-23 that are closest to Parcel
H-3 to develop up to 550 hotel rooms.
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60029MOM29860091,11
Attachment B to Agenda File No. 2018-0070
d. District shall consult RIDA, without obligation from the District or liability to the
District, and RIDA shall have the ability to cornment on developments on the li-
1, HI-I A, H8, H9 and H23 parcels, and the District shall act in good faith when
considering, accepting or rejecting any of RIDA's written comments to the
District, but in no way limit the discretion of the District.
5. Role ofRIDA; Project Qg�ca•i tion:
RIDA will be responsible for the design, development, construction and operation of the
Project subject to terms and conditions to be negotiated in the Definitive Agreement. The
Project shall include, but not be limited to, the following:
a. Approximately 1,450 room resort hotel, which must initially be branded as a
Gaylord Hotel and which must be designed, constructed and operated in
accordance with the Automobile Association of America ("AAA") Four Diamond
rating standards or the equivalent;
b. Approximately 275,000 net usable square feet of meeting space in the hotel and
the convention center, including all ancillary uses (including,pre-function); and
C. Associated retail and related development and resort level amenities, subject to
discretionary review by regulatory entities.
6. RIDA Financial Commitment', Return on Investment; Security Deposit:
a. The estimated total Project costs are approximately $913 million. RIDA's
contribution shall be the total Project cost less Convention Center Project Funds
(as defined below) (the "RIDA Contribution"). The RIDA Contribution is
currently estimated to be $688 million and will be made up of various forms of
debt and equity.
b. RIDA's Return on Investment ("RC I") in any given year will be equal to NO'] (as
defined below) divided by RIDA's actual capital investment which is defined as
the cost of designing, constructing and developing the Project, as certified
armually:
(i) "NOI" shall mean the total Project revenues less all operating expenses derived
from the uniform system of accounts to be defined in the Definitive Agreement.
Operating expenses shall also include industry standard operator and franchise
fees; replacement reserves and replacement costs in excess of reserves to be
defined further in the Definitive Agreement; asset management fees, which shall
not exceed 1% of gross revenues; gross tax receipts; insurance, property taxes;
incentive management fees; and ground rent actually paid by RIDA. Such
incentive management fees shall be limited to 20% of the portion of NOI that
exceeds $75.68 million; provided that solely for purposes of calculating the
maximum arnount of the incentive inanagement fee that will be treated as an
-3-
60029MOW2986009 1.11
Attachment B to Agenda File No. 2018-0070
operating expense, NOI shall be calculated before deductions for the incentive
management fee, asset management fee, and gross receipts tax;
(ii) Operating expenses will exclude debt service (principal and interest),
depreciation, and income taxes;
(iii) Shortfall in achieving the I I% ROI in a given year will not carry over to
subsequent years; and
(1v) Project revenues excluding proceeds froin any sale of the Project (or any
portion thereof) or any refinancing of the Project (or any portion thereof)..
C. Public Entities do not guarantee RDI.
d. RIDA shall deliver to the District a $1 million security deposit in cash or as a
letter of credit upon execution of the Definitive Agreement, which shall then
become the security deposit for the ground lease for the Site upon its execution,
unless the Definitive Agreement is ten-ninated earlier due to the failure to satisfy a
condition precedent or an uncured event of default. The District shall return to
RIDA any unused amounts of such security deposit upon substantial completion
of the Project.
e. Prior to execution of the ground lease, RIDA shall deliver commercially non-nal
and customary assurances and guarantees that it will complete the Project as
approved and permitted and as may be reasonably required to facilitate the
financing of the Public Entities Contribution.
f. The Project is subject to RIDA's payment of all customary fees required by City
and District, including but not limited to City permit processing fees, District cost
recovery and Public Art requirements.
7. Public Entities Contribution:
It is expected that on June 20, 2017, the District and City shall execute the
Amended and Restated Chula Vista Bayfront Master Plan Financing Agreement, which
identifies sources of funding and other requirements to finance the construction of public
improvements or other financial assistance within the Chula Vista Bayfront ("Financing
Agreement"). Subject to the Financing Agreement and a "Plan of Finance" (to be
developed by the District and the City pursuant to the Definitive Agreement and subject
to any Discretionary Actions (as defined below)), the financial commitment of the Public
Entities ("Public Entities Contribution") will consist of the following three primary
elements:
a. Phase I A Infrastructure, which includes those items listed on Exhibit A, attached
hereto, and incorporated herein by reference ("Phase JA Infi-astructure"), shall be
financed by the Public Entities, collectively, through the issuance of debt that is to
-4-
60029.00036\298600,91.11
Attachment B to Agenda File No. 2018-0070
be subject to the Plan oil'Finance and in an arnount currently estimated to be Fifty_
Six Million Three Hundred ,rhousand Dollars ($56,300,000.00).
b. The Public Entities will together finance an amount up to Two Hundred Twenty-
Five Million Dollars ($225,000,000.00) for the convention center improvements
(which shall be defined in the Definitive Agreement) for the Project (the
"Convention Center Project Funds"), The manner of such financing will be
determined by the District and City in the Plan of Finance. The District expects
that the Plan of Finance will include the District's, annual debt service
commitment towards the financing of the Convention Center Project Funds not to
exceed the amounts reflected in the following schedule:
Years 1-3 $0
Years 4-13 $5 million
Years 14-18 $6 million
Years 19-23 $3 million
Years 24- 37 $3.5 million
C. The District will provide for the construction on Parcel H-3 of approximately
1,500 parking spaces (the "Parking Improvements"), to be financed as further
defined in the Plan of Finance.
d. The City will provide for the construction of the required sewer and fire service
(together the "City Infrastructure").
Participation Provisions Benefiting Public Entities:
a. Public Entities shall provide evidence of financing based on a Plan of Finance
subject to and consistent with the Financing Agreement to be agreed to by the
Parties prior to the close of escrow of the ground lease for the Site, the Public
Entities financing and the RIDA financing. Bond proceeds will be structured to
pay for the convention center and related infrastructure which will be owned by
Public Entities and the convention center shall be leased back to MDA
("Convention Center Lease") for $1 per year,
b. If' total project costs fall below the current estimate of $913 million, the
Convention Center Project Funds will be reduced proportionately. For example, a
Project with total Project costs of$800 million (a 12% reduction in total Project
cost) would receive $197 million in Convention Center Project Funds, with
RIDA's Contribution making up the remaining $603 million. However, if total
project costs exceed the current estimate of$913 million, the Convention Center
Project Funds are capped at $225 million. For example, a Project with total
Project costs of $1.1 billion would receive $225 million in Convention Center
Project Funds, with RIDA's Contribution increasing to $875 million,
-5-
6002 9,0003612986009 1.11
Attachment B to Agenda File No. 2018-0070
C. The Convention Center Project Funds will genet-ally be utilized pen-i J)assu with
RIDA's equity contribution (currently estimated at $200,000,000) and before any
mezzanine or mortgage debt.
d. Mechanisms to ensure application of the above concepts will be addressed in the
Definitive Agreement.
9. Site Condition Prior to Execution of Ground Lease: I'he Site shall be delivered to,
RIDA upon ground lease execution for the Site in the following condition:
a. Completion by the Public Entities of those portions of the Phase I A Infrastructure
to be agreed to by the Pat-ties in the Definitive Agreement, and
b. District to remove, or cause to be removed, the existing RV Park.
10, Project TiiniLig.
a. RIDA shall complete the Project generally according, to plans and specifications
approved by the Public Entities. RIDA shall cause construction to commence no
later than 90 days following the mutual execution of the ground lease for the Site,
and shall cause construction to be completed no later than 36 months following
the mutual execution of the ground lease for the Site, as each such deadline may
be equitably extended from time to time subject to force majeure events to be
agreed to by the Parties during, the negotiation of the Definitive Agreement.
b. The Public Entities shall complete any remaining Phase I A Infrastructure, and
City shall complete City Infrastructure, required for the certificate of occupancy
for the Project.
C. A detailed schedule of perfort-nance, which may include performance milestones
to be completed prior to the certificate of occupancy for the Project, including
financing and development milestones for all Parties, and provisions regarding
force majeure and schedule extensions will be included in the Definitive
Agreement.
I I Basic Ground Lease Terms:
The basic terms of the ground lease for the Site by the District to RIDA are set forth on
Exhibit B attached hereto and incorporated herein by reference. The final terms of the ground
lease shall be attached to the Definitive Agreement.
12, Operations and Maintenance Cost Sharing:
a. Public Operating & Maintenance ("O&M") Expenses to be provided by Public
Entities for all offsite infrastructure.
-6-
60029.00036\2986009 1.11
Attachment B to Agenda File No. 2018-0070
b. Private O&M Expenses to,be provided by RIDA for O&M expenses incurred with
respect to the Project and associated retail and related development on the Site.
C. Parking O&M Expenses to be provided by District for the terra of the &,round
lease.
13. Compliance with Laws:
Compliance with all applicable federal, state, and local laws and regulations will be
RJDA's sole responsibility with respect to the Project. The Parties shall negotiate indemnities as
part of the negotiation of the Definitive Agreement.
14. Assig"u-nent and Sublease/Exit Fee:
a. RIDA shall have the right to assign and sublease the ground lease for the Site,
subject to District's prior written approval (subject to negotiated carve-outs), not to be
unreasonably withheld, and subject to an Exit Fee (defined below), Upon sale of the Project or
portion thereof, RIDA shall pay to Public Entities an exit fee (the "Exit Fee") equal to I% of the
difference of(a) the net proceeds from such sale minus (b) the suin of(i) the certified cost price
of the Project as of the time of the completion of the construction of the Project and (ii) 10�O
times the amount of any Exit Fee that has previously been paid to Public Entities (which surn
will be pro-rated in the case of sale of a portion of the Project); provided that RIDA shall pay no
Exit Fee to, Public Entities as long as one or more of the original partners in RIDC A (as of the time
of substantial completion of the Project), collectively, directly or indirectly, owns at least a 10%
ownership interest in the Project.
b. City shall have the right, not to be unreasonably withheld, to consent to any
assignment or sublease of the Convention Center Lease subject to negotiated carve-outs.
15, Non-Binding:
The Parties acknowledge that this Letter of Intent is not intended to nor shall it be
interpreted to create a binding agreement between the Parties, and is subject to further analysis
by the Parties. The Parties understand and acknowledge further that, while this LOI is intended
to guide the Parties in their negotiations relative to the Project pursuant to the ENA, it does not
waive or limit any of the rights of the District and RIDA in the ENA and does not bind the
Parties to continue negotiations for any reason. Moreover, each of the Parties understands and
acknowledges that, to the extent it expends funds or devotes resources in connection with, or as a
result of this LOI, including without limitation, the feasibility of implementing the Project or this
LOI, it shall do so at its sole cost and expense, upon its own initiative and not in reliance on this
LOI or any representations of any of the other Parties.
16. Discretionary Actions:
The Parties understand and acknowledge that, notwithstanding the terms, and conditions
of this LOI, certain actions incidental to matters described in this LOI may require the exercise
-7-
60029.00036%29860091.11
Attachment B to Agenda File No. 2018-0070
of discretion by one or more of the Public Entities (collectively, "Discretionary Actions"), any
and all Discretionary Actions may be exercised in the sole and absolute discretion of the Public
Entities and the Parties assume the risk that a Discretionary Action may not be taken or taken in
a manner not favorable to one or more of the Parties. By executing this LOI, the Parties do not
represent by the 1,01 or otherwise their legal capacity to provide the financial assistance or other
undertakings conternplated herein, such matters to be time subject of future actions and
agreements pursuant to the Financing Agreement or otherwise, including certain Discretionary
Actions.
CONCLUSION
This LOI shall not be binding upon the Parties. A binding agreement shall not exist until
a Definitive Agreement has been approved by the governing bodies of the respective Public
Entities and executed and delivered by all parties. No, party may claim any legal rights against
the other by reason of actions or non-actions taken in reliance upon this non-binding 1-01,
including, without limitation, any partial performance of the transactions contemplated herein.
If these terms are acceptable, please sign and return to the District. We appreciate your
time and consideration in this matter,
-8-
60029.00036\2986009 1.11
Attachment B to Agenda File No. 2018-0070
Sincerely,
APPROVED AS TCS FORM AND LEGALITY: SAN DIEGO UNIFIED POR'r DISTRICT,
GENERAL COUNSEL a public corporation
By:
Assistant/Deputy By: .....................
Randa Conigho
President/Chief Executive Officer
Dated:
APPROVED AS TO FORM AND LEGALITY: CITY OF CHULA VISTA,
a municipal corporation
By: .....................
City Attorney By:
Gary Halbert
City Manager
Dated:
REVIEWED AND ACCEPTED:
RIDA CHULA, r STA, LLC,
aDelaware lipilit d! liability coinpaqy
4e,
By:
Ira Mitzner
CEO and President
-9-
60029.00036\298600911,11
Attachment B to Agenda File No. 2018-0070
EXHIBIT "A"
Phase IA Infrastructure
To be inserted]
-10-
60029M036\2986009 1.11
Attachment B to Agenda File No. 2018-0070
EXHIBIT "B"
Basic Ground Lease Terins
Lease Term: Lease term: 66 years
Renewal Options: None
Base Rent: Base Rent/ Increases..,(Graduated Flat Rent) Years 1-37*'
(assumed terni, of debt, actual term determined during the term of
the Definitive Agreement)
Lease Rent
Years
I — is $0
19 23 $3M
24 37* $3.5M
38 66 See Belo�K�
Excess Net Operating Income:
- Annual Net Operating Income in excess of I I% of RIDA's
Contribution:
Lease Years Split
I - 37*1 80% (RIDA)/20%(Public Entities)
38-66 1001%RIDA
- let Operating Incol-fie for the Parking (for non-RIDA users):
� 1-66 1.100.% District I
For each Lease Year after 37*1 and later, the greater of (i)
Minimum Annual Rent which shall be calculated every five years
based on 65% of the average annual gross rent payable eaves the
previous 3 years; or (ii) Percentage Rent based on the gross
revenue in the specified year,
- Roorns Percentage Rent based on following adjusted rent periods:
Lease Years % Rent
38 - 47 8%
48 -66 9%
37 years is as assumed term of debt (including construction) for the Convention Center Project Funds,but the
actual.term of Convention Center PrQject Funds debt identified in the approved Plan of Finance shall be determined
during the terrn of the Definitive Agreement and the Lease Terms will be revised accordingly.
60029.00036129860091.11
Attachment B to Agenda File No. 2018-0070
- Banquet Percentage Rent based on following adjusted rent
periods:
Lease Years % Rent
..............
38 47 6,%
48 66 7%
- Food Percentage Rent based on following adjusted rent periods:
Lease Years % Rent
38 47 4%
48 -- 66 50/'o
- Beverage Percentage Rent based on following adjusted rent
periods:
Lease Years %Rent
3,8 47 6%
48 66 7%
Percentage rent rates for the remaining categories of revenue are to
be agreed during the negotiation of the Definitive Agreement.
Parking Revenue Throughout the Lease Term, Tenant shall pay to the District ten
percent (10%) of all parking revenue received by 'Tenant, including
(a) if a person pays Tenant for using a parking space through the
Motel valet service, or (b) if a person pays Tenant for self-parking.
If an employee of the hotel management company or the Project
uses a parking, space, and Tenant does not charge such person for
such parking space, then Tenant shall make no payment for using
such parking space to, the District.
If the construction of the parking, is not completed at least sixty
(60) days before the hotel is substantially complete, then the
District will provide land in the vicinity of Parcel H-3 that is
suitable for 1,000 parking spaces from such time until the
construction of the parking is completed.
The amount paid to the District by Tenant shall increase to fifteen
percent (15%) in the event that there is a change in ownership of
the Project greater than fifty-one (5 1,%).
Expenses: Tenant will pay all expenses of the leasehold of the Site, including
without limitation, (i) expenses to maintain all of the
improvements (excluding the parking spaces) in first class
-12-
60029MOM29860091.1 1
Attachment B to Agenda File No. 2018-0070
condition, (d) taxes, (iii) insurance, (iv) utilities and (v) any other
expenses of the leasehold.
Continuous Operation.- Lease shall require a covenant of continuous operation with "no go
dark"provisions, Subject to negotiated exceptions.
Lease Conimenceinent: Upon satisfaction of conditions precedent in Definitive Agreement
and mutual execution of the Lease.
Rent Con-imen cement: Per schedule of Base and Percentage Rent.
-13-
60029-00036\29860091.11
Attachment B to Agenda File No. 2018-0070
Exhiibit A
CHUFA VISTA BAYFRONT INFRASTRUCTURE, PHASE 1A
Type District Project Il llement
Street Sweetwater E Street (Bay Blvd to F Street
Street Sweetwater E Street (Lagoon Drive to G Street
Street Sweetwater Gunpowder Point Drive Relocation
Street Sweetwater F Street (Bay Blvd to E St Grading & Utilities
Street Harbor E Street G Street to H Street
Street Harbor G Street Connection
Street Harbor H Street (Marina Parka to E Street
Street Harbor HI Street (Bay Blvd to Street A
Park Sweetwater S-2 Sweetwater Signature Park (Initial)
Park Sweetwater SP-1 Sweetwater Buffer for S-2
Park Sweetwater SP-1 Sweetwater Buffer for S-1
Park Sweetwater SP-2 Seasonal Wetland
Park. Harbor Harbor Park Initial
Pad Sweetwater SP-3
Pad Sweetwater S-1 RV Park Preparation
Pad Sweetwater S-3 Mixed Use Preparation
Pad Harbor H-3 Utility Corridor
Pad Harbor H-3 Hotel & Convention Center Preparation
TOTAL 66,3010,000
Attachment B to Agenda File No. 2018-0070
MEMORANDUM
To: Adam Meyer, Department Manager, Real Estate
Port of San Diego
From: KEYSER MARSTON ASSOCIATES, INC.
Date: June 16, 2017
Subject: Proposed Letter of Intent (LOI)with RIDA Chula Vista, LLC
Chula Vista Bayfront Phase 1 Development
I. INTRODUCTION
A. Objective
In accordance with your request, Keyser Marston Associates, Inc. (KMA) has undertaken a review of
the economic feasibility of the proposed Resort Hotel and Convention Center (RHCC) proposed by
RIDA Chula Vista, LLC (RIDA). RIDA intends to develop a 1,450-room resort hotel and approximately
275,000 net square feet(SF) of convention and meeting space on a 36-acre site (Site) within the
Chula Vista Bayfront (CVB). The RHCC will be served by 1,500 parking spaces, proposed to be
developed and owned by the San Diego Unified Port District (District). The Site is currently owned
by the District.
As background, in May 2012 the District and the City of Chula Vista (City) entered into a Financing
Agreement for the Chula Vista Bayfront Master Plan (CVBMP) which outlined the financial
relationship between the District and the City.The Chula Vista City Council subsequently adopted
an Amended and Restated Financing Agreement (Financing Agreement) in November 2016. The
Financing Agreement identifies specific revenue sources that each entity agrees to contribute
toward public infrastructure and other facilities required for initial phases of development on the
Bayfront subject to a Plan of Finance. The Financing Agreement will be presented to the Board of
Port Commissioners for consideration on June 20, 2017.
Attachment B to Agenda File No. 2018-0070
Additionally,the District, City, and RIDA propose to enter into a Letter of Intent (LOI)to identify the
key economic terms to be included in a Disposition and Development Agreement (Definitive
Agreement). The proposed LOI subject to the Financing Agreement, outlines the terms of the
proposed ground lease between the District and RIDA, and further identifies additional
contributions from the District and City(Public Entities) in order to make the RHCC project feasible.
In response to your request, KMA has prepared an economic analysis of the District and City
financial contributions identified in the proposed LOI. This KMA report provides: (1) a
comprehensive financing gap analysis of the proposed District and City contributions toward
construction of infrastructure, parking, and the convention center portion of the RHCC; (2) a
feasibility analysis of the proposed method of financing for the RHCC; and (3) estimates of the
economic benefits to the City and region as a result of development of the RHCC and build-out of
the balance of the CVB.
B. Methodology
In completing this economic analysis, KMA performed the following key work tasks:
• Reviewed background documentation and historical data relevant to the CVB.
• Reviewed development cost estimates and cash flow projections provided by RIDA.
• Participated in meetings and teleconferences with the District, City, and RIDA to understand
project parameters, anticipated market performance, and other financial factors.
• Prepared financial models to estimate developer returns from development of the RHCC.
• Prepared an analysis of the potential economic impact caused by development of the CVB.
C. Report Organization
This economic analysis has been organized as follows:
• Following this introduction, Section II presents an overview of the RHCC project and future
phases of development within the CVB.
• Section III outlines the key business and economic deal terms contained in the proposed LOI.
Attachment B to Agenda File No. 2018-0070
• Section IV presents the KMA financing gap analysis of the RHCC.
• Section V presents the KMA economic impact assessment for development of the RHCC and the
balance of the CVB.
• Limiting conditions pertaining to this economic analysis are presented in Section VI.
II. PROJECT OVERVIEW
A. Chula Vista Bayfront
Development of the CVB is guided by the CVBMP. The CVBMP calls for the development of 556
acres of the CVB over the next 20 years to include parks, open space areas, a resort hotel,
convention center, other hotels, mixed-use office/commercial, industrial business park, and public
facilities, in three separate planning districts.
Table II-1 presents a summary of the projected development planned within the CVB by anticipated
Phase and Sub-Area:
DevelopmentTable 11-1: Chula Vista Bayfront Projected
Phase/ District Parcel Land Use Description
Subarea
Phase 1 Harbor Parcel H-3 Resort Hotel 1,450 Rooms
Harbor Parcel H-3 Convention Center 275,000 SF (1)
Harbor Parcel H-3 Structured Parking 1,500 Spaces
Phase 2 Harbor Parcel H-23 Limited Service Hotel 200 Rooms
Harbor Parcel H-9/H-21 Retail 225,000 SF
Phase 3 Harbor Parcel H-3 RIDA Hotel Expansion 150 Rooms
Sub-Area A Harbor Parcel H-9/H-21 Retail 200,000 SF
Harbor H-18 Mixed-Use Commercial 100,000 SF
Harbor H-23 Cultural/Retail 200,000 SF
Attachment B to Agenda File No. 2018-0070
DevelopmentTable 11-1: Chula Vista Bayfront Projected
Phase/ District Parcel Land Use Description
Subarea
Sub-Area B Harbor H-13/1-1-14 Residential 1,500 Units
Harbor H-13/1-1-14 Retail 15,000 SF
Harbor H-15 Limited Service Hotel 250 Rooms
Harbor H-15 Office 420,000 SF
Sub-Area C Harbor H-3/1-1-23 Limited Service Hotel 525 Rooms
Harbor H-3/1-1-23 Full Service Hotel 525 Rooms
Sub-Area D Sweetwater S-3 Mixed-Use Commercial 60,000 SF
Sweetwater S-4 Office 60,000 SF
Otay 0-1/0-4 Industrial Business Park 274,500 SF
Sub-Area E Sweetwater S-3 Mixed-Use Commercial 60,000 SF
Sweetwater S-4 Office 60,000 SF
Otay 0-1/0-4 Industrial Business Park 274,500 SF
(1) Reflect net usable area.
B. Proposed Development
The proposed RHCC is planned for development on Chula Vista Master Plan Parcel H-3. Parcel H-3
consists of 36 acres and is currently partially occupied by an existing recreational vehicle (RV) park.
The RHCC will serve as the anchor project for the CVB consisting of a 20-story, 1,450-room resort
hotel, branded by Gaylord Hotels; 275,000 SF of net usable convention and meeting space;
associated retail and related development; and resort level amenities. The RHCC will be served by
1,500 parking spaces, proposed to be developed and owned by the District, adjacent to the RHCC.
III. PROPOSED BUSINESS TERMS
The following summarizes the salient aspects of the proposed LOI. The LOI will set forth the basic
economic terms and conditions upon which the District, City, and RIDA will enter into a Definitive
Agreement for the ground lease, use, occupancy, development, operation, and financing of the
RHCC and public improvements located on the CVB. The following provides a summary of the key
responsibilities of RIDA,the District, and City:
Attachment B to Agenda File No. 2018-0070
A. Developer Responsibilities
• RIDA will enter into a ground lease agreement with the District and City for the Site for a period
of 66 years.
• RIDA will construct a 1,450-room resort hotel branded as a Gaylord Hotels and 275,000 net
useable SF of convention and meeting space.
• RIDA'S contribution toward the development is currently estimated at$688 million.
• RIDA will be responsible for all operating and maintenance costs incurred with respect to the
RHCC and associated retail and related development on the Site. Operating costs will include
industry standard operator and franchise fees; replacement reserves; insurance; property
taxes; ground rent actually paid by RIDA; and fees to include (i) asset management fees (not to
exceed 1%of gross revenues), (ii)gross tax receipts; and (iii) incentive management fees
(limited to 20%of the portion of NOI that exceeds $75.68 million).
B. District and City Responsibilities
• The Public Entities will contribute $56.3 million toward infrastructure costs including streets,
parks, building pads, and utilities.
• The Public Entities will be responsible for all operating and maintenance costs incurred with
respect to off-site infrastructure.
• The Public Entities will contribute $225 million toward development of the convention center
improvements, anticipated to be funded through a bond issue.
• The District will provide an annual contribution toward bond debt service to support its portion
of the Convention Center Contribution. As presented in Table III-1,the District contribution will
not exceed the following schedule of amounts during Lease Years 4 through 37.
Attachment B to Agenda File No. 2018-0070
Table 111-1: District Annual Contribution to Debt Service
Lease Year Annual Bond Debt
Service Contribution
Years 1-3 $0
Years 4-13 $5.0 M
Years 14-18 $6.0 M
Years 19-23 $3.0 M
Years 24-37 $3.5 M
• The District will provide 1,500 parking spaces on Parcel H-3. The District will be responsible for
all parking operating and maintenance costs.
• The City will provide for the construction of the required sewer and fire services to enable
development of the RHCC.
• The Definitive Agreement will have a term of up to four(4)years with up to three (3) one year
extensions.
• The District will provide, on a temporary basis, up to 15 acres of land on Parcel H-23 to house
construction trailers, construction materials, equipment staging, and parking during
construction of the RHCC.
• When the Definitive Agreement is executed,the District will exclusively negotiate with RIDA for
one (1)year a definitive agreement to lease of up to 10 acres of Parcel H-23 (closest to Parcel
H-3)for the development of up to 550 hotel rooms.
C. Proposed Ground Lease
• The District and RIDA will enter into a 66-year ground lease agreement.
• RIDA will pay ground lease payments to the District during Lease Years 1-37 as shown in Table
III-2:
Attachment B to Agenda File No. 2018-0070
Table 111-2: DA Annual Ground Lease Payments—Years 1-37
Lease Year Annual Ground Lease Payment
Years 1-18 $0
Years 19-23 $3.0 M
Years 24-37 $3.5 M
Beginning in Year 38,the proposed rent structure for the project will be in line with the
District's standard Port percentage rent categories, as shown in Table III-3 below:
Table 111-3: DA Annual Ground Lease Payments—Years 38-66
Years 38-66 Room Banquet Food Beverage
Percentage Rent Revenue Revenue Revenue Revenue
Rates
Years 38-47 8% 6% 4% 6%
Years 48-66 9% 7% 5% 7%
• Percentage rent rates for the remaining categories of revenue will be determined during the
negotiation of the Definitive Agreements.
• Annual Net Operating Income (NOI) in excess of 11.0%of the RIDA Contribution ($75.68
million)will be split between RIDA and the Public Entities as follows:
Table 111-4: Allocation of NOI after RIDA Target Return of 11.0%
Lease Year
Years 1-37 80%to RIDA/20%to Public Entities
Years 38-66 100%to RI DA
RIDA will pay the District 10%of all parking revenue from the RHCC throughout the term of the
ground lease. In the event of a sale of the RHCC resulting in a cumulative change of ownership of
51% or greater,the District's share of parking revenue will increase to 15%.
IV. FINANCING GAP
A. Financing Gap Analysis
KMA prepared a financing gap analysis for the proposed RHCC to determine the economic return to
RIDA subject to the business terms in the proposed LOI. Specifically, KMA estimated the project's
Attachment B to Agenda File No. 2018-0070
financing gap and RIDA's return. The KMA analysis also considered the revenue analysis report
prepared by CBRE Hotel (formerly PKF) and the development cost review prepared by Jones Lang
LaSalle (JLL).
KMA has analyzed RIDA's return both in terms of stabilized Return on Investment (ROI) and
Leveraged Internal Rate of Return (IRR). This section discusses RIDA's return in terms of ROI
outcomes. Section IV-C presents a detailed evaluation of RIDA's Leveraged IRR based on a 66-year
cash flow projection.
Total project costs, including both public infrastructure and private development, are estimated to
be $969.3 million. Of this total, RIDA will be responsible for a minimum investment, including
private debt and equity, of$688.0 million. The Public Entities will be responsible for a contribution
of up to $225.0 million toward the convention center portion of the RHCC and an estimated $56.3
million for public infrastructure. Costs for the 1,500 parking spaces provided by the District are to
be determined. These cost estimates, and respective responsibilities, are summarized in Table IV-1
below.
Table IV-1: Sources and Uses of Funds
RIDA Public Entities Total
A. Hotel/Convention Center $688.0 M $225.0 M $913.0 M
B. Infrastructure ---- $56.3 M $56.3 M
C. Parking ---- TBD TBD
D. Total $688.0 M $281.3 M $969.3 M
Table IV-2 presents illustrative figures for the stabilized year(Lease Year 7, or operating year 4). As
shown,the project is projected to generate $267.0 million in Effective Gross Income (EGI) in Lease
Year 7. This EGI estimate includes both room revenues and other income including food and
beverage revenues, banquet sales, gift shop and spa revenues, and parking.
Table IV-2: Effective Gross Income(Lease Year 7)
A. Number of Hotel Rooms 1,450 Rooms
B. Average Daily Rate (ADR) $275
C. Occupancy 77%
D. Total Room Revenue $112.0 M
E. Total Other Income $155.0 M
F. Total Effective Gross Income $267.0 M
Attachment B to Agenda File No. 2018-0070
As presented in Table IV-3,the project's Effective Gross Income, less operating expenses and other
fees, is projected to generate Net Operating Income (NOI) of$69.0 million during Lease Year 7.
Other fees include asset management fees, incentive management fees, and State of California
gross receipts tax.
Table IV-3: Net Operating Income
A. Total Effective Gross Income $267.0 M
B. (Less) Operating Expenses 195.0) M
C. Net Operating Income (NOI) $72.0 M
D. (Less) Fees(1) ( 3.0) M
E. Net Operating Income after Fees $69.0 M
(1) Includes asset management fees,incentive management fees,and gross receipts tax.
RIDA's ROI is estimated as stabilized year NOI ($69.0 million) divided by RIDA's total capital
investment. Absent the proposed Convention Center Contribution from the Public Entities, RIDA
would be responsible for the total development costs of the RHCC, i.e., a total capital investment of
$913.0 million. As shown in Table IV-4,this No Public Investment scenario is estimated to generate
a ROI to RIDA of 7.6%.
Table IV-4: Developer Return on Investment—No Public Investment in RHCC
A. Total Development Costs—RHCC $913.0 M
B. Net Operating Income after Fees $69.0 M
C. Developer Return on Investment(ROI) 7.6%
The proposed LOI identifies the Public Entities contribution toward the convention center portion
of the RHCC in the amount of$225.0 million. As shown in Table IV-5,the proposed Convention
Center Contribution results in a reduced capital investment from RIDA of$688.0 million. At this
level of capital investment, RIDA is projected to achieve a stabilized year ROI of 10.0%.
Attachment B to Agenda File No. 2018-0070
DeveloperTable IV-5:
A. Total Development Costs—RHCC $913.0 M
(Less) Convention Center Contribution 225.0 M
RI DA Total Capital Investment $688.0 M
B. Net Operating Income after Fees $69.0 M
C. Developer Return on Investment (ROI) 10.0%
Industry standard ROI targets for developers of large-scale, new resort hotel/convention centers
are estimated to range between 10.0%and 11.0% (unleveraged Return on Investment in stabilized
year of operations). Given the level of risk associated with undertaking such a major new
investment on the relatively undeveloped Chula Vista Bayfront in a single phase, KMA finds that the
upper end of this range is warranted for the proposed RHCC. The proposed Public Entities financial
contributions to the RHCC project are intended to support a ROI to RIDA of 11% in the stabilized
year or soon thereafter. The KMA financial analysis projects that RIDA will achieve a ROI in the
"With Public Investment" scenario of just 10.0% in Lease Year 7, lower than the target return
threshold. Even with the proposed public investment, RIDA is not projected to achieve a 11.0% ROI
until Lease Year 12.
To that end,the RIDA projected return after the Public investment and rent structure is not
excessive. This finding indicates that the Public Entities contribution is warranted and needed in
order for the RHCC to move forward and to be developed. Ultimately RIDA will need to control
development costs and/or improve operating performance in order to achieve a satisfactory long-
term return.
B. Proposed Method of Financing
Required Public Investment—Infrastructure and Convention Center Contribution
As indicated above,the Public Entities will contribute $56.3 million toward infrastructure and
$225.0 million toward the Convention Center. The Public Entities anticipate using one or more
bond financings to fund these contributions concurrently or immediately prior to the close of
escrow of the ground lease for the Site. Bond debt service will be paid through a combination of
existing and projected revenue streams from the Bayfront.
The District will contribute: (1) existing lease revenues from the Chula Vista Bayfront, including the
Chula Vista RV Park ground rent and (2) ground rent from the RHCC and new RV Park. Additionally,
the District will make one-time contributions toward the infrastructure costs using the previously
received SDG&E Relocation Fee of$1.7 million and the Pacifica Land Exchange Payment of$3.0
Attachment B to Agenda File No. 2018-0070
million. The District will also be responsible for an annual contribution toward bond debt service to
support the Convention Center Contribution not to exceed the schedule of amounts during Lease
Years 4 through 37 as presented in Section III,Table III-1.
The City will contribute: (1) existing Transient Occupancy Tax (TOT) revenues from the Chula Vista
RV Park; (2) existing Municipal Services Agreement (MSA) reimbursements that it receives from the
District; and (3) RHCC-generated revenues, to include: (a)TOT; (b) Additional Occupancy Based
Revenues generated from a proposed TOT Augment; (c) property tax increment; and (d) sales tax
revenues. In effect, most of the Public Entities financial contributions will be funded through
project-generated revenues.
Furthermore, in addition to the contributions shown above,the District is providing the land with a
"soft"ground rent structure that allows RIDA to begin making rent payments, at a reduced level, in
Lease Year 19. This ground rent structure is an essential part of the financial package, combined
with the District and City contributions,that are necessary to make the RHCC project feasible.
Table IV-6 on the following page, summarizes the District and City annual revenue contributions
toward the proposed bonds to finance the Convention Center Contribution and infrastructure. As
an illustrative example,the figures shown in the table reflect Lease Year 7, i.e., the projected
stabilized year of RHCC operations.
Attachment B to Agenda File No. 2018-0070
Table IV-6: District and City Annual Contribution at Stabilization(Lease Year 7)
San Diego Unified Port District
A. Existing Revenues A. Existing Revenues
Existing Lease Revenues(1) $2.7 M RV Park TOT $0.8 M
MSA Reimbursements $1.2 M
Subtotal Existing Revenues $2.0 M
B. Proiect-Generated Revenues B. Project-Generated Revenues
Project Lease Revenues $0.0 M Project TOT Revenues $10.7 M
Additional Occupancy Based Revenues $5.4 M
Project Tax Increment(2) $3.7 M
Project Sales Tax Revenues $1.1 M
Subtotal Project Generated Revenues $20.9 M
C. Annual Contribution C. Annual Contribution
Annual Contribution $5.0 M Annual Contribution $0.0 M
D. Total District Annual Contributions $7.7 M D. Total City Annual Contributions $22.9 M
(1) Includes projected increase from development of new RV park.
(2) Includes both City's and County's share of Project-generated tax increment and incremental property tax in lieu of
Vehicle License Fee(VLF).
The City engaged JP Morgan Securities, LLC (JP Morgan)to provide investment banking and bond
underwriting services. JP Morgan prepared estimates of achievable bond financing based on the
revenue streams to be pledged by the Public Entities. The JP Morgan projections were based on
currently available bond underwriting terms, the relative creditworthiness of the pledged revenue
streams, and JP Morgan's professional judgement regarding debt service coverage, interest rate,
and costs of issuance and capitalized interest during construction. The JP Morgan bond runs
assume a 37-year term, inclusive of the construction period, and effective interest rates of 5.48%
for taxable bonds and 4.41%for tax-exempt bonds. Notably,the KMA financial analysis uses the
1.75 debt service coverage ratio recommended by JP Morgan. JP Morgan assumed ascending debt
service schedules, i.e., annual debt service rises over the term, subject to the 1.75 debt service
coverage limit. In effect,the bond sizing is based on $1.00 of debt service for every$1.75 of
projected revenue. While this is a conservatively high debt service coverage assumption, i.e., it
reduces the achievable bond financing amounts, it also results in significant projected surplus cash
flow after debt service. KMA estimates total bond debt service paid by the Public Entities during
the 37-year bond term to total $861.4 million (nominal dollars).
Attachment B to Agenda File No. 2018-0070
Table IV-7 summarizes the currently anticipated underwriting terms for the Public Entities bond
financing for the Convention Center Contribution and infrastructure. It is important to note that
these preliminary bond underwriting terms are based on current market and financial data. These
terms are considered reasonable for planning purposes, but actual results may vary depending on
bond conditions, underwriting factors and future decisions regarding timing and structure for the
issuance of debt by the Public Entities. Using the currently anticipated underwriting terms,the
pledged revenues are projected to be sufficient to support the net bond proceeds required to fund
the Public Entities obligations under the LOI. Of course, the bonds will be issued at a future date to
be determined, at which time economic conditions may vary from the figures used in this
preliminary feasibility analysis. RIDA and the Public Entities will need to continually monitor real
estate market factors and bond financing parameters to determine if any changes to these
projections are warranted.
Table IV-7: Preliminary Underwriting Terms for Proposed Bond Financing
A. Revenues Pledged, Lease Year 7 Estimates
District $7.7 M
City $22.9 M
Total Revenues $30.6 M
B. Debt Service Coverage (DSC) Factor 1.75 DSC
5.48%taxable
C. Interest Rate
4.41%tax-exempt
D. Bond Term 37 years
Including construction period
E. Total Debt Service $861.4 M
Years 1-37 (nominal dollars)
F. Approximate Net Bond Proceeds $225 M Convention Center Contribution
$56 M infrastructure
Required Public Investment- Parking
The District will also be responsible for financing, constructing, owning, and operating at least 1,500
parking spaces to serve the RHCC project. District staff is evaluating the potential to construct
1,500 parking spaces on Parcel H-3. The District will assume all operating and maintenance
expenses for the spaces for the duration of the RIDA ground lease. Parking gross revenues from the
RHCC will be allocated 90%to RIDA and 10%to the District. The District's share will increase to 15%
of gross revenue if RIDA sells, on a cumulative basis, 51%or more of the RHCC project.
Attachment B to Agenda File No. 2018-0070
Required Private Investment
As noted above, RIDA will be responsible for a minimum private investment in the RHCC project of
$688 million. This investment is expected to take the form of a combination of debt (third party
loans) and equity. The KMA analysis assumes a maximum Loan-to-Value (LTV) of 65%, resulting in a
maximum loan of$447.0 million. The balance of the investment, a minimum of$241.0 million, will
comprise equity investment by RIDA. Table IV-8 summarizes the private investment in the RHCC
project.
Table IV-8: Required Private Investment
Factor
Amount
(Loan to Value)
A. Maximum Debt 65% LTV $447.0 M
B. Minimum Equity 35% LTV $241.0 M
C. Total Private Investment $688.0 M
Under the terms of the LOI, RIDA will pay a fixed ground rent schedule for the project during the
bond financing term, estimated to coincide with Lease Years 1-37. The fixed ground rent schedule
for this period is itemized in Section III,Table III-2. The District will contribute these ground lease
revenues toward the bond debt service.
District/City Participation in NOI
In addition to ground rent paid to the District, RIDA will pay the Public Entities an annual
participation payment based on surplus Net Operating Income (NOI) from the RHCC project.
Specifically,the Public Entities will receive 20%of surplus NOI above an 11% ROI threshold for RIDA
during Lease Years 4-37. KMA has prepared a preliminary projection of this potential future
revenue stream, which is summarized in Table IV-9.
Table IV-9: Projected Annual NOI Participation Payments to Public Entities
Estimated Annual NOI
Lease Year Participation Payment to Public
Entities
Years 1-3 -Construction N/A
Years 4-11 $0
Year 12 $0.025 M
Attachment B to Agenda File No. 2018-0070
Table IV-9: Projected Annual NOI Participation Payments to Public Entities
Estimated Annual NOI
Lease Year Participation Payment to Public
Entities
Year 20 $2.7 M
Year 30 $7.8 M
Year 37 $12.6 M
C. Leveraged IRR to RIDA with Public Investment
KMA prepared projections of NOI and cash flow for the RHCC project for the duration of the
proposed 66-year ground lease. The KMA projections are summarized in Table IV-10 on the
following page. As shown,the KMA projections estimate that RIDA will achieve a Leveraged IRR of
approximately 13.5%. A Leveraged IRR is used as a metric to determine the annualized effective
compounded return rate to RIDA, after taking into consideration all of RIDA's financial obligations
including debt service. KMA finds that the appropriate industry standard target for Leveraged IRR
for a resort hotel convention center of this type is in the range of 16%to 17%. In other words,
under current projections, inclusive of the Public Entities financial contribution, RIDA does not
achieve an industry standard return on a long-term basis. This finding indicates that the Public
Entities contributions and rent structure are warranted,that the RIDA return is not excessive, and
ultimately that RIDA will need to control development costs and/or improve operating performance
in order to achieve a satisfactory long-term return. At the same time,the proposed participation in
NOI provides for the Public Entities to participate in the success of the RHCC project as well.
Attachment B to Agenda File No. 2018-0070
Table IV-10: RIDA Leveraged Internal Rate of Return-Lease Years 1-66($Millions)
Lease Developer Net Ground (Less) NOI Before (Less) Annual
Year Equity Operating Lease Public Entities Debt Service Debt Service Cash Flow
Income Payment Participation
1 ($189.0) $0 $0 $0 $0 $0 ($189.0)
2 ($51.8) $0 $0 $0 $0 $0 ($51.8)
3 $0 $0 $0 $0 $0 $0 $0
4 $0 $42.0 $0 $0 $42.0 ($35.7) $6.3
5 $0 $54.9 $0 $0 $54.9 ($35.7) $19.2
6 $0 $65.2 $0 $0 $65.2 ($35.7) $29.5
7 $0 $71.7 $0 $0 $71.7 ($35.7) $36.0
8 $0 $76.3 $0 $0 $76.3 ($35.7) $40.6
9 $0 $74.8 $0 $0 $74.8 ($35.7) $39.1
10 $0 $76.5 $0 $0 $76.5 ($35.7) $40.8
11 $0 $78.2 $0 $0 $78.2 ($35.7) $42.5
12 $0 $79.8 $0 $0 $79.8 ($35.7) $44.1
13 $0 $81.5 $0 ($0.3) $81.2 ($35.7) $45.5
14 $0 $83.9 $0 ($0.7) $83.3 ($35.7) $47.6
15 $0 $86.4 $0 ($1.0) $85.4 ($35.7) $49.7
16 $0 $89.0 $0 ($1.4) $87.6 ($35.7) $51.9
17 $0 $91.7 $0 ($1.8) $89.9 ($35.7) $54.2
18 $0 $94.5 $0 ($2.3) $92.2 ($35.7) $56.5
19 $0 $97.3 ($3) ($2.2) $92.1 ($35.7) $56.4
20 $0 $100.2 ($3) ($2.7) $94.6 ($35.7) $58.9
21 $0 $103.2 ($3) ($3.1) $97.1 ($35.7) $61.4
22 $0 $106.3 ($3) ($3.6) $99.7 ($35.7) $64.0
23 $0 $109.5 ($3) ($4.1) $102.5 ($35.7) $66.7
24 $0 $112.8 ($3.5) ($4.5) $104.8 ($35.7) $69.1
25 $0 $116.2 ($3.5) ($5.0) $107.7 ($35.7) $72.0
26 $0 $119.7 ($3.5) ($5.5) $110.6 ($35.7) $74.9
27 $0 $123.3 ($3.5) ($6.1) $113.7 ($35.7) $78.0
28 $0 $127.0 ($3.5) ($6.7) $116.8 ($35.7) $81.1
29 $0 $130.8 ($3.5) ($7.2) $120.1 ($35.7) $84.3
30 $0 $134.7 ($3.5) ($7.8) $123.4 ($35.7) $87.7
31 $0 $138.8 ($3.5) ($8.4) $126.8 ($35.7) $91.1
32 $0 $142.9 ($3.5) ($9.1) $130.4 ($35.7) $94.7
Attachment Bb} Agenda File NO. 2018-0070
Table IV-10: RIDA Leveraged Internal Rate of Return—Lease Years 1-66($Millions)
Lease Developer Net Ground (Less) NOI Before (Less) Annual
Year Equity Operating Lease Public Entities Debt Service Debt Service Cash Flow
Income Payment Participation
Developer Leveraged Internal Rate of Return(IRR)
(1)Reflects 10-year total for each time period.
D. Proposed Cash Flow Distribution ("VVaterfa||")
As noted above,the currently contemplated bond financing structure will result in significant
surplus cash flow after debt service. Additionally, R|DAvviU make ND| participation payments to the
Public Entities. District and City staff have discussed in detail various approaches to distribute these
surplus funds. The current concept is to allocate these funds through a "waterfall",with the
priority sequence shown in Table |V'11 below. As an example,the chart presents the projected
figures for Lease Years 7 (stabilized operations) and 13 (loth year of operations).
Attachment B to Agenda File No. 2018-0070
ProposedTable IV-11:
Lease Year 7 Lease Year 13
(4th year of operations) (loth year of operations)
• Priority#3—Reimbursement to District
and City of their Bayfront
($3.2 M) ($3.8 M)
Infrastructure Operating and
Maintenance Expenditures
• Remaining Cash Flow Available for
$4.9 M $6.4 M
Distribution
As illustrated above, once the RHCC project has stabilized, the District anticipates that it will receive
a reimbursement of its annual contribution toward debt service. Moreover,the cash flow
projections indicate that both the District and City will be able to reimburse themselves for their
respective Bayfront infrastructure operating and maintenance expenditures. Even after the priority
distributions, KMA forecasts a remaining positive cash flow. District and City staff will need to
negotiate how these remaining surplus funds are distributed.
V. ECONOMIC BENEFITS TO CITY AND REGION
This section provides an evaluation of the economic benefits from the build-out of the CVB to the
County of San Diego and the City of Chula Vista during construction and on an annual on-going
basis. KMA prepared a detailed economic impact analysis (EIA)to estimate the total economic
output, payroll, and employment generated by development of the RHCC project and the balance
of the CVB, during construction and on a permanent basis.The EIA estimates the portion of
economic output that is paid out in wages,the average wage by type of employment, and the
resulting total construction employment and permanent employment (expressed in person-years).
In undertaking this analysis, KMA estimated development costs,valuation, and phasing for each
Phase and Sub-Area of the CVB. The KMA EIA relied extensively on IMPLAN (IMpact analysis for
PLANning) data multipliers for the County of San Diego and the City of Chula Vista to determine
indirect and induced impacts.The IMPLAN model is a commercially available model developed in
1979 and refined over time to quantify the impacts of changes in a local economy.
RHCC Proiect (Phase 1)
• Construction Economic Impact-As noted in Section III, Phase 1 of the CVB will consist of
development of the RHCC project and 1,500 parking spaces. The construction of the RHCC and
associated indirect spending, are projected to generate a construction economic output of$1.2
billion to the County and $65.8 million to the City.
Attachment B to Agenda File No. 2018-0070
KMA estimates that the payroll portion of this total construction economic output comprises
approximately$428.8 million for the County and $23.5 million for the City. Based on average
wages for construction and professional services, KMA translates this total payroll expense to
generate 3,140 full-time equivalent workers per year during a 30-month construction period in
the County and 170 construction workers in the City.
• Ongoing Economic Annual Impact- Phase 1 is projected to generate an annual economic
impact(inclusive of indirect and induced impact) of$391.2 million to the County and $268.6
million to the City. Of this total economic output, payroll income reflects$137.0 million of the
County's economic output and $93.4 million of the City's economic output; and annual
employment of 3,690 employees in the County and 2,700 employees in the City.
Balance of CVB (Phases 2-3 and Subareas A-E)
• Construction Economic Impact- The buildout of the reminder of the CVB(Phases 2, 3, and Sub-
Areas A-E) is projected to generate an economic output, including associated indirect and
induced impact, of$1.6 billion in the County and $382.8 million to the City during construction.
KMA estimates that the payroll portion of this total construction economic output comprises
approximately$556.8 million for the County and $133.9 million for the City. Based on average
wages for construction and professional services, KMA estimates that the development of
Phases 2 and 3 and Subareas A-E will result in the employment of an average of 6,610 full-time
equivalent workers in the County and 1,590 full-time equivalent workers in the City per year
during the construction period.
• Ongoing Economic Annual Impact-The remaining buildout of the CVB is projected to generate
an annual economic impact (inclusive of indirect and induced impacts) of$1.7 billion to the
County and $1.3 billion to the City; payroll income of$855.4 million to the County and $659.6
million to the City; and annual employment of 16,530 employees in the County and 12,460
employees in the City.
Tables V-1 and V-2 on the following page present a summary of the construction and ongoing
economic benefits to the County and City.
Attachment B to Agenda File No. 2018-0070
Table V-1: Economic Benefits to County of San Diego(1)
7 Phase 1 Phases 2 and 3 Total
and Sub-Areas A-E
I. Construction Economic Impact(2)
A. Economic Output $1.2 B $1.6 B $2.8 B
B. Personal Income $428.8 M $556.8 M $985.6 M
C. Employment(3) 3,140 Employees 6,610 Employees 9,750 Employees
II. Ongoing Economic Annual Impact(2)(4)
A. Economic Output $391.2 M $1.7 B $2.1 B
B. Personal Income $137.0 M $855.4 M $992.4 M
C. Employment 3,690 Employees 16,530 Employees 20,220 Employees
(1) All figures reflect 2017 dollars without escalation.
(2) Reflects direct,indirect,and induced impact.
(3) Reflects an average annual employment over a 30-month construction period for Phase 1;18-month construction
period for Phase 3 and Sub-Areas A,B, D,and E;and a 24-month construction period for Phase 2 and Sub-Area C.
(4) Reflects recurring ongoing economic impact from annual operations.
Table V-2: Economic Benefits to City of
Phase 1 Phases 2 and 3 Total
and Sub-Areas A-E
I. Construction Economic Impact(3)
A. Economic Output $65.8 M $382.8 M $448.6 M
B. Personal Income $23.5 M $133.9 M $157.4 M
C. Employment(4) 170 Employees 1,590 Employees 1,760 Employees
II. Ongoing Economic Annual Impact(3)(5)
A. Economic Output $268.6 M $1.3 B $1.6 M
B. Personal Income $93.4 M $659.6 M $753.0 M
C. Employment 2,700 Employees 12,460 Employees 15,160 Employees
(1) City figures are included within County figures.
(2) All figures reflect 2017 dollars without escalation.
(3) Reflects direct,indirect,and induced impact.
(4) Reflects an average annual employment over a 30-month construction period for Phase 1;18-month construction
period for Phase 3 and Sub-Areas A,B, D,and E;and a 24-month construction period for Phase 2 and Sub-Area C.
(5) Reflects recurring ongoing economic impact from annual operations.
VI. LIMITING CONDITIONS
1. The KMA analysis is based, in part, on data provided by secondary sources such as state and
local governments, planning agencies, real estate brokers, and other third parties. While KMA
believes that these sources are reliable, we cannot guarantee their accuracy.
Attachment B to Agenda File No. 2018-0070
2. The accompanying projections and analyses are based on estimates and assumptions which
were developed using currently available economic data, project-specific data and other
relevant information. It is the nature of forecasting, however,that some assumptions may not
materialize and unanticipated events and circumstances may occur. Such changes are likely to
be material to the projections and conclusions herein and, if they occur, require review or
revision of this document.
3. Any estimates of revenue or cost projections are based on the best project-specific and fiscal
data available at this time as well as experience with comparable projects. They are not
intended to be projections of actual future performance of any specific project. Any changes to
costs, development program, or project performance may render the conclusions contained
herein invalid.
4. KMA assumes that all applicable laws and governmental regulations in place as of the date of
this document will remain unchanged throughout the projection period of our analysis. In the
event that this does not hold true, i.e., if any tax rates change,the analysis would need to be
revised.
5. The KMA analysis assumes that any necessary entitlements for the proposed development can
be obtained in a reasonable time frame.
6. The KMA analysis assumes that property titles are good and marketable; no title search has
been made, nor has KMA attempted to determine property ownership.
7. A projection of economic impacts is inherently based on judgment. The projections contained
herein are based on the best information available at the time that this document was
prepared. However,the actual impacts may vary.
8. Property tax projections reflect KMA's understanding of the assessment and tax apportionment
procedures employed by the County. The County procedures are subject to change as a
reflection of policy revisions or legislative mandate. While we believe our estimates to be
reasonable,taxable values resulting from actual appraisals may vary from the amounts
assumed in the projections.
9. No assurances are provided by KMA as to the certainty of the projected tax revenues shown in
this document. Actual revenues may be higher or lower than what has been projected and are
subject to valuation changes.
Attachment B to Agenda File No. 2018-0070
Attachment E to Agenda No. 2017-0338
Glossary of Terms:
CVBMP—Chula Vista Bayfront Master Plan
District-San Diego Unified Port District
City—City of Chula Vista
Pacifica—Pacifica Companies, LLC
EIR—Environmental Impact Report
Board—Board of Port Commissioners
CCC—California Coastal Commission
CVB—Chula Vista Bayfront
Public Entities—District and City
LOI—Letter of Intent
RFQ—Request for Qualifications
Site—36 acres on the H3 parcel within the CVB
RIDA—RIDA Chula Vista, LLC
ENA—Exclusive Negotiating Agreement
RHCC—Resort Hotel and Convention Center
KMA—Keyser Marston Associates
SBPP—South Bay Power Plant
Rohr—Rohr, Inc, a United Technologies Aerospace Company
MOU—Memorandum of Understanding
Dynegy South Bay—Dynegy South Bay, LLC
CAC—Citizens Advisory Committee
Gaylord—Gaylord Hotels brand
SLC—State Lands Commission
Coalition—Chula Vista Bayfront Coalition
WAG—Wildlife Advisory Group
Attachment B to Agenda File No. 2018-0070
Attachment E to Agenda No. 2017-0338
NRMP—Natural Resources Management Plan
BCDC—Bayfront Cultural Design Committee
ARES—Ares Management, LP
CBRE Hotels—Coldwell Banker Richard Ellis Hotels Group (Formerly PKF)
JLL—Jones Lang LaSalle
RV Park—Recreational Vehicle Park
CVBFFA—Chula Vista Bayfront Facilities Financing Authority
TOT—Transient Occupancy Tax
MSA—Municipal Services Agreement
JP Morgan—JP Morgan Securities, LLC
NOI—Net Operating Income
ROI—Return on Investment
O&M—Operations and Maintenance
Attachment B to Agenda File No. 2018-0070
Chula Vista Bayfront Historic Timeline
d9 .10 -8 18, 1810 18, ,.10 �O `�O'`�O `�O `�O ��O ``�O `�O .�O `8
9,0s�p9S .196 41!
9 'l.9 4 .9j . 1 'l.9`99 >000 '0, .,0,;
RV Park *Lease *Buyout *Buyout Amendment
*S1 Negotiation *RFP/Select
MOU *W/Chula Vista(Phase 2 Convention Center)
South Bay Power Plant *Asset Sale Agreement *Must Run Status
*Lease Agreement) *Settlement Agreement
*Contract&Permit Rights Assignment/Assumptions *Demo
*Environmental Remediation Agreement
*Guaranty of Contract and Permit Rights Assignment and Property Escrow Agreement
*Property Escrow Agreement
Rohr Land Transfer *CAO *Implementation Ag.1(H Street Demo)
*Relocation Agreement *Implementation Ag.2(L-Ditch)
*Land Transfer Agreement *2nd Amend.(Pacifica) *Pacifica Soil Closure
*Exchange Agreement *Cooperative Remediation Agreement
CVBMP *Joint Planning Agreement *Settlement Agreement
*EIR *CCC Approval *H3 RFQ
Pacifica *Exchange Agreement&State Lands Approval
*Amended and Restated Exchange Agreement
*Closed Land Exchange
South Bay Sub Station *Exchange Agreement *Sub Station Relocated
*CDP Approved
Financing *Financing Agreement
*Amended and Restated
*JPA Financing Agreement