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SR-417-006 (18) ~.B SEP 1 4, 2004 Council Meeting: September 14, 2004 Santa Monica, California TO: Mayor and City Council Chairperson and Redevelopment Agency Chairperson and Parking Authority FROM: City Staff SUBJECT: Modification of the Amended and Restated Sale and Performance Agreement of the Santa Monica Downtown Parking Garage Acquisition and Retrofit Project and Related Promissory Note INTRODUCTION This staff report recommends that the City Council, Parking Authority and Redevelopment Agency adopt the attached resolutions authorizing an amendment to the Amended and Restated Sale and Performance Agreement for the Santa Monica Parking Garage Acquisition and Retrofit Project and related promissory note. This amendment will split the note into two separate notes and convert the variable interest rate to a fixed rate on the new promissory notes resulting in a level debt service payment during the remaining life of the notes. BACKGROUND On January 9, 2003, the City Council, Redevelopment Agency and parking Authority approved the transfer of ownership of the downtown parking structures to the Redevelopment Agency to accomplish the seismic retrofit of the structures and preserve resources for this purpose. As part of that transaction, the Redevelopment Agency executed a promissory note of $60 million to the Parking Authority, to be paid from redevelopment tax increment revenues. The current outstanding balance of the note is ~~ SEP 1 4 2004 $58 million. The Parking Authority is required to use these payments to implement the redevelopment plan and facilitate redevelopment of the area. The Redevelopment Agency is also obligated to fund the seismic retrofit and other improvements of the downtown parking structures. DISCUSSION The payment on the note is currently based on a fixed principal amount and with a variable interest rate. In order to provide protection to the Redevelopment Agency against the risk of increasing interest rates, provide budget certainty for the annual amount to be paid under the note, and provide level debt service payments the promissory note must be modified. In addition to the interest rate conversion from a variable to fixed rate, the total outstanding principal balance will be allocated between two separate notes according to the Parking Authority's current financing needs. One note will correspond to the current financing plan of the Parking Authority and the other note will be for the remainder of the $58 million, with both notes using an interest rate not to exceed 7%. The term of the new notes will remain the same as the current note and will be fully paid by 2033. BUDGET/FINANCIAL IMPACT The conversion of the promissory note into two fixed rate notes will result in a predictable level payment and allow the Agency to budget these obligations with a known interest expense over the remaining twenty-nine years of the notes. The appropriate adjustments to the FY 04-05 budget for the Redevelopment Agency's interest expense account #17274.577221 and the Parking Authority's revenue account # 77610.404980 will be made when the Parking Authority's financing plan is completed. RECOMMENDATION It is recommended that: 1) The City Council adopt the attached resolution, authorizing an amendment to the Amended and Restated Sale and Performance Agreement and modification to the Promissory Note; 2) The Redevelopment Agency adopt the attached resolution, authorizing an amendment to the Amended and Restated Sale and Performance Agreement and modification to the Promissory Note; and 3) The Parking Authority adopt the attached resolution, authorizing an amendment to the Amended and Restated Sale and Performance and Agreement and modification to the Promissory Note. Prepared by: Steve Stark, Director of Finance Jeff Mathieu, Director of Resource Management Martin Kennerly, Administrative Services Officer Tina Rodriguez, Redevelopment Administrator Attachments: Exhibit A: Resolution of the City of Santa Monica Exhibit B: Resolution of the Redevelopment Agency Exhibit C: Resolution of the Parking Authority Exhibit D: Amendment NO.1 to Amended and Restated Sales and Performance Agreement Exhibit E: Promissory Note A Exhibit F: Promissory Note B Exhibit D AMENDMENT NO.1 TO AMENDED AND RESTATED SALE AND PERFORMANCE AGREEMENT BY AND AMONG THE CITY OF SANTA MONICA, THE PARKING AUTHORITY OF THE CITY OF SANTA MONICA AND THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA FOR THE SANTA MONICA DOWNTOWN PARKING GARAGE ACQUISITION AND RETROFIT PROJECT This AMENDMENT NO. 1 TO AMENDED AND RESTATED SALE AND PERFORMANCE AGREEMENT (the "Amendment No.1") is entered into and is effective as of this day of , 2004 (the "Effective Date") by and among the CITY OF SANTA MONICA (the "City"), the PARKING AUTHORITY OF THE CITY OF SANTA MONICA (the "Authority") and the REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA (the "Agency") with reference to the following: RECITALS: WHEREAS, on January 9, 2003, the City, the Authority and the Agency entered into that certain Sale and Performance Agreement (the "Agreement") pertaining to the Santa Monica Downtown Parking Garage and Retrofit Project (the "Project"); WHEREAS, on June 20,2003, the City, the Authority and the Agency entered into that certain Amended and Restated Sale and Performance Agreement (the "Amended Agreement") to correct an error in title and to restate the terms upon which the Authority sold and/or conveyed its interests in six (6) parking structures to the Agency, and the Agency purchased and/or accepted conveyance from the Authority of the Authority's interest in such structures; WHEREAS, in partial consideration of the transfer of the Authority Parking Structures (as defined in the Amended Agreement), the Agency agreed to pay $60,000,000 to the Authority pursuant to the terms of the Authority Promissory Note; WHEREAS, the parties desire to amend the Amended Agreement to modify the terms of the Authority Note to reflect two notes with fixed rates of interest instead of a variable interest rate and to amortize principal to produce level annual note payments for the resulting notes; and WHEREAS, the parties desire to replace the form of Authority Promissory Note attached as Exhibit C to the Amended Agreement, which Authority Promissory Note is used to secure the obligations under the Amended Agreement, to cancel the existing Authority Promissory Note executed pursuant to the terms of the Agreement and the Amended Agreement and to execute two (2) replacement notes ("Promissory Note A" and "Promissory Note B" and collectively, the "Authority Replacement Promissory Notes"), in the forms attached hereto as Exhibit C-l and C-2; and WHEREAS, the parties desire that the principal amount and interest rate of the Authority Promissory Note A shall be as designated by the Authority in furtherance of and corresponding to the financing plan of the Authority, and, with respect to the Authority Promissory Note B, the principal amount shall equal the remaining balance of unpaid principal of the Authority Promissory Note after deducting for the principal amount of Authority Promissory Note A, and the interest rate shall equal 7.00% per annum. AGREEMENT: NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants herein contained and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto mutually agree as follows: 1. Amendment to Amended A2reement. 1.1 All references in the Amended Agreement to "Authority Promissory Note" or "Promissory Note" shall mean the "Authority Replacement Promissory Notes." 1.2 The reference to "Exhibit C" in Section C.1 shall mean "Exhibits C-1 and C-2" and the reference therein in line 5 to "principal amount" shall mean "aggregate principal amount. " 1.3 follows: Section C.2. a., b. and c. of the Amended Agreement is hereby amended to read as "C.2. Authority Replacement Promissory Notes. The Authority Replacement Promissory Notes shall include the following provisions: a. The Authority Replacement Promissory Notes shall be delivered as two separate notes ("Promissory Note A" and "Promissory Note B") in the aggregate principal amount equal to the unpaid principal amount of Authority Parking Structures Purchase Price as of September 1, 2004. The principal amount of Promissory Note A shall be $ and the principal amount of Promissory Note B shall be $ . The term of Promissory Note A and Promissory Note B each shall end on January 1, 2033. b. The Agency shall pay to the Authority, or its assigns, principal and interest due under Promissory Note A and Promissory Note B on each January 1 through and including January 1, 2033, in the amounts set forth on Schedule of Payments attached to each Promissory Note A or Promissory Note B. c The unpaid principal amount of Promissory Note A shall bear interest at the rate( s) not to exceed 7% per annum and shall be as set forth on Exhibit A to Promissory Note A. The unpaid principal amount of Promissory Note B shall bear interest at the rate of7.00% per annum." 45504976.3 -2- 2. Amendment to Authority Promissory Note. The form of the Authority Promissory Note attached as Exhibit C to the Amended Agreement is hereby replaced with the form of Promissory Note A and Promissory Note B attached hereto as Exhibit C-1 and C-2 (the "Authority Replacement Promissory Notes"). 3. Aereement to Execute. The Agency hereto agrees to execute the Authority Replacement Promissory Notes concurrently with the cancellation of any existing Authority Promissory Note issued pursuant to the terms of the Amended Agreement, all concurrently with the execution of this Amendment. 4. Miscellaneous. Except as hereinabove provided, the Amended Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the _ day of ,2004, to be effective as of the date first set forth above. CITY OF SANTA MONICA By: Susan E. McCarthy, City Manager Attest: By: Maria Stewart, City Clerk PARKING AUTHORITY OF THE CITY OF SANTA MONICA By: Susan E. McCarthy, Executive Secretary Attest: By: Maria Stewart, Authority Clerk 45504976.3 -3- Attest: By: Maria Stewart, Secretary APPROVED AS TO FORM: Marsha Jones Moutrie City Attorney and Authority and Agency General Counsel 45504976.3 REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA By: Susan E. McCarthy, Executive Director ~4- Exhibit E EXHIBIT C-1 PROMISSORY NOTE A SECURED BY DEED OF TRUST (AUTHORITY) Principal Amount Santa Monica, California Dated: , 2004 $ A. The REVELOPMENT AGENCY OF THE CITY OF SANTA MONICA (the "Borrower"), the CITY OF SANTA MONICA (the "City"), and the PARKING AUTHORITY OF THE CITY OF SANTA MONICA ("Lender"), have entered into that certain Sale and Performance Agreement dated as of January 9, 2003 ("Agreement") and amended by that certain Amended and Restated Sale and Performance Agreement dated as of June 20, 2003 (the "2003 Agreement"), and as further amended by the Amendment No. I to the 2003 Agreement dated _, 2004 ("Amendment No. I," and, together with the 2003 Agreement, the "Amended Agreement") regarding the acquisition by the Borrower of the Lender's interest in the Authority Parking Structures. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Amended Agreement. This Note is made pursuant to, entitled to the benefits of, and referred to as the "Promissory Note A" in the Amended Agreement. B. Pursuant to the Amended Agreement, Lender has agreed to permit Borrower to acquire its interest in the Authority Parking Structures, subject to the terms thereof. To induce Lender to permit such acquisition, Borrower has agreed, among other things to execute this Note. This Note is secured by, among other things, the Amended Deed of Trust dated on or about the same date as this Note, executed by Borrower as Trustor, in favor of the Lender as beneficiary and encumbering the real property described in the Amended Deed of Trust (the. "Property"). The Amended Deed of Trust also secures that certain Note B, dated the same date as this Note, in the principal amount of$ NOW, THEREFORE, in consideration of the foregoing, Borrower hereby agrees as follows: 1. Principal. The Borrower promises to pay to the order of the Lender at 1685 Main Street Santa Monica, CA 90401, or at such other place as Lender may from time to time designate in writing or to the assignee of Lender, the principal sum of Million Dollars ($ ) ("Principal"), with interest, as set forth in this Note. 2. Tntered. Commencing on the date of this Note first written above, the principal amount of this Note shall bear simple interest calculated on an annual basis at the rate(s) of interest not to exceed 7% per annum, as shall be designated by Lender in furtherance of and corresponding to the financing plan of Lender, in the amounts set forth in Exhibit A to this Note. 3. Repayment Terms. a. Borrower shall make payments to the Lender as provided in this Section 3. b. ill accordance with the Amended Agreement, Borrower shall make a total of twenty- seven (27) payments to the Lender, each such payment to be made on January 1st of each year for a period of twenty-seven (27) years commencing on January I, 2007. Each payment of principal and interest shall be in an amount as set forth in the Schedule of Payments attached hereto as Exhibit A and incorporated herein by this reference. c. Consistent with the proper and orderly implementation of the Redevelopment Plan for the Santa Monica Earthquake Recovery Redevelopment Project (the "Project Area"), all payments made by Borrower pursuant to this Note shall be made from legally available funds of the Project Area. d. Borrower's obligation to make any payment to Lender shall not be construed as a "pledge" of property tax revenue for the purposes of Section 33671.5 of the California Community Redevelopment Law (Health & Safety Code Section 33000 et seq.). e. The indebtedness of the Borrower created by the Agreement and this Note shall be subordinate to the Borrower's existing indebtedness and bond issuance(s) and the refunding or refinancing thereof and any future bonds and/or other indebtedness the Borrower may issue and the indebtedness incurred in connection therewith; provided that the Borrower determines at the time of issuance of any such future bonds and/or other indebtedness that the issuance and indebtedness will not materially adversely affect the Borrower's ability to perform its obligations under this Note. illdebtedness includes any indebtedness incurred by the Borrower for bonds, notes, interim certificates, debentures, certificates of participation or other obligations issued by the Borrower. 4. Prf>p,.yment. Borrower may refinance or prepay the outstanding indebtedness under this Note, in whole or in part, together with any accrued but unpaid interest and other sums owed to the Lender under this Note, at any time and from time to time, without penalty. 5. T ,awful Money. All sums due and owing under this Note are payable in lawful money of the United States of America. 2 6. Applications of Payments: T ,ate Charges. a. Any payments received by the Lender pursuant to the terms hereof shall be applied first to sums, other than principal and interest, due the Lender pursuant to this Note, next to the payment of all interest accrued to the date of such payment, and the balance, if any, to the payment of principal. b. If any payment is not received by the Lender within ten (10) days following the due date thereof, then in addition to the remedies conferred upon the Lender pursuant to this Note, the Amended Deed of Trust and the Amended Agreement, Borrower shall pay, at Lender's option, a late charge of not less than One Hundred Dollars ($100) and not more than One Thousand Dollars ($1,000) to compensate the Lender for the expense of handling the delinquency. Borrower shall pay this late charge only once on any payment. 7. Rvent of nefault a. Upon the failure of Borrower to perform or observe any term or provision of this Note, or upon the occurrence of any event of default under the terms and conditions of the Amended Deed of Trust or the Amended Agreement, then the Lender may exercise its rights or remedies hereunder or thereunder. b. Subject to the provisions of Section 8 and 15 hereof, the occurrence of any of the following shall be deemed to be an event of default ("Event of Default) hereunder: (1) Failure by Borrower to make any payments provided for herein; or (2) Failure by Borrower to perform any covenant or agreement in this Note, the Deed of Trust or the Agreement. 8. Notice ofnefault. a. Subject to the extensions of time set forth in Section 15, and subject to the further provisions of this Section 8, failure or delay by Borrower to perform any material term or provision of this Note, the Amended Deed of Trust, or the Amended Agreement constitutes a default under this Note. Any failures or delays by Lender in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by Lender in asserting any of its rights and remedies shall not deprive Lender of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. 3 b. Upon any default described in this Section 8, Lender shall deliver written notice to Borrower ("Notice of Default"), which notice shall specify the nature of the default. If the default is not cured within ten (10) days after receipt of the Notice of Default if an obligation to pay money, or within thirty (30) days after receipt of the Notice of Default otherwise, or if such default (other than the payment of money) is of a type which is not capable of being cured within thirty (30) days after receipt ofthe Notice of Default (or if commencement of a cure cannot reasonably begin within thirty (30) days, then within such reasonable period of time as Lender may allow to commence to cure the default) and is not cured promptly in a continuous and diligent manner within a reasonable period of time after commencement, Lender shall be entitled to exercise any and all rights or remedies which may be available at law or in equity. Any and all rights or remedies available to Lender shall be cumulative, not alternative. c. Any notice of default that is transmitted by electronic facsimile transmISSIOn followed by delivery of a "hard" copy shall be deemed delivered upon its transmission; any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by u.s. Postal Service), shall be deemed received on the documented date of receipt by Borrower, or two (2) days after deposit of such notice in the United States mail, postage prepaid, return receipt requested. Any notice to any party shall be addressed to the party as follows: Lender: Parking Authority of the City of Santa Monica 1685 Main Street Santa Monica, CA 90401 Attn: Executive Secretary Borrower: Redevelopment Agency of the City of Santa Monica 1685 Main Street Santa Monica, CA 90401 Attn: Executive Director 9. Remerlie~. Upon the occurrence of an Event of Default, the giving of notice and the expiration of any applicable cure period therefore, Lender may declare all sums evidenced hereby immediately due and payable by delivery to the Borrower of a written declaration of default and demand for payment. 10. Waiver, Borrower hereby waives diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this Note, and expressly agrees that, without in any way affecting the liability of Borrower hereunder, Lender may extend any maturity date or the time for payment of any installment due hereunder, accept additional security, release 4 any party liable hereunder and release any security now or hereafter securing this Note. Borrower further waives, to the full extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this Note, or on any deed of trust, security agreement, guaranty or other agreement now or hereafter securing this Note. 11. Attorneys' Fees, In the event of any dispute, legal proceeding, foreclosure or other enforcement action, reference or arbitration between the parties arising out of or relating to this Note or its breach, the prevailing party shall be entitled to recover from the non- prevailing party all fees, costs and expenses, including but not limited to attorneys' and expert witness fees, incurred in connection with such dispute, legal proceeding, foreclosure or other enforcement action, reference or arbitration, with any counterclaims or cross- complaints, with any appeals, and with any proceeding to establish and recover such costs and expenses, in such amount as the court deems reasonable. 12. Sevp.rahility. Every provision in this Note is intended to be severable. In the event any term or provision hereof is declared by a court of competent jurisdiction to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. 13. 'nip.red Rate' ,imitation. It is the intent of the Borrower and Lender in the execution of this Note and all other instruments securing this Note that the loan evidenced hereby be exempt from the restrictions of the usury laws of the State of California. The Lender and Borrower stipulate and agree that none of the terms and provisions contained herein or in any of the loan instruments shall ever be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of the State of California. In such event, if the Lender shall collect monies which are deemed to constitute interest, which would otherwise increase the effective interest rate on this Note to a rate in excess of such maximum rate shall, at the option of the Lender, be credited to the payment of the sums hereunder or returned to Borrower. 14. Numher and Gender. In this Note, the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa, ifthe context so requires. 15. F.nforl'p.d np.lay, For purposes of any provision ofthis Note, no party, nor any successors or assign of any party, shall be considered in breach of, or default in, its obligations under this Note as a result of the enforced delay in the performance of such obligations due to causes beyond such party's reasonable control, including, without limitation, failure of governmental agencies to act or to issue necessary permits or licenses, acts of God, acts of the public enemy, acts of the State or Federal governments, acts of any other party (including, but not limited to, delays in performing such other party's obligations pursuant 5 to this Note), fires, floods, epidemics, quarantine restrictions, strikes, labor disputes, freight embargoes, inability to obtain materials or supplies or unusually severe weather or delays of contractors and subcontractors due to such causes; it being the purpose and intent of this provision that in the event of the occurrence of any such enforced delay, the time or times for performance of the obligations of such party shall be extended for the period of the enforced delay. 16. Security. This Note, including any extensions or amendments hereto, and Borrower's obligation to pay the indebtedness evidenced by this Note, is secured by the Amended Deed of Trust. 17. Nonrecourse Ohlieation. Notwithstanding anything contained to the contrary in this Note, this Note shall be payable by Borrower without personal liability of the Borrower, or any officer, director, agent, attorney, servant or employee of Borrower, and the Note holder shall have no recourse for such payment with interest except against the Property against which this Note is secured. 18. .Joint Venture. The relationship of Borrower and Lender under this Note is solely that of borrower and lender, and the loan evidence by this Note and secured by the Amended Deed of Trust will in no manner make the Borrower the partner of joint venturer of Borrower. IN WITNESS WHEREOF, Borrower has executed this Note as of the day and year set forth above. Attest: REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA By: Maria Stewart Secretary Susan E. McCarthy Executive Director Approved As To Form: Marsha Jones Moutrie City Attorney and Authority and Agency General Counsel 6 EXHIBIT A * SCHEDULE OF PAYMENTS Payment Date Principal Interest (January 1) Amount Amount Total Payment 2007 $ 810,000.00 $ 809,641.88 $ 1,619,641.88 2008 835,000.00 1,594,983.76 2,429,983.76 2009 865,000.00 1,565,758.76 2,430,758.76 2010 895,000.00 1,535,483.76 2,430,483.76 2011 925,000.00 1,504,158.76 2,429,158.76 2012 955,000.00 1,471,783.76 2,426,783.76 2013 995,000.00 1,433,583.76 2,428,583.76 2014 1,030,000.00 1,398,758.76 2,428,758.76 2015 1,065,000.00 1,362,708.76 2,427,708.76 2016 1,105,000.00 1,322,771.26 2,427,771.26 2017 1,150,000.00 1,281,333.76 2,431,333.76 2018 1,195,000.00 1,235,333.76 2,430,333.76 2019 1,240,000.00 1,187,533.76 2,427,533.76 2020 1,295,000.00 1,136,383.76 2,431,393.76 2021 1,345,000.00 1,081,346.26 2,426,346.26 2022 1,405,000.00 1,022,502.50 2,427,502.50 2023 1,470,000.00 959,277.50 2,429,277.50 2024 1,535,000.00 893,127.50 2,428,127.50 2025 1,605,000.00 824,052.50 2,429,052.50 2026 1,680,000.00 750,222.50 2,430,222.50 2027 1,760,000.00 671,262.50 2,431,262.50 2028 1,840,000.00 588,542.50 2,428,542.50 2029 1,925,000.00 502,062.50 2,427,062.50 2030 2,015,000.00 411,587.50 2,426,587.50 2031 2,115,000.00 315,875.00 2,430,875.00 2032 2,215,000.00 215,412.50 2,430,412.50 2033 2,320,000.00 110200.00 2,430200.00 TOTAL $37,590,000.00 $27,185,689.52 $64,775,689.52 * Preliminary, subject to change. Exhibit F EXHillIT C-2 PROMISSORY NOTE B SECURED BY DEED OF TRUST (AUTHORITY) $ Principal Amount Santa Monica, California Dated: , 2004 A. The REVELOPMENT AGENCY OF THE CITY OF SANTA MONICA (the "Borrower"), the CITY OF SANTA MONICA (the "City"), and the PARKING AUTHORITY OF THE CITY OF SANTA MONICA ("Lender"), have entered into that certain Sale and Performance Agreement dated as of January 9, 2003 ("Agreement") and amended by that certain Amended and Restated Sale and Performance Agreement dated as of June 20,2003 (the "2003 Agreement"), and as further amended by the Amendment No.1 to the 2003 Agreement dated , 2004 ("Amendment No.1," and, together with the 2003 Agreement, the "Amended Agreement") regarding the acquisition by the Borrower of the Lender's interest in the Authority Parking Structures. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Amended Agreement. This Note is made pursuant to, entitled to the benefits of, and referred to as the "Promissory Note B" in the Amended Agreement. B. Pursuant to the Amended Agreement, Lender has agreed to permit Borrower to acquire its interest in the Authority Parking Structures, subject to the terms thereof. To induce Lender to permit such acquisition, Borrower has agreed, among other things to execute this Note. This Note is secured by, among other things, the Amended Deed of Trust dated on or about the same date as this Note, executed by Borrower as Trustor, in favor of the Lender as beneficiary and encumbering the real property described in the Amended Deed of Trust (the "Property"). The Amended Deed of Trust also secures that certain Note A, dated the same date as this Note, in the principal amount of$ NOW, THEREFORE, in consideration of the foregoing, Borrower hereby agrees as follows: 1. Prindpal. The Borrower promises to pay to the order of the Lender at 1685 Main Street Santa Monica, CA 90401, or at such other place as Lender may :from time to time designate in writing or to the assignee of Lender, the principal sum of Million Dollars ($ ) ("Principal"), with interest, as set forth in this Note. 2. Tntered, Commencing on the date of this Note first written above, the principal amount of this Note shall bear simple interest calculated on an annual basis at the interest rate of7.00% per annum. 3. Repayment Terms. a. Borrower shall make payments to the Lender as provided in this Section 3. b. In accordance with the Amended Agreement, Borrower shall make a total of twenty- nine (29) payments to the Lender, each such payment to be made on January 1st of each year for a period of twenty-nine (29) years commencing on January 1, 2005. Each payment of principal and interest shall be in an amount as set forth in the Schedule of Payments attached hereto as Exhibit A and incorporated herein by this reference. c. Consistent with the proper and orderly implementation of the Redevelopment Plan for the Santa Monica Earthquake Recovery Redevelopment Project (the "Project Area"), all payments made by Borrower pursuant to this Note shall be made from legally available funds ofthe Project Area. d. Borrower's obligation to make any payment to Lender shall not be construed as a "pledge" of property tax revenue for the purposes of Section 33671.5 of the California Community Redevelopment Law (Health & Safety Code Section 33000 et seq.). e. The indebtedness of the Borrower created by the Agreement and this Note shall be subordinate to the Borrower's existing indebtedness and bond issuance(s) and the refunding or refinancing thereof and any future bonds and/or other indebtedness the Borrower may issue and the indebtedness incurred in connection therewith; provided that the Borrower determines at the time of issuance of any such future bonds and/or other indebtedness that the issuance and indebtedness will not materially adversely affect the Borrower's ability to perform its obligations under this Note. Indebtedness includes any indebtedness incurred by the Borrower for bonds, notes, interim certificates, debentures, certificates of participation or other obligations issued by the Borrower. 4. Prepayment Borrower may refinance or prepay the outstanding indebtedness under this Note, in whole or in part, together with any accrued but unpaid interest and other sums owed to the Lender under this Note, at any time and from time to time, without penalty. 5. T ,awful Monp.y, All sums due and owing under this Note are payable in lawful money of the United States of America. 6. Applications of Payments~ T ,ate Charees. a. Any payments received by the Lender pursuant to the terms hereof shall be applied 2 first to sums, other than principal and interest, due the Lender pursuant to this Note, next to the payment of all interest accrued to the date of such payment, and the balance, if any, to the payment of principal. b. If any payment is not received by the Lender within ten (10) days following the due date thereof, then in addition to the remedies conferred upon the Lender pursuant to this Note, the Amended Deed of Trust and the Amended Agreement, Borrower shall pay, at Lender's option, a late charge of not less than One Hundred Dollars ($100) and not more than One Thousand Dollars ($1,000) to compensate the Lender for the expense of handling the delinquency. Borrower shall pay this late charge only once on any payment. 7. Rvent of Default. a. Upon the failure of Borrower to perform or observe any term or provision of this Note, or upon the occurrence of any event of default under the terms and conditions of the Amended Deed of Trust or the Amended Agreement, then the Lender may exercise its rights or remedies hereunder or thereunder. b. Subject to the provisions of Section 8 and 15 hereof, the occurrence of any of the following shall be deemed to be an event of default ("Event of Default) hereunder: (1) Failure by Borrower to make any payments provided for herein; or (2) Failure by Borrower to perform any covenant or agreement in this Note, the Deed of Trust or the Agreement. 8. Noti"e of Defanlt a. Subject to the extensions oftime set forth in Section 15, and subject to the further provisions of this Section 8, failure or delay by Borrower to perform any material term or provision of this Note, the Amended Deed of Trust, or the Amended Agreement constitutes a default under this Note. Any failures or delays by Lender in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by Lender in asserting any of its rights and remedies shall not deprive Lender of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. b. Upon any default described in this Section 8, Lender shall deliver written notice to Borrower ("Notice of Default"), which notice shall specify the nature of the default. If the default is not cured within ten (10) days after receipt of the Notice of Default 3 if an obligation to pay money, or within thirty (30) days after receipt of the Notice of Default otherwise, or if such default (other than the payment of money) is of a type which is not capable of being cured within thirty (30) days after receipt ofthe Notice of Default (or if commencement of a cure cannot reasonably begin within thirty (30) days, then within such reasonable period of time as Lender may allow to commence to cure the default) and is not cured promptly in a continuous and diligent manner within a reasonable period of time after commencement, Lender shall be entitled to exercise any and all rights or remedies which may be available at law or in equity. Any and all rights or remedies available to Lender shall be cumulative, not alternative. c. Any notice of default that is transmitted by electronic facsimile transmISSIon followed by delivery of a "hard" copy shall be deemed delivered upon its transmission; any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by u.s. Postal Service), shall be deemed received on the documented date of receipt by Borrower, or two (2) days after deposit of such notice in the United States mail, postage prepaid, return receipt requested. Any notice to any party shall be addressed to the party as follows: Lender: Parking Authority of the City of Santa Monica 1685 Main Street Santa Monica, CA 90401 Attn: Executive Secretary Borrower: Redevelopment Agency ofthe City of Santa Monica 1685 Main Street Santa Monica, CA 90401 Attn: Executive Director 9. Remedies. Upon the occurrence of an Event of Default, the giving of notice and the expiration of any applicable cure period therefore, Lender may declare all sums evidenced hereby immediately due and payable by delivery to the Borrower of a written declaration of default and demand for payment. 10. Waiver. Borrower hereby waives diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this Note, and expressly agrees that, without in any way affecting the liability of Borrower hereunder, Lender may extend any maturity date or the time for payment of any installment due hereunder, accept additional security, release any party liable hereunder and release any security now or hereafter securing this Note. Borrower further waives, to the full extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this Note, or on any deed of trust, 4 security agreement, guaranty or other agreement now or hereafter securing this Note. 11. Attorn~ys' Fees. In the event of any dispute, legal proceeding, foreclosure or other enforcement action, reference or arbitration between the parties arising out of or relating to this Note or its br~ach, the prevailing party shall be entitled to recover from the non- prevailing party all fees, costs and expenses, including but not limited to attorneys' and expert witness fees, incurred in connection with such dispute, legal proceeding, foreclosure or other enforcement action, reference or arbitration, with any counterclaims or cross- complaints, with any appeals, and with any proceeding to establish and recover such costs and expenses, in such amount as the court deems reasonable. 12. Severahility. Every provision in this Note is intended to be severable. In the event any term or provision hereof is declared by a court of competent jurisdiction to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. 13. T nterest Rate Limitation. It is the intent of the Borrower and Lender in the execution of this Note and all other instruments securing this Note that the loan evidenced hereby be exempt from the restrictions of the usury laws of the State of California. The Lender and Borrower stipulate and agree that none of the terms and provisions contained herein or in any of the loan instruments shall ever be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of the State of California. In such event, if the Lender shall collect monies which are deemed to constitute interest, which would otherwise increase the effective interest rate on this Note to a rate in excess of such maximum rate shall, at the option of the Lender, be credited to the payment of the sums hereunder or returned to Borrower. 14. Nllmher ami Gender. In this Note, the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa, ifthe context so requires. 15. Rnforced fiela)', For purposes of any provision ofthis Note, no party, nor any successors or assign of any party, shall be considered in breach of, or default in, its obligations under this Note Bs a result of the enforced delay in the performance of such obligations due to causes beyond such party's reasonable control, including, without limitation, failure of governmental agencies to act or to issue necessary permits or licenses, acts of God, acts of the public enemy, acts of the State or Federal governments, acts of any other party (including, but not limited to, delays in performing such other party's obligations pursuant to this Note), fires, floods, epidemics, quarantine restrictions, strikes, labor disputes, freight embargoes, inability to obtain materials or supplies or unusually severe weather or delays ofacontractors and subcontractors due to such causes; it being the purpose and intent of this 5 provision that in the event of the occurrence of any such enforced delay, the time or times for performance of the obligations of such party shall be extended for the period of the enforced delay. 16. S~r.lJrity. This Note, including any extensions or amendments hereto, and Borrower's obligation to pay the indebtedness evidenced by this Note, is secured by the Amended Deed of Trust. 17. Nonr~collrs~ Ohligation. Notwithstanding anything contained to the contrary in this Note, this Note shall be payable by Borrower without personal liability of the Borrower, or any officer, director, agent, attorney, servant or employee of Borrower, and the Note holder shall have no recourse for such payment with interest except against the Property against which this Note is secured. 18. Joint V~ntlJr~. The relationship of Borrower and Lender under this Note is solely that of borrower and lender, and the loan evidence by this Note secured by the Amended Deed of Trust will in no manner make the Borrower the partner of joint venturer of Borrower. IN WITNESS WHEREOF, Borrower has executed this Note Bs of the day and year set forth above. Attest: REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA By: Maria Stewart Secretary Susan E. McCarthy Executive Director Approved As To Form: Marsha Jones Moutrie City Attorney and Authority and Agency General Counsel 6 EXHmIT A * SCHEDULE OF PAYMENTS Payment Date Principal Interest (January 1) Amount Amount Total Payment 2005 $ 2,251,000.00 $ 1,428,700.00 $ 3,679,700.00 2006 2,409,000.00 1,271,130.00 3,680,130.00 2007 958,000.00 1,102,500.00 2,060,500.00 2008 214,000.00 1,035,440.00 1,249,440.00 2009 229,000.00 1,020,460.00 1,249,460.00 2010 245,000.00 1,004,430.00 1,249,430.00 2011 264,000.00 987,280.00 1,251,280.00 2012 284,000.00 968,800.00 1,252,800.00 2013 302,000.00 948,920.00 1,250,920.00 2014 323,000.00 927,780.00 1,250,780.00 2015 347,000.00 905,170.00 1,252,170.00 2016 371,000.00 880,880.00 1,251,880.00 2017 394,000.00 854,910.00 1,248,910.00 2018 422,000.00 827,330.00 1,249,330.00 2019 455,000.00 797,790.00 1,252,790.00 2020 483,000.00 765,940.00 1,248,940.00 2021 522,000.00 732,130.00 1,254,130.00 2022 557,000.00 695,590.00 1,252,590.00 2023 594,000.00 656,600.00 1,250,600.00 2024 637,000.00 615,020.00 1,252,020.00 2025 681,000.00 570,430.00 1,251,430.00 2026 727,000.00 522,760.00 1,249,760.00 2027 777,000.00 471,870.00 1,248,870.00 2028 834,000.00 417,480.00 1,251,480.00 2029 894,000.00 359,100.00 1,253,100.00 2030 957,000.00 296,520.00 1,253,520.00 2031 1,020,000.00 229,530.00 1,249,530.00 2032 1,091,000.00 158,130.00 1,249,130.00 2033 1.168.000.00 81.760.00 1.249.760.00 TOTAL $20,410,000.00 $21,534,380.00 $41,944,380.00 * Preliminary, subject to change.