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HomeMy WebLinkAboutRDA Packet 1994/08/23 Notice is hereby given that the Members of the Redevelopment Agency/City Council of the City of Chula Vista have called and will convene a specialjoint meeting of the Redevelopment Agency/City Council on Tuesday, August 23, 1994, 6:00p.m. immediately following the regular City Council meeting in Council Chambers, located in the Public Services Building, 276 Fourth Avenue, Chula Vista, Califomiato consider, deliberate, and act upon the following: Tuesday, August 23, 1994 6:00 p.m. (immediately following the City Council meeting) Council Chambers Public Services Building Joint Meeting of the Redevelonment Agencv/Citv Council of the Citv of Chub Vista CALL TO ORDER 1. ROLL CALL: Agency/Council Members Fox _, Horton _' Moore _' Rindone _' and Chairman/Mayor Nader _' 2. APPROVAL OF MINUTES: None Submitted. CONSENT CALENDAR None Submitted. · · END OF CONSENT CALENDAR · · PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES The following items have been advertised and/or posted as public hearings as required by law. If you wish to speak to any item, please fill out the "Request to Speak Form" available in the lobby and submit it to the Secretary of the Redevelopment Agency or the City Clerk prior to the meeting. (Complete the green form to speak in favor of the staff recommendation: complete the pink form to speak in opposition to the staff recommendation.) Comments are limited to five minutes per individual. 3. PUBLIC HEARING TO CONSIDER A PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, WAL-MART STORES, INC., AND CHULA VISTA TOWN CENTER ASSOCIATES, L.P., FOR THE PURPOSE OF DEVELOPING A COMMERCIAL SHOPPING CENTER AT THE NORTHWEST QUADRANT OF FIFTH A VENUE AND C STREET IN THE TOWN CENTRE n REDEVELOPMENT PROJECT AREA--On 12/14/93 the Agency approved a Semi-Exclusive Negotiating and Covenants Agreement with N ational Avenue Associates and Gatlin Development for the purposes of developing a community shopping center at the northwest quadrant of Fifth Avenue and C Streets in the Town Centre 11 Redevelopment Project Area. The Agency is requested to conduct the Public Hearing on the proposed negotiated Disposition and Agenda A. COUNCIL RESOLUTION 17631 and AGENCY RESOLUTION 1416 B. COUNCIL RESOLUTION 17630 C. AGENCY RESOLUTION 1417 -2- August 23, 1994 Development Agreement. Stan recommends the Agency conduct the Public Hearing and approve the resolutions. (Community Development Director) JOINT RESOLUTION OF THE CITY COUNCIL AND THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA FINDING PURSUANT TO HEALTH AND SAFETY CODE SECTIONS 33431 AND 33433, AFTER PUBLIC HEARING, THAT THE RESALE OF THE WALMART PARCEL IS EITHER AT FAIR MARKET VALUE OR AT SUCH LESSER PRICE AS IS NECESSARY TO EFFECTUATE THE REDEVELOPMENT PLAN; AND FINDING, PURSUANT TO HEALTH AND SAFETY CODE SECTION 33431, THAT IT IS IN THE BEST INTEREST OF THE PUBLIC, AND THE AGENCY, THAT CERTAIN REAL ESTATE BE SOLD TO REDEVELOPER WALMART PURSUANT TO THE PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT, AND BE SOLD WITHOUT PUBLIC BID APPROVING AND AUTHORIZING FOR EXECUTION A MEMORANDUM OF UNDERSTANDING BY AND AMONG THE CITY OF CHULA VISTA, THE CITY OF NATIONAL CITY, THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, AND THE NATIONAL CITY COMMUNITY DEVELOPMENT COMMISSION FOR THE PURPOSES OFCOOPERA TING ON THE POTENTIAL DEVELOPMENT OF COMMUNITY SHOPPING CENTERS ALONG THE SR-54 FREEWAY CORRIDOR BETWEEN FOURTH AVENUE AND NATIONAL CITY BOULEVARD WITH THE CITIES OF CHULA VISTA AND NATIONAL CITY--The staffs of the City of National City and Chula Vista have developed a Memorandum of Understanding in that regard which is presented to the Agency for consideration. Staff recommends approval of the resolution. (Community Development Director) [This item does not reQuire a Public Hearing. but is a related item.l APPROVING AND AUTHORIZING FOR EXECUTION A MEMORANDUM OF UNDERSTANDING BY AND AMONG THE CITY OF CHULA VISTA, THE CITY OF NATIONAL CITY, THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, AND THE NA TIONAL CITY COMMUNITY DEVELOPMENT COMMISSION FOR THE PURPOSES OFCOOPERA TING ON THE POTENTIAL DEVELOPMENT OF COMMUNITY SHOPPING CENTERS ALONG THE SR-54 FREEWAY CORRIDOR BETWEEN FOURTH A VENUE AND NATIONAL CITY BOULEVARD WITH THE CITIES OF CHULA VISTA AND NATIONAL CITY [This item does not reQuire a Public Hearing, but is a related item. 1 ORAL COMMUNICATIONS This is an opportunity for the general public to address the Redevelopment Agency on any subject matter within the Agency's jurisdiction that is not an item on this agenda. (State law, however, generally prohibits the Redevelopment Agency from taking action on any issues not included on the posted agenda.) If you wish to address the Council on such a subject, please complete the yellow" Request to Speak Under Oral Communications Form" available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to the meeting. Those who wish to speak, please give your name and address for record purposes and follow up action. Your time is limited to three minutes per speaker. Agenda -3- August 23, 1994 ACTION ITEMS The items listed in this section of the agenda are expected to elicit substantial discussions and deliberations by the Agency, staff, or members of the general public. The items will be considered individually by the Agency and staff recommendations may in certain cases be presented in the altemative. Those who wish to speak, please fill out a "Request to Speak" form available in the lobby and submit it to the Secretary to the Redevelopment Agency or the City Clerk prior to the meeting. Public comments are limited to five minutes. 4. RESOLUTION 1411 ADOPTING THE REDEVELOPMENT AGENCY BUDGET FOR FY 1994- 95 AND APPROPRIATING FUNDS THEREFOR--The FY 1994-95 Redevelopment Agency Budget was reviewed as part of the City budget approval process. As the Redevelopment Agency is a separate legal entity, it is necessary to approve the budget separately as required by California Community Redevelopment Law. Staff recommends approval of the resolution. (Administration) This item continued from the meeting of August 2, 1994. OTHER BUSINESS 5. DIRECTOR'S/CITY MANAGER'S REPORTlSI 6. CHAIRMAN'S/MAYOR'S REPORTlSI 7. AGENCY/COUNCIL MEMBER COMMENTS ADJOURNMENT The meeting will adjourn to the Regular Redevelopment Agency Meeting on Tuesday, September 6, 1994 at 4:00 p.m., immediately following the City Council meeting, in the City Council Chambers. ****** COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT The City of Chula Vista, in complying with the Americans With Disabilities Act (ADA), request individuals who require special accommodations to access, attend, and/or participate in a City meeting, activity, or service request such accommodation at least forty-eight hours in advance for meetings and five days for scheduled services and activities. Please contact the Secretary to the Redevelopment Agency for specific information at (619) 691-5047 or Telecommunications Devices for the Deaf (TDD) at (619) 585-5647. California Relay Service is also available for the hearing impaired. [C, \WP51 \AGENCY\AGENDAS\08-23-94.AGD] This page intentionally left blank. INFORMATION MEMORANDUM August 18, 1994 FROM: The Honorable Chairman and Agency Mem~rs " . \ 1\ John D. Goss, Executive Director J.~ ~ .~ rfj, David Gustafson, Assistant Director of Community Development f>'d TO: VIA: SUBJECT: Status of Auto Park Otav Vallev Road WideninQ Proiect The Agency was previously notified that relocation of the Chevrolet dealership from Broadway was delayed due to the delay in completing the Otay Valley Road widening improvements in front of the Auto Park. The target date for completion of the road work was September 15, 1994. A critical item preventing completion of this work was removal of the SDG&E power poles within the expanded right-of-way. This has now been completed, although several weeks later than anticipated. The contractor has moved in grading equipment and is proceeding. However, the removal and replacement of alluvium soils, grading, compacting, and paving work cannot be completed by September 15 unless overtime (including working Labor Day weekend) is authorized. The additional cost has been estimated at $85,000 by the contractor (the previous overtime estimate was $97,500 in July). Working on a normal schedule without any additional cost, the road work can be completed by September 30. Although this is not a guarantee, the contractor has pledged to make a concerted effort to meet this schedule. Staff concurs that this is a realistic target date Staff does not recommend paying additional money to the contractor. Since this work will only benefit the auto dealers, it cannot be charged to the Assessment District. The City and Agency have already contributed heavily to the Otay Valley Road Widening Project as well as development of the Auto Park. In lieu of this, staff is evaluating a proposal by Mr. Ordway that could provide some rent relief to South Bay Chevrolet at its current facility. Staff will bring this request and staff's recommendation to the Agency for consideration in the near future. ChanQe in SiQn Ordinance In the Disposition and Development Agreement with the Auto Park developers, the Agency pledges reasonable assistance and cooperation, including the conduct of The Honorable Chairman and Agency Members Subject: Status of Auto Park Page 2 August 18, 1994 public hearings which may be necessary, to permit the erection of a readerboard sign visible from 1-805. The most logical site for the sign is the former location of a billboard sign on the Davis property (4501 Otay Valley Road). The Auto Park developers have negotiated rental terms acceptable to the owner. However, the City's zoning ordinance currently conditionally allows such sign, under certain circumstances, to advertise only on-site uses. In order to permit a readerboard sign on the Davies property advertising the Auto Park (Off-site use), it is necessary to amend the appropriate codes. The proposed code revisions are docketed on the Planning Commission agenda for August 24, 1994 and will come before the City Council in September. [C,\WP51 \AGENCY\MEMOS\INF09406.MEMJ JOINT REDEVEWPMENT AGENCY/CITY COUNCIL AGENDA STATEMENT ITEM TITLE: COUNCIL RESOLUTION 17631 and AGENCY RESOLUTION 1416 SUBMITIED BY: REVIEWED BY: BACKGROUND: Item c:.3 Meeting Date 08/23/94 PUBUC HEARING: To consider a proposed Disposition and Development Agreement between the Redevelopment Agency of the City of Chula Vista, Wal-Mart Stores, Inc., and Chula Vista Town Center Associates, L.P., for the purpose of developing a commercial shopping center at the northwest quadrant of Fifth Avenue and C Street in the Town Centre II Redevelopment Project Area Joint Resolution of the City Council and the Redevelopment Agency of the City of Chula Vista Finding Pursuant to Health and Safety Code Sections 33431 and 33433, After Public Hearing, that the Resale of the Wal-Mart Parcel is Either at Fair Market Value or at such Lesser Price as is Necessary to Effectuate the Redevelopment Plan; and Finding, Pursuant to Health and Safety Code Section 33431, that it is in the Best Interest of the Public, and the Agency, that Certain Real Estate be Sold to Redeveloper Wal-Mart Pursuant to the Proposed Disposition and Development Agreement, and be Sold Without Public Bid Community Development Dir~1 _ Executive Director J~ ~ ~ o (4/Sths Vote: Yes _ No.x) The Redevelopment Agency, on December 14, 1993, approved a Semi-Exclusive Negotiating and Covenants Agreement (SENA) with National Avenue Associates and Gatlin Development (collectively known as "Chula Vista Town Center Associates") for the purpose of developing a community shopping center at the northwest quadrant of Fifth Avenue and C Street in the Town Centre II Redevelopment Project Area. Additionally, at the February 1, 1994 meeting, the Redevelopment Agency and City Council adopted "Omnibus Resolutions" authorizing staff to take all necessary steps to (1) comply with the terms of the SENA and (2) present the project, and proposed alternative projects, to the Council and Agency for consideration. Since that time, staff has been working with Chula Vista Center Associates and the City of National City to process the proposed project. The project requires the certification of an Environmental Impact Report, a General Plan Amendment, Rerone, and a Local Coastal Plan Amendment, all of which will be brought before the Council and Agency for consideration in late September or early October. Concurrently, staff has been negotiating the terms and conditions of a Disposition and Development Agreement (DDA) with Chula Vista Town Center Associates and Wal-Mart Stores, Inc. The purpose of this item is to conduct a Public Hearing and consider the merits of the proposed negotiated DDA which is included as Attachment 1 to Exhibit A. In addition, staff provided Council with the draft DDA under separate cover in the Council Packet for the August 16, 1994 meeting. J -/ Page 2, Item...3.. Meeting Date 08/23/94 RECOMMENDATION: It is recommended that the Agency Board open the public hearing, take testimony, close the public hearing and adopt the resolution which approves and authorizes the execution of a DDA with Chula Vista Center Associates and Wal-Mart Stores, Inc. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable since this item does not include a discretionary land-use approval. The obligations of the DDA are contingent upon approval of all discretionary entitlements required for the project, including an Environmental Impact Report, General Plan Amendment, Rewne, and a Local Coastal Plan Amendment. These necessary approvals will be forwarded to the Resource Conservation Committee, Town Centre Project Area Committee, and Planning Commission. DISCUSSION: The "Discussion" portion of the report is provided in three general sections: I) Health and Safety Code requirements, 2) Project Description, and 3) DDA Deal Points and Transactional Structure. Additionally, the report contains a "risk analysis" which further defines details of the DDA. Section 1. Health and Safety Code Requirements A. Public Hearing Pursuant to Health and Safety Code Sections 33431 and 33433, a noticed public hearing is required before any property of the Agency acquired with tax increment funds in whole or in part, directly or indirectly, is sold or leased for development pursuant to the Redevelopment Plan. Since the DDA contemplates a subsidy from the Agency to Wal-Mart, and since the subsidy could include tax increment funds as a source of paying the subsidy, the provisions of HSC Section 33433 apply. B. "Summary Report" Additionally, HSC Section 33433 requires that a "Summary Report" be on file and available for public review no later than the time of the first of two public hearing notice publications (Star- News, August 6, August 13, and August 20, 1994). The Summary Report, attached as Exhibit A and incorporated herein, has been on file in the Community Development Department since 5:00 p.m" Friday, August 5, 1994. The purpose of the Summary Report is to disclose and make available to the public: I) the cost of the DDA to the Agency, 2) the estimated value of the property interest conveyed determined at its' highest and best use, 3) the estimated value of the property interest conveyed at its' reuse value and 4) an explanation of how the sale or lease assists in the elimination of blight in order to ensure that the write-down in land value is consistent with redevelopment law. C. Resolution Findings The adopting resolution approving the DDA must make one of the following two findings: jr2 Page 3, Item....2. Meeting Date 08/23/94 1. That the consideration (paid to the Agency for the land) is not less than the fair market value at its highest and best use according to the Redevelopment Plan, or 2, That the consideration (paid to the Agency for the land) is not less than the fair reuse value at the use and with the covenants and conditions and development costs authorized by the agreement. As is further described in the Summary Report and in the next section, the adopting resolutions contain Finding #2 above. The general reasoning for this finding is that in order to provide the type of "use" under the covenants and conditions set forth by the Agency, a subsidy is required in order to construct the bridge that is necessary to provide adequate traffic circulation for the "high volume" retailer use, The cost of the bridge represents an unusual and expensive development cost that is not a normal commercial development cost. Section 2. Project Description The proposed project contemplated under the terms of the DDA calls for the development of a 120,000 square foot "Wal-Mart" high-volume retail development at the northwest quadrant of 5th Avenue and C Street immediately south of the SR-54 freeway. Due to the "impacts" of the project, substantial public street improvements will be provided by the developer in conjunction with the developer for the adjacent commercial center to be located in National City. The public street improvements will include (1) a bridge and/or other crossing to the project site to be constructed over the Sweetwater Channel from Broadway Avenue, (2) a new offset signalized intersection at Fourth Avenue and the south Dixieline property boundary, and (3) a signal at 5th and C Street to handle the traffic impacts, It is expected, although not required under the DDA, that the overall project to be developed adjacent to the Wal-Mart store will include another major retail anchor, additional retail shops, and a restaurant pad. It is this "overall project" that is currently being evaluated in the Environmental Impact Report and currently being processed through the City Planning and Engineering Departments. If fully developed the overall project will be comprised of an estimated 219,000 square feet of building area on approximately 21 acres, A site plan of the overall project is attached hereto, Note: The project originally proposed by the developer and contemplated by the SENA was the above-described "overall project", not just the Wal-Mart store which is the focus of the DDA. While the developer still contemplates and continues to pursue development of this overall project, during negotiations of the DDA the developer and Wal-Mart were unwilling to make the payment of Wal-Mart's subsidy tied to anything more than the development and operation of the Wal-Mart store itself. Because staff believes that the development of the Wal-Mart store will lead to the development of the overall project, staff compromised on this point in negotiations and agreed to tie the subsidy contemplated by the DDA only to the Wal-Mart store, 3 --3 Page 4, Item 3 Meeting Date 08/23/94 Section 3. DDA Deal Points and Transactional Structure As indicated, the required Summary Report is attached as Exhibit A and incorporated herein by reference. The following summary deal points and structure of the proposed transactions contemplated by the DDA is provided for clarity: A. Conditions to Effectiveness i. The DDA is contingent on approval of all entitlements for the project within 240 days of its' execution; such entitlements include certification of a [mal Environmental Impact Report. The City and Agency have, and will continue to have, complete and unfettered discretion to approve, condition, or disapprove any and all entitlements which may come before the Council and Agency in the future. ii, Agency's obligation to provide the subsidy is contingent upon a full service "Wal- Mart" store being constructed, fully inventoried and opened for business within two years of the execution of the DDA. B. Transactional Structure 1. National Avenue Associates (NAA) negotiated Purchase Agreement rights with all third party property owners for the entire 219,000 square foot shopping center project site, The DDA calls for NAA to assign their rights under those Purchase Agreements to Chula Vista Center Associates. ii. Chula Vista Center Associates will purchase the property for the entire project, and will subsequently enter into a Purchase Agreement with the Agency including that the Agency would agree to purchase the 13.4 acre Wal-Mart parcel for $5,265,097, iii. Prior to closing the transaction between Chula Vista Center Associates and the Agency, the Agency will assign its' purchase rights to Wal-Mart for $5,265,097, or $9.00 an acre, conditioned upon the Agency providing a land write-down subsidy of $1,915,000 payable over a period of up to 15 years at 4% interest. IV. Chula Vista Center Associates retains ownership of the remainder of the project site for development as contemplated in the proposed project description. C. Basic Deal Points i. Wal-Mart is not obligated to construct the store. However, if Wal-Mart fails to construct and open the store within two years of the approval of the DDA, the DDA is terminated and no subsidy is owed. ii, The subsidy of $1,915,000 was determined to be necessary in order to make the project financially feasible and stimulate the development of the remainder of the site, The Summary Report attached as Exhibit A, provides the basis for this determination. 3-Lf Page S, Item 3 Meeting Date 08/23/94 In short, the subsidy is required due to the extraordinary construction costs (bridge from Broadway to the site) necessary to develop the site for high-volume retail- commercial use. Other extraordinary site development costs that were considered include the expected costs of compacting potentially expansive soils and compliance with enhanced seismic standards, Verification of the need for this subsidy to make the project feasible is contained in the financial analysis for the project attached hereto as Attachment 3 to Exhibit A. The justification for the subsidy found in this report is based on the projected development costs for the site and the rate of return on the developer's investment in order to make the project fmancially feasible. This report was prepared under contract with the Agency by Cal Hollis of Keyser Marston and Associates, Mr, Hollis is a widely respected expert in the area of redevelopment project finance. iiL The subsidy is the primary obligation of the Agency. The subsidy is to be paid over a maximum 15 year period, During this period the amount owed to Wal-Mart accrues interest at the rate of 4% per year, Any principal or interest which remains unpaid at the end of the 15 year period is forgiven. The subsidy is to be paid in quarterly installments. The amount due in anyone quarter is to be measured by a percentage of the amount of sales tax revenue received by the City from the Wal-Mart store during the quarter immediately preceding such quarterly payment. In order to account for the project "transfer" effect (Le" transfer of sales from one outlet to another) the percentage amount of repayment obligation in year 1 through year 4 is 20%, 30%, 35% and 45%, respectively, By the end of the fourth year, the transfer effect is projected to be nullified, and therefore, the annual repayment obligation will be equal to 50% of the sales tax generated from the Wal-Mart Store. (See RISK ANALYSIS, Risk No, 3, below.) It should be noted that during the course of negotiations, Wal- Mart wanted the subsidy to be paid at an interest rate of 8 % per year with the cap set at 20 years with repayment set at 50% of the sales tax generated in Years 1 through 4. iv. While the obligation to pay this subsidy amount is an Agency obligation, it is likely that the tax increment generated by the project (an estimated $90,000 for the Wal-Mart store and an estimated $135,000 for the entire project) would not be sufficient to make the entire annual subsidy payment owed to Wal-Mart, Therefore, the City General Fund is likely to be obligated to make a significant portion of these payments. Note: This obligation would never be greater in amount than 50% of the sales tax generated by the Wal-Mart store and received by the City General Fund in anyone year, When Wal-Mart is fully operational, and the "transfer" effect is nullified, Wal-Mart is expected to generate at least $500,000 per year in sales tax. v. Agency is to use its best efforts to cause the City to enter into a Cooperation Agreement with the Agency which requires the City to provide the Agency with sufficient funds to make any annual payments in any given year, if necessary, Wal- Mart would be a third party beneficiary of this agreement and therefore would have the right to require the City to make payments to the Agency if necessary for the Agency to fulfill its obligations to Wal-Mart, (See RISK ANALYSIS, Risk No.3, below.) 3,5 Page 6, ltem....3 Meeting Date 08/23/94 vi, If the Wal-Mart store closes or is transferred to another user, the Agency obligation to pay the subsidy immediately terminates. Vll. Wal-Mart covenants for a period of 20 years that it shall not use the property for anything other than the retail uses permitted by the entitlements, RISK ANALYSIS The City Attorney's office has provided the following analysis of the business and legal risks associated with the proposed DDA: 1. Risk that Wal-Mart store contemplated by DDA will not be constructed. a, Nature of Risk: The proposed DDA does not impose upon Wal-Mart a contractual obligation to actually construct the Wal-Mart store contemplated by the agreement. Wal-Mart was unwilling to agree to such an obligation. While it is always preferable to obtain a formal contractual commitment from a subsidized redeveloper to develop the contemplated project, obtaining such a commitment does not by itself guarantee project construction. (I,e, , even if the DDA imposed such an obligation, the developer's economic circumstances, inability to obtain the necessary land-use entitlements and/or other site development problems could prevent construction of the store,) It is more important to mitigate this possibility by building in mechanisms for the Agency to recover the cost of the DDA to the Agency if the project does not go forward. b. Mitieatinl! Factors: (i) In the event that Wal-Mart fails to construct, inventory and open the contemplated Wal-Mart store within two years from approval of the DDA, the DDA provides that (1) the Agency is under no obligation to pay any portion of the proposed $1,915,000 subsidy; (2) the Agency has an option to acquire the Wal-Mart parcel (including any improvements thereon) at its appraised value; and (3) the Agency would be entitled to $50,000 in "liquidated damages" in order to cover the legal fees and staff costs incurred in connection with the negotiation and preparation of the DDA; (ii) The developers involved in the project have already expended considerable time and money towards its development and therefore have a vested interest in its completion; they are currently on course for a fall 1995 opening date; (ill) Gatlin Development and Wal-Mart have a good reputation and track record for completing projects that they have begun. Gatlin and Wal-Mart have begun and successfully completed approximately 10 Wal-Mart stores in southern California over the past five years, (iv) The overall project processing is progressing steadily without any major voiced opposition of the project at the Public Forum meeting, Design Review meetings, and the Planning Commission meeting reviewing the draft EIR, Additionally, the City of National City 3~~ Page 7, Item 3 Meeting Date 08/23/94 has been supportive and cooperative with the project as it relates to the project impacts to their City and the adjacent proposed commercial project in the city of National City. c. Overall Risk Assessment: The provisions of the DDA discussed above in the "mitigating factors" section virtually assure that if the project does not, for whatever reason, get built, the Agency will recover all of the out of pocket expenses it expended in the negotiation and implementation of the DDA. Furthermore, with its option right to acquire the property, if the project does not go forward as contemplated, the Agency will be given the opportunity to take control of and complete the project with another redeveloper and/or retailer. These factors combined with Gatlin's and Wal-Mart's apparent commitment to the project, and their reputation for following through with projects once begun, suggest that the risk that the Wal-Mart store will not be constructed has been substantially mitigated. 2. Risk that the remainder of the shoDDin~ center will not be developed. a. Nature of Risk: The Agency's original economic analysis of the proposed project and determination of the appropriate subsidy amount in the DDA included an analysis of the costs and likely returns on investment for the development of the entire project, not just the Wal-Mart store. Accordingly, Agency staff attempted to obtain--as a condition to the Agency's obligation to pay the requested subsidy--a commitment from Gatlin and/or Wal-Mart to develop the additional 70,000 to 100,000 square feet of retail space that Gatlin has proposed for the site. Unfortunately, after extended negotiations, neither party was willing to agree to such an obligation. b, Miti~atin~ Factors: (i) Because of Wal-Mart's ability to attract an extremely high volume of customers, the development of a Wal-Mart store at the site is expected to attract significant tenant interest in occupying the remaining portions of the development. To the extent that the development of the remaining portion of the project is likely to occur if there is a high level of quality tenant interest, the development of the Wal-Mart store which creates such interest should greatly enhance the likelihood that the remainder of the shopping center will be completed. (ii) By developing under contract with Wal-Mart the Wal-Mart parcel Gatlin will concurrently be providing significant infrastructure improvements to the remainder of the site. The need for the developer to recoup the costs of these improvements should provide a strong incentive for the developer to complete the overall project and should therefore encourage the completion of the overall project. c. Overall Risk Assessment: Obviously it would have been preferable to obtain a contractual commitment under the DDA for the development of the entire center and to make subsidy payments to Wal-Mart contingent on overall project development. However, since Wal- Mart would not agree to be required to build even its own store (see Risk No, 1, above) it is not surprising that they would not agree to the even broader commitment to develop the entire project. The Agency is therefore left to rely on the likelihood that the Wal-Mart store will be built, and the strength of Wal-Mart as an anchor tenant to assure the development of the entire 3r7 Page 8, Item3 Meeting Date 08/23/94 project, Wal-Mart is clearly one of the strongest anchor tenants in retailing. Moreover, the transaction makes good economic sense even if only the Wal-Mart store is constructed. Accordingly, the risk that the overall project will not get constructed clearly appears to be an acceptable risk under the circumstances, 3. Risk of Temporary Reduction in A~enc'y/City Revenues. a. Nature of Risk: The introduction of a Wal-Mart store into the City's existing retail market will undoubtedly result in some transfer of sales from existing retailers to Wal-Mart. As a result, some portion of the City's sales tax revenues previously generated by existing retailers will now be generated by Wal-Mart. The proposed DDA with Wal-Mart calls for subsidy payments to Wal-Mart measured by the sales tax that Wal-Mart generates at the site, If a sizeable portion of the sales tax revenue generated by Wal-Mart is not "new" sales tax, but rather "transferred" sales tax (i.e., sales tax that without a Wal-Mart would have been generated anyway by the City's existing retailers), it is possible that the subsidy paid to Wal-Mart in any one year might be greater than the new sales tax revenue actually generated by Wal-Mart in that same year, Under such circumstances the Wal-Mart store would actually be receiving more money from the Agency/City than it would be generating for the Agency/City. b. Miti~atin~ Factors: (i) The DDA limits the maximum amount of subsidy payment to Wal-Mart throughout the 15 year payment term in an attempt to address precisely this risk. In years 1 through 4 of Wal-Mart's initial operations, the payment owed to Wal-Mart by the Agency is limited to an amount equal to 20%, 30%, 35 % and 45 %, respectively, of sales tax generated by the Wal-Mart store during such years, These are the years, according to the Agency consultant which prepared the economic analysis portion of the Draft EIR for the project, during which the sales tax transfer effect would be most pronounced, Thereafter, according to this same consultant, population growth and general increased demand for consumer goods in the area would virtually eliminate the sales tax transfer impacts of the new store. Still, throughout the remainder of the maximum 15 payment term, the payment owed by the Agency to Wal-Mart will be limited to an amount equal to 50% of the sales tax revenue generated by the Wal-Mart store, This capped repayment structure significantly minimizes the risk that Wal-Mart will receive payments from the Agency in anyone year which are greater than the revenues actually generated by the store for the City, ~ The sales tax transfer analysis in the EIR was prepared by Iun Onaka of Onaka Planning and Economics. Cal Hollis of Keyser Marston and Associates was asked to review the Onaka analysis. While suggesting that the methodology in conducting the analysis would have been different, Mr. Hollis confirmed the general accuracy of the Onaka figures. (ii) The overall project is expected to generate an additional $135,000 per year of tax increment revenues for the Agency. As a result, even if there is a year in which the "net" sales tax revenues generated by the Wal-Mart store (i.e., the sales tax revenues generated less the sales tax revenue "transfers. from existing retailers) are less than the Agency payment to Wal- Mart for that year, the difference would need to be greater than $135,000 in order for the store to have an actual negative impact on collective Agency/City revenues, 3-! Page 9, Item3 Meeting Date 08/23/94 c. Overall Risk Assessment: This risk appears to be substantially mitigated by the mitigating factors discussed above, 4. Risk of ~~al Challenl!e to the DDA and Related Documents a, Nature of Risk: As you know, the authority of redevelopment agencies to subsidize redevelopment projects is strictly regulated by state law, In the past, some agencies have overstepped these regulatory bounds. In may cases the appropriate result has been legal challenge and a voiding of the unlawful transaction, Recently the state Legislature revised the Redevelopment Act. In order to address past abuses many of the revisions place even more restrictions on redevelopment agency authority to subsidize redevelopment projects. In the wake of this reforming legislation, it is fully expected that all redevelopment deals contemplating subsidies will face close scrutiny by redevelopment law compliance advocates. Furthermore, because of their newness, exactly how these restrictions might apply to specific fact situations has not been tested in court. Facing close scrutiny and to date uninterpreted new regulations, there is a significant risk that legitimate redevelopment projects might be challenged for purported non-compliance with the revised Redevelopment Acts. b. Miti~atin~ Factors: (i) Agency staff and outside legal counsel have been sensitive to and guided by the legal restrictions on Agency authority throughout its consideration of this project. Accordingly, prior to presenting this item to the Agency for its consideration, Agency staff and outside legal counsel fully analyzed the applicable laws which restrict Agency authority to subsidize redevelopment projects and have concluded that the proposed DDA and related documents fully comply therewith, (ii), If, nonetheless, for whatever reason the DDA is challenged by a third party, the DDA itself allocates the costs of defending the DDA to Wal-Mart, c. Overall Risk Assessment: Subsidized redevelopment projects have always been subject to legal challenge for failure to comply with applicable state redevelopment laws. This risk is particularly relevant in the wake of reforming legislation designed to narrow the scope of acceptable redevelopment activities. This transaction does not appear to be particularly susceptible to legal challenge, FISCAL IMPACT: The adoption of the resolution which approves the DDA will in and of itself not result in any negative or positive fiscal impact since the DDA is completely contingent upon the developer securing the entitlements to the project. The Wal-Mart store, if subsequently approved and constructed, will provide an estimated $90,000 annually in increased property tax increment revenue to the Agency. Additionally, the Wal-Mart store is estimated to generate approximately $400,000 in annual sales tax revenue to the City's General Fund in the first full year of operation and increasing to over $500,000 per year by Year 6, This figure is projected to increase in subsequent years, If constructed, it is estimated that the "overall project" proposed for the site (Wal-Mart plus the additional retail and restaurant space) will generate $135,000 in annual tax increment to the Agency and $500,000 of sales tax revenue in the first 3,-1 Page 10, Iteml Meeting Date 08/23/94 full year of operation. Finally, the project is estimated to employ approximately 400 temporary construction workers for a period of nearly 12 months, and 450 new permanent full and part- time jobs in the center. The DDA contemplates the Agency paying a land write-down subsidy of $1.915 million to Wal- Mart over a not-to-exceed period of 15 years at 4% interest. The fmancial obligation of the Agency is contingent upon construction of the Wal-Mart store, with the annual repayment amount being determined and measured by (but not paid from) the amount of annual sales tax. revenue received by the City each year. The annual Agency obligation will be payable from any lawful and available funding source, Any unpaid principal balance remaining after the term of 15 years will be forfeited by Wal-Mart. Because the tax. increment generated by the Wal-Mart will not by itself be sufficient to make the subsidy payments which are projected to be owed to Wal-Mart each year, it is expected that, pursuant to the Cooperation Agreement expected to be approved between the Agency and the City, that the City General Fund will be obligated to make a significant portion of the annual payments owed to Wal-Mart. Because the payment owed to Wal-Mart in anyone year will never exceed 50% of the sales tax. generated by the Wal-Mart store and actually received by the General Fund, the project, in effect, more than supports itself. The tables on the following page provides an estimated projection of the relative costs and revenues of the City and the Agency with respect to the DDA and the Wal-Mart project. The following summary statements are provided: [1] Tax increment revenue over 15 years is expected to be $1,350,000. [2] Net sales tax. to the City's General Fund over 15 years is expected $4,800,000, [3] Total revenue to the City/Agency expected to be generated over the 15 year period is $6,200,000. [4] The expected total subsidy payment (including interest) to Wal-Mart is anticipated to be $2,500,000. [5] With repayment of the principal amount of $1,915,000, the estimated interest charges over 15 years will approximate $586,000. C,\WP51\HAYNESIREPORTSIWALDDA.RA4 J -- /0 Page 11, Item..1... Meeting Date 08/23/94 TABLE PROJECTED FISCAL IMPACT WAL-MART STORZ WAL-HART NET SUBSIDY NET TAX TOTAL SALES TAX PROJECTED WAL-MART % PMT TO SALES TAX INCREMENT REVENUE YR PROJECTION TRANSFERS SALES TAX SHARE WAL-HART TO CITY REVENUE TO CITY 1 $400,375 $240,375 $160,000 20.00% $80,075 $79,925 $90,000 $169,925 2 $424,056 $180,266 $243,790 30,00% $127,217 $116,573 $90,000 $206,573 3 $449,148 $120,317 $328,831 35.00% $157,202 $171,629 $90,000 $261,629 4 $475,747 $60,002 $415,745 45.00% $214,086 $201,659 $90,000 $291,659 5 $490,043 $0 $490,043 50.00% $245,022 $245,022 $90,000 $335,022 6 $504,740 $0 $504,740 50.00% $252,370 $252,370 $90,000 $342,370 7 $519,894 $0 $519,894 50.00% $259,947 $259,947 $90,000 $349,947 8 $535,514 $0 $535,514 50.00% $267,757 $267,757 $90,000 $357,757 9 $551,557 $0 $551,557 50.00% $275,779 $275,779 $90,000 $365,779 10 $568,082 $0 $568,082 50.00% $284,041 $284,041 $90,000 $374,041 11 $582,284 $0 $582,284 50.00% $291,142 $291,142 $90,000 $381,142 12 $596,841 $0 $596,841 50.00% $46,171 $550,670 $90,000 $640,670 13 $611,762 $0 $611,762 50.00% $0 $611,762 $90,000 $701,762 14 $627,056 $0 $627,056 50.00% $0 $627,056 $90,000 $717,056 15 $642,733 $0 $642,733 50.00% $0 $642,733 $90,000 $732,733 TOTALS $2,500,808 $4,878,064 $1,350,000 $6,228,064 SUBSIDY REPAYMEBT SCHEDULE BASED OB ABOVE REVENUE PROJECTIONS INT. PRIBCIPAL IBTEREST PRIBCIPAL TOTAL YR RATE BALANCE PAYMEBT PAYMEIIIT PAYMENT 1 4.00% $1,915,000 $76,600 $3,475 $80,075 2 4.00% $1,911,525 $76,461 $50,756 $127,217 3 4.00% $1,860,769 $74,431 $82,771 $157,202 4 4.00% $1,777,998 $71,120 $142,966 $214,086 5 4.00% $1,635,032 $65,401 $179,620 $245,022 6 4.00% $1,455,412 $58,216 $194,154 $252,370 7 4.00% $1,261,258 $50,450 $209,497 $259,947 8 4.00% $1,051,762 $42,070 $225,687 $267,757 9 4.00% $826,075 $33,043 $242,736 $275,779 10 4.00% $583,339 $23,334 $260,707 $284,041 11 4.00% $322,632 $12,905 $278,237 $291,142 12 4.00% $44,395 $1,776 $44,395 $46,171 13 4,00% $0 $0 $0 $0 14 4.00% $0 $0 $0 $0 15 4. 00% $0 $0 $0 $0 TOTALS $585,808 $1,915,000 $2,500,808 3-/1 This page intentionally left blank. .3 - It--- I- u W .." o 0:: 0- W Cl ~ V') -' W z: z: <( :r: u I . I I . I '. '. I . . . . . . I ~lIl1ll1l11l1l1i:~ '. :! ~llIlillllllllllW 'I I ~;IIII1I1I1II1I:W . : ~1I111111:1I:I!li~ . I "111'''1'1'''1'''1". 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"'- ~ " , -~ .-'l~ ~<l!l ~:!: '" <( l- V') --- @ 1m I _.., , i Q h 00) a: 0......___ " Ii ~~ ) . 3(\N3~41s.... tii >-- w ~ ,>-- lfl , '-' , I u c ~ - ~- ""g D o _ u~ 8 ~~fL., ~..ilt~ ~.~~: ~~~:.. ;:;~~~ iC:l.= .. z~rE ~~i5_ 5e!";~ ~ ~ lr) - ::>. "'C -J ~ =r: () This page intentionally left blank. :3 ~ PI- EXHIBIT A SUMMARY REPORT PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT ("WAL-MART PROJECT") AMONG THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, W AL-MART STORES, INC., AND CHULA VISTA TOWN CENTER ASSOCIATES, L.P. Public Hearing Date: August 23, 1994 This "Summary Report" is provided for public review pursuant to Health and Safety Code Section 33433 (a) (2). 3~/5 This page intentionally left blank. -3 ~/f:, HEALTH AND SAFETY CODE SECTION 33433 "SUMMARY REPORT" W AL-MART PROJECT NORTHWEST QUADRANT OF FIFTH A VENUE AND C STREET PROJECT SUMMARY The City of Chula Vista Redevelopment Agency proposes to enter into a Disposition and Development Agreement with Wal-Mart Stores, Inc., (Redeveloper) and Chula Vista Town Center Associates, L.P. for the purposes of developing a minimum 120,000 sq. ft. "Wal-Mart" store on a vacant 13.52 acre site located at the northwest quadrant of Fifth Avenue and C Street in the city of Chula Vista. It is expected that the construction of the "Wal-Mart" store will stimulate the development of the remainder of the net developable 21 acre site with another major anchor, additional retail shops, and a restaurant. Included as Attachment I is the proposed Disposition and Development Agreement (DDA) with accompanying exhibits. The DDA and supporting exhibits constitute the relevant documents of the proposed sale(s). The purpose of the proposed DDA is to further the goals of the Town Centre II Redevelopment Plan, comply with the obligations of the previously approved Semi- Exclusive Negotiating and Covenants Agreement (SENA), and assist in the elimination of blighting influences. The DDA contemplates a subsidy by the Agency to Wal-Mart in the amount of $1,915,000 in order to make the project financially feasible. The proposed terms of the subsidy is to repay at 4% interest over a maximum period of 15 years. The actual amount of annual payment is measured and determined by the amount of sales tax revenue generated from the Wal-Mart store in any given annual year. The subsidy is completely contingent on the construction and opening of the Wal-Mart store and the generation of sufficient sales tax revenue to make the contemplated payments. In order to verify that the project warranted financial assistance as requested by the developer, the Agency secured the services of Keyser Marston Associates, a professional real estate and economic market consultant firm, to independently review the economics of the project. Based upon their analysis (Attachment 2) the project warranted financial assistance ranging from $1.63 to $1.94 million. Set forth below are specific information requirements as required by Health and Safety Code Section 33433. SPECIFIC PROJECT INFORMATION Pursuant to Health and Safety Code Section 33433(a)(2)(B)(i-iv), the Agency is to provide in this "Summary Report" the following four (4) items: 1. The cost of the agreement (DDA) to the Agency. 2. The estimated value of the interest (land) conveyed by the Agency to the developer as determined at its' highest and best use. ..3 ~ /7 3. The estimated value of the interest conveyed by the Agency to the developer as determined by the "reuse" value subject to the covenants, conditions and development costs of the agreement. Any difference between the value in #2 and #3 requires an explanation by the Agency. 4. An explanation as to how the sale of property will assist in the elimination of blight. Item 1: Cost of DDA to Al!encv The costs of the DDA to the Agency include land acquisition costs, interest costs and and legal costs. These costs are described in more detail below: Land Acquisition Costs The Agency is providing the redeveloper a land write-down in the amount of $1,915,000. The subsidy was arrived at by evaluating the overall project developmenl costs and the amount of "income" estimated to be derived from the project with a reasonable rate of return. Pursuant to the terms of the DDA, the $1,915,000 amount will be paid to the redeveloper over the course over a 15 year period commencing with the opening of the Wal-Mart store. Payments in any one year are to be limited to no more than 50% (less in earlier years) of the sales tax revenue generated by the store and paid to the City. In the event that sufficient sales tax revenue is not generated during this 15 year period to pay the entire $1,915,000, the remaining unpaid principal balance shall be forgiven. It is assumed that sufficient sales tax revenue will be generated to repay the entire subsidy amount within the 15 year period, therefore, the maximum land acquisition cost of the DDA to the Agency is $1,915,000. However, because this amount will be paid out in a roughly amortized fashion over a 15 year period, the estimated land acquisition cost of the DDA to the Agency in net present value terms (assuming a current market interest rate of 8%) is $1,033,521. (Please see table below.) Interest Costs The land write-down cost of $1,915,000 (discussed above) is to be paid over a 15 year period with interest at a rate of 4 % per year. Based upon projected sales tax generation figures it is estimated that the principal land write-down balance will be paid off sooner than the 15 year period. However, assuming that the land write-down amount is not retired sooner than 15 years, the estimated maximum amount of interest cost to the Agency is $668,558. This estimate is determined based upon a straight amortization schedule (provided below). The estimated interest cost of the DDA to the Agency in net present value terms (using a current market interest rate of 8%) is $440,739. .3---/;> Principal $1,915,000 Interest Rate 4.00% Term 15 years INTEREST PRINCIPAL ANNUAL PAYMENT PAYMENT PAYMENT Yrl $ 76,600 $ 95,637 $172,237 Yr2 72,775 99,463 172,237 Yr3 68,796 103,441 172,237 Yr4 64,658 107,579 172,237 Yr5 60,355 1l1,882 172,237 Yr6 55,880 116,357 172,237 Yr7 51,226 121,012 172,237 Yr8 46,385 125,852 172,237 Yr9 41,351 130,886 172,237 Yr 10 36, 116 136,122 172,237 Yr 11 30,671 141,566 172,237 Yr 12 25,008 147,229 172,237 Yr 13 19,119 153,118 172,237 Yr 14 12,994 159,243 172,237 Yr15 6,625 165,613 172.237 TOTAL $668,558 $1,915,000 $2,583,558 NPV @ 8% $440,739 $1,033,521 $1,474,261 Legal Costs The estimated costs for outside legal services to the Agency in connection with the negotiation and preparation of the DDA and related documents is $15,000. Item 2: Estimated Value of Al!encv Convevance to Developer at Hil!hest and Best Use Highest and Best Use The highest and best use for the property to be transferred by the Agency to the Redeveloper is believed to be general commercial/retail. This conclusion was reached due to two major reasons: 1) the inability of the overall project site to be developed with any other use, and 2) the overall location and surrounding land-uses. First, the most northerly parcel of the overall site has been the subject of various project proposals. Two projects which were presented and conditionally approved were for an industrial park project and a golf driving range. Those projects were not constructed because of the lack of industrial tenant users (no market demand) and financing impediments (inability to get financing). Second, the property is located along the south side of the SR-54 freeway with great commercial visibility, and commercial uses to the east, north and northeast. There are pockets of industrial and quasi-commercial uses to the south and west, but the freeway proximity and utility is not as pronounced. Due to these general market and specific site conditions, it is believed that this property's highest and best use is as a general commercial/retail use. $ - /9 Value of Conveyance The estimated value of the property to be transferred by the Agency to the Redeveloper at the "highest and best use" (described above) is $5,265,097; assuming a 13.43 acre parcel this translates to a value of $9.00 per square foot. This value is based on Agency staff's analysis of comparable sales figures and the recently negotiated purchase price for the property. Included as Attachment 3, is a list of recent comparable sales of retail properties in Chula Vista and San Diego County provided to the Agency by its financial consultant for this project, Keyser Marston Associates. The range of values established are from $6.55 to $16.57 per square foot (excluding the footnoted transactions due to external financial influences). The "average" value for these comparable properties was determined to be $9.73 per sq. ft. The recently negotiated purchase price for the Wal-Mart parcel is $5,265,097; assuming a 13.43 acre parcel this translates into a value of $9.00 per square foot. (Note: the final purchase price may be slightly higher or lower to the extent that the size of the parcel gets changed in the entitlement process.) Based upon the similarity of this negotiated price to the comparable sales figures provided by the Agency's financial consultant, Agency staff has determined that the negotiated price represents the fair market value for the property. Item 3: Estimated Value of Aeency Conveyance to Developer at Reuse Value The estimated reuse value of the property being transferred by the Agency to the Redeveloper is $4,065,097; assuming a 13.43 acre parcel this translates into a value of $6.90 per square foot. The reuse value in this instance is less than the estimated highest and best use value discussed above due to the "use" restrictions contemplated in the SENA and established by the Agency in the DDA. The SENA required that any development of the site include an approximately 120,000 square foot "high volume" retailer. In accordance with this restriction, the developer under the SENA obtained a commitment from Wal-Mart, the Redeveloper under the proposed DDA, to develop the high volume retail portion of the proposed project. As a condition to its development of the site, both Agency staff and Wal-Mart have required that a bridge be provided over the Sweetwater Channel area to the west of the project site. (The basis for this requirement is that due to the expected traffic volume and customer draw for typical Wal-Mart outlets, the access from Broadway Avenue to the project site is vitally necessary in order to ensure orderly, safe and efficient internal traffic circulation.) The current estimated development cost of the bridge is $1,200,000 to $1,500,000. Thus, to the extent that the use of the project contemplated by the SENA and the DDA requires, in effect, the construction of this bridge, Agency staff has estimated the "reuse value" of the property to be transferred under the DDA to be in the range of $3,765,097 to $4,065,097. Based upon the present value calculations discussed above, this range of reuse value is roughly equal to the price at which the Agency is selling the Wal-Mart parcel to the redeveloper. A -;2D Item 4: Elimination of Blil!ht The project site, comprised of two "triangular" shaped parcels under separate ownership, was included in the expansion area of the Town Centre II Redevelopment Project Area in 1987. The inclusion into the redevelopment area by definition, deems it to be "slum and blighted." The most northerly parcel has been the subject of various project proposals as was previously described. The Agency's financial consultant determined that the proposed project was not feasible without the currently proposed subsidy. Thus, it is apparent that private enterprise acting alone would not develop the property within the prevailing development climate. The approval of the DDA eliminates the current "blighted" condition by creating the public sector mechanisms that the private sector needs in order to sell and develop vacant, impediment laden non-income producing property. Specifically, the DDA provides the financial mechanism to construct a viable commercial shopping center with a strong major retail anchor that currently does not operate an "outlet" in Chula Vista. 3 ---J.l This page intentionally left blank. o -r2-:L fJTTI9CH/>?i!::-'}.)7 / .;.., E:'YJ1IBIT A REDEVELOPMENT DISPOSITION AND DEVELOPMENT AGREEMENT (W AL-MART PROJECn AMONG THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA "Agency" , WAL-MART STORES, INC. "Redeveloper" , and CHULA VISTA TOWN CENTER ASSOCIATES, L.P. " Seller" August 1994 J ~~3 080594 I C31253-013/ 22219.4 This page intentionally left blank. ..3 -ol i TABLE OF CONTENTS PAGE 1. TERMS OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3 1.1. Purpose of This Agreement . . . . . . . . . . . . . . . . . . . . . . . .. 3 1.2. Redevelopment Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3 1.3. The Redevelopment Project Area ..................... 3 1.4. The Site .................................... 3 1.5. The Wal-Man Parcel. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3 1.6. panies to This Agreement ......................... 4 1.6.1. The Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4 1.6.2. The Redeveloper . . . . . . . . . . . . . . . . . . . . . . . . . " 4 1.6.3.The Seller. ............................... 4 2. CONDITIONS TO EFFECTIVENESS. . . . . . . . . . . . . . . . . . . . . .. 4 2.1. Contingency of Obligations . . . . . . . . . . . . . . . . . . . . . . . " 4 2.2. Required Entitlements . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5 2.3. City and Agency Retain Discretionary Approval Rights. . . . . . .. 5 3. PURCHASE AND DISPOSITION OF THE SITE . . . . . . . . . . . . . .. 6 3.1. Acquisition and Sale of Site ........................ 6 3.2. Covenants Agreement; Option Agreement . . . . . . . . . . . . . . .. 6 3.3. Agency Land Write-Down ......................... 7 3.5. No Representations or Warranties by Agency. . . . . . . . . . . . .. 8 4. REDEVELOPMENT OF THE WAL-MART PARCEL. . . . . . . . . . .. 8 4.1. Scope of Development. . . . . . . . . . . . . . . . . . . . . . . . . . .. 8 4.2. Cost of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8 4.3. Antidiscrimination During Construction ................. 8 4.4. Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 9 5. USE AND MAINTENANCE RESTRICTIONS. . . . . . . . . . . . . . . .. 9 5.1. Uses....................................... 9 5.2. Obligation to Refrain from Discrimination. . . . . . . . . . . . . . .. 9 5.3. Form of Nondiscrimination and Nonsegregation Clause. . . . . . " 9 5.3.1. In deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 9 5.3.2. In leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 9 5.3.3. In contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.4. Effect and Duration of Covenants . . . . . . . . . . . . . . . . . . . . . 10 5.5. No Implied Covenant to Operate ..................... 10 5.5.1. Failure of Redeveloper to Construct and Open the Store on the Wal-Man Parcel. . . . . . . . . . . . . . . . . . . . . . . 11 5.5.2. Option to Purchase ......................... 12 5.5.3. Sole Remedy '" . . . . . . . . . . . . . . . . . . . . . . . . . . 12 5.5.4. Survival of Obligations . . . . . . . . . . . . . . . . . . . . . . . 12 3-:2.5 080594/ C31253..()131 22219.4 6. DEFAULTS, REMEDIES AND TERMINATION . . . . . . . . . . . . . . . 12 6.1. Legal Actions .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 6.1.1. Institution of Legal Actions .................... 12 6.1.2. Applicable Law ........................... 13 6.1.3. Rights and Remedies Are Cumulative . . . . . . . . . . . . . . 13 6.2. Special Remedies and Rights of Termination .............. 13 6.2.1. Remedies Prior to Close of Escrow. . . . . . . . . . . . . . . . 13 6.2.2. Remedies After the Close of Escrow. . . . . . . . . . . . . . . 14 7. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 7.1. Notices, Demands and Communications Between the Parties .... 14 7.2. Inspection of Books and Records ..................... 14 7.3. Real Estate Commissions .......................... IS 7.4. Computation of Time ............................ 15 7.5. Independence of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 7.6. Text to Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IS 7.7. Interpretation ................................. 15 7.8. Nonliability of Officials, Employees and Contractors ......... 15 8. SPECIAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 8.1. Amendment of Redevelopment Plan. . . . . . . . . . . . . . . . . . . . 16 8.2. Entire Agreement, Waivers and Amendments . . . . . . . . . . . . . . 16 8.3. Recordation.................................. 16 8.4. Legal Challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 8.5. No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . 17 8.6. Assignment................................... 17 8.7. Time for Acceptance of Agreement by Agency. . . . . . . . . . . .. 17 3~:;Jo 080594/ C31253-OI3/ 22219.4 11 EXHIBIT 1 - EXHffiIT 2 - EXHIBIT 3 - EXHIBIT 4 - EXHffiIT 5 - EXHffiIT 6 - EXHIBIT 7 - EXHIBIT 8 - 080594 J C31253..{l131 22219.4 TABLE OF EXHIBITS Legal Description of Site Map of Site Legal Description of the Wal-Man Parcel Purchase Agreement Grant Deed Memorandum of Redevelopment Disposition and Development Agreement and Covenants Agreement Promissory Note Option Agreement J -/17 iii This page intentionally left blank. .J-:;f REDEVELOPMENT DISPOSITION AND DEVELOPMENT AGREEMENT (Wal-Mart Project) THIS AGREEMENT is entered into as of the _ day of , 1994, by and among the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body corporate and politic ("Agency"), WAL-MART STORES, INC., a Delaware corporation ("Redeveloper"), and CHULA VISTA TOWN CENTER ASSOCIATES, L.P., a California limited partnership (" Seller") . RECITALS A. The City Council of the City of Chula Vista ("City") has established the Agency and has approved and adopted a Redevelopment Plan (the "Redevelopment Plan") for a redevelopment project known as the Town Centre II Redevelopment Project ("Project Area") by its adoption of Ordinance No. _ on May 7, 1987, pursuant to the provisions of Sections 33000, et sea., of the California Health & Safety Code ("California Community Redevelopment Law"). B. The Agency is undertaking a program, in the interest of the health, safety, and general welfare of the people of the City pursuant to its authority under the California Community Redevelopment Law for the redevelopment, replanning and redesign of blighted areas within the Project Area which are characterized by stagnant, improperly utilized and unproductive land which requires redevelopment. C. The Agency is desirous of carrying out the Redevelopment Plan for the Project Area by providing for the development of certain real property within the Project Area ("Site"). The Site is comprised of approximately 32 gross acres of currently vacant land located within the Project Area and within the City, a portion of which has been previously developed. The Site is currently owned by third parties. The Site is legally described for purposes of identification only in the "Legal Description of the Site" attached hereto and incorporated herein by this reference as Exhibit" 1". The Site is graphically depicted on the "Map of the Site" attached hereto and incorporated herein by this reference as Exhibit "2". D. In furtherance of the Agency's program to provide for the development of the Site the Agency entered into a Semi-Exclusive Negotiating and Covenants Agreement ("Semi- Exclusive") pertaining to the Site by and among the Agency, National Avenue Associates, a California general partnership ("NAA") and Gatlin Development Co., Inc" a California corporation ("Gatlin"). Gatlin and NAA are collectively referred to as the "Developer" in the Semi-Exclusive and herein. The Semi-Exclusive became effective as of December 7, 1993 and required the Developer to (1) use its good faith efforts to acquire the Site; (2) diligently process all required permits and entitlements necessary to develop the Site with 192,000 square feet of high volume retail uses (hereinafter referred to as the "Project"); (3) upon receipt of the necessary entitlements to develop the Site as the Project; and (4) upon 3~~~ 080594/ C31253-013/ 22219.4 1 obtaining ownership of the Site to impose covenants thereon to use the Site for retail purposes for a minimum of twenty (20) years. E. Subsequent to the date of the Semi-Exclusive Gatlin has caused to be formed Chula Vista Town Center Associates, L.P., A California limited partnership ("Town Center Associates"), the entity referred herein as Seller. F. NAA has entered into purchase agreements ("Third Party Purchase Agreements") with the third party owners of the Site to acquire the Site and has commenced review of the required entitlements in furtherance of the Project and as required by the Semi-Exclusive. N AA has assigned its rights in the Third Party Purchase Agreements to the Seller by Assignments dated . Seller intends to assign its rights and obligations under this Agreement, the Third Party Purchase Agreements and the Purchase Agreement (as defined in Section 3.1 below) to a partnership (the "Partnership") to be formed by Seller and NAA or an affiliate thereof, of which partnership Seller shall be the general partner. The Partnership shall also enter into an agreement (the "Development Agreement") with Wal- Mart regarding development of the Site, including the Wal-Mart Parcel. G. A portion of the Site is subject to a ground lease ("Site Ground Lease") between the third party owner and a third party lessee ("Lessee"). NAA, a partner of the Seller, is the sublessee in a Sublease ("Site Sublease") between the Lessee and NAA. The Site Sublease provides NAA with the option to buyout the Site Ground Lease ("Lease-Purchase Option"). H. It is the intention of the parties that the Site will be divided into three (3) primary parcels: 1. The Wal-Mart Parcel comprised of approximately 13.5 acres. The Wal-Mart Parcel is described for identification only in the Legal Description of the Wal-Mart Parcel attached hereto and incorporated herein by this reference as Exhibit "3" and is graphically shown on the Map of the Site (Exhibit 2). 2. The Seller's Parcel comprised of approximately 17 acres. The Seller's Parcel is graphically shown on the Map of the Site (Exhibit 2). 3. The Lessor's Parcel comprised of approximately 1.5 acres. The Lessor's Parcel is graphically shown on the Map of the Site (Exhibit 2). 1. Seller, Agency and Redeveloper have entered into negotiations regarding construction of the Project consisting of a minimum 120,000 square foot Wal-Mart store and all ancillary improvements relating to the Store including but not limited to required parking and landscaping ("Store") and approximately 70,000 square feet of additional retail ("Seller Improvements"). The Agency has determined that the provision of financial assistance to Redeveloper, on the terms and conditions provided herein, will make feasible the development of the Store on the Wal-Mart Parcel by the Redeveloper in accordance with the purposes set forth in the Semi-Exclusive and that such development will stimulate development of the remainder of the Site and is in the best interests of the taxpayers and 3 ---3C) 080594 I C31253-{)13 I 22219.4 2 residents of the City and will otherwise promote the public health, safety, and general welfare of City residents and is in accordance with federal, state and local laws and regulations . OPERATIVE PROVISIONS NOW THEREFORE, in consideration of the foregoing Recitals, which Recitals are incorporated herein by reference, and covenants of the parties contained herein, Agency and Redeveloper and Seller hereby agree as follows: 1. TERMS OF AGREEMENT. 1.1. Puroose of This Agreement. The purpose of this Agreement is to implement the Redevelopment Plan and comply with the obligations of the Semi-Exclusive by providing for the disposition of the Site and the development of the Wal-Mart Parcel with the Store by the Redeveloper. The parties hereby expressly agree and acknowledge that a substantial portion of the consideration for the Agency's participation in this project is the development of the Store. Due to the quality of Wal-Mart as a national retailer and the projected [mancial benefits to the City and Agency deriving from the operation of a Wal- Mart retail outlet, the Redeveloper's rights and obligations pursuant to this Agreement shall not be assignable. The Agency's obligations hereunder are expressly contingent as set forth in more detail below upon the construction and operation of a full service, fully inventoried and fulIy staffed Wal-Mart retail facility. 1.2. Redevelopment Plan. This Agreement is subject to the provisions of the Redevelopment Plan. The Redevelopment Plan, as it now exists and as it may be subsequently amended pursuant to Section 8.1 hereof, is incorporated herein and made a part hereof by reference. 1.3. The Redevelopment Proiect Area. The Project Area is located in a portion of the City, and the Project Area's boundaries are specificalIy described in the Redevelopment Plan. 1.4. The Site. The Site consists of certain real property located within the Project Area as shown on the Map of the Site (Exhibit 2), and more particularly described in the Legal Description of the Site (Exhibit 1). The Site is comprised of portions of two (2) legal parcels which are currently owned by Metropolitan Shopping Square, Ltd., a California limited partnership, Charles C. Kerch, Nancy W. Kerch, Gayle Jean Stephenson, Trustee for Jill Stephenson, and Gayle Jean Stephenson, Trustee for William Stephenson (COllective "Metropolitan") and Dixieline Lumber Company, Inc., a Delaware corporation ("Dixieline"), respectively. Metropolitan and Dixieline may be collectively referred to herein as "Owner". 1.5. The Wal-Mart Parcel. The Wal-Mart Parcel consists of a portion of the Site which will be conveyed to Wal-Mart pursuant to this Agreement. The Wal-Mart 3 ~31 U80594 I C31253-0131 22219.4 3 Parcel is shown on the Map of the Site (Exhibit 2) and is legally described in the Legal Description of the Wal-Mart Parcel (Exhibit 3). 1.6. Parties to This A!!reement. 1.6.1. The Ae:encv. The Agency is a public body, corporate and politic, exercising governmental functions and powers, and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California. The offices of the Agency are located at 276 Fourth Avenue, Chula Vista, California 91910. "Agency", as used in this Agreement, includes the Redevelopment Agency of the City of Chula Vista and any assignee of or successor to its rights, powers and responsibilities. 1.6.2. The Redevelooer. The Redeveloper is Wal-Mart Stores, Inc., a Delaware corporation. The principal office of the Redeveloper for purposes of this Agreement is 702 S.W. 8th Street, Bentonville, Arkansas 72716, Attention: President and Attention: Property Manager. 1.6.3. The Seller. The Seller is Chula Vista town Center Associates, L.P., a California limited partnership, comprised of NAA and Town Center Associates. The principal offices of Seller are located at c/o Gatlin Development Co., Inc., 12625 High Bluff Drive, Suite 304, San Diego, CA 92310. Seller, at its sole election, may assign its rights and obligations under this Agreement, the Third Party Purchase Agreements and the Purchase Agreement (as defmed in Section 3.1 below) to the Partnership. 2. CONDITIONS TO EFFECTIVENESS. 2.1. Contine:encv of Oblie:ations. The Agency and the Redeveloper acknowledge and agree that the ultimate development of the Site will be governed by and/or subject to certain governmental approvals ("Entitlements"), including Entitlements which must be obtained from the City and other public agencies. The parties hereto expressly acknowledge and agree that the Agency cannot grant any such entitlement or cause any other governmental agency, including the City, to grant any such Entitlements. Accordingly, the parties hereto expressly agree that, notwithstanding approval of this Agreement, the obligations of each party hereto shall be contingent upon the receipt of all Entitlements required for the development of the Site in the manner set forth in this Agreement and the obligations of each party hereto shall only arise upon the receipt of all such Entitlements. The Seller and the Redeveloper hereby release the City and the Agency from any liability based upon the Seller's or the Redeveloper's failure to obtain any such Entitlement and expressly agree that in no event shall any exercise of the City's or Agency's discretion to approve, condition or disapprove any Entitlement or other discretionary item which is a condition to the obligations of the parties of this Agreement be deemed to be a default or an act of bad faith by the City or the Agency. J.--3>y- 080594/ C31253-o13/22219.4 4 2.2. ReQuired Entitlements. The obligation to initiate and process the required Entitlements shall be Seller's. The obligations of each party hereto shall not arise until Seller or Redeveloper shall have applied for and City or other applicable public entity shall have approved all required entitlements (hereinafter the "Entitlements ") required for the construction of the Store and the Improvements. The Entitlements include but may not be limited to the following: A. An amendment of the Chula Vista General Plan changing the land use designation for the Site from "Limited Industrial" (I-L) to "Retail Commercial"; B. An amendment of the Chula Vista zoning designation for the Site from I-L to "Central-Commercial-Precise Plan" (C-C-P); C. An amendment of the Chula Vista Local Coastal Program to change the zoning designation for a portion of the Site referred to as the "Inland Parcel" from "Industrial-General" to "Commercial-Retail"; D. Certification of an environmental impact report reviewing all of the required entitlements and other discretionary actions necessary to authorize construction of the proposed Project on the Site; Improvements; and E. Approval of a Precise Plan for the construction of the proposed F. Approval of a Parcel/Tract Map for the Site. In the event that all of the Entitlements are not approved within 240 days of the effective date of this Agreement, or in the event that the City, the Agency, the Coastal Commission or any other entity shall deny any of the requested discretionary approvals or disapprove any required Entitlement or other agreement necessary for construction of the Store or the Seller Improvements, this Agreement shall be of no force and effect and none of the parties shall have any further obligations to any of the other parties pursuant to this Agreement. 2.3. City and Al!encv Retain Discretionarv Aooroval Ril!hts. The Parties understand and acknowledge that the City and Agency reserve the right to exercise their discretion as to all matters which they are, by law, entitled or required to exercise their discretion. It is not the intent (nor shall it be deemed) that, by the Agency's execution or City's approval of this Agreement, the City or the Agency are granting approval of the Project contemplated in this Agreement or any of the Entitlements. Further, in no event shall the Agency or the City be under any obligation to approve such development or any of the Entitlements by virtue of having entered into or approved this Agreement, it being understood that such development and each of the Entitlements as to which the Agency or the 3 --33 080594/ C31253-Q13/ 22219.4 5 City has any approving authority shall be taken up and considered as matters to be separately deliberated upon at such time in the future as they may be so taken up and considered. 3. PURCHASE AND DISPOSITION OF THE SITE. 3.1. Acauisition and Sale of Site. Pursuant to that certain Purchase Agreement and Escrow Instructions dated December 15, 1993, as amended (collectively the "Metropolitan Agreement"), by and between NAA and Metropolitan, and that certain Purchase Agreement and Escrow Instructions dated December 15, 1993, as amended (collectively the "Dixie1ine Agreement") by and between NAA and Dixieline, NAA has the right to purchase the Site from the third party Owners. Pursuant to an Assignment dated , 1994, NAA has assigned to the Seller, its rights under the Dixieline Agreement and the Metropolitan Agreement, with respect to the Wal-Man Parcel. The Seller and the Agency have entered or will enter into a Purchase Agreement (the "Purchase Agreement") for the purchase by the Agency of the Wal-Man Parcel in the fonn of Exhibit "4", attached hereto and incorporated herein by this reference. Subject to the terms, conditions and provisions of this Agreement, and provided that all conditions to the obligations of the panies hereto have been complied with and the Seller has acquired fee simple title to the Site, including exercise of the Lease- Purchase Option, the Agency, on or before June 30, 1995 shall use its best efforts to acquire fee title to the Wal-Man Parcel from the Seller pursuant to the Purchase Agreement for the purchase price (the "Purchase Price") set forth in the Purchase Agreement; provided, however, that (i) prior to the close of escrow conveying the Wal-Man Parcel, the parties hereto shall have recorded the covenants required by this Agreement, (ii) Agency shall assign to the Redeveloper, at or before the close of escrow, its rights under the Purchase Agreement; (iii) that Agency shall exercise its rights under the Purchase Agreement, prior to such assignment, only as directed or agreed to by the Redeveloper; and (iv) the Wal-Man Parcel shall be conveyed to the Redeveloper generally in the fonn provided in the grant deed (the "Grant Deed"), attached hereto as Exhibit "5" and incorporated herein by this reference. The Redeveloper shall pay the Agency for the Deposit (as defmed in the Purchase Agreement), the Purchase Price, the cost of the surveys, and any other costs and expenses required to be paid by the Buyer (as defmed in the Purchase Agreement) pursuant to the Purchase Agreement. Wherever this Agreement provides for any document or instrument to be delivered through escrow, such document or instrument shall be delivered through the escrow established pursuant to the Purchase Agreement. Notwithstanding provisions of this Section 3.1, the Agency's obligation to acquire fee title to the Wal-Man Parcel shall be subject to the provision of all required funds by Wal-Man. In no event shall the Agency be required to deposit Agency funds into the escrow and Agency shall not be deemed to be in default of this Agreement or the Purchase Agreement if escrow fails to close because Wal- Man has not deposited the required funds into escrow. 3.2. Covenants Al!reement; Ootion Al!reement. At the close of escrow, the Redeveloper and the Agency shall execute, acknowledge and deliver, through escrow: (i) a Memorandum of Redevelopment Disposition and Development Agreement and Covenants Agreement, a copy of which is attached hereto as Exhibit "6" and incorporated herein by 080594 I C31253-013! 22219.4 3 -3f 6 reference ("Covenants Agreement"), and (ii) an "Option Agreement" (as such term is defmed in Section 5.5.2, below), which Covenants Agreement and Option Agreement shall be filed for record in the Office of the County Recorder of San Diego County, California, immediately following the Grant Deed and prior to all other documents affecting the Wal- Man Parcel. 3.3. Ae:encv Land Write-Down. Pursuant to the Purchase Agreement the Purchase Price to the Agency for the Wal-Man Parcel is approximately $5,265,097.00, computed at Nine Dollars ($9.00) per square foot and assuming that the Wal-Mart Parcel contains 13.43 acres. If the survey taken pursuant to the Purchase Agreement reveals that the actual area is more or less than the approximation shown above, the Purchase Price shall be adjusted accordingly. The Redeveloper has represented to the Agency that if the Wal- Mart Parcel is acquired at the Agency's Purchase Price, completion of the Store including all required public improvements, is not financially feasible. Therefore, in order to facilitate the redevelopment of the Wal-Mart Parcel and subject to all of the terms and conditions set forth herein, the Agency agrees to sell the Wal-Man Parcel to the Redeveloper for Three Million three Hundred Fifty Thousand Ninety-Seven Dollars ($3,350,097.00) ("Redeveloper Purchase Price"). The Redeveloper shall pay all funds necessary to close escrow on the Wal-Man Parcel and the Agency shall repay to the Redeveloper One Million Nine Hundred and Fifteen Thousand Dollars ($1,915,000.00) ("Redeveloper Loan") in accordance with the terms and conditions set forth in the Promissory Note attached hereto and incorporated herein by this reference as Exhibit No. "7". Interest shall accrue on the unpaid principal balance of the Redeveloper Loan, as provided in the Promissory Note. The Agency shall make payments to the Redeveloper in periodic installments and the payments shall be applied in the manner described in the Promissory Note. The Promissory Note shall be held in escrow until the Store opens to the public for retail sales and shall be delivered to the Redeveloper within 5 business days after that date. The Agency's payments on the Promissory Note shall be payable from any source of funds legally available to the Agency. 3.4. Citv/Ae:encv CooDeration Ae:reement. The Agency shall use its best efforts to cause City to enter into a cooperation agreement ("City/Agency Cooperation Agreement") with the Agency, which City/Agency Cooperation Agreement shall be acceptable in form and content to the Redeveloper provided that it contains the general provisions set forth in this paragraph. The City/Agency Cooperation Agreement shall provide that in the event the Agency for any reason fails or is unable to make a payment due to the Redeveloper pursuant to the Promissory Note (Exhibit 7) City shall provide Agency with sufficient funds to make such payment. Any such payment by City shall be contingent upon the performance required of Redeveloper pursuant to the Promissory Note and shall be made from any funds legally available to City. The City/Agency Cooperation Agreement shall provide that it shall not be amended, altered, terminated or otherwise revised in any manner without the prior written consent of the Redeveloper, and that the 080594/ C31253-013/ 22219.4 ,J---3S 7 Redeveloper shall be a third pany beneficiary under the City/Agency Cooperation Agreement. Upon any such amendment, alteration, termination, or other revision (collectively "revision") without the Redeveloper's consent, or upon the breach by the City of its obligations under the City/Agency Cooperation Agreement, the Redeveloper may by written notice to the Agency terminate this Agreement, or exercise any other remedy available at law or equity, and the Redeveloper shall not have any further obligation to the Agency not yet accrued as of the date of the City's breach or of such revision. If, within sixty (60) days after the Effective Date of this Agreement, the Agency and the City have not entered into such a City/Agency Cooperation Agreement, the Redeveloper may at any time thereafter, by written notice to Agency, terminate this Agreement. 3.5. No Reoresentations or Warranties bv A!!encv. The Agency makes no representations or warranties regarding the condition of the Wal-Man Parcel or its suitability for construction of the Store. The Redeveloper hereby expressly acknowledges that it has satisfied itself from its own due diligence as to the suitability of the Site and in panicular, the Wal-Man Parcel. The Seller and the Redeveloper hereby agree to protect, defend, indemnify and hold harmless the Agency, it agents, representatives and employees from any claims made by Seller, its affiliates, or third panies due to the existence of any hazardous substances on, in or under the Wal-Man Parcel or emanating therefrom. Notwithstanding the foregoing: (a) all representations and warranties of the Seller contained in the Purchase Agreement shall inure to the benefit of Redeveloper, (b) the Agency hereby assigns to the Redeveloper all of its rights under such representations and warranties of the Seller subject to the right of the Agency to rely upon such representations and warranties in the event of any legal action penaining to the Wal-Man Parcel naming Agency as defendant; and (c) the Seller hereby consents to such assignment. 4. REDEVELOPMENT OF THE WAL-MART PARCEL. 4.1. Scooe of Develooment. The Wal-Man Parcel shall be redeveloped in accordance with a minimum 120,000 square-foot Wal-Man retail store, sufficient parking spaces to comply with the requirements of the Entitlements and all landscaping and other public and private improvements as required by the Entitlements, provided, however, that Wal-Man shall have no obligation to perform any such construction pursuant to this Agreement. 4.2. Cost of Construction. As between the Agency and the Redeveloper, the cost of any development of the Wal-Man Parcel and any construction of onsite or offsite improvements necessary to the completion of the Store on the Wal-Man Parcel shall be borne exclusively by the Redeveloper. 4.3. Antidiscrimination Durin!! Construction. The Redeveloper for itself and its successors and assigns agrees that in the construction of any improvements on the Wal-Man Parcel, the Redeveloper will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, religion, creed, national origin, or ancestry, and that the Redeveloper will comply with all applicable local, state and federal fair employment laws and regulations. 080594 I C31253-013 I 22219.4 3 -.jt 8 4.4. EstoDDel Certificate. At the request of the Redeveloper, the Agency shall. within ten (10) days, certify in writing that, to the best of its knowledge, (a) this Agreement is in full force and effect and subject to the contingencies set forth herein is !! binding obligation of the certifying Dartv and (b) this Agreement has not been amended or modified, except as is expressly provided in such estoppel certificate. 5. USE AND MAINTENANCE RESTRICTIONS. 5.1. Uses. The Redeveloper covenants and agrees that during any construction and thereafter for a minimum of twenty (20) years after the Effective Date of this Agreement. the Redeveloper and Redeveloper's successors and assigns shall devote the W ai-Mart Parcel only to the retail uses authorized by the Entitlements. 5.2. Obligation to Refrain from Discrimination. The Redeveloper covenants and agrees for itself and its successors and assigns, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Wal-Mart Parcel. 5.3. Form of Nondiscrimination and Nonsegregation Clause. The Redeveloper shall refrain from restricting the rental, sale or lease of the Wal-Mart Parcel on the basis of race, color, creed, religion, sex, marital status, ancestry or national origin of any person. To that end, all such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 5.3.1. In deeds: "The grantee herein covenants by and for himself, his or her heirs, executors, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee, or any persons claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land. " 5.3.2. In leases: "The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of 080594/ C31253-D13/22219.4 j.-37 9 discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased. " 5.3.3. In contracts: "There shall be no discrimination against or segregation of any persons or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself or herself, or any person claiming under or through him or her, establish or pennit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land. " effect in perpetuity. The foregoing covenants shall run with the land and shall remain in 5.4. Effect and Duration of Covenants. Except in those instances when a longer period is required by this Agreement, the covenants contained in this Agreement and the Covenants Agreement for the Wal-Mart Parcel shall remain in effect until the expiration date of the Redevelopment Plan or any extension thereof. The covenants against discrimination shall remain in effect in perpetuity. The covenants established in this Agreement and the Covenants Agreement shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency and the City and their respective successors and assigns and any successor in interest to the Wal-Mart Parcel or any part thereof. The Agency and the City are deemed the beneficiaries of the tenns and provisions of this Agreement and of the covenants running with the land for and in their own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. This Agreement and the covenants shall run in favor of the Agency without regard to whether the Agency has been, remains or is an owner of any land in the Project Area. The Agency shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. Notwithstanding any provision hereof to the contrary, after any conveyance of the Wal-Mart Parcel or any legally subdivided parcel thereof by the Redeveloper, the Redeveloper shall not be liable for the perfonnance of the foregoing covenants. 5.5. No Imolied Covenant to Ooerate. Subject to the provisions of Section 5.5.1 below, it is expressly agreed by the parties hereto, for their own benefit and that of their successors-in-interest, that nothing contained in this Agreement shall be construed to contain a covenant, either expressed or implied, to either construct the Store or any other improvements on the Wal-Mart Parcel, to commence the operation of a business on the Wal- Mart Parcel, or to thereafter continuously operate a business upon the Wal-Mart Parcel. The Agency recognizes and agrees that the Redeveloper may, at the Redeveloper's sole and 3.-3 Y 080594 I C31253-013 I 22219.4 10 absolute discretion and at any time during the term of this Agreement, cease the operation of any business on the Site. 5.5.1. Failure of RedeveloDer to Construct and ODen the Store on the Wal-Mart Parcel. The parties expressly acknowledge and agree as follows: construct or open the Store. A. The Redeveloper is not contractually obligated to B. The Agency, the Redeveloper and the Seller have entered into this Agreement with the current intent that Redeveloper will construct the Store, notwithstanding that the Redeveloper is not contractually obligated to construct or open the Store. C. The Agency's purpose in entering into this Agreement is to facilitate the redevelopment of the Site and in particular to provide for the construction of the Store on the Wal-Mart Parcel; it is not to assist in land assembly for purposes of resale or speculation. D. In the event that the Redeveloper fails to construct and open the Store on the Wal-Mart Parcel on or before the second anniversary of the effective date of this Agreement, this Agreement shall terminate at 5:00 p.m. on the second anniversary of the effective date of this Agreement. E. In the event this Agreement terminates as a result of the Redeveloper's failure to construct and open the store on the Wal-Mart Parcel on or before the second anniversary of the effective date of this Agreement, the Redeveloper hereby expressly agrees as follows: (i) The Agency shall have no obligation to the Redeveloper pursuant to the Promissory Note and the original Promissory Note shall be delivered to the Agency by escrow within three (3) business days of termination of this Agreement. (ii) The Redeveloper shall pay to the Agency $50,000 within ten (10) business days of such termination as reimbursement for the Agency's out of pocket costs incurred in the negotiation and implementation of this Agreement; in the event the Redeveloper fails to pay the Agency within the time set forth herein, the $50,000 shall accrue interest at 10% (ten percent) and the Agency shall be entitled to reimbursement of all out of pocket costs, including but not limited to legal fees, expended to obtain payment of the $50,000; (iii) The Redeveloper shall not construct any improvements other than the Store on the Wal-Mart Parcel until expiration of the Agency's option (as defined in Section 5.5.2 below) without the express written approval of the Agency in Agency's sole discretion; j--39 080594/ C31253-n13 / 22219.4 11 (iv) The Redeveloper shall not sell or lease the Wal- Mart Parcel (except pursuant to a sale-leaseback transaction) to any third party until expiration of the Agency's option (as defined in Section 5.5.2 below). Any attempt to sell or lease the Wal-Mart Parcel (except pursuant to a sale-leaseback transaction) during this period shall be void and the Redeveloper shall be fully responsible for any damages incurred by third parties attempting to acquire title to or possession of the Wal-Mart Parcel contrary to the provisions of this Agreement and the Grant Deed. (v) The act or failure of any third party, including but not limited to the fulfillment of Seller's obligations to Redeveloper to provide for preparation of the Wal-Mart Parcel and installation of public improvements evidenced outside of this Agreement, shall not relieve Redeveloper of its obligations to Agency in the event Redeveloper fails to open the completed store on or before on or before the second anniversary of the effective date of this Agreement. 5.5.2. ODtion to Purchase. Provided the Redeveloper purchases the Wal-Mart Parcel as provided herein, the Agency may purchase the Wal-Mart Parcel from Redeveloper at the price and upon the terms described in the Option Agreement ("Option Agreement") attached hereto in the form of Exhibit "8" in the event that (1) this Agreement terminates as a result of the Redeveloper's failure to construct and open the Store on the Wal-Mart Parcel on or before the second anniversary of the effective date of this Agreement, or (2) at any time before the Redeveloper opens the Store on the Wal-mart Parcel, the Redeveloper gives written notice to the Agency that it does not intend to open the Store on the Wal-Mart Parcel on or before the second anniversary of the effective date of this Agreement. 5.5.3. Sole Remedv. The Agency and the Redeveloper acknowledge and agree that exercise of the Option by the Agency (together with the payment to the Agency required by Section 5.5.1 above) is the Agency's sole and exclusive remedy in the event this Agreement terminates as a result of the Redeveloper's failure to construct and open the Store on the Wal-Mart Parcel on or before the second anniversary of the effective date of this Agreement. 5.5.4. Survival of Oblil!:ations. The rights and obligations of the Agency and the Redeveloper pursuant to this Section 5.5 shall survive the termination of this Agreement by the Agency pursuant to Section 5.5.1 above. 6. DEFAULTS. REMEDIES AND TERMINATION. 6.1. Lel!:al Actions. 6.1.1. Institution of Lel!:al Actions. All legal or equitable actions brought under or with respect to this Agreement must be instituted, at the election of the Redeveloper, in the Superior Court of the County of San Diego, State of California, in any other appropriate court in that County, or in the Federal District Court in the Southern District of California. The prevailing party in any such legal action may recover its actual 080594 I C312S3-0131 22219.4 :3 ~ it) 12 attorney's fees, expert witness fees, costs of taking depositions and discovery, and all other costs reasonably incurred in such litigation. 6.1.2. Aoolicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 6.1.3. Rights and Remedies Are Cumulative. Except as otherwise expressly provided for in this Agreement, the rights and remedies of the parties shall be limited to the remedies set forth in this Section 6. Except as otherwise expressly provided for in this Agreement, neither the Agency nor the Redeveloper shall have the right to terminate this Agreement. 6.2. Soecial Remedies and Rights of Termination. The following are special optional remedies and rights of termination of the parties. 6.2.1. Remedies Prior to Close of Escrow. A. The Redeveloper or the Agency may terminate this Agreement if the Seller fails to take all steps necessary to convey fee simple title to the Wal- Mart Parcel to the Agency or the Redeveloper subject only to those encumbrances set forth in this Agreement and such additional encumbrances as may be approved in writing by the Redeveloper. The Redeveloper and the Agency may pursue a claim for equitable relief (including without limitation specific performance) only against the Seller if the Seller fails to perform any term or provision of this Agreement in the manner required by this Agreement. B. The Agency at its option may terminate this Agreement if the Redeveloper does not advance all funds and deposits required by this Agreement on or before the date set for Closing (as the same may be extended) and such breach is not cured within fifteen (15) days after the date of written demand therefor by the Agency. In the event of such termination pursuant to this Section, neither the Agency nor the Redeveloper shall have any further rights against or liability to the other under this Agreement, and the Agency shall have no obligation to make payments under the Note. C. If any condition of the close of escrow or the performance under this Agreement for the benefit of either the Agency or the Redeveloper, fails to occur (except where such failure results from the willful act or omission of the party benefitted by such condition), then the party for whose benefit such condition exists may terminate this Agreement. In the event of any termination pursuant to this Section, neither the Agency nor the Redeveloper shall have any further rights against or liability to the other, under this Agreement or under the Note. J---tf! 080594 I C312S3-013/ 22219.4 13 6.2.2. Remedies After the Close of Escrow. A. The Redeveloper at its option may pursue the remedy of specific performance against the Agency, pursue a claim for damages against the Agency or terminate this Agreement or pursue any other remedy at law or equity if the Agency defaults and fails to perform any term or provision of this Agreement in the manner required by this Agreement, and within the time established therefor in this Agreement, and any such failure is not cured with fifteen (15) days after written demand by the Redeveloper. B. Although the failure of the Redeveloper to construct and open the store on or before the second anniversary of this Agreement shall not be deemed a default of this Agreement, the Agency shall be entitled to the rights and payments set forth in Section 5.5.1 and 5.5.2 above. Failure of the Redeveloper to comply with the requirements of Section 5.5.1 and 5.5.2 above, shall constitute a default of this Agreement and the Agency shall be entitled to pursue the remedy of specific performance against the Redeveloper, pursue a claim for damages or any other remedy at law or in equity if such default is not cured within fifteen (15) days after written demand by the Agency, or, if such default cannot reasonably be cured within 15 days after written demand, then the Agency shall be entitled to pursue a claim for damages or any other remedy at law or in equity if the Redeveloper fails to commence cure within 15 days after written demand by the Agency and thereafter to diligently prosecute such cure to completion. 7. GENERAL PROVISIONS. 7.1. Notices, Demands and Communications Between the Parties. Formal notices, demands and communications among the Agency, the Seller and the Redeveloper shall be sufficiently given if personally delivered by hand and a receipt therefor is obtained or is refused to be given or if dispatched by registered or certified mail, postage prepaid, return receipt requested, or by way of a nationally recognized overnight mail delivery service (such as United Parcel Service or Federal Express), to the principal offices of the Agency, the Seller and the Redeveloper as set forth in Section 1.6 above. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail. Such notices, demands and communications shall be deemed given on receipt or rejection. 7.2. Insoection of Books and Records. Until the earlier of (a) payment in full to the Redeveloper of the payments which the Agency is obligated to pay to the Redeveloper under the Promissory Note or (b) termination of the Agency's obligation to pay any remaining payments to the Redeveloper under the Promissory Note, in the event of a dispute between the Agency and the Redeveloper regarding the amount of any payment due under the Promissory Note, the Redeveloper shall have the right at all reasonable times to inspect and copy the books and records of the Agency with respect to the Sales Tax Revenue as is reasonably necessary for the Redeveloper to enforce its rights under this Agreement. In the event of such dispute and in order to assist Agency in the calculation and verification of amounts due to Redeveloper, Agency shall have the right at all reasonable times to inspect and copy the records of the Redeveloper relative to the Sales Tax Revenue generated by the 080594/ C31253-013/ 22219.4 3---L/Y 14 Store, including but not limited to records of gross sales and documentation provided by Redeveloper to the Franchise Tax Board. The right of Redeveloper and Agency to inspect each other's records is limited to those inspections necessary to resolve a dispute. 7.3. Real Estate Commissions. The Agency and the Redeveloper each represent to the other that it has engaged no broker, agent, or finder in connection with this transaction. The Agency and the Redeveloper shall each indemnify the other for any claims for real estate commissions, brokers' fees or finders' fees which are alleged to be due as a result of the acts of the indemnifying party. 7.4. Computation of Time. Unless otherwise required by a specific provision of this Agreement, time hereunder is to be computed by excluding the first clay and including the last day. 7.5. Independence of Parties. The terms and provisions of this Agreement shall not cause the parties hereto to be construed in any manner whatsoever as partners, joint ventures or agents of each other in the performance of their respective duties and obligations under this Agreement, or subject either party to this Agreement to any obligation, loans, charge or expense of the other party unless the party to be held responsible has independently contracted with the claimant so as to make it directly responsible for the performance and/or payment, as appropriate, of the pertinent obligation, loss, charge or expense. 7.6. Text to Control. The table of contents and headings in this Agreement are included solely for convenience, and if there shall be any conflict between such table or headings and the text of this Agreement, the text shall control. 7.7. Interoretation. Should any provision of this Agreement require interpretation, it is agreed that the person or persons interpreting or construing the same shall not apply a presumption that the terms of this Agreement shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the party thereto who itself or through its agent or counsel prepared the same or caused the same to be prepared; it being agreed that the agents and counsel of all parties hereto have participated equally in the negotiation and preparation of this Agreement. The language in all parts of this Agreement shall be in all cases construed simply, fairly, equitably and reasonably, according to its plain meaning and not strictly for or against any of the parties thereto. 7.8. NOnliabilitv of Officials. Emplovees and Contractors. No member, official, employee, agent or contractor of the Agency shall be personally liable to the Redeveloper in the event of any default or breach by the Agency or for any amount which may become due to the Redeveloper or on any obligations under the terms of this Agreement, and no officer, employee, agent or contractor of the Redeveloper shall be personally liable to the Agency in the event of any default or breach by the Redeveloper or for any amount which may become due to the Agency or on any obligations under the terms of this Agreement. 3 ~ C{J 080594/ C31253-013/22219.4 15 8. SPECIAL PROVISIONS. 8.1. Amendment of Redevelooment Plan. The Agency agrees that no additional amendment which changes the uses or development pennitted on the Wal-Mart Parcel or changes the restrictions or controls that apply to the Wal-Mart Parcel or otherwise affects the Wal-Mart Parcel in a manner which would preclude or inhibit the development or continued operation of the Store shall be made or become effective without the prior written consent of the Redeveloper. Amendments to the Redevelopment Plan applying to other property in the Project Area or modifying general provisions of the Redevelopment Plan such as but not limited to the duration of the Plan or the tax increment limits, shall not require the consent of the Redeveloper. 8.2. Entire Agreement, Waivers and Amendments. This Agreement is executed in 3 duplicate originals, each of which is deemed to be an original. This Agreement, the Grant Deed, the Purchase Agreement and the Note when taken together integrate all of the terms and conditions mentioned herein or incidental hereto, and supersede all negotiations or previous agreements, including the Semi-Exclusive between the parties and their related entities, including Gatlin and NAA, with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Agreement shall be in writing and signed by the appropriate authorities of the Agency and the Redeveloper, and all amendments hereto must be in writing and signed by the appropriate authorities of the Agency and the Redeveloper. The Executive Director of the Agency is authorized to approve and execute amendments to this Agreement which are not of a material nature, including, but not limited to, the granting of extensions of time to the Redeveloper not exceeding a cumulative total of 180 days. 8.3. Recordation. Although this Agreement shall not be recorded, the Agency and the Redeveloper shall make, execute and record at the close of escrow, in the land records in the Office of the County Recorder for San Diego County, the Covenants Agreement. 8.4. Legal Challenge. In the event that any court action or other legal proceeding is brought by any person not a party to this Agreement to challenge this Agreement, the granting of any Entitlement or the fulfillment of any condition to the obligations of the parties hereto, and without regard to whether or not the Redeveloper or the Seller is a party to said action or proceeding, the Redeveloper shall have the right to terminate this Agreement upon thirty (30) days notice in writing to the other parties given at any time during the pendency of such action or proceeding prior to the conveyance of the Wal-Mart Parcel to the Redeveloper. If this Agreement is not terminated, the Redeveloper and the Seller jointly and severally, shall indemnify the Agency and the City for all expenses including attorneys' fees, to defend the City or the Agency from any claim, action or proceeding 080594 I C312S3..Q13/22219.4 ~~V1- 16 against the City, the Agency or their agents officers, or employees to attack, set aside, void or annul the approval of this Agreement or the approval of any Entitlement or condition to the obligations of the parties hereto. The City and the Agency shall promptly notify the Redeveloper and the Seller of any such claim, action or proceeding. For purposes of this Section 8.4, the Redeveloper and the Seller acknowledge that the term "attorney's fees" includes the cost incurred by the City or Agency in the defense of any claim, action or proceeding by the City Attorney or his staff. 8.5. No Third PartY Beneficiarv. The terms and provisions herein contained shall be only for the benefit of the parties hereto and such terms and provisions shall not inure to the benefit of any other party whosoever, it being the intention of the parties hereto that no one shall be deemed to be a third party beneficiary of this Agreement. 8.6. AssilZrunent. The parties hereto expressly agree and acknowledge that, except as expressly set fonh herein, this Agreement and the more specifically the rights conferred to Wal-Mart by this Agreement are not assignable. 8.7. Time for Acceotance of AlZreement bv AlZencv. This Agreement, when executed by the Redeveloper and the Seller and delivered to the Agency, must be authorized, executed and delivered by the Agency no later than , 1994 or this Agreement shall be voidable at the election of the Redeveloper and/or the Seller. The effective date of this Agreement shall be the date when this Agreement has been signed by the Agency. AGENCY: REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Dated: _,1994 By: Its: ATTEST: Secretary APPROVED AS TO FORM AND SUBSTANCE: General Counsel to the Redevelopment Agency of the City of Chula Vista By: 3-Lf-S 080594 I C31253-013/22219.4 17 Special Counsel to the Redevelopment Agency of the City of Chula Vista By: (ADDITIONAL SIGNATURES FOLLOW) 080594 I C31253-013/ 22219.4 j -- fro 18 Dated: Dated: Dated: 0805941 C31253..Q13/22219.4 ,1994 ,1994 ,1994 REDEVELOPER: WAL-MART STORES, INC., a Delaware corporation By: Its: SELLER: , a California limited partnership CHULA VISTA TOWN CENTER ASSOCIATES, L.P., a California limited partnership By: Its General Partner By: Its General Partner 03~17 19 EXHmIT "1" Lel!:al Descriotion of the Site All that real property located in the City of Chula Vista, County of San Diego, State of California, described as follows: [To Follow] (EXHIBIT" I ") .3 ~ ff (Page I of 1) +619-571-3241 NRSLRND ENS SD 657 P05 RUG 05 '94 14:20 EXHIBIT 1 LEGAL DESCRIPTION (PARCEL 'A') THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS: ALL OF 10 ACRE LOT 8 AND THOSE PORTIONS OF 10 ACRES LOTS 5, 6 AND 7 IN QUARTER SECTION 151 OF RANCHO DE LA NACION , IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP BY MORRILL NO. 166, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID SAN DIEGO COUNTY, LYING SOUTHERLY OF A LINE DESCRIBED AS FOLLOWS: BEGINNING AT TH[ INTERSECTION OF THE WESTERLY LINE OF THE SOUTHEAST QUARTER OF SAID QUARTER SECTION 151 TO A POINT DISTANT SOUTH 18004' EAST 75.00 FEET FROM THE NORTHWEST CORNER OF SAID SOUTHEAST QUARTER; THENCE SOUTHWESTERLY IN A STRAIGHT LINE TO THE INTERSECTION WITH THE WESTERLY LINE OF SAID QUARTER SECTION 151 DISTANT THEREON NORTH 17044'07" WEST 407.50 FEET FROM THE SOUTHWESTERLY CORNER OF SAID QUARTER SECTION. EXCEPTING THEREFROM THAT PORTION DESCRIBED AS FOLLOWS: LOTS 1 THROUGH 10 OF HODGE BROS. INDUSTRIAL PARK, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 8755, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 27, 1977. TOGETHER WITH THAT PORTION OF THE WEST HALF OF NORTH FIFTH AVENUE ADJOINING SAID 10 ACRE LOTS 5 AND 6 ON THE EAST AS VACATED AND CLOSED TO PUBLIC USE BY RESOLUTION NO. 16426, RECORDED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 30, 1992 AS FILE NO. 1992-0842769 OF OFFICIAL RECORDS. LEGAL DESCRIPTION (PARCEL 'B') THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS: ALL OF 10 ACRE LOT 4 AND THOSE PORTIONS OF 10 ACRE LOTS 5, 6, AND 7 IN QUARTER SECTION 151 OF RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA, COUNTY OF DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP BY MORRILL NO. 166, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID SAN DIEGO COUNTY, LYING NORTHERLY OF A LINE DESCRIBED AS FOLLOWS: 3--1.(1 +619-571-3241 NA5LRND ENG SD 657 1'06 RUG l'l5 '94 14:21 BEGINNING AT THE INTERSECTION OF THE WESTERLY LINE OF THE SOUTHEAST QUARTER OF SAID QUARTER SECTION 151, BEING A POINT DISTANT SOUTH 18004' EAST, 75.00 FEET FROM THE NORTHWEST CORNER OF SAID SOUTHEAST QUARTER; THENCE SOUTHWESTERLY IN A STRAIGHT LINE TO THE INTERSECTION WITH THE WESTERLY LINE OF SAID QUARTER SECTION 151 DISTANT THEREON NORTH 17044'07" WEST, 407.50 FEET FROM THE SOUTHWESTERLY CORNER OF SAID QUARTER SECTION. EXCEPTING THAT PORTION OF 10 ACRE LOT 4, IN QUARTER SECTION 151 OF RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP BY MORRILL NO. 166, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID SAN DIEGO COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWESTERLY CORNER OF SAID LOT 4; THENCE EASTERLY ALONG THE SOUTHERLY LINE THEREOF 40 FEET TO THE EASTERLY LINE OF NA TIONAL A VENUE (100 FEET WIDE); THENCE CONTINUING EASTERLY ALONG SAID SOUTHERLY LINE 260 FEET; THENCE NORTHERLY PARALLEL WITH THE WESTERL Y LINE OF SAID LOT TO THE NORTHERLY LINE OF SAID LOT; THENCE WESTERLY ALONG SAID NORTHERLY LINE 300 FEET TO SAID WESTERLY LINE; THENCE SOUTHERLY ALONG SAID WESTERLY LINE TO THE POINT OF BEGINNING. ALSO EXCEPTING p-jEREFROM THE WESTERL t 40.00 FEET OF FIFTH A VENUE (FORMERLY FIRST ~AVENUE) AS DESCRIBED IN RESOLUTION NO. 2550, FILED JANUARY 27, 196J 'f'S FILE NO. 15926 OF OFFICIAL RECORDS. ALSO EXCEPTING t~EREFROM ALL THAT PORTION AS DESCRIBED IN DEED TO THE STATE OF CALiFORNIA, FILED JANUARY 14, 1972 AS FILE NO. 10301 OF OFFICIAL RECORDS AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS" BEGINNING AT THE NORTHEASTERLY CORNER OF SAID LOT 4; THENCE ALONG THE EASTERLY LINE OF SAID LOT 4, SOUTH 17040'16" EAST, 329.20 FEET; THENCE LEAVING SAID EASTERLY LINE, SOUTH 72028'44" WEST, 462.22 FEET; THENCE SOUTH 71005'28" WEST, 300.06 FEET; THENCE SOUTH 68015'46" WEST, 524.01 FEET TO THE NORTHWESTERLY CORNER OF LOT 5 IN QUARTER SECTION 151 OF SAN DIEGO LAND AND TOWN COMPANY'S MAP OF CHULA VISTA, MAP NO. 505, FILED MARCH 13, 1888 IN SAN DIEGO COUNTY RECORDER'S OFFICE; THENCE ALONG THE NORTHERLY PROLONGATION OF THE WESTERLY LINE OF LAST SAID LOT 5, NORTH 17044'48" WEST, 40.00 FEET TO THE SOUTHERLY LiNE OF LOT 4 ACCORDING TO SAID MAP NO. 166; THENCE ALONG SAID SOUTHERLY LINE, NORTH 72013'14" EAST, 260.01 FEET TO THE SOUTHEASTERLY CORNER OF THAT LAND DESCRIBED IN DEED TO THE STATE OF CALiFORNIA RECORDED SEPTEMBER 11, 1970 AS FILE NO. 164245 OF OFFICIAL RECORDS OF SAN DIEGO COUNTY; THENCE ALONG THE EASTERLY LINE OF SAID STATE LAND, NORTH 17044'48" WEST, 329.39 FEET TO THE NORTHERLY LiNE OF SAID LOT 4; THENCE ALONG SAID NORTHERLY LINE, NORTH 72013'52" EAST, 1025.38 FEET TO THE POINT OF BEGINNING. J --5D EXHIBIT "2" MaD of Site [To Follow] j ~s I (EXHIBIT "2") (Page 1 of 1) o 'm: +619-571-3241 NASLAND ENG SD BB:lADWAY 657 P07 AlJG 05 '94 14:22 EXHIBIT 2 -------------------- ~ '" ~ ~ >t~ ~ro ~~ "'~ ~~ ~ i ~ .. ----------- NORlH FFlH AVENUE ~ o ~ '" ~ ., h ~ 3----5')/ ~ > s ... I ~ '< Iii ~ ~ ~ g ~ F) ~ ~ o '" I I SIr",,"- -""'~rEli' I I C ;1;2 \:l~ o " g) , c:: z ,~ ~~ . ,. I ~ e ;0: ,..----\1' I 1 J J> 1 , ~ 51 I c... 1 I . c ~ 16 - II: I ! I . I '" ~ I i . . . I Ie:;' , . " . 0 F~ ~ -I ~ I . :""I~W , 0 ~ .: ae 0 ;.,'(.,? . , . ~~~~ . . H 1 o .' 0 . 1 "'2";1 0 , 0 2J . . 'G 01 : 011 0 CARDEN . CENlER ~, . . 0 H . ildJ . B . . . t . , P'PIII ",'Ir ! ~ .~~ nr!!!J !!' 1$1;1" 100" ! i I 3~S3 I>G :1>1 1>6.!;0 9fltj 01d l.S9 as 9N3 a~~N 1I>G~-~l.S-6~9+ EXHmIT "3" Legal Descriotion of the Wal-Mart Parcel All that real property located in the City of Chula Vista, County of San Diego, State of California, described as follows: [To Follow} (EXHIBIT "3") 3~5f (Page I of 1) +619-571-3241 NRSLRND EN6 SD 657 P02 RUG 05 '94 14:18 EXHIBIT 3 lOT 1 (WAL -MART) DESCRIPTION: LOT 1 Of PARCEL MAP NO._____. IN THE CITY Of a-IULA VISTA, COUNTY OF SAN DIEGO, STATE Of CALIFORNIA. FILED IN THE OFfiCE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY __~~___ r 3 ~S5 +619-571-3241 NRSLRND ENG SD '2 ~ w ~ VJ ~ , i3 I \, ~! ~ \\t h (;) ~ , I I I I I ., 1-. <:I ... 657 P03 RUG 05 '94 14:19 3nN3t\V HI:lI:I Hl.I:ION 3~~0 fQ 1--. (;) ~ be ...J~ !~ ~ < () 3='" 12 ~ cl :c: l:I., ~ EXHmIT "4" Purchase Agreement (EXHIBIT "4") 3~57 (Page 1 of 1) This page intentionally left blank. j~SJ' Exhibit 4 CHULA VISTA. CALIFORNIA PURCHASE AGRBEMB'NT This Agreement is dated as of the ___ day of f 1994, between CHOLA VISTA TOWN CENTER ASSOCIATES, L.P. a California limited partnership, ("Seller"), and the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body, corporate and public, or nominee ("Buyer"): WIT N B SSE T H: 1. Sale and Purchase. Seller shall sell and Buyer shall purchase, subject to the terms and conditions herein, an approximately 13.43 acre tract of land (the "Property"), more particularly described in Exhibit A attached hereto and made a part hereof located in or near the City of Chula Vista, San Diego County, California. Seller warrants that it owns, or controls with a contract to purchase, the Property. 2. Purchase Price. The purchase price, subject to the provisions of Paragraph 4 contained herein, for the Property shall be Five Million Two Hundred Sixty Five Thousand Ninety Seven Dollars ($5,265,097) computed at Nine and 0/100 Dollars ($9.00) per square foot (the "Purchase~") payable as follows: (a) Five Thousand Dollar~ ($5,OOO.00) paid ~ithin 30 days of the execution by Buyer of this Agreement to the escrow holder designated below to be held in an interest bearing escrow account (the "Deposit") with interest accruing to Buyer. This Deposit shall be nonrefundable, except in the event of Seller default or as otherwise provided herein, but applicable to the Purchase Price and shall be released to Seller as Liquidated Damages pursuant to Article 10.A. should Buyer fail to complete the purchase of the property in breach of this Agreement; and (b) The balance of Five Million Two Hundred Sixty Thousand Ninety Seven Dollars ($5,260,097) paid on the date of the closing of this sale (the "Closing") by certified check or federal wire transfer. 3. Escrow. Buyer and Seller shall deliver signed instructions to First American Title Insurance Company (the "EScrow") as escrow holder, within twenty (20) calendar days of both parties' execution of this Agreement which shall provide for closing as provided herein. Escrow fees ~all be subject to the rev~~ and appro,,:.al <:f. Buyer and Selle;:',.._':!J:ll;1...J:_hem shall he shared ~::~~:._~.?-nner provided herein. The "Close of Escrow" or the "Closing" shall be the date Seller's grant deed is recorded. Concurrently with Seller's execution of the escrow instructions, Seller shall execute-a grant deed to convey title of the Property to Buyer, and Escrow shall hold said deed until the Close of Escrow. For all purposes, the date of the l'openi~g of escrow" shall be the date of this Agreement. In the event of any inconsistency between the escrow instructions and O:\G19Ol.071\I"ur<:hue.AI'" 3~61 1 either party may have intentionally or inadvertently executed such inconsistent this Agreement, this Agreement shall control, notwithstanding the fact that instructions. 4. Survev. Buyer, within twent1( (2~) A...-a.Ys from the effective date of this Agreement, shall order a certified"ALTA boundary line and topographic survey of the Property. Buyer shall pay for both surveys and Seller agrees to reimburse Said surveys shall (i) be prepared by a registered land surveyor pursuant to the Buyer at the Closing for the cost of the certified ALTA boundary line survey. description. If the survey reveals that the actual area is more or less than the instructions attached hereto as Exhibit B, and (ii) contain an accurate legal approximation shown above, the Purchase Price to be paid hereunder shall be adjusted accordingly. 5. Title Insurance. Buyer~ within ten (10) days ot the date on which it receives a satisfactory survey as provided in Section 4 hereof, shall order , a standard form ALTA Owner's Title Commitment Policy (the "Commitment") covering the property and issued by First American Title Insurance Company ("Title Company"), together with copies of all instruments, if any, referred to in the Commitment as exceptions to title. The Commitment shall also contain the Title Company's commitment to issue such California Land Title Association endorsements ("CLTA Endorsements") to the title policy as Buyer or its lender shall require. llithiI1uiIrty (3011days of receipt of the Commitment, together with copies of all documents constituting exceptions to title and survey, Buyer shall give notice in writing to Seller of any defects in or objections to the title as so evidenced. Seller shall, within forty-f~ve (45) days of receipt of said notice, or such time as may be extended by Buyer, exert its best efforts to clear the title of the defects and objections so specified. Failure to exert such effort to clear the title of defects and objections within the forty-five (45) days, or such time as may be extended by Buyer, shall constitute a default on the part of the Seller and be subject to the provisions of Paragraph 10 contained herein. Seller, however, shall not be required to expend more than Twenty Thousand and 00/100 Dollars ($20,000.00) to clear the title of any defect, except that all monetary liens, mortgages and assessments must be satisfied or paid on or before the Closing. 6. Title and Deed; Additional Documents. At the Closing, Seller shall convey to Buyer marketable title to the Property, free and clear of any and all encumbrances, which are unacceptable to Buyer or which provide for a forfeiture of the title to the Property or which prohibit or restrict the erection of the necessary structures or facilities for, or the operation of a Wal-Mart Store on the Property, it being acknowledged and agreed that ~er intends to assign its rights hereunder to Wal-Mart Stores, Inc., a Delaware corporation ("Wal-Mart"). Those exceptions which are acceptable to Buyer shall be referred to as "Permitted Exceptions". At the Closing, Buyer shall also be able to obtain a standard form ALTA Owner's Title Insurance Policy (the "Policy") issued by the Title Company, O:\GI!lO\07I\Purd...e.Alm ~"-0l) 2 insuring marketable title to Buyer in the full amount of the Purchase Price and containing no exceptions or conditions other than the Permitted Exceptions, and containing the CLTA Endorsements which Buyer or its lender shall require. Seller shall pay the cost of a CLTA policy and the CLTA Endorsements, and Buyer shall pay the difference between the cost of a CLTA Policy and an ALTA Policy. At the Closing, Seller shall also enter into with Buyer a (a) Development Agreement and (b) a Declaration of Covenants, Conditions, Restrictions and Reciprocal Easements, each in Wal-Mart's standard form, except as may be acceptable to Buyer in Buyer's sole discretion. 7. Condemnation. If, prior to the Closing, all or any part of the Property shall be condemned by governmental or other lawful authority, Buyer shall have the option of (a) completing the purchase, in which event all condemnation proceeds or claims thereof shall be assigned to Buyer, or (b) cancelling this Agreement, in which event the Deposit shall be returned to Buyer and this Agreement shall be terminated with neither party having any rights against the other. 8. Taxes and Assessments. Real property taxes, water rates and sewer charges and rents, if any, shall be prorated and adjusted on the basis of thirty (30) days to each month, Seller to have the last day, to the date of Closing. Taxes for all prior years shall be paid by Seller. If the Closing shall occur before the tax rate is fixed for the then-current year, the apportionment of taxes shall be upon the basis of the tax rate for the preceding year applied to the latest assessed valuation, with the proration to be adjusted between the parties based on actual taxes for the year in which Closing Occurs at the time such actual taxes are determined. Assessments and bonds, either general or special, for improvements completed prior to the date of Closing, or other governmental charges, whether matured or unmatured, shall be paid in full by Seller. Furthermore, the Seller shall cause to be completed the Real Property Tax Guidelines attached hereto as Exhibit C and upon completion will forward to Buyer. Seller hereby agrees to pay, reimburse, indemnify, defend and hold Buyer harmless from any supplemental assessments, or taxes or assessments, and any late charges or penalties associated therewith, levied by the taxing authorities after the close of Escrow attributable to facts or circumstances arising before the close of Escrow, or otherwise excepted from coverage under the Title Policy. 9. Transfer and Sales Taxes. The expense and cost of all federal, state and local documentary or revenue stamps, transfer, sales and other taxes, if any, relating to the sale of the Property shall be paid by Seller on the date of Closing. Both parties agree to execute any tax returns required to be filed in connection with any such taxes. 10. Time of the Essence/Defaults/Remedies. Time is of the essence of this Agreement and failure to comply with this provision shall be a material breach of this Agreement. If the Escrow fails to close as provided herein, Buyer or Seller may at any time thereafter give .written notice to the escrow holder to O;IQl9l'M711Pun:lwo.Aam 0-tl 3 cancel the Escrow, and payor return the Deposit to the party entitled thereto under the terms hereof, and return all other money and documents in Escrow to their respective depositors. The escrow holder shall comply with such notice without further consent from any other party to the Escrow or from any broker involved in the transaction. Cancellation of Escrow as provided herein shall be without prejudice to whatever legal rights Buyer and Seller may have against each other. A. Default bv Buver. IF BUYER FAILS TO COMPLETE SAID PURCHASE AS HERBIN PROVIDED BY REASON 011' ANY DEFAULT BY BUYER, SELLER SHALL BE RELEASED FROM OBLIGATION TO SELL THE PROPERTY TO BUYER, BUT SELLER, BY INITIALLING THIS PARAGRAPH, SHALL HAVE RELEASED BOYBR FROM ANY CLAIMS OR CAUSES OF ACTION ARISING OUT OF SUCH DEFAULT, AND SELLER SHALL HAVE AG~EBD THAT SELLER SHALL RETAIN THE DDEPOSITft AS LIQUIDATED DAMAGES, AND THAT SUCH RETENTION SHALL BE SELLER'S SOLE REMEDY AGAINST BUYER IN REGARD TO SUCH DEFAULT. THE PARTIES HERETO HAVE CONSIDERED THE AMOUNT OF DAMAGES WHICH SELLER IS LIKELY TO INCUR IN THE EVENT OF A DEFAULT OR BREACH HEREUNDER BY BUYER, AND THE PARTIES HERETO HAVE AGREED THAT THB DEPOSIT IS A REASONABLE APPROXIMATION AND LIQUIDATION OF SELLER'S POTENTIAL DAMAGES, CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, INCLUDING THE RELATIONSHIP OF THE SUM TO THE RANGE OF HARM TO SELLER THAT REASONABLY COULD BE ANTICIPATED AND THE ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE RECEIPT AND RETENTION OF SUCH AMOUNT BY SELLER IS INTENDED TO CONSTITUTE THE LIQUIDATED DAMAGES TO SELLER PURSUANT TO THE CALIFORNIA CIVIL CODB, AND SHALL NOT BE DEEMED TO CONSTITUTE A FORFEITURE OR PENALTY WITHIN THE MEANING OF THE CALIFORNIA CIVIL CODE, OR ANY SIMILAR PROVISION. SAID AMOUNT OF LIQUIDATED DAMAGES SHALL BE IN LIEU OF ANY OTHER REMEDIES, DAMAGES OR SUMS DUE OR PAYABLE TO SELLER. IN PLACING THEIR INITIALS AT THE PLACES PROVIDED, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE. BUYER SELLER B. Default bv Seller. If Seller fails or refuses to comply fully with the terms of this Agreement, because of failure to exert its best efforts to clear title as outlined in Paragraph 5 contained herein to the Property or for any other cause Buyer may, at its option, exercise every right and remedy available at law and in equity under California law, including but not limited to the right to: (i) rescind this Agreement and recover from Escrow or Seller the Deposit, as well as any and all reasonable expenses, not to exceed $10,000.00, paid or incurred by Buyer in connection with this Agreement, (ii) proceed with this Agreement and take the Property as is, subject to the qualification below, (iii) record a lis pendens and enforce Buyer's right to specific performance and related injunctive relief, or (iv) select another location for Wal-Mart's store, and bring an action for its actual and consequential damages. Seller acknowledges that if Buyer seeks specific performance of this Agreement, Buyer shall be entitled to an order by the court enforcing this Section, without any O:\Gl9(M7I\PurelllH,Alm -3 ~t;2/ 4 need to make a showing that the Property is unique, or that its damages are liquidated and not speculative, or no other remedies are practical, available, effective or adequate. Seller acknowledges that if Buyer seeks injunctive relief, the same may be fashioned in a mandatory or prohibitive manner, and Seller hereby waives any right, at law or in equity, to demand the posting of a bond or other security by Buyer as condition to the continuation of record, of any lis pendens which it may file. 11. Riqht of Entrv. At any time prior to the Closing, and at Buyer's sole expense, Buyer or its authorized agents shall have the right to enter upon the Property for any lawful purpose, including without limitation making such surveys and site analyses, test borings and engineering studies and to erect such signs as Buyer may deem necessary. Buyer shall indemnify and hold Seller harmless from and against any and all claims and liens arising out of any act or failure to act of Buyer or its authorized agents as a result of their respective activities on the property. 12. Brokeraqe Fees. Seller shall be responsible for the payment of the brokerage fee or commission, payable only upon the Closing of the sale contemplated herein. 13. Utilities. Seller, at the time of Closing, warrants that all utility services, adequate to meet the needs of Buyer, including water, gas, electrical, telephone and sanitary and storm sewer are available to the Property. Seller also warrants that except as disclosed in writing by Seller to Buyer prior to their execution thereof, no public agency or utility has imposed a connection or service commencement fee or assessment which would be a pre-condition to Buyer's use of ' said services, nor is any moratorium against connection to such services, or quantitative or qualitative limitation on such services in place at the date hereof, or proposed, pending, likely or necessary, to the knowledge of Seller and any of its design or engineering consultants with respect to the Property. 14. Continqencies and Seller's Warranties. Buyer's obligation to perform hereunder is subject to satisfaction of the following contingencies within the time periods hereinafter set forth. A. Governmental Aoorovals To Be Obtained Bv Seller. This Agreement and Buyer's obligation to close Escrow is expressly conditioned on the general plan, any applicable specific plan, zoning, zone clearance, subdivision map, environmental clearance, planned development program or permit, conditional use permit program, architectural review process, redev8lopment plan, approved traffic study, development agreement, redevelopment agreement, subdivision improvement agreement, special assessment district creation and bond issuance, and other discretionary approval programs of the governmental agencies and owners associations with jurisdiction over the Property (individually and collectively the "Governmental Approvals") permitting the use of the Property for business retail usage in the manner customarily undertaken by Wal-Mart (the "Wal-Mart Plan") and the retail businesses which surround it, and as shown on any schematic O:\GI9O'I071\1'un:.....e.^gm -3 ..d,3 5 drawings or plans shown by Buyer to Seller, and otherwise acceptable from Buyer's legal, business and economic point-of-view. Seller agrees that since the Property does not have all of the Governmental Approvals necessary for the Wal- Mart Plan, Seller shall, at its expenee and subject to timely receipt of all necessary information from Buyer, apply for or execute for Buyer and within thirty (30) days of the date hereof, an application to obtain each and every Governmental Approval for the Wal-Mart Plan. Seller or Buyer shall pursue the applications and processing to completion and shall execute all necessary and appropriate instruments, provided that Seller may not execute any application or instrument as an agent of Buyer (Buyer hereby covenanting to timely do the same) , but provided further that each representation, covenant, condition, limitation, exaction, fee and design change offered to the governmental agencies by Seller, or mandated by the governmental agencies shall be subject and contingent to Buyer's review, approval or disapproval, counter-offer or counter-condition, and Buyer shall not be obligated to give any binding or final approval of any of the same unless and until: (i) the totality of the Governmental Approvals have been reviewed and finally approved in writing (and by publication of necessary ordinances) by each and everyone of the governmental agencies charged with originally granting the Governmental Approvals, (ii) any ordinances with respect thereto having taken effect, (iii) the time has passed for appeal of any such Governmental Approvals to any administrative agency and court with appeal jurisdiction over such Governmental Approvals or appeals in connection therewith, (iv) no notice of referendum or initiative with respect thereto having been published or publicized and (v) any appeals or litigation with respect to (iii) or (iv) have been prosecuted and resolved in a manner which is not subject to remand to lower courts or governmental agencies, all of the enumerated processes being the "Final Approval". If the Final Approval has not occurred, and/or all of the Governmental Approvals have not been obtained on or before the scheduled Closing, this Agreement shall, at Buyer's option, either (a) continue in full force and effect until the same has occurred (subject to the parties hereto agreeing that the same must occur by June 30, 1995, or this Agreement shall terminate) or (b) this Agreement shall be of no further force and effect, and Seller shall return to Buyer the Deposit or (c) Buyer shall waive some or all parts of this contingency, (with or without imposition of further conditions not involving additional dollar expense by Seller) at Buyer'S sole and absolute discretion, and proceed with the Closing. Seller agrees that this contingency shall be deemed satisfied when Buyer is able to obtain, from the director of planning or the director of building and safety in the municipality where the Property is located, an unconditional letter indicating that Buyer is now able to obtain a building permit for construction of the improvements shown on the Buyer Plan. B. Permits To Be Obtained bv Buver. This Agreement and Buyer's obligation to close Escrow is expressly conditioned on Buyer receiving prior to O:IGI9lJ\071IPurct.a.o.A.m 3 -~ y: 6 the close of Escrow from all appropriate and applicable private and/or public agencies and entities including but not limited to applicable regional, county and/or city authorities and Caltrans any written approvals, permits and licenses as may be required for the construction of its facilities in the manner of the Buyer Plan, including utilities, buildings, parking lots, lights, landscaping, signs, driveways, and curb-cuts upon the Property and adjacent right-of-way, and for the construction of any off-site improvements which Buyer is obligated (and has agreed) to construct (individually and collectively the "Permits"). Buyer agrees to apply for and diligently pursue approval of the Permits as soon as the Final Approval of the Governmental Approvals, provided that each condition, limitation, exaction, fee and design change mandated by the governmental agencies with respect to said Permits shall be subject and contingent to Buyer's review, approval or disapproval, counter-offer or counter-condition, and Buyer shall not be obligated to give any binding or final approval of any of the same unless and until: (i) the totality of the Permits have been reviewed and finally approved in writing by each and everyone of the governmental agencies charged with originally granting the Permits, (ii) the time has passed for appeal of the granting or conditioning or disapproval of any such Permit to any administrative agency and court with appeal jurisdiction over such Permits or appeals in connection therewith, (iii) no notice of development policy change as described in the California Government Code with respect thereto or with respect to the Governmental Approvals which would affect the Buyer Plan shall have been published, (iv) no notice of referendum or initiative with respect thereto having been published or publicized and (v) any appeals or litigation with respect to (iii) or (iv) have been prosecuted and resolved in a manner which is not subject to remand to lower courts or governmental agencies, all of the enumerated processes being the II Final Permit Approval II . If the Final Permit Approval has not occurred, and/or all of the Permits have not been obtained on or before the scheduled Closing, at Buyer's option, either (a) this Agreement shall continue in full force and effect until the same has occurred (subject to the parties hereto agreeing that the same must occur by June 30, 1995, or this Agreement shall terminate) or (b) this Agreement shall be of no further force or effect, and Seller shall return to Buyer the Deposit or (c) Buyer shall waive some or all parts of this contingency, (with or without imposition of further conditions not involving additional dollar expense by Seller) at Buyer'S sole and abnclute discretion, and prcceed with the Closing. Seller agrees that this contingency shall be deemed satisfied when Buyer has, in hand, all of the Permits and the Final Permit Approval has occurred. C. Insoections and Soils Tests. Buyer shall have the right, at Buyer's expense, to select licensed engineers, contractors, and/or other qualified professional (s) to make "Inspections" (including tests, surveys, other studies, inspections, investigations and interviews of persons familiar with the Property) concerning the Property, including but not limited to tests of structures, wells, O:\GI9lM1I\Pun:__^lm .3 ~i:,57 septic tanks, and underground storage tanks on the Property, soils, geologic hazards, utility lines and systems, possible environmental hazards, utility lines and systems, possible environmental hazards such as asbestos, formaldehyde, radon gas, methane gas, pesticide residues, oil and gas deposits, and other "Hazardous Materials" as defined in Paragraph 26, below. This Agreement is expressly conditioned upon Inspection results which, in the sole judgement of Buyer, evidence that the Property is suitable for Wal-Mart's intended use. Buyer shall order the Inspections within thirty (30) days of receipt of the Survey, provided for in Section 4 hereof. Seller shall deliver to Buyer, within ten (lO) days of the date hereof, copies of any reports of similar Inspections of which Seller is aware, and Seller's delivery of such existing Inspection reports shall be Seller's representation to Buyer that Seller is not aware of the existence of any others. Buyer shall keep the Property free and clear of any liens, and repair any material physical damages to the Property arising as a result of such Inspections. Upon receipt of reports of such Inspections, Buyer shall promptly deliver one copy of the same to Seller. When such reports disclose conditions or information unsatisfactory to Buyer, which Seller is unable or unwilling to correct at Seller's expense, Buyer may cancel this Agreement by written notice to Seller. D. Condition of the Pronertv. Seller warrants that Seller has no knowledge of any notice of violations of city, county, state, federal, building, land use, fire, health, safety, environmental, hazardous materials or other governmental or public agency codes, ordinances, regulations, or orders with respect to the Property, or as to health, safety, environmental, or hazardous materials codes, ordinances, regulations or orders relating to any lands adjacent to the Property. Seller warrants that no litigation is pending, threatened or likely with respect to the Property, Seller's interest therein, or which would otherwise inhibit Buyer obtaining clear title to the Property. Seller also warrants that there are no physical, legal, economic or political facts, circumstances, problems or governmental actions with respect to the Property which should be disclosed by Seller or its agents under California law, or which an owner or developer of a property such as the Property would want to know in making decisions concerning acquisition and development of the Property, except those which have been disclosed to Buyer in detail, in writing. The foregoing warranties shall be true as of the close of Escrow. If, prior to the close of Escrow, Buyer learns that any of the foregoing warranties or any disclosures by Seller are misleading, incomplete or otherwise incorrect, Buyer may utilize any of its remedies provided in this Agreement. E. Snecial Studies Zones/Flood Hazard Zone. Unless otherwise disclosed by Seller to Buyer in writing prior to the date hereof, Seller warrants that no portion of the Property, or the road rights-of-way immediately adjacent to the Property, (i) are situated in a Special Studies Zone (as defined in California Public Resources Code Sections 2621-2625), or a Border Zone {as defined in O:\G19CM71\Purcllue.A.m .3 ~ &~ 8 California Health and Safety Code Sections 25117.3 and 25117.4) or in a Special Flood Hazard Area as set forth on a Federal Emergency Management Agency (FEMA) Flood Insurance Rate Map, or Flood Hazard Boundary Map, (ii) are located within 2500' of an earthquake fault which has been mapped in the planning records of San Diego County or the city in which the Property is located, (iii) was the former site of any public or private landfill, dumpsite, retention basin or settling pond, (iv) was the former site of any oil or gas drilling operations, or (v) was the site of any experimentation, processing, refining, reprocessing, recovery or manufacturing operation for any petrochemicals or Hazardous Materials as defined in paragraph 26. The foregoing warranties shall be true as of the close of Escrow. If, prior to the close of Escrow, Buyer learns that any of the foregoing warranties or any disclosures by Seller are misleading, incomplete or otherwise incorrect, Buyer may utilize any of its remedies provided in this Agreement. F. Real Estate Committee Aooroval. This Agreement and purchase is wholly contingent upon Wal-Mart being able to obtain approval, from Wal-Mart's Real Estate Committee, of the placement of a store on the Property in Chula Vista, California. It is understood that Buyer shall notify Seller within ninety (90) days after the date of this Agreement of the decision of the Committee. If the decision is "yes", this Agreement shall continue in full force and effect. If the decision is "no", Seller shall return the Deposit to Buyer and this Agreement shall terminate and neither party shall have any further obligations under the terms thereof. 15. Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be mailed by certified or registered mail, postage prepaid, addressed as follows: If to Seller: If to Buyer: Chula Vista Town Center Associates, L.P. c/o Gatlin Development Co. 12625 High Bluff Drive, Suite 304 San Diego, CA 92130 Attn: Franklin C. Gatlin, III Redevelopment Agency City of Chula Vista 276 Fourth Avenue Chula Vista, CA 92010 Attn: Chris Salomone, Director 16. Closina. The Closing shall take place at a place and time mutually agreed upon by the parties, within ten (10) days following the date upon which all conditions and contingencies set forth in Sections 4, 5, 13, 14A, 14B, 14C, 140, 14E and 14F contained herein are satisfied. 17. Closina Costs: Notwithstanding anything to the contrary contained herein, or in the escrow instructions, the Closing costs shall be paid as follows: Bv Seller: (a) Cost of ALTA boundary survey; (b) Title insurance examination and premium for a CLTA policy; (c) Expenses of placing title in proper condition; (d) preparation and Recording of Grant Deed; (e) All documentary, stamp and transfer taxes; (f) One-half (1/2) the escrow fee, if any; and (g) Brokerage fee as outlined in Paragraph 12 herein. O:\GI90\07I\l'urctlue.Alm 3 (P7 9 BY ~wr: , la) (b) (c) Cd) Titla insurance premium for difference in CLTA POlicy end AIm. policYI Preparation of Mortgage, Deed of Trust or other applicable financing instrumental Reoording fees for finanoing instruments; and One-half (1/2) the .Icrow fea, if any. '1 ,.. 18, Time of. ll!sR4!mee I At:!C:f!lnt:.l!ftcf!I, Time:l.a expressly declared to he of the e."encs of this Agreement, Seller shall have seven C'> waines. daye from the c1ate of receipt of this Agreement to aocept and agree to the term. and oonditions heroin. 19. Ent:irl!ll Aat"l!IIRment. Bxoept: for t.h.at certain Redevelopment Di.poBi t:ion and. Oevelopment J\greement by and hetween Buyer. Wal-Mart Stores, Inc.. and Seller, th:l. Agreement contaius t:he entire agreement, _l>etn!n Se.ller.~d Biuyer",. ~d~~he~..:;i2r~.rno:"other"te~'~G=dit:1~If';' pro~8.ei:~-~aez,Jt'Ak'rh'g'8, atatemerit;~-~r.o^,~ ~:~ representation. expres8 or implied, cano.ming the .ale contemplated by this Agreement. 20. RAad.i~tt., -'The hltadings to the Sections herl!!lof haVti been inserted 'tor convenienCe or reterenoe only and ahall in no way modif'y or reabrict any proviaions hereof or he used to eon. true any such Provisions. 21. Modifi~Ati~8. rho term. of tMa Agreement may not b. amended, waived or terminated crally, but cnly by an in.trument in writing signed by both 8ol1l!!l~ and !uyer. 22. SUC~egBOr~. This Agreement Shall inure to the benefit of and bind the parti.s hereto an4 their re8peetiva 'ucce'80r. and assign.. 23. ,Non..]!I'oreicm Affidavit:. Seller agree. to .'Cecut., at th6 ClOsing. the Transreror Form attached hereto a, Ixhihit:. I) and made a part hereof'. in oompliance with Section 1445 at the Internal Revenue Code. It i8 understood that if there are multiple S.ller.1 each Seller 8hall execute.. Transreror Form at the C1081ng. 24. B'ffeClt:ivs. DatA. The lIffective Date of this Agreement and the "Opening- of Bsorow" shall be the laat date on which all parti.. hereto have executed this Agreement. 25. Recordino at MA1I'Iorandum. 'I'he parties agree to execute. aOknowledge eneS record a memorandum of thh Agreement, which Buyer Covenant. to releue of record if it terrni.nate. thie Agreement. 26. Ad~~t1on.l W~rr~nti.R bv ~.ll.r. eA.> Seller hereby represents and. warrant, to Buyer t:h.. t the Property ie not contaminated; with, nor threatened. wiCh contamination from out. ide. source. by, any chemical, material oX" substance to which exposure i. prohibited, limited or regulated by any federal, atate, county, local or region.: aut:hority Or which i. known to pOSe a hazard to health and .afety and that the Property haa never been uaed for a landfill, dump site, Or storage o~ hazarc!ou8 eubet.anoea. Seller aleo a.gre:elB e.) to provid.e Buyer w.1.th oopi.. (received or obtained by Sellet" of any written communication. bet.ween Seller, or its tenants, or their agent. or predec...or. and any third parties, inclUding but not limited to, governmental luthcritiel relative to any Ra.ardoul Materiel Cal defined below) on, under, in, about, near or affecting the Property, and (b) that non-disolosure of any .uoh .3 ,&f 10 communication prior to the closing of Escrow shall be deemed an affirmative representation that no such communication has been received by or is known to Seller, its officers, employees or agents and (c) that Buyer is hereby granted the right (but not the obligation) to participate in any proceeding with any governmental agency or court relative to any Hazardous Materials on, in, under, about, near or affecting the Property. This representation and warranty shall survive the Closing. In the event that Buyer notifies Seller that the representation set forth in Paragraph 26 is untrue and such notice is accompanied by a report from an engineering company with experience in evaluating such matters, then one of the following alternatives shall control. (1) If the cost of performing such acts as may be necessary to cause the Property to be in compliance with all federal, state and local environmental laws, rules and regulations is equal to or less than fifty percent (50%) of the Purchase Price (as the same may be adjusted pursuant to Paragraph 4 above) , then Seller agrees, at its sole cost and expense, to perform such acts as may be necessary to cause the Property to be in compliance with all federal, state and local environmental laws. In the event that Seller fails so to perform such acts prior to the Closing, then Buyer may postpone the Closing for such period of time as may be necessary for Seller to do so, or, postpone the Closing and undertake such actions as may be necessary to fulfill Seller's obligations hereunder and receive a credit against the Purchase Price for the expenses incurred by Buyer in so fulfilling Seller's duties hereunder. (2) If the cost of bringing the Property into compliance with the above-described laws, rules, and regulations exceeds fifty percent (50\) of the Purchase Price (as the same may be adjusted pursuant to paragraph 4 above), then Buyer, as its election, may either (a) rescind this Agreement and receive a full refund from Seller of all Earnest money previously deposited with Seller, or (b) proceed with purchasing the Property, and receive a credit against the Purchase Price of the Property in an amount equal to fifty percent (50\) of the Purchase Price (as the same may be adjusted pursuant to Paragraph 4 above). If the Closing has occurred and the costs of performing any acts as may be necessary to cause the Property to be in compliance with all federal, state, and local environmental laws, rules and regulations is equal to or less than fifty percent (50\) of the Purchase Price (as the same may be adjusted pursuant to paragraph 4 above), then Seller agrees to refund to Buyer the cost of such acts. If the Closing has occurred and the cost of bringing the Property into compliance with the above-described laws, rules and regulations exceeds fifty percent (50\) of the Purchase Price (as the same may be adjusted pursuant to Paragraph 4 above), then Buyer, at its option may either (a) rescind and reverse the Closing and receive a full refund of the Purchase Price and costs incurred as a part of the Closing or (b) retain ownership of the Property and receive from Seller an amount equal to fifty percent (50\) of the Purchase Price (as the same may be adjusted pursuant to Paragraph 4 above) . O,IGI9O\rr71IPurohas..ABm .3 ~~ 7 11 (B) As used in this Agreement, the term "Hazardous Materials" means any hazardous, toxic, infectious or explosive substance, material, gas or waste which is or becomes regulated by any governmental authority, or the United States Government, or any of their agencies, or which has been identified as a toxic, cancer causing or otherwise hazardous substance. The term "Hazardous Materials" includes, without limitation. any material or substance which is (a) defined as a "hazardous waste". "extremely hazardous waste" or "restricted hazardous waste" under the California Health and Safety Code, Division 20, Chapter 6.5, as it may from time to time be amended (the "Hazardous Waste Control Law"), (b) defined as a "hazardous substance" under the California Health and Safety Code, Division 20, Chapter 6. S as now existing or hereinafter amended (the "Carpenter Presley-Tanner Hazardous Substance Account Act"), (c) defined as a "hazardous material". hazardous substance", or "hazardous waste" under the California Health and Safety Code, Division 20, Chapter 6.95 as presently existing or hereinafter amended, (the "Hazardous Materials Release Response Plans and Inventory"), (d) defined as a t1Hazardous Substances under the California Health and Safety Code, Division 20, Chapter 6.7 as presently existing or hereinafter amended (the "Underground Storage of Hazardous Substances Act"), (e) petroleum, (f) polychlorinated biphenyls ("PCB"), (g) asbestos, (h) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of title 22 of the California Administrative Code, Division 4, Chapter 20, and now existing or hereinafter amended, (i) designated as a "hazardous substance" pursuant to Section 307 of the Federal Water Pollution Control Act (33 U.S.C. S 1317), as presently existing or hereinafter amended, (j) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. S 1251 et seq. (33 U.S.C. !!i 1321), (k) defined as a "hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C. S 6901 et seq. (42 D.S.C. !i 6903), as presently existing or hereinafter amended or (1) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 59601 et seq. (42 U.S.C. !!i 9601), as presently existing or hereinafter amended. (Cl Seller also represents that the Property is not a "hazardous waste property" or within a "border zone" as defined in California Health and Safety Code, nor is the Property subject to the requirements for notice to the California Department of Health Services, as such notice requirement is defined in California Health and Safety Code as presently existing. (D) This Paragraph 26 shall survive the Closing. 27. Survival. All warranties, representations and covenants herein shall survive the Closing. IN WITNESS WHEREOF, the parties have executed this Agreement in quadruplicate as of the day and year first above written. SIGNATURES FOLLOW O:\G19UI071IPurclw..AJm :3 -- lZ) 12 ltSeller" Chula Vista Town Center Associates, L.P., a California limited partnership By: Chula Vista Town Center, Inc., a California corporation By: Its: ltBuyer" Redevelopment Agency of the City of Chula Vista, a public body, corporate and politic By: Its: O:\Gl9lM7I\J>urcllue.^lm 3~?/ This page intentionally left blank. 3 r? J---- EXHffiIT "5" Grant Deed [Attached] .3 --73 (Exhibit" 5 ") (Page 1 of 1) This page intentionally left blank. 3,-7'1 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: Mark A. Ostoich, Esq. GRESHAM, VARNER, SAVAGE, NOLAN & TILDEN 600 N. Arrowhead Ave., Suite 300 San Bernardino, CA 92401 SPACE ABOVE TillS LINE FOR RECORDER'S USE Documentary Transfer Tax S _ Computed on Full Value of Propeny Conveyed or Computed on Full Value Less LieD! and Encumbrances Remaining at Time of Sale Signature of Declarant or Agency Determining Tax - Finn Name GRANT DEED , a California limited partnership, hereby grants to WAL-MART STORES, INC., a Delaware corporation, the real property (the "Property") legally described in the document attached hereto, labeled Exhibit A, and incorporated herein by this reference. The Property is conveyed subject to all matters of record. , a California limited partnership Dated: 1994 By: Its: By: Its: 3---7.5 (Exhibit "5") (Page 1 of 1) ACKNOWLEDGMENTS STATE OF CALIFORNIA ) ) ss: COUNTY OF ) On before me, , Notary Public, personally appeared r---l ,--, L-.J personally known to me or L--1 proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature [Seal] STATE OF CALIFORNIA ) ) ss: COUNTY OF ) On before me, , Notary Public, personally appeared r---l ,--, L-.J personally known to me or L--1 proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature [Seal] 3~ 7t:, (Exhibit "5") (Page I of I) EXHIBIT "A" PROPERTY DESCRIPTION (To Be Supplied) 3r77 (Exhibit "5") (Page 1 of 1) This page intentionally left blank. .3~7f EXHmIT "6" RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Mark A. Ostoich, Esq. GRESHAM, VARNER, SAVAGE, NOLAN & TILDEN 600 N. Arrowhead Ave., Suite 300 San Bernardino, CA 92401 MEMORANDUM OF REDEVELOPMENT DISPOSITION AND DEVELOPMENT AGREEMENT AND COVENANTS AGREEMENT This Memorandum of Redevelopment Disposition and Development Agreement and Covenants Agreement ("Covenants Agreement") is made by and among the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body corporate and politic of the State of California, herein called" Agency, " acting to carry out the Redevelopment Plan for the Town Centre II Redevelopment Project Area (which plan is hereinafter referred to as the "Redevelopment Plan") under the Community Redevelopment Law of California, CHULA VISTA TOWN CENTER ASSOCIATES, L.P., a California limited partnership, hereinafter "Seller", and W AL-MART STORES, INC., a Delaware corporation, herein called "Wal-Mart," regarding real property ("Wal-Mart Parcel"), described on Exhibit "1" attached hereto. I. The Parties hereby agree that each shall perform their respective obligations in accordance with the terms and conditions of that certain unrecorded Redevelopment Disposition and Development Agreement ("DDA") dated _, 1994, and executed by the Agency, Seller and Wal-Mart. The DDA is hereby incorporated herein by reference. 2. Wal-Mart covenants, by and for itself, its representatives, successors and assigns and all persons claiming under or through it (including, without limitation, all lessees), that there for a period of twenty (20) years after the Effective Date of the DDA the Wal-Mart Parcel shall be used only for the retail uses authorized by the Entitlements (as defined in the DDA). 3. Wal-Mart covenants, by and for itself, its representatives and all persons claiming under or through it that prior to the completion and opening to the general public for retail sales of a Wal-Mart Store on the Wal-Mart Parcel, or if Wal-Mart for any reason does not construct and open a Wal-Mart Store on the Wal-Mart Parcel, prior to the expiration of the Agency's Option, Wal-Mart shall not sell or lease (except pursuant to a sale-leaseback transaction) the Wal-Mart Parcel to any third party nor shall Wal-Mart construct or seek to construct any improvement or use on the Wal-Mart Parcel other than a Wal-Mart Store. Any attempt to sell, lease, transfer or otherwise convey title to or possession of the Wal-Mart Parcel (except pursuant to a sale-leaseback transaction) to a third party prior to the expiration of this Covenant shall be void. 3 .- 79 (Exhibit "6") (Page I of 7) 4. Wal-Mart covenants, by and for itself, its representatives, successors and assigns and all persons claiming under or through it (including, without limitation. all lessees), that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex. marital status, national origin. or ancestry, in the sale. lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Wal-Mart Parcel or any part thereof, nor shall the Wal-Mart itself or any persons claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number. use of occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property or any part thereof. The foregoing covenants shall run with the land. All deeds, leases, or contracts made relative to the Wal-Mart Parcel, improvements thereon, or any part thereof, shall contain or be subject to substantially the following nondiscrimination clauses: a. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of. any person or group of persons on account of race, color, creed, religion, sex, marital status. national origin or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection. location, number, use or occupancy of tenants, lessees. subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." b. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs. executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon the subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race. color, creed. religion. sex, marital status, national origin or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased. nor shall the lessee or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection. location, number, use or occupancy of tenants, lessees, subtenants. sublessees or vendees of the land herein leased." c. In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status. national origin. or ancestry in the sale, lease, sublease, transfer, use. occupancy, tenure or enjoyment of the land, nor shall the transferee or any person claiming under or through him or her establish or permit any such practice or practices of discrimination or segregation with reference to the selection. location, number, use, or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land." 5. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Covenants Agreement shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or security instrument expressly permitted by the Agreement; provided, however, that any successor of Wal-Mart to 1he Wal-Mart Parcel or parcels thereof shall be bound by such remaining covenants. conditions, (Exhibit "6") .3 --eft> (Page 2 of 7) restnctlons, limitations and proVISIOns, whether such successor's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. 6. All covenants contained in this Covenants Agreement shall run with the land and shall be binding for the benefit of the Grantor and its successors and assigns and such covenants shall run in favor of the City of Chula Vista and the Agency and for the entire period during which such covenants shall be in force and effect, without regard to whether the City or the Agency is, was at any time or remains an owner of any land or interest therein to which such covenants relate. The City and the Agency, in the event of any breach of any such covenants, shall have the right to exercise all of the rights and remedies provided herein or otherwise available, and to maintain any actions at law or suits in equity or other proper proceedings to enforce the curing of such breach. The covenants contained in this Covenants Agreement shall be for the benefit of and shall be enforceable only by the City, the Agency and their successors and assigns. 7. The Covenants contained in paragraph 2 herein shall terminate on 2014. The Covenant contained in paragraph 3 herein shall terminate on _, 199_ and the covenants contained in Paragraph 4 herein shall remain in effect in perpetuity. 8. The covenants contained in this Covenants Agreement, without regard to technical classification or designation, shall not benefit or be enforceable by any person, firm or corporation, public or private, except Agency and the City of Chula Vista and their successors and assigns. 9. The purpose of this Covenants Agreement is to give notice of the existence of the Agency's and Wal-Mart's rights and obligations under the DDA. If there is an inconsistency between the provisions of this Covenants Agreement and the DDA, the provisions of the DDA shall control. Except as otherwise expressly provided herein, all of the words, phrases and capitalized terms used in this Covenants Agreement shall have the same meaning set forth in the DDA. IN WITNESS WHEREOF, the Agency, the Seller and Wal-Mart have caused this instrument to be executed this _ day of , 1994. (SIGNATURES FOLLOW) 3---t( (Exhibit "6") (Page 3 of 7) AGENCY: REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Dated: ,1994 By: By: ATTEST: Secretary APPROVED AS TO FORM AND SUBSTANCE: General Counsel to the Redevelopment Agency of the City of Chula Vista By: Special Counsel to the Redevelopment Agency of the City of Chula Vista By: (ADDITIONAL SIGNATURES FOLLOW) 3"-~V (Exhibit "6") (Page 4 of 7) Dated: Dated: (Exhibit "6") W AL-MART: WAL-MART STORES, INC., a Delaware corporation ,1994 By: Its: SELLER , a California limited pannership , 1994 By: Its: By: Its: 3--g3 (Page 5 of 7) STATE OF CAUFORNIA ) ) ss: ) COUNTY OF On , 1994, before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the persons whose names are subscribed to the within instrument, and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said County and State STATE OF CALIFORNIA ) ) ss: ) COUNTY OF On , 1994, before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the persons whose names are subscribed to the within instrument, and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said County and State j.-8f (Exhibit "6") (Page 6 of 7) STATE OF CALIFORNIA ) ) ss: ) COUNTY OF On , 1994, before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the persons whose names are subscribed to the within instrument, and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said County and State STATE OF CALIFORNIA ) ) ss: ) COUNTY OF On , 1994, before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the persons whose names are subscribed to the within instrument, and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said County and State 3---tS (Exhibit "6") (Page 7 of 7) EXHmIT "7" Promissory Note [Attached] 3rih PROMISSORY NOTE $ W AL-MART PROJECT Chula Vista, California , 1994 RECITALS A. On , 199_, the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ("Agency"), WAL-MART STORES, INC., a Delaware corporation ("Redeveloper"), and , a California limited partnership comprised of ("Seller"), entered into a Disposition and Development Agreement ("Agreement"), relating to the redevelopment of certain real property located in the City of Chula Vista. A true and correct copy of the Agreement is on file in the City Clerk's Office located at 276 Fourth Avenue, Chula Vista, California 91910. B. The Agency and the Redeveloper have executed and delivered this Note pursuant to the Agreement. Terms not defined herein shall have the meaning ascribed in the Agreement. NOW, THEREFORE, the Agency and the Redeveloper agree as follows: 1. FOR VALUE RECEIVED, and subject to the terms and conditions of the Agreement, the Agency promises to pay to the order of the Redeveloper, at 702 S.W. 8th Street, Bentonville, Arkansas 72716, Attn: President and Attn: Property Manager or at such other address as the Redeveloper may from time to time designate, the principal sum of One Million Nine Hundred Fifteen Thousand Dollars ($1,915,000.00) in accordance with the following: 2. Interest Rate. Interest on the unpaid principal balance owed hereunder shall accrue at the rate of four percent (4%) simple interest per annum, commencing on the date the Store on the Wal-Mart Parcel opens for business, and continuing thereafter until the principal and interest are paid in full or the Agency's obligation is forgiven and discharged as set forth in paragraph 4 below or is otherwise properly terminated. 3. Installment Pavment. The obligation of the Agency to make payments to the Redeveloper pursuant to this Promissory Note is expressly contingent upon the construction, opening to the general public for retail sales and continued operation as a retail outlet of a Wal- Mart store (the "Store") on the Wal-Mart Parcel. Subject to the opening for business and continued operation of the Store on the Wal-Mart Parcel, the Agency shall make installment payments of principal and interest to the Redeveloper at the times and subject to the other terms and conditions herein set forth. 3.1. Installment payments of principal and interest will be payable quarterly during the term of this Note, in arrears and without offset or demand: (i) commencing 30 days after the date that City or the Agency receives a detailed report ("Detailed Report") from the State Board of Equalization itemizing the sources of the State Board of Equalization ..3 ~!7 reconciliation payment ("Reconciliation Payment") for the first quarter in which the store opens for business (the "First Payment Date") and (ii) continuing 30 days after the date that the Agency receives the Detailed Report for each subsequent quarter through including the 59th calendar quarter after the First Payment Date until the earlier of (a) the Payment Date on which all principal and interest have been paid to the Redeveloper; or (b) the quarter during which the Wal-Mart Store ceases to operate as a Wal-Mart retail outlet (individually a "Payment Date" and collectively the "Payment Dates"). 3.2. On each Payment Date, the Agency shall pay to the Redeveloper the "Redeveloper's Payment" as hereinafter defined. The Redeveloper's Payment shall be an amount equal to a specified portion of the "Sales and Use Tax Revenues" generated by the operation of the Wal-Mart Store on the Wal-Mart Parcel as set forth below. Sales and Use Tax Revenues means those funds received by the City of Chula Vista (the "City") as unrestricted general fund revenues pursuant to the imposition of the Bradley-Burns Uniform Local Sales and Use Tax Law (the "Sales Tax Law"), commencing with Section 7200 of the Revenue and Tax Code of the State of California, as amended, arising from sales at or from the Wal-Mart Parcel which are subject to such Sales and Use Tax Law. Any funds received by the City from impositions pursuant to the Sales Tax Law which are subject to use restrictions imposed by the State shall not be included in the definition of Sales and Use Tax Revenues in the First Payment Year. 3.3. The Redeveloper's Payment shall be calculated as follows: A. The payment to Redeveloper in the First Payment Year (to be paid quarterly) shall be an amount equal to the lesser of the amount necessary to pay principal and interest in full or twenty percent (20%) of the Sales and Use Tax Revenues. B. The payment to Redeveloper in the Second Payment Year (to be paid quarterly) shall be an amount equal to the lesser of the amount necessary to pay principal and interest in full or thirty percent (30%) of the Sales and Use Tax Revenues in the Second Payment Year. C. The payment to Redeveloper in the Third Payment Year (to be paid quarterly) shall be an amount equal to the lesser of the amount necessary to pay principal and interest in full or thirty-five percent (35%) of the Sales and Use Tax Revenues in the Third Payment Year. D. The payment to Redeveloper in the Fourth Payment Year (to be paid quarterly) shall be an amount equal to the lesser of the amount necessary to pay principal and interest in full or forty-five percent (45%) of the Sales and Use Tax Revenues in the Fourth Payment Year. E. The payment to Redeveloper in the Fifth through the Fifteenth Payment Years (to be paid quarterly) shall be an amount equal to the lesser of the amount necessary to pay principal and interest in full or fifty percent (50%) of the Sales and Use Tax Revenues in the applicable Payment Year. 3~t? 3.4. As used in this Note, Sales and Use Tax Revenues based on sales at or from the Site will be deemed to include only sales which occur on the Site and sales which occur elsewhere, if they are initiated on the Site and if the situs of the sale is within the Agency's corporate limits. The parties agree for purposes of detennining the amount of the Redeveloper's Payment that the Agency will not be obligated to consider Sales and Use Tax Revenues from any source other than Tax Revenue which is based on sales at or from the Wal-Mart Parcel. 3.5. If the Sales Tax Law is modified after the date of this Promissory Note in a manner which results in the City receiving an increased or a decreased amount of Sales and Use Tax Revenues from the Wal-Mart Parcel, the amount of the Redeveloper's Payment shall be calculated on the modified level of Sales and Use Tax Revenues. If the Sales Tax Law is repealed after the date of this Promissory Note the Agency's obligation pursuant to the Promissory Note shall be deemed to be forgiven and discharged, and no liability of the Agency for the nonpayment of such principal and interest shall result in any manner whatsoever. Provided, however, that if concurrent with the repeal of the Sales Tax Law, additional legislation provides for the replacement of all or a portion of the Sales and Use Tax Revenues, the Agency's obligation to make Redeveloper Payments shall be deemed to be modified and will thereafter be based on the alternative form of tax or revenue (the "Alternative Revenue") which the City receives with regard to the applicable quarter in total or partial replacement of Sales and Use Tax Revenue. In addition, in the event of such repeal and replacement of Sales and Use Tax Revenues, the Redeveloper and the Agency will fully cooperate with one another in amending the Agreement and this Promissory Note as is necessary or appropriate to facilitate repayment of this Note in a manner consistent with the amount and nature of the Alternative Revenue and the intent of the parties in entering into the Agreement and this Promissory Note. The parties acknowledge that their intent includes: A. The timely and full payment of the principal and interest of this Promissory Note. B. The Redeveloper's Payment shall not exceed an amount which is equal to fifty percent (50%) of the incremental unrestricted revenues received by the City in each fiscal year as a result of the operation of the Wal-Mart Store. C. The Agency's obligation to repay the Redeveloper shall not extend beyond fifteen (15) years after the date the Wal-Mart Store is opened for business and terminates upon closure or transfer of the Wal-Mart Store, provided that the Agency shall make the payment to the Redeveloper for the last calendar quarter prior to such termination. 3.6. All such payments shall reduce the accrued interest first and then the unpaid principal until the principal and interest due hereunder is paid in full, or the Agency's obligation is forgiven and discharged as set forth in Paragraph 4 below or is otherwise properly terminated. .3 rg 9 4. Forgiveness and Discharge of Balance of Obligation. In the event that the payment of the Redeveloper's Payments in the amounts set forth above is insufficient to fully satisfy and discharge the amount of principal and interest on this Note by the Final Payment Date, any and all principal and interest on this Note remaining unpaid after such Final Payment shall be forgiven and discharged, and no liability of the Agency for the nonpayment of such principal shall result in any manner whatsoever. The Final Payment Date shall be the Payment Date for the calendar quarter which is first to occur of: (i) the 59th calendar quarter after the First Payment Date; (ii) the quarter for which all outstanding principal and accrued interest are paid in full; or (iii) the Payment Date in the fIrst quarter in which the Wal-Mart Store ceases to operate as a Wal-Mart retail outlet. 5. PreDavment. The Agency shall have the right at any time to prepay all or any portion of the unpaid principal balance owing under this Promissory Note. 6. General Provisions. All sums payable hereunder shall be due and payable in lawful money of the United States of America. In the event any installment due hereunder is not paid by the Agency within fifteen (15) days after it is due, such installment shall bear interest from and after such date at the lesser of the rate of eleven percent (11 %) per annum or the maximum legal rate, but not less than the rate fIrst set forth above, until paid. If any action is instituted to enforce this Note, the losing party in any such action promises to pay reasonable attorney's fees and costs and expenses. This Note has been executed in the State of California and shall be construed and interpreted according to the laws of the State of California. SIGNATURES FOLLOW ~ .-90 REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA By: Its " Agency" WAL-MART STORES, INC., a Delaware corporation By: Its "Redeveloper" -.3 --- 1 ( EXHIBIT "8" FOnTI of Option Agreement [Attached] :3 .J} Y RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: The Redevelopment Agency of the City of Chula Vista 276 Fourth Avenue Chula Vista, California 92010 Attention: SPACE ABOVE THIS LINE FOR RECORDER'S USE OPTION AGREEMENT THIS OPTION AGREEMENT ("Agreement") is made and executed as of this _ day of 1994 (the "Effective Date"), by and between the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body corporate and politic of the State of California, herein called " Agency," acting to carry out the Redevelopment Plan for the Town Centre II Redevelopment Project Area (which plan is hereinafter referred to as the "Redevelopment Plan") under the Community Redevelopment Law of California. and WAL-MART STORES, INC., a Delaware corporation, herein called Redeveloper, with reference to the facts set forth below. RECITALS A. The Agency, Redeveloper and have heretofore entered into that certain Redevelopment Disposition and Development Agreement (the "DDA") dated as of , 1994, the purpose of which was to effectuate the Redevelopment Plan by providing for the development of certain real property (the "Property") included within the boundaries of the Project (the "Project Area"), as such Property is more particularly described in Exhibit A attached hereto and incorporated herein by this reference. Capitalized terms not otherwise defined in this Agreement shall have the same meanings given thereto in the DDA. B. Under the terms of the DDA, as material part of the consideration to Agency from Redeveloper for assisting Redeveloper in acquiring and developing the Property, Redeveloper has agreed to grant the Agency an option to acquire the Property. This Agreement is entered into in order to document such grant of option and to more fully set forth the circumstances under which the option may be exercised. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agency and Redeveloper hereby agree as set forth below. .3 -- czj ARTICLE I. Grant of Ootion Redeveloper hereby grants to Agency an exclusive option (the "Option") to purchase the Property, on the terms and conditions set forth in this Agreement. ARTICLE II. Term of Ootion The term (the "Option Term") of the Option shall commence as of the Effective Date, and shall expire upon the earlier to occur of: (i) one-hundred eighty (180) calendar days after the "Trigger Date" (as such term is defined below), or (ii) the date upon which Redeveloper opens the Store on the Property. As used herein, the term "Trigger Date" means the date which is the earlier to occur of: (i) the date upon which Agency delivers to Redeveloper written notice of its election to terminate the DDA as a result of the Redeveloper's failure to have constructed and opened the Store on the Property on or before the second anniversary of the effective date of the DDA, or (ii) the date upon which Redeveloper delivers written notice to Agency that Redeveloper does not intend to construct and open the Store on the Property on or before the second anniversary of the effective date of the DDA. ARTICLE III. Exercise of Ootion Agency may exercise the Option at any time after the Trigger Date (and prior to the expiration of the Option Term) by delivering written notice (the "Notice of Election") to Redeveloper to such effect. In the event that Agency fails to exercise the Option prior to the expiration of the Option Term, the Option and this Agreement shall automatically (i.e., without further action on anyone's part) expire and cease to be reflected as an encumbrance on title to the Property. ARTICLE IV. Purchase Price In the event Agency exercises the Option, the purchase price ("Purchase Price") at which Agency shall be entitled to purchase the Option Property shall be the difference between: (i) the "Fair Market Value" (as such term is defmed below), (ii) any gains or income withdrawn or made by Redeveloper from the Property or the improvements thereon, and (iii) the amount required to discharge, as of the "Close of Escrow" (as such term is defined below), any mortgage, deed of trust, or other lien having priority over this Agreement ("Priority Lien") which Agency elects, in its sole and absolute discretion, to take title subject to. "Fair Market Value" shall be determined as follows: 8 .--LJ 1- Immediately following the delivery of the Notice of Exercise, Agency and Redeveloper shall attempt in good faith to determine the fair market value of the Property. If Agency and Redeveloper are unable to agree upon the fair market value of the Property Parcel within ten (10) calendar days, then the following provisions shall apply: (i) For an additional ten (10) calendar day period, Agency and Redeveloper shall attempt in good faith to agree on a single appraiser to determine the fair market value of the Property. If Agency and Redeveloper are successful in selecting a single appraiser, then that appraiser shall be retained, at equal cost and expense to Agency and Redeveloper, to determine the fair market value of the Property within thirty (30) calendar days after he/she is retained, and his/her determination shall be conclusive. (ii) If during the aforementioned additional ten (10) calendar day period, Agency and Redeveloper are unable to agree on a single appraiser to determine the fair market value of the Property, then Agency and Redeveloper shall each, within ten (10) calendar days after the expiration of the original ten (10) day period, retain an appraiser and shall give written notice of the identity of each such appraiser to the other. Within thirty (30) calendar days after the date the first of the appraisers is retained, each appraiser shall determine the fair market value of the Property. If the appraisals of the appraisers are not the same, then the appraisals shall be averaged and the average of the fair market values of the Property shall be used and such average shall be conclusive. The failure of either party to retain an appraiser and produce an appraisal within the time frames set forth above shall be deemed a waiver of their right to do the same and acceptance of the other party's appraisal. (Hi) Each appraiser shall be a member of the American Institute of Appraisers and shall have at least 5 years experience in appraisal of commercial and/or industrial property in Southern California. ARTICLE V. Terms of Purchase 5.1 Purchase Price. If Agency exercises the Option, then Agency shall pay to Redeveloper the Purchase Price calculated in accordance with Article IV above. 5.2 Escrow. If Agency has exercised the Option, then the provisions set forth below shall apply. Within five (5) days of delivery of the Notice of Exercise, pursuant to the provisions of Article I, above, the escrow ("Escrow") shall be opened by Agency with Chicago Title Insurance Company or another escrow selected by Agency ("Escrow Agent"). Escrow shall be deemed opened upon the delivery of this Agreement to Escrow Agent and the obtaining of Escrow Agent's Consent as provided for in Schedule 1 attached hereto. Agency and Redeveloper shall execute any additional escrow instructions required by Escrow Agent. 3~95 5.3 to the following: Title. Fee title to the Property shall be conveyed to Agency subject only (a) Non-Monetarv Existing Exceotions. All non-monetary covenants, conditions, restrictions, easements, reservations, right and rights-of-way of record existing immediately after Redeveloper obtained title to the Property pursuant to the DDA, including, without limitation, the Covenants Agreement; (b) Non-Monetarv Develooment Encumbrances. Non-monetary encumbrances, such as easements or permits, granted to facilitate the development of the Property pursuant to the DDA, including, without limitation, a Declaration of Covenants, Conditions, Restrictions and Reciprocal Easements, and reciprocal easement agreements with adjacent landowners; (c) Monetarv Encumbrances. Any Priority Lien which Agency elects in its sole and absolute discretion to accept as a title exception; and (d) Taxes. Non-delinquent general, special and supplemental real property taxes, bonds and assessments of the nature and extent levied or assessed against the Property as of Redeveloper's acquisition thereof or imposed in connection with the construction of off-site improvements contemplated by the DDA ("Taxes"). To the extent that all other exceptions are not, by virtue of the prior status of this Agreement, removed by exercise of the Option and conveyance of the Property to Agency, Redeveloper shall pay such amounts and/or deliver to the Escrow Agent such indemnities as the Escrow Agent may require, in order to permit Escrow Agent to issue the title insurance described below. 5.4 Redevelooer's Deliveries. Within ten (10) calendar days following the delivery of the Notice of Exercise, Redeveloper shall deliver to Escrow Agent an executed and acknowledged grant deed (the "Grant Deed") for the Property conveying title to the Property to Agency or its assignee. 5.5 Close of Escrow. The close of Escrow ("Close of Escrow") shall occur no later than ninety (90) calendar days after delivery of Agency's Notice of Exercise ("Closing Date"). Escrow Agent shall close Escrow upon satisfaction of the following conditions precedent: (a) Escrow Agent shall be able to issue, immediately upon recording the Grant Deed, a CLTA title insurance policy (together with such endorsements thereto as Agency may reasonably request), or, if requested by Agency, an ALTA form of title insurance policy, with liability in an amount specified by Agency insuring title subject only to the matters agreed upon pursuant to the provisions of Section 5.3 above; and (b) Agency shall have deposited into Escrow, in cash, the Purchase Price. -3-9(; 5.6 Title Insurance: Closinl! Costs. Redeveloper shall pay the cost of the title insurance described above: provided that if Agency requests an ALTA policy of title insurance, the cost differential between said policy and the CLTA form shall be paid by Agency. Escrow Agent's standard transaction fee shall be borne fifty percent by each party. Redeveloper shall be responsible for any transfer taxes. All other closing costs shall be borne as is customary in San Diego County. 5.7 Prorations. Taxes shall be prorated as of the Close of Escrow. ARTICLE VI. Assil!nment and Transfer of Warranties, Plans, Soecifications and Insurance/Condemnation Proceeds In the event the Property is transferred to Agency, together with the delivery of the Grant Deed, Redeveloper shall execute and deliver an assignment of warranties in a form prepared by Agency, assigning and transferring to Agency all warranties in which Redeveloper may then have an interest relating to work, labor, skill or materials furnished in connection with the construction of any improvements on the Property, and of which Agency desires to take assignment. Also in the event of such transfer, Redeveloper shall similarly execute and deliver an assignment of plans and specifications in a form prepared by Agency assigning and transferring to Agency all plans and specifications prepared by or for Redeveloper relating to improvements on the Property or to adjacent lands of Agency, whether constructed or not, and of which Agency desires to take assignment. Additionally, Redeveloper agrees to so execute and deliver a general assignment in favor of Agency assigning and transferring any architect's agreements, construction contracts, or other contracts or agreements entered into by Redeveloper relating to the Reverter Property, and of which Agency desires to take assignment. Finally, Redeveloper agrees that, in the event of such a transfer of the Property, any and all insurance and condemnation proceeds (and the rights thereto, to the extent not yet disbursed) shall be transferred and assigned to Agency concurrently with the Close of Escrow hereunder. Redeveloper covenants that it shall take whatever actions are necessary to ensure that the rights described in this Article VI are transferrable as set forth above without further cost or expense to Agency. ARTICLE VII. General Provisions 7.1 Notice and Pavments. Any notice to be given or other document to be delivered by any party to the other or others hereunder, and any payments from Agency to Redeveloper, may be delivered (i) personally, (ii) sent via Federal Express (or other messenger service) or (iii) deposited in the United States mail, duly certified or registered, return receipt requested, with postage prepaid, and addressed to the party for whom intended, as follows: J-97 To Redeveloper: with a copy to: To Agency: The Redevelopment Agency of the City of Chula Vista 276 Fourth Avenue Chula Vista, California 92010 Attn: Executive Director Any party hereto may from time to time, by written notice to the other, designate a different address which shall be substituted for the one above specified. Personally delivered notices shall be deemed given upon actual personal delivery to the above address. Notices sent via Federal Express (or other messenger service) shall be deemed given upon delivery to the above address (as evidenced by the receipt of the delivery service). Mailed notices shall be deemed given upon the earlier of three (3) business days after deposit into the United States mail, registered or certified, with postage fully prepaid, or the date of actual receipt as evidenced by the return receipt. 7.2 Caotions. The captions used herein are for convenience only and are not a part of this Agreement and do not in any way limit or amplify the terms and provisions hereof. 7.3 Governinl! Law. This Agreement shall be governed by and construed under the laws of the State of California. This Agreement shall be deemed made and entered into in San Diego County. 7.4 Time of the Essence. Time is of the essence of each and every provision of this Agreement. 7.5 Successors and Assil!ns. All of the covenants and conditions of this Agreement shall inure to the benefit of and shall be binding upon the successors in interest of Agency and the successors, heirs, representatives and assigns of Redeveloper. As used in the foregoing, "successors" shall refer both to the parties' interest in the Reverter Property and to the successors to all or substantially all of their assets and to their successors by merger or consolidation. 3-11 7.6 Attornevs' Fees. In the event of any conflict or dispute with respect to the interpretation or enforcement of any of the terms or provisions of this Agreement, the prevailing party shall be entitled to recover from the other party all of its costs and expenses incurred in connection therewith, including, without limitation, attorneys' fees. 7.7 Severability. In the event that any phrase, clause, sentence, paragraph, section, article or other portion of this Agreement shall become illegal, null or void or against public policy, for any reason, or shall be held by any court of competent jurisdiction to be illegal, null or void or against public policy, the remaining portions of this Agreement shall not be affected thereby and shall remain in full force and effect. 7.8 Gender and Number. In this Agreement (unless the context requires otherwise), the masculine, feminine and neuter genders and the singular and the plural include one another. 7.9 No Partnershio or Joint Venture. Agency or Redeveloper shall not, by virtue of this Agreement, in any way or for any reason be deemed to have become a partner of the other in the conduct of its business or otherwise, or a joint venturer. In addition, by virtue of this Agreement there shall not be deemed to have occurred a merger of any joint enterprise between Agency and Redeveloper. 7.10 Entire Al!reement. This Agreement (together with the provisions of the DDA which are applicable hereto) constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof, and all prior and contemporaneous agreements, representations, negotiations and understandings of the parties hereto, oral or written, are hereby superseded and merged herein. The foregoing sentence shall in no way affect the validity of any other documents executed by Agency and Redeveloper relating to the Property. 7.11 Authority. Each individual executing this Agreement on behalf of Redeveloper represents and warrants that he is duly authorized to execute and deliver, and has the power to execute and deliver, this Agreement on behalf of Redeveloper, that the transaction contemplated hereby has been duly authorized by all requisite action on the part of Redeveloper, and that no other consents of any party shall be necessary to the consummation hereof. 7.12 Further Assurances. Redeveloper agrees that it will, at its sole cost and expense, at any time and from time to time after the Close of Escrow, upon the request of Agency, execute, acknowledge and deliver all such further deeds, assignments, transfers, conveyances and assurances as may be reasonably required for the effective assignment, transferring, granting or conveying of all or any of the assets or property to be assigned, transferred, granted or conveyed to Agency as provided herein. 7.13 Further Assistance. If Agency exercises the Option and purchases the Property, Redeveloper: (i) waives any right to relocation assistance to an owner or business tenant pursuant to State law including, but not limited to, California Government Code Sections 7260 through 7277, and (ii) further waives any claim for compensation for loss of or damage to goodwill against the Agency pursuant to California Code of Civil Procedure Section 1263.510. s~97 7. 14 Reference. Each controversy, dispute or claim between the parties arising out of or relating to this Agreement, which controversy, dispute or claim is not settled in writing within thirty (30) days after the "Claim Date" (as hereinafter defmed), will be settled by a reference proceeding in San Diego County, California in accordance with the provisions of Sec- tion 638 et sea. of the California Code of Civil Procedure, or their successor sections ("CCP"), which shall constitute the exclusive remedy for the settlement of any controversy, dispute or claim concerning this Agreement, including whether such controversy, dispute or claim is subject to the reference proceeding and the parties waive their rights to initiate any legal proceedings against each other in any court or jurisdiction other than the Superior Court of San Diego County (the "Court"). The referee ("Referee") shall be a retired Judge of the Court selected by mutual agreement of the parties, and if they cannot so agree within forty-five (45) days after the Claim Date, the Referee shall be promptly selected by the Presiding Judge of the San Diego County Superior Court (or his representative). The date on which the Referee is selected is herein called the "Selection Date." The Referee shall be appointed to sit as a temporary judge, with all of the powers of a temporary judge, as authorized by law, and upon selection should take and subscribe to the oath of office as provided for in Rule 244 of the California Rules of Court (or any subsequently enacted Rule). The Referee shall set the matter for hearing within sixty (60) days after the Selection Date, and try any and all issues of law or fact and report a statement of decision upon them, if possible, within ninety (90) days of the Selection Date. Any decision rendered by the reference will be fmal, binding and conclusive and judgement shall be entered pursuant to CCP 644 in any court in the State of California having jurisdiction. Either party may apply for a reference at any time after thirty (30) days fol- lowing the date (the "Claim Date") one party notifies the other party of a controversy, dispute or claim; by filing a petition for a hearing and/or trial. All discovery permitted by this Agreement (as more particularly provided below), shall be completed no later than fifteen (15) days before the first hearing date established by the Referee. The Referee may extend such period in the event of a party's refusal to provide requested discovery for any reason whatsoever, including, without limitation, legal objections raised to such discovery or unavaila- bility of a witness due to absence or illness. No party shall be entitled to "priority" in conducting discovery. Depositions of a party or its afftliates may be taken by the other party upon seven (7) days written notice, and, request for production or inspection of documents on a party or its afftliates shall be responded to within ten (10) days after service. All disputes relating to discovery which cannot be resolved by the parties shall be submitted to the Referee whose decision shall be final and binding upon the parties. Except as expressly set forth in this Agreement, the Referee shall determine the manner in which the reference proceeding is conducted including the time and place of all hearings, the order or presentation of evidence, and all other questions that arise with respect to the course of the reference proceeding. All proceedings and hearings conducted before the Referee, except for trial, shall be conducted without a court reporter, except that when any party so requests, a court reporter will be used at any hearing conducted before the Referee. The party making such a request shall have the obligation to arrange for and pay for the court reporter. The costs of the court reporter at the trial shall be borne equally by the parties. The Referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State of California. The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference proceeding. The ~ ,- / CJ7) Referee shall be empowered to enter equitable as well as legal relief, to provide all temporary and/or provisional remedies and to enter equitable orders that will be binding upon the parties. The Referee shall issue a single judgment at the close of the reference proceeding which shall dispose of all of the claims of the parties that are the subject of the reference. The parties hereto expressly reserve the right to fmdings of fact, conclusions of law, and a written statement of decision. ARBITRATION OF DISPUTES. IN THE EVENT THAT THE ENABUNG LEGISLATION WHICH PROVIDES FOR APPOINTMENT OF A REFEREE IS REPEALED (AND NO SUCCESSOR STATUTE IS ENACTED), ANY DISPUTE BETWEEN THE PARTIES THAT WOULD OTHERWISE BE DETERMINED BY THE REFERENCED PROCEDURE HEREIN DESCRIBED WILL BE RESOLVED AND DETERMINED BY ARBITRATION. THE ARBITRATION WILL BE CONDUCTED BY A RETIRED JUDGE OF THE COURT, IN ACCORDANCE WITH THE CAUFORNlA ARBITRATION ACT, SECTION 1280 AND 1294.2 OF THE CCP AS AMENDED FROM TIME TO TIME; PROVIDED, HOWEVER, THAT NOTWITHSTANDING ANY PROVISION TO THE CONTRARY REGARDING DISCOVERY SET FORTH IN THE CALIFORNIA ARBITRATION ACT, THE RIGHTS AND UMITATIONS WITH RESPECT TO DISCOVERY AS SET FORTH HEREINABOVE SHALL APPLY TO ANY SUCH ARBITRATION PROCEEDING. "NOTICE: BY INITIALUNG IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE , ARBITRATION OF DISPUTES' PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CAUFORNIA LAW AND YOU ARE GMNG UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE UTIGA TED IN A COURT OR JURY TRIAL. BY INITIALUNG IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CAUFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY." "WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION TO NEUTRAL ARBITRATION." AGENCY REDEVELOPER .3 ...-)LJ! IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. AGENCY: REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Dated: , 1994 By: Its: ATTEST: Secretary APPROVED AS TO FORM AND SUBSTANCE: General Counsel to the Redevelopment Agency of the City of Chula Vista By: Special Counsel to the Redevelopment Agency of the City of Chula Vista By: J-/~t/ REDEVELOPER: WAL-MART STORES, INC., a Delaware corporation Dated: ,1994 By: Its: 0-/1)3 ACKNOWLEDGEMENTS STATE OF CAUFORNIA ) ) ss: COUNTY OF ) On before me, , Notary Public, personally appeared ,-, ,-, ~ personally known to me or L-..J proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature [Seal] STATE OF CAUFORNIA ) ) ss: COUNTY OF ) On before me, , Notary Public, personally appeared ,-, ,-, ~ personally known to me or L-..J proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature [Seal] ~~/CJ f ~d-.Y'l\~.-n- 'L-. KEYSER MARSTON ASSOCIATES INC. 500 SOUTH GRAND AVENUE, SUITE 1480 Los ANGELES, CALIFORNIA 90071 213/622-8095 FAX 213/622-5204 < ~~ ADVISORS IN: REAL ESTATE REDEVELOPMENT ECONOMIC DEVELOPMENT FISCAL POLICY [ (t'~I". i Los ANGELES RiCHARD 1. BoTTI CALVIN E. HOLLIS, II KATHLEEN H. HEAD SAN D,EGO GERALD M. TRIMBLE ROBERT}. VVETMORE MEMORANDUM TO: Mr. Lyle Haynes, Principal Community Development Specialist City of Chula Vista Community Development SAN FRANCISCO A. JERRY KEYSER TIMOTHY C. KELLY KATE EARLE FUNK DENISE E. CONLEY FROM: KEYSER MARSTON ASSOCIATES, INC. SUBJECT: Economic Analysis: Wal-Mart Center DixielinejNational Avenue Associates site DATE: April 5, 1994 In accordance with your request, Keyser Marston Associates, Inc. (KMA) has analyzed the development economics associated with the development of a retail center on the 21 acre site located at Broadway and C Street in the City of Chula Vista, known as the DixielinejNational Avenue Associates site. The retail development consists of a 126,000 square foot Wal-Mart store with the capability of a 20,000 square foot expansion; a 53,000 square foot Mega Foods supermarket; 8,800 square feet of retail shops; and a restaurant pad. The purpose of the KMA analysis is twofold. First, KMA will evaluate the market strength of the site based upon the demographic characteristics of the market area, as compared to the characteristics of other market areas with recent Wal-Mart transactions. Second, KMA will determine if the project economics, as currently proposed, support the assumed land acquisition costs of $5.50 per square foot and the construction of a $1.5 million bridge, or if City assistance is warranted. BACKGROUND Gatlin Development (the developer) will develop the Mega Foods market and 8,800 square feet of retail shops. The developer will sell the Wal-Mart pad consisting of 13.28 acres or 578,500 square feet to Wal-Mart for an assumed sales price of $9.00 per square foot, as provided by the developer. The developer plans to ground lease the 1.43 acre restaurant pad. ...j -/lJ5 Page 2 The developer has requested that the city fund the cost of the bridge necessary to allow additional access to the site from Broadway. The current construction cost estimate for the bridge is approximately $1.5 million. The developer has also requested that the city write-down the Wal-Mart pad land acquisition cost by $1.50 per square foot, an assistance request of approximately $870,000. Therefore, the total assistance request is in the magnitude of $2.4 million. MARKET ASSESSMENT KMA attained demographic information for a two mile radius around the subject site and comparable Wal-Mart and K-Mart sites, consisting of population and income statistics. The subject site contains a population of approximately 69,000 in a two mile radius, as shown in Table 1. However, per capita income is $10,860, which is significantly lower than the per capita income levels of the other market areas. In fact, the median household income for the market area population of the subject site is $25,000, while the median incomes for the comparable five sites are nearly two times this level, at a range of $42,000 to $52,000. The Wal-Mart and K-Mart land sales range in price from $2.38 to $8.31 per square foot, as shown in Table 1. The K-Mart land sale in Chula vista was $8.23 per square foot. The city of santee/Wal- Mart transaction involves a rebate of 50% of the sales tax revenues generated from the store, resulting in a net land sale payment of $2.38 per square foot. Similarly, the city of poway reimbursed Wal-Mart for infrastructure improvements, resulting in a net land sale payment of $4.28 per square foot. Therefore, given the subject site's below average income levels within the market area in comparison to the other market areas, the proposed Wal-Mart land payment of $9.00 per square foot appears to be high in comparison to other recent transactions. A reduction of $1.50 per square foot, as proposed, to $7.50 per square foot, would place the transaction in the mid-portion of the range observed. KMA also gathered land sale comparables for major retailers, including Wal-mart transactions, in San Diego County. As shown in Table 2, the land sales range in price from $2.38 to $16.57 per square foot. The retail land sale transactions that involved no City assistance range in price from $6.30 per square foot to $16.57 per square foot . Given the site's market area demographics, a value at the lower end of this range appears appropriate. PRO FORMA ANALYSIS To evaluate the project economics in determining the level of assistance, if any, warranted by the city, KMA prepared a pro forma .3 ..- It) C:, KEYSER MARSTON ASSOCIATES INC. Page 3 analysis of the proposed project. The assumptions utilized in estimating the project development costs and operating income, are summarized below. Estimated Development Costs The estimate of construction costs are based in part on the assumptions utilized by the developer in the development pro forma, and on information compiled by KMA related to the costs incurred to develop similar retail projects in Southern California. The major costs embodied in the KMA cost pro forma can be summarized as follows: 1. Land acquisition costs for the 21.13 acre site are provided by the developer at $5.49 per square foot, or $5.05 million. Subtracted from the acquisition costs is the assumed sale of the Wal-Mart Pad for $9.00 per square foot, plus Wal-Mart's share of site improvements of approximately $3.00 per square foot of land area. 2. Off-site improvements, excluding the bridge construction costs, are estimated at $1.20 per square foot as provided by the developer. 3. Based on the developer's estimate provided 4/5/94, the estimated cost of the bridge is $1.5 million. 4. On-site improvements, including landscaping and surface parking costs are estimated at $3.00 per square foot of net land area. 5. Shell costs are estimated at $39 per square foot of building area. The tenant improvement allowance for the 8,800 square feet of retail shops is estimated at $10 per square foot. 6. Indirect costs are based on a percentage of direct costs, with the exception of public permits and fees, leasing fees and financing costs. 7. Public permits and fees are estimated at approximately $3.00 per square foot of building area, as provided by the developer. 8. Leasing fees are calculated based on $2.00 per square foot for the Mega Foods market, and $4.00 per square foot for the retail shops. 9. Project financing costs consist of loan origination fees equalling 2.5% of the assumed loan amount, plus interest .8 ~/D7 KEYSER MARSTON ASSOCIATES INC. Page 4 incurred during construction, calculated on the basis of a 60% average balance outstanding, an 8.5% interest rate and a return on equity of 15%. As indicated in Table 3, the direct construction costs are estimated at approximately $7.9 million, indirect costs total approximately $1.8 million, and financing costs are $624,000. When net land acquisition costs of ($1.9 million) are applied, the total development costs are approximately $8.4 million. Net operating Income KMA's estimate of net operating income is based on the lease rates provided by the developer for the Mega Foods market and retail shops, and a review of achievable lease rates for similar supermarkets and retail shop tenants in centers in Chula vista and the vicinity. The net operating income, as shown in Table 4, is arrived at as follows: 1. The assumed lease rate for the Mega Foods store is $10.00 per square foot. 2. The retail shop rents are estimated to range from $15.00 to $16.00 per square foot 3. The 62,000 square foot restaurant pad is assumed to be ground leased based on an assumed land value of $12.00 per square foot and an 8% return, resulting in an annual ground lease of $60,000. Assuming the developer funds the site improvements of $3.00 per square foot of land area for the pad, the resulting net land value is $9.00 per square foot. 4. An allowance for vacancy and collection is provided at 5.0% of the retail shop income. 5. Operating expenses consist of net management costs of 3.0% of gross effective income, a CAM expense on vacant space of $3.00 per square foot, and a reserve allowance of $.15 per square foot. The assumed rents result in gross income of $723,000. After allowing for vacancy and operating expenses, the net operating income before debt service is approximately $677,000. Warranted Assistance Based on the above including land, and calculated using two estimates of project development costs, project income, warranted assistance is approaches. The first approach used to .,]~/ttJf KEYSER MARSTON ASSOCIATES I N C. Page 5 determine the additional value or warranted assistance is based on the project's value upon completion of construction. The project value is estimated based on the capitalization of stabilized income. For the purposes of this analysis, a 9.0% capitalization rate is assumed to determine value, as shown in Table 5. When the net income before debt service is capitalized at 9.0%, the projected value upon completion is approximately $7.5 million. After deducting the estimated development costs ($8.4 million), an imputed cost of sale, and a development profit equal to 12% of value, the resulting warranted assistance is approximately $1.94 million. The second approach is based on the assumption that the developer maintains long-term ownership in the project. To determine the project's value, this approach considers the developer's required return on total investment, based on both the current real estate investment environment and the interest environment. Given current market conditions, KMA assumed that the combination of debt and equity returns equate to a blended rate of return of 10.0%. As shown in Table 5, the total warranted investment is $6.8 million. After subtracting estimated development costs, warranted assistance is equal to approximately $1.63 million. CONCLUSIONS Based on KMA's review of the project economics, the project, as currently proposed, warrants city assistance in the magnitude of $1.8 million. Therefore, given the estimated bridge cost of $1.5 million plus indirect costs, the city could provide the assistance through the funding of the construction of the bridge. However, if the retail center is the highest and best use of the land, land acquisition costs in the magnitude of $5.50 per square foot are in excess of the land value. It is KMA's conclusion that given the uses in the development, including the requirement of the bridge which results in a detriment of $1.5 million to the project, the proposed retail project yields a land value less than $5.50 per square foot. As such, the acquisition cost is in excess of the supportable land value at $5.50 per square foot. Because KMA has not seen an appraisal for the site, we are unable to verify if the $5.50 per square foot acquisition cost is appropriate. We are available to answer any of your questions regarding our analysis at your earliest convenience. KTN:/p 94234.CHV 11220.0001 c3-IO? KEYSER MARSTON ASSOCIATES INC. This page intentionally left blank. .J ~/J LJ W I- in (,,) o o ~ ...J C o Z S:! 0 :l: ~ I>. 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Z ::; "' 0 " , I- If) C1:1: ~,g N '" .., 00 <D " W '" '" ;: ~ ~ ;! ~ ~ ~ ~ ~ z__ o-u. alz....:s COO cc;:z: ~ff~ .... u .3 -//;--- .-..-.-. .- TABLE 3 ESTIMATED DEVELOPMENT COST WAL-MART CENTER. DIXIEUNElNATIONAL ASSOC SITE CHULA VISTA, CALIFORNIA I. LAND ACQUISITION COSTS 920,423 SF $5.49 /SF $5,053,000 (LESS) WAL-MART CONTRIBUTION' 578,477 SF $12.00 /SF (6,942,000) NET LAND ACQUISITION COSTS ($1,889,000) II. DIRECT COSTS OFF-SITE IMPROVEMENTS 920,423 SF $1.20 /SF $1,105,000 BRIDGE CONSTRUCTION ALLOWANCE 1,500,000 ON-SITE IMPROVEMENTS 920,423 SF $3.00 /SF 2,761,000 SHELL COSTS WAL-MART 126,249 SF $0.00 /SF 0 MEGA FOODS 52,640 SF $39.00 /SF 2,053,000 RETAIL - SHOPS 1A 4,000 SF $39.00 /SF 156,000 RETAIL - SHOPS 1 B 2,000 SF $39.00 /SF 78,000 RETAIL - SHOPS 2A 1,600 SF $39.00 /SF 62,000 RETAIL - SHOPS 2B 1,200 SF $39.00 /SF 47,000 RESTAURANT PAD 5,544 SF $0.00 /SF 0 TENANT IMPROVEMENTS RETAIL 8,800 SF $10.00/SF 88,000 TOTAL DIRECT COSTS $7,850,000 III. INDIRECT COSTS ARCHITECTURE & ENGINEERING FEES 4.00% DIRECT COSTS $314,000 PUBLIC PERMITS & FEES 193,233 SF $3.00 /SF 580,000 LEGAUACCOUNTING 1.00% DIRECT COSTS 79,000 TAXES/INSURANCE 2.00% DIRECT COSTS 157.000 LEASING FEES - MEGA FOODS 52,640 SF $2.00 /SF 105,000 LEASING FEES - RETAIL 8,800 SF $4.00 /SF 35,000 DEVELOPMENT MANAGEMENT 4.00% DIRECT COSTS 314,000 DEVELOPER CONTINGENCY 3.00% DIRECT COSTS 236,000 TOTAL INDIRECT COSTS $1,820,000 IV. FINANCING COSTS CONSTRUCTION FINANCING $6,772,421 WARR INV 10.00% BLD RTRN $339,000 FINANCING FEES (CONST & PERM) 2.50 POINTS 285,000 PRESENT VALUE OF NEGATIVE CASH FLOWS DURING LEASE-UP 0 TOTAL FINANCING COSTS $624,000 I V, TOTAL DEVELOPMENT COSTS $8,405,000 I . $9.00/SF ASSUMED LAND PRICE PLUS SITE COSTS OF $3.00/SF SOURCE: KEYSER MARSTON ASSOCIATES, INC. FILE NAME: lCHULA: MARCH. 1994: KTN .8 .-- /)3 .TABLE4 ESTIMATED NET OPERATING INCOME WAL-MART CENTER - DIXIELlNElNATIONAL ASSOC SITE CHULA VISTA, CAUFORNIA I. RENTAL INCOME MEGA FOODS RETAIL - SHOPS 1A RETAIL - SHOPS 1 B RETAIL - SHOPS 2A RETAIL - SHOPS 1 B RESTAURANT PAD GROSS INCOME 52,640 SF 4,000 SF 2,000 SF 1,600 SF 1,200 SF 62,291 SF $10.00 ISF $15.00 ISF $16.00 ISF $16.00 ISF $16.00 ISF $0.96 ISF (GL 0) (LESS) VACANCY & COLLECTION 5.00% GROSS INCOME (RETAil) II. GROSS EFFECTIVE INCOME In. OPERATING EXPENSES NET MANAGEMENT CAM EXPENSE ON VACANCY RESERVES 3.00% GEl 3,072 SF 61,440 SF TOTAL EXPENSES $3.00 ISF $0.15 ISF $526,000 60,000 32,000 26,000 19,000 60,000 (7,000) $723,000 ($21,000) (9,000) (9,000) $716,000 ($39,000) IV~NET OPERATING INCOME $677,0001 o RESTAURANT GROUND LEASE BASED ON $l21SF LAND VALUE AND 8% RETURN AFTER ACCOUNTING FOR SITE COSTS OF $3/SF NET LAND VALUE IS $9/SF SOURCE: KEYSER MARSTON ASSOCIATES. INC. FILE NAME: ICHULA: MARCH, 1994: KTN S~I/Y fABlES WARRANTED ASSISTANCE WAl-MART CENTER. DIXIEUNElNATIONAl ASSOC SITE CHULA VISTA, CALIFORNIA VALUE UPON COMPETION I. NET INCOME BEFORE DEBT SERVICE II. CAPITALIZED VALUE (LESS) DEVELOPMENT COSTS (LESS) COST OF SALE (LESS) DEVELOPMENT PROFIT 9.00% 2.00% VALUE 12.00% VALUE III. ADDITIONAL VAlUEI(WARRANTED ASSISTANCE) RETURN ON INVESTMENT I. NET INCOME BEFORE DEBT SERVICE II. SUPPORTABLE INVESTMENT DEBT EQUITY 125% COVERAGE $135,400 NlADS TOTAL WARRANTED INVESTMENT (LESS) DEVELOPMENT COSTS 10.00% BLENDED RETURN III. ADDITIONAL VAlUEI(WARRANTED ASSISTANCE) SOURCB: KEYSER MAR5I'ON ASSOCIATES. INC. FILE NAME: lCHULA: MARCH, 1994: K.TN -.5-//5 $677,000 $7,522,000 (8,405,000) (150,000) (903,000) $677,000 9.23% CONS. INT $5,870,000 15.00% RETURN 903,000 ($1,936,000) $6,773,000 (8,405,000) ($1,632,000) This page intentionally left blank. ..3 ~ /1 t.. 00 o c ~ (') Q, C1l OJ ::J 'U ~ @ _. -0 OJ '" (') m ~ Q. ~ - (') 0 o ~ 3 A 3~ '" <J> ~ '" (') ~ [ (') '" ::J en '" s: ~ !!l. o ::J }> JJ ~ m. 0 '< (') "0 S' '" Q. rn :<~ ;::+" ^ ::J'S: -0 }> "'~ 3 5' -. (') ~ 0 0' .2. ::J 5 an. 3 ~i' A :< s: ::::;: }>::J' . 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A ~ '" '" ~ This page intentionally left blank. 5 -lit COUNCIL RESOLUTION 17631 and AGENCY RESOLUTION 1416 JOINT RESOLUTION OF THE CITY COUNCIL AND THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA FINDING PURSUANT TO HEALTH AND SAFETY CODE SECTIONS 33431 AND 33433, AFTER PUBLIC HEARING, THAT THE RESALE OF THE WALMART PARCEL IS EITHER AT FAIR MARKET VALUE OR AT SUCH LESSER PRICE AS IS NECESSARY TO EFFECTUATE THE REDEVELOPMENT PLAN; AND FINDING, PURSUANT TO HEALTH AND SAFETY CODE SECTION 33431 , THAT IT IS IN THE BEST INTEREST OF THE PUBLIC, AND THE AGENCY, THAT CERTAIN REAL ESTATE BE SOLD TO REDEVELOPER WALMART PURSUANT TO THE PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT, AND BE SOLD WITHOUT PUBLIC BID. WHEREAS, the Redevelopment Agency of the City of Chula Vista, a political subdivision of the State of California ("Agency"), is charged with the elimination of blighting influences in the City; and. WHEREAS, in conjunction with its responsibility to eliminate blight, Agency has formed the Town Center II Project Area which Project Area has several non-contiguous parcels, including a 32.5 acre area between 5th and Broadway adjacent to, and south of, the 54 Freeway, more particularly shown on the map attached hereto as Exhibit A, designated "Project Site" thereon; and, WHEREAS, on or about February 1, 1994, the Agency had become seriously concerned about the blighting influences located in and around the Project Site; and, WHEREAS, on or about February 1, 1994 the Agency had, by the adoption of Resolution No. 1388 ("Agency Omnibus Resolution"), and the City Council, by the adoption of Resolution No. 17381 ("City Omnibus Resolution") authorized staff to negotiate with a group proposing to redevelop the site consisting of both an owner and non-owner (National Avenue Associates and Gatlin Development Company, both of which entities are predecessor entities to Chula Vista Center Associates, the Developer), and at a time when the only other owner of real property therein (Dixieline) is and was a full participant in the Developer's plan for redevelopment, and to return to the Agency with a recommendation that would cause the redevelopment of the said site and eliminate or retard the blighting influences thereat; and, WHEREAS, staff has developed a plan for the redevelopment of the Project Site which plan involves the sale of the Project Site from its current owners to Chula Vista Center Associates ("Redeveloper); the acquisition from Chula Vista Center Associates by the Agency of one of the parcels consisting of 13.4 acres ("Walmart Parcel") contained therein; and the resale of the Walmart Parcel to Walmart Stores, Incorporated ("Walmart"); and the development of the Project Site by the Redeveloper and Walmart as a retail shopping center for redevelopment purposes, which plan shall herein be referred to as the "Staff Sponsored Plan", or alternatively, especially in an environmental context. the "Project"; and, WHEREAS, the Agency and City had called a joint public meeting for August 23, 1994 between the City Council and the Agency Members for the purpose of studying the Staff Sponsored plan and for certain other purposes; and, WHEREAS, at said meeting, the Agency and City received substantial and convincing evidence that the acquisition of the Walmart Parcel is for a public use, to wit: for the elimination s -- // f Resolution 17631 Resolution 141 6 Page 2 of blight and the redevelopment of the Town Center II Project Area in which the Project Site and the Walmart Site are located; and, WHEREAS, Health and Safety Code Section 33431 permits an Agency to lease or sell property without public bidding but only after a duly noticed public hearing; and, WHEREAS, under the provisions of Health and Safety Code Section 33433, before any property of the Agency acquired in whole or in part, directly or indirectly, with tax increment moneys is sold or leased for development pursuant to the redevelopment plan, the sale or lease shall first be approved by the City Council after public hearing, duly called, noticed and held in the manner required by law; and, WHEREAS, the Agency and City has considered all of the evidence submitted at the hearing including the staff report which is incorporated herein by reference. and the report on file in the Office of the Executive Director and the City Clerk prepared and filed pursuant to Health and Safety Code Section 33433; and, WHEREAS, at said meeting, the Agency and City further received evidence that the following environmental compliance has occurred: (1) a draft EIR for the Staff Sponsored Plan has been prepared and published; (2) the draft EIR has been submitted for public review and the review period closed on August 10, 1994 which draft EIR has been received and considered by the Council; (3) a public hearing was conducted in the manner required by City policy on August 10, 1994 before the Planning Commission, who voted at that time to close the public review period; (4) public comments were received on the draft EIR but none raised any new and not previously considered environmental impacts; (5) the Final EIR is in the process of publication at this time; (6) the Final EIR will only identify a single, unmitigable impact--air quality; concludes that all other significant impacts identified therein are mitigable to a level of less than significance by feasible mitigation measures which are proposed for adoption therein; and further concludes that as to the Project's impact on air quality, sufficient evidence justifies, in a legally adequate proposed Statement of Overriding Considerations, that the public benefits that are derived from the Project override the adverse environmental impact of the project on air quality; and, WHEREAS, the approvals herein and in implementing documentation is fully conditioned on the Agency complying, in their sole and unfettered discretion, with CEOA, including certifying that the Final EIR was prepared in compliance with CEOA, properly and correctly making the findings required by CEOA, and properly and correctly making the findings required by a Statement of Overriding Considerations; and, 1994. WHEREAS, the Final EIR will be heard by the Agency and Council on or before October 30, NOW, THEREFORE, THE CITY COUNCIL AND REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA DO HEREBY JOINTLY FIND, RESOLVE AND DETERMINE, AS FOLLOWS: Section 1. No persons have any remaining owner participation rights to develop the Project Site. Section 2. In order to effectuate the Staff-Sponsored Plan, the acquisition and resale of the Walmart Parcel was necessary and that the public interest and necessity require the proposed ~,. /? b Resolution 17631 Resolution 1416 Page 3 Project and the proposed Project is planned and located in a manner that will be most compatible with the greatest public good and the least private injury. Section 3. The hearing required by the Health and Safety Code Section 33431 and 33433 was duly called, noticed and held in the manner required by law, and all conditions precedent required by law to be performed have been duly performed. Section 4. The Section 33433 Report has been prepared, and filed in the Office of the City Clerk and in the Office of the Executive Director, and made available for public inspection and coPVing, all in the manner required by law. Section 5. All protests, if any, to the proposed Project, and the sale of the Walmart Site contemplated therein, were made and received at said public hearing. Section 6. The City Council does hereby find that the consideration to be received for the Walmart Site which is the subject matter of the DDA is not less than fair market value in accordance with covenants and conditions governing the sale or lease; and further, if the sale or lease of the designated parcels should be at less than estimated value, determined at the highest use permitted under the plan, such lesser consideration is necessary to effectuate the purposes of the plan. Section 7. The City Council does hereby approve the sale of the Walmart parcels in the manner set forth in the DDA. Section 8. It is in the best interests of the community, the City and the Agency that the Walmart Site be sold to Walmart Stores, Incorporated without public bid. Section 9. That the Disposition and Development Agreement between the Agency, Wal- Mart Stores, Inc., and Chula Vista Town Center Associates, L.P., dated August, 1994 ("DDA") is hereby approved in substantially the form as presented. Section 10. The Chairman of the Agency is hereby authorized and directed to execute said DDA, in the form herewith approved or with minor modifications thereto that do not, in the opinion of the Agency General Counsel and the Executive Director, involve any significant increase in cost or risk to the Agency or the City of Chula Vista, which minor modifications have received the advance written approval of the Executive Director a the Agency Gen I Counsel. ~~ A ::71"1 o Bruce M. Boogaard Citv Attornev and Agen 1) Approved as to Content by: Chris Salomone Community Development Director [C:IWP51IAGENCYIRESOSIWALMART1.RESI IC:IWP51\COUNCILIRESOSIWALMARTl.RES] S - /:;./ ex: I- ~ c:J ~ :x: >< LLl I- u LLl ...., o C>: c... LLl Cl ~ V') -' LLl Z Z ex: :z: u <: >- :s :i Q 0 ~ f::! 0 - &; V) " ).. 0.. Cl:: '" !;! ~~ - " ~ u - !Q [;:jO Cl::'" Q~ >- I- ~ u -' ex: z o ~ I- ex: z "- a >- I- ~ u ,-~--- C< o , <( ::> 4j ex: l- V') >- ~ OCU1 > <(z ::>0 ex: 1-' -' !~ ~ W <(w "- NO:: 0 ::it;; a. >- >-4j t::; ~~ u a", CjtJ a:: a:: OJ"- I ~ I >- I ~~' Ii I \ ~\..- -------- 01111111111111111111111 rlllllllilllll~~ U ' . 'I III ,Ii I ;' I II I, . \ ~ ~ - . ~ ai)fI;I:::I:::::lurl;IU:lI:1iU;:;:::I::liiir~\, lITTTittU ~ "11~1:,) I 111 II I I IIJIII ' I!:'I I 'I~~' . "Jal/"o'~ III II! I I , I I I 1111111, 111.,. ' . IIIII'III'!"I'I'I'"II''''''''IIII''''''' rt:;- ({Juu::uu, I II1I Iii III 11111111. 111",_" DI'I"I!"'I'll'I"IIIII'IIIlIIII"P!I""I'I"1I"i:~~ "r III i III I i 1III 1111 I I, II IIII ~ 111111 I III I" '-' 1.11'1.'.'.'11"'111"""'- 111111'111111'1'1"1111','1 'j :'11 DJ'1 IIJlilliJl11,11111, 1111.;,11 II:I~ "- , " f I 111111 1:1'111 I // I I I i:li. ~I . >' II 111'111:0111 ,'./ // Irl:I'II:""r~ II II I !'I/ fullllll::IIIIIII:I:II:IIII~"h~/ I , , " . /1 (~ \1) I ',,=,~ ( UIII:II~II:I:flll'~~~:~// 1(1 ! ~ . ~1I::1I1111111r:1: ~/ 1 ~ \ ~ ~ ~1Ir:1I11i11111R7:, ~ l':! \ ~ '. ,. ~! ) ~ " 0' : : ~ ...1,,:.....,~ II ('\.. I ~ :: \"'1"- h I :i L I ~I ::::::::~~:~~~~~:~~~~~~~}i~~~~~~;::::~:::;~~~~:~~~~~:~~~~~~~ '--,--,. 1"'1 .3 - /"2--:2-- aN'tlHOIH ..,. "' z " " go eo" ~~ ~1i:llllIli::I::I~ D::rllll::illllll~ DIIIIIIIIIIIlIlIW UIIII:i::llllllllU ~1I11l:lfll:lllll~ UIl:IlIlIlIiIIIIl~ , . . . . . . . il >-" < . ~e /!I~ . . ~:i . "I ~ ... '<- ~ " , ~~I o....l '<(! ~, .. ..... I I I I I I ,I 'I I I I I I I I 'I 'I I I I I I I I 'I 'I I I I I @ ~ " ~ " ~ '" ~ '" ~ , bJ , ~ !. [I .. ~ .' ;~ . 3nN]~412... EiI >- w ~I ,>-- V1 , u " ..e 1<: - ~. "'g 0 '" - t.J.! 8 !;;:~~'" ~.-~~ ~.~..!!; S~~:... ~";=::s ~5~~ c:r.... .. !."'~~ :z:;:;..~ i::~~~ C::;::::!o"le ~ ~ V) - ~ ~ -J ~ :::r: (j ~ o ~. c~ " ~- ,0 "' ~2 ITEM TITLE: CITY COUNCIUREDEVELOPMENT AGENCY AGENDA STATEMENT Item ,5 Meeting Date 08/23/94 RESOLUTION / 763 Cof the City Council of the City of Chula Vista Approving and Authorizing for Execution a Memorandum of Understanding by and Among, the City of Chula Vista, the City of National City, the Redevelopment Agency of the City of Chula Vista, and the National City Community Development Commission for the Purposes of Cooperating on the Potential Development of Community Shopping Centers Along the SR-54 Freeway Corridor Between Fourth Avenue and National City Boulevard with the cities of Chula Vista and National City RESOLUTION / ~ / 7 of the Redevelopment Agency of the City of Chula Vista Approving and Authorizing for Execution a Memorandum of Understanding by and Among, the City of Chula Vista, the City of National City, the Redevelopment Agency of the City of Chula Vista, and the National City Community Development Commission for the Purposes of Cooperating on the Potential Development of Community Shopping Centers Along the SR-54 Freeway Corridor Between Fourth Avenue and National City Boulevard with the cities of Chula Vista and National City SUBMITTED BY: Community Development Director REVIEWED BY: Executive Director BACKGROUND: (4t5ths Vote: Yes_ No X) The City Council and Redevelopment Agency directed staff to pursue the processing of a joint retail-commercial development project with the City of National City along the south side of SR-54 between 4th Avenue and Broadway. Attached as Exhibit A is a site plan for both projects that presents the specific building/parking layouts for the Wal-Mart center in Chula Vista, and the general building and parking areas for the National City project. City staff from both jurisdictions felt it reasonable and important that each jurisdiction formally agree to "cooperate" with one another in terms of processing their individual projects, and the proposed Memorandum of Understanding (MOU) seeks to accomplish this goal. RECOMMENDATION: It is recommended that the City Council/Redevelopment Agency adopt the resolutions which approve and authorize the execution of the MOU with the City of National City and the National City Community Development Commission. BOARD/COMMISSION RECOMMENDATION: Nt A :3 - /;;.3 Item Meeting Date 3 08/23/94 Page 2 DISCUSSION: The Chula Vista portion of the project includes a proposed Wal-Mart and additional retail encompassing the northwest quadrant of Fifth Avenue and C Street just south of SR-54. The National City portion of the project includes a new building for "Dixieline" and additional retail located just north of the existing Target Center between Fourth Avenue and Fifth Avenue just south of SR-54. The Chula Vista portion of the project requires the certification of an Environmental Impact Report, General Plan Amendment, Rezone and a Local Coastal Plan Amendment. Concurrently, staff has been negotiating the terms and conditions of a Disposition and Development Agreement (DDA) with Chula Vista Center Associates and Wal-Mart Stores, Inc. Due to the similar nature of the projects, their close proximity, and inter-dependency for effective internal and external traffic circulation, City personnel from each jurisdiction felt it important to cooperate in general terms to ensure that: 1. The proposed projects are visually compatible. 2. The environmental review of each project takes into consideration the cumulative effects of the adjacent project, and that each jurisdiction is fully informed about the portion of the proposed projects to be constructed in the adjacent jurisdiction and the corresponding impacts on each jurisdiction's public facilities. 3. Adequate funding is available for all required public improvements and that the adjoining jurisdiction will cooperate relative to completion of the public improvements. 4. Site planning of the two projects is coordinated to provide the appropriate internal traffic circulation and ingress to and egress from the public street system. As described in Section B of the agreement, the following items are general "Issues for Discussion: " 1. Compliance with all environmental requirements. 2. Site planning, architectural and landscaping design compatibility. 3. Public facilities impacts. 4. Signage. 5. Internal project traffic circulation. a. Fifth Avenue terminus. b. Wal-Mart access across "Dixieline" site, eastward to Fourth Avenue. c. "Dixieline" access across the Wal-Mart site westward to Broadway. 3-/1-1 Item Meeting Date 3 08/23/94 Page 3 6. Off-site public street improvements. a. Misaligned intersection at Fourth Avenue b. Bridge/crossing from Broadway to Wal-Mart project. In Section A of the Memorandum of Understanding, both jurisdictions agree to meet and confer with one another, and the respective developers, about the proposed projects, The "meet and confer" responsibility includes a two week prior written notice of any public hearing, with accompanying documents, in order to allow time for review and comment. The overall goals of these responsibilities are to provide open communication and reach mutual agreement on any items of mutual concern. As a matter of information, the City of National City and the National City Community Development Commission approved this Memorandum of Understanding at their August 16, 1994 meeting. Generally speaking, the projects are on similar timeline tracks. The National City portion of the project has already received General Plan and Rezone change approvals. Currently, they are processing the project, and negotiating a Development Agreement. The Chula Vista portion of the project, as you are aware, needed an Environmental Impact Report, which has been completed and was presented to the Planning Commission on August 11, 1994. In the event that the project continues through an approved DDA, it is expected that the remainder of the discretionary approvals and the EIR will be presented to the Council/Agency in late September or early October. FISCAL IMPACT: Adoption of the resolutions will in and of themselves have no fiscal impact. The legal services fees incurred to prepare the MOU is to be split 50/50 with the City of National City. The estimated Chula Vista amount required is $3,500 which is to be encumbered from the existing unappropriated fund balance under the authority granted to staff in the "Omnibus Resolutions. passed by the Council and Agency on February 1, 1994. c:lyle\11311\walmart -.5-1')..5 This page intentionally left blank. J -- / )-0 "" I-- ~ co ~ :I: >< L.U <: >- :s :;! a..C ~ ~ c _ 0.. (f)'" " >..0.. Ct:i:; ~ ~ - " ::;; " - !Q c;jc Ct:'" a.. 2 >- I-- ~ U --' "" z o ~ I-- "" z w.. o >- I-- ~ U I_~_'_- i? 0 :;> ::< ~ "" I-- I-- f- V) ~ u Cl:(J1 :> L.U <(z ...., "'0 "" 0 1--' --' "" -.J>- 0- <(CL => 2:.f- :I: L.U U Cl W ~ <(w w.. V) NCl: 0 --' :"it:; >- L.U CL z >-<<S I-- I z ~ "" ~~ U :I: \ u 0;< <(w Ow Cl:Cl: CD... I ON'1lH~IH % " " 1 I I I I I I ~IIII [[1111 [IIIII~ :1 : ~ 1I1111!: [[II [III~ 1 :~ ~11[llIllllllllllij 1 I ~ [[1111 [II: 1I11[ I~ 1 : ~IIIIIIIIIIIIIIII~ 1 I ~ 1111111111111111 ~ 1 : ~ 1I11111111111111ij 'I : ijll II 1111 1111: [II~ 'I I ~ :1111111111111: I~ 1 : ij II [[ II i I [I I: [Ii [~ I ~ [III :1 [[IIIIII[lij 1 I 1 I ~III: I[ [[:: [I i [I:~ 1 11ltIftt~'1 \ IJ[:II[[IIIIIII~ 'I \~lliilill!1["1 \JTTTTTTTTTlJ 1 \:::_~ 1 I 1 ~- ~~ -~ .. 3flN3A'9' ",1 @ ~ 0.. ~ " i' <0 ~ '" , . . . , . bJ ..,. "' , i , iil U '" ll........_.. i3 ~" < , ~a Ii!~ ~~ . !i · ~ '---J Eo, "'- ~.:::t::;i '0' ~:l~ ~, '" f- e.,; ~I '''- , (J1 u ~ 0 ~. 5~ , I .... I ~ .,,', " ..5 ;:; ~ ~- "'. 0 8~ ~ E-'~~;' Z ,~ ~,iC::; g~~:: ~'3:::;s f:ii5a~ ~"" -, 2:~~~ ~*~~ ~':::!.&'l~ @ ~ V) - ~ ...q: -J ~ =r:: () ~ o ~. ~~ . , ~- ,0 "' is:g This page intentionally left blank. ~ ~ /J-f MEMORANDUM OF UNDERSTANDING (W AL-MART/DIXIELINE PROJECT) THIS MEMORANDUM OF UNDERSTANDING (the "MOU") is entered into this day of ,1994 by and among, THE CITY OF CHULA VISTA, a municipal corporation having charter powers ("Chula Vista"), THE CITY OF NATIONAL CITY, a municipal corporation ("National City"), THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public entity corporate and politic (the "Agency") and THE NATIONAL CITY COMMUNITY DEVELOPMENT COMMISSION, a public entity corporate and politic (the "Commission") with reference to the recitals set forth below which are incorporated herein by reference as if set forth fully. RECITALS A. Chula Vista and National City have individually received information regarding two proposed projects (the "Projects") which, if approved, would be developed on three adjacent parcels (the "Project Site ") located partially within the City of Chula Vista and partially within the City of National City. The Project Site is shown on the Site Map attached hereto and incorporated herein by this reference as Exhibit No.1. The Project Site is comprised of approximately 44.6 acres of land and is generally bounded by Highland Avenue on the East, "B" Street on the North, and National City Boulevard on the West. The southern boundary of the Project Site is north of "C" Street. B. The Project Site is comprised of three (3) parcels (the "Project Parcels"). The Project Parcels are legally described in the "Legal Descriptions of the Project Parcels" attached hereto and incorporated herein as Exhibit No.2 and are illustrated on the Site Map (Exhibit No. 1). 1. For purposes of identification only, Parcel 1 is comprised of approximately 14.5 acres owned by Dixieline and generally located between 5th A venue and Highland Avenue. Parcel 1 is located within the boundaries of the City of National City and is bounded on the east by Highland A venue which is within the City of Chula Vista. Parcel 1 may also be referred to herein as the "National City Parcel". The development proposed to be constructed in Parcel 1 is referred to as the "National City Project". 0809941 C31253-013/20487.4 - 1 - .3 ~ /'2 i 2. For purposes of identification only, Parcel 2 is comprised of approximately 17.22 acres owned by Dixieline (Assessor's Parcel No. 562-324-02) and generally located between National City Boulevard and 5th Avenue. Parcel 2 is bounded on the north by Parcel 3. Parcel 2 is located within Chula Vista. National City Boulevard is located within National City. 3. For purposes of identification only, Parcel 3 is comprised of approximately 12.94 acres, owned by Chuck Kerch and subject to leasehold interests held by Metropolitan Property and National Avenue Associates. Parcel 3 is generally located east of National City Boulevard and south of "B" Street (Assessor's Parcel No. 562-324-02). Parcel 3 is bounded on the south by Parcel 2. Parcel 3 is located within the City of Chula Vista. Parcels 2 and 3 may be collectively referred to herein as the "Chula Vista Parcels" and the development proposed to be constructed on Parcels 2 and 3 is referred to as the "Chula Vista Project". C. Parcels 2 and 3 are located within the Agency's Town Centre II Redevelopment Project Area ("Town Centre II Project Area ") as more particularly described in the Redevelopment Plan for the Town Centre II Redevelopment Project Area approved by the'City Council of the City of Chula Vista on August 15, 1978 by Ordinance No. 1827, amended on May 19, 1987 by Ordinance No. and further amended on , 1988 by Ordinance No. D. Parcel 1 is located within the National City Downtown Redevelopment Project ("Downtown Redevelopment Project Area ") as more particularly described in the Redevelopment Plan for the Downtown Redevelopment Project Area approved by the City Council of the City of National City on December 1, 1981 by Ordinance No. 1762. E. National Avenue Associates ("NAA") and Gatlin Development Co., Inc. ("Gatlin") have approached Chula Vista and the Agency regarding the potential development of the Chula Vista Parcels. NAA and Gatlin may be collectively referred to herein as the Chula Vista Developers. On December 7, 1993 the Agency entered into a Semi-Exclusive Negotiating and Covenants Agreement (the "Negotiation Agreement") with the Chula Vista Developers regarding the proposed development of the Chula Vista Parcels. F. National City and the Commission have entered into informal discussions with New West Development Company and Dixieline (the "National City Developer") regarding the proposed development of the National City Parcel. G. approvals: Development of the Chula Vista Parcels will require the following discretionary I. Amendment of the Chula Vista General Plan. 080994 I C31253-Q13/ 20487.4 - 2 - 0-/.32) 2. Amendment of the zoning designation of the Chula Vista Parcels. Parcels. 3. Amendment of the Local Coastal Program as it pertains to the Chula Vista 4. Certification of the Environmental Impact Report for the Channelside Shopping Center (EIR), City of Chula Vista EIR No. 94-02, State Clearinghouse No. 94031004. It is anticipated that development of the Chula Vista Parcels will require public improvements to the public right of way within and under the jurisdiction of National City. Said improvements may require the acquisition of real property within National City and Chula Vista. H. Development of the National City Parcel will require a site plan review and other standard City approvals. It is anticipated that development of the National City Parcel will require pnblic improvements to the public right of way within and under the jurisdiction of Chula Vista. Said improvements may require the acquisition of real property within Chula Vista and National City. I. It is the intent of the parties that the Site Plan for the Proposed Projects should provide for integrated internal traffic circulation throughout the entirety of the Proposed Projects. In order to provide for adequate circulation the first entity to develop may be required to construct and install or fully fund the construction and installation of certain circulation or other public improvements which will be of benefit to both projects. J. The parties hereto wish to cooperate with one another to insure that I. The proposed projects are visually compatible; 2. The environmental review of each project takes into consideration the cumulative effects of the adjacent project and that each jurisdiction is fully informed about the portion of the Proposed Projects to be constructed in the adjacent jurisdiction and the impact of that portion of the Proposed Projects on each jurisdiction's public facilities; 3. Adequate funding is available for all required public improvements and that the adjoining jurisdiction will cooperate relative to completion of the public improvements and required traffic mitigation measures for each project; 080994/ C31253-013/20487.4 - 3 - .3 - /3 J 4. In the event that one project precedes the other project and any of the parties hereto or the private developers is required to complete or finance the construction of circulation or other public improvements which are also of benefit to the adjacent project, to insure prorata reimbursement of the first party at such time as the second project is developed. 5. Site planning of the two projects is coordinated to provide the appropriate internal traffic circulation and ingress to and egress from the public street system. M. The parties wish to jointly consider the funding sources available to provide the required public improvements including but not limited to the transfer of funds from one party to another to pay for certain public improvements. N. The parties are authorized to enter into a cooperative agreement. . NOW THEREFORE, in consideration of the above recitals and for good and valuable consideration the receipt and sufficiency of which the parties hereby acknowledge, the City of Chula Vista, the City of National City, the Agency and the Commission hereby agree as follows: A. Parties Al!ree to Meet and Confer 1. The City Council of the City of Chula Vista and the Redevelopment Agency of the City of Chula Vista hereby authorize and direct the Director of Community Development or his designee to meet, confer and exchange information with the other parties to this MOU and with the developers of the Proposed Projects regarding the Proposed Projects. 2. The City Council of the City of National City and the Community Development Commission of the City of National City hereby authorize and direct the Executive Director of the Community Development Commission or his designee to meet, confer and exchange information with the other parties to this MOU and with the developers of the Proposed Projects regarding the Proposed Projects. 3. The Parties shall meet at mutually convenient times and all parties agree to make a good faith effort to schedule meetings at least once a month during the term of the MOU. 4. Each Party agrees that prior to any Party holding a public hearing or taking any discretionary action relating to the Proposed Projects, the Party holding the hearing or considering taking action shall provide the other parties with (a) two weeks written notice of such pending hearing or action; (b) a copy of any and all written materials including but not limited to staff reports and environmental documents which will be provided to decision makers; and, (c) make a good faith effort to meet with the other Parties to this MOU at least one week prior to any hearing or discretionary action to discuss matters of mutual concern. 080994 I C31253-013 f 20487.4 - 4 - ...3 - /37-- The goal of the parties in the meet and confer process shall be to: (i) to the Proposed Projects; provide an open exchange of information and concerns pertaining (ii) reach mutual agreement on all items of mutual concern relating to the Proposed Projects including but not limited to the issues set forth in Section 2 below; and (Hi) to determine whether a more formal cooperation, financing or other agreement is necessary to implement the Proposed Projects and if so to agree on the proposed terms of such implementing agreement and make recommendations regarding any proposed agreement to their respective goveming body. 5. Each Party agrees to make a good faith effort to insure that the cost of any public improvements which are required to be paid for, constructed or installed by one or more of the private developers, shall be equitably distributed. Such efforts may include, but shall not be limited to, providing for reimbursement of a prorata portion of the costs incurred by one developer to design, construct, install or finance any public improvement which benefits all of the developers. B. Issues for Discussion. The issues pertaining to the Proposed Projects which will be the subject of the discussions among the parties may include but shall not be limited to the following: I. Compliance with all environmental requirements pertaining to the National City Project and the Chula Vista Project. 2. Design of the Projects including but not limited to mutually agreeable design criteria and opportunities for parties to review the architectural design, site plan and landscape plan of the project in the adjacent jurisdiction. 3. Impact of the Projects on public facilities including but not limited to: (a) an integrated plan for internal traffic circulation within the Projects; (b) an integrated plan for vehicular ingress to and egress from the Projects, including access from the Chula Vista Project eastward across the National City Project to 4th Avenue and access from the National City Project westward across the Chula Vista Project to National City Boulevard; (c) mutual agreement as to the specific improvements to the public rights of way including streets and bridges, traffic signals, utilities and other public facilities 080994 I C31253.<J131 20487.4 - 5 - 3~/33 required to accommodate each project individually and as an integrated whole. This discussion may include the opportunity for the engineering and public works staff of each jurisdiction to review proposed plans for that portion of the Proposed Projects located in the adjacent jurisdiction. Specific issues to be discussed shall include (i) the appropriate terminus of 5th Avenue and the possible extension of 5th Avenue northward to the Cal-Trans right-of-way to provide truck access to both the Chula Vista and National City Projects; (ii) the construction of off-site improvements necessary to realign the 4th Street intersection with the access to the Project Site; and (iii) the construction of a new bridge crossing Broadway to the Chula Vista Project. (d) equitable methods of financing the required public improvements including, but not limited to, payments from one jurisdiction to another or from one developer to another to reimburse the cost or a portion of the cost of certain public improvements. 4. Compatible signage for the Project including, but not limited to signage; (a) the location of on-site pole, monument or other freeway visible (b) location and design of off-site signs on/or adjacent to the Cal- Trans right-of-way and major access streets (4th, 5th and C, and Broadway). C. follows: Commitments of the Parties. Each Party hereto commits to the other Parties as In granting any discretionary approval relative to the Chula Vista or the National City Project the approving Party shall, within its legal authority, use its best efforts to require that the Chula Vista Developers and the National City Developer each contribute their prorata share to the cost of the construction and installation of circulation and other public improvements which are of benefit to both the Chula Vista and the National City Projects. D. Allocation of Legal Exoenses I. The Agency has entered into a contract with PAONE, CALLAHAN, McHOLM and WINTON ("PAONE") to provide legal services (the "Contract for Legal Services") pertaining to the drafting of this MOU and any subsequent cooperation or other agreement which may be entered into among the parties pertaining to the implementation of the Proposed Projects. The Contract for Legal Services including scope of work and rates is attached hereto and incorporated herein as Exhibit 3. The provision of such legal services commenced prior to the approval of this MOU. 080994/ C31253-<J13/ 20487.4 - 6 - 3-/.31 2. The City of Chula Vista, the City of National City and the Community Development Commission of the City of National City hereby expressly agree to the selection of PAONE for this purpose. 3. The Commission hereby agrees to reimburse the Agency 50% (FIFTY PERCENT) of the costs incurred by the Agency pursuant to the attached contract for Legal Services as such costs are incurred. 4. Reimbursement of legal expenses shall be implemented as follows: (a) The Agency shall be billed monthly by PAONE for services performed pursuant to the Contract for Legal Services; (b) The Agency shall forward to the Commission a copy of the bill from PAONE with a transmittal letter stating the amount due to the Agency from the Commission (the "Agency Invoice"); and (c) The Commission shall remit all amounts due to Agency within thirty (30) days of the receipt Agency Invoice. Each party shall bear its own costs relative to any other costs or expenses incurred in compliance with this MOU. E. Term parties. The Term of this MOU shall be ONE (1) Year from the date of execution by all F. Parties Retain Discretionarv Aooroval Rights The parties understand and acknowledge that each party hereto reserves the right to exercise its full discretion as to all matters which it is, by law, entitled or required to exercise its discretion relative to the Proposed Projects individually and collectively. Each party agrees and understands that by entering into this MOU no party waives its right to review and object to or challenge any action taken by any other party to the MOU relative to the Proposed Projects or any portion thereof. G. Entire Agreement This MOU together with all exhibits attached hereto constitutes the entire agreement among the parties with respect to the subject matter contained herein. 0809941 C31253-ll131 20487.4 - 7 - .3 - /35 H. Countemarts This MOU may be executed in counterparts. Dated: ,1994 CITY OF CHULA VISTA /,;2 ~ t t Bruce M. Boogaard City Attorney r By MAYOR Dated: ,1994 REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA 4,~ ,~( I: Bruce M. Boogaard Agency Counsel By Chairman, Redevelopment Agency Marcia Scully Agency Special Counsel Approved as to Content: Chris Salomone Executive Secretary 080994 / C31253'()13/20487.4 - 8 - 3-/36 Dated: , 1994 Approved as to Form: George H. Eiser, III City Attorney Approved as to Content: Dated: ,1994 Approved as to Form: George H. Eiser, III Counsel to the Commission Approved as to Content: ,1994 Paul Desrochers, Executive Director Dated: 080994/ C31253-ll!3 / 20487.4 - 9 - CITY OF NATIONAL CITY By MAYOR COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY By Chairman S -/37 This page intentionally left blank. o -/3! <: >- :S~ Q", ... ~~ -go (f)", >- Q, O:::~ ~ ~ - '" ::, <.> _ '" cje 0:::'" QE2 >- >- ~ u -' <ot: z o ~ >- <ot: z u... o >- >- ~ u Cl. "' :E (].J of-' .~ V> cr 0 , <{ :>; 0(1 >- >- U "'II> UJ <z ...., :>;0 0 1-" "" -">- 0.. <0.. UJ ~>- Cl W ~ <{w N'" V> :'it;; -' UJ 0.. :z >-0(1 z <ot: ~>- :J:: a~ u <w Ow "'''' Illu. 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"'. 0 = - u.! g !;Jl~;, ~:'~~ =--e~ :; gG:l...eo=. =' ei5~~ ~~~~ i=~~~ ~:::!ci!l~ @ ~ V) - ~ ""( -..J :::::> ::r: () ~ = ~. ~> , , ~- ,0 "' D~ This page intentionally left blank. ~ - / lfo - ,..............._.,..........._..n. +619-571-3241 NASLAND ENG SD fS7 P05 RUG 05 '94 14:2( EXHIBIT 1 LEGAL DESCRIPTION (PARCEL 'A') THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS: ~ . -. -.... '" ALL OF 10 ACRE LOT 8 AND THOSE PORTIONS OF 10 ACRES LOTS 5, 6 AND 7 IN QUARTER SECTION 151 OF RANCHO DE LA NACION , IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP BY MORRILL NO. 166, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID SAN DIEGO COUNTY. LYING SOUTHERLY OF A LINE DESCRIBED AS FOLLOWS: BEGINNING AT TH[ INTERSECTION OF THE WESTERLY LINE OF THE SOUTHEAST QUARTER OF SAID QUARTER SECTION 151 TO A POINT DISTANT SOUTH 18004' EAST 75.00 FEET FROM THE NORTHWEST CORNER OF SAID SOUTHEAST QUARTER; THENCE SOUTHWESTERLY IN A STRAIGHT LINE TO THE INTERSECTION WITH THE WESTERLY LINE OF SAID QUARTER SECTION 151 DISTANT THEREON NORTH 17044'07" WEST 407.50 FEET FROM THE SOU THWESTERL Y CORNER OF SAID QUARTER SECTION. EXCEPTING THEREFROM THAT PORTION DESCRIBED AS FOLLOWS: LOTS 1 THROUGH 10 OF HODGE BROS. INDUSTRIAL PARK, IN THE CITY OF CHUlA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 8755, FilED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 27, 1977. TOGETHER WITH THAT PORTION OF THE WEST HALF OF NORTH FlFTH A VENUE ADJOINING SAID 10 ACRE LOTS 5 AND 6 ON THE EAST AS VACATED AND CLOSED TO PUBLIC USE BY RESOLUTION NO. 16426, RECORDED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 30, 1992 AS FILE NO. 1992-0842769 OF OFFICIAL RECORDS. LEGAL DESCRIPTION (PARCEL 'B') THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS: ALL OF 10 ACRE lOT 4 AND THOSE PORTIONS OF 10 ACRE LOTS 5, 6, AND 7 IN QUARTER SECTION 151 OF RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA, COUNTY OF DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP BY MORRILL NO. 166, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID SAN DIEGO COUNTY, LYING NORTHERLY OF A LINE DESCRIBED AS FOllOWS: -3-/i.f/ +619-571-3241 NASlJ:iNIJ ENG SD 657 P06 RUG 05 '94 14:2 BEGINNING AT THE INTERSECTION OF THE WESTERLY LINE OF THE SOUTHEAST QUARTER OF SAID QUARTER SECTION 151, BEING A POINT DISTANT SOUTH 18004'_EAST, 75.00 FEET FROM THE NORTHWEST CORN~R OF SAID. SQVTHEAST QOARTER; THENCE SOUTHWESTERLY IN A STRAIGHT LINE TO THE INTt~SECTION WITH THE WESTERLY LINE OF SAID QUARTER SECTION 151 DISTANT THEREON NORTH 17044'07" WEST, 407.50 FEET FROM THE SOUTHWESTERLY CORNER OF SAID QUARTER SECTION. EXCEPTING THAT PORTION OF 10 ACRE LOT 4, IN QUARTER SECTION 151 OF RANCHO DE LA NACION, IN THE CITY OF CHULA VlSTA, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA. ACCORDING TO MAP BY MORRILL NO. 166, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID SAN DIEGO COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWESTERLY CORNER OF SAID LOT 4; THENCE EASTERLY ALONG THE SOUTHERLY LINE THEREOF 40 FEET TO THE EASTERLY LINE OF NATIONAL AVENUE (100 FEET WIDE); THENCE CONTINUING EASTERLY ALONG SAID SOUTHERLY LINE 260 FEET; THENCE NORTHERLY PARALLEL WITH THE WESTERL Y LINE OF SAID LOT TO THE NORTHERLY LINE OF SAID LOT; THENCE WESTERL Y ALONG SAID NORTHERLY LINE 300 FEET TO SAID WESTERLY LINE; THENCE SOUTHERLY ALONG SAID WESTERLY LINE TO THE POINT OF BEGINNING. I ALSO EXCEPTING )l-jEREFROM TI-iE WESTERLY 40.00 FEET OF FIFTH A VENUE (FORMERL Y FIRST lA VENUE) AS DESCRIBED 1t'J RESOLUTION NO. 2550, FILED JANUARY 27, 196J ~S FILE NO. 15926 OF OFFICIAL RECORDS. ALSO EXCEPTING tfEREFROM ALL THAT PORTION AS DESCRIBED IN DEED TO STATE OF CALIFORNIA. FilED JANUARY 14, 1972 AS FILE NO. 10301 OF OFFICIAL RECORDS AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS" BEGINNING AT THE NORTI-iEASTERl Y CORNER OF SAID LOT 4; THENCE ALONG THE EASTERLY LINE OF SAID LOT 4, SOUTH 17040'16" EAST, 329.20 FEET; THENCE LEA VlNG SAID EASTERLY LINE, SOUTH 72028'44" WEST, 462.22 FEET; THENCE SOUTH 71005'28" WEST, 300.06 FEET; THENCE SOUTH 68015'46" WEST, 524.01 FEET TO THE NORTHWESTERLY CORNER OF lOT 5 IN QUARTER SECTION 151 OF SAN DIEGO lAND AND TOWN COMPANY'S MAP OF CHULA VISTA, THE MAP NO. 505, FILED MARCH 13, 1888 IN SAN DIEGO COUNTY RECORDER'S OFFICE; THENCE ALONG THE NORTHERLY PROLONGATION OF THE WESTERLY LINE OF LAST SAID LOT 5, NORTH 17044'48" WEST, 40.00 FEET TO THE SOUTHERLY LINE OF LOT 4 ACCORDING TO SAID MAP NO. 166; THENCE ALONG SAID SOU THERL Y LINE, NORTH 7201.3'14" EAST, 260.01 FEET TO THE SOUTHEASTERl Y CORNER OF THAT LAND DESCRIBED IN DEED TO THE STATE OF CALIFORNIA RECORDED SEPTEMBER 11, 1970 AS FILE NO. 164245 OF OFFICIAL RECORDS OF SAN DIEGO COUNTY; THENCE ALONG THE EASTERLY LINE OF SAID STATE lAND, NORTH 17044'48" WEST, 329.39 FEET TO THE NORTHERLY LINE OF SAID LOT 4; THENCE ALONG SAID NORTHERLY LINE, NORTH 72013'52" EAST, 1025.38 FEET TO THE POINT OF BEGINNING. J-- Exhibit A to Agreement between City of Chula Vista the Redevelopment Agency of the City of Chula Vista and Paone, Callahan, McHolm & Winton I. Effective Date of Agreement: Februarv 2. 1994 II. City-Related Entity: (X) City of Chula Vista, a municipal chartered corporation of the State of California (Xl Redevelopment Agency of the City of Chula Vista, a political subdivision of the State of California (I Industrial Development Authority of the City of Chula Vista, a (I Other: , a [insert business form] ("City") III. Place of Business for City: Community Development Department City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 619.691.5047 IV. Consultant: Paone, Callahan, McHolm & Winton V. Business Form of Consultant: ( ) Sole Proprietorship ( ) Partnership (Xl Corporation VI. Place of Business, Telephone and Fax Number of Consultant: Paone, Callahan, McHolm & Winton 19100 Van Karman - Eighth Floor Irvine, CA 92713 Voice Phone 714.955.2900 Fax Phone 714.955.9009 .3 - )l.f3 PAONE-1.ATI August 15, 1994 Paone, Callahan, McHo1m & Winton Page 1 VII. General Duties: To prepare the necessary legal documents and assist staff in negotiatIon of a Memorandum of Understanding with the City of National City and a Disposition and Development Agreement with Gatlin Development and Wal-Mart Stores, Inc., for the purpose of presenting a Wal-Mart Project at Fifth Avenue and SR-54 for consideration by the City Council and Redevelopment Agency Board. VIII. Scope of Work and Schedule: A. Detailed Scope of Work: 1. Prepare a Memorandum of Understanding between the City of Chula Vista and the City of National City and assist City personnel from both jurisdictions to negotiate the Agreement as necessary. 2. Negotiate and prepare a Disposition and Development Agreement with Gatlin Development and Wal-Mart Stores, Inc. B. Date for Commencement of Consultant Services: (X) Same as Effective Date of Agreement () Other: C. Dates or Time Limits for Delivery of Deliverables: All items delivered. D. Date for completion of all Consultant services: Februarv 1. 1995 IX. Insurance Requirements: (X) Statutory Worker's Compensation Insurance () Employer's Liability Insurance coverage: $1,000,000. (X) Commercial General Liability Insurance: $1,000,000. () Errors and Omissions insurance: None Required (included in Commercial General Liability coverage). () Errors and Omissions Insurance: $250,000 (not included in Commercial General Liability coverage). X. Materials Required to be Supplied by City to Consultant: 1. Copies of the Town Centre II Redevelopment Plan, Procedures Manual, and related Ordinances. XI. Compensation: A. () Single Fixed Fee Arrangement. For performance of all of the Defined Services by Consultant as herein required, City shall pay a single fixed fee in the amounts and at the times or milestones or for the Deliverables set forth below: PAONE-l.ATT August 15. 1994 ..3 ~ J tft.{- Paone, Callahan, McHolm & Winton Page 2 Single Fixed Fee Amount: , payable as follows: Milestone or Event or Deliverable Amount or Percent of Fixed Fee B. () Phased Fixed Fee Arrangement. For the performance of each phase or portion of the Defined Services by Consultant as are separately identified below, City shall pay the fixed fee associated with each phase of Services, in the amounts and at the times or milestones or Deliverables set forth. Consultant shall not commence Services under any Phase, and shall not be entitled to the compensation for a Phase, unless City shall have issued a notice to proceed to Consultant as to said Phase. C. (Xl Hourly Rate Arrangement For performance of the Defined Services by Consultant as herein required, City shall pay Consultant for the productive hours of time spent by Consultant in the performance of said Services, at the rates or amounts set forth in the Rate Schedule hereinbelow according to the following terms and conditions: 1. () Not-to-Exceed Limitation on Time and Materials Arrangement Notwithstanding the expenditure by Consultant of time and materials in excess of said Maximum Compensation amount. Consultant agrees that Consultant will perform all of the Defined Services herein required of Consultant for $ including all Materials, and other "reimbursables" ("Maximum Compensation"). 2. (X) Limitation without Further Authorization on Time and Materials Arrangement At such time as Consultant shall have incurred time and materials equal to $33,000 (as broken down below) ("Authorization Limit"), Consultant shall not be entitled to any additional compensation without further authorization issued in writing and approved by the City. Nothing herein shall preclude Consultant from providing additional Services at Consultant's own cost and expense. Phase Fee for Said Phase 1. Completion of Memorandum of Understanding $ 7,000.00"1 2. Completion of Disposition and Development Agreement $ 26,000.00 {.I As contemplated in the MOU, the City of National City is responsible for 50 percent of the total cost of the MOU. Currently, it is estimated that the total cost of the MOU will be $7,000 and therefore, National City's portion is expected to be $3,500. 0- /'fS PAONE-l.ATI August 15, 1994 Paone, Callahan, McHolm & Winton Page 3 Rate Schedule Category of Employee of Consultant Name Hourly Rate Principal Marcia Scully $155.00 ( ) Hourly rates may increase by 6% for services rendered after [month], 19 ,if delay in providing services is caused by City. XII. Materials Reimbursement Arrangement For the cost of out of pocket expenses incurred by Consultant in the performance of services herein required, City shall pay Consultant at the rates or amounts set forth below: (X) None, the compensation includes all costs. () Reports, not to exceed $ () Copies, not to exceed $ () Travel, not to exceed $ () Printing, not to exceed $ () Postage, not to exceed $ () Delivery, not to exceed $ () Long Distance Telephone Charges, not to exceed $ () Other Actual Identifiable Direct Costs: , not to exceed $ , not to exceed $ Cost or Rate XIII. Contract Administrators: City: Lyle W. Haynes, Principal Community Development Specialist, Community Development Department, 276 Fourth Avenue, Chula Vista, CA Consultant: Marcia Scully, Esq., Paone. Callahan, McHolm & Winton, 19100 Van Karman, Eighth Floor, Irvine, CA 92713 XIV. Liquidated Damages Rate: ( ) $ () Other: per day. 3 -J Vb PAONE-I.ATI August 15. 1994 Paone, Callahan. McHolm & Winton Page 4 XV. Statement of Economic Interests, Consultant Reporting Categories, per Conflict of Interest Code: (Xl Not Applicable. Not an FPPC Filer. ( ) FPPC Filer (l Category No.1. Investments and sources of income. () Category No.2. Interests in real property. () Category No.3. Investments, interest in real property and sources of income subject to the regulatory, permit or licensing authority of the department. () Category No.4. Investments in business entities and sources of income which engage in land development, construction or the acquisition or sale of real property. () Category No.5. Investments in business entities and sources of income of the type which, within the past two years, have contracted with the City of Chula Vista (Redevelopment Agency) to provide services, supplies, materials, machinery or equipment. () Category NO.6. Investments in business entities and sources of income of the type which, within the past two years, have contracted with the designated employee's department to provide services, supplies, materials, machinery or equipment. () Category No.7. Business positions. ( ) List "Consultant Associates" interests in real property within 2 radial miles of Project Property, if any: XVI. () Consultant is Real Estate Broker and/or Salesman XVII. Permitted Subconsultants: None d -Itf l PAONE-l.AIr August 15, 1994 Paone, Callahan. McHolm & Winton Page 5 XVIII. Bill Processing: A. Consultant's Billing to be submitted for the following period of time: (X) Monthly ( ) Quarterly () Other: B. Day of the Period for submission of Consultant's Billing: ( ) 15th Day of each Month (X) End of the Month () Other: ( ) First of the Month C. City's Account Number: 992-9920-5201 XIX. Security for Performance ) Performance Bond, $ ) Letter of Credit, $ ) Other Security: Type: Amount: $ ( ) Retention. If this space is checked, then notwithstanding other provisions to the contrary requiring the payment of compensation to the Consultant sooner, the City shall be entitled to retain, at their option, either the following "Retention Percentage" or "Retention Amount" until the City determines that the Retention Release Event, listed below, has occurred: ) Retention Percentage: % ) Retention Amount: $ Retention Release Event: ( ) Completion of All Consultant Services ( ) Other: IC:\ WP51 ICONTRACTlP AONE-l.A Tf] 0-111 PAONE-1.ATT August 15, 1994 Paone, Callahan, McHolm & Winton Page 6 RESOLUTION /7 /P3v OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AND AUTHORIZING FOR EXECUTION A MEMORANDUM OF UNDERSTANDING BY AND AMONG. THE CITY OF CHULA VISTA. THE CITY OF NATIONAL CITY. THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA. AND THE NATIONAL CITY COMMUNITY DEVELOPMENT COMMISSION FOR THE PURPOSES OF COOPERATING ON THE POTENTIAL DEVELOPMENT OF COMMUNITY SHOPPING CENTERS ALONG THE SR-54 FREEWAY CORRIDOR BETWEEN FOURTH AVENUE AND NATIONAL CITY BOULEVARD WITH THE CITIES OF CHULA VISTA AND NATIONAL CITY The City Council of the City of Chula Vista ("Councin does hereby resolve as follows: WHEREAS. the cities of Chula Vista and National City have individually received information regarding two proposed projects which. if approved. would be developed on three adjacent parcels located partially within the City of Chula Vista and partially within the City of National City; and. WHEREAS. the Chula Vista portion of the project is located within the Agency's Town Centre II Redevelopment Project Area and the National City portion of the proposed project is located within the National City Downtown Redevelopment Project Area; and, WHEREAS. the City of Chula Vista has entered into negotiations with Chula Vista Town Center Associates regarding the potential development of the Chula Vista portion of the project and National City has entered negotiations with Nu- Western Development Company for development of the National City portion of the project; and, WHEREAS. it is anticipated that development of the Chula Vista portion of the project will require public improvements to the public right-of-way within and under the jurisdiction of National City and that development of the National City portion of the project will require public improvements to the public right-of-way within and under the jurisdiction of the City of Chula Vista; and, WHEREAS. it is the intent of both jurisdictions that the site plan for the proposed projects should provide for integrated internal traffic circulation, site plan, signage, and architectural and design compatibility. 0-/tfr NOW THEREFORE BE IT RESOLVED by the City Council of the City of Chula Vista does hereby authorize the execution of the Memorandum of Understanding for the purposes of cooperating with the City of National City and the National City Community Development Commission. Presented by: CLS:~ Chris Salomone Community Development Director c:lyle\resos:\walmartcou f '"T Bruce M. Boogaar City Attorney J-/5() form by: () J RESOLUTION I If /1 OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA APPROVING AND AUTHORIZING FOR EXECUTION A MEMORANDUM OF UNDERSTANDING BY AND AMONG, THE CITY OF CHULA VISTA, THE CITY OF NATIONAL CITY, THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, AND THE NATIONAL CITY COMMUNITY DEVELOPMENT COMMISSION FOR THE PURPOSES OF COOPERATING ON THE POTENTIAL DEVELOPMENT OF COMMUNITY SHOPPING CENTERS ALONG THE SR-54 FREEWAY CORRIDOR BETWEEN FOURTH AVENUE AND NATIONAL CITY BOULEVARD WITH THE CITIES OF CHULA VISTA AND NATIONAL CITY The Redevelopment Agency of the City of Chula Vista ("Agency") does hereby resolve as follows: WHEREAS, the cities of Chula Vista and National City have individually received information regarding two proposed projects which, if approved, would be developed on three adjacent parcels located partially within the City of Chula Vista and partially within the City of National City; and, WHEREAS, the Chula Vista portion of the project is located within the Agency's Town Centre II Redevelopment Project Area and the National City portion of the proposed project is located within the National City Downtown Redevelopment Project Area; and, WHEREAS, the City of Chula Vista has entered into negotiations with Chula Vista Town Center Associates regarding the potential development of the Chula Vista portion of the project and National City has entered negotiations with Nu- Western Development Company for development of the National City portion of the project; and, WHEREAS, it is anticipated that development of the Chula Vista portion of the project will require public improvements to the public right-of-way within and under the jurisdiction of National City and that development of the National City portion of the project will require publiC improvements to the public right-of-way within and under the jurisdiction of the City of Chula Vista; and, WHEREAS, it is the intent of both jurisdictions that the site plan for the proposed projects should provide for integrated internal traffic circulation, site plan, signage, and architectural and design compatibility. -3 - /S / NOW THEREFORE BE IT RESOLVED by the Redevelopment Agency of the City of Chula Vista does hereby authorize the execution of the Memorandum of Understanding for the purposes of cooperating with the City of National City and the National City Community Development Commission. Presented by: c~.~ / Chris Salomone, Executive Secretary and Community Development Director c:lyle\resos:\walmart.age '] .0 -/52- fkN6'71lT~D /7J /t6FII/C~ I1-r g!23 /11/ , /17 FE T//J (;-: MEMORANDUM TO: MEMBERS OF THE REDEVELOPMENT AGENCY/CITY COUNCIL OF CHULA VISTA FROM: William McMahon, Chula Vista resident RE: WAL-MART STORES DDA, AGENDA ITEM 3 DATE: Auqust 23, 1994 I. Summary As a Chula Vista resident, I urge the Agency and Council to reject this DDA. This is an unlawful giveaway of nearly $2 million in tax dollars in violation of AB 1290. It makes no economic sense because Wal-Mart will simply take business away from existing retailers -- those retailers will be paying less in taxes to the government. and those retailers will layoff employees or cut their hours. Retail jobs with decent employers who provide health benefits and decent pay will be replaced with lower-wage Wal-Mart jobs without health benefits. This project will have enormous environmental impacts on traffic, etc. You cannot legally approve this agreement without simUltaneously considering an Environmental Impact Report. You should postpone any vote on the DDA until the EIR can be considered. Finally, in February 1994 I wrote the Community Development Department and aSked that I be notified of every pUblic meeting concerning this project. This apparently was not done, because I have just learned that a draft EIR was circulated and a Planning Commission meeting held, none cf which I received notice of. In fact, I had to come down here last Friday to get the information about the project, and was told the notice had just been sent to me -- it still has not arrived at my house. Because of these Brown Act violations, I urge you to table this matter and give me time to comment on the EIR and appear before the Planning Commission on it. rr. AB 1290 MAKES THIS DDA UNLAWFUL In 1993, the Legislature enacted Health & Satety Code section 33426.5, which provides, in relevant part: 1 Notwithstandinq the provisions of sections 33391, 33430, 33433, and 33445, or any other provision of this party, An aqencv shall not Drovide anv form of direct assistance to: . . . (b) (1) A development that ~ll be or-1s ona p~r~l of land of five acres or more which has not been Drevio sl develooed for urban use and that will. when develoDed. qenerate sales or use tax pursuant to Part 1.5 (commencinq with Section 7200) of Oivision 2 of the Revenue and Taxation COde, unless the principal permitted use of the development is ottice, hotel, manufacturinq or industrial or unless. prior to the effective date of the act that adds this section. the aaencv either owns the land or has entered ;nto an enforceable aqreement. for the purchase of the land 0 of an interest in the land. includinq. but not limited to. a lease or an aqreement containing covenants affe~tinq r~al property. that reauires the land to be develoDed. You have tried to evade this statute by entering into the so- called "Semi-Exclusive Negotiating Agreement". This agreement does not meet the statutory requirements. If it had really been one which "requires the land to be developed", you would have completed an EIR at the time, but did not. You cannot have it both ways. III. THIS DEAL MAKES NO SENSE FOR THE COMMUNITY Item J of the city staff's Risk Analysis correctly notes there is a risk that you will be paying Wal-Mart more in SUbsidies than your net gain in sales tax, because Wal-Mart will take business away trom existing retailers who pay you taxes. I have not seen the Onaka economic analysis because the EIR has not been provided to me. I understand it claims that increased consumer demand in the area will make sure there is a net gain in sales tax revenues. However, if this is so, why does this project need $1.9 million in government subsidies? The bankruptcy courts are filled with people who made overly optimistic projections about growth in population and consumer demand in California and elsewhere. The experience of towns across this nation is that walmart takes trom their existing retailers, rather than relying on any increases in consumer demand. We urge you to contact other communities, such as Redlands, Lompoc and Rohnert Park, who have said Walmart did not pay in direct taxes what it projected (not even considering the lost taxes from other retailers). I doubt Wal-Mart's economist has considered the very real eftects on pUblic budgets of replacing existing jobs at existing retailers whiCh have health insurance with lower-wage Wal-Mart jobs that don't provide health insurance. Many Wal-Mart employees 2 are eligible for public health care and public assistance. I ask that you consider not only the fiscal impact, but the social impact of bringing Wal-Mart in here. IV. THIS DDA CANNOT BE APPROVED WITHOUT SIMULTANEOUSLY CONSIDERINC AN EIR It is clear this DDA is part of a larger overall project. However, once this DDA is approved, you will probably have gone too far down the road to realistically turn back just because you see some environmental impacts. That defeats the whole point of the California Environmental Quality Act, which is to have agencies "look before they leap" into actions which injure the environment. In Bozuna v. Local Aaency Formation Comm'n (1975) 13 Cal. 3d 263, 282 the Supreme Court approved "the principle that the environmental impact should be assessed as early as possible in government planning." It struck down an agency's decision to approve an annexation even though that was just the first of many steps that would lead to a development. In sundstrom v. County of Mendociij2 (1988) 202 CA3d 296, 307, the court noted "Environmental problems should be considered at a point in the planning process 'where genuine flexibility remains.' [cite)" In a series of cases after Bozunq, the courts have struck down actions even though the agency promised to consider an EIR later on down the road, such as Citizens Assn for Sensible DeveloDment of Bishop v. Countv of Invo (1985) 172 CA 3d 151 and city of Carmel-by-the-Sea v. Board of SUDervisors (1986) 183 CA3d 229, 240-44. Putting in a Walmart here is going to increase traffic and affect the coastline. You must table this DDA until the EIR can be considered at the same time. V. APPROVAL OF THIS DDA WOULD VIOLATE THE BROWN ACT BECAUSE OF FAILURE TO GIVE PROPER NOTICE In February 1994 I made a written request to the head of the Community Development Department to be notified of "all public hearings or meetings. . .involving development of a commercial shopping center at or near the intersection of 5th Avenue and C street." This was apparently ignored, in violation of the Brown Act, because in reading the materials presented to you for today, I discovered you have already had a Planning Commission meeting to approve the EIR. I have never seen the EIR. I urge you to postpone consideration of this DDA, allow me to make comments on the EIR, and allow me to appear betore the Planning Commission. K'r1Wl'tl~.... -.wUtt 3 REDEVELOPMENT AGENCY AGENDA STATEMENT Item 4- Meeting Date 08/23/94 ITEM TITLE: RESOLUTION 1411 Adopting the Redevelopment Agency Budget for Fiscal Year 1994-95 and Appropriating Funds Therefor E . D' r(/,? xecutive trecto~< SUBMITTED BY: c (4/5ths Vote: Yes_ No X) BACKGROUND: At the June 21, 1994 Redevelopment Agency meeting, the Agency's Fiscal Year 1993-94 budget was adopted and the FY 1994-95 budget adoption was deferred pending a staff response on two issues. The ftrst request was for the City Attorney to analyze the legal aspects of a proposal to invest City funds for acquisition of Agency-owned real estate, and the second was to establish current market values of three Agency-owned properties being considered for possible purchase by the City. Additionally, during this interim period staff was able to further refine 1993-94 available year- end fund balance estimates, the proposed 1994-95 budget as well as the long-term financial plan. The report consists of four general categories: General Overview, Proposed Financial Pian Recommendations, Adoption of the Fiscal Year 1994-95 Budget, and Future Positive Impacts FY 95-96 and Beyond. RECOMMENDATION: That the Redevelopment Agency adopt the resolution which approves the Fiscal Year 1994-95 Redevelopment Agency Budget incorporating the following staff financial plan recommendations: 1. Sell the Marina Motor Hotel and Cappos properties to the Port District 2. Market for sale the Fuller Ford and South Bay Chevrolet sites 3. Issue Request for Proposals (RFP) for the El Dorado Building 4. Return to Agency in January 1995 with a mid-year progress report BOARDS/COMMISSION RECOMMENDATION: Not applicable. DISCUSSION: Section 1 General Overview As has been discussed in detail in previous reports, staff has been proactive in developing a long term plan to deal with the deficit of the Agency. Based on this detailed review, it is recommended that the Agency plan as carefully as possible for the future, but preserve maximum flexibility for the long-run. While it is expected that the current deficit problem will prove to be short-term as the economy recovers and real estate development and commerce return to full health, the Agency plans to be set at the first sign of recovery to take advantage of its assets and capabilities. We must, however, realize that it may not be in the Agency's or the City's best interests to liquidate assets and cut back on operational capacity to the degree that it would impact our ability to respond to the opportunities that are currently emerging in the general economic recovery. /1-/ Page 2, Item t} Meeting Date 08/23/94 In the previous report a variety of options to deal with the operating deficit were presented as follows: Property Asset Sales City-Agency Sales Tax Cooperation Agreement Funding Economic Development with a greater share from the General Fund Reduce Agency Reimbursement for General Fund Staffing Costs In reviewing these options, Council requested 1) further information on, and the legality of, investing City funds in the purchase of real estate and 2) the current market valuation of three properties proposed for sale to the City. As stated in the memo from the City Attorney (Attachment 1) the concept of using the City's pooled investment account to purchase the properties does not appear to be legally viable. The Attorney concludes that current City investment guidelines do not permit the City Council to invest City funds in real estate, and that it would take a Charter Amendment to modify the guidelines. He also felt that it would be a "high risk" for the City. Although it is certainly understood and agreed that investment by the City in real estate owned by the Redevelopment Agency is of higher risk than what the current policy allows, Administration and Community Development staff believe that the risk is mitigated for the following reasons: 1) the investment in real estate would be limited to a maximum of 5 % of the City's total investment portfolio, and 2) the Agency property proposed to be sold to the City have a high potential investment value and could not be characterized as "risky" properties. The overall intent was to provide short-term relief to the Agency while also allowing the City the opportunity to realize financial benefits from the expected appreciation for these properties. However, since State law and the Charter precludes such an investment, and steps need to be taken now to stabilize the Agency's budget, it is recommended that action be taken to prudently sell certain select assets to support Agency operations. The table below identifies the three properties Council directed staff to re-evaluate, with the previously estimated values and with the currently estimated values, based on appraisals: Prior Current Proposed ProD9rtv Value Value DiSDosition EI Dorado Building $1,600,000 $1,400,000 RFP "Merziotis" $2,200,000 $1,200,000 Hold 340-368 Bay Boulevard $1,100,000 $1,265,000 Hold As the table identifies, two of the three properties appraised are closely in-line with their previously reported values. However, the "Merziotis" property, a 6.36 acre parcel at the northeast corner of E Street and Bay Boulevard, came in significantly lower. The site is intended for development as a Hotel/Motel use and is controlled by the Bayfront Redevelopment Plan and the Local Coastal Plan. The expected future value was estimated to be $4,900,000 at its highest and best use as a hotel and sit-down restaurant. If sold today however, the $4,900,000 value would need to be severely discounted to the estimated $1.2 million value. The majority of the discount is due to estimated "holding/profit" cost of $3.1 million. In essence, 1-2- Page 3, Item Meeting Date 08/23/94 1 the appraisal report indicated that for a hotel/motel use, an investor would need to purchase the property and hold it for another five to ten years before the hotel/motel market is expected to return. It is for this reason that staff does not recommend selling this property at this time. Section 2 Prooosed Financial PIan Recommendations This section of the report details the specific staff recommendations listed previously for the 1994-95 Agency budget and the long-term financial plan. The recommendations are as follows: 1. Sell the Marina Motor Hotel and Cappos properties to the Port District 2. Market for sale the Fuller Ford and South Bay Chevrolet sites 3, Issue Request for Proposals (RFP) for the El Dorado Building 4. Return to Agency in January 1995 with a mid-year progress report Recommendations 1 through 3 (Property Asset Sales) Recommendation #1 calls for the Agency to sell the Marina Motor Hotel and Cappos properties to the Port District. Staff is pursuing discussions toward the possibility that the Port District could purchase these two properties designated for park lands. The value applied to these properties (collectively totalling $2.1 million) represent the acquisition costs to the Agency, but not necessarily the value of the property at this time. Recommendation #2 proposes that the Agency market for sale the Fuller Ford and South Bay Chevrolet sites. With respect to the Fuller Ford site, the Agency, on July 17, 1994, authorized the execution of a Semi-Exclusive Negotiating Agreement with Joelen Enterprises for the west side of the property (approximately 2.5 acres) to build a unique "Business Home" complex. The Citrons, however, are currently speaking in terms of $5.00 a square foot for the 2.5 acres which will result in only approximately $544,500 to the Agency. Staff feels that the fair market value for the property is in the $7.50 per square foot range which would generate approximately $817,000 for the western portion, and another approximately $283,000 for the eastern .9 acres. The South Bay Chevrolet site was the subject of a previously approved Semi-Exclusive Negotiating and Covenants Agreement (SENA) with The Moxham Company for a commercial shopping center. Unfortunately, The Moxham Company was not able to comply with provisions of the SENA by securing a "high volume" retail sales anchor for the site and did not wish to seek an extension. The Agency does not have any potential buyers for the site at this time. Recommendation #3 proposes that the Agency issue an RFP for sale of the El Dorado Building. It would be prudent to "test the market waters" on this office building before engaging in actual marketing of the property in order to get a clearer picture of the achievable value and to be able to assess the benefit of receiving that value compared to the impact the sale would have on City services currently occupying space in the building. The RFP process will allow the Agency the time to be more deliberate in analyzing the benefits of sale. The following table updates the list of Agency-owned properties, with current disposition recommendations: if r 3 Prooertv Marina Motor Hotel. Cappos (965 F St.)" Fuller Ford" South Bay Chevrolet" EI Dorado Building" Merziotis 340-368 Bay Blvd. Prior Value $1,200,000 900,000 1,100,000 900,000 1,600,000 2,200,000 1.100.000 $9,000.000 Current Value $1,200,000 " 900,000 " 1,100,000 " 900,000 " 1,400,000 " 1,200,000 1.265.000 $7,965,000 . RECOMMENDED SALES $5,500,000 Page 4, Item ~ Meeting Date 08/23/94 Proposed Disoosltion Sell to Port Sell to Port Market Market RFP Hold Hold As identified in the table, the five properties recommended for disposition represent a maximum amount of $5.5 million in land sale revenue. In each case, the actual amount of revenue to be generated from the sales are uncertain and dependent on a number of outside uncontrollable factors. Recommendation 4 It is recommended that staff return with a mid-year "progress" report in January, 1995. As indicated in the prior report, staff believes that the exercise of developing a long-range fmancial plan has been worthwhile and fruitful. Staff has laid out an ambitious plan that, when realized, will result in positive financial benefits and ramifications. In order to keep Council apprised of staffs progress, a report will be presented outlining: 1) the accomplishments made toward the attainment of the three recommendations stated above, 2) the plan of action for January through June 1995, and 3) the updated corresponding budgetary and fmancial impacts that are expected. Redemption of a Portion of the 1986 TABS As outlined in the previous budget report of June 21, staff presented a preliminary scenario whereby the Agency could fund approximately $6.5 million in debt service payments over the next 4 1/2 years by escrowing $5.5 million up front (presumably through cash raised by asset sales) to defease the "non-refundable" portion of the existing bonds. Unfortunately, in order to realize the maximum benefit of this plan, the Agency would need to raise $5.5 million and escrow it prior to May 1, 1995. The sale of property is the only viable source of this amount of money. Although staff feels that this is not feasible, any property sale revenues over and above the amount needed to fund the operating deficit will earn additional interest and effectively fund some portion of this debt service obligation. Section 3 Adoution Of 1994-95 Al!encv Budl!et Results of Agency Operations for Fiscal Year 1993-94 The following table shows the results of Agency operations, including expenditures for capital improvements and debt service, for fiscal year 1993-94. These figures differ significantly from those provided in the June 21, 1994 agenda item for various reasons, but primarily due to the inclusion of capital improvement expenditures in this schedule. The other differences are 1~tf Page 5, Item ~ Meeting Date 08/23/94 generally the result of refinements in revenue and expenditure figures due to fiscal year end accounting adjustments. The net result is that the Agency is now reflecting a $1,083,168 fund balance deficit as compared to the June 21, 1994 schedule showing an available fund balance of $863,289. The m'\ior capital expenditures excluded from the previous report were $1.1 million each for the Auto Park Project and the Otay Valley Road Street Widening Project, and $555,116 for the acquisition of the Shinohara property. REDEVELOPMENT AGENCY FY 93-94 FINANCIAL SUMMARY Beginning EXPENDITURES Ending ~ Fund Balanca Revenue ODsratina C.I.P. Dabt Sarvlca Fund Balance (Deficit) (Deficit) Southwest $ (312,113) $ 136,650 $ (263,821) $ (22,416) 0 $ (461,700) Bayfront/TC I 881,637 3,848,764 (1,493,381) (274,744) (3,623,487) (661,211) Town Centre II (1,129,934) 3,754,938 (2,906,590) (267) (1,011,044) (1,292,897) Otay Valley Road 1,778,712 859,935 (387,786) (2,899,697) 0 (648,836) low & Mod 1,224,278 1,128,537 (486,905) (161,475) 0 1,704,436 Fine Arts 268.624 16.415 (8.0001 0 0 277 .039 $2,711 .204 $9.745.239 $15.546.482) $f3.358.598) $(4.634.530) $n,083.1 681 Proposed Fiscal Year 1994-95 Budget The proposed Redevelopment Agency budget for 1994-95 totals $8,790,238 and is composed of Agency Operations ($4,163,916), Debt Service ($4,255,839), and Capital Improvements ($370,483). Estimated revenues to the Agency are projected to be $11,980,496, creating a budgetary surplus of $3,190,258 for this fiscal year. However, when the FY '93/94 operating deficit identified above is included, the final ending fund balance for FY '94/95 will be $2,107,090. The following tables show the proposed budget by project area, with separate presentations for Operations, Debt Service, and Capital Improvements. Since these figures have been somewhat refined since the June 21 report, also included is a reconciliation to those numbers and an explanation of significant differences. OPERATIONS 06/21/94 REPORT ADJUSTMENTS +/(-) 981 -RDA Housing 985-Southwest 990-Bayfront/Town Centre I 991 -Fine Arts 992-Town Centre II 993-Low Mod Orange Tree MHP 994-0tay Valley Subtotal $ 300,000 359,150 1,957,270 8,000 284,660 604,330 16,490 401.200 $3,931,100 $ 0 o 174,819 <~ o 24,345 ,., o o 33.652 ,., $232,816 ,., ERAF Payment to Schools 4-5 1994/95 Proposed $ 300,000 359,150 2,132,089 8,000 309,005 604,330 16,490 434.852 $4,163,916 DEBT SERVICE 06/21/94 REPORT 1986 Tax Allocation Bonds 1987 COPS "B" TCI 1987 COPS "B" TCII 1993 COPS-REF 1987 "A" 1993 COPS "Parking" LOW/MOD Loan Repayment NIC-Bayfront Conservancy Trust Subtotal $1,709,182 ,., 450,850 154,476 971,850 162,703 574,398 201.000 $4,224,459 (., tf Page 6, Item Meeting Date 08/23/94 ADJUSTMENTS +/H 1994/95 Proposed $605,778 o o o o (574,398) o $31,380 $2,314,960 'b' 450,850 154,476 971,850 162,703 o fol 201.000 $4,255,839 'b' ,., Contemplated the "Defeasement" of the "Non-Refundable" portion of the Bonds requiring escrow amount of $6.5 million -- this scenario is not deemed to be feasible. Estimated debt service in current year with the 86 TABS Refunding FY 93-94 loan not consummated --deemed unnecessary CAPITAL IMPROVEMENT PROGRAM 06/21/94 REPORT ADJUSTMENTS 1994/95 +/(-) Proposed 995-Geographic Information System $0 $ 10,000 $ 10,000 995-SD Shipbuilding Demolition 0 25.000 25.000 35,000 35,000 996-Auto Park 0 50,000 50,000 996-Geographic Information System 0 MQQ MQQ 55,000 55,000 997 -Paint Pit 0 267,000 267,000 ,., 997-Automated Budget System Q 13.483 1 3.483 280,483 280,483 Subtotal - CIP $0 $370,483 $370,483 Grand Total - All Cost. $8,155,559 $634,679 $8,790.238 ,., This expenditure may be eligible for reimbursement under "Polanco" judgement AGENCY REVENUE Adoption of the resolution will appropriate funds for the FY 1994/95 Redevelopment Agency budget totalling $8,790,238. This proposed budget is based on the recommendation to sell property and to use proceeds from the property sales to apply to the fund balance deficit and balancing the budget, while concurrently proceeding with the refunding of the 1986 TABS. If Council accepts all of the staff recommendations, staff will be pursuing the sale of a total of four properties and issue an RFP for the El Dorado building toward the goal of generating $5.5 million. If the sales goal is realized, there will be a budgetary surplus of $3,190,258 to be applied to the deficit as the table below indicates. 1~!.o Page 7, Item Meeting Date 08/23/94 + The table below identifies the current revenue projections as they compare with the ones presented in the prior report: REVENUES 06/21/94 REPORT ADJUSTMENTS 1994/95 +/(-) Proposed 985-Southwest $218,000 ($ 65,900) (0' $152,100 990-BayfrontfTC I 3,726,263 (133,907) (b1 3,592.356 99 t -Fine Arts 12,300 0 12,300 992-Town Centre II 671,804 (55,273) lb' 616,531 993-LOW/MOD Income Housing 991,100 54,847 lb' 1,045,947 994-0tay Valley Road 821,262 0 821,262 Paint Pit Judgement 0 240,000 240,000 Property Sales 1.714.830 3.785.170 5.500.000 TOTAL $8.155.559 $3.824.937 .11.980.496 FY 93/94 Operating Deficit ($1,083,168) ($1,083,168) Budgetary Surplus IDeficitl $2,107,090 '0' 'b' Decrease based on actual experience for prior year and tax sharing agreements with other agencies. Decrease or Increase based on actual experience for prior year. Section 4: Future Positive !moods - 1995/96 and Bevond Previously, staff provided a long term plan based on various growth scenarios. The result showed an annual operating deficit of a high of $2.5 million next year and declining slightly every year thereafter until sometime between FY 2002 and FY 2004 when Agency revenues would equal Agency expenditures. However, it is staffs opinion that this scenario is highly unlikely, given the following major factors: 1. Additional Agency Assets As provided in the Agency current year plan, the maximum amount of $5.5 million in sale proceeds from the recommended properties could be generated and added to fund balance in order to balance the budget and earn interest. Additional assets are also available for liquidation or development that could further protect the Agency from future budgetary deficits if necessary. These assets include the Merziotis, Shangri-La, and Bay Boulevard properties. 2. Completion of Major Projects Major projects such as the Mid-Bayfront, MCA Amphitheater, and/or phase II of the Auto Park will result in major "spikes" of tax increment revenue to the Agency that were not previously estimated in the cash flows. The prior cash flows were estimated utilizing historic growth trends and projecting similar trends for the future. Completion of these projects or some other projects that may come on-line, will significantly increase tax increment revenue to the Agency. 1-~7 Page 8, Item Meeting Date 08/23/94 tf 3. Growth of Southwest Project Area It is anticipated that the Agency's newest and largest project area, Southwest, will experience tremendous growth and therefore, growth in tax increment revenue for the Agency. The project was adopted in December 1990 and encompasses over 1,100 acres of industrial and commercial corridors along Main Street, South Broadway, South Third Avenue and 1-5. Staffis currently in the planning stages for street widening and other improvements for Main Street while also in the midst of an economic feasibility and land use study for the purposes of developing a long range economic development strategy for the area. It is expected that Southwest will be in a competitive position to be able to attract new businesses and development as the general economic climate improves. Therefore, the long range perspective is that Southwest will experience tremendous growth and will begin to provide some financial relief toward the end of the 1990s. 4. General Economic Improvement The' 1990s, so far, have not been prosperous in terms of real estate values and investment returns in California. This state has been in a prolonged slump deepened by the reduction in the military infrastructure and the painful conversion from a military based economy. However, with the tremendous diversity and strengths of the state in general, it is anticipated that California will again emerge from this recession as powerful and influential as ever. Therefore, as stated before, when the economy begins to pick up again, we will see a corresponding increase in property sales and appreciation, and therefore increased tax revenue for the Agency. 5. Stabilization of Tax Increment from State Assessed Utilities Although not relative to the expected revenue for the current year, staff is expecting to see stabilization of assessed values assigned to utilities beginning in FY 95-96 because FY 94-95 is the final year of a three year phase in of a 10.5% reduction in assessed values as a result of state-wide litigation. This is especially important in the Bayfront/Town Centre I Project Area, since almost 50% of that project's tax increment revenues are derived from this source. Other Expected Cost Savings and Revenue Increases Although the above described items are significant, they are difficult, if not nearly impossible, to estimate specific positive impacts. However, the following three items can be determined: 1. 1986 Bayfront TABS Refunding The Redevelopment Agency issued $7 million in Tax Allocation Bonds for the combined Bayfront/Town Centre Redevelopment Project Areas in 1979. These bonds were refinanced in 1984 and again in 1986 decreasing the total principal amount and annual debt service. The proposed refunding of the tax increment bonds, taking advantage of currently low interest rates, will reduce annual debt service and, consequently, reduce the Agency's annual operating deficit for the Bayfront Redevelopment Project Area. ~ ~f Page 9, Item -i- Meeting Date 08/23/94 Agency Resolution No. 1383, authorizing the issuance refunding of Tax Allocation Bonds in an amount not to exceed $37,500,000 was adopted on December 28, 1983, and Agency Resolution No. 1400, authorizing appointment of an underwriting team, bond counsel, and financial advisor for these bonds was adopted on May 4, 1994. In the Agency item for the May action, it was indicated that annual debt service savings of between $100,000 and $200,000 could be achieved, depending on market interest rates at the time of issuance. At this time, under the structure recommended by the refunding team, potential avera~e annual debt service savings through the final maturity date of the existing bonds, 2011, are projected to be in excess of $650,000. Savings of $816,000 are projected for 1994-95, largely due to only having to fund one semi- annual debt service payment in the initial year of the issue. The recommended structure contemplates issuing the refunding bonds with a final maturity date of 2024. Although this structure increases the overall cost of the borrowing over the life of the refunding issue, it maximizes annual savings through the year 2011, and still achieves overall present value savings of approximately 3 %. More importantly, by extending the maturity date, a higher coverage ratio of annual tax revenues to annual debt service is obtained, creating the opportunity for additional borrowing, if necessary, and the related extension of the pledge of tax revenues for debt service, tends to insulate this project from the State Legislature's continued attempts to pirate local funds. The tentative financing timetable calls for final Agency approval of the refunding and related legal documents in late September. 2. "Paint Pit" Judgement As Council is aware, the City/Agency has been pursuing legal recourse for the cost of removal of environmental hazards from the "Paint Pit" located on the Corporation Yard property at "F" and Woodlawn. All eligible Agency costs related to this clean up will be reimbursed to the Agency through the successful "Polanco" judgement pursued by our Special Legal Counsel to enforce the Agency's insurance policy. Currently, the Agency has submitted approximately $800,000 in invoices for reimbursement. Approximately $240,000 is expected to be paid by October 1994 ($212,513.30 + interest). The remaining amount (approximately $590,(00) will be argued before a jury trial to determine if they are eligible costs for reimbursement. Under the policy, expenditures related to clean-up of the "soil and water" are nQ1 covered. Disposition of the jury trial is expected by January 1995. However, for the purposes of projecting revenue, only the aforementioned $240,000 is included in the budget. Additionally, the current year ClP includes another $267,000 for the Paint Pit, which staff will be pursuing for reimbursement. 3. Final Year of ERAF Payment The current fiscal year is the final year in which the Agency is responsible for making payments to schools as part of the State budgetary bailout crisis. Beginning in FY 1992-93, the State seized approximately $1,113,000 from the Agency ($647,000 + $233,000 + $233,(00) to help 1-9 Page 10, Item ~ Meeting Date 08/23/94 balance its' own budget. Therefore as it stands now, the Agency will not need to make any other payments to the Slate which will result in reduced expenditure levels. Summary of Future Positive Impacts As we look ahead from the current fiscal year toward FY 95-96 and beyond, several significant factors, as described above, are on the horizon that will have positive impacts on the Agency's financial status both in terms of revenue enhancement and/or decreased expenditures. They are as follows: 1. Surplus funds from proposed property sales in current year · Maximum amount of $5.5 million 2. Additional property assets to sell including Merziotis, Shangri-La and Bay Boulevard · Maximum amount of $6.0 million o Merziotis $4,000,000 o Shangri-La $ 900,000 o Bay Blvd. $1,100,000 3. On-going savings from the 86 TABS · Average annual savings in excess of $650,000 through 2011 4. Completion of major projects · Undetermined impact but projects include Mid-Bayfront, MCA Amphitheater and Auto Park Phase II S. Outstanding growth potential from the Southwest Project Area · Undetermined, but expect tax increment revenue to take-off by the late 1990's 6. General improvement in the economy · Undetermined, but will increase property tax revenue to the Agency 7. Possible reimbursements from "Paint Pit" expenditures · $230,000 increase in current year revenue · Possibility of another $857,000 over the next two years ($590,000 + $267,(00) 8. Reduced Agency expenditures for the CIP · Reduction of approximately $200,000 from current year expenditure level 9. Final year of ERAF payment · Reduction of $233,000 from current year expenditure level 10. Stabilization of Unitary Tax Revenue · Undetermined, but Unitary Revenue will not be reduced as has been the case over the past several years )./--10 Page 11, Item Meeting Date 08/23/94 4- 11. No retroactive tax sharing payments from Southwest to the taxing districts · No additional "hits" to the existing fund balance of $247,000 It is expected that by taking prudent actions now, and with the expected financial revenue versus expenditure improvements identified above, that the Agency will again emerge from the current deficit situation. FISCAL IMPACT: Adoption of the 1994-95 proposed budget will appropriate $8,790,238 of an estimated $11,980,496 in revenues for Agency Operations, Debt Service, and Capital Improvements. The projected surplus will be applied to the current fund balance deficit. C:IWP511HA YNESIREPORTSICD95BUGT.lI3 ~ ,II This page intentionally left blank. 1--/'Y From the Office of the City Attorney City of Chula Vista Memorandum ATTACHMENT 1 Date: July 6, 1994 AttorneY~ From: Bruce M. Boogaard, city To: John Goss Chris Salomone cc: Honorable Mayor and Councilmembers Re: Modification of Investment Policy to Permit Investment in Agency-owned Real Estate. Facts: The City and its various related corporate entities, such as the Agency, Industrial Development Authority, Housing Authority, etc. have, from time to time, excess cash in various fund balances. The City accumulates this excess cash in an account referred to as an "Investment Pool". In essence, the equity owners of this Investment Pool are the many various funds in the City which have contributed . their excess balances to the Investment Pool in proportion to their specific contribution. Thus if the Sewer Fund contributed 25% to the Investment Pool, the Sewer Fund, managed by the City Council, is the owner of 25% of the Investment Pool, including all earnings or losses thereon. Similarly for the Housing Authority or Redevelopment Agency or Industrial Development Authority. In order to reduce the debt service payments of the Agency due on outstanding Agency bonds, the Agency would like to sell three of its properties to the City's Investment Pool, and use the proceeds therefrom to retire bonds. . Ouestion Presented: The City Council has inquired as to the legal permissibility of acquiring the three particular real estate parcelsll, and 1. It is beyond the assignment to determine the individual value (continued. ..) invest2.wp July 6, 1994 Legal Opinion re Investment in Real Estate Page 1 1~/3 specifically inquired, if necessary, as to the permissibility of modifying the city's investment policy guidelines to permit excess cash held in this Investment Pool to be used to purchase such real estate owned by the community Redevelopment Agency. Issue: L Does the City of Chula Vista, as a charter city, have the legal authority to acquire the property without modifying our guidelines? 2. Can our guidelines legalLy be amended to permit the ownership investment in real estate? Conclusions: 1. The city of Chula Vista is currently bound by our investment guidelines which would not permit such an investment because of the high risk, lack of liquidity, and low yield. 2. Our guidelines can not legally be amended to permit the ownership investment in real estate without charter permission being granted. Analvsis: Our current investment ~Olicy was approved by Resolution No. 12176 on September 24, 1985.-1 The former Finance Director felt obligated to abide by the investment standards set forth in Government Code section 53601~1 and 53635~1 ("Permissible Investments for Local Agencies") and civil Code Section 2261~1 ("Prudent Person Rule"), and proposed an Investment Policy consistent ~ith those standards. That Investment POlicy, as you can see from Exhibit A, will not allow the investment in real estate. Under the current policy, 1. (...continued) of the specified real estate, and risks associated with its acquisition by the Investment Pool. 2. Exhibit A, attached. 3. Exhibit B, attached. 4. Exhibit C, attached. 5. Now moved to Probate Code section 16040, attached hereto as Exhibit D. invest2.wp July 6, 1994 Legal Opinion re Investment in Real Estate Page 2 ~ --It real estate would violate the investment goals of "safety" because of the risk of market value depreciation, "liquidity" because it can not be readily converted to its cash equivalent of fair market value, and "yield" because one or two of the parcels do not have an income generated from the parcel, and because they do not offer the immediate prospect of appreciation. Can the Investment Policy be liberalized to permit the investment in real estate? No. The People of the City, through the Charter, have not assigned investment discretion to the city Council. Instead, they have somewhat ambiguously given "depository selection" authority (i.e., what bank to put cash in") to the City Councilor Manager if the city Council declines to act, but assigned general "fund handling authority" to the Director of Finance in Section 504 (h), and in doing so, constrains the Director to abide by state law for the handling of such funds: "Sec. 504. There shall be a Finance Department headed by a Director of Finance, who. shall have power and be required to: (h) Have custody of all public funds belonging to or under the control of the City or any office, department or agency of the City government and deposit all funds in such depository as may be designated by resolution of the City Council, or if no such resolution be adopted, by the city Manager, and in comoliance with all the orovisions of the State Constitution and the laws of the State qoverninq the handlinq. deoosi tinq and securinq of oublic funds; and . . ." The state law to which the Director is bound in the investment standard set forth in Section 53601 (for city Councils) and 53635 (for City Treasurers). Both standards are generally the same~1 and include such safe, low risk, liquid investments as Federal Government-issued debt instruments (U.S. Treasury Bills), State Government-issued debt instruments, "Triple A-rated" commercial debt instruments, and bank accounts. Fee-ownership in real estate is nearer to the other end of the risk spectrum. Even if the Charter were. silent on the issue of, or standards 6. Except that a City Council is granted a little more latitude than a City Treasurer/Finance Director. Compared Exhibit A to Exhibit B. invest2.wp July 6, 1994 Legal Opinion re Investment in Real Estate Page 3 1-/5 for, the investment of funds,II the presumption of the law is that the People of the City were relying on the general law of the state, unless they declared their exemption therefrom. In McLeod v. Board of Pension Commissioners of Citv of Los Anaeles. 14 Cal. App. 3d 23: 94 Cal. Rptr 58 (19701, the Second Appellate District held!!1 that "where the charter contains no special procedures concerning.a municipal subject, the general laws govern", citing the "Home Rule" section of the State Constitution: "Article XI, section 6, reads in part: "Cities organized under charters . . . are . . . empowered . to make and enforce all laws and regulations in respect to municipal affairs . . . and in respect to other matters thev shall be sub;ect to and controlled bv aeneral laws." The Municipal Law Handbook recently issued by the League of California cities cites McLeod as authority on this subject relating to "investment standards:" ". . .Traditionally, charter city financing has been a matter of local concern so charter cities have been able to set up their own investment policies and programs independent from the state. A charter city would only be constrained by basic constitutional limitations. However, in the rare instance where a city charter might omit any mention of specific investing or financing procedures, it appears the general laws would govern such procedures. . . .[McLeod]" Therefore, in the face of a charter imposing the state investment standard on the Finance Director, or a silent charter with no investment standard specified, Government Code Section 53601 controls the investment latitude available to the City. Local Redevelopment Agency-owned real estate does not qualify. Because of policy aspects investment. this conclusion, it is unnecessary to address the or business risks associated with such an other Considerations Nothing herein should be deemed to frustrate the Council's 7. See generally Article X. "Fiscal Administration" attached as Exhibit E. 8. In an unrelated case where a police officer was seeking to force a pension board of a charter city to use its subpoena powers available under general law. invest2.wp July 6, 1994 Legal Opinion re Investment in Real Estate Page 4 1~/b intention of reducing the debt service the Agency is currently facing. The Manager's recommendation in this regard is still a sound and economical approach to resolving the financial concerns of the Agency. The same parcels and perhaps others owned by the Agency can still be sold on the open market to third party purchasers (other than the City Investment Pool) over time and without any associated development restrictions (a "straight, open market" transaction"), and the proceeds could be made available for the call of bonds thereby liquidating said debt service. At such time as the Agency regains its financial health, the Agency can reacquire said 'parcels or other parcels needed to achieve a development purpose.2 Even if the Investment Pool would be a permitted purchaser of the Agency's parcels, as a fiduciary operating under the prudent person rule, the Investment Pool would be required to effectuate an arm's length transaction acquiring the parcels at fair market value. Properly done under this standard, there is essentially no difference between the amount of the proceeds that would be re- ceived by a sale to the Investment Pool and the proceeds received from a sale on the open market to a third party purchaser. Furthermore, if the Council desires, we can prosecute an amendment to the Charter through the Charter Review Committee and city Council to provide, for example, that: "Investment of surplus cash of the City, the various funds under its control, and its related entities shall be at the discretion of the City Council set by ordinance or written resolution." This would be sufficient instruction from the People of the city to permit the Council to deviate, by policy statement, from the state investment standard set by Government Code Section 53601 and 53635. This is not being recommended by the City Attorney, but is an option available for recommendation by the City Manager, or City Council. 9. If the market value has had further slippage from the resale price, the Agency will have profitted. If the market value improves above the resale price, the Agency will have taken a loss on the liquidation. But the risks of this market volatility is not, under State investment standards, permitted to be shifted to the Investment Pool. invest2.wp July 6, 1994 Legal Opinion re Investment in Real Estate Page 5 if-II This page intentionally left blank. +r I R t l:xHIE.ri,4 RESOLUTION NO. 12176 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE CITY OF CHULA VISTA INVESTMENT POLICY AND GUIDELINES The City Council of the City of Chula Vista does hereby , resolve as follows: WHEREAS, the Director of Finance has Investment Policy and Guidelines, attached hereto and incorporated herein by reference as if set forth prepared an as Exhibit A in full, and WHEREAS, said statement is intended to provide guidelines for the prudent investment of the City's temporary idle cash and outline the policies for maximiZing the efficiency of the City's cash management system, and WHEREAS, the investment condition of the City while invested, and goal is to enhance the economic insuring the safety of funds WHEREAS, at its meeting of August 20, 1985, requested staff to prepare additional language indicating preference regarding the investment of City funds. Council a local NOW, THEREFORE, BE IT RESOLVED that the City Council of City of Chula Vista does hereby approve the Investment Policy Guidelines attached hereto as Exhibit A. Presented by Approved as to form by 0<: f'L;.I~AI-A LY~hr~'t;;h~ -Director of , Finance ~~ '/?,cd:e Charles R. Gill, Assistant City Attorney . ., 4~19 This page intentionally left blank. 4...')-0 EXHIBIT A ~ CITY OF CHULA VISTA INVESTMENT POLICY AND GUIDELINES 1'2-17~ 1. PURPOSE This Statement is intended to provide guidelines for the prudent investment of the City's temporary idle cash, and outline the policies for maximizing the efficiency of the City's cash management system. The investment goal is to enhance the economic condition of the City while insuring the safety of funds invested. OBJECTIVE The City's cash management system is designed to accurately monitor and forecast expenditures and revenues, thus enabling the City to invest funds to the fullest extent possible. The City attempts to obtain the highest yiel d on its investments consi stent wi th the cri teri a establ i shed for safety and liquidity. 3. POLICY . The Finance Director is responsible for investing the surplus funds in the bJ City Treasury in accordance with the California Government Code, Sections \) \ 53600 et seq. and 53635 et seq. The City operates its temporary idle) A\\,l 19 cash investments under the prudent man rule (Civil Code Sect. 2261, et /11~V.D7 seq.l which states, in essence, that "in investing... property for the Y...... benefit of another, a trustee shall exercise the judgment and care, under ~oi ) I the circumstances then prevailing, which men of prudence, discretion and . i}1f/ . / intelligence exercise in the management of their own affairs..." ~ The three principle factors of safety, liquidity and yield are to be taken .I,dJl hbt-' into consideration when making investment decisions. I~ A.I III 1 V" C~. Al Safety. Safety and the mi nimi zi ng of risk associ ated wi th investing refers to attempts to reduce the potential for loss of principal, interest or a combination of the two. The City invests only in those instruments that are considered very safe. Bl Liquidity. Liquidity refers to the ability to convert an investment to cash promptly with minimum risk of losing some portion of principal or interest. A portion of the portfolio should be maintained in liquid short-term securities which can be converted to cash if necessary to meet disbursement requirements. Cl Yield. Yield is the average annual return on an investment based on the interest rate, price, and length of time to maturity. The City attempts to obtain the highest yield possible, provided that the basic criteria of safety and liquidity have been met. If - :2-1 INVESTMENT INSTRUMENTS /~/70 The City of Chula Vista may invest in the following instruments under the guidelines as provided herein: A) Certificates of De~osit. Time Certificates of Deposit will be made only 1n FDIC or fS IC 1nsured accounts. For deposits in excess of the insured maximum of $100,000, approved collateral shall be requi red in accordance wi th Cali forni a Government Code Secti on 53652 and/or 53651 (m) (l). B) Securities of the U.S. Government or its A~encles. Includes ob 11 gatl ons 1 ssued by federa I Home Loan Banks, overnment National Mortgage Association, Farm Credit System, the Federal Home Loan Bank, Federal Home Loan Mortgage Association, Federal National Mortgage Association, or obligations or other instruments of or issued by a federal agency or a United States Government sponsored enterprise. Treasury Bill s and Notes. U. S. Treasury Bi 11 s, Notes. Bonds or Certificates of Indebtedness, or those for which the full faith and credit of the United States are pledged for the payment of principal and interest. C) D) Local A~enCt Investment Fund (LAIF). Investment of funds Californ a AIF which allows the State Treasurer to' invest the Pooled Money Investment Account. Maximum investment is to state regulation. E) Bankers Acceptances. Bills of Exchange or Time Drafts drawn on and accepted by a commercial bank, otherwise known as Bankers Acceptances, both domestic and foreign, which are eligible for purchase by the Federal Reserve System. Purchases of Bankers Acceptances may not exceed 270 days maturi ty or 4~ of the Ci ty' s surplus money which may be invested. in the through subject F) Commercial Paper. Paper of the highest rating as provided by Moody's Investors Service, Inc., or Standard and Poor's Corporation (A-l: P~l). Purchases of eligible commercial paper may not exceed 180 days maturity or 15% of the City's surplus money which may be invested. Eligible paper is further limited to issuing corporations that are organized and operating within the United States and having total assets in excess of five hundred million dollars ($500,000,000). G) Negotiable Certificates of Oeposit. Issued by a nationally or state-chartered bank or a state or federal savings and loan association or by a state-licensed branch of a foreign bank. Purchases of Negotiable Certificates of Deposit may not exceed 3~ of the City's surplus money which may be invested. - 2 - 1- ;2N Hl . 1117~ Repurchase Agreements. A purchase of securities by the City pursuant to an agreement by which the seller will repurchase such securities on or before a specifi ed date, or on demand of ei ther party, and for a specified amount. Investments in repos will be used solely as short term investments not to exceed 90 days. 11 Other. Other investments that are, or may become, legal. investments through the State of California Government Code and with prior approval of the City Council. 5. DIVERSIFICATION Investments shall be di versified among i nsti tuti ons, types of securi ti es and maturities to maximize safety and yield with changing market conditions. Local financial institutions will be given preferential consi derati on for investment of Ci ty funds consi stent wi th the City IS objective of attaining market rates of return, and consistent with constraints imposed by its safety objectives, cash flow considerations and State laws. SAFEKEEPING All investments of the City shall have the City of Chula Vista as regi stered owner or shall be kept in the custody of the City or by a qualified safekeeping institution. 7. INVESTMENT REPORTS Al The Director of Finance shall submit a monthly investment report to the City Manager and City Council containing the following information: - Financial institution - Type of investment Amount of deposit - Rate of interest - Purchase date - Maturity date _ Current market value for securities with a maturity of more than 12 months - Other data as required by the City Bl The Director of Finance shall annually render a Statement of Investment Policy' to the City Council. - 3 - 1-:L3 This page intentionally left blank. ;.f~;L + COUNCIL AGENDA STATEMENT Item 16 Meeting Date 9/24/85 EM TITLE: Resolution 1~/1p Approving the City of Chula Vista Investment Policy and Guidelines MITTED BY: Di rector of Fi nance/~ City Manager@' (4/5ths Vote: Yes___ No~) The attached statement of Investment Pol icy and Guidel ines was initially submitted to the City Council on August 20, 1985. At that time, Council approved the Guide- lines but requested that staff return with additional language indicating a local preference regarding the investment of City funds. COMMENDATION: That the City Council adopt the resolution approving the Investment Policy. RDS/COMMISSIONS: Not Applicable. . The City of Chula Vista has had an infonnal policy in ,the past of "spreading around" the City's investments into local financial institutions as much as ~ssible. The City Council requested that staff formalize this policy by incorporating language into the City's Investment Policy and Guidelines that will give local financial institutions preferential consideration but not unduly handicap staff in making prudent investment decisions. To that effect, staff has added the following language to the Investment Policy and Guidelines under Section 5 - DIVERSIFICATION: "local financial institutions will be given preferential consideration for investment of City funds consistent with the City's objective of attaining market rates of return, and consistent with constraints. imposed by its safety objectives, cash flow considerations and State laws." The above language will' allow the flexibility to give preference to local financial institutions without locking us into an unwise commitment or investment. lSCAl IMPACT: None, /i~'~/::'- ~/.V d ... ,,~"'H of -t \/ f'r. City '....u.... ,.... . .". '. c..,;.;r"Ota c:-,~',~. ~: ;)~i-s~= Dated - 1~:15 A-1l3 (Rev, 11/79) This page intentionally left blank. 1,-;L&, ITEM TITLE: I /; !~; /' . v /;:..~ Item 14 Meeting Date 8/~85 Resolution Approving the City of .Chul a Vista Investment Policy and Guidelines COUNCIL AGENDA STATEMENT SUBMITTED BY: Di rector of Finance.;t'~ REVIEWED BY: City Manage~ (4/5ths Vote: Yes_No2.J Attached for the City Council review and approval is the proposed statement of Investment Policy and Guidelines for the investment of City funds. RECOMMENDATION: That the Ci ty Council adopt resol uti on approvi ng the Investment Policy. BOARDS/COMMISSIONS RECOMMENDATION: Not Applicable. DISCUSS ION: Interest income has, and will continue to be, a major source of revenue to the City of Chula Vista. In FY 1983-84, the City and Agency earned $1,565,246 in interest income and in FY 1984-85 earned $3,215,515 in'interest income. With an investment portfolio of almost $27 million including the City and Redevelopment Agency, it is important to have formal written guidelines regarding the investment of funds. Investment Policy and Guidelines In light of the recent scrutiny of the treasury function for municipalities and other public agencies, staff has prepared the following guidelines for the Prudent investment of the City's temporary idle cash. The purpose is to provide. broad guidelines to the officers of the City charged with the responsibility for investment of the City's funds. These guidelines are not intended to be comprehensive in every situation, but . rather to serve as a tool to hel p assure adequate safeguardi ng of the Ci ty' s assets. . As stated in the Investment Policy and Guidelines, the. City operates its investments under the "prudent man" rul e concentrati ng on three maj or.criterj a of Safety, Liquidity, and Yield. I ~.- ' . . . . The prudent man ule ,is contained in Civil Code Section 2261 and states that 'in invest ,rei nvesti ng, purchasi ng, acqui ri ng, exchangi ng, sell i ng and managing property for the benefi t of another; a trustee shall exercise the judgment and care, under the circumstances ,then prevailing, which men ;'of prudence, di screti on. and i ntell igence exerc ise in the management of thei r .own affai rs, not in regardi ng to specul ati on. but in regard to the penna~ent disposition of their funds, considering the probable income, as well.asJthe probable safety of their capita1." This general statement leads to consideration of major criteria. 1-~7 /2-I?~ Page 2, Item 14 Meeting Date 8/20/85 ~Iety - This is the basic premise underlying the investment policy for the I y of Chula Vista. This means minimizing the risk associated with investing 1d insuring the safety of funds. The City does not speculate; it does not JY stocks or deal in futures or options. The City invests only in those nstruments that are considered safe. iquidity - The City maintains a portion of its portfolio in liquid short-term ecUrl ti es whi ch can be converted to cash to meet di sbursement requi rements. rdinarfly, because investments carry a positive yield curve, (i.e., longer enn rates are hi gher than shorter maturi ti es 1, the Ci ty attempts to 1 adder ts maturities to meet anticipated cash needs in such a way that new nvestment money can be placed in maturities that carry a higher rate than is vailable in the extremely short market of 30 days or under. ield - The City attempts to obtain the highest return on investment that is vaITable, provided that the basic criteria of safety and liquidity have been et. n accordance with the guidelines and criteria as stated above, the City of hula Vista may invest in the following instruments: A) Certificates of Deposit B) Securities of the U.S. Government or its Agencies C) Treasury Bills and Notes D) . Local Agency Investment Fund E) Bankers Acceptances F) Commercial Paper G) Negotiable Certificates of Deposit H) Repurchase Agreements I) Other investments with prior approval of the City Council he above investment instruments are more fully described in the attached tatement of Investment Policy and Guidelines. nvestment Reports t is intended that the Director of Finance shall submit a monthly investment 'eport to the City Manager and City Council. ,ttached for Council information and review is the investment report for the lonth of July 1985. The first page is a summary that indicates the total 'mount of funds invested on behalf of the Ci ty of Chula Vista and the ledevelopment Agency, a summary of investments by type, and an indication of he par value versus book value of the investments. 'allowing the summary page is a detailed listing of each investment of the :ity that Pravi des i nformati on regarding type, value, acquisi ti on and maturity late, term, and yie1 d (rate of return 1. Current market val ue i nformati on is tlso provided for those investments with a term in excess of one year. 'he format of the investment report may be changed, adjusted, Idded or del eted at the suggesti on of the Ci ty Council. 1-- J.i or i nformati on 'ISCAL IMPACT: None. IPC 0301 G RESOLUTION NO. )}..1-7~ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE CITY OF CHULA VISTA INVESTMENT ~OLICY AND GUIDELINES The City Council of the City of Chula Vista does hereby resol ve as follows: WHEREAS, the Di rector of Finance has Investment Pol icy and Gu i de lines , attached hereto and incorporated herein by reference as if set forth prepared an as Exhibi t A in full, and WHEREAS, said statement is intended to provide guidelines for the prudent investment of the Ci ty' s temporary idle cash and outline the policies for maximizing the efficiency of the Ci ty' s cash management system, and WHEREAS, the investment goal is to enhance the economic condition of the City while insuring the safety of funds invested. . NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby approve the Investment Policy and Guidelines attached hereto as Exhibit A. ' Presented by Approved as to form by ~man Christopher, Director of Finance cC~~Ltu ~. ~-t;LL CrIes R. Gill, Assistant City Attorney 0700a J(~J-1 This page intentionally left blank. 1-je; . ' IV .' RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE CITY OF CHULA VISTA INVESTMENT POLICY AND GUIDELINES /1-17 ~ The City Council of the City of Chula Vista does hereby 'esolve as follows: WHEREAS, the Director of Finance has Investment policy and Guidelines, attached hereto and incorporated herein by reference as if set forth prepared an as Exhibit A in full, and WHEREAS, said statement is intended to provide guidel ines for the prudent investment of the Ci ty' s temporary idle cash and outline the policies for maximizing the efficiency of the City's cash management system, and WHEREAS, the investment goal is to enhance the economic condition of the City while insuring the safety of funds invested. NOW, THEREFORE, BE IT RESOLVED that the City' Council of the City of Chula Vista does hereby approve the Investment Policy and Guidelines attached hereto as Exhibit A. . Presented by Approved as to form by cC~h.uK. c-:LL CrIes R. Gill, Assistant City Attorney ~ 1-3/ This page intentionally left blank. 4-3r- CY2\ h. I-i ~ ~ ><. [() - _._~ ii ~. \':~"H;!W) ~mw \ IH~t \:~ ii:~.l :/l~i 1;iih~.gbn! l~H:i:~ ~~~~~ j~l~ ~",~~~:: ~ .~~ h8~~~oJl~~82: i~".5~",i5 .~~o ~ 1i iiJ:';;Ei ~~ 1e.~a.2silfe.!9h!!.1 -'l!hi'l<"iS ~~, =1 & H", :;&i;;"':!l~ ".5~ !l"'~'~ ;:s3oOl..-Son A'-~ ~"iS"" ell~l-ll 1l?>{I-' -:!l-'. ~ .i -:;lId18i~"iSU"" tllmg-at:..~ sa ~~ ~~~=~;;;' ~~Q "!tlO'5I~lna:8.sj>.c:l 11'5-8 ~olf O;s s: ~1'4 ..Q~~Q,"'~ ., 8~~ ~'S:;8:l-~.~ '1:.:n~~_~y.:iii"iS ~ ..~~ b~'i 'li~-:"'''':!l 0: := '''e'E .3~\.>. ~Q4.I~ o..c:CXe e~(lI~.-: 0"": "I:lC/}s;x....,3 ~ ~i~ h].~iUl~h85 H~~~;i rd~~ ~~j~ !N~~:: -< a i! .I....!!.~ 'a >. . ~! >..8 i ~,~ a '0 ... 0. d'C ~ i!..c: . ...... >. 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'll). ~ [ ~ ~.~ .ss~i~~~~ :lJ1~~]L~~~.'clI!.~i ~]~'cl,!j'al~ ;~!]] ].!ltJ ~ ~~ls,!j~} ~~ '''118E8.~ jii. iPll '~'!l::> S=~U ~i>. ~ i j ~ 'cl ~ ~ I ! ~ ~ [ ~.s l ~ ~ ~ ~ .~ ~ ~ ~ ~ I H U. ; j H H ~ ~ ~ ~ :l~'~h.!li ~ii~i!!gnHf; ~j~.~.~lli !~hi ~~% ::> ll~]h~"S~ ~J2l'!~~~]se~sl~ j~1!Hhe ~~n~ :~d~ 8 : ~ Q, ~ ,a ~ >.:a '!l Q.r ~(J.. ~ Ii u g t s 4> ~ ~ ., g 50:0 ~ e g & ~ ... :2 = "" g )!li!'s11 ~tll~I!III~i!1 ;il:I:~E~~liii ;I~ <3 ,;= ~.!l~-= "':lQ,"~=~Q,>"~~~] !!l13gQ, ...'t:f~>.~~ ~> ! tfiH~U] H~H jin f~j,!j! j.~ ~JiIHi =H ~t lH ~-:c.h!l',,!l ~ E ~ ~ .]'.~.!l' il' ~ 1 ~ ~ ~~ ~iP: &~ l~ ~ ~ ~ 2 g, ~~ .~:!!; ~ ~~~iPHls~';,di~nt:Slfp.€~~He~~~h3!~i ~H ~ fIl < ~ i i ! ~ ~:: $1] e 1 ~ ~; I! ~ !,S i i ~ i ~ j ! ~:~ ~ t s I ~ ~ ,S .8 ~ i ! "" "" is.s;=a~a Eli :h ~h ;'o~:; H'8~~~H 8'iih~ H +~3f EXHI(;n P ~1604O TRUST LAW Dlv.9 Article 2 TRUSTEE'S STANDARD OF CARE Section 16040. Standard of care; modification by trust instrument. 16041. Effect of compensation. t6042. Construction of trust language. TransttlonaI Provtalons Application of Division, see 6 /500/. Cro.. References Application of old and new law. see t 3. Common law rules soverning trusts, application. see t 15002. RelstlollJhIps excluded from Code definition of trust, applIcation of this dlvlslon, see Ii 15003. ~ 16040. Standard of care; modlftcatlon by trust Instrument (a) The trustee shall administer the trust with the care. skill. prudence. and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims to accomplish the purposes of the trust as determined from the trust instrument. (b) When investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing trust property. the trustee shall act with the care, skill, pru- dence. and diligence under the circumstances then prevailing, including but not limited to the general economic conditions and the anticipated needs of the trust and its beneficiaries, that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like characler and with like aims to accomplish Ihe purposes of the truSI as determined from the trust instrument. In the course of administering the trust pursuant to this standard, individual investments shall be considered as part of an overall investment strategy. (c) The settlor may expand or restrict the standards provided in subdivi- sions (a) and (b) by express provisions in the trust instrument. A trustee is not liable to a beneficiary for the trustee's good faith reliance on these express provisions, (Stats.1990, c. 79 (A.B.759), ~ 14, operative July t, 1991.) Law RevisIon Comml..loD Comment 1990 Enactment Section 16040 continues Section 16040 of the repealed Probate Code without change. Subdivision <a) provides a general standard of care for administra- tion of the trust; subdIvision (b) provides the standard of care applicable to investment and management of trust property. An expert trustee is held to the standard of care of other experts. See the discussion.s in Estate of Collins, 72 Cal.App.3d 663, 673, t39 Cat.Rptr. 644 (1977); Coberly v. Superior Court, 23t Cat.App.2d 685, 689, 42 Cat.Rptr. 64 44 '. <. . I I , ,!' This page intentionally left blank. rf~3!.o E,XH'1.g TT E ARTICLE X. FISCAL ADMINISTRATION. Sec. 1000. Fiscal Year. The fiscal year of the City government shall begin on the first day of July each year and end on the thirtieth day of June of the following year. Sec. 1001. Annual Budqet. Preparation bv the Citv Manaqer. The City Manager shall set a date for obtaining from each department head or other responsible City officer estimates of revenues and expenditures for the particular department or office detailed in such manner as may be prescribed by the City Manager. In preparing the proposed budget, the City Manager shall review the estimates and confer with the party submitting such estimates and revise such estimates as deemed advisable. Sec. 1002. Budqet. Submission to the citv Council. At least thirty-five days prior to the beginning of each fiscal year, the City Manager shall submit the proposed budget to the City Council. After reviewing same and making such revisions as it may deem advisable, the City Council shall determine the time for the holding of a public hearing thereon and shall cause to be published a notice thereof not less than ten days prior to said hearing, by at least one insertion in the official newspaper. Copies of the proposed budget shall be available for inspection by the public in the office of the City Clerk at least ten days prior to said hearing. Sec. 1003. Budqet. Public Hearinq. At the time so advertised, or at any time to which such pUblic hearing shall from time to time be adjourned, the City Council shall hold a public hearing on the proposed budget, at which interested persons desiring to. be heard shall be given such opportunity. Sec. 1004. Budqet. Further Consideration and Adoption. After the conclusion of the public hearing, the City Council shall further consider the proposed budget and make any revisions thereof that it may deem advisable and on or before June 30, it shall adopt the budget with revisions, if any, by the affirmative votes of at least three members. Upon final adoption, the budget shall be in effect for the ensuing fiscal year. A copy thereof, 1--37 Section 1004 (continued) certified by the City Clerk, shall be filed with the person retained by the City Council to perform auditing functions for the Council and a further copy shall be placed and shall remain on file in the Office of the city Clerk where it shall be available for inspection. The budget so certified shall be reproduced and copies made available for the use of departments, offices and agencies of the City. Sec. 1005. Budaet. Appropriations. From the effective date of the budget, the several amounts stated therein as proposed expenditures shall be and become appropriated to the several departments, offices and agencies for the respective objects and purposes therein named. All appropriations shall lapse at the end of the fiscal year to the extent that they shall not have been expended or lawfully encumbered except appropriations for specific capital projects incomplete at the end of the fiscal year. At any meeting after the adoption of the budget, the city Council may amend or supplement the budget by motion adopted by the affirmative votes of at least four members. Sec. 1006. Tax Limits. The tax limit for any ad valorem tax on real property shall be as prescribed by Article XIIIA of the Constitution of the state of California. Sec. 1007. Tax System. The procedure for the assessment, levy and collection of taxes upon property, taxable for municipal purposes may be prescribed by ordinance of the city Council. Sec. 1008. Bonded Debt Limit. The City shall not incur an indebtedness evidenced by general obligation bonds which shall in the aggregate exceed the sum of fifteen percent (15%) of the total assessed valuation, for the purposes of city taxation, of all the real and personal property within the city. No bonded indebtedness which shall constitute a general obligation of the City may be created unless authorized by the affirmative votes of two-thirds of the electors voting on such proposition at any election at which the question is submitted to the electors and unless in full compliance with the provisions of +-B! Section 1008 (continued) the State Constitution and of this Charter. No bonds payable out of any revenues of the City or of any department thereof, shall be issued without assent of a majority of the voters voting upon the proposition of issuing the same, at an election at which such propositions shall have been duly submitted to the qualified electors of the City. The City may issue bonds, notes or other obligations, any portions of the proceeds of which will be used to finance in whole or in part the acquisition, construction, equipping or improvement of any public utility, industrial or commercial facility and which will be payable in whole or in part out of any revenues derived from the operation of such public utility system or payments received from such industrial or commercial facility without the assent of the voters provided that neither the faith and credit of the City or any department thereof nor the taxing power of the City is pledged to the payment of principal or interest of such bonds, notes or other obligations. Sec. 1009. Contracts on Public Works. In the construction, reconstruction, or repair of public buildings, streets, drains, sewers, parks, playgrounds and other pUblic works, the furnishing of supplies, materials, equipment or contractual services for.same shall be done by written contract approved as to form and legality by the City Attorney. Every project involving an expenditure of fifty thousand dollars ($50,000.00) or more for the construction, reconstruction, improvement or repair of pUblic buildings, streets, drains, sewers, utilities, parks and playgrounds and other public works, and the furnishing of supplies, materials, equipment or contractual services for same shall be done by written contract except as otherwise provided in this chapter, and the Council, upon the recommendation of the City Manager, shall let said contract to the lowest responsible bidder after notice by publication in the official newspaper for sealed bids for the work contemplated by one or more insertions, the first of which shall be at least ten days before the time for opening bids. If the cost of said public works project is more than the sum of twenty-five thousand dollars ($25,000.00) but less than fifty thousand dollars ($50,000.00), the City Council may let said contract without advertising for bids after the City Manager or his designated agent has secured competitive prices from interested contractors; which shall be considered by the Council before said contract is let. If the project involves the expenditure of twenty five thousand dollars ($25,000.00) or less, the City Manager may cause such written contract to be let without advertising for bids. However, except in emergencies, the city Engineer or the Purchasing Agent ;f-g? Section 1009 (continued) shall obtain informal bids. The project shall be awarded to the lowest responsible bidder whose bid is determined to be, in all respects, most advantageous to the public interest. The city Engineer may solicit such bids personally, by telephone or by mail, and shall submit to the Purchasing Agent and the City Manager a written account of the procedures used and the bids thus obtained. A copy of said informal bidding procedure shall be filed in the Office of the city Clerk as a public record. The City Council may, however, declare and determine that, in its opinion, based upon estimates approved by and the recommendations of the City Manager, said projects may be excepted from the requirements of this section because the work in question may be performed better or more economically by the City with its own employees, and by a resolution to this effect, adopted by at least four affirmative votes of the Council, order the performance of any such construction, reconstruction, improvement or repair by appropriate City forces. All bids of more than fifty thousand dollars ($50,000.00) shall be accompanied by either a certified or cashier's check, or a bidder's bond executed by a corporate surety authorized to engage in such business in California, made payable to the City. Such security shall be in an amount not less than that specified in the notice inviting bids or in the specifications referred to therein, or if no amount be so specified, then in an amount not less than ten percent (10%) of th. aggregate amount of the bid. If the successful bidder neglects or refuses to enter into the contract within the time specified in the notice inviting bids or specifications referred to therein, the amount of his bidder's security shall be declared forfeited to the City and shall be collected and paid into its general fund and all bonds so forfeited shall be prosecuted and the amount thereof collected and paid into such fund. The City Council shall be competent to award any contract by comparison of bids on the basis of several factors including timely completion. Such an award shall be secured by a surety bond as hereinabove provided with adequate sureties and penalties, and provided, further, that for any contract awarded solely or partially on a specified time for completion, the Council shall not extend such time limits unless such extension Be recommended by the City Manager and the head of the Department concerned. The City Council may reject any and all bids presented and may readvertise in its discretion. The City Council may waive any defects in any bid to the extent it finds at a public hearing held for that purpose that it is necessary to do so for the benefit of the pUblic. Contracts may likewise be let without advertising for bids if such work shall be deemed by the City Council to be of urgent 1~fo Section 1009 (continued) necessity for the preservation of life, health or property, and shall be authorized by resolution passed by at least four affirmative votes of the Council and containing a declaration of the facts constituting such urgency; provided, however, that nothing in this section shall prevent the City Manager from taking any and all means necessary to make emergency repairs in the event of immediate need arising from any calamity or disaster. Sec. 1010. Centralized Purchasina. A centralized purchasing system shall be established for all city departments, offices and agencies. The City Manager shall recommend and the City Council shall consider and adopt, by ordinance, rules and regulations governing the contracting for, purchasing, storing, distribution or disposal of all property, supplies, materials and equipment required or possessed by any department, office or agency of the City government. Sec. 1011. Competitive Biddina. Before making purchases for or contracts for, supplies, materials or equipment, ample opportunity shall be g~ven for competitive bidding under such rules and regulations and with such exceptions as the City Council may prescribe in the ordinance setting up such rules and regulations. When making purchases for the City, merchants with places of business located within the City shall be given the preference, quality and prices being equal. Sec. 1012. Cash Basis Fund. (Repealed 11/5/85) Sec. 1013. Capital Outlays Fund. A fund for capital outlays generally is hereby created to be known as the "Capital Outlays Fund". The City Council may create, by ordinance, a special fund or funds for a special capital outlay purpose. The City Council may levy and collect taxes for capital outlays and may include in the annual tax levy a levy for such purposes, in which eyent it must apportion and appropriate to any such fund or funds the monies derived from such levy. It may not, in making such levy, exceed the maximum tax rate provided for in this Charter, unless authorized by the affirmative votes of a majority of the electors voting on the proposition at any election at which such question is submitted. The City Council may transfer to any such fund any unencumbered surplus funds remaining on hand in the City at any time. Once created, such fund shall remain inviolate for the purpose for which it was created; if for capital outlays generally, then 1-lf ( . . , I I I I I I I - Section 1013 (continued) for any such purposes, and if for a special capital outlay, then for such purpose only, unless the use of such fund for some other purpose is authorized by the affirmative votes of a majority of the electors voting on such proposition at a general or special election at which such proposition is submitted. If the purpose for which any special capital outlay fund has been created has been accomplished, the City Council may transfer any unexpended or unencumbered surplus remaining in such fund to the fund for capital outlays generally, established by this Charter. Sec. 1014. Departmental Trust Fund. The City Council shall prescribe, by ordinance, for the setting up of a "Departmental Trust Fund" into which the collections of the various departments, offices and agencies shall be deposited daily by the respective officers handling the receipt of such collections. Withdrawals from such fund may be made by the Director of Finance only on order signed by the proper department or division head. Sec. 1015. Presentation of Demands. Any demand against the City must be in writing and may be in the form of a bill, invoice, payroll, or formal demand. Each such demand shall be presented to the Director of Finance, who shall examine the same. ' If the amount thereof is legally due and there remains on his books an unexhausted balance of an appropriation against which the same may be charged, the Director of Finance shall approve such demand and draw a warrant on the City treasury therefor, payable out of the proper fund. Objections of the Director of Finance may be overruled by the City Council and the warrant ordered drawn. Sec. 1016. Reaisterina Warrants. (Repealed 11/5/85) Sec. 1017. Independent Audit. The City Council shall employ, at the beginning of each fiscal year, a qualified accountant who, at such time or times as may be specified by the City Council, shall examine the books, records, inventories and reports of all officers and employees who receive, handle or disburse public funds and all such other officers, employees or departments as the City Council may direct. As soon as practicable after the end of the fiscal year, a final audit and report shall be made by such accountant directly to a meeting of the City Council. One detailed copy shall be submitted to each ;f~ Lj-y Section 1017 (continued) member, one to the City Manager, Director of Finance and city Attorney, respectively, and three additional copies to be placed on file in the Office of the City Clerk where they shall be available for inspection by the general public. . '-f - +3 This page intentionally left blank. f- Lf f RESOLUTION 1411 RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ADOPTING THE REDEVELOPMENT AGENCY BUDGET FOR FY 1994-95 AND APPROPRIATING FUNDS THEREFOR WHEREAS. Redevelopment Agency staff have prepared budget requests for various redevelopment project areas and the Redevelopment Low and Moderate Income Housing Fund and; WHEREAS. the Redevelopment Agency has determined that the planning and administrative expenses are necessary for the production, improvement, or preservation of Low and Moderate-Income housing. WHEREAS. the Redevelopment Agency of the City of Chula Vista has reviewed and approved the budgets contained in fund numbers 980, 981, 985, 990. 991, 992, 993, and 994. NOW THEREFORE. BE IT RESOLVED THAT THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA does hereby appropriate funds for the purposes set forth in the 94-95 Redevelopment Agency Budget submitted by the Executive Director, subject to the same terms, conditions and authorities given to the City Manager over the City's budget, summarized by Fund Number, as follows: FUND PROJECT /PROGRAM AMOUNT 980 Debt Service - 86 TABS $ 2,314,960 981 RDA Housing Program 300,000 985 Southwest Project 359,150 990 BayfrontfTown Centre I 2,132,089 991 Redevelopment Fine Arts 8,000 992 Town Centre II Project 309,005 993 Low/Mod Income Housing 620,820 994 Otay Valley Project 434,852 f PRESENTED BY: ~~ ED 'AT M ''J) Chris Salomone Community Development Director Bruce M. Boogaard Agency General Cou [C:IWP51IAGENCYIRESOSIRES01411.RESI tf- Lf5 This page intentionally left blank. J/~ fb